Dragons' Den - Magic Wand Remote - Part 1

Summary

Chris Bernardo and Richard Pleakley, founders of the Wand Company, seek a £200,000 investment for a 10% stake to grow their business, which specializes in magical fantasy products. They introduce their first product, a real magic wand that functions as a universal remote control for electronics. Despite selling 10,300 units in their first year, they aim for £18 million in revenue within three years. The pitch is met with interest from potential investors, who offer varying deals, including equity back for performance milestones, highlighting the product's innovative appeal and the company's growth potential.

Takeaways

• 🧙‍♂️ Chris Bernardo and Richard Pleakley are the founders of the Wand Company, seeking a £200,000 investment for a 10% stake in their business.
• 🎩 They aim to capitalize on the 'magic market', a significant industry where consumers spend billions on fantasy products.
• 🪄 Their flagship product is a real magic wand, designed to control various devices in the home, such as music, TV, ceiling fans, and lighting.
• 📈 The Wand Company has already sold over 10,000 units since its inception and projects revenues of approximately £18 million within three years.
• 🤖 The technology behind the wand is a universal remote control chip used by one of the world's largest remote control manufacturers.
• 🔄 The wand's software is designed to recognize its orientation, allowing for intuitive control regardless of how it's held or turned.
• 🚀 The company has plans for future products that are not yet disclosed, with a focus on creating magical and surprising items.
• 💼 Both founders have a background in electronics and remote control development, with a previous product selling about 2 million units.
• 💰 The cost of the magic wand is around £10 in the UK, and it is sold directly to customers for £50, indicating significant profit margins.
• 📊 The Wand Company expects to sell 1.2 million units in the current financial year, projecting a net profit of £600,000.
• 💼 The founders are not seeking the investment for production but rather for growth and leveraging the expertise of the investors.
• 🤝 The pitch in the 'den' resulted in offers from multiple investors, with varying conditions and percentages of equity involved.

Q & A

What is the name of the company founded by Chris Bernardo and Richard Pleakley?

The company founded by Chris Bernardo and Richard Pleakley is called the Wand Company.

What investment are Chris and Richard seeking from the investors?

Chris and Richard are seeking an investment of £200,000 for a 10% stake in their company.

What is the main product of the Wand Company?

The main product of the Wand Company is a real magic wand that can control various electronic devices.

What technology is used in the magic wand to control electronic devices?

The magic wand uses a universal remote control chip that can send out and learn codes for various electronic devices.

How many units of the magic wand did the Wand Company sell by Christmas of the previous year?

The Wand Company sold over 10,000 units of the magic wand by Christmas of the previous year.

What is the projected revenue for the Wand Company within 3 years with the help of the investment?

With the help of the investment, the Wand Company projects a revenue of about £18 million within 3 years.

What is the cost of the magic wand to produce?

The cost of the magic wand to produce is about £10 landed in the UK.

What is the selling price of the magic wand to customers?

The selling price of the magic wand to customers is £50.

What is the projected number of magic wands to be sold in the current financial year?

The projected number of magic wands to be sold in the current financial year is 1.2 million.

What is the projected net profit for the Wand Company if they sell 1.2 million units?

The projected net profit for the Wand Company if they sell 1.2 million units is £600,000.

What special circumstances are expected to influence the sales of the magic wand?

Special circumstances expected to influence the sales include the release of two more Harry Potter movies and the popularity of Wizarding-themed games and franchises.

Outlines

00:00

🧙‍♂️ Magical Wand Company Pitch

Chris Bernardo and Richard Pleakley, founders of the Wand Company, are seeking a £200,000 investment for a 10% stake in their business, which aims to create magical and fantasy products. They highlight the vast market for such items, with millions of consumers spending billions annually. Leveraging their combined 40 years of experience in design, development, and electronics, they have developed a 'real' magic wand that can control various devices, such as music players and TVs. The wand's capabilities include playing music, adjusting volume, changing tracks, and operating home appliances. Despite having sold over 10,000 units within their first year, they believe with investment, they can reach £18 million in revenue within three years.

05:01

🤝 Negotiating the Dragon's Den

The Wand Company's founders face a series of offers and negotiations in the 'Dragon's Den.' James Caan inquires about the technology behind the wand, which is revealed to be a universal remote control chip used by a leading remote control manufacturer. The wand's unique feature is its ability to recognize its orientation, allowing for consistent operation regardless of how it's held. The duo is also developing a new, undisclosed product with strong patent potential. The company's sales figures are scrutinized, with over 10,300 units sold at a significant markup from cost to retail price. The founders project a conservative estimate of 1.2 million units for the financial year, expecting a net profit of £600,000. Various offers are made, including a ratchet deal from Duncan Bannatyne, which would require giving back equity if certain profit milestones are met. Other dragons propose different equity stakes for their investment, with some suggesting performance-based adjustments to the equity share.

Keywords

💡Investment

Investment refers to the act of committing money, time, or effort with the expectation of a return. In the video, Chris Bernardo and Richard Pleakley are seeking an investment of £200,000 for a 10% stake in their company, emphasizing the potential for growth and profitability in their innovative product line.

💡Magic Wand

A magic wand is traditionally a device used in fantasy settings to cast spells or perform magical acts. In the context of the video, it is a product that the company has created, which functions as a universal remote control, capable of controlling various electronic devices such as music, TV, and lighting.

💡Technology

Technology in this video refers to the advanced systems and devices that enable the magic wand to perform its functions. It is highlighted by the quote 'any sufficiently advanced technology is indistinguishable from Magic,' suggesting that their product blurs the line between fantasy and reality.

💡Remote Control

A remote control is a device used to operate electronic equipment from a distance. In the video, the magic wand is essentially a remote control with a universal chip that can learn and emit codes for various devices, as explained by the entrepreneurs.

💡Market

The market in this context refers to the potential customer base and the economic environment for the sale of magical and fantasy products. The script mentions a 'magic Market fantasy Market,' indicating a large and lucrative sector that the company aims to tap into.

💡Revenue

Revenue is the total income generated from the sale of goods or services. The entrepreneurs project that with the investment, their company could achieve revenues of about £18 million within three years, showcasing their ambitious growth plans.

💡Equity

Equity in a business context refers to ownership shares or stakes in a company. The dragons (investors) are offered equity in exchange for their investment, with negotiations focusing on the percentage of equity that corresponds to the investment amount.

💡Profit

Profit is the amount of money remaining after all costs and expenses have been deducted from the revenue. The script discusses projected profits of £600,000 from sales of 1.2 million units, which is a key metric for evaluating the business's financial health and potential return on investment.

💡Product Development

Product development is the process of creating a new product or improving an existing one. Chris and Richard mention their combined experience in design and electronics development, which has led to the creation of their innovative magic wand.

💡Patent

A patent is a form of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention. The entrepreneurs hint at a new product that is 'patentable,' suggesting they have a unique and protected idea in development.

💡Distribution

Distribution refers to the process of making a product available to consumers through various channels. The script mentions signing up distributors and deals with Target in the US, indicating the company's efforts to expand its reach and sales.

Highlights

Chris Bernardo and Richard Pleakley introduced their company, the Wand Company, seeking a £200,000 investment for a 10% stake.

They reference Arthur C. Clark's quote about advanced technology being indistinguishable from magic, highlighting the vast market for fantasy products.

The Wand Company's first product is a real magic wand with capabilities to control various devices such as music and home appliances.

The wand uses a universal remote control chip from a leading manufacturer, allowing it to learn and send codes for various devices.

The software is designed to recognize the wand's orientation, enabling control regardless of how it is held.

Chris and Richard have a background in electronics and remote control development, with a past product selling 2 million units.

They have sold over 10,000 units of the magic wand by Christmas of the previous year.

The Wand Company aims to reach revenues of about £18 million within 3 years with the help of investment and expertise.

The product costs about £10 to produce and is sold directly to customers for £50, indicating significant profit margins.

The company projects conservative sales of 1.2 million units for the current financial year, with a net profit of £600,000.

Duncan Bannatyne offers the full £200,000 investment but requests 30% equity with a ratchet clause for profit performance.

Hagrid offers £200,000 for 25% equity with a potential share buy-back based on performance.

Deborah Meaden proposes an offer of 20% equity going down to 10% if the company makes £600,000 profit in the first year.

The Wand Company has signed deals with distributors and is in talks with major retailers like Target and Sky.

The company's next product is undisclosed but is described as strongly patentable and part of their magical and surprising product line.

James Khan expresses interest in the product and the team, but does not make a counteroffer on the table.

The Wand Company is considering the offers and the potential benefits of having multiple investors on board.

Transcripts

[Music]

hi I'm Chris Bernardo I'm Richard

Pleakley and together we're the wand

company and we're here today to ask for

£200,000 investment for a 10% stake in

our company

Arthur C Clark is famous for having said

any sufficiently advanced technology is

indistinguishable from Magic and the

magic Market fantasy Market is huge

hundreds of millions of people spending

billions of pounds each year on magical

fantasy products and we thought with our

combined experience of 40 Years of

design development Electronics

development the rich and I would get

together and make some really magical

products our first one is a real magic

wand

and this is it so it looks pretty much

as you'd expect for a Wizard's wand but

of course a real magic wand should

actually do something and so with this

wand I can for

example play some

music I can rotate it to turn the volume

up or the other way to go down again I

can give it a flick to change

tracks stop the music in fact you can

control anything in your house so for

example I can turn on the

TV which I can fast

forward rewind

pause turn it off or even things like

ceiling fans and

lighting um we started the company last

year and by Christmas we'd sold over

10,000 units but we feel that with your

help investment and expertise we could

take the wand company to a revenue of

about £18 million within 3 years thank

you very

[Music]

much business partners Chris Bernardo

and Richard blakesley want the dragons

to spot money-making potential in their

magical take on the remote control so if

I come right up to

it in return for just a 10% stake they

need £200,000 to grow their business but

what's behind the magic James Khan wants

to

know what's the techn techology in this

that turns the TV on is it the same as

the remote control it is actually and

it's a chip that's applied by one of the

largest remote control manufacturers in

the world so we have contacts there and

it's a universal remote control chip so

that is the thing that sends out the

codes and learns the codes because it's

a learning remote control so you can

teach it codes of a ceiling fan or if

you had electric curtains or lights even

this responds by an action exactly

that's the difference it's bit like the

Wii really yeah and the way we've

written the software is it knows which

way up it is the whole time so it

doesn't matter which way up it is if you

turn turn it to the side as far as it's

concerned now that's the top again and

if you turn it around again that's still

the top and it still knows which way is

up right what's your next product uh

apart from this one that we've shown

here yeah

um well

um I I I can't say but it's I can't say

what our next product is because we

haven't protected it and we think it's

got very strong patentable so it's all

based around

magic surprising products so the one

company we believe will be a brand that

will take make sort of

quite magical and surprising

[Music]

products the dragons are clearly

absorbed by the product and Duncan

bantine wants more information about the

inventors

themselves so tell me about about the

two of your an I mean where have you

come from tell me your your story Chris

um that I did an engineering degree from

there I started a company that made an

electronic display as a component at

that place I met Richard we developed a

remote control actually which sold about

2 million units this this thing you

might have seen it about 2002 and what

about you Richard are you I was working

for the same company that did this up

until Christmas I'm now working

full-time for the wand company um let me

just go back through your figures then

you sold 10,000 of these ones yeah just

over 10,000 10,300 what does the product

cost you was about £10 landed in the UK

how what do you sell it for £50 you said

for 50 that's a huge markup yeah that's

direct to customers okay so what you

selling to wholesalers for between 28

and 35 £3 31 was our Blended average

selling price Blended average yeah it's

great price on a £10

product impressive margins great product

Chris and Richard are clearly doing well

in the den but are yet to receive an

offer will they now stand up to the

scrutiny of retail expert theop

petus so how many do you really believe

you can sell your to calendar year you

got Financial year Year we're projecting

conservatively 1.2 million for this year

how much net profit are you going to

make out of 1.2 million 50% .6 million

£600,000

what makes you think that you require my

£200,000

we we don't we don't need the cash to

make this worst case forecast we're

talking about but we're saying within

your investment we think we can do say3

million P worst case is 1.2 million and

make £600,000 profit that's correct

purely from this you've already

developed you've already got working

it's it's

there and you want £200,000 for 10%

y okay have there been any special

circumstances you think that have

influenced this so for instance the

Harry Potter movies yeah there are two

more Harry Potter movies coming one of

them is is this year in November and

then one is the next year in the summer

but actually it's appealed to people who

like the whole Wizarding thing there's

there's huge online games which like

World of Warcraft Age of Empires there's

other film franchises like naria and

there's uh Lord of the Rings what's the

income a quarter well it's been about

£100,000 in the last quarter expect that

to be growing up a little bit more than

that in the next quarter as we had more

resellers we just signed up a couple of

Distributors we're just concluding a

deal with Target in the US and one of

our Distributors wants to put the

product into skyl they are putting in

Sky they putting in Sky okay so skyl for

example it's a magazine the back of the

seat of every us internal flight pretty

much that 600 million people a year sit

in front of that

Chris Richard we could be here all day I

want your attention for a minute okay

I'm going to make an offer for all the

money the £200,000 but I want not

10% but 30% of the company if you make

600,000 profit I'll give you 10% of

equity back you have 80% of a business

making more than £600,000 profit and we

think we can grow that a lot from there

so so does that dealan can we ask if

anyone else is interested to you can if

you want to but you'll be wasting your

time thank

you Duncan bantine is the first dragon

to break cover but the structure of his

ratchet deal would still end up with the

duo giving away double the equity they

were offering will any rival dragons now

choose to compete

you've currently had your your offer

from Voldemort over

there and now Hagrid's going to come in

and play the same

game I'd like to offer you the full

amount of money2

200,000 for

25% of the equity of the

business can we have any uh share back

if we have any particularly good

performance then from that point if I

put the whole 200k in and own 25% of the

business that means one thing to you

you've got my

attention yes and I put quite a lot of

work into it because £2 200,000 is quite

a lot of money is quite a lot of money

okay would you like me to make you an

offer would you be interested in joining

Duncan Peter Well the fairness of the

other two they've offered you 100% of

the money and that in the den shows that

somebody actually wants to do this for

the themselves what offer would you like

from me that would make you happy 20%

going down to say 10 if we make 1.2 net

profit in this year you mean 600,000

profit no mean no no I mean I mean what

we think we should be able to do with

you guys on board so you're saying if

you do 3 million yeah you get 10 back if

we can make the business what we think

it should be 1.2 profit yeah I think if

you were talking about a sliding skill

getting it down to 12% so that work for

you that would work thank you Deborah

James I think it starts becoming less

about the percentages and more about

what you're going to get out of it your

answer to Theo was in your Ideal World

you'd have walked out here with two

dragons if the the least we can give

away is say 20 25% then I think we want

two dragons for that I think okay well

I'm going to offer you half the money

for

10% no Ratchet that's not we could offer

is it why not well the is offered this

a moment same equivalent and give them

what you they want two dragons

[Music]

oh in a canny move Deborah mean's tactic

to secure the deal is to differentiate

her offer from those of her Rivals but

with just one Dragon left will James

Khan now opt to share the bid or will he

want it for

himself I'm must I do like the product

and I like you guys thank you and I've

just been sitting here just listening to

the band