Companies & Industries

Does Dragons' Den encourage a short-sighted approach to business?

The pitch is only the beginning

Most people who get the attention of the business tycoons on Dragons’ Den have to make an actual pitch on the show.

But Darrell Kopke, a Vancouver-based business consultant and former Lululemon executive, has in the past two weeks managed to spark the interest of no less than three Dragons (past and present) with an op-ed for the Huffington Post entitled, “Why Dragons’ Den is Killing Business.”

The problem lies in ownership, Kopke said during a recent interview at Toronto’s King Edward Hotel. If you’ve seen Dragons’ Den (or its American equivalent Shark Tank) you’ll know that it involves entrepreneurs offering a stake of their company to the Dragons in exchange for financing and connections.

The problem perpetuated by the show, argues Kopke, is that it contributes to a business culture that revolves entirely around the pitch, a short-sighted approach that barely scratches the surface of what an entrepreneur has to offer, or what it means to grow an idea into a long-term business plan.

Perhaps Kevin O’Leary might offer financing for a 30% stake in your company – “but you’re going to need more financing,” says Kopke.

“As soon as you buy all that inventory and make sales, you’re going to need more inventory, you’re going to need more people, you’re going to need more marketing, and it’s going to cost you more,” he explained. Suddenly, you need more partners, and your stake in your own company might start to get smaller and smaller. Eventually, Kopke argues, entrepreneurial autonomy has been minimized to the point of no return.

“If you have very powerful board members that are significant shareholders, it’s not your agenda anymore,” he says. “It’s painful for me to see entrepreneurs working for less than 10% of their companies because they were impatient.”

Kopke’s criticism of Dragons’ Den as a show that minimizes entrepreneurial autonomy drew a somewhat negative response on Twitter from Dragons’ cast member Arlene Dickinson, while former “dragon” W. Brett Wilson sang Kopke’s praises, calling his article both “brilliant” and “accurate.”

(Kopke says David Chilton, a Dragons’ cast member known to many Canadians as the “Wealthy Barber,” also gave him a call after the article was published.)

The Dragons’ Den argument speaks to something of a mission Kopke has embarked on in the past few years to affect change in Canada’s business culture. In opposition to startup models that prioritize financing over revenue, and accelerator systems that place all manner of importance on the short-term goal of getting a pitch right, Kopke has become a proponent of a more holistic, long-term approach to developing a business.

In fact, the splash he’s been making via the Huffington Post, as well as his trip to Toronto, was timed with the release of a documentary produced by his consulting practice, Institute B, that discusses the notion of “conscious capitalism.”

Not Business As Usual (the entire hour-long doc is below if you want to give it a view) asks viewers to consider not just a long-term view of how to build a business, but also a holistic—or “conscious”—consideration of how one’s business affects the people involved in it, and the planet it relies on to run. A conscious capitalist still likes profit, but they’re not in the game to get rich quick. Instead, they take a slower approach in an attempt to leave the world and its resources intact.

“[There’s] a really big need for social entrepreneurs out there, because they’re very clear in their vision, their activism. They’re very clear in how they want the world left better,” Kopke says.

Institute B has become heavily involved in helping social entrepreneurs work toward the goal of becoming “B Corporation” certified. The certification program is run by American non-profit organization B Labs, which evaluates companies on their environmental and social “performance.” To become a B Corp, companies must accumulate 80 out of 200 points on a stringent list of requirements for a business’s supply chain, human resource practices and sustainability. Easily recognized B Corps currently include online retailer Etsy, ice cream makers Ben and Jerry’s, and Method Soap. B Labs has certified over 900 companies worldwide, 98 of whom are Canadian, according to the B Corp website.

On a separate note, 20 American states have also passed “Benefit Corporation” legislation, opening the way for companies to legally apply for a “B” corporate status that is separate from what B Labs does. With legal B corporation status, companies are allowed to favour social impact over profit without the risk of being sued by shareholders. (Canadian Business has more on this subject here.)

Kopke and Institute B (which, coincidentally, did not name its practice after B Labs, but instead the expression “plan B”), are hoping to develop the first multi-billion dollar for-profit corporations that have a social impact. Once the business community sees that profit and sustainability can go hand-in-hand, says Kopke, hopefully more companies would follow suit.

To get there, entrepreneurs and business owners will need to look beyond quick financing schemes and focus on a “triple bottom line” that places profit, people and the planet on equal footing.

“It’s okay to be good and make money,” Kopke says. “In fact it’s the only way to change things, in my opinion.”