Almost a decade in, Dragons’ Den continues to inspire and amuse Canadian TV audiences. But the CBC’s hit show isn’t just meant to be entertaining. It’s a televised school for entrepreneurs. For each episode of Season 10 (which airs Wednesdays at 8 pm ET), we’ll be talking to one of the Dragons to get a behind-the-scenes glimpse of their decision-making process and hear what they hope viewers learned. Episode 8 featured two young entrepreneurs with a multi-million dollar business, and a boxer with an inspiring backstory.
A couple of years out of high school, Charith Perera and Mubin Vaid would go store to store selling LED strips imported from China. By the time they walked into the Den seven years later, they were running a business they project will do $10 million in sales in 2015.
Tdot Performance, the business the friends started with the savings from their first entrepreneurial endeavour, is an e-commerce platform selling auto parts and accessories. With solid margins (23% gross and 5% net) and no debt, the company proved popular with most of the Dragons. “You guys got an e-commerce unicorn,” Michele Romanow—the builder of multiple online shopping platforms herself—told them. “I want in on this one.” And it was Romanow who won the deal, parting with $1 million in exchange for a 27% equity stake.
It’s not the first time Perera and Vaid have been recognized for their business-building achievements. In 2013, Tdot Performance ranked #12 on the PROFIT HOT 50 Ranking of Canada’s Top New Growth Companies.
Joe Mimran may not have been able to get in onthedeal—he offered to partner with Romanow, but the duo chose to go with her alone—but in an exclusive interview before the episode aired, he was effusive in his praise for Perera and Vaid. “That is really the essence of the show, is when you find people like that who are driven to be entrepreneurs from a young age,” he says. “Really two terrific young businessmen.”
Perera and Vaid have a Canadian edge, because consumers who buy from U.S. competitors must pay duties and higher shipping costs to get their purchases across the border. Tdot Performance works with some of the country’s biggest distributors who ship direct to shoppers, making it in effect an online showroom for products rather than a conventional retailer. That model eliminates one major risk that businesses dealing with physical products face. “The fact that you don’t take inventory is super-attractive,” Romanow told them. “That’s what kills all retail business.”
On the show, Mimran concurred. And post-taping, the fashion entrepreneur who first conceived the Club Monaco and Joe Fresh brands reiterated the point. “Inventory is on the wrong side of the balance sheet,” he says. “People put it on the asset side [but] I put it on the liability side, because if you don’t manage inventory correctly it’ll put you out of business.”
Mimran was also impressed by the company’s revenue and it’s potential. “A lot of these people come on the show, they’re so niche—they come up with one little niche idea that may hit or may not hit” he observes. “But in this particular case they were fishing in a very, very large pool.”
Mr. Lube owner Jim Treliving also made an offer to Perera and Vaid, agreeing to give the duo the deal they came in for. “Jim is in the automotive industry,” observed Vaid when the partners retreated to discuss their offers. “Michele understands the e-commerce game though,” countered Perera. “You can’t just buy that.” The entrepreneurs attempted to rope both into the deal, but Romanow was intent on doing it herself. Mimran says he liked the two very much, and could have offered them a lot of mentorship and guidance. But he has no hard feelings. “I would have loved to actually taken part in that, but I think they made the right choice.”
Equity isn’t everything: Poutine may be a simple food, but De Silva’s proposed investment model decidedly was not—a group of 10 outside investors had pledged half a million dollars if the Curdz CEO could get the Dragons to match. Michele Romanow was not impressed. “I would be worried if you’re going to give all this up, if you’re even going to be incentivized to work for this business,” she told him. “It’s going to be investors that are going to own everything!” But Michael Wekerle saw an opportunity to use Curdz as a second-line business for another of his investments, Wahlburgers. The Dragon asked De Silva $500,000 for a 45% equity stake and an exclusive district in which Wekerle would be able to add stores, with De Silva getting a 5% royalty and 10% equity stake in his original nine-store franchise. With Manjit Minhas retracting an earlier offer, De Silva was happy to take the deal.
You’ve got to want it: By the time he stepped into the Den, Hosseini had spent close a million dollars across two businesses to create his house painting product. That investment had yet to yield any sales, which the entrepreneur put down to a lack of marketing. The Dragons weren’t buying it. “Sales means you create one of these for $50, you go out and see if anyone wants to buy it,” Jim Treliving told him. Hosseini’s nonchalant attitude also didn’t impress his would-be investors. “You invest not only on the item or the idea, you invest in the person,” Joe Mimran explains in a post-taping interview. “When all of a sudden you get somebody who was pretty lackadaisical about spending [that amount of money] it sends out alarm bells as to the credibility of the pitcher.” Unsurprisingly, Hosseini received no offers.
No risk equals no revenue: Jump On’s flights don’t depart unless they’re about 80% full, a strategy Roger Jewett saw as a counter to the low margins of the airline industry. “We’ve created our business model such that we won’t go broke,” Jewett explained on the show. Jump On uses existing charter aircraft fleets, which typically sit idle for many hours each week. “We don’t own the planes, and we don’t fly empty airplanes around.” But Manjit Minhas had a ready retort. “You won’t go broke, but you won’t make any money either,” she told him. And Jump On’s record of just 13 flights in two years didn’t impress the Dragons. Jewett and son Sean didn’t receive any offers.
Back the fighter: Canadian heavyweight boxing champion Carman entered the Den with a compelling backstory and a very impressive championship belt. “It’s a big losing game right now. I’ve invested my life savings and more into this,” he told the Dragons. “I’m not here for the money.” His confidence won them over, as did the endorsement potential. “For me, it sounds like a match made in heaven—a real boxer for Boxer Beer!” Manjit Minhas said. She and Michael Wekerle teamed up to back Carman.
MEET THE DRAGONS THEMSELVES:
- The Secrets of Jim Treliving’s Success »
- How Manjit Minhas Built Her Booming Business »
- Inside the Brilliantly Weird Mind of Michael Wekerle »
- How Michele Romanow Picks New Product Ideas»
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