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Is The Dragons' Den a Farce?
The Dragons' Den has been one of the CBC's most successful original shows in recent memory. In January, it will begin its fifth season and earlier this year ABC started to notice and launched a similarly formatted show called Shark Tank, bringing two of Dragon Dens' VCs, Kevin O'Leary and Robert Herjavec, along for the ride.
But while The Dragons' Den might seem like a way for budding entrepreneurs to raise quick funds (while at the same time gaining national exposure for their brand or product on the show), the reality is that not all the deals that get made on-air come to fruition. Take for example the case of GrubCanada, a Toronto start-up that helps restaurants find take-out customers via the web. They appeared on The Dragons' Den a number of months ago and, as the clip embedded above might have us believe, they secured $200,000 in funding for 50% of their company. Or did they? Last week I connected with GrubCanada founder Ross Lipson who filled me in on his business and what actually transpired when the cameras weren't rolling.
You're from Detroit. What brought you to Toronto?
With the colder climate and the wide variety of restaurants, I felt there would be demand for GrubCanada.com in Toronto.
So you came here specifically to start the business?
Yes.
What was it about Detroit or the US market that you felt wasn't going to work?
Actually, I ran a similar website in the States; we sold the business and saw the demand for it in Canada. I was a first year university student that LOVED ordering delivery, like all university students do. I had a stack of delivery menus on my table.
It was a hassle sorting through the menus, and I hated calling. The busy signals, and the mis-communication was very frustrating, so I thought to myself: there must be a solution. So I started the company. (Note: Lipson asked that I not include the company name in this post.)
So did you have a non-compete clause in the U.S. that prohibited you from launching a similar site or expanding in the U.S.?
Yes.
When did Grubcanada.com launch?
GrubCanada launched in September 2008 in London, Ontario. We have expanded to eight cities across Ontario - Toronto, London, Guelph, St. Catharines, Waterloo, Hamilton, Kingston and Ottawa. We now offer online ordering for over 200 restaurants in Toronto and we are actively signing more.
From which restaurant are you getting the most orders from?
A few restaurants that we have noticed do extremely well, including Spring Rolls, B.B.Ques, Mykonos Mediterranean Grill, Sizzlers Panzerotto Pizza, and Dominos.
You charge a 9% commission per order. Are there any restaurants that have declined to come on board that you really wish you had as customers?
We have received great feedback from all of our restaurants. GrubCanada lists restaurants on the website for free! We post menu information and allow customers to order directly online. We only charge the restaurant for results. The only reason people come to our website is because they are hungry and ready to place an order. They are qualified customers. We give restaurants the opportunity to put their menu in front of these potential customers and take the order.
We bring restaurants additional orders - incremental revenue - and only charge a small percentage, making it a direct return. The first order they receive, they have seen an ROI.
Fair enough. But on the episode of Dragons' Den, one of the chief criticisms laid against you was that restaurants would balk because 9% commissions would cut into their margins. Is it not safe to say that many restaurants have declined to be listed, even for free?
No. We have not had restaurants deny the charge. What aired on the show, was not exactly what took place when taping.
So you're able to sign up every restaurant you approach?
I don't want to say every restaurant, but restaurants love the concept. And we have great feedback from them.
Who do you consider your main competition?
Just-Eat.ca. They just recently launched in Toronto. They have a very similar business model.
Are there any ways you're different (or better) than them?
We work out exclusive specials with our restaurants so we can offer menu items at a discounted price. The idea is that you save money when ordering online at grubcanada.com. We have focused on making our website extremely user-friendly. We also have a larger selection of restaurants! GrubCanada is known to give out free food! We frequently send out emails with free food coupons to our customers!
On Dragons' Den you initially asked for $200,000 for 20% of the company. Why did you choose to take the offer for $200,000 + 1% commission for 50%?
We valued the experience and knowledge Brett Wilson brought to the table; however, the deal fell though after the show. We did not end up partnering.
Why did the deal fall through?
We respectfully declined. After meeting with our partners and advisers, we felt the deal undervalued GrubCanada.
So saying yes on-air wasn't intended to be a binding decision in any way?
No. It goes to a due-diligence period where both parties have the right to back out.
Did Brett back out or did you?
We did.
So you didn't get your funding. How would you rate your overall experience with Dragons' Den?
It was an awesome experience. It was fun! I love talking about GrubCanada, especially with experienced and knowledgeable people.
Have you maintained contact with any Dragons from the show?
Unfortunately not.
How did you feel when Jim Treliving declined to participate in the offer. His decision seemed to sway the rest of the Dragons. Do you think he understood your business?
Yes, he wanted to speak post-show, and see if it may be a conflict of interest.
What do you mean?
He wasn't sure if our system would work with Boston Pizza (Jim is the chairman and owner of Boston Pizza International Inc.).
So he chose not to invest simply because he didn't think your web site would integrate with Boston Pizza's ordering process?
He wasn't sure. He doesn't know much about online food ordering. He wanted to speak with his team. So he stated he could not make the deal at the time of taping; however, he wanted to revisit the opportunity after speaking with his team.
What did you mean when you said the clip that aired wasn't really how it went?
Well, of course what aired happened. However, they taped for 90 minutes and cut the clip down to 7 minutes.
So what did we miss in the other 83 minutes?
There was a lot of talk in between that was not aired. The Dragons loved the concept. The Dragons explained to [Treliving] how it is incremental revenue; they are additional orders and that he would be naive to say he didn't want a piece of the cake. The Dragons had more of a conversation and were on our side when speaking with [Treliving]. He simply didn't know if it would be a conflict of interest, so he stated he could not move forward at this time. But he thought it was a great idea. We went more in-detail with our numbers and revenues. That was not shown as well.
So why didn't more of the Dragons make an offer? Or a better offer?
I'm not sure. Arlene was the only one that said why, and that was because she thought someone else can do the same thing.
She thought there weren't any competitive barriers to entry?
Exactly.
Is she right?
We have very strong relationships with our restaurants and clients. They listen to us. Although you can run a similar operation, it may be difficult to start. A lot of our clients would not be opposed to signing exclusive contracts.
Are most off your relationships exclusive? Or can the same restaurant sign up with another site?
Yes they can sign with another site. We do not have exclusive contracts.
What advice would you give to other entrepreneurs considering appearing on the Dragon's Den?
Do it. It's fun, exciting, and very rare to have the opportunity to speak to such intelligent individuals about your business.
What's next for GrubCanada?
GrubCanada is actively signing more restaurants across Ontario. We hope to have over 300 restaurants in Toronto within the next few months. We will be continuously running aggressive discounts on the website, and giving away FREE FOOD to our customers! We have plans to expand out west in 2010.
How do customers get free food?
Simply sign up and order! We send our customers emails with coupons quite often. Also if you would like, I just made a coupon code: BLOGTO for 10% off any order at any restaurant. It expires January 1st.
Discussion
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Nice interview and great business idea...I wonder about the exclusivity claims though.
Very misleading headline!
I don't think Dragon's Den denies that many of the on-air deals don't go through. They had a great follow-up episode on lately that talked to people who's deals didn't meet the due diligence process, companies that backed out of the offers. The best ones though were the people who have gone on to great success after the Dragon's turned them down.
I had the opportunity to sit down with Arlene a few weeks ago at the CBC Winter launch, and we discussed the 'intricacies' of reality TV based around business proposals.
The long and short - and I can speak to this with some authority, since my company was filmed for Dragon's Den this season - is that just like business, there's an artificial factor to TV that can't be avoided. Everything stated above isn't hidden from the public, but in terms of public consumption they certainly aren't going to go over the legalities of a 'yes deal' with each episode.
Arlene was refreshingly candid about the editing process of the show, and spoke to the entertainment value that the CBC producers are obviously trying to instill. Anyone who has actually worked on a business pitch or proposal on a grand scale would understand how fabricated this type of pitch process really is... especially given that some businesses are clearly selected for their 'wow' or 'it' factor, vs. their profit potential.
I was really glad that the Dragons spent over 1.5 hours actually probing our company... knowing full well that we'd be cut to
"We have very strong relationships with our restaurants"
I just took a quick look at his website and the competition. I found four restaurants available on both websites. I do prefer grubcanada's layout though. Less jarring to the eyes.
What a false representation of Dragon's Den! The author of this article is trying to suggest sorry inform us factually that the Dragon's Den is a farce from the title of the article. And the only proof provided in the article of that is the case of this company that itself refused after the cameras went off to accept the proposal. Come on people, we call cannot be so naiive to think that every deal made in a few minutes on the show will come to fruition a 100%. This is not child's play and in the end its about business and legal contracts. This article is plain stupid if the content is trying to justify the title.
What a strange title for this interview.
Is dragon's den a farce, followed by an article that really had nothing to do with whether or not dragon's den is a farce. They don't hide the fact that all deals are only finalized after lots of due diligance, which only makes sense. And the fact that they cut most of the conversation is simply typical of 100% of so-called reality or non-scripted shows. Do you think they should have a 2 hour episode for each deal? Even the person you interviewed is still pro-dragon.
Seems to me that someone doesn't like dragon's den, and set out to prove that it's a farce, and even when their interview offered no proof of said farce, refused to change the title, because hopefully enough people will just read the title and then tune out.
Is this article a farce? Yes.
HORRIBLE MISLEADING HEADLINE!!!!
SHAME SHAME SHAME!!!!
What is this? The Toronto Sun of blogs now?
Very misleading title indeed. I feel like I just got baited into reading one big pitch for a website.
I've worked with a number of companies that have gone on this show and would suggest only 10% actually take the deal once their lawyers get through the agreements.
Wow, you should certainly change this headline. As previous posters have said it is very misleading and there is nothing in the content of the interview that should lead any reader or the author to suggest that the show is a farce.
At first glance I agree with Cocoa that the headline on this piece is pretty misleading.
That said it makes perfect sense once you actually read the article, like the show the headline was crafted to convey a certain amount of drama where there really isn't any.
Anyone naive enough to believe that business is concluded completely on camera should probably leave the house a bit more. The "Dragons" didn't garner the reputations they have, or the capital to invest in in other people's businesses without performing their due diligence, something that arguably wouldn't make for riveting television. Unless for some reason the thought of watching a group of lawyers and accountants in a windowless room on Bay Street debating the veracity of column x on page 27 of a financial statement keeps you pinned to the couch, in which case I stand corrected.
Between this article and yesterdays regarding the Roncesvalles construction it's been a banner couple of days for misleading headline writing on BlogTO. I can only hope that tomorrow we get something titled "BLAMO!" or "HEARSAY AND CONJECTURE!" but hey I guess it worked because I read both articles, like a sucker. Caveat, I'd also read articles entitled "BLAMO!" and/or "HEARSAY AND CONJECTURE!"
I vote for BLAMO!
Or, if you realy want click-throughs, the next time you do a profile on somone, title it "is (insert name here) Tiger's latest lover to come forward?" And then in the article, briefly mentin that they've never met Tiger.
Just wondering how many comments will it take for Blogto to change the misleading and meaningless headline of this story...
I'm gald the guys are doing well with their business but it's hardly original or exclusive. They just need to do it better than the competition.
Very interesting, but tedious to read. Why didn't you write this as an article instead of a transcript of an interview?
If you just tell me what the guy said I'll take your word for it, I don't need a direct quote and I'd really prefer to read a STORY, not a conversation.
For the record, I came up with the title after I finished the post. First off, I like Dragons' Den and I'm merely asking if the show is a farce - not necessarily suggesting it is. Second, the post is about two things: (a) GrubCanada in general and (b) their experience with Dragons' Den. If you watch the video you're led to the conclusion that they got funding. They didn't. And as the subject of the interview says himself, what aired in the clip isn't exactly what happened on set. Dragons' Den may or may not be a farce, but nowhere in the post do I say the answer to my question is "yes". But given the evidence I certainly think asking the question is not out of line.
Ahhhh, the ol' Fox news IS OBAMA A MUSLIM? shtick: we're not saying he's a Muslim, we're just asking.
That's a very Glenn Beck way of posing a question. :). Also I'm fairly certain that is 0 'evidence' of the show being a farce, so that argument really doesn't go anywhere.
I don't think anyone has a problem with the content of your story, but it's simply a misleading headline that you chose.
Yes - great story. Poor headline.
Something like "The real deal on a Dragon's Den deal" would be more appropriate...
Watched this once and its Donald Trump-we're-proud-assholes attitude didn't appeal to me to watch it ever again. But the one I watched had the women from Ms. Lube down at College and Bathurst asking for money to start a new one. One of the 'judges' (aka 'total prick') freaked out at the name Ms. Lube and told them he was going to sue them for a bajillion dollars. The show took place a couple years ago and Ms. Lube is still running as Ms. Lube. Smart women FTW!!
oh, the headline... I believe this was already covered on a recent (the most recent?) South Park...
pieces? :P
Agreed on the title...also, orderit.ca already exists too. How many of these take-out websites do we need?
if all these readers believe your title was misleading, sorry to say, but its probably misleading!!
also, i would say that due diligence ends a lot of deals, and from watching the show, i would hope the viewers do not presume that handshake means the deal is final. in real life things do not happen so easy. the show also had an entire episode dedicated to deals that do not go through.
Also I'm wondering about this line:
"The Dragons' Den has been one of the CBC's most successful original shows in recent memory."
Is it a CBC property and the BBC show is a British version, or was it a BBC property originally?
I feel like I read somewhere that it was originally a BBC production.
http://www.bbc.co.uk/dragonsden/
From the show page's FAQ:
Is Dragons' Den originally a British show?
Dragons' Den originated in Japan and versions of it have emerged in Britain, Australia, New Zealand, Israel, The Netherlands, Finland, in the Middle East and of course our own here in Canada. More information can be found on Wikipedia.
So why is it a farce? That's exactly how I would expect it to go.
Is The Dragons' Den a Farce?
Is the flu shot safe?
Is Obama a socialist?
Are the Liberals jew haters?
Did the moon landing really happen?
Agreed the title is misleading and the with opening blurb implies the entrepreneurs get the shafted in the end.
It should not surprise anyone they still have time to mull over the deal with their (legal) on either side.
I'd be suspicious of the author trying to discredit the show but I can't imagine why. Other than that it indeed is a note worthy article.
Great post...I think Dragon's Dean is basically great for PR. In terms of venture money their valuations are terrible. If I had a startup I'd try to get on the show just to promote my business.
i have a few comments.
re: the title & the article.
Anyone who's a fan of the show (they even mention this in many episodes)knows that the deals made on the show aren't necessary seen all the way through. The dragons are rich by making smart clever investments, not throwing money away. The acceptance of a the deal aired shows the basis of the agreement, but the process of due diligence is necessary in business to make sure both parties are protected.
re: GrubCanada.com
Immediately after watching the episode, I went to browse the site to see what they have to offer. Perhaps it was the Dragon's Den effect, but the site slowed slowy and it didn't work like a "good website" should work. Their concept is great and I wish them success, but the flaws pointed out by the Dragons are very valid, and my first experience with that site did not have me wanting more.
re: Ms. Lube
The person that was going to sue them for bajillions was Jim Treliving. He owns Mr. Lube. You can see why he was a little upset at the whole brand and trademark issue. Sure Kevin, Jim or other dragons can come off as dicks, but I'm sure they play it up for TV. You wouldn't watch a show if all they do is unenthusiastically say "I'm Out"
Broken record time... title is absolutely misleading.
Anyone who watches the show knows that business DUE DILIGENCE is on the forefront of any deal brokered on Dragon's Den. We know that despite a handshake on air, doesn't necessarily mean it's a done deal behind the scenes.
As one commentor stated, special episodes were aired that showed many deals that fell through cuzza due diligence, and it wasn't always the Dragons that did it.
And here I thought the article was about the crazies that show up once in a while... y'know the ones with the really whacked out ideas that are so out there, they have to be actors... like that one guy on the last ep who was pitching that 1 billion dollar phallic hotel thing. He can't be a real businessman.
The folks at StartUpNorth had written several blog posts about Dragon's Den back in summer 2007; the following link has links to a couple notable ones:
http://www.startupnorth.ca/2007/10/01/tonight-is-the-night-dragons-den-season-2-episode-1/
They are pretty bearish about DD being less of a valid incubator for startups for some of the reasons implied in this article and others. A good read for anyone interested in bringing their startup to DD.
Its TELEVISION. ITS ENTERTAINMENT. ITS A GAME SHOW!!!!
Do all of the people who win prizes on the Price is Right take the prize home??? Not unless they can pay they taxes on it.
Like all business deals there's a handshake of interest to start it off. If it still looks good after all of the meetings the deal is still on, if not the deal is off...
I know this has been said several times now... but I just had to pipe in! Anyone who watches the show regularly knows about Due Diligence, and knows that all of the deals don't make it through. Because the show is so open about this fact, I would say that no, Dragon's Den is in no way a farce. Maybe if this aspect of the deals was kept HIDDEN, then yes, I might say something is up.... but it's not hidden, it's actually quite in the open. Nothing farce-like about that at all!
Yikes....
That headline.
Is this headline a Farce?
tim,
as a writer you look very foolish with that misleading and just plain dumb headline. and that it appears that you don't get that is the real farce.
Orderit.ca is different. GrubCanada.com charges no extra fees. A lot of there restaurants offer free delivery! Where as the other company charges up to 7 dollars for delivery
What website linked to blogto that you people are coming from?
I can hardly buy that this story about this crappy CBC show is more comment-worthy than the article from a few days ago about Igor Kenk only getting 2 years for stealing 5,000 bikes.
Seriously. I'm curious, what site linked to this story? I don't buy that this many people care about Dragons Den.
I'm just a blogto reader, and i've only seen Dragon's Den 2 or 3 times...
That said, clearly we shouldn't underestimate the popularity of cbc apparently :)
Just want to throw my hat in the ring with the others who found the headline on the article misleading and not up to the quality I'd expect from this website.
Is BlogTo a Farce?
For the record, I came up with the title after I finished the post. First off, I like BlogTO and I'm merely asking if the blog is a farce - not necessarily suggesting it is. Second, the blog is about two things: (a) Toronto in general and (b) their experience with Toronto. Poor writing and editing often leave you with the feeling that you are reading a random torontonians poorly formed opinion.
BlogTO may or may not be a farce, but nowhere in my post do I say the answer to my question is "yes". But given the evidence I certainly think asking the question is not out of line.
The show is a farce in that what we see on it is not always be the real deal. Website bro backed out and so "the deal" we all believed to have happened didn't actually happen. Not as juicy/scandalous as we'd/the author'd like it to be, maybe. Not wrong, just every-so-slightly sensationalistic.
Hehe... well, cut to
What no one here is talking about is the fact that you can never get a good, honest accounting from anyone who has been on DD of the experience, because participants sign a mammoth non-disclosure package and a set of waivers that forbid them, in perpetuity, from slagging the show, or the CBC, in future. So anyone interviewed after appearing is dancing delicately around those issues. They can talk about it, but must be very mindful of the fact that lawyers could come a callin' if they breach those waivers. I know this from having talked to participants who have been on the show, who, of course, can never go on the record with their complaints about how they were treated.
Your title is misleading. You are trying to make a story out of nothing.
Igor Kenk got 30 months for stealing 10 bikes, not 5000, and for minor drug possession. When police raided his various bat caves, they seized around 3000 bikes, but they never charged him with stealing them, because that would have required an insane and totally pointless and likely impossible amount of investigative work to buttress said charges. In exchange for not charging him with a civil suit, Kenk agreed to allow the police to confiscate the stolen bikes permanently.
The part about this sordid tale that angers me the most is that this guy is not even a Canadian citizen. He's here as a guest, more or less, and this is how he treats our country? Apparently, he won't be deported, but he damn well should be.
This is a story about nothing, just as in real life not every deal works out. Anybody who watches the show knows that not every deal that is made on air is successful in getting a signed deal with a Dragon. They do follow up on some of the pitches that were successful and the ones that were not.
You don't respect the entrepreneurial spirit and personally i think the concept is quite innovative. You cannot fault him for recognizing a great opportunity and seizing it. I saw the episode - he appears to be too smart to leave himself vulnerable to those kind of accusations.
that title needs to go... embarrassing frankly very misleading.
d'oh, read wrong. congrats on the tv dealy.
re: The headline: it's fine. It asks a question you, the reader, are expected to answer for yourself by reading the article. It's blunt and is black and white in the sense that there are on-air happenings and off-air happenings. Just because it didn't end up being a 'farce' and your whetted appetites for a juicy expose didn't exactly come to pass, doesn't mean you were misled. Think for yourselves ya big babies.
Actually Rob, the disclosure package isn't nearly as extensive as you'd imagine... mainly geared towards stopping any 'spoilers' from getting out. I found it VERY reasonable for a TV NDA.
This was a pretty interesting view into Grubstreet and its experience in DD, so I really enjoyed the article. Like others I think the headline is misleading, sensationalist, irrelevant and just plain, well, grubby. The idiocy of "I'm just raising the question!" gambit is, I would have thought, journalism ethics 101. And far from hiding the fact that there's a subsequent due diligence process, they refer to it all the time and, in fact, have featured it right on the show. But once you get past it the whorish headline, and the bad taste in your mouth that it leaves, the article is a nice addition to the site.
Dragon's Den isn't a CBC original; far from it. The concept is owned by Sony and licensed around the world. I think the main reason for it's success is that we feel we are sitting in a sort of star chamber, where great minds are at work. This may not be true, but the Dragons are certainly virtuosos in their field for the most part, and they know what they are doing. It's not purely a business show, and it's not pure entertainment either; we are entertained to learn how some of the most successful and creative people think.
After an on-air "deal" is made, both parties must enter into a period of due diligence. All knowable facts can not be presented on the show, and things can change. Any investor or entrepreneur has the right to ask more questions and do their own investigations before signing a deal. The TV pitch is just the first step in a process which may or may not reach fruition. Regardless of how much we don't see, the few minutes we do see is very entertaining.
Good Christ, Canadian television is awful.
The title definitely is peculiar. There are some examples of the various DD investors pulling out during due diligence without particularly good reason. In this case however, the entrepreneurs declined. Perhaps you need to write another article if you want to do justice to the headline and just call this one "Interview With Some Online Ordering Guys Who Happened To Have Been on CBC and Wanted a Free Plug on Blog.To"
I hope more marketing experts exert efforts like this to help people with great ideas like the Shark Tank TV Show (http://www.SharkTankTVShow.com) that provide financial assistance and expert's advice to small entrepreneurs, which is great for the economy.