Talks@Google: James Caan

JAMES: I just wanna say I'm absolutely a-a massive fan of Google. I'm not just saying
because I'm here but I think when you stand in Dragon's Den you see so many people with
lots of ideas. And, clearly, at some stage, Google itself was an idea.
Somebody had an idea, put the idea to practice and I think one of the things that Iíve learned
about watching organizations like Google that it's not just about an idea.
So many entrepreneurs that you meet in life think that success lies because they woke
up in the morning sitting in the bath and they have that Eureka Moment.
That's not the moment you become the millionaire. The concept is how do you execute an idea?
I think Google is a great example of not just an idea but how you then execute and take
that idea to fruition.
I think the thing that I've always been really passionate about business is to execute you
need to find the right people. And certainly for me in Dragon's Den one of the things that
I'm always very conscious of is not to get overly excited about just the idea but while
sometimes other dragons may test the idea where they might want to break it or overly
analyze it or-or get too detailed.
What I believe is whatever business proposition that's offered to me- can I make it bigger,
smaller, harder, change the color? Yes, I can.
But the one thing I can't change is the individual. So when I invest, I typically overly focus
on, "Is this an individual that I believe could be successful?" And that's really where
my kinda journey started when I first set up my own business.
It wasn't that I necessarily had what I think was an amazing idea. My kinda Eureka Moment
was the concept that headhunting in the mid-80's was only available to the elite class of this
country. So only chief executives were headhunted or the Chief Exec. of BA. And I thought, why
wouldn't you offer headhunting to the masses?
Why, why shouldn't Google hire a developer and get a headhunter to find that person?
And in the mid-80's that didn't exist. And that was really my idea- bring headhunting
to the masses. And I launched a company called Alexander Mann, set up the firm and, literally,
from the word go, the first year, we took just over a million pounds in fees and, by
the time I sold the company, we were doing about a hundred and thirty million in fees.
And it became quite a large brand in the UK.
One of the key things that I learned in that business is when you are backing people, businesses,
recruitment one of the biggest challenges in that market is people who become really
successful.
They join you two years. They get up and running. They do really well. And next thing you know
you get a knock on the door and says, "James,I'm now ready to leave you because I think I've
watched what you've done, you've done an amazing job. I think I should do this myself."
So I thought this is quite a silly business because, literally, every year you go three
steps forward and you take two steps back; and, literally, year in, year out, the same
thing happened.
And one day I woke up and thought, "I'm never going to this into a huge business because
in people orientated businesses you'll never hang onto these people."
And so I came up with a really crazy idea. The next time somebody knocks on that door
with that white envelope, I'm gonna surprise him.
And lo and behold, of course, they did. Knock on the door. "James, I think you're a great
guy. I love the firm. It's amazing. But it's time for me to move on."
I said, "What are you going to do?"
And they said, "I'm gonna start my own business."
I said, "Fantastic! But can I tell you something? I'm really surprised."
I said, "Why did it take you so long? Because, in my diary, I penciled you in 2 months ago
[AUDIENCE CHUCKLES] to come to this conversation. You've obviously had to think about it more
than I did."
They said, "What do you mean?"
I said, "Because I've been watching you and, as far as I'm concerned, you are absolutely
prime ready to go and do this."
I said, "But can I take you one step further to when you go and set up when you run, can
I give you some advice?
I said, "You know Brian who works with, you been with you for 3 years, Judy that joined
you about a year ago and Steve -- when you leave, why don't you take them with you?"
[LAUGHTER]
[PAUSE]
So he is, obviously, looking a bit confused 'cause he thinks I'm now taking a piss.
And I said, "One other thing", I said, "'cause I'm sure it's crossed your mind."
I said, "I was having a quick look at your data base and the customers that you've been
doing business with and what I've actually done for you is actually taken a copy of the
data base. Here it is. Take it with you."
He said, "James, you know, it's taken me a long time to prepare for this meeting. I've
been pacing up and down at home thinking, how am I going to tell you this? And you're
not taking me seriously."
I said, "I think you're absolutely wrong. I have never been more serious in all my life."
He said, "So let me get this right. So you want me to leave. I'm going take all of the
people with me. You want me to take my customers."
I said, "Yeah, there's one more thing."
I said, "I've worked out roughly this is going to cost you about a hundred forty thousand."
I said, "And I'd like to give you the money, too."
[AUDIENCE CHUCKLES]
He said, "There's gotta be a catch."
I said, "Absolutely. I want you to, I want you to go halves with me. Let's go 50/50."
He said, "I don't know really. I've never thought about that."
He said, "Do you want half the business?"
I said, "Sure. 'Cause if I'm going to give you the clients, give you the staff, and I'm
gonna give you the money, why don't we just go halves?"
He said, "You've got yourself a deal."
And, literally, that was my first deal, because when you think about it, it sounds stupid.
But I know the guy; he works for me; he's been there three years; he's very good. Clearly,
he's very good. He's now taking that big leap of faith to say, "I'm gonna leave this corporate
work and I'm gonna take the risk with my own money."
Which for me is really important so by walking into me, he stepped over that line. And I'm
thinking you know what's gonna happen don't you? He's gonna leave.
What's gonna happen to the people who's been working with him? He's gonna take 'em with
him anyway.
Those clients-What-If I was him, what would I do? I'd pick up the phone and I'd call them
all-"'Member me? You used to deal with me. I'm great. I've now left. Set up on my own
and by the way I'm going to give you 20% discount."
He's going to do it anyway. The money I'm risking. I'm matching his money.
That was my first deal. And, literally, within three months he got up and running and was
profitable. And by month six, I got all my money back.
So I came up with the idea-there's lots of people out there. Because one of the things
that happens I think in the UK in the corporate world is exactly that. The minute you have
an idea your first reaction is- "I've gptta leave and do it somewhere else." So I thought
I need to change that principle because otherwise my business will never grow. And I had an
idea that Alexander Mann was, literally, just one company, with one location in Thomacle
Road. And just like every other entrepreneur, my ambition was I want to be global. I want
to be in every country around the world. But I'd never opened a second office before. So
the problem is I can't do that. But there must be somebody out there who could show
me how to do that.
Happened to be in America, met a guy working for a company called MRI that had 600 offices.
He was the marketing director, been there 10 years. And I went to a conference where
he was speaking. So then I'm sitting there and he's giving the big spiel ñ he put this
big map on the wall with all these flags, and "We've got these 600 offices."
And I'm sitting there thinking, "How do you open the second one, let alone the six hundredth
one?"
So after the conference, went up to him and said, "Hi, I'm James Caan. I'm from London."
Said, "I'm really impressed with your presentation." Said, "Can I ask you a really silly question?"
I said, "You've been in this firm 10 years. Have you ever thought about doing this yourself?"
He says, "So you were-"
[AUDIENCE CHUCKLES]
So I said, "No. I'm being really straight."
I said, "You know, I run this company in London. We'd like to expand. I'm looking for a partner
to really help me expand that business. Having listened to your presentation, I think you
are that man."
He said, "What's the deal?"
I said, "Really simple. I'll put up all the money, you run the business. If it works,
I'll lose. If we succeed, we'll go halves."
He said, "I can't do that. You know, my family's here. I've been here ten years. I'm on the
board."
Anyway, like any good salesman, I badgered him to death, on the phone, every day.
I said, "Look, let me fly you over." Brought him over to London. Paid for the flight. Arrived.
You know sometimes you do those silly things that just work. When he arrived in reception,
I'd had these business cards printed and left them on reception.
[AUDIENCE CHUCKLES]
So a little bit of humor. He came in, I gave him the concept and said, "You know I think
you've been doing this for ten years. You're clearly very good at it, but I think it's
really time where you should own a part of what you're doing."
And long story short, we set up an organization, Humana International, which was basically
the kind of the international brand for Alexander Mann -- so the overseas brand. I backed him
in '92, by 1997 we'd opened 147 offices in 30 countries and we sold the business. And
that was the right guy. Was it the most ingenious idea in the world? No, just got the individual
right.
About a year into it, I get a knock on my door. A consultant who's working for me, Rosaleen,
been there six months, not particularly successful. Ok. She comes to me and said, "James, I want
to have a quick chat. I've been thinking about what I'm doing and I think that Alexander
Mann has got all of this wrong."
So I said, "That's quite interesting, I thought I was doing quite well, you've been here six
months. [AUDIENCE LAUGHS] So I said, "Have you, have you billed anything?"
"What not really, but we've got it wrong."
"Ok, let me just-" I looked at my watch, "You've got five minutes just give us the pitch."
"Actually I think that the kind of whole concept of recruitment is gonna change. I think today
this business is very much about transactions. I think it's going to be about customer's
saying, "We will essentially outsource the entire recruitment to one organization."
Now in '95, that sounded a bit kind of airy fairy, because nobody did it. But she, for
some reason, when you look at her face, was really passionate. She convinced us out, that's
where the market was going to go.
So I said, "So give me an example. What do you mean?"
And she said, "Well, over the phone today you deal with like 120 different suppliers.
They go to a micro page for one thing, an ad for another, a blue arrow for something
else, paste something else. Why don't we go to them and say, 'Look we understand recruitment
better than anybody. Why don't you just give it all to us?'"
I said, "Because Rosaleen, we can't do it. We only deal with one area."
She said, "The bits we don't do, James, we just buy from somewhere else. We'll just own
the space. We'll become the gate keeper."
Truthfully, I thought 50/50 -- will it work, but just listening to her, I thought, "You
know what, I think she will convince somebody that this might work.
Anyway, so the next board meeting, I said, "Oh by the way, I've got a little action for
the board meeting." I said, "I'd like to back Rosaleen to start this outsourcing business."
They said, "She got any experience?"
"Uh, Not really."
"How long has she been with us five years, 10 years, 12-?"
"Six months."
"Sorry -- and you want to back her to do what?"
I said, "Well, I think just hypothetically, just amuse me. What happens if she's right?
What happens if somebody actually hands you a contract, a vodafone, and says. "Take the
lot". What would that do to us?"
I said, "In my view it's a service concept, remember? We don't have to open a hundred
shops or buy huge cafex. There's an office on the third floor that's empty. Let's just
give her the third floor. Let's give her an office there and we'll start another business.
It'll be really creative. Instead of Alexander Mann, we'll call it AMS -- Alexander Mann
Solutions and she can run it."
Anyway, within about five minutes they all said, "James, I think you're being ridiculous.
We've gotta be focused. We know what we do. We understand what we're good at. We don't
want to become all things to all people. Our view is no."
One of the advantages of owning the majority of a company, you can ignore what everybody
says.
[AUDIENCE CHUCKLES]
So I said, "Thanks for your advice, but I'm gonna see Rosaleen, and I'm gonna back her
anyway."
So I've gone back to Rosaleen and I said "Look, they thought it was an amazing idea. They're
completely behind you. And we're gonna give you the opportunity of the third. You can
have your own office. And we're gonna launch this business."
And just as, she's utterly excited, as she's leaving, she says, "Oh, by the way, just forgot
to mention this -- I'm only going to do this for the equity."
I said, "Rosaleen, you haven't made one placement yet, you've been here six months, equity in
what?"
She says, "Well, I'm not doing it then."
Because she knew I'd backed a number of other people. And obviously, this whole concept
is you're going to own the bit.
So literally, she's at the door, I said, "I get you love, I'll give you 10%."
She says, "Great, Thank you."
[CHUCKLE]
So I say, "Oh, ok."
And saw her the next day she says, "I'm really excited, really motivated. I know you haven't
spent a lot of money, James, but I do need you to make an investment. Because, I want
to be called Managing Director of my own firm, so I want my own business accounts."
Said, "How much does that cost?"
She said, "43 quid."
So I said, "Rosaleen, you're gonna have to make that investment yourself. I've gone as
far as I wanna go. You're going to have to swim the second mile yourself."
She said, "Can I expense it?"
I said, "When you make a profit, you can expense it. But today you should pay for it."
Anyway, six months go by, doesn't make a sale, banging on every door you can find.
Everybody thinks, "You're crazy. You want me to hand you the entire recruitment. We
don't know you from Adam. You have no track record. You have no reference sites."
So at end of the six months at the board meeting, I'm supposed to give an update. "How's your
ingenious investment doing? How's she performing? Has she sold anything?"
I said, "You know these things take a long time. You've gotta be patient. This is a long
game this is not about-." You know the same spiel she gave me, I gave it back.
In the back of my mind I thought, "I am going to give her five more months, because if I
get to the year end and she still hasn't done a deal, now I'm looking a tad silly really.
Anyway, thank God, by month ten, she convinces one company, called Fujitsu, to outsource
their entire recruitment, a 14,000,000 pound contract. So, of course, now I look like a
hero [CHUCKLES]. So I go out with her, sit down with the customer. We craft the deal
and they buy the concept.
They said, "You know, we're a technology company that's what we do. We understand that that's
your expertise. And the key issue is what happens if you can't deliver."
And she was really good. She said, "Look right now, what do you do? You go to Adica, don't
you? You go to Amka. Why can't I do that? Why can't one organization manage that supply?
Price it correctly. Agree the structure. Agree the brief and I'll guarantee you that if I
can't fill it, I'll pay whatever the market. But I want all the business."
So we got Fujitsu. She then signed up Vodaphone, you've got Deloittes you got KPMG. At one
point, my revenues at Alexander Mann's were about 90 million, her's were 270 million.
When I sold, we'd peaked at 130 -- she was at 380. So three times bigger than the business
that I thought I was pretty good at running. [CHUCKLES]
We separated the company and I sold my business in '99, so at a small stake to a private equity
firm. And we took a minority stake and we got 25 million for that and then a few years
later her division got sold to Graphite Capital for 93 million. So that little 10% actually
turned out to be quite a successful deal for her and for me.
So I think for me the key experience, and that was probably one of the reasons why I
ended up at Dragon's Den. Because I actually do this for a living so backing people with
good ideas and then working with those individuals to grow businesses is really what I do anyway.
So Hamilton Bradshaw, which is my private equity firm, we have 40 businesses that we
control today. Where which is outside of Dragon's Den, which is simply where I've come across
somebody. And it's always that situation. It's not that I had an idea or I was really
engaged with some strategy. It was literally I met somebody, and I thought well I like
this guy. I think this guy- It's always my feelings, never about I think "the dog treadmill's
gonna revolutionize the world." It's the individual.
So even if you take Sammy- why did I invest in Sammy. As she was making her pitch, Peter
and Deborah, everybody was like killing themselves laughing, 'cause this dog's right there {CHUCKLES]and
knacking on the treadmill. Duncan is lying down with Heineken in his hands. He's thinking,
"What are they doing?"
And I'm listening to the woman because she's saying, "I'm a waitress during the day. In
the evening, I go on the web and I sell these treadmills." That year she'd sold 23 machines.
And I said, "So tell me, Sam, what is it that's making you do this. Why are you doing this?"
She said, "I've got three kids and one my daughters, Elizabeth, is really smart, she's
really bright and I would love to send her to private school. And right now as a waitress,
I'm never gonna get that kind of money. So I've kind a started this little business on
my own and I think if I could sell enough treadmills, I could get Elizabeth into private
school."
Now to me in a way the kind of product doesn't matter so much now, because she's driven by
a goal and a focus that she so believes in, that I think she will do whatever it takes.
And that was actually when I put my hand up and said, "I'm in."
And of course, as soon as we came out of the den, Peter Jones said, "James, [CHUCKLES]
where's your street cred? And Theo said, "If anybody buys one of those, I'll eat, I'll
eat the dog biscuit."
And so I called her in the next day. I've got my team of writers together, I said, "Guys,
I need your help. Let me introduce you to Sammy, and this is Daffy the dog, and this
is the treadmill." Said, "We have to find a way somehow, because my good name is at
risk because Peter and Theo are gonna track this investment like the hawk. Because I made
a statement, in the den, that said, "I'm going to make this woman really successful. So I
don't care what you do I don't care if we have to buy them ourselves, we are going to
sell-[CHUCKLES]-we are going to sell these treadmills."
Anyway, the right guy's in the room and somebody came up with the idea, "Why don't we sell
to the blind dogs association? They've got 500,000 dogs. They rehabilitate; they train
the dogs -- really important. So put them on the white board. Police force train their
dogs." We put up them. The customs people do it. All the vets. If you think naturally
of that, you take your dog in; the dog could be there for four days. That vet's gotta hire
somebody and employ a dog walker four times a day, 6 quid an hour. He's got 20 dogs that
he's looking after. That's actually quite a lot of logistics, aggravation. Our pet now
could have the treadmill in reception. He can be lying on his couch with his Heineken
thinking about the world, while the dog's on there doing its thing. So I'm thinking,
why wouldn't we sell to vets?
Anyway, year one pre-Dragon's Den, she sells 24 machines. Post-Dragon's Den with Jimmy
C, 493 machines. Last year-year two-840 machines. And ladies and gentlemen, Elizabeth is now
into private school. Isn't that amazing?
So to me it wasn't really the concept but because she believed so much in her ultimate
goal where she wanted to be. I think all we've done really is facilitate her that. Now I'm
not ashamed to tell you she has paid me all money back and we are now making quite decent
profit; so success for her and success for us.
I think what I've learned is if you are an entrepreneur, one of the things that is quite
useful is your attitude becomes quite driven because for some reason, I think entrepreneurs
believe they can do almost anything. Because in business, as you know, generally if anything
can go wrong, it normally does go wrong. And one of the investments I made. Well, I was
going through a couple of years where things were just going amazingly well. Every deal
I did, just worked.
And KPMG rang me up and said they've got this great business at Benjys. It's a sandwich
chain. Of course, I'm an expert at sandwiches. Nice strong food. I know everything about
that and they said, "James have I got a deal for you. So Benjys has got like a 150 shops.
It's got a factory that employs 300 people. It's quite a big brand." And, they said, "It's
really cheap."
So I go in on a Monday. They said the only catch is that you've gotta make a decision
on Friday. Now in every lesson I've ever had and everything I've learned about business,
what do we say -- do your homework, know your market, etc.
So what do I do? I go in on Monday meet the management, Tuesday I go meet the accountants,
Wednesday I meet the bank, Thursday I meet the lawyers, Friday I buy the business. Broke
every rule in the book.
When I bought the business, the reason why it was cheap, it was losing 100,000 pounds
a week. So there was me every Saturday, cash point card in, 100 grand in the business for
26 weeks. And so, if you can work the math, 2.6 million quid. And I tried everything.
Everything I could think of to make-to turn the business around.
But it was a bit like the Titanic. It takes too long because it was too big. It wasn't
A one boutique where you can go in. You might change the brand or change the stock. But
it was the factory, the logistics, the ingredients.
And one of the biggest lessons that I've learned, that I miscalculated is when you¥ve got a
brand that has quite a strong visibility in the market -- so let's say we're selling cheese
sandwiches at 1.40. You think, "Well it's not making any money. Why don't we just put
the price up?" The problem is if I sell at 1.70, I'm not competing with Eat. Because
the consumer is quite brand loyal. The consumer's view is if I want to pay 170, I'll go to Eat;
I won't go to Benjys. If it is 2 quid, I'll go to M&S. If it is 2.30, I'm a Pret customer.
So customers fit into prices [inaudible]. So the minute I put the price up on the cheese
sandwich, we didn't sell any. Because the next day the customer came in and said, "I'm
not paying that." And people are genuinely that sensitive.
So every idea I had didn't work.
So come week 26, at the end of the sixth month, I probably made the best decision I've ever
made in my life, which is actually putting my hand up and saying, "You've got this one
wrong. Because If I carry on, I'm gonna go bust. 'Cause I'll probably lose all of my
money."
I think one of the biggest issues I think for entrepreneurship, I think even a lot of
people in this room sometime will happen. Because sometimes you get an idea, you become
so obsessed with it that whoever you talk to, what do they say? "Don't give up! Carry
on, carry on until you go broke."
[audience chuckles]
And, literally, for me the smartest idea was actually knowing when to quit. Because that
morning when I got up I thought, "You know what? I can't do this. I've tried everything.
It doesn't work. I have to stop hemorrhaging, because if I go to that cash vault one more
time, they're going to run out of cash at the rate I'm going. Decided to call it a day
and, literally, handed the keys back to KPMG who I bought the business from and said, "Guys,
you can take it."
And it was quite interesting, that having made that decision, what a relief. Because
for that period, I mean I was the most stressed person, you can imagine.
And in my head, when I decided to give the keys back, the idea was that was it. I've
lost my money, end of story, move on to the next opportunity.
And the guy at KPMG said to me, "Actually, James, before you do that, the one thing Benjys
does actually have is quite good sites. We have Bond Street, Oxford Street, Tottenham
Court Road, Bank." He said, "When we-what we could do, before we put it into administration,
we could actually sell the sites. Because those sites Pret want those sites, Eat want
those sites. So why don't we just moush all of them and say, "We've got a site available
on Bond Street -- make us an offer." So Pret offered 30 grand. Heat offered 50 and Subway
came it at 80. So of the 150 sites, 100 of them we gave away just as they were; but 50,
we got 1.7 million for. Just on premiums. So actually sometimes it was smar- that had
I had actually-
So what is the moral of this story? If I had called it quits from month four, I probably
would have broken even. And I think that was the other lesson that sometimes, when something
isn't working, having that ability to be strong enough and cut your losses.
So if I look at SME businesses or small businesses, one of the biggest reasons why they fail is
'cause they hang on too long. Which for me now a days, I have a very clear strategy.
If it's gonna fail, please make sure it fails quickly because procrastination is really
expensive.
So what do I do now?
I spend essentially a third of my time at Hamilton Bradshaw with private equity, where
I look after -- I've bought plenty of businesses.
I spend two days a week with Dragon's Den, with the media, with the TV, all that kinda
stuff.
And probably the most interesting part of my life now is that four years ago now I set
up the James Caan Foundation and it really started where I was just like a lot of people
sitting there watching TV. I saw that earthquake in Kashmir where 3 million people just got
dislodged because of the earthquake, and as I'm watching this I'm like, genuinely, quite
taken aback thinking just in a split second just imagine 3 million people just kind of
lose their homes.
It was a Thursday, and that night for some reason I couldn't sleep. I was just going
through my head. And I got up in the morning and I said, "I'm actually going to go to Kashmir.
I'm just gonna fly out.
I wanna see, actually wanna see what happened and how did this happen? And as I arrived,
I can't even begin to explain to you, but if you kind a closed your eyes and visualized
what would the end of the world look like. That's what Kashmir was.
As you walked down the street, there were these five story buildings that, literally,
had dropped where you could see the fifth story which had become one story. Cars literally
hanging off cliff tops. People dead with arms hanging out and things. It was just unbelievable.
You could just smell death everywhere.
Anyway so I'm walkin' around, and I'm completely taken aback. I can't believe where I am. And
these army people were showing me around. And as I'm going up to the mountain top, because
it's quite hilly, I see all of these people wandering around.
And I say to the army guys, "What's gonna happen to these people? 'Cause it don't seem
like nobody's looking after them."
He said, "To be frank, James, the flat land is where the vast majority of the people are
and that's where we're gonna concentrate. So we're gonna get tents, etc.; but we can't
get to the mountains. It's too hard, it's too expensive, we've gotta focus on the ground."
So I thought, but, Jesus, there's like hundreds of these people. It's October, you know, it's
gonna be 24 degrees minus in like a week's time. And he's just casually said, "So they'll
die."
I thought, "Wow! This is -- it's just unbelievable." Anyway so while I'm the ñ I just decide that
what I'm gonna do is I'm gonna build houses for the people on the hill tops. Because just
the idea that a human being when somebody just says to you very casually, "and they'll
die", you think there must be something you can do. And I didn't blame the government
because I can understand -- there's such a big issue that you can't do it all.
So I come back to the UK bring lots of friends of mine and I said, "Do you know anyone who's
like an architect, who understands, how do you build houses in an earthquake kind of
environment?"
And one of my friends knew a guy, who just came back from the tsunami so I talked to
him, spoke to him, flew him out to Pakistan. He then actually ñ interesting -- used Google
Earth to kind of look at the area, look at the terrain, worked out what you have to do,
designed the models in the UK, we flew back over there, we found a factory.
The factory built houses. Then I have to get the lorries to physÖ 'cause the factory was
300 miles away from the location. So we got the factory made the houses, got the transport,
got 'em up to the mountains. When we got to the mountains, we couldn't take them any higher,
because the roads didn't exist or they were broken. Had to get 4x4's, so the army provided
all the 4x4s. Got them so far couldn't take them any further. We then needed mules too.
I mean the point I'm making is that anything that could've gone wrong, went wrong, because
I'm trying to do it from remote control in Grosvenor Street, Mayfair, not easy.
And eventually, we decided we've got the houses, we've 100 houses that we built. We have to
fly back. It's amazing. The army said to me, "So who do you want to give the houses to?"
Really a silly question, never thought of it. He said, "Because there's all of these
people, how do you select, who gets the house."
So I said, "Ok, just what have you got as the list?" So he's going through this list
which is just unbelievable where he said this family with six kids-five sons, one daughter
-- all of the sons unfortunately have died and she only got one daughter left so she
can't really fend for herself so we could give her one of those.
So a married couple, grandma, grandpa, I think the father lost his legs because he got crushed
in as a ñ just imagine going through a situation like that where you have to decide. I mean
it was just unbelievable.
And that experience of -- and you can imagine as I've arrived and I've built the houses
and given the houses to these people, just the look on their face. I mean anything I'd
ever done in my life, any deal I've done or any money I've ever made could not replace
that one day of going round and giving keys to these people and saying they're rather
new.
Just because ñ and the reason they wouldn't come down is that they felt that if they left
their piece of land, somebody would take it. This little piece of land, something that's
all they own in their life and that just meant everything to them.
So that kinda taught me that actually -- entrepreneurs we can do a lot more because there are skills
that you acquire just in terms of mindset. So because of that experience, I now do the
Big Issue that I'm chairman of Big Issue and I'm quite involved with homeless in this country;
because you set there and think about it-why should we in Britain, you know, we're quite
a sophisticated race; we're quite a developed economy -- why should people have to sleep
on the streets?
It's almost kind of ridiculous when you think about it. I think what the Big Issue does
is actually quite a good concept, because what it's saying is, 'We don't want people
to beg. We want to be entrepreneurs.'
So homeless people come to the Big Issue every day. We sell the magazine to them for 75 pence
and they go out and sell it for a pound fifty. And they keep all profits. So actually it
is an idea I thought was a fantastic idea. We sell [COUGH]I think a 116,000 copies a
week.
And my objective, and since I've become chairman, my idea was - in 18 years, this business is
actually not that profitable, I thought what I'd like to do is in my first year, I want
this business to make a 1,000,000 pound profit.
So I spent a day with one of the homeless people and said, "Show me what you do." So
I literally stood in Cavendish Square with him as he's selling his Big Issue. And entrepreneur
mindset, standing there I notice that for every four people that walk past and give
him money only one of them takes the magazine. That's interesting.
So we're selling 116,000 copies a week -- that's with three people not taking it. All I need
to do is get two out of the three to take the magazine. I've quadrupled my sales. And
actually, we'll make a profit and that 1,000,000 pounds I can now support more homeless people.
So just that little twist of educating the consumer to say, "Please, by you not taking
the magazine, you're turning him back into a beggar, 'cause actually he's now begging,
isn't he? Because he hasn't sold you anything." So by changing that, phenomenal!
Secondly, my first board meeting I asked them a question. "I set it for one pound fifty.
There's eight people in the room. Can somebody give me a reason why it shouldn't be one pound
seventy?" So I go around the room; nobody has a response. So I said, "I think it's decided
then. It's one seventy. So, I said to the finance guy, "116,000 a week times 20 p. is
roughly how much?" It's 20 grand a week. So 20,000 times 52, bingo there's a million quid.
To the finance guy, "What will it cost me? How does my cost go up? Do I need more people?"
"No." "Do I need more infrastructure?" "No." So it's just the cost of the magazine. And
how much is that -- 8 p. So actually roughly we're going to make half a million quid.
So just by doing something really simple, the amount of money that we'll make, that
extra million pounds, the impact that we'll have to more homeless people.
And that to me, I find really fascinating where entrepreneurship can move into kind
of social entrepreneurship where you can use that expertise, because all the people I meet
in kind of charitable organizations are great because they're there because they got obsessed
with the idea. But do they have what it takes, that kind a DNA of business? Probably not.
So I'm kind of applying that business concept and ideas to different types of charitable
organizations. And it's amazing that just the simple things you can do that literally
transform some of those organizations, because they're things they haven't really thought
of.
So kind of two days a week, doing that. And I must admit that side of it has probably
given me more of a buzz and, and probably more experience of business because some of
the issues that I face- whether it's with the Big Issue or with Bosnia or with Kashmir.
I can actually apply a lot of that experience in the businesses that I'm involved with.
Because you're going into an organization where you're challenged with a problem and
you've got to find a way. You have to think outside the box.
So there's no reason why I think anybody in this room couldn't apply some of the things,
because giving back is not always about money. So a lot of the stuff that I do isn't about
writing a check but it¥s actually using the things that have helped me get where I am.
Using your expertise, your knowledge, especially now a days.
I think technology. I mean somebody pitched me the other day what I think is really quite
an interesting idea. You go to a village in Bombay, or in India somewhere and a lot of
medication just doesn't exist because they don't have the technology; they don't have
the hospitals; they don't have all that machinery. But telemedicine, where literally you can
use a video camera to diagnose somebody. Here -- guy's sitting in London. You've got a little
shack in a village somewhere. Using technology, you could diagnose that person actually quite
accurately, just by using a phone and a camera that enables you to show those visuals to
somebody sitting in the UK.
And this guy's got a data base of 470 doctors that he's approached and said, "Would you
give up 2 hours of your time every week to sit in a room with a camera where you could
advise people on the ground in these villages?" And he's got 470 people. And he's just got
this rotor where he's showing how it's done. It's an amazing idea.
And just think what does it cost? Nothing really. How much is a camera? Mobile phones
are more popular in some of those countries than they are literally in the UK. So very
cheap technology. Very easily accessible.
But can you imagine if you're in some remote part of Africa, in some village and somebody's
got an illness, the chance, and that's why even something as basic as malaria is still
probably in the world today -- is still the biggest killer. And yet, for pennies, you
can get a cure.
So that for me, just as an entrepreneur realized. That actually there are things that you can
do. But sometimes we think that some of the issues are so big that we can't do anything
because we haven't the time or the money.
But actually just a little bit of thought process when you look at some of these issues
where organizations and groups of people get together -- literally, you can make profound
changes to society that I think you'd be very surprised at. So that kind of gives you a
little bit of flavor about what that bloke at the end who strokes his beard in Dragon's
den does.
But maybe, I can just open it a few minutes for some Q&A if you'd like.
>>Can you tell us a little bit about your home life/work life balance?
>>JAMES: I do passionately believe in that because I think in order to be effective you've
got to be able to bring your dog to work and I think clearly Google do that. I, I think
work/life balance to me is what it means to you. Because, I'm a bit sad because I work
seven days a week, I work 18 hours a day. I'm in the office at 7:30 and don't get home
until midnight. I'm there on a Saturday, I'm there on a Sunday. So talk me through the
work/life balance.
And the reason why do I do it is that I really enjoy it.
So I think everybody has a view where I kind of work hard but then I play hard. So I do
it differently. So last week I was in St. Tropez on the boat for seven days just cruising
around. So I'm back this week, back next week.
Then, I'm off to Monte Carlo ñ I'll be there for another 10 days. So when I'm here, I'm
really focused but then I take lots of breaks because I need that, my dear. So I think that
work/life balance is where you are in your life. To some people like me the idea of maybe
finishing up at 5:00 doesn't work for me. And I think that entrepreneurs in general,
I think we're all the same. I think we're all mad. We spend too much time at work because
we're driven. So I think that the entrepreneurial community is probably quite unique because
they don't have the work/life, because they are just so obsessed with where they're going.
>>Why charge under £2.00 for a copy of the Big Issue?
>>JAMES: Because it was my first board meeting. In a way I was just testing to see what response
I'd get and I thought 20 p. and I picked it quite carefully I thought was almost a no
brainer and I think what you do is you let it go for six months. Because what I would
then do is I wouldn't actually put it up to 2 quid but I'd put it up to 1.85 because everybody
would give you 2 anyway and nobody would take the 15 p. So I have got that thought process
but I thought do it gradually.
>> What did you learn doing your MBA that you did not learn as an entrepreneur?
>> JAMES: Harvard as an institution was without a doubt -- it really was the best institution
in the world. I think for me because I didn't finish school, and I didn't take any qualifications.
When I was-when I'd sold my company and I was sitting at home watching neighbors, and-
[CHUCKLES]-and I, literally, I know it sounds really ridiculous I'd actually write my CV
because I thought, "I've got to do something." And as I'm writing my CV it says "Education".
And it said, "None". Maybe that's what I should do.
I think I need to and I've got two girls and I'm trying to lecture to them about how important
education is and you need good grades, and you've got to do well. And then I'm writing
the CV and it's got blank.
So I thought actually I need to go back and maybe I suppose it was curiosity. What did
I miss out. Why do all of these people become so obsessed with their degrees? And because
I had a little bit of cash at the time, I thought if you had money where would you go?
And I thought Harvard seemed like a good idea [AUDIENCE CHUCKLES] and then I bought it.
NO!
[AUDIENCE LAUGHS]
So I did the course. And I suppose being serious there was one bit that I thought was really
clever in the way that they taught. So basically the structure of the course was -- in the
mornings you do case studies on companies. So they say letís look at a company, it could
be American Express, letís go to management, let's look at the balance sheet, the vision,
the strategy, the product, etc. Kinda get that, understand that. But in the afternoons,
we did countries; so we'd say letís look at India and the way Harvard taught which
I thought was unbelievable is they taught you about countries the same way that they
teach about companies. Which as entrepreneurial as you get straightaway. They say, ok, China
whoís the management. Letís look at the board. So letís look at the President. Who
is he? Whatís his values? Whatís his views? Whoís he got around him? Has he got a balance
sheet? Whatís the kind of natural resources of this country which is the balance sheet
really? Whatís its GDP? What kind of productivity does it? Whatís its GDP level? Who is its
partners?
And I kind a learned more about the global economy in that environment because we had
147 offices in 30 countries and I remember when I was at Harvard, I was going through
the list of offices that we had that I should never have gone into. Because the truth is,
I knew nothing about it.
What I learned about the dynamics of those economies because when I opened those offices
it was 'cause I was looking at a map and I was puttin' these needles with little flags
in, sayin', "We need one there, we need one there, that one looks really good." But actually
half of them we didnít make any money; because we didnít think it through carefully. And
why did we do it? Because one of our competitors were there.
But actually, if I had followed what I was taught I probably wouldnít; and I played
the 80/20 rule. That 80% of my revenue came from 20% of the offices and 80% of them didnít
make any money. So I probably would have been more effective, I think, just by being more
intelligent about it. But with CSC Woodwork, itís kind of difficult to do that, but anyway.
>>What is the grand plan for the next ten or twenty years?
>>JAMES: Funny enough a gentleman asked me that question, "Where will you be in ten years'
time?" And I said, "If Iím really honest, I would love to be exactly where I am now.
Iím really happy where I am. I love what I do. I actually wouldnít change anything.
I think Iíve got that kind of balance where I do a bit of business, a bit of media, a
bit of philanthropy. And I think that spread really keeps me happy so if I was still doing
this 20 years from now, I think that Iíd be a happy man" And I know that's not what
you wanna hear butÖ
>>Do people really ìfreezeî on Dragonís Den?
>>JAMES: Literally, the first time we see that person is when he walks up the stairs.
And the reason for that is if you havenít noticed the camera is always focused on our
faces. They want that expression, of what your first impression of that person is. And
so the guy comes into you.
Youíre a normal individual. You walk into a den. Six cameras, lights everywhere. And
thereís these five people sitting there staring at you. You know what? It doesnít feel great
and sometimes, Iíve tried it sometimes, when weíre messing around in the den, weíre waiting
for the next guy to come in. One of us will go and just take the Mickey and pitch just
pitch the ridiculous pitch the guy did before.
[LAUGHTER]
Sorry, can you edit that?
[LAUGHTER]So Iíve stood there and actually it feels weird. Because in
a way, what you'd really like is you would like somebody to lean on or sit on a stool.
But when youíre standing there itís like where do I put my hands, and a lot of people
donít have props.
And, literally, you're standing there and Deborah will come in with a question and Peter
will come in with a question. Of course, because of the way the show is made we all, literally,
fire questions at the same time 'cause it's great TV. No! And I think it's hard, I think
itís really difficult. And I think ñ I have watched literally grown men stand there and
they just go silent. You know, his throat just seizes. Forget about asking the same
questions; some of them canít even get the words out. Because it really is, genuinely,
that tough.
And I donít know if some of you have noted but the cameras go on that. There was a guy
in this series where heís pitching away and heís really, really nervous and as Iím looking
at his face, thereís a drop there of sweat just coming down his face and Iím finding
it really hard to concentrate because I can see itís gonna drop. So I said to the guy,
the camera man, "Dave, do me a favor. Can somebody give him a tissue?" And in Daveís
ear, the producer said, "No". So I thought, 'You, whatever.' Anyway since I've come out
I've had a real-I said guys that was really bad, but he said, "It made for great TV."
[LAUGHTER]
>>What would you do differently if you owned Google?
>>JAMES: I think, actually I think as a business model, I think clearly itís very successful,
does very well. And I think in some of the areas that it's diversified into- you see
so many different products whether itís the phone, or Google Earth, or the map, etc.
To be honest, I think it probably is doing what I would do. You're trying different markets,
different products, different services. There are clearly with the brand ñ I mean I think
the key issue to me is the brand. That brand, because it is so generic can be almost used
in so many different areas. And I think, just I'm sure, I have no doubt, that in your kind
of research and development space, there must be 20 other ideas that are currently being
explored, developed, evaluated which is what you would do.
I think that because you have that clear market leader position, I think the only thing you
have to be very sensitive about is -- Donít ever underestimate your competition.
You know, I think in every business Iíve ever been in sometimes, when I reflect back,
the mistake that Iíve made is Iíve become too complacent. Because when you are that
successful, it's very easy to forget that everybody else is watching you a lot closer
than you're watching them. There are far more people who study Google than Google study
them.
So I would just -- for me just be very sensitive because I have seen you get knocked off your
perch quicker than you think.
I think if you look at Microsoft, you know kind a lost its way a bit. And there are other
organizations that at one point I mean they were so dominant that really Google should
never have existed in my opinion because Microsoft should have. It was the natural thing for
them to do, but when you look back -- how stupid was that decision, but complacency
is the same issue isnít it. You're sitting there, you're king of the world, youíve got
everything.
You think you have arrived but actually everybody else is biting away at what you're doing.
And I think to me, that's always the key, whether youíre an individual or an organization,
whether you're in a job there are other people who frankly want that job more than you do.
You know, youíre number one. There are more people whoíd like to be in that position
than the way youíre looking at it. So I think when youíre that successful --
Itís a bit like me when I look at myself and say, "What is it that motivates me?" The
actuality is the fear of failure. Sounds weird but that's exactly how I feel; because you
get somewhere and you think, Oh my God, what would happen if I lost it? Because I absolutely,
Iím convinced that I could lose it all tomorrow, because no business is infallible. You know
if you look at some of the crazy things that happen in this world whether itís a dust
cloud or some glitch of technology or the Chinese saying, you don't believe in what
you are doing, something happens.
Remember, that example where you had Ratners? It was an amazing jewelry brand, and it was
a huge business. And the guy went up just like me. He was makin' a speech and he said,
"We sell crap." And that was it. A brand that had been around for a 100 years, had like
400 shops in every single high street, multi-million pound business and then in three months crashed
because he just got it, just made the most fatal error. Overly confident, overly arrogant,
said the wrong thing, one statement and the media just destroyed it. So to me complacency
is quite key.
On that note, ladies and gentlemen, Thank you very much indeed. It has been great being
here. Thanks a lot.
[APPLAUSE]