Cleaning up
British entrepreneur James Dyson offers just one lesson for inventors seeking to emulate his achievements: commercialise your own inventions. His success designing, developing and selling the revolutionary line of Dyson vacuum cleaners was hard won, but he has no regrets. James C. Tuckerman caught up with Dyson in Sydney for a chat about creativity, commercialisation and confounding the critics.
James, tell me about your first experience developing and commercialising a product.
Now the first one was a high-speed landing craft. I didn’t invent it (it was invented by an industrialist who became a friend), but I engineered and designed it and built a business making and selling it. It was flat bottomed with a particular shape so it ran across a layer of bubbles reducing friction and resistance so you could go very fast. You could carry two jeeps on it and land right on the beach. So I designed and engineered this, put it into production and began to sell it. That was 1970. It took me nine months to sell the first one but by the second year we were doing 200 boats per year, so it became a very successful business.
How many years were there between that and having your ‘a-ha’ moment with the Dyson vacuum cleaner?
Not too many. I finished with that in 1975 and started on the vacuum cleaner in 1979. In the interim I did a wheelbarrow with a big ball on the front.
I’ve heard about that. I heard that you faced a challenge protecting it.
Yes, that was my first patent battle. But you face obstacles innovating and bringing out something different anyway. Our sea truck didn’t look like a boat so people didn’t buy it … because it didn’t look like a boat. We had to really convince them that the technology worked before they overcame their scruples about it being so very different. And the same with the Ball Barrow – the Ball Barrow looks very different. Retailers wouldn’t take it. They giggled at the sight of it. I had to start selling it through little ads in the newspaper, but eventually I built up a reasonable demand for it.
But you couldn’t protect it.
Well we had a patent battle in America. They even pinched the name. I’d been to see a company to try and license the thing and instead of licensing it, they went and copied it. The colours, the name, everything. But that happens quite a lot.
Moving onto the Dyson vacuum cleaner, it was 1979 when you first came up with the idea. How long was it until your first product made it onto the shelf?
It took me four and a half years and 5,127 prototypes to develop the technology. So when I’d done it I was in debt up to my eyeballs because I had been borrowing money from the bank. And banks don’t really like inventors. Rather, they like inventors but they don’t like lending to inventors. So I had to try and licence the technology. I tried in Europe, where they all had a good look at it but, for whatever reason, didn’t take it on. Now I realise that they’re not interested in new technology.
Then an American company became interested in it and we licensed it to this American company, who then cancelled the agreement after I handed over all the technology and drawings. Unbeknown to me, they proceeded to copy it. So that ended up in a five year lawsuit. By the time that was over, we were into the early nineties. I also had a Japanese licensor making a pink version of the product.
I had had enough of licensing and wanted to make the vacuum cleaner myself. So I decided to set up and make it, which meant borrowing more money (about a million pounds). I tried to borrow it from venture capitalists and merchant banks, the sort of people who ought to lend money for that sort of venture. I could prove its technical side and to some degree its commercial success in the United States (through the plagiarist) and in Japan, but they wouldn’t give me the money. I think there were two reasons for this. Firstly, they don’t like manufacturing startups and secondly, they don’t like engineers.
Do you think that’s changed now?
I shouldn’t think so for one minute.
Have you since raised any private capital or has it largely just been debt?
No, I borrowed money from Lloyds Bank, a rather large amount which I paid back quite quickly. We’ve been cash-positive ever since, so I haven’t really had to borrow money.
So you’re the sole owner?
Yes, because no one else would invest in it. That was the point. I’m very grateful for that now. I don’t hold any grudges against those merchant banks that wouldn’t lend me money. In fact, I’ve met one or two of them subsequently.
Did they express their regret?
I think they tried not to.
Have you ever thought of listing on a stock exchange?
No, for a number of reasons. We generate cash so we have no particular need for vast funds. We’re not the sort of company that takes companies over. We’re in the business of inventing and developing technology, not buying companies for profit. We generate things ourselves. The desire to become enormous isn’t there. The desire to grow by bringing out wonderful products is there.
It’s quite a normal thing for entrepreneurs – I’d say 99 percent of them in England – to sell out or sell part of it to get a nest egg. I actually like having my future wealth tied up in the business. I’m as dependant on it as anyone else who works in it. I have no particular urge to sell shares or have a nest egg. Also, if we’re not listed we don’t have to worry about investors; we just have to worry about our next product and the product after that. Our only concern is the product and that’s all I have to worry about.
You can probably get things done faster, too.
Well probably, and we can take a much longer view of things. If we want to spend a huge amount on R&D, take a hit this year or advertise less this year, we can do that. It’s great to be able to think really long-term.
A lot of entrepreneurs and technology developers seem to be motivated by the process of creation rather than the process of wealth creation. Would you say that’s true in your case?
Yes, we are. For the last 35 years I’ve spent my time developing products and developing technology. That’s what I love doing. Sometimes it made money, sometimes it didn’t.
It’s a bit risky in the beginning. How much did you end up borrowing, and over how long, to get your own business into a cash flow positive position?
I was in debt for years.
A decade?
Yeah, more like 15 years. But I borrowed a lot of money when I was a student and I’ve always had big overdrafts. It’s just that this was a bigger overdraft. I didn’t have any money so that’s all I could do. And no one would invest in it so that was the only option left.
I’m sure our readers are wondering about two things. Firstly, how did you manage the stress and secondly, how did you manage the repayments at that level of debt over such an extended period of time?
Well, you just manage it. You scrape the money together to pay the interest or whatever it is you have to do. I was fortunate because in the period between developing it and going into production I was able to get one or two licensees around the world. So besides fighting a financially draining lawsuit, I was also getting some money coming back in from license fees and engineering design work, which kept our head above water. We lived very frugally and hardly had any employees and struggled through those years. But they were fun. Of course it was stressful. There were ups and downs and times when we made exciting technical breakthroughs, and times when we were shafted by people, which was a bit depressing. But it was fun.
I gather that you have no regrets, but is there anything that you would change if you had the chance to do it again?
Of course, I would have been much more intelligent about it. Mistakes and terrible experiences teach you things, so they’re interesting. Life should be full of them. If everything went well all the time or easily or quickly, you wouldn’t learn anything.
If you were to look back and say, “That was the dumbest thing I ever did James,” and slap your head vigorously, is there anything that instantly comes to mind?
Absolutely. I hate giving advice, but the only advice I ever give to other inventors is, if you’ve got a good invention, commercialise it yourself. The biggest mistake I made was to try and license our technology to other people. I thought it was the easy way out, but it absolutely isn’t.
On a personal level, have you managed to balance a private life with everything that has happened professionally?
Yes, I’m married with three children and they were all brought up while this was going on, taking part in the highs and the lows and helping me in the workshop. They were very much part of it and still feel very much part of it, although they’re all off doing their own thing now.
It seems as though family is as integral to the successes as just about any other factor, because if they’re doubting you…
They’re always doubting me, I don’t blame them. But no, no, they were right behind me and my wife is an artist and absolutely understands the need to have creative projects and take risks and the need to believe, in spite of the putdowns and the debt and the favours.
Where did you acquire this tolerance for risk, or was it simply a passion for wanting to see the spoils of your inventive ideas reach people?
I’m not sure that I always see it as taking a risk. If you invent something and make it work, you have a belief that other people think its good as well. You ask a few friends and if they agree, then you’re pretty certain that you have some sort of success on your hands. So it doesn’t always seem like a big risk. It’s just something that you’re driven to do. I suppose that if you’re born without any money and you lose a parent, those sorts of risks are quite small. And I can make things with my hands so I know that if I go bankrupt I can always make chairs or sofas or something – you can always make money, or a living.
Has your inventive nature influenced the way you run the business now?
Probably. I mean, I don’t really run it. I’m obviously the shareholder, but the management side of it is run by people far better at that than I am. So I get on with the R&D and developing new products.
Are you still working as many hours as you used to?
Probably more, because there’s more to do. But I hope that what we make is original and that we do things in an original way. I’ve never really thought of it as a business. I’ve thought of it as an operation to design, develop and engineer products. I don’t see it as a money making machine. Come to our office and you’ll see that it’s not like a conventional business at all. There are no ties and suits and there never have been. It looks more like a university campus than a business.
How do you find managers who embrace that sort of culture and whom you know you can trust?
There are a lot of very good people around. Everybody’s very young. A policy to recruit graduates and allow them to do things in a different way, coming without the baggage of experience, has been very much part of my philosophy. We’re trying to do things in new and different ways. The way we look after our customers is quite refreshing. Young people who haven’t been trained somewhere else, who aren’t experts, are much more able to do that.
How do you find quality managers?
It’s difficult. It’s one of the most difficult things about business. And going to head-hunters isn’t always the right way. Particularly when you move into a new country and start from scratch, like Japan for example. The obvious thing is to try and get one of the new wave of Japanese entrepreneurs rather than the old guard. In the end we found it very difficult, so I pinched a Scottish diplomat out of the British Embassy and he’s turned out to be absolutely brilliant because the Japanese store buyers were left wondering what a Scottish diplomat was doing trying to sell them a vacuum cleaner. They were intrigued. A Japanese person would find it much harder to get in at the top. So we’ve done some odd things along the way. But it’s generally finding young people with the right spirit and not going for older experienced people.
When you hear that someone needs to recruit somebody, one of their first comments is, “Oh, you need to get someone with about six years experience, it’s a lot easier and we’ll be up and running a lot more quickly.” At that point I stop them and remind them that we employed them as a graduate, and they were up and running very quickly. Almost everybody that’s with us came to us as a graduate.
What’s the greatest advice that you’ve ever received, and is there any mantra that you’ve lived by?
I’m sure that I’ve been given some wonderful advice, but I’ve never taken any notice and I can’t remember any of it. I don’t give advice because I don’t think that you can. What worked yesterday or what’s working today, won’t work tomorrow, guaranteed. It’s logical that, if a piece of advice is sound, then that’s probably what everyone else is doing. If you want to succeed you need to do the opposite – something very different – to succeed. The only bit of advice I give is don’t license your product, go out and make it yourself.
You seem very relaxed. Has it always been that way, or was there a moment in the evolution of the business where you could go, “(sigh) Everything’s all working out the way I wanted it to.”
No, because it never does. There are always problems and I actually quite enjoy the problems. The engineer in me likes going in every day and solving problems. And I suppose that when there are business problems I quite enjoy solving them, however big or awful they are. But I’m quite relaxed. I sleep at night.
What about when the US company was copying your products…
Yes, even then. I wouldn’t call it an enjoyable experience. It was very unpleasant, but it was a necessary fight. As an engineer, you’ve never made it. There are always problems to solve. My life really is one of going in, solving problems and moving straight onto the next problem. There’s no time to sit back and have a glass of champagne. But I don’t mind that. If I had time to relax, I’d be bored.
Are you happy with your suite of patents?
Holding a patent doesn’t mean that someone can’t copy it. It merely means that you have a good reason to take them to court. It’s a system used much more by big companies that can afford the enormous cost involved in renewing patents – every patent in every country, every year.
Individual inventors and small businesses can’t afford to file and maintain the patent because of the renewal fee, let alone fight the legal action (which can run into millions). Sadly, it’s a very anti-competitive system.
How do you deal with it? Do you find yourself constantly defending your IP all over the globe? Is China a big threat?
Yes. There’s not much point to suing them in China, which is something China has to address quickly or the rest of the world is going to get very upset. You have to sue the Chinese in every country they sell in. It’s a shame that the system is geared for big companies and not small companies.
I actually think that a patent renewal fee is a fundamental breach of human rights. A patent is described as a work of art by the patent office and in order to renew your rights to it every year you have to pay patent offices in every country. For example, it’s $4,000 for every patent, every year in Germany. If you don’t pay that you lose your rights to your work of art, which I think is a fundamental infringement of human rights. Your work of art is yours and no one else can take it from you.
I’ve tried two cases in front of the European Court for Human Rights but they were both rejected on the basis that patent renewal fees were completely reasonable. You can’t appeal it, so I’m now trying to think of another way to fight it. The patent offices in each country make huge amounts of money. It’s a tax on innovation.
