Theo Paphitis on AI, social media, and seeking out negative criticism

Last week, Dragons’ Den returned to TV after a three-month hiatus. It’s been considerably longer since Britons saw Theo Paphitis in one of those famous black leather chairs (four years since his last, brief guest judge appearance).

Today, we’re thankfully in comfier, swivelly red armchairs in the offices of Theo Paphitis Retail Group in Wimbledon, where the lift goes up, not down. Here, Paphitis runs three retail chains from this penthouse boardroom: Ryman, Robert Dyas, and Boux Avenue. It’s also where he manages his small business network, #SBS or Small Business Sunday.

It’s SBS that we’re here to talk about. The network is less than a week away from its 15th anniversary – remarkable, given that Paphitis started it with a single tweet. One Sunday afternoon, he posted a call-out on then-Twitter, asking for businesses to jump into his mentions and tell him about their enterprises. Then, he shared his six favourites.

At the time, the idea of being able to reach thousands, even millions of people, from a device on your phone, was still new. The post instantly took off and “got a life of its own”, as Paphitis describes. “I just thought, wow. I just touched all those people, and they’re really engaging with me, and I can do something for them.”

Social savvy and taking criticism

Now also running on Instagram and LinkedIn, #SBS has so far given a platform to 4,500 winners. Every Sunday, Paphitis still hand-picks half a dozen firms to join the exclusive club where they can boost each other up, network, or trade ideas.

It might seem happy-go-lucky. But this origin story is also a reflection of Paphitis’ business savvy. Early on, he spotted the huge engagement opportunities these platforms – today also spanning platforms like TikTok and Reddit – could offer.

“In the old days of marketing, you transmitted. Very hard to receive. Now, you transmit and you receive, which is brilliant for business”, he says. “As a small business, you couldn’t get anywhere near that sort of reach. But you have got the capacity now.”

But that two-way communication cuts both ways. The same openness that allows small firms to connect with thousands of potential customers also exposes them to real-time scrutiny and public criticism. For Paphitis, that’s not a downside – it’s an advantage, if handled with the right mindset.

“Nothing is perfect. Some things on social media can be hard to hear if you’re thin-skinned. But I think you’ve got to be realistic and find the medium that works for you within that”, he says.

In the Den, Paphitis was known for his direct feedback. Even now, he rolls his eyes about the “people who didn’t know their numbers” who would make it onto the show. But the investor makes it clear he’s from the school of thought that honesty is the best policy.

In fact, for those who live in fear of the comment sections, Paphitis specifically warns against only looking for business feedback from the ‘three F’s: Family, Fools, and Friends’.

“You need to ask people who are going to say ‘don’t be so bloody stupid’,” he implores. “Negative criticism doesn’t have to be unconstructive. In the early days, I’d rely so much on talking to people and what they tell me.”

Of course, being able to take on that feedback and make calculated risks, in Paphitis’ view, requires specific traits. “You need to have some bravery, and a positive disposition to start and run a business. 80% of our winners are women. Quite a few balance a family life and other commitments around their business. You might only have one part-time person or two people working with you. It can be a really dark place and it’s so easy to give up.

“SBS gives [winners] energy, enthusiasm, confidence, credibility, and somewhere to look for answers. It’s not everything you need by any stretch, but it’s a great package to help you”.

AI as small business sage

Another defining characteristic of the SBS winners list is that most work alone – 52% are sole traders. Much has been said already about the isolation this group feels. Today, it’s been widely reported that lonely founders are turning to AI to solve the problem. Some experts even predict we could soon see a future where a startup becomes a unicorn with no employees. How does Paphitis feel about this? Is it a prescient or ridiculous statement?

“I never think anything is ridiculous”, he says wryly. “AI is a gamechanger for small businesses, it’s like a sage. You can ask it any question. I’m using it for my business all the time. I use Perplexity because it doesn’t have adverts.”

He pulls out his phone to show me a briefing video his team used in a meeting that morning. It’s entirely AI-generated, and inarguably impressive. But when I ask him for his views on remote work, it’s clear Paphitis isn’t one of those CEOs who’s advocating for the metaverse.

“Personally, I love face-to-face interaction. I love the discussions over the water cooler, the coffee machine. I love the fact that you can bring on the next generation and they can learn from you”, he says. “I’m not going to choose one or the other. It depends on the business and what level it’s at. For my business, it loves the face-to-face.”

The Autumn Budget

Putting his money where his mouth is, Paphitis has also grown the SBS into the offline world. So far, Small Business Sunday has hosted 12 large-scale annual events, and the next will be the #SBSEvent2026 early next year to mark the network’s 15th birthday.

All of these events are entirely free to attend, a key USP for SBS from day one. Paphitis assures me that SBS is fully committed to remaining free and accessible. “Lots of small businesses spend a lot of money on lots of things, some good, some bad. We’re not trying to sell anything. We encourage them to work on their business, not in their business.”

In a business world where almost nothing now feels certain, this certainty feels like a blessing. Last week, research revealed that over three in four SME leaders have little to no confidence that the Autumn Budget will support growth. More than a fifth expect profitability to fall in the next 12 months.

Paphitis himself has called for Whitehall to radically reform business rates to support smaller ventures (“as a society, if we just go with the approach of ‘might is right’, then our High Street is going to die”, he stresses). But he seems frustrated that he can’t answer what the future will look like for his network as he waits, like many, for the Chancellor’s statement.

“To know what’s next for SBS, you’d need to go to 11 Downing Street and ask Rachel Reeves,” he says. “Because the decisions this government makes will dictate what happens to our economy. And we might have a better idea on the 26th of November.”

But Paphitis is keen to stress that entrepreneurs don’t need to wait passively for change.

“Dragons’ Den was an amazing step change in the world of entrepreneurship. Before it, people wouldn’t have talked about entrepreneurship. Running a business was a mystery. And the show just completely took away all that mist. It showed people where to start from.

“There’s that ridiculous statistic that 50% of small businesses fail in the first couple of years. But that doesn’t mean the people fail. Lots go on to start another business and get it right. That’s what SBS stands for. Telling you what you don’t know, before the scars and the pain.”

Want to be in the Small Business Sunday community? Head to the #SBS website to find out how to enter via X, Instagram, or LinkedIn.