EVEN WINNERS MAKE MISTAKES
ATAPAX,we turned down the opportunity to invest in the business of the domestic-appliance entrepreneur James Dyson.
Dyson became a huge success. By 2005,his company had grown to £400 million of sales and £100 million of pre-tax profits.
It was clear when he came to us that he personally had many of the key entrepreneurial qualities. We thought, however, that he was taking on something that was extremely difficult: to challenge the massive incumbents — Hoover, Miele, AEG, Electrolux and Bosch — in the mature market of domestic appliances; a market in which there were significant barriers to entry, not least in terms of the costs of product development, manufacturing, distribution, marketing, and of brand awareness.
What is more, Dyson was not intending to compete on price; he aimed to compete on design and technological innovation.
We thought the chances of success were small. In this, we made a mistake.
We underestimated the effectiveness of Dyson’s marketing as much as we underestimated the design appeal and efficiency of his products.
Most of all, we underestimated Dyson himself. He made the difference.
It is always good to be reminded that just because something is unlikely to happen it does not mean that it will not happen.Even low-probability events, by definition, do occur.
Just because James Dyson’s business venture seemed to us to have a low probability of success did not mean that it would not be successful.
by Ronald Cohen, published by Weidenfeld & Nicolson on November 8 at £20. JC readers may order copies for the special price of £18 including free postage & packing (UK only, overseas add £1.60) by calling 01903 828 503 and quoting reference no: JA200 © Ronald Cohen 2007. Extracted from The Second Bounce of the Ball: Turning Risk into Opportunity,