September 17, 2012 by Speakers' Spotlight
David Chilton Roars As CBC’s Newest Dragon
From The National Post:
The newest investor to join CBC’s Dragons’ Den is David Chilton, author of The Wealthy Barber and The Return of the Wealthy Barber.
He co-founded his first business at age 17 — an agency that shopped the Canadian marketplace to locate the highest rate of return Guaranteed Investment Certificates for clients in exchange for a commission from the financial institution selling the product.
“That was in 1979-80 and I’ve worked for myself ever since,” Mr. Chilton said. “When you’re in your twenties, you don’t know what you don’t know and that was a huge help for me in publishing. I didn’t take returns when I self-published The Wealthy Barber — the entire industry takes returns. When I was told by Coles that they had return privileges and I’d have to give them their money back if they didn’t sell the books, I said ‘I’m not doing that. My mom fills the orders on Sundays out of my garage, I’m not going to have her take them back, too.’ And Coles accepted them as non-returnable. I did that because I didn’t know what I was doing.”
In an interview with Mary Teresa Bitti, Mr. Chilton said that it was publishing bestselling cookbooks by Janet and Greta Podleski (Looneyspoons, Crazy Plates, Eat, Shrink & Be Merry!) and working with them on their frozen food business that is helping him be an effective Dragon.
Q Why did you decide to enter the Den?
A I’ve been an entrepreneur my whole life — I’m not sure anyone would hire me, truthfully. I love entrepreneurship and I really liked the show. I’ve also been involved with Janet and Greta Podleski in a basement project that ended up making tens of millions of dollars. I had that background and I was looking for a new challenge. The Wealthy Barber Returns (August 2011) was out in the market, I was speaking a lot but I wanted to do something different. When CBC first called I was a little reserved because I live a humble, low-key life and really try to stay out of the limelight. But then I went to the audition and I loved it.
Q What is your goal and how do you see your role as a Dragon?
A I’ve never thought about the big picture and how I’m gong to be different from the other Dragons. I think, where can I add value beyond the capital? Do I have connections in that field? I’m also doing my own due diligence. I don’t just look at the numbers. I try to get to know their suppliers, their competitors, potential distribution partners, how they are marketing and how we might be able to market more effectively.
Q What are you looking for when investing in a business?
A I pay a lot of attention to the people, their energy, their ability to articulate because sooner or later it comes down to selling and they have to be able to get other people enthused. More than that, I’m really gravitating to people who have a strong attention to detail. The entrepreneurs I’ve known who have been successful are fanatical about detail. The big picture idea is important but it’s execution that wins the day and execution comes down to detail.
Q Valuation has come up regularly as a concern and a reason many deals don’t happen. How do you assess a company’s valuation — particularly a startup’s?
A What you are trying to do is envision the company two and three years out and where you can take it. Can I add value that makes the valuation more reasonable or even cheap? This year, I found people in general had done a much better job of valuing their companies and were in the ballpark of being realistic. But there are no hard and fast rules. You’re trying to use your instincts as to how to weight all the different dimensions of the analysis. It changes based on the industry, the competitive landscape, the pitcher.
Q Was there a common theme that emerged in the pitches you saw this year? Common mistake pitchers made?
A I don’t think there’s a common theme and that’s one of the reasons the show has done so well. Every pitch truly seems a bit different. I remember the last day of taping vividly because we had a number of great pitches that got deals and they were so different — different businesses, different style of pitching. The one thing that always makes me skeptical is when people don’t know their numbers. I’m not looking for people to be CAs but when they can’t tell you their profit margins or their average cost per unit or what the retailer will want for a product like theirs, not only does it jolt your confidence but it makes it impossible to value the business.
Q What are some of the biggest lessons you’ve learned as an entrepreneur?
A With The Wealthy Barber it was how long you have to stick with something to gain traction. People are under the impression because its end sales were so great it took off out of the gate. It didn’t. What you’re trying to do as an entrepreneur is help people solve their problems but for that to happen they have to hear about you, understand what you’re doing and what you’re doing differently. That can take time and you have to hit people from a number of different angles before you stick.
Moving from a high-margin business such as books to a low margin business such as frozen food is a tough transition. I made some pretty big stumbles running a food business. Our first launch was poorly done but we relaunched successfully. One of the things I tell MBA students is that you hear about our successes but we’ve made a ton of mistakes in our careers, initiatives that don’t work that you don’t hear about. You see people get rejected on Dragons’ Den but I reject 95% of my own ideas.
By Mary Teresa Bitti/The Financial Post/September, 2012