Peter Jones: Phones International & Dragons’ Den

Why the Dragon is leading the race to create the UK's most enterprising generation yet


Peter Jones balances the demands of a £200m telecommunications firm, a TV production company and numerous Dragons’ Den investments, but none of those provided him with his proudest business moment. He tells Growing Business about his latest passion

It’s hard not to be impressed by the diversity of interests Peter Jones commands, but some of his more familiar traits should make him easier to dislike: the infamous sneer and withering comments with which inadequate Dragons’ Den hopefuls are dismissed, for example.

His critics, meanwhile, have done some sneering of their own, particularly about American Inventor, the TV show he dreamt up with friend Simon Cowell, presumably for the gall he displayed in adapting the Dragons’ Den formula and turning it into a gaudy stateside success for his television production firm, Peter Jones TV.

But then Jones comes in several guises: the maverick investor whose hand can’t be read by his fellow Dragons, but still claims the show’s best investment record; the one-man brand who’s put his name to numerous advertising campaigns, a book, board game and even a range of socks; and the telecoms magnate who’s as fired up as ever about growing Phones International, the £200m-turnover business he founded in 1998.

I leave my meeting with him at his Marlow, Buckinghamshire HQ still unsure which incarnation I’ve just met, but disarmed by the sheer enthusiasm of a man I’d feared it could be hard to warm to.   Angel’s academy

It might be difficult to judge what gets most of Jones’ attention these days – Phones International, which sells and distributes mobile communications products and is still growing organically and acquisitively, or his public persona, which demands frequent international travel, filming time, photoshoots and numerous personal appearances. But it doesn’t take me long to work out what he’s currently most passionate about.

Last October, the government committed an initial £8m over four years to a National Enterprise Academy (NEA), which will provide the first full-time accredited courses in enterprise and entrepreneurship, providing fledgling tycoons with the skills to set up and run a business. Jones didn’t just put his name to the school, it was his brainchild. He committed £4m of his own money and went through an exhausting Whitehall process to secure public funding.

His trademark persistence paid off, and the academy’s first batch of students have just graduated from a six-month tester programme. Now, £40m has been committed over five years to bring the concept to nine regions of England, and then to Scotland and Wales, with plans to process 12,000 students by 2012.

“That’s the proudest thing I could ever do in my life apart from having my own kids,” Jones beams. “It’s got nothing to do with going out there and saying: ‘I want to give something back.’ It’s a mindset-based curriculum that’s very testing to students, and it’s the first academy of its type in Britain. It’s a proven, working model.”

Indeed, students will graduate from the academy with Edexcel-accredited NVQ qualifications, having benefited from hands-on lessons in business from a stellar list of UK entrepreneurs.

Jones’ charm and enviable contact book, which includes close friends Philip Green and Gordon Brown, also came in handy when building support for his idea in the face of a rival bid for public funding from James Dyson, who wanted to establish a national engineering academy.

When Jones won through, The Sunday Times reported that Dyson suggested that his plans were rejected in favour of the Dragon’s on the basis of spin. Dyson wrote a letter to the then skills secretary John Denham in which he argued that a skills gap acknowledged in more than one government report was being overlooked in favour of other more “eye-catching subjects”.

“His quote was something along the lines of ‘they went for a celebrity-driven option’,” says Jones. “I find that interesting when he’s a guy on TV advertising his own product. Everyone knows James Dyson. He’s probably more famous than me.”

Rock ‘n’ roll

The real reason Dyson’s proposal failed, some observers suggested, was that it was over budget, he was unwilling to compromise on a planning dispute over the academy’s location and that he, unlike Jones, lacked the political guile to play the system. Jones’ enthusiasm might come across as boyish, but it would be a mistake to confuse that with naivety. Fellow entrepreneurs and politicians alike will testify to his ability to strike a deal.

“One thing business has taught me is that you’ve got to get your pitch right. If you don’t, you won’t get investment,” he says. “But I believe there is a place for his innovation academy and it will happen, because we need more James Dysons coming through. I hope he does it.”

While Jones believes that the UK lags behind the US when it comes to enterprise culture (“If you fail three times in the States, they’ll assume your fourth business will be a success. Here, we won’t even give you a job,” he observes), he’s fond of calling business the new “rock ‘n’ roll”. He says the popularity of Dragons’ Den and The Apprentice is prompting a surge of interest in business from school leavers.

Unfortunately, few of those who express an interest in starting a business actually do so. Whether Dyson chooses to press on with his idea or not, Jones can be justifiably proud that it’s his school that has provided a prototype for addressing a skills and development shortage outside of the traditional education system.

Entering the den

Regardless of the views on Jones’ celebrity status, his business journey would have been radically different if he hadn’t agreed to be involved in a pilot TV show. Although  his first response was that he was too busy, following pressure from BBC producer Martin Smith, Jones relented. “At first, I didn’t know whether to do it,” he recalls. “But BBC2 had a strong factual ethic, so I knew it wasn’t just about entertainment and I agreed to a pilot. Even then, I thought it might go under the radar.”

In fact, the pilot was so popular within the BBC that it became the first episode of a series that’s now in its seventh season. So why does he think it was such an instant hit? “No element of the show is staged in any way,” he replies. “I have no idea who’s going to walk up the stairs – none of us do. It’s our own money, and we’re not actors, we’re businesspeople. We’re investing in real ideas, but the difference is we’ve got to do it in 15 minutes, and there’s a real risk factor for the investor as much as fear on the part of the pitcher. It’s captivating.”

Despite Dragons’ Den’s success, not everyone is as impressed as Jones. Some feel the show gives angel investing a bad name. The piles of fake cash are crass, they say; the boiler room atmosphere discouraging. More importantly, don’t the Dragons misrepresent business angels by consistently asking for too much equity?

It’s a criticism that frustrates Jones. “It’s a shame that people say that,” he says. “If they realised the level of risk that’s involved in making a decision in 15 minutes about a business, there’s one thing that they’d try and do, and that’s protect their downside. One way to do that is to take a bigger slice of the cake. If people really understood the level of risk, they’d probably come to a similar reasoning.”

Maverick angel

Jones certainly takes his investments on the programme seriously, and claims he has the show’s best record, losing money on only one investment. “The rest are either profitable or breakeven,” he says – a pretty remarkable score for an angel investor. Normally, a couple of ‘home run’ investments pay for a series of duffers.

But, fittingly for a man who likes “being seen as a bit of a maverick”, if Jones was forced to pick a standout investment, it would be Levi Roots’ Reggae Reggae Sauce, which has been flying off the shelves since its launch, and even outsold tomato ketchup in certain months of last year, according to Jones. “It’s a brand that’s about to go international,” he says.

“That single investment could pay for all of the others I’ve made in the Den.” Jones, who is worth an estimated £157m, has also backed fashion magazine Wonderland, children’s toy iTeddy, an indie band with an unfortunate moniker (Hamfatter) and, improbably, Magic Pizza, a device that ensures the centre of a pizza is cooked at the same rate as the edge, solving a problem its inventor told the Dragons was called “soggy middle”. Surely the latter was a bridge too far, even for a maverick?

“People asked me why I was investing in a hub cap with holes in, but we’ve done deals, licensed it and it’s worked,” he says. “You’ll see some wacky ones in the next series, too.”

What’s most remarkable about Jones in the flesh, other than his six-foot-seven frame, is his lack of arrogance and the obvious joy he gets from sharing his interests. “In the Den, I could invest in a sauce one minute and technology the next,” he says. “That’s like my life. One minute I’m talking about how our telecoms group is doing, the next I’m discussing a magazine, producing a TV show in America or giving an award away. It’s a real eclectic mix of activities.”

Restless streak

You’d be forgiven for assuming Jones suffers from a bad case of the restlessness that characterises many entrepreneurs. This is often accompanied by a lack of attention to detail, but Jones’ case is a notable exception, perhaps because of a bruising experience in his mid-20s. After setting up a successful tennis coaching academy in his teens (his much-documented penchant for fast cars began when he bought himself an Audi 80 sport at 18, with his first house following a year later), he made his first million from a computer business inspired by Dell.

“I just started building computers,” he says. “I knew nothing about it, but I’d read about a guy called Michael Dell, who started above his parents’ garage, and I thought that I could do the same.”

After early successes with manufacturing PCs under his own brand, he hit trouble during the recession of the early 1990s. “It was naivety. I gave people credit, and in the recession, they went bust on me,” says Jones. He lost the business and with it, his marriage, home and car. Trade credit insurance would have saved him, but for all the difficulties it was to provide a useful lesson. Jones never repeated the mistake and his ambitions remained undimmed, but first he needed a job.

He wrote to Romano Arteoli, applying for the vacant managing director position at Lotus Cars, despite lacking any relevant experience. He failed, but did get a job at Siemens, and within 12 months was head of its computer business in the UK.

“I was quite happy to camp out in Germany to get the answers I wanted. I’d fly over at seven o’clock when most people would prefer to be at home. I would do 15 hours a day and I wouldn’t take ‘no’ for an answer,” he recalls. “There’s a lot to be said for being entrepreneurial in a corporate.”

Next, Jones ran logistics at John Caudwell’s Phones 4U for a year, before walking out to start Phones International in direct competition with his old boss. The combination of his entrepreneurial drive and newly found commercial nous drove rapid growth at the firm, initially focusing on the distribution of Ericsson products, quickly becoming its biggest customer in Europe.

At the end of its first year, the company turned over £14m, hitting £140m just three years later, earning it a place on the Fast Track and Jones an entry in the Rich List. Now, the group encompasses three operating companies, which distribute, operate and service telecoms equipment around the world.

Despite the breakneck pace of the company’s early years, the failure of Jones’ earlier venture means he retains a healthy dose of caution. “I wanted to scale the business up at that rate, but I didn’t want to bring in huge amounts of debt,” he explains.

“I never went to the bank and asked for £30m. Trying to generate profits each month to turn them back into the business focuses your mind. It stops you taking huge stock positions. As you grow, the most important thing is that you learn to keep doing it when you actually don’t need to, because you’ve got free operating cashflow.”

Dear diary 

Every morning, Jones looks at a sales dashboard that shows him his business units across the whole group. “If I see an anomaly on there, such as stock positions going out to 60 or 90 days, I’m on the phone to the managing director,” he says.

As proof of his continued commitment for doing deals and driving growth at the telecoms firm, in June, he took control of troubled AIM-listed smartphone retailer and distributor Expansys, strengthening Phones International’s global presence with its established worldwide operations. While AIM companies are often acquired with a view to taking them private, Jones is keeping the firm listed, insisting the junior market is strong and full of undervalued companies worthy of investment.

“We’ve got an 81% stake in a firm that used to have a market cap of £50m,” he says. “The market cap is only £4.5m at the moment, but AIM is one of the most solid exchanges in the world, and we’ve got no intention of taking it off. We want to be regarded as the global route for all technology products, and I think that’s a possibility, especially with the acquisition we’ve just made.

With a new series of Dragons’ Den being filmed and angel investment commitments, his TV production firm and a growing property portfolio, there’s no chance of Jones going private anytime soon, either. Surely, diary management is a nightmare?

“My time is managed by other people, which is where it can go wrong. They’re either incompetent or I’m really late. I decide which one it is,” he jokes. “Some of the things they put into my diary just don’t work. You end up trying to fit everything in and sometimes you just can’t. But, in a funny way, it doesn’t bother me. I’d rather be trying to fit everything in, and then when things fall to the wayside, I’m open minded. That’s my life.”

In his own words

On Alan Sugar’s appointment as enterprise tsar

Enterprise Tsar is an odd title, but he’s been around for 20 years in government circles, with an interest in the way that policy has been written. It’s a shame they haven’t listened to him to be perfectly blunt. He’s a sharp cookie. I’d go into business with him any day

On Duncan Bannatyne

If he had half a brain he’d be dangerous. It’s difficult to have an intelligent conversation with him

On Phones International

We’ve definitely seen a reduction in consumer spending, but not in our group’s performance, because we’re strong at managing our inventory, looking at new sales markets and we’re very fleet of foot. As much as we’re a mid-cap business as a group and how we’re regarded, we’ve kept a small business ethos

On acquiring Rachel Elnaugh’s business out of administration with Theo Paphitis

Red Letter Days has been the hardest turnaround we’ve ever had to do. If we’d known half of what we discovered when we unearthed the business, I’m not sure we would have made that acquisition. It’s taken us three years of hard work and now we’re just tinkering on the edge of breakeven. But we’re really, really excited about its future

On Dragons’ Den

You see people who are breathless, shaking, sweating, one or two of them faint and then you’ve got the fact that I’m competing with one or two of my fellow Dragons. I don’t see the rest as any competition

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