The Power of ‘Why’ – Exclusive Grow Exeter Interview with James Caan
James Caan is, arguably, the most experienced businessman in the UK today. From his humble beginnings in London’s East End, he has built a reputation as a man of integrity, of honesty and of heart. A founder and chairman of government initiative Start Up Loans, James has helped entrepreneurs to start over 28,000 businesses; some of whom have gone on to create substantial personal wealth.
We caught up with the people’s Dragon, at his home in Monaco, to talk disruption, attracting talent and the importance of investing in yourself.
Written by Tracey Duke
Let’s start off James, with a little background on Start Up Loans and what lies behind the initiative.
Start Up Loans was founded to encourage people in the UK to become more entrepreneurial; the view being that one of the biggest challenges, we face as a country, is that we’re not creating enough jobs.
One of the ways that we can rectify this, is to encourage entrepreneurship which, by default, creates jobs. I was approached, by the government, to launch Start Up Loans in 2012 and was given a target to start 1,000 businesses within three years. During that three year stint, I helped to start over 28,000 new companies, creating 42,000 jobs, across the UK.
I’m now looking to launch a recruitment entrepreneur campaign; a sector that lies very close to my heart and one I am hugely passionate about.
Here’s the thing. I don’t invest in businesses, because I can’t understand every business. I back people who have passion, drive, determination and conviction; people who have a belief in what they do. I can buy into that, but I can’t really buy into every type of business. I’ve chosen a different route where I focus on the individual.
And that was exactly one of my questions… When you invest in a person, are you looking for innate qualities, knowing that skills and business plans can be developed along the line?
Absolutely! The products do not sell themselves. You need an individual who has that drive, that passion, that conviction. I’m looking for someone who gets up in the morning and, regardless of their current circumstance, commits to making things work; that’s something you just can’t put into a plan. It’s not something you can create.
Of course they have to understand their market; they have to understand what they’re doing, have experience and a track record. But even with all those things, it still doesn’t mean that the business will be successful.
There’s a basic requirement, which I need to understand and of course I need to do my due diligence, but most people will back it on that. For me, that’s just the entry level. What I then want to focus on, is who is behind the plan? But, more importantly, what I want to focus on, is why? Why is it that they want to do this?
Just because someone wants to make a lot of money, isn’t enough; that’s not a big enough driver. I need to understand what it is about this proposition that gets them up in the morning and gets them excited? What is the success of this business going to mean to them and how will they translate that success?
Sometimes the issues are personal. I remember when I was investing in a business on Dragon’s Den, I invested in something that everyone laughed at; a dog treadmill. Although I couldn’t get my head around the idea; I didn’t really understand why dogs need a treadmill, I invested because Samantha, the lady I backed, told me that she had grown up in a middle class family with a good private education. She explained that she was now a divorced mother with three kids and worked as a waitress during the day. One of her daughters; Elizabeth, was really bright and she felt that she wanted to give Elizabeth the same education as she had had. As a consequence, in the evenings, she ran a website selling dog treadmills. I got really engaged with her story and I could see why she was doing this.
Her drive wasn’t the treadmill, it was the success that would enable her daughter something that she felt was lacking and I really believed in that. I believed in her and her why; the product was almost incidental.
At the point I invested in her, she had sold 25 treadmills; buying them from Taiwan for £340 and selling them at £1,200 on her website.
In the first year, we sold 450 machines and did amazingly well. We were making £1000 a machine, so made just short of £400,000, which enabled Sam to achieve what she wanted. But the moral of the story, is that the driver was her and her why.
I get that. There always has to be that driving force and reason for getting up. James, I’m interested to know; if you’re looking more so at the innate qualities and characteristics of an individual, when considering investment, whether that be time or finance, what are you looking for when you consider investing in a city?
If I was investing in the city, as a businessman, one of the key things that would be important to me, is what talent is available? Whenever big nationals pick a city, talent is one of the fundamental drivers. There’s no point in having a business if you don’t have the cash or the talent.
Take Exeter for example. How is Exeter marketing itself as a desirable place to live and work?What is it doing to attract talent to come into your city? If Exeter is off everybody’s radar and no-one’s looking at it, then you’re not going to attract the talent.
We’re fortunate enough to have a CEO of Exeter City Council; Karime Hassan, who has extraordinary vision. We’ve had some big investors move into the city over the past few years and our sports teams are doing pretty well too.
And that’s what’s needed. Exeter is a brand in itself. The question ‘what does brand Exeter mean to the outside world’ needs to be asked, because in order to attract talent to your business, you need to attract talent into Exeter. What is Exeter doing to market itself so that people will see it as a desirable location to work?
Cities, in themselves, are businesses. I see lots of marketing campaigns from big cities in the UK, because they want to attract businesses. They want to attract investors. But at the same time, you have to attract people.
And that right now, is one of our biggest challenges. In Exeter we currently have 4.5k job vacancies, but only 900 people registered as unemployed in the city.
So then, if you’ve got full employment, isn’t that the best kept secret in Exeter? By promoting that; telling the world you have a thriving economy, a growing city, you will attract talent. If you can do that, you can solve your problem.
I’d really encourage use of social media; Facebook etc to do that. It has to be a comprehensive strategy which enables you to have all the touchpoints.
So what about challenges on a global level. What are the biggest we’re facing, as business owners, at the moment?
It’s the entrepreneurs’ unawareness of disruptive technology. If you look at what’s happening, using Amazon as an example, every business, every entrepreneur today, should be looking at their business and considering what could potentially disrupt things?
In the most basic form, if you’re a book shop in Exeter and you’re not conscious that Amazon can sell your book cheaper, and get it delivered the next day, you’re going to be out of business. So the question that is facing so many businesses today, is what could the impact of disruptive technology do to their business?
If you look at recruitment and the introduction of LinkedIn; LinkedIn is a hugely disruptive technology. When I built Alexander Mann, one of the biggest assets I had, was my database of customers and candidates. With the introduction of LinkedIn, you could suddenly have a database, ten times the size of mine, for free.
Let’s think about what happened to Kodak, who were asleep when the mobile phone came along with a camera. Here was a brand, one of the biggest in the world; there wasn’t a place on the planet that you could walk into, whether that was a department store in New York or a small village in China or Vietnam, or where the brand Kodak didn’t exist. Today that brand has disappeared. Why? Because disruptive technology has replaced what it does. They simply didn’t see it coming.
So whether you’re a small business or a big business, the impact of disruptive technology is something that entrepreneurs and businesses need to be constantly aware of. If you miss it, you might very well find yourself out of business.
Let’s talk a little more about recruitment, which I know is an area you are hugely passionate about. There’s much focus on mental health and openly addressing the challenges and struggles that many go through. This is an area that I’m passionate about and, in particular, the challenges that those transitioning from a professional sports career, into a corporate and business environment face. That change can be an incredibly, mentally tough and challenging time for them. Do you have any advice for those making the transition to the next phase of their careers?
People from the armed forces or the sports world, do make very good business people. They make good corporate individuals because the discipline and the training that they receive, either in the forces, or through sports, is invaluable. Their dedication, sacrifice, commitment and desire to win, just can’t be beaten. Many organisations I’ve worked with, in the past, particularly like attracting people from the armed forces and sport, because of this.
There’s no question of doubt that I think the thing that those individuals lack, is industry sector knowledge. So, if you’re a sports person and want to go into business, spend a bit of time researching and understanding the business sector that you want to enter. If I was to meet a successful sportsman, the only thing that I would have reservation about is that they don’t really know my market. So, what they have to address is what can they do to prepare themselves to understand the market and how they can make a difference in that market; the key is how you can make a difference. Is it with customers? Is it with logistics? Or is it with pricing? Is it the back office? What is the skill set that you want to apply to that particular business and how much research have you done, into the business, to demonstrate why your particular skill set will be appropriate in moving the needle?
And so what about the international players who have been at the very pinnacle of their sport. They’ve played for their country & in front of thousands at Twickenham or Wembley. How do you replace the high, that you get from playing at that level, when you step into the corporate world? Surely that’s a tough one to replace?
It is, but I think you can get the same adrenaline rush. People in sports, I’ve always found, are very good at customer acquisition. They’re personable and they’ve got good communication skills. In business, you get the same rush, when you win a piece of business.
I think that if I was a sportsman, I’d want to understand how I would replace that sense of winning, in any given business. What are the characteristics of that opportunity or that business that gives me that same feeling? It’s a bit like me. When I find somebody that I really believe in and want to invest in, I get a rush because I’m excited that I’ve found my person. Or maybe I’ve just won an amazing customer that’s taken me three weeks to convince.
I think that there are the same rushes and that’s what keeps us going. I think that it’s getting the sports person to understand that the same does exist, they just have to identity what it means to them.
That makes a whole lot of sense and yes, I agree. There is an incredible rush that you get from honest business, rooted in passion and belief. Ok James, let’s wrap this up with a word on the greatest lesson you’ve learnt.
It was a lesson I learnt during my time on Dragon’s Den. It became very clear that people who came to Dragon’s Den focused only on the idea, not on the execution.
Having an idea, to me, is only 5% of the business; the execution of the idea is 95%. Most entrepreneurs think it’s the other way round and don’t focus on the execution. They think that because they have a great idea, they will be successful.
In my own business career, the key ingredient that I focused on, above all else, is the importance of people. People can make a difference and can transform a business. I don’t think that the value of that is understood. So whenever I hit a problem, or face a challenge in one of my businesses, the reason why it’s a challenge is because it’s something I can’t do which, by default, becomes challenging.
The answer, always for me, is how do I find somebody who can do that better than me and to not be afraid of finding people better than myself in that particular component.
I also believe that the concept of education is an important component. Despite that fact that I left school at 16, I went back at the age of 42 recognising that I felt I’d missed something in my life. I felt that I probably should have stayed on and that I should have gone to University.
There’s a component of academia that is important and you just can’t overlook it. At 42, I went back to Harvard Business school and did a degree, because I felt that I had something missing.
Investing in yourself should be a lifelong commitment. As the entrepreneur, you’re worrying about the business, you’re worrying about people, but what is it that you can do to help develop yourself? Ultimately, unless you become better at what you’re doing, unless you understand some of the challenges faced in the economy; globalisation, technology, attracting talent, you can’t give the best of yourself.
You need to be investing in you because if you’re not developing yourself, then how are you in a position to address the issues that come forward?
A Start Up Loan is a government-backed personal loan available to individuals looking to start or grow a business in the UK. Find out more at www.startuploans.co.uk
Follow James @JamesCaan for more info on his latest recruitment campaign.