Inside Dragons’ Den & Rachel Elnaugh startup lessons

Rachel Elnaugh of Red Letter Days and Dragon’s Den fame spoke last week of her Den and startup experiences. Rachel now mentors startup founders. Rachel said ‘99% of all Dragon’s Den footage ended up on the cutting room floor’ and only the “bitchy” comments make it to the final cut. Dragon’s Den is great entertainment but it does have its darker side.

dragon-shrek

Rachel confirmed my long held view that Dragons’ Den is not how real business funding is done. The show producers deliberately put many unsuitable candidates in front of the investors to provoke and maximize emotional responses on both sides. This makes for exciting entertainment but is frequently at the expense of the entrepreneur. The entrepreneur’s often become the laughing stock. Some of the entrepreneurs are naive. Some are foolish. Many of them are unprepared but they’ve all taken a significant risk to start their own business. We now live in a time when our economy needs young fresh businesses the most. So lets celebrate entrepreneurship and give them a helping hand.

In the past I’ve heard negative comments questioning Rachel’s success. I even heard some of these after Rachel’s talk. From my experience of interviewing and working for entrepreneurs there is often more to learn from failure than success. Yes, Rachel did fail after having a big success, however she has not quit. More importantly she has continued to learn from her experiences. This has enabled her to change her focus. I think there is much to learn from Rachel’s 16 points on starting and running a startup:

  1. You need the ability to overcome constant knock backs – It can be an emotional roller coaster of a ride. You have to pick yourself up and keep running. Good things can come from bad situations. My startup was badly let down by a freelancer last week but in the end we found someone even better.
  2. Think BIG – Jim Connolly posted ‘6 words to transform your results!’ - “Start with the end in mind.”. This is not a new idea – Laurence J. Peter said: “If you don’t know where you are going, you will probably end up somewhere else.”
  3. Have a killer idea – Hummm.. difficult one. Innovation is not easy. A great way to look at the Innovation challenge: Tyler Durden’s 8 rules of Innovation. We’ve taken a long route to come up with our product idea and that’s only the start.
  4. Your first/fast decision if often the best one – I agree but also some thought and analysis is always useful.
  5. You will go through a ‘Dark period’ (the ‘pit‘) - When the knock backs get too hard or they come too often you may loose all hope. Keep the faith and keep believing as this entrepreneur did.
  6. Yours sales will be half your forecast and costs will be double – I’ve heard variation on this from 2.5 to 4 times cost multipliers. Oh dear!
  7. Pay for marketing help – Good idea if you can afford it or you don’t have the skills.
  8. A good sales model should be effortless – Sounds like a dream. ‘Pinch me quick!
  9. PR & Word of mouth marketing is vital – Absolutely number one in the new open web world
  10. It’s dangerous when you win business awards. The ego rules. – I’ve also heard this before. Good advice.
  11. Keep the company lean – A lean mean fighting machine :)
  12. Get proper funding if your going to grow your company – Not aways the case. Atlassian is a good home grown example
  13. Believe in yourself – But don’t forget the people around you
  14. Know the numbers – A very important point which the Dragons’ always expect entrepreneurs to have
  15. Have absolute persistence and determination – For me its back to Jim’s point “Start with the end in mind“, then you have something to aim for
  16. Take responsibility (don’t blame others)A true leaders quality

I enjoyed Rachel’s talk. She showed openness, commitment to business ethics and reflective learning. Many of Rachel’s points are obvious but as I’ve said many times over the last three years the ‘obvious is all around us, but it’s hard to follow’. There is a difference between knowing the path and walking the path’.

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14 Responses to “Inside Dragons’ Den & Rachel Elnaugh startup lessons”

  1. Ben Grech Says:

    Hi Nick

    I do agree with most of the lessons Rachel put forward as things entrepreneurs need to know. However, she does still seemed to be seriously affected by the Red Letter days failure.

    Cheers

    Ben

  2. Nick Barker Says:

    Hey Ben!

    Thanks for the comment :)

    Rachel’s journey did not sound easy. But then if it was easy it would not make a good story. I think that set of experiences would change anyone. Perhaps your right she still has some healing to do and her mentoring/speaking services are all part of the healing process.

    Best

    Nick

  3. Paul Bilan Says:

    I do agree with Ben’s comments. I am not too sure of the full details of the demise of Red Letter day, but as customers of Red Letter Day gifts (value around £500). We did not receive any compensation or equivalent gifts and that was a lot of money to throw away. Perhaps knowing lots of people were given gifts for Birthday’s, Anniversaries et al and were never honored could be part of the pain she is going through?

    I do hope she recovers quickly and can find closure too.

  4. Nick Barker Says:

    Hi Paul,

    Tricky point. I do not know the full details but it sounds like a lot of people were let down, upset and disappointed during the demise of Red Letter Days in 2005. Rachel said in the April 2008 edition of the Director magazine that she’d “achieved closure on Red Letter Days.” Clearly others like yourself have not. Perhaps in some ways she never will either.

    I’ve heard stories of unscrupulous entrepreneurs who habitually fail leaving a trail of debtors each time their next business goes down. Guilt may weight heaving on the conscious of some entrepreneurs who fail owning alot of money.

    Thanks for sharing your experiences.

    Nick

  5. Paul Bilan Says:

    Hi Nick

    Thanks for your reply. I actually forgot all about the Birthday gift from Red Letter Day. It only resurfaced as *they were running a competition and the winner will receive mentoring from Rachael. As a boot-strapped entrepreneur I was considering entering however from my personal experience I doubt the merits of anyone leaving their former customers in such a predicament. At least we can learn from those mistakes and engage and communicate with our customers at all times.

  6. Nick Barker Says:

    Hey Paul

    Trying to sell to disgruntled ex-customers doesn’t sound like a very well thought out strategy. I completely agree good communication is vital, especially in todays web connected world.

    Best

    Nick

  7. Rachel Elnaugh Says:

    Hi Nick

    Thanks for your Blog post. Just to explain, I was invited by GINEM to speak and specifically asked to share my experiences of Red Letter Days in particular the mistakes I made… That’s why I return to the story!

    I don’t feel bitter about RLD but it was an important part of my own journey from which I learned a lot. I can assure you I personally lost an awful lot more than any voucher holder, and as I explained on the evening the real criminals of the piece was the fact that £3.3 million of our cash was bonded by Barclays (against a liability which turned out to be only £1.1million). Had we had use of the cash we would not have been forced to put the company into administration.

    The day that people stop asking me to speak (or mentor them for that matter!) is the day I’ll stop and go do something else. My current business (inspiring, motivating and helping others on their journey) has been 100% demand lead.

    Regards

    Rachel

  8. Nick Barker Says:

    Hi Rachel,

    Thank you for the comment and sharing the detail. Your experiences make for quite a story. The Philosopher Friedrich Nietzsche (1844-1900) said “That which does not kill us makes us stronger.” As Jeffery Walker, who is fighting Cancer for the 4th time, recently said to me “Live strong”.

    All the best

    Nick

  9. Tips and Tales from the Brads (Brad Sugars & Brad Rosser) PART 1 « Nickpoint Says:

    [...] Know your numbers – Rachel Elnaugh also said this at her talk [...]

  10. Tips and Tales from the Brads (Brad Sugars & Brad Rosser) PART 2 « Nickpoint Says:

    [...] point! A idea is only a science project until its out with customers. Brad makes a good point which Rachel Elnaugh also made – get a good product/customer fit and then ramp up sales. This requires a customer [...]

  11. jimconnolly Says:

    Hi Nick,

    An interesting post – thanks for sharing.

    Jim

  12. Nick Barker Says:

    Why Thank you Jim :)

    Glad you enjoyed it. Good to hear from you.

    Best

    Nick

  13. Learning is the source « Nickpoint Says:

    [...] idea through repeatedly trying and failing; learning  to over come your fears to live your dreams; Rachel Elnaugh’s learning experiences; and anyone can learn to be a [...]

  14. The source of entrepreneurial determination « Nickpoint Says:

    [...] Elnaugh calls it the “pit” which you have climb out and Seth Godin named it the “dip” that you see see beyond. [...]

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