Entrepreneur James Caan recently joined the BBC venture capital series, Dragons’ Den. He reveals how investing is based on an understanding of people and whether they can deliver that dream.

When did you first realise you had an entrepreneurial streak?

I probably realised I was going to be in business at the age of 12. My father had a manufacturing business for leather garments. And I used to borrow jackets from my Dad and I remember one of my friends telling me “Love the jacket. Where did you get it?” I said, “My Dad made it for me.” A couple of weeks later, my friend said his Mum had said he could have one for his birthday. So I went back to my Dad, and asked him to make the jacket, and I made £15 on the deal. My pocket money was £2 a week, so you can imagine how I felt. I thought I’d won the lottery.

Seeing that kind of deal, buying something and making that sort of money really appealed to me. After that I realised that the conventional idea of working for someone else probably wasn’t me.

What are the necessary skills of an entrepreneur?

Being an entrepreneur is about running a business, being a leader and a business winner.The challenge is actually running the business: dealing with growth, expansion, technology, investment, finance, legal, commercial, and governance.

What happens when you start to run the business is you find that all the things that made you successful are not the things you end up doing, but as the owner of the business, the buck stops with you. And a lot of entrepreneurs probably don’t realise that.

What entrepreneurs constantly find challenging is hiring their own people, which is very, very different to hiring for someone else. I don’t know any owner today who’s got it right and it’s still one of my biggest challenges.

What would you say has been the key ingredient for your success?

In the beginning there was just me, a broom cupboard, a phone, and a Yellow Bible. Why has it worked for me? I think because I have tended to focus on people.

I’m probably not a stereotypical entrepreneur because I believe there are people better than me. And if you’ve got the confidence to surround yourself with people better than you, then all those challenges you face in the business, you take in your stride.

When I was at Harvard, we did a case study on eBay. eBay was launched by a couple of tekkies who came up with a fantastic idea, but they also recognised that they couldn’t build the business, so they had the vision to track Meg Whitman, who was an accomplished CEO of a substantial business. I take my hat off to them. They have this little tekkie business, and yet they’ve still got the confidence to go out and pitch to Meg Whitman.

How does your interest in and understanding of people translate into your work in Dragons' Den?

One of the things I’m renowned for is I don’t back businesses for the product, or the service, but I back people, because I think that whatever business it is, it is people who breathe life into it.

Some of my other Dragons in the Den really get into a great venture or idea. For me, yes, the idea has to make sense and it has to emotionally stack up, but that’s it. What I then focus on, and the reason why I make the investment, is because I rate the guy. There are people who’ve presented to me with something that I’ve thought, ‘This could change the world’ – but then I’ve looked at the guy and thought he could never do it, because to me the success of the business is based on the skill of implementation.

What makes it work is your ability to implement the real dream. When I focus on the person I ask “can he implement?” If he can’t, it doesn’t actually matter what the idea is.

How are you finding life in the Dragons' Den? Is it easier or harder than you thought?

When I was offered the chance to do Dragons' Den, I thought it’d be a walk in the park. I do this for a living, I’m actually quite good at it, and when I studied the other Dragons, I thought I’m probably more experienced than they are. What I didn’t realise was that was actually a handicap: if you’re a professional at something, you have a set structure and method.
I’ve been investing in people for nearly 20 years and when someone comes to meet me we see if there’s chemistry. Then we’ll go through their business plan, the market, the numbers, and so, typically, you’re going to meet four times, spending 12-15 hours together. Whether it’s £100,000 or half a million pounds, the principle’s the same.

So, for twenty years, I’ve been following a particular programme of 15 hours, and now you expect to make the same step in 20 minutes. So I’m sitting in the Den in a kind of daze, unable to make an investment.

You have no CV, no business plan, nothing. And then I realised that at the end of the day, you have to take a punt on it. It was ten times harder than I thought because when it’s your own money, when you say “I’ll make that investment,” on the back of just 20 minutes, it’s so tricky!

In the Dragons' Den, you’re helping make the ambitions of others. Do you have any ambitions left for yourself?

Really to continue what I’m doing. I had my chance of a sabbatical and retirement when I sold Alexander Mann. I decided to take a gap year so I went to Harvard, then learned to fly helicopters and planes, sail a boat, until my daughter turned to me one day and said, “Dad, all my friends’ Dads have got real jobs.”

Private equity had been a big buzzword at Harvard, and I thought I’d give my money to the private equity industry because it’s something I understand and believe in. So, I met all these very fancy private equity firms and I got treated extremely well. And I’m sitting in these very plush boardrooms thinking that when it’s all going well, I’m sure these guys are fantastic. But when it goes wrong, I’m not sure they know that as an entrepreneur running a business, you need to get back in the trenches and deal with the issues. When I looked at these guys, I thought, “This is not about spreadsheets or theory, this is about being there.” So, instead of giving my money to ‘suits’, I set up my own private equity firm.

You recently completed the Haj pilgrimage. What was that like?

It was an amazing experience. The mosque is an enclosed building with 1.5m people in there. The biggest number you can probably think of is 100,000 people, and that’s probably open-air. Just imagine something 15 times that size that’s enclosed, and the ‘spiritual impact’ of it. At the Haj, 1.5m people pray five times a day, and even with all those people, the place is pristine. Not a single piece of paper, not a speck of dust.

You can also only wear two pieces of white cloth, which can’t be stitched. The idea is that you all go as equals. So I could be standing next to the Sultan of Brunei in exactly the same thing. There are no privileges, no dress codes. And I found that to be quite powerful, because you all look exactly the same: Chinese, Malaysian, European, Asian – every nationality, all the same, all equal.

Entrepreneur and 'Dragon' James Caan reveals how investing is based on an understanding of people and whether they can deliver that dream.

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