Not only did the axed Richard Farleigh bring a much needed dose of serenity to one of the most combustible environments on British television, he also lent an analytical approach borne out of experience of investing in growing businesses that few of the other dragons - all more conventional entrepreneurs - could match.
But by recruiting James Caan to the judging panel, the BBC has once again proved it is a master of keeping the show fresh by tinkering with the line-up, bringing in a fresh face whose blend of business experience and willingness to invest meets the core demands of the show.
Unusually for the Den, Caan is a mixture of an entrepreneur who has taken the risk of starting his own businesses and profited handsomely as a result, and someone with a proven track record of investing in early-stage start-ups. Originally the founder of recruitment services company Alexander Mann, Caan is today the chief executive of Hamilton Bradshaw, a private equity organisation that has invested in companies in as industries as diverse as technology, leisure and nursing homes.
He certainly wasn't about to be overawed by the prospect of appearing alongside the likes of Duncan Bannatyne, Peter Jones, Theo Paphitis and Deborah Meaden. "My background is probably equally as successful as theirs so I didn't have any issues about whether I had the right experience to be in that position," says Caan, who is every bit as well turned out in real life as he appears on TV. "I probably had more experience because I'm a professional investor."
As well as injecting a degree of vitality into a format that undoubtedly has the potential to go stale, Caan also proved hungry to invest his hard-earned cash, which is especially important when two of the dragons have been there since the first series and one from the second and as such have already built up impressive portfolios. Over the course of the series Caan made five investments and believes one - Peter Moule and his Chocbox product - will go on to be the most successful investment in the history of the programme.
He also has high hopes for Sammy French's canine treadmill business Fit Fur Life which has had positive feedback from both vets and the Guide Dogs for the Blind, while he has also helped to take Laban Roomes's gold-plating company Gold Genie from a garden shed to running a concession in Harrods. Other investments included a takeaway restaurant website and a Caribbean ready-meals business, although the due diligence into these investments has revealed concerns that have yet to be addressed. Virtually all of the above were rejected by the other dragons apart from Bannatyne, who teamed up with Caan on every investment bar Gold Genie and the dog treadmill.
"I genuinely think I'm quite different on the show," says Caan. "I bring that dimension where I'm as interested in the person as I am in the product or service and in the last series a lot of the dragons started to follow suit. I think the balance between recognising the value and the importance of the individual as well as the idea is probably right in the Den, and I didn't think that existed before I arrived."
On the back of his extensive career in recruitment, Caan prides himself on his people skills and for the most part resisted the temptation to indulge in the less constructive criticism that has helped make Dragons' Den such compulsive viewing. "A lot of the dragons can be very aggressive and I can understand why," he says. "But when people walk into the Den it's is a very daunting experience for them. You've got five people staring at you, no props and nowhere to sit and you're just standing there. So to then give them a pasting is probably not my way."
Breaking the mould
Originally heralding from Lahore, Pakistan, Caan witnessed at first hand his father's hard graft to make a success of his leather garments business and rejected the chance of a readymade career in the family firm. "It was too easy," he says. "I was looking for something more challenging and exciting. Having grown up watching my father's business, I pretty much knew what the future had for me and I needed to know for myself what I could really do given the opportunity."
Instead, attracted by the idea of selling in an office-based role, Caan joined a recruitment agency where he proved so successful at placing clients into a financial services company that the organisation asked him to work in-house. "At that point I stumbled on an idea," he says. "I was dealing with all these agencies and I now knew exactly how the market operated from both sides of the fence.
"The recruitment sector is broken down into three categories," explains Caan. "You have the high street agencies which typically deal with anything up to £30,000, the mid-market and executive search, where the jobs are £100,000 plus and the methodology used to find the right candidate is headhunting. So the idea occurred to me to set up an executive search firm that operated at the mid-range level.
"Because of the market I wanted to operate in, which was financial services, I needed a brand with substance and gravitas," he adds. "So I created a brand called Alexander Mann. In my own mind I thought it was dynamic, professional and smacked of integrity and it had that sort of solidness about it."
Caan launched the business in 1985 and by the end of its third year it was turning over £1m a year. The nature of the business also meant that he came into regular contact with foreign companies looking to start up operations in the UK as a means of getting a foothold into Europe. "I came up with this crazy idea that rather than placing these people for a fee I should back them. I was a successful entrepreneur with a very successful business and I happened to be in the people area anyway," he says. "I had a company that was highly successful and very profitable and recruitment doesn't require a lot of capital. So my idea in 1992 was to find highly talented people who I could back to build their own businesses."
So the entrepreneurial zeal that had prompted Caan to set up Alexander Mann also prompted him to take a step back in the business. After appointing his own chief executive, Caan set himself a challenge: to fund 10 start-up companies over the next decade. In the end, he backed 13 businesses, including executive recruitment firm Humana International, business process outsourcing company AMS and computer services organisation The Concise Group.
In 2004, however, he decided to shift focus again and set up Hamilton Bradshaw - again a name chosen by Caan to bring a certain gravitas to the business - with the aim of investing in more established companies and taking them to another level. Caan tells how he wanted to see if the strategies he had employed so successfully with smaller firms would also translate to larger ones.
‘My background is probably equally as successful as theirs so I didn’t have any issues about whether I had the right experience to be in that position. I probably had more experience because I’m a professional investor’
They did. Hamilton Bradshaw today has stakes in public sector finance company Resource Partners, health chain Odyssey Clubs, specialist healthcare firm Pendleton Healthcare and technology component manufacturer nLine, while it also took business service centre Avanta from a start-up to a £450m company before selling the stake in 2007.
That year it also bought a 60% stake in public sector recruiter Eden Brown, which was then turning over £170m a year, which Caan - aware that his former business Alexander Mann now turns over £350m a year - hopes to double in the first year. The early signs are promising: the half-year results revealed a 207% rise in profits. "Some people are really good at £0-£10m, some at £10m-£100m, some at £100m-£200m," he says. "But some of the things you need to have as the business gets bigger are slightly different. And I felt that I bought management expertise to that proposition that complemented the existing management team."
The only blot on Caan's impressive copybook is the failure of sandwich firm Benjys, which Hamilton Bradshaw purchased from administrator Deloitte in 2006. "I bought the business too quickly," he admits. "It was my first experience of buying a business from the administrator. I got a call on the Monday, met the management team on the Tuesday, the administrator on the Wednesday, the bank on the Thursday and I made an offer on the Friday. Deals don't happen that quickly.
"Within six months we realised just how complicated and broken the business was," he adds. "When you buy from an administrator you get a six-month licence to trade and at the end of the six months we literally handed it back. The lessons I learned were not to buy businesses of that scale that quickly and if you've made a mistake put your hands up very quickly and accept that you've made a mistake. Had I tried to be a hero and continued to run the business I probably would have lost a fortune."
Lure of the Den
When Dragons' Den came calling, it offered a chance for Caan to add to his own investments as well as to get involved with smaller companies once again. "If I'm honest I did miss the journey between 1992 and 2002 when I did 13 start-ups," he admits. "They are much harder and tougher but they are also more rewarding. Creating successful people around me does give me an enormous thrill so when Dragons' Den came along I'd been in that space for five years and it appeared quite attractive."
Caan was already a big fan of the show but says he was still surprised by both the sheer craziness of some of the people and products - many of which don't make the final programme - and the lack of preparation that so winds up the five dragons. "People are generally very poorly prepared when they bring an opportunity across," he says. "I would advise anybody to think it through very carefully: get your numbers, get your proposition, get your unique selling points, don't waffle, deliver a very concise proposition very clearly and very effectively if you want to be taken seriously."
His main message for anyone starting a business is to conduct proper research and ensure that the product or service has a unique selling point that will make people will to pay for it. "The biggest mistake people tend to make is that they're over-optimistic and unrealistic and they don't think through the challenges clearly enough," he says. "They tend to listen to the wrong people. If you have a good proposition and you go to family and friends, most of them are going to say it's a great idea. But they're not paying for it so you need to do much wider due diligence. The other factor is pricing. What's the price point it's going to be sold at? Everything works at a price."
Once a business is established, there are further obstacles to overcome in the form of funding and building a team of people. "The single biggest challenge in starting a business today is raising capital," he says. "Funnily enough, the smaller the amount the harder it is to raise money. The second one is having the right team. A lot of people think having an idea is a business but it takes more than one person to build a business. A lot of people are inadequately resourced from a team perspective. There are six or seven key components in a business - whether it's financial, operational, sales, IT, back office, distribution or logistics - and you can't be good at everything."
Caan has also put his business skills to use in the charity sector and believes entrepreneurs have an obligation to give something back in time and expertise as well as hard cash. His own charity work has seen him build a school from scratch in his native Pakistan, which involved everything from buying the land and employing a team of architects to purchasing minibuses to pick up local children. He still visits the school every couple of months, while he also sits on the fundraising board of the NSPCC's Full Stop campaign and helped Save The Children raise £3m through submitting a formal business plan.
"As entrepreneurs we write cheques as something that is good for our conscience; it makes us feel better," he says. "But the fact of the matter is that we're faking it. At our level as entrepreneurs we have more to offer than just money. So 10 years ago I made a conscious decision that if I was going to get involved with charity work, it had to be money and time. I wanted to go in and make a difference."
Outside business, Caan is kept busy by his two daughters, 19 and 20, and is a keen sailor, skier and tennis player. He has houses in London, Lahore and Cannes and the development of technology means he is less restricted to being in the office. One thing he won't be doing any time soon, though, is retiring.
"I did retire when I was 40 and I sold my final stake in Alexander Mann," he says. "I thought that was it and bought a fabulous yacht in the south of France and a home over there. I thought that that was what people do when they'd sold their company. I took a gap year and had the most amazing time. I travelled, I learned to fly a plane, I raced cars and went to Harvard Business School. But at the end of it you wake up one morning and think ‘where am I going here?' I've now accepted that I'm going to work until I drop dead."
Extract from full interview conducted by Nick Martindale for New Business magazine
