Warning! Dragons’ Den can cause business headaches
After appearing on Dragons’ Den, founder of tailor made condom company TheyFit talks exclusively to Startups.co.uk to set the record straight
When Joe Nelson, founder of tailor made condom company TheyFit, signed up for the BBC’s Dragons’ Den he shared the hopes of every business owner who seeks to gain a high-profile backer – cash to grow, and publicity.
As he found, it doesn’t always go to plan. Pitching for £200,000 in exchange for a 10% stake, his hopes were dashed.
Worse was to come when the programme aired and he felt the editing of his appearance left crucial details on the cutting room floor. He’s not alone in having his business very publicly rubbished by the Dragons, but chose to speak to Startups.co.uk to air his grievances at what he feels misrepresented his business model and valuation – and has left him responding to the fall-out.
Read his interview with us and make your own mind up – and be aware that, for some at least, appearing on the programme may not be all it’s cracked up to be:
Joe, why do you think your Dragons’ Den appearance gave an unfair representation of your business?
Dragons’ Den is drama-TV at its best. More than 90 minutes of footage was heavily edited into the final six or seven broadcast ones and since I “lost” by not getting investment I could hardly be painted in too bright a light, could I?
Suffice to say all of the Dragons’ questions were handled politely but thoroughly at the time, especially given the pressure, but this in turn seemed to rile them further – especially Duncan Bannatyne and Kelly Hoppen. Perhaps it’s something about the topic of erections and sizing condoms to fit them that puts people on the defensive? It’s most curious a reaction.
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You were challenged on your patents and Deborah Meaden said other people could easily steal your idea. How would you respond?
The patents are watertight and boil down to a technical term called “reference data” – indeed the exchange with Meaden on this point took nearly 10 minutes but ended up with just a brief mention in the programme.
In fact it seems to paint me as not having much faith in my own IP! I explained to her in extensive detail why this reference data terminology was so broad, and how it made the patent so powerful, but this was entirely edited out.
On the day I’d said “Actually the patent doesn’t make me sleep easily at night – I sleep easily at night because to copy this concept you’d have to turn your back on the wholesale model of selling condoms. There’s no reason for a Durex or a Trojan to do that. On the other hand, maybe it’s a reason they would buy me out”.
And there really isn’t a reason for them to change their 70-year-old business model, when you think about it. Why bother getting your hands dirty selling directly to customers when you can just sell one million rubbers at a time to the likes of Boots and Tesco and let them deal with the customers?
Her response that a manufacturer could simply call condoms small, medium and large – I think it’s fairly obvious why that would never work!
What about uniqueness? Duncan Bannatyne said there’s already different sizes of condoms on the market.
Bannatyne’s claim that condoms come in different sizes already is a common misconception – and owes more to marketing than any real difference. I attempted to explain this to him at the time but he spoke over me – he’s fairly punchy like that.
My more persistent response, which got really heated at one point, was entirely edited out – in a nutshell Durex regular condoms are 8” long with a nominal width of 56mm – the “XL” version from the same manufacturer is also 8” long, but with a 57mm nominal width. That’s a millimetre of difference – hardly extra large.
Durex “small” (called ‘Close Fit’) are 7” long. So again, this is just marketing. In the US the “Magnum” condom, commonly perceived to be really large, is actually smaller than a regular Durex rubber. And so on… using examples like this, coupled with my persistence, just seemed to rile him further – in fact in the broadcast edit you can see just how miffed he gets by the end – it’s an abrupt “I’m out!”.
It was similar with Hoppen – she genuinely believed that men simply don’t have any problems when it comes to condom sizing and fit, and positively enjoy using them!
But clinical research dating back as far as 1993, and we’re talking multiple studies around the world here, consistently finds that 40-45% of men suffer these fitting issues, and it puts men off wearing them. There’s even growing evidence that it can affect safety, too (condoms that are too big slip or fall off all together). Again these important retorts were entirely edited out.
Ok, you’ve got an extensive range of products, which Peter Jones clearly felt was unwieldy and would impact on profit.
Jones’ point about profitability being impacted by 95 SKUs is absurd, frankly. Condoms have a five-year shelf life. 2.5 million fit in a shipping container (so storage space isn’t an issue). Credit terms mean no cash up front and they don’t cost an awful lot to make anyway, even custom fitted.
But best of all the sales curve (of sizes) is highly predictable – like a bell curve, if you’ll excuse the expression. So we are able to plan massively in advance what we need to manufacture, and which sizes need to be made at any point in time – even then it’s only an eight-week lead that is required. Again, all explained to Jones. Again, all cut by the BBC.
Why do you believe TheyFit has the potential to disrupt and take a share of the long-established condom market?
The main problem with modern condoms is plain to see – men don’t like using them. Lots of the problems with sexual health in 2014 could be fixed if only men, especially young men, would use a condom when they had sex. Now, when you dig into the reasons why these men are shunning prophylactics, things like comfort, sensitivity and feeling during use are by far and away the most common complaints.
It turns out that, as you might expect, when you make the condoms fit men better, they feel better during use. In turn that encourages their use in the first place. Taking sales online is just a happy side effect of this process!
People buying condoms in-store, off the shelf, is not sensible and never has been. No time to browse, just smash and grab. It’s just a habit. This product of course lends itself perfectly to online sales – buying online is discreet, embarrassment free and cheaper. And now you can customise your fit, thereby ending up with a better experience when you use them. To me it’s really hard to find a valid reason why this won’t work.
Finally, you went in with a £2m valuation, which is high and always likely to be challenged by the Dragons. In hindsight, were you being unrealistic?
The valuation was clearly and concisely explained using current and projected sales revenue and profit. Remember – I had worked as an investment banker for 10 years prior to this. So referencing EBITDA multiples for things like the SSL International acquisition (they made Durex) by Reckitt Benckiser Group a few years back, and market statistics like the 160 million condoms which are sold in the UK retail channel each year, is second nature.
That not a single number or data point featured in the final cut tells you something about just how this comprehensive and defensible the valuation was! And that’s before we talk about things like the NHS and public health distribution. Again, none of those numbers made the cut.
Did the experience leave you feeling bruised?
Pissing off Bannatyne and Hoppen was unfortunate, but sort of satisfying given how weak I felt their points were. I really thought Piers Linney might be tempted, especially given how quiet he was through most of the filming. Peter Jones is a character, but also funny. Meaden not liking me, the person? Well, that was a shame, because she’s lovely!
I’d do the whole thing again for sure.