"How much money do you need to be a Dragon?" I asked David Chilton, creator of The Wealthy Barber empire and the newest member of the Dragons' Den team of millionaire entrepreneurs-turned-TV-venture capitalists. He'll be taking pitches next season in the place of Robert Herjavec, whose last episode was last week's season finale.
"I don't want to put a figure on it," he said, "but you'd have to have a fair amount of money set aside."
Don't worry, I didn't let it go... I've always been dying to know and David's career, thus far, has been very much about explaining finance to people like me.
Here's what he had to say about getting liquid enough to enter the Den, his ideas for future partnerships with the other Dragons and the moment he knew he wanted the part real bad...
CBC Live: So, what does it take, then, to be financially ready for a whole season of Dragons' Den?
David Chilton: You've got to be liquid to a certain extent so that if you see several good ideas over a multi-week period you can capitalize on each. You'd hate to only budget 'X' and then see one or two great ideas early and commit to those and then be blocked from doing others. That wouldn't make sense for you, personally, nor for the show... and it wouldn't be fair to the pitchers. I think that's where the integrity of the show really exists. I think you have to set aside a fair amount of money - a pretty big number - in your head and make sure it's liquid so you can get involved.
For me personally, I'm very comfortable investing in private companies. I've done it before, and... I'm not adverse to that kind of investing at all. In fact, I love entrepreneurship and both my kids want to be entrepreneurs and so the fact that I'm going to end up dedicating this money towards these types of ventures is actually quite exciting to me.
I mean, you also have to know [the investments are] high risk. Any time you're investing in startups there's always a higher risk. People say, "Kevin's always talking about valuation." It's that important. You have to make sure that it works. The valuation is absolutely key and there's a reason he brings it up a lot.
You already had a relationship with the CBC before being invited to join Dragons' Den, right? You've been on George's show at least three or four times now?
DC: Yeah, I think four or five total. Probably five or six when I think about it. The relationship has been more of a conventional one, though, as an author where you do an interview. The other thing I do is The Lang & O'Leary Exchange. When Kevin is away I'll sub in. I think that that all played a role, especially the interviews with George. They told me on Dragons' Den that they watched those interviews and that influenced them a bit.
If you've subbed in for Kevin, does that mean that you lean more toward his way of thinking?
DC: No, not at all. Interestingly, the only time that Kevin and I dealt with each other, we had a very heated exchange on Lang & O'Leary - and that wasn't that long ago. We got into a heated debate about mutual fund expense ratios and so, no, we don't tend to see eye to eye on some of those things, although I really do enjoy him on Dragons' Den. I think he's the straw that stirs the drink and he keeps people on their toes.
How did you react to the opportunity to join the show?
DC: I was quite interested right away but I felt mixed emotions. I'm a very low key guy. I like being under the radar... What really led me to doing this was that they set me up to talk with Arlene on the phone and Arlene was amazing. She's so smart and so helpful, she talked about the process and the pros and cons, all those types of things. But what pushed me over the edge, for sure, was actually coming down and going through a couple of dry runs. Listening to the pitchers and playing the role - I loved it! In fact, we did about three hours and it honestly seemed like 45 minutes to me, I was having a blast. I was so disappointed when it ended, and that was the clincher. As soon as that happened, I thought, "This is great. I love it." In fact, I saw several pitches that day that I wanted to invest in! By the time I had finished I was really excited and really hoping to get it.
What did you love the most about the dry run?
DC: Honestly, I loved the pitchers. I really did. I found it so energizing. And being a fan of the show too, it was nice to see the inner workings, so it was all kind of cool.
And it must be energizing because your money is involved...
DC: You're right, and that makes it such a unique situation. It's your own money so you've really got to be thinking and on your toes. Yes, you can joke around a little bit, and play back and forth with the other Dragons, but you've got to be asking the right questions and also sizing up the person. Because when it comes down to it, you're investing in people. I mean, obviously ideas matter, but it's the execution that's really going to lead the success and you've got to try to relatively quickly get a feel for this person's potential to execute well - their attention to detail, their passion, do they have an infectious enthusiasm?
Funnily enough, it's not all that different from how the real venture capital world works. They often come in and make that kind of a pitch and things move from that first meeting. First impressions are everything.
How do you feel about going into the Den and into competition with the other Dragons?
DC: I think there's been more and more of that going on because the quality of the pitches continues to rise so you're likely going to have that competition. That's something I'm going to have to get accustomed to because, again, I tend not to be too aggressive and I always want to be polite. But in the end, you really want the pitchers to do well, you want them to have a thriving business or at least a good opportunity for one, so you want them to get your capital. Do I hope it comes from me if I love the idea? Obviously. But if it comes from somebody else, I can live with that too. I really want the business idea to be the big winner. But it'll be fun competing - and I'd actually like to see more of us cooperating. I think every Dragon brings something different to the table in terms of contacts and skills and I think going forward you might see more partnerships where two or three of us divide up the pie and say "Hey, you bring this to the table beyond the money," and hopefully someone else brings this...
You mean joint ventures between the Dragons? What do you have in mind?
DC: You look at Arlene, I mean, she really is a great marketer. She's got all kinds of ideas and all kinds of connections. Nobody can raise capital the way Kevin can. If it's a franchise idea look what Jim brings to the table. Bruce obviously knows the internet exceptionally well. So, you've got all these different people with different skills and I think some ideas will really benefit from several - if not all - the Dragons partnering together and providing the capital because of what they can bring beyond the money.
What are you looking for from the pitchers?
DC: That's an interesting one. I don't know if you can describe that. I think that you're obviously always looking for tremendous passion and I know that sounds kinda corny, but this is tough. Any time you're starting a business, you're looking at long hours. Again, you know, Kevin's done a very good job of pointing out that business does not go smoothly. Bruce was saying a few episodes ago that you're going to hit all kinds of speed bumps no matter how strong your idea, it doesn't matter how smart you are, you're going to have a lot of horrible days when you start up a company. And I think the ability to overcome those, the tenacity, all of those things you're trying to assess, that's why it's really important to watch the people - everything from their body language to their clothes to the way they articulate.
I also want them to be realists. I think that the kind of pitcher that might scare me off a little bit is one that only sees the positive. I want them to be optimistic and upbeat, but you have to be realistic too. There are going to be competitive challenges, there are going to be setbacks, how do you deal with them? I think that Arlene over the years has done a very good job of asking, "What if this goes wrong, what would you do?"
I think the numbers matter too. They really do, you can't ignore valuation, that's for sure.
The final thing I think I'll pay a fair amount of attention to is the potential for competition. Some of the ideas that come on the show are quite strong, but they can be knocked off relatively easily. So you have to make sure that the pitcher's bringing something unique. It can be their own charisma, it can be a patented idea, it can be a first market move or advantage, it can be a lot of different things, but they have to be bringing something fairly unique that's tough to duplicate and is going to give them a bit of a head start or a competitive advantage.
What makes you most nervous about doing the show?
DC: I'm not too nervous now. But it's such a popular show and so many people watch it and I've always quite a modest life so that part makes me a little bit nervous.
But my daughter - I've never seen her so excited about anything. She loves the show. It's almost insulting because she couldn't care less about The Wealthy Barber. I said, "You know The Wealthy Barber is a pretty big book - two books." And she said, "Oh, dad, that's a book. Who cares about a book? This is a TV show!"
And what are you most excited about?
DC: I'm really looking forward to working with the team, I really like them all. I'm a huge fan of all four of them. We have to celebrate our business successes in Canada more than we do. You look at someone like Jim with Boston Pizza... starting that business up and learning to franchise. It's a billion dollar top line business now. Think of all the jobs he's created and all the revenue, tax revenue, etc. That's what it's all about. It's exciting! I think getting to know those four better is going to be a lot of fun.