Imagine having a great idea for your own business. You are convinced that your idea is brilliant. You are even ready to approach a bank to get a loan so that you can start the business, provide your new service or product, and become rich and successful as soon as possible. That’s how many businesses fail in the first few years of their existence — too much enthusiasm and not enough wisdom. This is the point of the TV show called Dragon’s Den — it makes the wisdom and expertise of successful entrepreneurs available to inexperienced but hopeful novices. The successful entrepreneurs take a direct, even abrasive approach to their work. Their views are rarely buffered with kind words. For this reason, they are known as “dragons” and their “den” is the place — the studio — where the show is recorded.

Background Information: 

The Text: Dragon‘s Den

The Dragon’s Den is a widely seen BBC TV programme (2005–2014), which invites would be entrepreneurs to present their business ideas to successful entrepreneurs: these are the “dragons” who may agree to provide funds for business development. The text includes key questions the dragons ask which in effect give some criteria for being a successful entrepreneur. There is worldwide interest in the programme — originating in Japan, versions can be found in up to twenty-four countries (including the UK, the USA, Canada, Australia, New Zealand, Spain, Sweden, Nigeria, Ukraine, Netherlands, Finland, and China) and students may have seen the Chinese version. The focus is on what we can learn about the qualities and experience necessary to get support and become a successful entrepreneur. Underlying questions include: What kind of enterprise and candidate will attract the dragons’ interest and support? What kinds of questions and discussion areas do the dragons commonly ask about and focus on — and why are these areas important for entrepreneurs? 

Key Words:

expertise: special skill or knowledge that you get from experience, training or study

abrasive: behaving in a way that seems rude to other people, because you say what you think even if it is not nice

Dragon’s Den was created in Japan (the Sony Corporation owns the rights to the show) before having been aired in the UK by BBC TV in 2005. It has since become a global success, with twenty-three other countries (including the USA, Canada, China, Spain and Sweden) now showing their own versions to tens of millions of viewers. The show appeals to people from a diversity of cultural backgrounds because the basic logic — if not the actual daily operations — of business is universal in any part of the world there will be a demand for a product or service, a supply to meet the demand, and costs and potential profits for those involved. The show enables potential entrepreneurs to showcase their ideas and get feedback — and even receive financial backing — from a panel of successful entrepreneurs. The panel (consisting of around five dragons) asks — interrogates might be a more appropriate word — potential entrepreneurs about the demand for the product or service they are offering, the quality of their business plans, the accuracy of their financial projections and the credibility of their cost/benefit statements. This is important because many entrepreneurs underestimate the challenges of producing good business plans and fail to consult experts.

Key Words:

diversity: the fact that very different people or things exist within a group or a place

universal: involving or affecting everyone in the world

feedback: comments on how well or badly someone is doing something, with the intention of helping them to do better

interrogate: to ask someone a lot of questions in an angry or threatening way in order to get information

credibility: a quality that someone has that makes people believe or trust them

The show has its own distinctive format and structure. Each show begins with a “pitch.” This involves each of the entrepreneurs identifying themselves and the nature of their business. They also state the amount of money they need to get the business off the ground. The entrepreneurs then have three minutes to sell their idea to the dragons. Then follows the question-and-answer (Q&A) section of the show. The dragons ask most of the questions but the potential high-fliers can also ask the dragons questions because it’s important to find out if the dragons have empathy for the business being pitched. Entrepreneurs are allowed to have a person to help them answer the dragons’ questions. This person is known as an “advocate” and is normally someone directly involved in the business in question. The advocate provides support for the entrepreneur and is a source of supplementary information for the dragons.

Key Words:

distinctive: easy to recognize because it is different from other people or things of the same type

get something off the ground: to begin something, normally a project or business

high-flier: a person who has achieved a lot and is determined to continue being successful

supplementary: additional

After the Q&A section, entrepreneurs face the toughest part of the show: the dragons can decide to either opt in or out of making an investment in the new product or service pitched to them. If a dragon wants to invest, the entrepreneur must secure, at minimum, the amount of money stated earlier to get the business off the ground. If this total sum cannot be achieved, the aspiring entrepreneur will leave the den empty-handed. In any event, entrepreneurs must exit the den after all five dragons have opted out. Individual dragons can offer as much or as little of their own money as they see fit, and to reach the total sum an entrepreneur may need investment offers from two or more dragons. An entrepreneur can reject as well as accept an investment offer from any dragon. A typical exchange shows participants using the language of negotiation:

Dragon: 

Entrepreneur: 

Dragon: 

Entrepreneur:  OK, I can agree to that.

Key Words:

aspiring: hoping and trying to be successful at something, especially in your career

empty-handed: without getting anything for your effort

Despite the very public nature of the business negotiations and agreements that occur in the dragon’s den, partnership between an entrepreneur and the dragons is by no means guaranteed to go ahead. After the show, there will be long meetings to hold and additional feasibility studies to carry out, and if after all this due diligence an agreement is not reached, neither party is legally bound to complete the initial deal made on TV.

Key Word:

feasibility study: a report that shows if something is worth doing or not

The dragons don’t always identify potential winners among the pitchers. A good example is Natalie Ellis, who invented a dogs’ water bowl that does not allow water to spill out of it. The dragons were concerned that Ellis’s product would not be a success in the all-important pet market of the USA. In fact, she has had a worldwide success with the dog bowl — and her star customer is President Obama of the USA! Natalie had the self-belief to carry on even when rejected by the dragons and of course Natalie was sensible in her choice of product: the bowl is cheap to manufacture and thousands can be transported at minimum cost. Starting a business making and selling bowls for dogs demands a lot less capital than making and selling cars or mobile phones.

However, the dragons are probably more often right than wrong. Success stories include entrepreneur Sarah Lu’s “You Doo Dolls” concept. This was quickly recognized by the dragons as a winning idea since the product had a degree of novelty compared to competitors in that it allowed children to construct their own dolls and then personalize them by making clothes for them that reflect the personality of the constructor. The dolls were seen by the public as not simply entertaining but also of educational value. In the early days, Sarah was short of money and almost sold all her belongings to keep the business going, but fortunately her family pointed out that starting a business should not entail such great personal losses and agreed to lend her the amount she needed.

However, initial success may not last. Sarah soon ran into supply problems and, as she is based in the UK, she has had to face the problem of high-street toy shops closing down as economic recession continues to destroy small businesses. Sarah also underestimated the importance — and cost — of advertising. Large existing toy makers benefit from immense economies of scale and have not only the ability to make huge quantities of toys inexpensively but also to make their existence known through major advertising campaigns. So a good entrepreneur not only needs to identify gaps in the market, he/she also needs to be strong in the face of pressures and be prepared to create a niche market when the economic strength of large established competitors threatens the survival of the young company. Intelligence and creativity are important in a successful entrepreneur but determination, the will to achieve business objectives, and endurance even more so.

Key Word:

endurance: The ability to continue doing something physically difficult or continue dealing with an unpleasant situation for a long time