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 examining the pitches for smart strategies and useful tips that entrepreneurs can use to make their own businesses better. Episode 18 featured a product stuck in the middle of the market and an entrepreneur with big expansion potenial.
It’s not enough to tread water: Slaman’s high seas-inspired family adventure is a proven gimmick. “I’ve always worked in tourism and entertainment, and the business model does exist across various cities in the U.S.,” he explained. “It has been successful there over 10 years.” But though the Dragons were entertained, and Manjit Minhas promised to bring her family aboard (“I can easily fill up [the boat] with my immediate family,” she joked), they were less enthused by Pirate Life’s potential margins. Without taking a salary, Slaman was looking at $100,000125,000 at best, Michael Wekerle calculated. “After tax, it’s hard to get that re-investment rate going, especially with a $600,000 valuation,” Wekerle told the pitcher. Slaman’s boat currently holds 33, with a top capacity of 45, and the Dragons encouraged him to focus on maximizing his traffic. “I think the magic for you getting this business right is making sure the boat is full,” Michele Romanow counselled him. “Just get that inventory management piece right, and you’ll probably build a good business for yourself.” But none of the Dragons saw an opportunity for themselves, and Slaman left without their gold.
Keep up with the times: Synerpet’s isn’t the only solution to the lost pet problem. “The low-tech solution to finding your dog is to put your phone number on their pet tag,” observed Michele Romanow. “The high-tech solution is to use [a tag], but have it connected to GPS.” Wonham’s was a “weird middle solution,” and one in danger of obsoletion by newly-cheap location trackers. The company’s numbers proved equally unappealing—Synerpet had $25,000 in retail sales, with about half that coming back to the company. And though Wonham protested that high-tech trackers weren’t designed for pet use and wouldn’t stand up to harsh outdoor conditions, the Dragons weren’t buying it. “This product will be replaced very, very quickly by a product that costs the same, that has a GPS, that is way better than what you’re offering here,” Romanow told him. Wonham received no offers.
Stand out in a crowded space: Hagensborg Chocolates are ethically-sourced, sustainably-harvested, gluten- and trans fat-free, and kosher—and they come with a fun, irreverent, pig-centred brand. “We researched and found out pigs drug up truffles and said, Truffle pig,’ we just burst out laughing,” Wallace explained. But it wasn’t just Wallace’s smart brand that appealed to the Dragons—they were also inspired by her story. The Burnaby entrepreneur had $1.4 million in sales in the year before filming, having gone into the chocolate business after a decade of waitressing.
But the confectionary market is competitive. “I see a new chocolate bar coming out almost every other week,” noted Joe Mimran. The same is true of white T-shirts, where Mimran made his career, countered Wallace. “We’re a unique product,” she emphasized. Michele Romanow, who’s first business was a sustainable coffee shop, was particularly taken with the organic aspect. “Environmental was just starting to trend [then],” she recalled. “When we started it, I wasn’t sure that it would have this kind of longevity, so you’re on absolutely the right track.” Manjit Minhas made the first move, offering her Costco connections and branding expertise along with the $300,000 for a 50% stake. Romanow opted to join her on the deal, and though Wallace said she wouldn’t have imagined accepted the offer when she walked into the Den, she took it.
Be ready to move quickly: The gap between launch and monetization can be a large one in the technology sector, and Payso was no exception. Although it began by facilitating consumer-to-consumer money transfers, Cartwright and Tyler’s ultimate goal was to charge an interchange fee when users paid merchants through the app. “The long term will be that we will be the default way that the millennial generation pays for things,” explained Tyler. “So that starts with payments to friends, but ultimately you’ll also be able to pay for shoes online [and] beers at the bar.”
But Payso isn’t the only such solution in the market—Cartwright noted that the likes of Facebook and Venmo already facilitate such transfers in the U.S. “This needs to be a very quick play,” she said. “The Canadian market is not yet taken, and we have 18 months to two years.” Payso’s user count wasn’t particularly high—1200 downloads and 300400 active users at filming—but Michael Wekerle made an offer anyway, proposing $100,000 for 50.1%. He soon withdrew, however, when app guru Michele Romanow indicated her interest. “You’re going to have to raise more money, but on the contingency that we get a larger round, I’ll put in the [$100,000] for 20%,” she said. Payso had other investors, however, and Romanow couldn’t accept their upper limit of 12.5%. Cartwright and Tyler left the Den without making a deal.
Build up, then out: Goodwin’s company connects parents with private pool access to swim instructors, providing a more convenient and personal alternative to big-group lessons at a community centre. “AquaMobile is North America’s largest, at-home, on-demand swim lesson provider,” Goodwin told the Dragons. The company had 700 swim coaches at filming, with plans to grow to 1,100 by the end of the year. And it solves the trust problem through instructor profiles on the website backstopped by extensive vetting. “If they don’t know their stuff, then we can’t bring them on board,” Goodwin said, explaining that AquaLife requires three years of swimming and lifegaurding experience. “I’ve had to turn away Olympic athletes—just because they were a great swimmer themselves, that doesn’t make them a great instructor.”
Goodwin brought some impressive numbers to the Den—$1.5 million in the fiscal year before filming, and a projection of three times that for the then-current year. At a 25% margin that Goodwin said was set to grow, it was an attractive financial proposition, especially since the Toronto entrepreneur had bootstrapped the business to that point. And the potential to move into new markets got one Dragons’ interest. “It sounds like you’ve built a really good piece of technology, a booking engine,” Michele Romanow said. “Can we apply your same booking technologies to another vertical?” Goodwin reeled off a list: yoga, pilates, personal training. Impressed, Romanow made the first offer, proposing $200,000 for 20%.
Impressed by AquaLife’s geographical footprint—the company operates in 20 U.S. states, including warm-weather ones like Florida, California and Texas—Jim Treliving also put in a bid, matching Goodwin’s initial ask. “I do a lot of business in the States, and I’m also in Mexico now,” he told her. ¦We do have an office in Dallas if you wanted to work out of there.” Joe Mimran also got in on the bidding war, joining Romanow for a new offer of $200,000 for 15%. After a bout of indecision and a bid to bring all three Dragons in on the deal, Goodwin took Treliving’s offer.
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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