Thanks to RBC Wealth Management, I had the opportunity to hear David Chilton speak in person for the first time in my life. I’ve heard of him, heard others speak of him, read a few of his interviews here and there, but to hear him speak in person was on another level altogether. Here’s my biggest takeaway from his short 50 minute lecture of sorts: keep it simple – great executions trump great ideas.

 

Reminiscing his time as a Dragon, Chilton brought up his most memorable team on Dragons Den. Dubbed the “Holiday Rejects”, Chris Cheng, Adil Hooda and Kyle Fitzgerald came to Dragons Den from Calgary, Alberta asking for $30,000 for 30% in their company.

 

What do they do? They sell ugly Christmas sweaters.

 

The idea wasn’t great. It wasn’t refreshing nor did it seem to catch anyone’s eye. But unbeknown to the Dragons, these people could almost be deemed subject matter experts at exploiting distribution channels. They understood how the sweaters were sold. They knew how to get them on shelves, and most importantly, they knew how to get buyer to take the sweaters off the shelves.

 

The Dragons, however, were more interested in valuations. They were, after all, successful entrepreneurs and venture capitalists in their own right and perhaps owed their success to perfecting the art of valuation.

 

The Holiday Rejects got rejected by the Dragons but after the show was over, Chilton lent them an unspecified amount of money as a loan which he wasn’t expecting on getting back. A few months later, he got back his principal, interest and found out that the Holiday Rejects made much more than what the other Dragons had anticipated.

 

A few months after, Chilton got a call from the Holiday Rejects again. This time they were asking for him to help fund their next project: a zombie half marathon – some sort of race where they got participants to sign up to run and hired “zombies” to scare them. Without thinking twice, Chilton wired them the money. Once again, the Holiday Rejects knew their distribution systems inside and out and the zombie half marathon was a huge success.

 

Here’s the bottom-line: many Dragons who appear on the show were great at projections. They knew their discount rates, the optimal weighted average cost of capital and the many factors that could influence these projections. But as Chilton said on Monday night: few would know that that these projections ended up being inaccurate. Instead of projecting the potential cash flows that would end up being off-side anyway, why not take the time to understand what it costs to get products on the shelf and what it takes to get people to take it off the shelf and to the counter? After all, there’s much less ambiguity and more likely to work. Such is the way of the Wealthy Barber: Keep it Simple – great executions trump great ideas.

 

 

Photo of the Wealthy Barber and I after he autographed my book.