An Abbotsford businessman recently demonstrated the irreversible nature of first impressions when he ventured on a national television show to seek investment in his business.
Vancouver-based new company Viralogix Media Inc., run by Abbotsford resident Ryan Bennett and sister-in-law Rita Bennett, was slaughtered by investors on CBC’s mega-popular show Dragons’ Den last week.
“You have hundreds of millions of dollars sitting up here,” investor Kevin O’Leary told the Bennetts in Wednesday night’s airing. “You just have to convince us that we can get an extraordinary return in investing in your deal, and you were incapable of doing that. What a waste of time. What a waste of your time, and my time.”
The Bennetts were requesting $250,000 in exchange for 10 per cent of their marketing and promotions company from the panel of five investors, valuing Viralogix Media at $2.5 million.
However, the company did not have any sales. And it didn’t help that the Bennetts led their pitch with a promotional video they had launched the day of the pitch in April 2013. The video had only generated 200 page views at that point, even though it grew to 25,000 views in the time since.
The dragons were not impressed with the high valuation of the company. They grilled the Bennetts about the poor view counts and client acquisition costs, and didn’t hold back their frustration. All refused to back the young company.
“I feel sort of stunned because of this,” investor and Boston Pizza owner Jim Treliving told the Bennetts. “Because a valuation like that makes me puke when I see this kind of stuff. A 10 per cent for 2.5 million bucks for a bunch of noise? This is crap…I don’t believe half of what you’re telling us is true. For that reason, I’m out.”
Marketing guru and investor Arlene Dickinson said the Bennetts used the right industry buzzwords, but had the wrong business model.
The company owners retained their cool during the beat down on a stage where countless other presenters have gotten flustered or lashed out.
They have since turned the criticism into an opportunity.
“When you’re an entrepreneur, sometimes you have to be up against harsh criticism, and you have to find the silver lining in it. And that’s what we did,” Ryan told the News. “We did a complete 180. It gave us the fuel and the fire to really assess our business model. And we went back to the drawing board. We stayed true to our original vision, but we simplified it.”
The Bennetts conducted market research with hundreds of Lower Mainland businesses to understand what worked with existing marketing strategies, and what didn’t.
They launched daily deal website ShareNation.tv last week, which they said would not have been born without the dragons’ feedback.
“You’ve got to find that silver lining in harsh criticism. And we did. And we responded. And we ended up rising from the ashes with a successful product,” said Ryan.
Despite the negative publicity, the Dragons’ Den effect still took hold and Viralogix Media’s sales jumped 200 per cent immediately after the airing. On average, over a million people tune in to the show every week.
“Honestly, the show was not an accurate reflection. When you go down a certain rabbit hole on Dragons’ Den, you’re doomed,” said Ryan.
Abbotsford entrepreneurs have a history of pitching to the dragons.
Joel Primus pitched his underwear company, Naked, on the den twice. Although no deal materialized, the company has grown tremendously since then and products are in stores across North America.
Neil Currie cut a deal in 2012 with dragon O’Leary for Vantagewire.ca, his online real-time stock quote website, although the deal later fell through.
Local physiotherapist Greg Bay failed to get a deal for his company Coreshorts in 2007, but the show publicity helped secure a contract with sports garment company Under Armour.
The full Viralox Media pitch is available at email@example.com twitter.com/alinakonevski