Sir James Dyson: Sucking up the cash

23:39It took five years. He was cross-examined for days by lawyers trying to trip him up. He says just the use of the wrong word at this point could have cost him the case and the validity of his patent and that's the very valuable thing. But his wife good old Deidre encouraged him to fight it through and they never did manage to trip him up in court. In 1992, Amway settled. He received$1 million. Now, most of that went back to legal fees, but at least he'd halted the copy of his product. And meanwhile, the company that licensed his designs in the US had launched their bagless vacuum. So he was finally getting a bit of money from that.

24:15Let's just take another moment to hear it for Deirdre because she encouraged him to fight on at this point. So I praise hats off to Deirdre once again. Things are finally looking up for James Dyson, but he realised he needed to change his whole business plan, his model and manufacture the bagless vacuums himself. So in 1991, he launched a company to manufacture them and he calls it, huge leap of imagination here, Dyson. Why mess with a good brand name? But yet again, he needs money and he can't get any venture capital funding. So he goes to the bank to take out yet another loan. And at first, the bank manager is not sure.

24:49But then the bank manager consults his wife, who thought the bagless vacuum cleaner was a great idea. So the bank manager was convinced and gave Dyson the loan. I love that credit process they go through at that bank. Yeah. So Dyson still had to put up the family home as collateral, much like Jim Ratcliffe, one of our other billionaires. And, you know, this is a major bet in your 40s, especially if you've got kids and a wife. No kidding. You know, putting your house on the line when you're 40 is incredible roll of the dice. In fact, it feels a bit like the last roll of the dice. So he's got a team of four working out of his own home.

25:20Remember, he sold off his office to raise money. And in 1992, Dyson is now 45. In fact, on his 45th birthday, they released the first fully operational bagless vacuum built by Dyson. And it was called the Duo Cyclone or DC01. Do you remember this vacuum cleaner at all? I remember the colour scheme. It was kind of grey and yellow. It was quite different looking than anything else. How old would I have been then? I would have been 22. So vacuum cleaners weren't my top priority at that age. No. In fact, I don't think they're the priority of any 22-year-old. The one thing I will say is that when I looked up pictures of this vacuum cleaner, it's got this clear bin so you could see all the dirt that accumulated.

26:02That's kind of fascinating, seeing what's inside the vacuum cleaner. If you hoover up an earring or a key or something like that, you can look right through it and say, there it is. Apparently, Dyson actually insisted on this design quirk because they've done market research saying that consumers will be put off by seeing all the dirt in their own home. But him and his team apparently enjoyed seeing it so much that they thought customers would too. I like to examine my own filth. Yeah, yeah. Say goodbye to it before you toss it out of your home one more time. So he starts selling it himself? Yeah, he actually makes personal trips to retailers to convince him to carry his new vacuum.

26:38And he used interesting techniques, which actually became quite standard in the vacuum world, like making a bit of a mess on someone's carpet, but then cleaning up right in front of them, convincing them that it actually worked. Impressed, but not convinced, one catalogue executive asked why people would buy his machine rather than famous brands like Hoover and Vax. Dyson replied that the exec's catalogue was boring. And after a brief silence, the guy agreed to sell the Dyson. Now, this is the stuff of legend, I think. Yeah, I mean, it's kind of interesting that his answer was that the exec's catalogue was just boring, because I think if you're selling what's essentially a technological product, But a lot of the appeal comes from the fact that it's cool.

27:14You know, like I think of those old iMac computers, the kind of brightly coloured ones. And, you know, they were considered kind of cool and sexy and futuristic. But computers are cool and sexy and futuristic. Vacuum cleaners, not so much. Hey, if you need to vacuum all day, you'd want to look at the vacuum version of an iMac too. So in 1993, the Dyson Dual Cyclone vacuum cleaner goes on sale to the public. It was nearly£200,£199. That was about twice what a cheap vacuum cleaner would cost. But this was a top of the range vacuum cleaner. And don't forget that Dyson had learned his lesson about underpricing his product with the ball barrow.

27:48I do remember people were saying having a Dyson was a bit of a status quo. Oh, gosh, you know, Dyson, you know. Moving up in the world, are we? Exactly. Eventually, all this persistence by Dyson pays off. 18 months after it launched, all the mainstream chains were stocking it. They cornered 20 % of the vacuum cleaner market and a turnover of£10 million. So he's got to be a millionaire by now. Well, millions were generated in sales of the bagless vacuum cleaner. But it wasn't until 1995 after he'd paid back the bank loan, the manufacturing costs, and finally paid off that original overdraft he took out as a newlywed that James Dyson was officially a millionaire.

28:27He's 48 years old. He's nowhere near a billion, but he is financially stable. So he's got a long way to go to get to that billion. But I think he now believes he's going to make it.

29:09We'll see you next week. Now purchase Mori at 50 % off while it lasts. And take a quiz for a custom hair care recommendation at moerie.com. Results can vary. Mori is not a substitute for medical advice. See website for more. In business, they say you can have better, cheaper, or faster, but you only get to pick two. What if you could have all three at the same time? That's exactly what Cohere, Thomson Reuters, and Specialized Bikes have since they upgraded to the next generation of the cloud. Oracle Cloud Infrastructure. OCI is the blazing fast platform for your infrastructure, database, application development, and AI needs, where you can run any workload in a high availability, consistently high performance environment, and spend less than you would with other clouds.

29:54How is it faster? OCI's block storage gives you more operations per second. Cheaper? OCI costs up to 50 % less for computing, 70 % less for storage, and 80 % less for networking. Better? In test after test, OCI customers report lower latency and higher bandwidth versus other clouds. This is the cloud built for AI and all your biggest workloads. Right now, with zero commitment, try OCI for free. Head to oracle.com slash strategic. That's oracle.com slash strategic. Hey, let's talk about your expense report. I didn't submit an expense report. You will. Custom saddles and dog training services are not within policy.

30:36What are you talking about? SAP Concur uses advanced AI to audit and automatically detect out-of-policy expenses. It's the breakthrough I needed to focus more on our future. These are my future expenses? Yes, and self-defense classes are out-of-policy. I'll need self-defense classes? You will. For what? It's a big dog. SAP Concur helps your business move forward faster. Learn more at concur.com. Mint is still$15 a month for premium wireless. And if you haven't made the switch yet, here are 15 reasons why you should. One, it's$15 a month. Two, seriously, it's$15 a month. Three, no big contracts.

31:12Four, I use it. Five, my mom uses it. Are you playing me off? That's what's happening, right? Okay. Give it a try at mintmobile.com slash switch. A upfront payment of$45 per three-month plan,$15 per month equivalent required. New customer offer first three months only. Then full price plan options available. Taxes and fees extra. See mintmobile.com. Eight-year-old James Dyson is a millionaire, and a ruthless focus on expansion is set to take him all the way to a billion. He starts by building his own factory near his home in the English countryside and he works on improving the designs. He reduces the weight, he increases the power.

31:44And Dyson starts releasing new models of vacuum cleaners with new designs to serve kind of different customers. Soon there was a small cylindrical Dyson for the 50 % of the UK market who preferred smaller vacuums and to appeal to the European market where people mostly use cylinder vacuums, think products like Henry Hoover's. that's as opposed to upright vacuums, which is what the Dyson Duo Cyclone had been modelled on. And these expansion plans are starting to work. They triple their production output year on year from 1993 onwards. And Dyson opens offices across Europe, in France, Germany, Spain, the Benelux countries, Italy.

32:18And while he was also launching in Japan and Australia, he really had eyes on the big prize, the US market. So the US was the biggest market for vacuum cleaners. Americans were buying nearly 18 million vacuums a year. But Dyson had been in court fighting yet another legal battle against the US giant Hoover. In 1999, they'd launched their very own bagless vacuum called the Triple Vortex. And Dyson accused Hoover of infringing his patent. And again, he won his case. The court ordered Hoover to stop selling the Triple Vortex. Hoover appealed but lost. And in 2002, they had to pay a total of$6 million in compensation and costs, which was one of the highest settlements for a patent case at that time.

33:00So Dyson have gone from newcomer to taking on the biggest names in vacuum cleaning, the biggest in fact in Hoover, and winning. Now, at the same time, the company that Dyson had been licensing his designs to in America went bankrupt. So all this meant that the way was clear for Dyson to launch Dyson the brand stateside. After a successful trial run, the US chain Best Buy, you'll see their Best Buys all across America, they agreed to stock his product right across the country. but there was one condition that Dyson ran a national advertising campaign. And this may be the moment that makes James Dyson so famous and perhaps the reason we're talking about him today because the creative company Dyson employed to make the ad suggested that Dyson himself should be in the ad.

33:44Now he was a great salesman as we've seen. He knew the product better than anyone so he agreed. I mean do you think this is just ego or you know do you think he really was such a brilliant salesman that an advertising team said, you should be the face. I think there's something about Dyson. He's posh. Yes, he's very, he sounds very posh. You know, he's a crazy inventor. I can see that, you know, there's probably a bit of ego at work there, but there's probably some smarts as well. Yeah, some advertising savvy. Americans do go crazy for a British accent. I mean, Branson, for example, was very successful in doing that.

34:16So maybe he thought, you know, British guy out there, entrepreneur selling direct to Americans, like the way Branson did with Virgin and what have you. and he knew it could definitely work. I mean, those first Dyson adverts, which you can still watch online, they are just really surprisingly simple. It's literally him in his own home explaining the product. You know, in one of these adverts, he tells the story of the clogged machine from the 70s, plays up all the prototypes he made, and it ends with the tagline, I just think things should work properly. I mean, who could disagree with that? Can't disagree with that.

34:47So he spends 20 million on TV advertising in the US. Now, that might seem a lot, but this is lower than average for a nationwide product launch. And, you know, it's not a commercial with whiz-bang explosions, just him talking things through. So it was pretty cheap as well. Yeah, but they were a great success. And in fact, soon they're being parodied on late night comedy shows like Saturday Night Live. So they really worked. They made Dyson and his products big in the USA. US immigration officers started recognising him. Oh, you're the 5000 prototypes guy when he arrived in the country. and most importantly they really started to sell.

35:21Dyson vacuum cleaners became so ubiquitous. They featured on sitcoms like Friends, Will & Grace, Ellen and a Dyson was even included in the celebrity goodie bag at the 2005 Oscars ceremony. Talk about the irony of a bagless vacuum cleaner appearing in the goodie bag. I like it, full circle. So not only is Dyson getting famous he's actually getting really, really rich. So in 2005, two years after launching in the States Dyson was the number one selling vacuum in the US, beating Hoover. In fact, one in five of all floor cleaners bought in the US were made by Dyson. You know, given the fact that people use the word hoovering as a verb, the fact that it became bigger than Hoover is massive.

36:04It's like becoming bigger than Google when it comes to Googling. Exactly. Dyson joked that he was the first Brit to conquer America since the Beatles. And sure enough, he's on his way pretty soon. Dyson is a billionaire. Forbes, the financial magazine, put him on their billionaire list in 2006. Now, they estimated his fortune to be$1 billion, although Dyson is still a private company, so that really is an estimate. But don't forget, at this point, Dyson owns the whole company. So yeah, James Dyson is definitely a billionaire.

36:40But while Dyson was getting rich and famous in the US, he wasn't quite as popular back in the UK. In 2002, Dyson announced they were moving the manufacturing from England to Malaysia. The site near his home remained as a sort of research and development hub, a kind of brains trust, but it meant the loss of 800 British jobs. And the trade and industry minister of the UK at the time was annoyed. A union leader said Dyson had betrayed British manufacturing and British consumers. Dyson said the move was purely practical. He needed more factory space and more staff for the big US demand. And that just wasn't possible in the UK.

37:15But cheaper labour costs abroad also meant significantly reduced production costs. And that move really boosted profits in those days when he was becoming a billionaire. And for his part, Dyson said of the move, I invested£40 million into a vacuum cleaner factory and I would love to still be there now, but it simply wasn't possible. If anybody else thinks it is, then they are welcome to have a go. But I wasted a lot of money on the factory trying to do it. Nice words, but when Dyson personally took a£17 million dividend, many more union leaders were angered. Yeah, Dyson's reputation took a bit of a hit during this period.

37:52I remember in 2003, he became a government-appointed innovation czar, advising on Britain to become more competitive. And that was seen as a bit hypocritical. He says, oh, you're teaching Britain how to be more competitive whilst at the same time you're moving your manufacturing to the Far East. Later on, he supported Britain leaving the EU after he previously lobbied for the UK to join the euro in the 1990s. And this was seen as a conflicting position. So there was a kind of tension between Dyson trying to talk up Britain but at the same time moving most of his manufacturing base out of Britain.

38:26Yeah, in fact, after Brexit happened, he moved his headquarters to Singapore, which led some newspapers to call him a hypocrite, even a traitor. He was called disgraceful. And actually, Dyson sued the Mirror Group newspapers over these accusations, saying it was not only wrong, but incredibly harmful to his reputation. But Dyson lost a libel case. And the High Court ruled in 2023 that Mirror Group newspapers had successfully argued its defence of honest opinion. Now, whatever people's feelings about Dyson the man were, once he actually hit that billion, he continued to be an incredibly successful businessman and made Dyson the company even more successful.

39:04Yeah, he's not going to stop at vacuum cleaners. He diversified his range of products. We probably all know about the, if you've been to a bathroom lately, you know about the air blade. You put the little hands in and out. That came out in 2006. That's everywhere, right? Yeah, I really struggle to think of the last time I even saw a regular hand dryer in a toilet. But it was interesting because he really did give a kick up the backside to the toilet hand drying market. Because in the old days, you used to press that button. You'd get this little wheezing sound. You'd be there for ages trying to dry your hands.

39:32Like a machine trying to cough. Yeah, exactly. This is going to sound so silly, but I remember the first time I used one of these Dyson airblades and I put my hands and I thought, wow, this is the future. Which just goes to show even the most mundane technological product can always be made better. Well, it claimed to reduce hand drying time from 40 seconds to 10 seconds. It made Dyson a major player in the international hand dryer industry. And they've got other products, a bladeless air fan, a supersonic hairdryer. And one of Dyson's most profitable products are actually air purifiers. With all these products and lines, he uses the same Dyson approach that he did with the vacuum.

40:07So he looks at how these pre-existing products are made and then he picks it apart. So that research and development, that R &D really pays off. So Dyson comes up with designs that look not a lot like what the competition put out. Not everything was a success, though. They tried making a washing machine. That was too costly. And I reported on this at the time. He invested up$3 billion in trying to build an electric car that was quite quietly abandoned. He had big plans. I actually went down to the plant with him to see where he was going to make this car. I mean, he does say that a lot of the technology developed for that failed electric car has actually helped his other projects.

40:42He also, and this is one of the things he's been in the news for recently here in the UK, he got into farming. Not the first of our billionaires to do that. He's also got Dyson University in the UK, which has the power to award degrees. It's an engineering school which actually pays students as employees. and 2025 this year will see the second wave of graduates with a Dyson Institute degree. And actually in 2024 it was revealed Dyson's invested about half a billion on household robots and artificial intelligence so he's still looking towards the future. And design and innovation still at the heart of what they do today.

41:18Yeah so Dyson owns 10 ,000 patents and patents pending and it spends 11 million dollars a week on research and development. He definitely doesn't seem to have lost that obsessive drive and determination that made him a billionaire. What is he now, in his 70s, I'm guessing? Yes, late 70s, actually. He's still active in his company. Not only is he still chairman, but he's also the very public face of Dyson. He's out there on the Chatchell circuit. You'll see him yapping away. And let's face it, if I was in my late 70s, I'd be hanging my boots up to dry. OK, well, listen, that's James Dyson's story to becoming extremely rich, one of the British men in the UK.

41:52I think it's time to judge him.

41:57this is where we judge people on a number of categories and then we figure out whether they're good bad or just another billionaire so let's start with wealth so currently about 13 billion dollars but dyson has set 2025 as the completion date for a five-year plan to double his product portfolio so you can expect even more dyson launches which could potentially raise his wealth even higher assuming they don't end up on the scrap heap like that electric car and he's come a long way since you know he made his first million when he was 48 as we said a late bloomer in this sense so he's come a long way very quickly i mean he's definitely one of the richest british people in fact i think he was the richest person in britain a few years ago he's fallen down the list a little bit so i'm going to give him in uk terms he's at the top of the tree in global terms he's miles off the musks and the bezos's of this world so i'm going to give him a solid

42:52five. Yeah, I think a solid five out of 10. You know, while we like to think that Britain is the centre of the world, unfortunately, if you're a rich, very rich person in Britain, it doesn't mean you're in the big leagues at all. Fair enough. Okay. Let's judge him on villainy. What have they done to get to the top? Who suffered along the way, if anyone? So he's actually laid off quite a few people recently. In 2024, Therefore, 1 ,000 job losses were announced at Dyson in the UK. I think that one of the things counts against him in many people's minds is that he was pro-Britain, Britain should go its own way and Brexit.

43:24But this is a man who moved his manufacturing base to the Far East with lower costs. And he also said better quality of engineers coming out of Asian universities. And I think a lot of people found that a bit hypocritical. So there's that. He's not been universally loved by many of the people who actually work for him. And I think definitely if you want to take a public political stance as a business person, and then you quite publicly seem to do something that goes directly against your stance, I think, you know, you should receive some criticism for that. He's become quite vocal in this debate about taxing farmland, a recent change that when farmers, you know, if they die, farmland used to be exempt from inheritance tax.

44:08That is no longer going to be the case. He came out very strongly against them. And people say, well, you would say that. He's got quite a lot to lose as one of the biggest landowners in the UK. Some accusations that he only bought all this farmland in order to avoid inheritance tax. Others would say, well, actually, given the stuff they've done in terms of trying to pioneer new methods of farming, that, you know, just that is certainly isn't the full story. So a bit of debate there. But, you know, we've had billionaires before who've tried to flex their political influence and muscle in quite public ways.

44:37maybe part of the criticism against him is because people don't like to see billionaires flexing that muscle quite so publicly. Yeah, especially when they're pleading a case which you know is going to affect them personally. Yeah. But at the end of the day, these are, you know, political spats, arguments, where reasonable minds can differ on some of this kind of stuff. He's not a drug dealer. No, he's certainly not an arms dealer like some of the billionaires we've covered on our podcast. So to the extent it's villainy, it's pretty low level villainy if it is there at all. So I'm going to give him a three for villainy.

45:09I'm going to give him a four out of ten. OK. All right, we go on to philanthropy. He's given away quite a lot of money. Let's just recap where it's gone. So£50 million to his former boarding school Greshams. £100 million through his foundation to educational and medical research, mostly to cancer and meningitis. He contracted meningitis himself when he was 45. That's old to get meningitis. I know. While he was still trying to build Dyson the brand. Wow. Wow. Wow. And Dyson has funded engineering education programmes since 2002. And since 2009, there's been an increase of engineering graduates in the UK.

45:42There's no doubt he is held up as a kind of modern day, I don't know, James Stevenson or Isambard Kingdom Brunel. He became the most famous engineer in Britain. And engineering, you know, not usually the sexiest of subjects. He's probably done quite a lot for that kind of degree and discipline. I mean, he's given a lot of money away. He has got a lot. So I'm going to give him a six for philanthropy. Yeah, I think I would give him a six for philanthropy too. It's very targeted towards his interests and also his local area. Exactly. OK, six each on that one. But some of those comments take us neatly into power and legacy.

46:16I mean, he's changed marketplaces pretty drastically. When he launches a product, the market usually remains permanently changed by his designs. Nearly all electrical companies now sell a bagless vacuum cleaner, including his old enemy Hoover. The Airblade has seen most hand dryer manufacturers increase their airspeed. They're pretty ubiquitous. Yeah, so where Dyson goes, others follow. Interestingly, by 2008, more men were actually seen to be vacuuming. So an estimated 50 % of male partners do the household task. Asked why more men were now vacuuming, Dyson at the time said, probably because I've turned what's seen as a humble domestic appliance into an exciting machine.

46:56I think there's all sorts of problematic things with that sentence. I know, yeah. And also, in terms of legacy, I think he made engineering sexy again. He made being a designer something that people wanted to get into. I think that was quite inspirational to quite a whole generation of kids and young designers. In terms of power, he's still trying to wield that political power. He's getting involved in political debates in the UK. he writes editorial leaders for newspapers laying out his opinions on things he's got some political muscle I think yeah on power and legacy I think Dyson will go down as one of the most important engineers in British history so I'm going to give him an 8 in the UK and a 6 worldwide ok so the average of that is what 7 yeah I would give him a 7 out of 10 ok and then we have to decide is he good, bad or just another billionaire Well, now I have to confess that I have never used a bagless vacuum cleaner.

47:55So I cannot comment on whether it's better or worse. So I feel like my decision will have been influenced if I did have a bagless vacuum cleaner and thought it was terrific. I've never used a Dyson vacuum cleaner myself, although he did let me have a go of one of his, whilst he actually did a demonstration of hoovering stuff off in one of his showrooms. But I think we can all say for those people coming out of the loo with wet hands, that he has made a sizable difference to the hand-drying routine. And the earlier comments about what he's done for British engineering and aspiration and design and whatever, I'm going to say he is marginally.

48:31There are some problems, but I'm going to say, James Dyson, you are a good billionaire. You seem torn. Yeah, I'm kind of torn because to me this is a story of just another billionaire. But then I will admit that the things that he has invented, even though I myself have not personally experienced a Dyson. Not even the hairdryer or the fans or the purifier? I've used the hand dryer and the bladeless fan. Yeah, I mean, it is good, isn't it? They are good products. And not to make this sound like SponCon, but, you know, nobody's coming up. SponCon, is that sponsored content? Sponsored content, yes.

49:04I've never heard that abbreviation before. You learn something new every episode. With you, I always do. I would say, yeah, maybe he does marginally edge into the good billionaire category. We've not had very many inventors And I do think inventing things should be applauded. Inventing is cool. We need inventors. And this guy's basically reinvented the wheel, sort of. The wheelbarrow. So, Sir James Dyson, you are officially a good billionaire. Zing and I have more intriguing billionaires lined up for the new season. Join us each week for a closer look at the lives of some of the world's richest people.

49:37From Minecraft creator Marcus Person to basketball star LeBron James, we've got comic book moguls, film directors, computer programmers, sports stars, and lots of other very, very rich people lined up too. So don't forget to subscribe to Good Bad Billionaire wherever you get your podcasts. Good Bad Billionaire is a BBC World Service podcast. It's produced by Mark Ward with additional production by Tamsin Curry and Sarah Joyner. Paul Smith is the editor and it's a BBC Studios audio production. For the BBC World Service, the senior podcast producer is Kat Collins and the commissioning editor is John Manel.

50:18This is the story of the one. As a maintenance supervisor at a manufacturing facility, he knows keeping the line up and running is a top priority. That's why he chooses Grainger. Because when a drive belt gets damaged, Grainger makes it easy to find the exact specs for the replacement product he needs. And next day delivery helps ensure he'll have everything in place and running like clockwork. Call 1-800-GRAINGER, click grainger.com, or just stop by. Grainger, for the ones who get it done.