Piers Linney, Dragons' Den: Failure is fine, but don't blow up and take people down
10 min read
15 February 2015
Dragons' Den's Piers Linney has a varied background – as a qualified solicitor with a venture capital focus, he eventually immersed himself into a series of businesses in founding, advisory and investment positions, before co-founding cloud technology firm Outsourcery.
When Real Business sat down to talk to the Dragon at his London office near Tottenham Court Road, he stressed his passion for technology. “I’m very much interested in the disruptive power of technology and the internet, the convergence of technology and communications and the consumerisation of technology. We’re all using apps, smartphones, websites and cloud solutions in our private life, but in the business world you don’t always have access to those things.”
That’s where Outsourcery comes in. The company specialises in supporting enterprise cloud communications for around 400 businesses and organisations, which includes a partnership with the government. According to Linney, it’s the “movement of that consumer experience into the workplace – that’s what we do at Outsourcery.”
With entrepreneurs aplenty hoping to secure cash from the Dragons, it would be seemingly all too easy to become jaded, so Linney revealed what it is he looks for in projects seeking funding: “The individual and their ability to make it happen, something that interests me personally, and the management team and whether I feel I can work with them and add value.”
One company he felt that had all of those things was Lost My Name, a book publishing startup with a technology core, which was founded by fathers who wanted to make children’s books have a personal touch. “It was the highest ever valuation in Dragons’ Den but it’s a dynamic publishing business with content for young children and it’s doing really well. With computer technology you can go from zero to hero very quickly, which you struggle to do in the traditional world of physical products and physical distribution and that’s what interests me.
“I’m a Nesta trustee we’re interested in innovation, technology, the creative economy, art and where those things interact. Lost My Name is an interesting model because it’s publishing, so there’s an art form both in the written content and beauty in the way they’re drawn, then that artistic ingredient combined with software creates a lean on-demand publishing business with bespoke content for a unique product.”
He explained it’s about finding the right balance between a good idea and a bad idea, and a good idea can often be one where the average person will think it will never work – like renting out a mattress on Airbnb, for example.
Given Linney’s zest for technology, especially in the workplace, he noted that some traditional companies can get stuck as we experience a shift in the dynamics of the industry and its developments. This could include staff using Dropbox and Skype in the office to make their work more efficient, but that in turn puts data at risk and the company’s IT department will struggle to track where IP is going.
“What we’re trying to do is bring controlled security in house with solutions that are good as consumer solutions – for me that’s the most exciting bit. IT and communications are going to be completely reimagined over the next decade,” Linney said.
“Both are multi-billion dollar industries and have grown up selling physical stuff from warehouse to customer. The cloud model removes that physical supply chain so you’re disrupting this enormous industry. Typically there’s confusion about what’s going to be the future, how it’s going to work, and a lot of the biggies like IBM and Oracle in corporate ICT struggle to move from the current innovation curve to the new one.”
And for Linney, startups have the power to support the shift, as he explains on the next page, as well as why failure is acceptable as long as you don’t consistently take people down with you.</p >
“I’m a big believer in startups. For larger companies to embrace these technologies, what they have to look for is innovative new partners and suppliers – that’s what’s driving opportunity for a lot of startups and small companies. There’s a lot of smaller companies developing applications that give a huge amount of value. Big companies will increasingly have to partner with smaller innovative businesses to access the technology to get a competitive advantage,” Linney offered.
On the other hand, he said SMEs, especially the micro ones, should not own infrastructure and should also embrace the cloud in order to ease cash flow and reduce overheads.
“When I set up one of my first businesses, I had people turning up to my flat with servers and computers all around the place. That world is gone – even in just 15 years,” he said.
“There is absolutely no reason for a company of almost any size to own loads of infrastructure. You might need a tablet and smartphones, but there’s no need to use a data centre where someone is looking after your servers for you. What kills small companies is cash flow and starvation of working capital – infrastructure, including office space, is a fixed cost, so the more you can remove fixed cost from any business, especially small businesses, will reduce risk.”
Linney detailed that while the company has offices in London, Manchester and Leicester, there’s a very relaxed attitude when it comes to working remotely from home and so forth – unsurprising given the nature of the business.
“Maybe have less reliance on premises because you can work from anywhere and be just as connected, then you can worry about fixed costs which are the people. The holy grail for any business is to have 100 per cent variables,” he advised.
The topic of failure came up during our discussion, notably the difference in how it’s perceived in the UK and US. Linney said: “I think most entrepreneurs who have succeeded have had trials and tribulations along the way, but it just makes you stronger – a lot of what you learn along the way lets you become a better business leader.”
He drew upon an encounter on Dragons’ Den with Vini & Bal, an Indian curry venture that was “given a bashing” for owning a “flailing bakery business.” Linney’s advice was, fix it or sell it, but focus on the new one, and regardless of the struggle with the existing cookery company, he invested in their pitch.
“In America people prefer failure. If you turn up over there with a great idea but haven’t had an experience as an entrepreneur or with failure, you’d find it harder, whereas the Brits need to get over that. There’s a mantra now in the US about failing fast – get a minimum viable product onto market, try it and if it doesn’t work, move onto the next thing, but it doesn’t fit into the way of thinking here,” Linney said.
Closing on what he’s learned from past experiences and what other entrepreneurs can take away from his history, he said: “I’ve invested in things that have failed. I’ve been involved in businesses where we tried things, it didn’t work out, and we paid everyone off and shut it down which is fine.
“Failure is okay, but it doesn’t mean you can raise loads of money to blow up every couple of years and take people down with you – that’s not acceptable. You’ll soon find you won’t be able to raise anything.
“I’ve learned to cut losses faster. Any entrepreneur, when first experiencing a business, can sometimes hang onto something when you know in your heart of hearts it’s probably not going to work out, and sometimes it’s better to cut losses. I’ve been involved in businesses as an investor where teams want more money to fix things, and it can be a tough decision to make, but I think the key is don’t be afraid to move on.”</p >