Are Dragons' Den Valuations Making Any Sense? | My View on the Latest Episode

0:00I'm privileged to be here with the OG again, Richard Farleigh. We are watching, so I understand this is the third episode in the new season, is that correct? It says that on the screen, so I'm guessing that's right. Yeah, so I've got absolutely no idea what we're watching. I haven't pre-watched it. I'm presuming you haven't pre-watched it. I am dangerously living here because I seem to have the remote in my hand and I know that that does not belong to me. Well, I don't mind. I mean... I dare. It might be a better thing. I mean, last time we had a lot of people interested in watching us or watching you.

0:32So I had the remote, but why don't you take the remote? No, I didn't. I didn't. It's my gift to you. I know where power lies and it doesn't lie with me. So, yeah, well, let's give it a go. Let's see what the episode's about. Students have uni days. Key workers have blue light card. And now new parents have Cubby. I'm Tanika. This is my sister, Olivia, and we're the founders of Cubby, the money-saving platform for new and expecting parents. We're here today to offer you a 10 % stake in our company in return for£50 ,000. Cubby works in a similar way to other multi-million pound discount platforms, offering verified new parents exclusive discounts across their favourite brands.

1:08Are they big thing discount apps? No idea. So I guess for me, you know, like if you're looking at that, you'd think they'd been around for a long time, haven't they? Yeah. So I'd be wanting to know you know of the other discount cards which I don't know much about but I'll be wanting to know of the other discount cards how many of them cover your hundred retailers yes so if I get a Revolut or any of those sort of points are they exclusive yeah exactly you know and are they big names or are they just some little corner shop I agree so at the moment what's the revenue on this here we go what does that look like yeah so we we do consider ourselves pre revenue So the year ahead is our year one.

1:53We're looking to generate£20 ,000. Year two, we will generate£160 ,000. Revenue. In revenue. Revenue, yeah. And year three, we'll start making a profit. So we will generate£600 ,000 with a profit of£190 ,000. And excitingly looking ahead to year five, we're looking to generate£5.5 million. pounds write that down write all that down write all down I'll tell you there's one thing I take away from that pre-revenue the rest of it you know 20 ,000 and then well I went to 20 million to 5 million uh you know so what that's a pretty good growth curve I mean to be honest it sounds like one of my early business plans quite frankly I've seen a hundred thousand of those sort of business plans we haven't got anything yet the first year is going to be you know we'll do that that sounds plausible and then in year four we'll do five million and we'll conquer the world I think this valuation is very rich.

2:51Our brands on board are much broader than just baby and kids. That's such a small element of our... We want to offer discounts across everything. So whether it's your takeaway or your jeans for you or your new computer, it's anything. Too complicated. Well, it's a model that works already for student discounts. Your folk... So, all due respect, you're focusing on newborn babies and you're talking about everything. Gee, you see... We're not focusing on... There's a difference between the target market and the product that you're serving to the target market. Where a new mum has had a baby, she's lost two shares, she can't go to her favourite customers.

3:26It's kind of strange because they've come on with a business, and I'd be testing where they're getting their numbers from and how they got those customers or those people downloading the app, etc. And the social media following, what they do. I'd be testing all that rather than proposing my own business. Such a good idea, then Tuga, go and start your own. This is like a movie, this is. This is like a movie with no script. And you have another job and you've got a dream. But at the end of the day, back to reality. And the reality tells me you're going to need a lot of money. I don't think we will.

4:02Ah, point of difference. We know how much money we think we'll need. And this is why we focused on a small niche. This discounts element of our business has super high profit margins. You're fantastic. But the reality is, how do we... She's getting quite angry with you. Take this from where it is today to a proper business. Yeah, yeah. And how do you take that leap and commit yourself full time to this? You have to take the leap. You know, we're saying they've got good skills, okay? Whenever I've seen someone come from a big company into a small one, I've never seen, I don't think I've seen many cases where it works.

4:41In fact, you get these people who are in big organisations, they have someone doing this, someone doing this, someone doing this. suddenly they get they've got to do everything themselves and a small company and I found them generally overconfident I'm not that good at managing stuff you know so and also so that's great but they don't have any entrepreneurial experience anyone actually asked has anyone paid any money I mean they're very they're very credible I think they're coming across really well I think they're they're pretty confident I think they're obviously got you know good good jobs at the moment in good industry so they definitely understand the market but I think your point is absolutely critical because I think to take two people who are coming from a very safe well resourced corporate environment I mean I don't know what financial services company but let's assume she's at Amazon as well she's probably got 300 people around doing all the jobs that she's gonna have to do on herself and also those companies have big budgets you know they can try ideas and they can give them time to be tested you know when when you're in a startup you know you try an idea for a few weeks you start to have doubts already if it's not taking off you know because you've got so much uncertainty well the point there that uh tuka made about the money that basically he said you're going to need a lot more money and they said i don't know i don't think we will the one thing that i would say to any startup is no matter how much you think you need double it yes it takes twice the idea the idea that these guys no we're not going to need that 50 grand will get us to 5.5 million pounds in five years we are doing like the thing is the reason that we haven't grown more is because we don't have the time so we both need to focus on this and we are going and we're going to do that are you leaving your jobs to do this yes yes are you wow that's a massive commitment a massive risk yeah if she's struggling to buy in a year's time i would suggest sorry you know and you got a good job you know yeah let's not be hasty yes let's not be yeah exactly you got a mortgage on your you know if you got anything else you got commitments you got the cost with children only go up unfortunately you can't do a coffee on there when you're pregnant god knows what you're gonna do when they're five years old but to your I was gonna say to your point though given technology and given the sort of relative low effort to create what they've created so far there is no reason why you couldn't get that to the point of earning some money whilst you're still carrying on your day jobs in fact it's an indictment that they haven't got that because they've got enough now to get some paying customers so why why isn't even just a thousand pounds or two thousand why isn't there a number yeah because it's it's in the moment they're like well we've created an app therefore we're going to leave our jobs yeah that feels like a terrible because we've got some followers on social media you know because we're mums but but but um you know it's funny because peter's favorite thing used to be i could do that myself in a couple of weeks my guys will whip it up i mean it's almost the case of this because you get cord co-work to to design the app you get even you just get the mail out you just you probably almost do that with AI just to get the whole thing mailed out to all the retailers you want to approach you don't probably don't have to sit there and type it all out by hand so you get those out wait to see what comes back you could almost run this so far by AI and a bit of social media we should literally get our phones out and create a version while we're watching the rest of the episode that would be fun by the time we're finished filming we'll be 5.8 million by the end of that We'll call it Cubby House.

8:17But I would never want to put anybody in that position. They're going to give up their job because they believe in it and they're struggling at the back end. That's not what I want. Whether you invest or not, we're giving up our job. We're going to raise money for this business and we're going to do it. Strong minded. I mean, that would kind of worry me just a little bit. I mean, you know, we're all different. But that sort of pushback would worry me because I can just imagine the first board meeting. No. I tell you what, I bet the rest of the dragons are going to absolutely love that no Tuca getting a slap in the face.

8:54Oh, look, there they go. There you go. And I tell you what, you're right. Everyone else is going to be, I don't know what that. Listen, you two are really, really, really good. Why could she say that? I'm sorry, all this niceties. What have they done? We know. Why are they good? what defines good about it's a nice presentation from the previous dragon that it's a charity show it's a charity show you know that how much do you want exactly get the checkbook out i'm just wondering who's going to be chucking the cash out them and so i am going to make you an offer um and i absolutely assure you it's down to you too so you've asked for 50 000 pound for 10 % of the business.

9:38I'm going to offer you all of the money and I want 20 % of the business. Well, take it, take it, take it. Take it. Take it. And Tanika and Olivia, I'm going to follow on straight away because you are both incredibly, incredibly good. Thank you. I think the standards of low is where's the numbers? They're pre-revenue. I'm sorry, I've seen a lot of people like these two contestants. They're not yet. There's not yet enough information to say they're good. What would you do? Well, the rules of the game, the rules of the show, they're not allowed to take less than$50 ,000. I think$50 ,000 is too much.

10:18I still think they should do it. You know, come back. If it was me off the show, I'd say, come back. Here's$10 ,000, here's$20 ,000, different valuation. Could you do it off the show? No, no, no, no. I'm just saying what I would do in real life would give them a smaller amount on a much less valuation and say, go and prove it, and maybe even a condition. You know, the valuation is$100 ,000, but if you manage to make my$10 ,000 and you use that and you get revenue, then we'll change the valuation. We'll do some deal like that. But go off and prove the concept first for a small amount of money because it's still probably going to fail.

10:53Go off and prove it first with a smaller amount of money. $50 ,000 for that concept is too much. Yeah, yeah, yeah, I agree. So I think, you know, it's a TV show, but giving$50 ,000 for an app and a social media following, Based on a valuation of half a million or even half of that is too much Yeah, so small amount of money and go and prove the concept don't leave the day jobs I think I've I've sat here trying to figure out whether Whether I want to invest or I just want to be your friend

11:23There's a friendship for that reason I'm gonna say that I'm out But I wish you the very very best for the future and I feel so proud of you even though I don't really know you Thank you. Thank you

11:36you know the thing is when they praise all these contestants you know they don't put any bad ones on in my day they used to have sort of like a juggler come on who who dropped things all over the place like he was clearly hopeless and that would give you some comparison good or bad these are all good these are all polished but they're not it's a substance they've all gotten very well they're all well spoken they're all well dressed they all know what they're talking about it's a neat, slick presentation. The presentations have got better, but the detail has gotten less. You know, you can get brilliant people who aren't very good at presenting.

12:09You know, it's not a measure, really, if they're, you know, it's more about what they're saying. And sometimes you've got to look past, even if they're stumbling or they're making a few mistakes. I mean, look at Levi Roots. You know, he was out by a factor of a thousand and one of these numbers. Or, you know, I've noticed something else where the guy forgot to put his egg in his egg cooker. You know, but people make mistakes. But you've got to look beyond that because, you know, There might be something really underneath it. Here we're getting a very slick presentation, but no one has asked how much they've spent so far, what their competitors are, how many of those 100 retailers, how many did they have to approach?

12:41Did they approach 100 ,000? They got 100? Or is it every single one? Yeah, how did they? And also, of those retailers, how many other apps can use those retailers? Because probably the retailers sign up for them, but sign up for everything else. Is there anyone else doing kids discount cards? All those questions have not been asked. it's gotten very superficial and but praising them is fine they've given a good presentation but there's no detail hello dragons I'm Louise and I'm Kate and we are the founders of craft and crumb we're on a mission to make home baking more creative more connected and way more fun we're here today looking for a hundred thousand pounds in exchange for three percent of our business Louise and Kate first of all congratulations what a gorgeous business I love the branding I love the animals the creativity the fun side of it help me understand about the actual product itself in terms of the cookie that is made because I'm looking at your ingredients and I'm seeing flour and caster sugar do you have a range with slightly healthier alternatives like she got any kids yet so sorry you've got this one over here with it no you can only have the brown flour no sugar I can understand the the intent but not necessarily the practicality.

13:57I mean I know that we are you know of that sort of world these to where it's straight in with the you know the vegan versus the non-vegan everything but this is a business show and if you're on the panel is your first question about this 10 year journey where they're in every single supermarket they've got all of these things are after 3 % for X month or is it about the flavor of the cooking? Yes you know I'm fascinated how they've made so much product it's been 10 years but they've made fantastic progress. yeah so I mean Tesco to get on the Tesco accelerator program there's no mean fee no I'd like to know with how much they're selling and why do they what are they raising 100 grand for three percent why do they need a hundred thousand you know would still like to know how much the sales they have every year that would be nice because you know this if you know nothing else and you're trying to value a business that's been going for ten years then you you either ask about how much profit are you making and that you know and then you multiply that by 10 or 20 depending on what it is or how much sales you have and they're the first if I could ask one question and there's only allowed one question it would be about how much money you're taking it wouldn't be can we make it without sugar so that question has to be asked early on a thousand for three percent you must have knocked it out the park this must be a great company and making lots of money.

15:18So tell me about that. What's last 12 months? What have you turned over? Here we go. So last 12 months we turned over 1 million and 65 ,000 with a net of 66 ,000. Okay, that's all right. So it's three times sales, which, you know, if we're growing business, sounds reasonable. You know, off the top of my head, sounds reasonable. Way better than the other one, we're at half a million with no sales. Yeah, these seem pretty established. There's something going on here they're gonna find something and the year before and the year before that we turned over nine hundred and five thousand with a net of 44.

15:52now hang on that sounds a bit flat doesn't it nine hundred the to a million million and sixty-five maybe it's flattening out maybe they're struggling with future growth okay and what's the forecast for this year so this year we are forecasting 1.5 million now 15 ,000 50 percent net 15 ,000 yeah so you're going to make 15 ,000 pounds and you're valuing a business over 3 million. So this is our topic. Anyone watching this and trying to learn about business has got very mixed signals because they've just seen a valuation of half a million for a business with no sales, no agreements, just a few sort of downloads.

16:30An idea. Right? And that was valued at half a million. This has got revenue of a million and it's valued at 3 million. So it's only six times the other one. Yeah. So someone watching this, if they were trying to learn about business, they've got some very different messages they're inconsistent so so if Susie loved the other one at half a million she must think this is absolutely fantastic three million if she's got any money left after wasting half 50 grand on the last one because the profit is not there so for that reason I'm out she just invested in a business valued half a million with no sales I'm sorry Susie I've never met you, but that to me doesn't make sense.

17:13So I'm going to tell you where I am. I think this is a business for you. And it's sometimes businesses do take a while to grow. It can take some time to do that. And then suddenly you wake up and think, oh, my goodness, we've really got something here, which is what I suspect happened to you. It started off as, well, let's do it, let's make a bit of money. And now you're thinking, wow, we can do this. But I think it's for you. You're smart. You can do it. You've done it already. you're good I think you have a great business but I won't be investing that doesn't make any sense I think what she's saying is I'm not investing I think she's saying you should invest in yourselves back yourself well no then maybe they do need money to increase that thanks for coming on but you've just got working capital maybe they need yes they've only got 15 grand between them yeah I think the big question that was alluded to there though which has not been even touched on is the 10 years.

18:09You know, 10 years isn't necessarily a long time to be in business, but there's a lot that goes on in those 10 years of pivots and changes and contracts and stuff like that. You would like to understand why it's taken them 10 years to get to, because if they're teetering around a million now, if they were five years ago at like a few hundred grand and it's just gradually been about getting the contracts and the contracts take a long time to get over the line but you kind of think 10 years 100 grand it just doesn't feel that it kind of stacks up for me so I don't think I can understand the reason why none of them wanted to invest in it but I don't think any of them have actually said the reason why they wanted wouldn't invest in it you know maybe it was we started out of a kitchen maybe the first five years we're just you know playing around with different formulas and you know trying to get the packaging right you know doing it as a hobby you know and then it you know so you don't know.

19:00We haven't really dug into that business but there's an inconsistency between the last one and this one. We're trying to make off-grid toilets more convenient. Everybody poops. Yeah. There's no way back now. Have they just said what I think they've just said? What did they say? I think they basically said something about everybody poops. I think we're about to drop. Okay, well hopefully they talk about animals not humans. I don't know, let's find out. I think we've basically... Oh no, that looks like a toilet seat. Oh my god. I'm sorry.

19:31Which dragon is going to be demonstrating on the set? So far the business has been doing very well and last year's turnover was just over£700 ,000. We sell primarily direct to consumer in North America, US, Canada and the UK and we have distributors in Australia, New Zealand and Germany. We're currently looking for£100 ,000 for a 3 % stake in the business. Same. Well, another. I'll go into a quick demonstration of each product, but that's okay. Uh-oh. Not quite a live demo. Not a live demonstration.

20:05A range of composting toilets which break down waste without water or chemo. I mean, you know, because you'd want to know, you know, you want to be able to evaluate the technology. So I'd love to know, does it, you know, how different is it to other technology? is it protected by patents or any other you know protections they might have yeah where did the invention come from what what's the nearest competitor in terms of something else you know what's it replace is it weight is it 10 percent better than what's out there or is it 50 percent so i mean i don't know much about the portable loo market but i think they're very impressive i think this is this is probably the most impressive yeah that's been on this is the sort of thing that It excites me, not that it's news.

20:50I mean, it just, like, I'd love to know more about this. Let's find out. It's patent pending. We haven't pushed it to grant. We pushed it to... Do you want to put the lid down as well? Oh, thank you. That's fun.

21:06We haven't pushed it to grant. We've filed it internationally in America, Australia, Europe and the UK. OK, got it. Thank you. hi guys can I get a confirmation on your revenue and profit so you said it's 780 just on the pattern I mean I invested in something on dragon sign which was sorry revenues clothesline when it rained yeah and one of my questions was about patents and they said he had a fundamental patent and I took it face failure but it turned out that the patent was just on a clip you know as a patent application for a clip that held it on it wasn't the fundamental or no one else can put this over the top of the clothesline and you know with patterns you've really got to ask I mean that's where it's hard being a dragon because how much can you really dig into what is that pattern what you know you could be there this is the sort of thing that really needs three or four days of due diligence to decide and it's very hard in the 40 minutes that they would have without the editing say it's 40 minutes to go into it's really hard to figure all that out and presumably that's because this is without the pattern it's not particularly defensible well you know sometimes it's you know like I've had companies where you don't rely on a patent because it's so you know you because sometimes just putting the patent out there invites people to copy it because yeah and they can get around the pattern it puts it out there sometimes you're best just better getting first-mover advantage you know how but you know they haven't real and they may not have time but you know what this this the way it's breaking down the mess you know how does that work and with natural ingredients.

22:41What is different? Where did this come from? Was it out of university? Or did Richard on that show find a way to do it? You know, where did it come? You'd have to dig into it quite deeply. Five, revenue. And what's your net profit? Net profit this last year was 75 ,000 pounds. Okay, and what are you forecasting for this next year, this upcoming year? The target for sales for this year is 1.2 million sterling. Yeah. We're at about£415 ,000 in revenue. And what are you forecasting for the end of the year in terms of profitability? I would expect for the end of the year a£300 ,000 loss. Ooh, no. So I'm trying to figure out if I invest£100 ,000, which is a lot of money, for 3%.

23:28You know, I have to do the math to figure out if I can get a seven-figure return on that investment over time. You haven't had. How long are you going to take me back with that first investment? I know. They haven't even left their job. So with the growth of the business in the next two years, we're planning to pay 4 million pounds. Clearly know your stuff and I really commend you for that. Unfortunately for me, this is not an area that I'm passionate about and I'm working on the right dragon with you guys. So for that reason, I'm out. Yeah, but when you go on as a dragon, you know, like when you're just investing in the stuff you're passionate about I mean I invest in a source of freaking egg cooker I mean I wasn't particularly passionate I can't say I'm passionate about crap in a bowl no one's gonna be passionate you know but they've done very well you know I think this is the best presentation and no one's even making an offer okay I'll put in you know a hundred grand but I want 10 % but they're not even making an offer well it goes back to the last one as well it's just it's not a sexy product but you know there'd be some explanation be what they've got 700 ,000 off sales I mean that's not chump change is it you know they've sold a lot of these things so so you know that's data you know these things do sell someone's buying them someone's changing their design so so that's that's a lot yeah and so if it was just a prototype you might go no it's not gonna work but I'd like to know how they get made that progress I mean I suspect they're going out because it's too complicated you know it's just too it's very easy to understand like here we make some cookies and we yeah that's easy right but this is like as i said this is a really a three or four day you know people going through it and you're sitting in a chair going i don't got a clue right honestly you know who's an expert in portable loot nobody everyone eats cookies but no one yeah i mean everyone takes a poo but not everyone wants to yeah i think this is absolutely brilliant i think that you both are presented really really well Richard you're nervous and yet you're quirky as a character you'd be amazing both of you to work with I think you'd be refreshing and I'd like to be given that chance oh so that's why I'm gonna make you an offer it ain't gonna be three percent come in here in 12 months time and you had your patent and you had everything teed up and this was a purely a sort of, let's say, more advice-led investment, I think the offer of 100 ,000 at 3 % would be right.

26:04But I do think that you're over-evaluing at this moment what you've got. And that's why I'm going to make you an offer of all of the money, but for 20 % of the business. What the... I mean, to be fair... At least it's an offer. That's what you said. When I went on, they were, you know, the other dragons sometimes they'd call me Mr. the nicest but other times they call me Richard the reject because I was so determined to make an offer you know like I may be way off what they wanted but at least I was trying to put a value on every business came in there and at least he's done that he's made an offer well and rich and Peter's just said exactly what you said which is that basically this is there's no advice there's no due diligence there's a lot of stuff here that could value it at this but there's a lot of stuff that can value it that and I think that's basically I thought Peter very impressive there that was a good moment Better than his jokes.

26:49Yeah, no, no, exactly. Well, actually, Jagger's Den has just done a business thing. Yes, a sensible question. I mean, I'm quite surprised. Sensible question, sensible offer.

27:00I think she's going to go in. Camera goes in. Yeah, exactly. Do you know what? I'm not going to make you an offer. Oh! Bloody Laura! I can't see for me that it's an investment that I'm going to get a reasonable return on in a reasonable amount of time. So I'm afraid I'm out. Let me see. I think we're gonna define the offer appreciate the offer what about a counter on me believe we gotta haggle try and grow it ourselves and yeah see where the journey takes us 100 % to know what that's what he wanted come on that's what we're supposed to do here so the lessons learned so far if you have an idea and no business 50 grand if you have a million turnover nothing if you have seven and sales all over the world technology nothing yeah no one asked how unique the technology is I mean when you know Deborah made the point that they want to get increasingly eco-friendly you know are there other eco-friendly you know how bad is the existing product because if it's the only eco-friendly which is probably not but if it's the only eco-friendly then that's a massive Yeah, 100%, exactly.

28:09But no, they just need a good app, a good presentation, and no money. That's the route. Hello, Dragons. My name's Martin. And I'm Tom. We're brothers and the founders of OnlyCat. We've created a smart AI-powered cat flap designed to stop your cats bringing home prey. This is OnlyCat. The built-in AI-enabled camera screens your cats upon entry. If prey is - Also, if it comes up and it's got a mouse or something in its mouth, it won't be allowed in. Yeah. What happens to it then? At 2am it wants to come in. It's stuck outside. In the rain. The pet tech market is booming and we've already raised over£750 ,000 in pre-orders.

28:57And we're here today looking for£200 ,000 investment in return for 4 % equity in our business. I mean, there was one thing, it says 750 ,000 pre-orders. So that doesn't sound like they've actually started selling it yet. But, I mean, that's a huge number. I was going to say, I mean, I don't have a problem with that. If they've only built a prototype and they've basically gone out and sold 750 ,000. Because they're what, about 400? For£450 each. It's like 20 ,000. That's huge. I think there's going to be some good numbers. But then again, I think, yeah, if you look at their valuation, what was that?

29:30They want 200 ,000 for 4 % of the business. Yeah. So it's clearly, yeah, I mean, I think there's clearly a lot of cash that's gone into this so far. I mean, even the packaging and everything else looks pretty well. But are they selling, just selling online? Well, you know, there's a lot of questions, you know, but it's funny to have pre-orders. Is it because it's been on crowdfunding or something? Well, that's, yeah. So why have they got, you know, have they got actual orders? Let's find out their numbers. And what their background is as well, to be honest. Right, so give us some numbers. So your sales, your gross profit and your net profit.

30:02So, last year, we had 352 ,000 revenue, 155 ,000 gross and zero net. This year, we are looking at 1.9 million turnover. We're now seeing weekly orders in the region of 30 ,000, and that has been growing on an exponential... Bloody hell. So, 30 ,000 a week? Correct. Yes. Gee. So, 1.9, gross profit? 847 ,000. Bloody hell. than 300 339 ,000 what do you think they're gonna spend the 200 grand that are net hmm phenomenal business I never knew there was such a big problem cats bringing in well I suppose if you're gonna put a cat flap in anyway you might as well get one that stops I think that's I think that's exactly it and I think if you think about the pet well they called it the pet tech market if you think about that pet care market you would spend I think four or five I mean you spend I don't know how much is a ring doorbell there like a few hundred quid you know I mean you would spend that on a something that's going to effectively mean carving up your door you're going to want the best thing that you can possibly get in it so it's it's that you want that so badly that you're you've asked for 200 ,000 pounds for 4 % of the business we believe it's a fair valuation if you look at our financials the 750 ,000 pounds in pre-orders the trajectory that we're on to deliver millions of revenue in the coming years.

31:28I might ring up these guys and invest. I was going to say, would you invest in this? I think I would. At this point, what would you be doing? I think you would. If everything they say is true, which I've got no reason to doubt their integrity, but if everything they say is true, I think it's a great business. Can I ask a few questions surrounding the product? Sure. So I wonder if there is a wider wildlife benefit. If a cat is denied entry if it has a rodent in its mouth, does it teach the cat to not kill rodents? Oh my god. That's the most stupid question asked today. Sorry. I mean, I think it's the most stupid question I've ever heard on Dragon's Den.

32:05I think you're probably more likely, if you sit the cat down and ask it really nicely and explain why killing things is bad, I think you'd have a better chance than what she suggested. It reminds me of Nemo when they're trying to get the shark. you know you know fish are friends not food you know like just trying to reprogram this shark no luck there yeah good luck an apex predator don't donate it it's an excellent point oh right okay now we're going to debate whether the cat is going to train with nothing about where the money is spent well yeah all this other stuff will it train the cat train cats so we've seen a steady reduction in the attempts you've seen I'm not I'm looking for data so this is field data based on a deployment of 2000 just observation it is it is it is data analysis based on I can there's an anecdote and then there's a day there reminds me of three or four times a night after install it's not the unique selling point will the cat learn you know that's not going to learn I'm sorry if he's saying yes it's only because he's trying to keep her happy all right the cat's not going to learn unless it's a you know three-month-old cat it's not going to learn it's not gonna but at least you don't wake up with a dead rat next to your bed what I don't understand is that they started out as a decent pitch with two smart people and the dragons have now turned it into a question of whether you can teach a cat yeah we've gotten in this rabbit hole you know exactly well maybe you could teach a rabbit more you can teach a cat I don't know slightly peripheral Jesus commend you for what you have created I I think you're both obviously very, very clever.

33:49And I definitely see scope for growth for this. And I see success in the future for the two of you. I think for me personally, 200 ,000 pounds for 4 % of your business is a big ask. Yeah, not like half a million for the first business. No, that's fine. That's absolutely fine. But you know when they, it's almost like the compliments, when you're so good, you're this, you know it's coming. Yeah, it's coming, it's definitely coming. It's not me, it's not you, it's me, it's coming, isn't it? It's coming. I think you've got a very small opportunity at your price point and your point of entry very small this is a product that's going to be not only specific to people that have cats it's also specific people that have got a lot of money so I'm gonna wish you know I'm not worth going for that I've never seen it have you seen first-class on airways have you seen Rolls-Royces you know Sometimes people can make money out of that part of the market.

34:43I think this is one of these, I think you would definitely have invested in it. I think you would have ended up working with these guys. Yes, they impress me the most. That's what I mean. But I am also a sucker for clever people. Well, that's what I mean. They're very much in your wheelhouse because they're smart people. They're tech-focused. They've got a good business plan. They like ridiculing stupid people. I mean, it's literally tick, tick, tick, tick. But, you know, where are these pre-orders? I mean, the sales are out. They haven't really got 30 grand a week. They've proven that there is a market for this.

35:12I agree. So making that it's too expensive, it's obviously not. They've proven there's a market, so what else can they do? So I'm going to make you an offer. No, I'm not going to like it. This is going to be a great offer. This is going to be a really great offer. No, it's going to be a fantastic offer. I am really excited. I think it's a writer. No, no, no. We're at the edge of our seat. It's an unbelievable offer. You just wait for this one. Drumroll, please. Don't take all day. Yeah. You've asked for 200 ,000, for 4%. I'm going to offer you all of the money for...

35:54..12.5 % of the business. Wow. That's a pretty accurate number, sir. Thank you very much. We are leaning towards going... Look, you have got a very good... I mean, I wouldn't have... I mean, to me, there's a lot to do here. Because what you need is to create the reality... I mean, 200 grand is a lot of money. ...accessible at the price point that you're going to knock the competition out. Because somebody else is going to come along and make a version of it at a much lower price. We are leaning towards going with Stephen, but we came here thinking that 10 % is really our upper limit and we wouldn't be able to go beyond that, yeah.

36:51So 10 % is the limit? 10 % is the limit. Then you've got a deal. didn't give took her a chance to rebid no no no no i think if you're going to go for social media coverage then obviously yeah that's sort of it i think it became very clear when they were talking about manufacturing and then they sort of went down their own little rabbit hole on that they were after marketing they wanted somebody who understood how to pay they are not in they're not instagram specialists no and you know all you know fair dues to them but i think they were probably fast you know going god if we have board meetings with deborah and every meeting is about is about has we trained that cat show me the data they're going we don't need the money we don't need the money deborah deborah we have stopped cat killing worldwide here's the proof yeah here's the proof but what does she want to say the rats that they're killing i have no idea i've no idea it didn't make any sense and there we go that was a good episode i thought that was a good episode i it was very different to the last one that we watched I thought it was an episode of two halves it definitely wasn't it well I mean well they were dishing out money by the end of it then I mean to be honest I don't know whisper it but it almost turned into a bit of a business program yes yeah there was some real analysis there was some good people and it actually was a half day in fact there was two two to three half decent businesses and it did look like if you'd gone on there with a decent business you had no chance of getting investment and actually in the end they kind of They got one.

38:23And I think you would have learned something about business from the second half of the show. Yes, exactly. What are your kind of biggest take-offs? The stuff about valuations, valuing business, if they have no revenue, is incredibly hard because you're valuing an invention. And they're not normally worth that much because, prove it. And then you've got revenue and then if they become profitable, you've got different multiples. And, you know, people used to talk about three times revenue. So if you've got half a million revenue, your business is worth one and a half or ten times profit. And obviously, which is a price earnings ratio, you know, multiplying by profit.

39:04And that varies with interest rates. When interest rates were very low, you know, you were on a very high because effectively you buy the business and it's like paying you interest. So if a business is paying you ten grand a year, then, you know, how much would you need to stick in the bank to make that ten grand? And when interest rates move, that amount you need in the bank changes. And oddly enough, so price-earnings ratios are linked to interest rates. So there's a bit of science there. You're never going to learn that. No, no, no. Because they were very inconsistent. One business had no revenue and was valued very high.

39:36But different dragons have different approaches. Different sectors have different multiples. So if you're in a hot sector like tech, it can have a higher multiple. And it's got sticky customers where you get customers. If you're just selling apples at a food store, you know, that's not very, customers may not be that sticky. You know, so there's different multiples. There's a whole lot of science. And so from that episode, but even having said that, there was a vast inconsistency with how they valued businesses. Yeah, yeah. And, you know, I made a joke about Susie, you know, wanted people who are passionate when it was what she's passionate on.

40:12But, you know, you need your expertise. And I think people showed their expertise. you know Steve Bartlett knew that he could add value on the social media side which obviously can yeah and Susie might have been able to add value on the other you know so it's sort of settled where maybe it should have been so well I think out of all of those the first one was basically just typical dragons den charity show I think the second one the second one was understandable because I wonder whether the second one are kind of reached its ceiling I mean we didn't really interrogate the numbers with the cookie and crumb thing or whatever it was cool so i think that one's quite understandable i am surprised about the the portalu thing because i think actually there was a genuinely incredible business there i thought they were very honest i thought they were pretty good in terms of their presentation but for me you know despite not being a cat lover i think that final pitch the i mean they were just fantastic and i loved watching one of the guys just take deborah to school on what deb what data meant which is scary when deborah gets a finger out the finger was out the finger well yeah exactly exactly exactly so they were yes it was um it was always good to see that happen but yeah no i thought that was a good episode yeah i think i think there could have been a little bit more about the nearest competitor you know about you know what what else is out there but you know it's tv so you know and i think it was enjoyable to watch and educational in its way it was it was i think people genuinely will have taken something out of this week so well done well done yeah that was thanks for inviting me back see you next time you've done well

41:44Thank you.