Your Start-Up Business: Behind the Scenes of Dragon’s Den
This week, I spoke with an entrepreneur who has achieved the Canadian Dream. In 2010, Barb Stegemann walked onto a soundstage on the 10th floor of the CBC building in Toronto to pitch her business: a perfume company which sourced its ingredients from Afghanistan. It was an idea which confused many of the Dragons, one of whom, Kevin O’Leary, didn’t even give Barb the time of day.
But, Barb secured an investment from W. Brett Wilson, and she has been full-steam ahead on The 7 Virtues, ever since.
Karen: I interviewed Dragon Bruce Croxon earlier this year, and he was very clear to point out there is a different reality to the 7 minutes you see on screen. Talk to me about what it’s like in the run up to the show actually airing.
Barb: Bruce is right! A whole lot of work happens between the day you film and the day it airs! As soon as you tape, if you get a deal then the due diligence begins and it’s intense. The Dragon Investors want to know you are what you said you were during taping.
Passing due diligence was the easy part for me. Not telling my friends for the nine months between taping and airing was the hardest thing I ever had to do! It was killing me not to tell my friends. Everyone knew I went on the Den. Then they wanted to know how I did. And I wasn’t allowed to say! But it was so important not to say a word for the effect when it aired. It paid off!
It’s really tough too when you are going to W. Brett Wilson’s Garden party (well the party is not tough, best party of the year) but your kids are wondering why you are heading to Brett’s house across the country and they can’t tell anyone. My kids think Brett is the coolest and they are right. My son and his friends did a launch of our Middle East Peace fragrance with him and we did photos and Brett drew moustaches all over their faces on their photos. So like guys, they banter back and forth and now they want me to take them to Calgary to see his cars.
Karen: Everyone’s curious about what happens after the Den. In your case, you made a deal. Can you talk about what happened next?
Barb: A lot goes on behind the scenes. I was seeking a mentor. At the end of our clip, when they asked if we had a deal, I said, “Do I get your wisdom and counsel?” And Brett said, “You’ll have a hard time ignoring us!” He was right. He became my dream mentor immediately. He had me booked to present in front of groups within 24 hours.
He and his team at Prairie Merchant gave me their undivided attention. His VP Dave Waslen spent hours on the phone hours after taping. So I went with Brett as my investor. He has grown into my mentor and friend. He pushes me and challenges me and we share the same philosophy of economic empowerment. He also got me connected with my speakers’ bureau, Speaker’s Spotlight. Here is the coolest part, we bring The Hudson’s Bay stores to my talks and they set up a “pop up” store and our retailer sells hundreds of bottles of fragrance. It’s a whole new way to do retail. So I may not be a giant company, but I bring new things to the table and get to really know our retail partners.
Karen: You received some additional awards and notoriety soon after closing your deal. How did that come about?
Barb: I had been giving talks with my book, The 7 Virtues of a Philosopher Queen for a couple of years before the fragrance launch. Then I spoke on the 100th anniversary of International Women’s Day at 14 Wing Greenwood, Canadian Forces Base. I shared the message that we as citizens and businesses must not expect government and military to do all of the heavy lifting alone.
I shared that I am on a mission to see a cavalry of businesses coming to do trade with nations rebuilding. When a farmer can buy books and shoes for his children in Afghanstan or Haiti or the Middle East because of the essential oils we purchase, then his children won’t be taken by oppressors who promise literacy and deliver nothing but oppression to people who just want an education and economic freedom.
After my talk, the Commanding Officer asked me to be the first female Honorary Colonel for their base. As the first woman to land a deal on CBC’s Dragons’ Den from Atlantic Canada it’s really important for me to remain in my community to prove it can be done. We can be the change. It was an honour to win the WXN Top 100 Most Powerful Women in Canada, especially since I was born with a hearing impairment and raised in humble roots, many years on welfare when we were young in rural Nova Scotia.
Our fragrance line won Chatelaine Beauty 100 Award, ranked top five fragrances in Canada! That was big. It meant we went beyond this great story and are now officially a stand alone exquisite fragrance. This year I was the only woman on the stage (out of 8 winners) to receive the Ernst & Young Entrepreneur of the Year Award in Atlantic Canada. And as a result my son will study at Ashridge School of business this summer in London, England! The program is for children of the EYA winners! How cool is that! And it was an honour to be named Top 30 Cool & Fabulous Canadian Entrepreneurs by Profit Magazine this past year.
Karen: What was the biggest surprise after securing your investment?
Barb: You have to move fast — going from a few boutiques to 90 stores at The Hudson’s Bay across Canada was rapid growth, but you really have to grow big otherwise you will never move the volume investors expect. So life changed overnight. Life became so busy I could not take the time required to drive to the gym and had to create a mini gym in the room beside my office so that I can get my run and weights in. Health is my priority when working this hard, you really learn to streamline your day to get everything you need in. I still get everything I need done, there is just no time wastage.
Karen: How hands-on is W. Brett Wilson?
Barb: Brett is incredibly hands-on I talk to him about everything from design on the fragrance packaging to expansion. He is a true mentor. He believes in me and I look up to him and have the greatest respect for his mind (and heart). He is so brilliant (and generous!). I stay at his home if I am in Calgary and he generously comes and shares the stage with me when I speak in his community.
We get a standing ovations together — I think it’s the chemistry. We joke around a lot. I get his humour. We can say anything to one another. Our retailers LOVE him. The Hudson’s Bay team, Lord & Taylor and Air Canada Duty free all love how involved he is and they find him adorable. My daughter is 13 and she thinks it’s pretty cool for her mom to have a mentor in business like Brett Wilson! It shows my kids that women can do anything with mentors. Brett and I always joke that out of the over 20 companies he has incubating, I am the loudest baby in the nursery with the red cheeks and the tears and my hands outstretched saying, “love me!”
Karen: 2 years on, how has your company changed? Is it the company you envisioned when you pitched it?
Barb: The 7 Virtues is really on a wild ride. And yet, we have followed the business plan I wrote. So in a sense it was all mapped out and planned. This is one of the most competitive industries with only four major companies running the fragrance industry. And yet, our little company is the #2 selling fragrance on Air Canada Duty free. Our fragrances rank in the top 50 per cent of the 125 prestige brands at The Hudson’s Bay consistently, often in the top 10! Our highest was in January, we made #6 top selling fragrance. I told Shelley Rozenwald, the Chief Beauty Adventurer that we will make #1 one day! That’s my goal, to be the #1 selling fragrance at The Hudson’s Bay (even just for one week!)
The company is up against titans with huge advertising budgets that have been around for over half a century. The 7 Virtues is a new collection that is really an indie niche brand and yet it’s out there in the commercial retail world competing with launch budgets in the millions. We boot strap it! Early days are all about pumping revenue back into production to make that next remarkable fragrance and story. So I live off of my book sales as I did before the fragrances and am able to use my skills as a journalist to share our story of economic empowerment. Leveraging everything we have to compete.
Karen: What’s the biggest misconception about being funded?
Barb: I think people think you have to give away the farm. You don’t. Brett invested $75,000 and got 15 per cent of my company. I think that was reasonable on both sides. We both won and I remain the majority shareholder.
Karen: What have you learned about business in the 2 years you’ve been working on the 7 virtues?
Barb: I have learned that mentorship is key. Build friendships with your suppliers and retailers. They become family. Follow your gut. Do your homework. Be passionate. You don’t need to know everything. But you do have to be fearless and you do have to make a product so extraordinary that people can’t do without it. Our fragrances are paraben free, phthalate free, vegan and made with essential oils that empower so they are good for the world and good for your skin. We have been dubbed the fragrance you can wear to work because our fragrances don’t walk in the room ahead of you, they are light. I love when women tell me this is the first bottle of fragrance they have purchased in 15 years and they can wear The 7 Virtues. That makes me really happy. We are filling a need.
Karen: Any advice for those who want to go on the Dragon’s Den, or who are seeking funding?
Barb: DO IT! Go and meet with venture capitalists in your community and practice on them first. I did! I met with an Angel Investment group and with Mickey MacDonald, considered to be the wisest person in retail in our community! Their wisdom and valuation gave me confidence. My company was only two months old! So there are things you can do to win! Just do your homework.
Karen: What else do you want people to know about The 7 Virtues?
Barb: It was an honour to be made the first woman to land a deal on Dragons’ Den from Atlantic Canada. Then to go on and be named Top Game Changer in the history of the show for making a social impact in communities with our buying power was really a turning point. When Jim Treliving surprised me with a Ford Fusion (aired in Dec) for winning top Game Changer I was so touched, I cried. It’s really wonderful to remain close with Jim and Arlene too. Arlene and I are both Honorary Colonels and we have shared the stage speaking.
I also like that our company is debunking old ideas and myths around capitalism and what it looks like. Two weeks ago I traveled to Haiti as a guest of President Clinton and the Clinton Foundation because of my work in doing trade with suppliers in Haiti. I know my business is not Kevin O’Leary’s idea of capitalism, but I’ll take President Clinton’s idea of socially responsible capitalism any day over O’Leary’s. There is room in the market for both of us.
I want all socially conscious entrepreneurs to know you don’t have to be only about the money. You can make a difference and change lives of others while making money. I was awarded the Women’s Innovator Award at the APEC Women and the Economy Summit for my business model. It was hosted by Hillary Clinton. We won because of our business model where the farmer makes money, the supplier makes money, the retailer makes money and we make money is what our global village needs right now. Everyone makes money. No one makes all the money.