Innovation

Lessons from the Dragons: Sharing the Final Say

A pivotal decision and some all-in entrepreneurs in Dragons’ Den Season 10 Episode 5

Written by Murad Hemmadi
Matt White (at right) of Sussex Beard Oil Merchants. Photo: CBC

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 5 included a pivotal decision and a pair of entrepreneurs who were all in.

Sussex Beard Oil Merchants

Entrepreneur: Matthew White | From: Sussex, N.B. | Ask: $65,000 for 25%

Beard and men’s grooming products

The form factor: White made a big impression in the Den. “You’re one of the best pitchers I’ve seen so far, and I think you’re perfect for the brand and a great spokesperson,” Joe Mimran told him. But the company didn’t have much by way of sales, and the small space it operates in turned most of the Dragons off the deal. Michele Romanow ruled herself out, but made a valuable suggestion. “Take that tear-dropper, which is now a circle, and make it into a cool rectangular container,” she told White. “[If] it’s less than 2.5 cm, you can send it via letter mail with Canada Post.” The easy packaging change could translate into major shipping savings. Michael Wekerle, who had already made White an offer, was thoroughly taken with the idea, and Romanow decided she wanted in after all. The two Dragons gave the Sussex entrepreneur his $65,000 for a 30% stake and a five-year, 5% royalty.

Deadbolt Arrest Lock

Entrepreneurs: John & Michelle Nichol | From: Oshawa, Ont. | Ask: $40,000 for 20%

Security lock for homeowners

Sales prove a solution: With only 300 units sold out of an inventory of 6,000 (plus 50 given away on a radio show), the Dragons concluded that the Nichols had a product in search of a problem. “When I’m not totally sold on the solution, I look to sales to prove me wrong,” Michele Romanow told them. “And neither of those things are there.” Their lack of success in securing placements with big box retailers or real estate developers also didn’t go over well. “Get what you can out of the inventory and move on,” suggested Manjit Minhas. The Nichols received no offers.

PeapodMats

Entrepreneurs: Liz Brezer & Amanda Pilgaard | From: Vancouver | Ask: $50,000 for 30%

Bed-wetting mats

Necessary solutions: Though the problem PeaPodMats is trying to solve isn’t widely discussed, it’s widely experienced. “There’s between eight and 10 million children in North America who wet the bed,” Pilgaard explained. The founders’ commitment to the business impressed the Dragons—leaving six-figure jobs displayed “entrepreneurial spirit,” Joe Mimran told them. But solutions are just as important as spirit when it comes to business success. “I love products that are based out of necessity,” Manjit Minhas said. “Good on you guys for actually creating something and discovering that there is a need for it, even though outwardly people are not talking about it.” And it was Minhas who offered a deal, offering $50,000 for a 35% stake.

Guusto

Entrepreneurs: Skai Dalziel & Joe Facciolo | From: Vancouver | Ask: $150,000 for 7.5%

Gifting app for food and drinks

Basic app math: With $14,000 in total sales and a $2 million valuation, Guusto’s numbers just didn’t add up for the Dragons. “Come with a proper valuation, and things always tend to work out,” Michael Wekerle told them. And Guusto’s implementation of the marketplace model didn’t go over well with Michele Romanow, who has considerable experience with the framework. “I’ve built three of these, they’re the most difficult things in the world,” she said. She was also unimpressed by the app’s conversion rate (7,000 downloads and only 1,000 accounts created). “You made a big mistake by not forcing the user to download the app when you send them a drink,” she said. “This is like App 101.” Dalziel and Facciolo didn’t get any offers.

Good for You Deserts

Entrepreneur: Wendy McNally | From: Toronto | Ask: $225,000 for 15%

Healthy banana breads

Control isn’t everything: McNally spend nearly two decades years building her company, so her reticence to agree to Jim Treliving’s stipulation of a 50% stake was understandable. “It’s just that I have worked very, very hard with this business for 19 years,” she said. But her ambitions of doubling sales and breaking out of her current Ontario retail base required a large influx of capital, and the Dragons all concurred that the amount she was seeking simply wouldn’t be enough. “It’s a critical moment as an entrepreneur, knowing when to let go, and knowing when to say, ‘This is still my product, but I can’t do everything around this,’” Michele Romanow told her. Treliving readily acknowledged McNally’s contribution to the business, but insisted that a half-half split was necessary for him to get involved. “I want to have the same amount of say as you have when we make a decision to go in a direction you may not want to go, but [that’s] better for the company,” he told her. Ultimately, she took the deal.

MEET THE DRAGONS THEMSELVES:

Share your reactions, thoughts and feedback onDragons’ DenSeason 10 Episode 5 by commenting below.

Originally appeared on PROFITguide.com