Dragon’s Den: The missing piece

Watching the latest episode last night I got thinking that CBC really needs a different mix of Dragon’s next season. My fundamental problem with it right now is every episode we continuously hear “It’s not a space I know anything about” and it’s generally Robert Herjavec or Kevin O’Leary saying it.

And I think it’s because they’ve got a major gap in the skill sets of the Dragons on the show – manufacturing.

While many of the “contestants” are total crackpots there have been more than a few opportunities over the past couple of seasons that the Dragon’s have passed on simply because they didn’t get the space etc. – the reality though was the person typically wasn’t looking to the Dragon’s for insights into their own industry. They knew all that themselves – what a lot of them truly needed was support in moving to that next step – taking hand crafted to mass production.

Lawrence might have some insights but I think fashion is a world unto itself – besides his real value is understanding retail strategies.

But who to replace?

When push comes to shove I think Robert needs to go – I like him but when you step back I think his real strengths (computers/IT Services etc.) add minimal value to the mix. When you look at it, with the exception of the JobLoft guys there haven’t really been any legitimate software opportunities showing up on the show (they’re not great TV and I’m guessing many are deliberately avoiding DD as a “financing opportunity”).

Swap him out in favour of a new Dragon who has some serious manufacturing cred and I think he (or she) would provide an interesting perspective on a lot of these products. It really is the one hole they’ve got in the show right now. The other four cover off key industries, skills & personalities to balance out the show. What they’re missing is someone who really really gets taking a product from idea/prototype to manufacturing.

Add a manufacturing person to the mix and I think they’d likely “lead” a lot more of the deals with Jim, Lawrence or Arlene following (for when it’s time to take the product to market).

Oh, while I’m on the topic of Dragon’s Den – about this 50% thing.

Would someone on the show please call these guys out on their 50% fixation?

It’s the most bullshit play in the book. They all know there’s plenty of other ways to structure these deals without stripping the entrepreneur of the bulk of their equity right off the bat.

Sure, occasionally the “valuation” the person is putting on their company based on the ask/equity share ratio ( i.e. $250K for 10% of my idea ) is out to lunch once in a while but many times they’re simply putting the screws to the entrepreneur.

For example, the woman last night, with the line of home organization products, should have run far, far away from that deal – Arlene gave her some good advice “Take the order to the bank and get some money” as she stepped out of the deal. I can’t fathom why she flipped and nodded “It’s a good deal” to the girl later.

Tragic.

  • Bryce

    That woman was Jodi Sinden. I went to high school with her. We were good friends. I hope it works out.

    I’m not saying you are wrong, I don’t really know.

    I guess I’m saying it is a small world.

  • Anonymous

    any suggestions on WHO a new dragon or two could be though?? I agree, just can’t think of who would fit the “dragon” role better than the 5 egomaniacs already up there!

  • Ryan

    I’ve been ticking it over and haven’t come up with anyone yet… one person I was talking to suggested Stronach though…

  • Jodi

    There was a missing piece that wasn’t put to air, but only hinted at: I would’ve needed large future investments of capital to finance inventory, and $50,000 wasn’t even close. The extra little push that made it an attractive deal was that they said future cash investment on their part would never reduce my equity in the company. That is very different than most venture capital groups, where every further investment is in return for another percentage. At the time of the filming, I had a good idea but it launched only a week before, so I only had $5000 worth of sales. Over the two months of negotiation time afterwards, my FIRM orders grew to twice the value of the dragon deal. So I did. Run away that is! Speaking of which, now looking for investment to finance that inventory… Look for the Homebox this friday on The Shopping Channel and in the spring at Indigo and Staples! Jodi
    (www.sindenhome.com)
    P.S. Hi, Bryce!

  • Ryan

    Hey Jodi, Thanks for stopping by!

    Interesting to hear the extra details of their offer – but also glad to hear you ultimate chose to bail on the deal.

    Congrats – it sounds like things are really taking off for you :)

  • Chris

    I agree with you about the makeup of the dragons, but they’re there to be on a TV show. The investment is just a side-line; Dragon’s Den is supposed to make people watch the show first, educate them second, and provide capial third.

    The 50% obesession is just being smart. If at all possible, have control of your investments. Now if it was me up there, I’d make sure I included the right to buy them back out to 20-40% to regain control at a pre-set price.

    Chris (www.chrisdavies.ca)

  • Ryan

    “The 50% obesession is just being smart. If at all possible, have control of your investments.”

    <50% ownership != lack of control.

    As many people have said before, if you take even a penny of someone’s money they own you.

    There are loads of ways to control a company without holding a majority ownership position.

    i.e.
    – Double check signing (investor must sign all checks too)
    – Purchase authorization over certain amounts
    – contractual obligations on how the money must be spent.

    etc. etc.

  • Ryan

    Oh, and while I’m the subject…

    At the end of the day, for all their posturing and “I never go in for les than 50%” the reality is they all are as they’re generally splitting the investment amongst themselves.

    They each end up with only 10-20% which means now they all have to agree or their so called “power” is out the window.