Welcome to the second series of Small Business Snippets, the podcast from SmallBusiness.co.uk.
In this episode, Anna Jordan chats to Piers Linney, an entrepreneur, investor and former Dragon on Dragon’s Den. We discuss the most memorable pitches from the show as well as Piers’ first foray into entrepreneurship.
Listen to it in the media player below.
We’ve got podcast episodes from the first series looking at:
- How one business owner’s mental breakdown caused her to see trolls from her past
- How one entrepreneur hired a videographer to track their every move and build their business brand
- How funding a business led one entrepreneur to stress-related alopecia
- One entrepreneur’s first professional public speaking engagement
- Adapting to UK life and learning English before starting a business
- Securing seed funding
- Finding the perfect head of customer care
- Reaching a £1 million annual rate of return
- Boosting client numbers from 30 to 850
- Starting a brand new business from scratch
To find out more about Small Business Snippets, you can download the trailer.
Want to read the interview instead?
Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.
Today we have Piers Linney, an entrepreneur and investor who is best known for his time as a Dragon on Dragon’s Den.
We’ll be talking about Piers’ enterprising beginnings and how you can drive your small business forward, even during difficult spells.
Anna: Hello Piers.
Piers: Hi Anna.
Anna: How are you?
Piers: Very good.
OK, as the intro suggests, I’d like to go back a bit. As we know, it’s easier for entrepreneurs to get started earlier and reach a larger audience, helped by the likes of selling platforms like eBay and Depop. But you were just as entrepreneurial, even when you were a teenager – that was before the introduction of social media, apps.
I understand that you used to sell the Sunday papers, but you bypassed the –
Piers: Ah, you’re going way back now! [laughs] Yup, yup, I did.
So, you bypassed the newsagent because you saw a gap in the market there and you want to the wholesaler and distributed the Sunday paper around your neighbourhood.
Piers: Yes, so, just going back to your earlier point. The fact that you can start a business more easily these days – there are platforms that help you in terms of distribution – it doesn’t mean you should. It’s still about the idea. What I learned early on – I’ve always been fascinated about business, really – I grew up in a village in Milltown, so a lot of the neighbours had their own businesses. I didn’t really know anybody who had a job in terms of getting up in the morning and going off to work. They were builders, joiners, jobs that you work with your hands. Maybe owned a quarry.
I sort of thought: ‘Right, I had a job’ which was my paper round, which paid £5 a week. If I was late it was £4.50, which shows you how long ago this was. And I thought: ‘This is just a mug’s game’. It was very cold up in the north in those days. Global warming’s made it easier. And I thought: ‘What can I do?’ So, one morning on a Sunday when they [the newsagent] didn’t deliver, my dad said to me: ‘Could you get me my paper? I don’t want to get out of bed.’ And I said: ‘OK, I’ll go and get it for you.’ And he gave me 50p. I said: ‘Hang on a minute, that’s pretty good money compared to what I’m earning on my paper round.’ The next-door neighbour said to me: ‘Oh, can you do the same?’ My dad was telling him about the new service. And I thought: ‘Hang on, there’s something in this.’
I flyered my whole neighbourhood and built a paper round. I was earning £15-£20 on a Sunday morning for doing a bit of a longer paper round, but it was first entrée and my first understanding that if you find a niche and you find a product or a service that somebody wants and it adds value to their lives, and they’re willing to pay you more than it costs to deliver that service, i.e. it’s profitable, then you can create value and – in this case, it was a small example – some wealth.
I used that money to buy my first and very expensive BMX. And through that I understand that the idea’s great and the execution clearly, but what it also came down to is a lot of hard work and graft.
I Imagine it must’ve taken quite a bit of confidence as well at that age. How did you approach the wholesaler and how did they respond to you?
Piers: I’ve never lacked self-confidence and it’s probably something that’s helpful in being an entrepreneur. Becoming confident or becoming a leader in many ways is something that can be instilled in you or you can be born with it, or it’s something you can learn. In the military, they can train leaders.
I was always confident, and I could see the opportunity to make money. And again, the wholesaler, all he got was another customer, it just wasn’t a newsagent. His bundle of papers, rather than drop it outside a newsagent, was dropped off at someone’s house, at a residential address. He didn’t really care – he was just making a bit more money.
I understand that your mother set up her own business after retiring from nursing in the NHS, I’m sure that was some kind of inspiration to you.
Piers: People say to me: ‘Who are your role models in life?’ I’ve never had formal mentors. My initial role models were my parents. My dad was a Mancunian working-class lad who got into Cambridge on a scholarship, so he was bright.
Then after that, it was people that I worked with. I’ve always worked with people who are more senior that are better than me. Then after that, I’ve always tried to hire people that are better than me.
I’ve had three meetings today and they’ve all been with people that know more about something that I’m looking to get into. And that’s really important because you never have all the answers. The world’s moving so quickly now and the market is so dynamic that you can’t be expected to have the answers. And if you think you have, you’re probably wrong.
What would you say in terms of small businesses being able to hire better talent? Perhaps because they’re nimbler, they can innovate at a faster rate. Would you agree with that?
Piers: I’ve been through this quite a few times where you’ve got a small business and you want to attract talent. Now, a couple of things: the first one is that, really, you shouldn’t be concerned about where talent resides. If you want to have a talented forklift truck driver, they probably need to live reasonably close to your warehouse. But if you’re looking at the creative economy and tech-based businesses, talent can live anywhere now. It doesn’t matter. The idea of a city even is arguably unnecessary going forward into the future. Don’t worry about where talent is, just go for the best talent.
You’ve then got to be more creative to access more talent because they’re going to have more people talking to them, they might have a nice cushy job in a big company. You’ve got to be more creative about how you bring them onboard, about renumeration. If you’ve got a company you intend to sell or float one day, you can offer people shares. You shouldn’t give shares in a company that’s intending to be a lifestyle business forever – unless you’re going to make money in dividends. Think about how you’re going to add value to their lives.
A lot of the entrepreneurs I come across think that these senior people who are joining them are doing them a favour. But you’ve got to remember that you’re doing them a favour actually because if they didn’t want to leave corporate life and do something more interesting and entrepreneurial where they have a better work-life balance, they wouldn’t be talking to you.
And when you bring people onboard – no matter who they are, how talented they are – think very carefully about handing out shares. Make sure that when they leave, for whatever reason, you can get them back.
But the talent is out there. And the other thing about talent that I’m very passionate about is diversity. There’s a pool of talent. If you’re looking for people who look like you, have the same religious beliefs as you, same sexuality as you, they live in the same area and went to the same school as you, you’re limiting your talent pool. Don’t do that. You need to think about diversity in all of its forms, especially in terms of thought as well, to access a broader and deeper talent pool. That’s the competitive advantage. There’s a huge amount of talent out there.
I’m a trustee of Nesta as well, the innovation charity, and if you look forwards, the research about robotics and AI, menial jobs and even jobs such as accountants and lawyers [are at risk]. Software’s pretty good at adding up numbers, it’s pretty good at looking at datasets and applying logic to it. It’s not just Uber drivers and forklift truck drivers that have got a problem; it’s the professions. So, creativity is what differentiates us from the machines. And the talent you access in the future is going to have that creative edge.
My mantra is that you’ve got to have a plan, but your plan has to have some growth in it. Add some creativity, some innovation, some differentiation to your product or service to attract different customers. Having no plan for growth, in a world that is changing very quickly, is a very bad plan. You wake up one morning, and you find your market, your customers, your product, your supply chain – something’s changed which means that you’re no longer relevant or you no longer have a profit margin.
Anna: I was actually reading an article about ice cream vans the other day and they seem to be a type of business that – there are some that have moved forward but a lot of them are in the same types of vans, still doing your normal vanilla with a Flake and they haven’t moved on and they’re wondering [why they’re falling behind].
Piers: They should be doing smoothie vans!
Piers: It doesn’t matter what you do, 20-30 years ago – I’m generalising now – you could do that. I don’t think it’s a wise plan these days – ice cream van, corner shop, tech company, it doesn’t matter – to rest on your laurels. You’ve got to keep talking to your customers about what it is they want so you understand change, ideally before it happens.
You’ve spoken a bit about instilling the values of entrepreneurialism. How are you doing that with your two daughters?
Piers: Another interesting thing I’m quite interested in is the future of work, the future of employment. Dell has some research that says in 30 years, 85pc of the jobs that exist don’t exist today. There’s other research that says ten years out, half of them don’t exist today.
You’ve got an education system that’s training your children to enter a world that the teachers don’t understand, that I don’t understand. It’s very difficult. They’ve got to equip kids with these sorts of skills and keep them as a rally car, as I call it, to the unweighted so you could go left or right as you go over the brow of the hill – and that’s hard to do.
‘I’m not going to punish my daughter for being entrepreneurial and making some money – that’s all she’s ever seen me do!’
My daughter – I’ve got a daughter called Tiger. I got called into school, actually, by the head teacher. She said she’s been selling things at school and they need to talk to her. I thought she’d made a couple of quid. I asked what happened and the teacher said: ‘She got some erasers and she was making them funky and selling them on at a margin.’ I asked how much money she made and she said £60. They said that I need to tell her off and I refused. I take the point about taking money off the other kids, maybe there should be some kind of bartering, but I’m not going to punish my daughter for being entrepreneurial and making some money – that’s all she’s ever seen me do!
Anna: Exactly. Do you know who her dad is?!
Piers: It was quite interesting to see that. I bring them up to – they’re young, so I don’t really sit them down and go over how to start a business with them. But I think they get it, that my view is that – especially when they enter the labour market – is if you can, work for yourself. It’s got its problems, you sacrifice, it’s got its risks, but at the end of the day you’re masters of your own destiny.
You seem to have a knack for identifying emerging markets as well [Piers launched cloud tech firm Outsourcery before the cloud was popular]. What kind of emerging markets do you see coming up?
Piers: I was into the telecoms which was the tail-end of that, really, the particular way it was done. I was into cloud and cloud is the way things are now. Since then I’ve been looking at what I do next. I made some investments, some work and some don’t, and I’ve been looking at doing something big, something disruptive.
I’ve been looking at wellness, so health, fitness and now I’m looking now more at going back almost into what I know, which is markets, SME services. I’m trying to disrupt those because a lot of them just have not changed, even since I was in them ten years ago. And even ten years before that, they haven’t changed. I think there’s an opportunity in there in services for small to medium-sized businesses to disrupt markets.
Coming on to everybody’s favourite, Dragon’s Den. I’m sure you would’ve had a lot of pitches in your time on the show, but which was the most memorable one for you and why?
Piers: There’s two, I suppose. I’ll give you the negative, funny one first. That was Bathomatic (click the link to see a clip), which was a chap that turned up wanting £1m or £2m for 20pc and he had a product which pretty much filled a bath and dropped some rose oil in it. I said I’ll do that myself actually. I don’t need to spend £15,000 on something that turns a tap on and off.
We asked what the money was really for. He had this pretend plaque/device that didn’t really work, it was a mock-up, and he said he needed a floor in the Shard for the marketing suite. You laugh at that, but I’ve heard about entrepreneurs who have got equally bonkers ideas and raised money from people. That was one of the comedy moments.
‘I don’t need to spend £15,000 on something that turns a tap on and off’
The most interesting one for me was a company that at the time was called Lost My Name and now it’s called Wonderbly. That was the leading producer of personalised children’s, it was books, now it’s increasingly content. They raised investment from the likes of Google and other venture firms, and they’ve been growing.
I was one of the first to do real tech on Dragon’s Den. There were four or five Israeli entrepreneurs walked in the Den and they all had their venture capital term sheet and I thought: ‘What’s there not to like?’ They knew what they were talking about and that’s been very successful. So hopefully out of Dragon’s Den I’ll make some money because it’s like a portfolio – some work, some don’t, some you lose money, some make money.
Anna: Yeah, it was as you were saying as well, personalisation is a huge market and growing, as is tech, so combine that –
Piers: Personalisation is everywhere now. I’ve met lots of founders recently and whether it’s books or baby’s clothes, technology allows you to do that now. It was very hard, very expensive to do this. Companies like the Moonpigs and all those kind of people in the world and the moo.coms, personalised greetings cards and business cards, is normal now. It was very hard to do a decade ago, so personalisation is somewhere where you can really add value.
People want to see personalisation, they want to see provenance, they want to know the founder’s story. The new consumer that’s beginning to amass disposable income, they want to see more, they don’t want to have some clever advert that’s sold on something they don’t really want.
But increasingly, people are interested in – not all sectors – but they’re interested in where did this product come from, who’s put it together, what’s the ethos of that business – how do they treat their customers, their employees, the environment – locally, globally. That’s what you need to think about because especially on the eco side of things you’re seeing now that the Millennials, whatever you want to call them – Gen Z – Millennials now have the –
Piers: Like yourself. Millennials are mid-level managers in most companies now, they’re moving up, because they’re getting older. And they are changing the way in which products and services are consumed – because these were little things that didn’t matter too much, they were seen as ‘got to have it for the marketing’. Now you’ve got to have it because if you don’t have it, they’re not going to buy your product or service.
Anna: And it’s so easy to research as well. So, if there’s something you fall down on, people can research it. Boom – there you go.
Piers: That means you have to be transparent about it as well. Because if you’re not, people are going to start asking questions.
You don’t have to be, always. There are lots of people that make good money out of businesses that don’t do any of this. They just found a product. I mean, mobile phones. I used to be in mobile, and people made a lot of money out of it and the service was pretty awful. But at the end of the day, they had a product that selling it was like shooting fish in a barrel. Because it was an amazing new product that everyone wanted, nobody had one, so you couldn’t really go wrong – and those markets haven’t really changed much since.
At the time of recording, it is Small Business Advice Week. This year it’s running from 2nd-8th September. First off, it’s a little bit difficult to get around this topic and it may very well change by the time the podcast goes live. What advice do you have for small businesses to prepare and operate in the event of a no-deal Brexit?
Piers: Well, the problem with that is that we don’t know what a no-deal Brexit means. That’s the bad thing about it: we should not be in this position. The economy depends upon entrepreneurs and entrepreneurship and innovation. And having a period of time where – and I’ve seen this – on a large scale and also on a small scale, where investment, decisions, sales cycles, things have been delayed. That slows the economy down and it has slowed the economy down and that’s going to continue.
And even if we end up with a no-deal, and it’s been said that over time, we’re all dead. So, if you’re looking at it in one year it’s probably bad but in five years, ten years, things change and water will find its level again. But there’s going to be a period of time where the innovation in the UK, the economy and entrepreneurs are being stifled. And I don’t care what the outcome is, we should never have been put in this position.
So, in terms of answering your question, it’s very hard. It actually makes sense, and I hate saying this, it does make sense in many ways to delay investments. Maybe in terms of marketing or looking overseas or EU relationships or your supply chain. Just give it a week. It was worse six months ago, at least now you’re looking at maybe days and weeks. It’s a very hard question to answer.
Anna: It is, isn’t it?
Piers: It’s incredibly frustrating.
Anna: Yeah, we’ve had so many people ask.
Piers: There’s no easy answer to that, sadly.
Possibly something a little more positive. What is the most common question you get and what advice do you give small business owners in return?
Piers: One thing I’m talking about this week a lot is financing.
I’ve worked in the US quite a lot and you look at entrepreneurs there and even small business owners, the ones who aren’t looking to grow exponentially, it’s about if you need to grow a business sometimes, your net income, your profits, don’t provide sufficient capital to fund your growth aspirations. You need to raise money. That could be debt, it might be equity. It depends where your business is in its life cycle and its profitability, and your balance sheet.
And a lot of UK entrepreneurs, it seems, are afraid of raising external finance. So, raising external finance isn’t for everybody, but given the numbers are 70pc-80pc of UK businesses would rather forego growth than raise external finance, that needs to change. I don’t know exactly how much, but by changing it you can put more into the engine of the UK economy, and how these businesses grow.
And that’s really simplistically about understanding your options. There are lots more options now: peer to peer lending or challenger banks or angels or angel funds, crowdfunding. There’s lots more ways you can raise capital which you couldn’t do five, even three years ago in some cases.
Go and look at the options if you need to grow, understand them and then it comes down to a contract. Be happy with the terms of that contract and the small print. Can you lose your business, can you lose your shirt? Are they draconian terms?
This is where you need a good lawyer, I’m not joking about that either. When someone hands over a term sheet or a document for debt (or a shareholder agreement if you’re looking at equity), you need to understand exactly what that means for you and not just if things go well. You need to understand what happens if things don’t go well.
Extreme examples – there’s no point having an investment agreement where you are restricted, you have a veto of you raising debt and equity if you need to raise more because they can hold a gun to your head, essentially. There’s no point having documentation for your start-up which says that in year four, you will hit this EBITDAR number (Earnings Before Interest, Depreciation, Amoritisation and Restructuring or Rent costs) or they have swamp rights. They can take over the board and fire you.
They’re extreme examples, but I’ve seen them. Both professionally and I’ve seen them in things put before me as well. So, understand the detail and the small print and make sure that if things don’t go to plan, you know where you stand. And I’ve known one example recently where someone built a business, they had a 12 million evaluation, they raised £2-£3m and within a month, they were out. They missed some sales target.
But don’t be afraid of raising finance if you want to grow because otherwise in many, many cases, you can’t really grow.
Anna: Well, that’s it from me unless there’s anything else that you’d like to add.
Piers: No – we’ve covered some ground there.
Anna: Thanks for coming on the show, Piers.
Piers: It’s a pleasure.
Anna: You can find out more about Piers at pierslinney.com. You can also visit smallbusiness.co.uk for more information on starting and growing your own business. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.
Piers Linney is represented by the Champions Speakers agency.