Dragons’ Den – JobLoft’s blog about their deal breakup

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Dec 9th, 2010 UpdateFrom JobLoft (Dragons’ Den) to Teamsave – Chris Nguyen

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I’ve already commented on JobLoft’s deal getting away so I will now focus on only a few key and important points in the JobLoft’s blog entry (Dec 9th, 2010 update: thanks to Tuzo, here is Wayback Machine’s archive of JobLoft’s blog entry that was “deleted”). And I quote from JobLoft’s blog directly here,

  • “What we need to address first is that what was shown on TV was just a glimpse of what happened in that boardroom on a wonderful Halloween morning. Of course, it was edited for TV, and producers have a magical way making things look and feel a certain way for television.”
    • [K: Are there any reasons for CBC to deliberately twist the JobLoft story to favour the Dragons? Seems to me it is good TV either way already. As far as I know, Stu has a background in Fifth Estate and Tracie has a background in Venture. In my humble opinion, there are just too much journalistic integrity in them to really distort the story one way or another. I wander if JobLoft has a full audio and video recording of what happened that Halloween morning to support their views? If they don’t have the tapes, has a request been made to CBC to help clarify the events that morning? Full video of the meeting may be required for analysis to be fair to all parties involved.]
  • “We are fortunate to have him [Dr. James Norrie] as a mentor and we are willing to stand up for the best interests of the company.”
    • [K: Did JobLoft truly want the deal to go through? Why were nothing done or said by the founders to stop Dr. Norrie’s personal insults of the Dragons? Why create such a negative environment right at the beginning of things?]
  • ‘For the record, Chris Nguyen, CEO of JobLoft says, “I learned a lot about business when I was at Ryerson…but nothing prepared me for the harsh lessons about what can happen when things go so wrong, so fast. [K: emphasis mine] The coolest thing about it though, is that in retrospect I wouldn’t change a thing about what happened and learning is always a good thing. As we complete the search for appropriate investment partners in the coming weeks, I think the shareholders have realized that we are better off with this outcome than the alternative of a fractious board fighting about the right strategy for our company. I would never take an investment offer again without making sure everyone was aligned on the company strategy. No regrets, no hard feelings and my partners and I, and even our company advisors, all wish the Dragons well and hope they can say the same about us…”’
    • [K: Learning is of course a good thing. But I was deeply disappointed to read that, “… in retrospect I wouldn’t change a thing about what happened …”. Chris didn’t have the basic graciousness to apologize for the personal insults by Dr. Norrie ( who is a director of the company) against the Dragons and Jim.
    • K: Did the JobLoft founders support Dr. Norrie’s view of the deal being under-valued? The problem was that Dr. Norrie’s attack was partly predicated on $200,000 being too little money. And given Dr. Norrie’s view of the fairness of the amount, supporting Dr. Norrie’s view fully has the same tone and appearance of backing out of a deal simply because of the agreed upon amount of money weren’t “good enough”.
    • K: May be JobLoft can get more investment dollars elsewhere. May be money really trumps “a deal is a deal” and integrity in our world where Donald Trump was treated as model businessman and source of wisdom. I just hope there is more than just money in life. I may be wrong. (smile)]

Here is a philosophy that I call “front page story test” which I learned from Warren Buffett after reading Roger Lowenstein’s Buffett: The Making of An American Capitalist about ten years ago. I will quote Warren Buffett to Salomon Brothers employees (I think it is Salomon) here, [K: emphasis mine]

“I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, be read by their spouses, children, and friends … If they follow this test, they will not fear my other message to them: Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.

Now, the JobLoft founders and Dr. Norrie have put themselves in the center of attention on national TV. I am deeply sadden that based on limited clips that I’ve seen and the above Jobloft blog entry, I truly wonder if the four JobLoft entrepreneurs and Dr. Norrie have unwisely traded off part of their reputation for a potential better deal for JobLoft (i.e. more money and other benefits). Is it worthwhile? Your comments are much welcomed here.

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27 Responses to Dragons’ Den – JobLoft’s blog about their deal breakup

  1. […] By the way, I have another blog entry commenting on the JobLoft’s official blog account of the event that morning. […]

  2. Rob Drimmie says:

    Regardless of anything else, I think that CBC definitely had a bias towards telling the story in a way to cast the Dragons in a positive light. The whole premise of the show is that the Dragons are near infallible. Getting a deal with them is the best possible thing that could happen to a petitioning entrepreneur, and if the Dragons don’t bite then obviously there is something inherently wrong with what was offered.
    I don’t really know any details of JobLoft, but a $200,000 deal for 50% of the company means that the company’s valuation is $400,000. JobLoft has been around for some time, they have an existing system and several founders and apparently employees. That is an extremely low valuation.
    Would the Dragons have turned it into something huge? Quite possibly. But if not, oh well, they were each only out $40,000 which is a completely acceptable risk for people with millions and billions of dollars. The stake the founders had was significantly higher in relative terms.
    Ultimately I can’t agree with your implicit assertion that we as the audience were shown enough to actually be able to determine what the best course of action might have been, though without any actual knowledge of the situation, certainly the best bet is on the 5 extremely successful Dragons before any of the entrepreneurs.

    **********************

    Hi Rob,

    I respect your view but I find it difficult to believe that CBC deliberately distort either the JobLoft entrepreneurs or the Dragons. Presenting it fairly even-handedly will still get a great audience number.

    I think the beauty of the show is that the Dragons are humans and fallible too. It shows, admittedly in an artificial set-up, how some investors think and will invest. In fact, they might adopt a much safer approach to deals than normally when they have much more access to information and background researches, etc.

    “Getting a deal with them is the best possible thing that could happen to a petitioning entrepreneur …”
    Well, not necessarily, it really depends on the quality of the deal and the entrepreneurs themselves. As witness in the UK Dragons’ Den series, I am sure there are Dragons’ deals that the entrepreneurs didn’t bite and they ended up better elsewhere, it is quite possible.

    $400,000 may be a low valuation but that is one of the strongest defensive mechanism the Dragons had in the Den. It is the Warren Buffett safety margin in investing idea.

    True, $40,000 may be a small investment compare to the wealth of the Dragons but that doesn’t make it a good reason to invest in bad business. The deal have to be “good” for them in terms of risk/rewards, fit for their knowledge, etc. first.

    Would l like to see more? Of course yes. Is there really a thing call “enough”? I am not sure. For me, I would love to take some time-off to be at the “eight days” (?) season two actual taping and I would love every minute of it. But not many people can do that or will enjoy or endure the really boring pitches. And, after all, CBC is in the TV business, so to get high ratings, it is their job to pull out the good bites and have enough information for us viewers at home to follow what is going on.

    Thanks for your feedback.

    Kempton

  3. Frankly I think that Professor exerted unreasonable influence over the students, and should have stepped aside.
    I would have given up 50% of the company to have Laurence and Jim on board.
    The cash was less important than there knowledge and expereince. getting three of them at the first meeting was an indication of their true comitement.
    Jobloft will fold if they do not take control of their destiny and try to continue being students. Laurence or Jim could replicate it tomorrow for less than $100k.

    —————-
    Hi Andrew,

    I agree with you that the Professor should indeed step aside. But how many people with “rock-star” power (I define as one grade lower than “absolute power”, which corrupts absolutely) is willing to step aside voluntarily? Especially if Dr. Norrie still probably thinks he did the absolute right thing by “helping” the student to get out of a “bad” deal?

    I would have given up 50% too. Of course, I go with the original deal of having all five Dragons on board. (smile) Given the way they will likely be working together.

    You are absolutely right that the case is “less important than there knowledge and experience”. You can’t pay them with the money they are investing in exchange of the time they will spend. Granted, they are busy people but they three were there at the “here is the cheque and welcome aboard” meeting.

    You are right that the Dragons can probably hire the right people and replicate a workable site and compete with JobLoft. As do some other enterprising people. It is the sites with jobs that will get people using them. The JobLoft entrepreneurs have just made their own path to success so much less clear and so much more challenge.

    And worst, the reputation lost by the JobLoft entrepreneurs and Dr. Norrie were incalculable. Just a sad situation.

    Kempton

  4. Mark says:

    The one lesson that the JobLoft team, and the esteemed Professor Norie, have yet to learn is to respect both their friends and their enemies. Hurling insults, personal ones to boot, and not apologize at the first possible opportunity is a sure way to begin your descent.
    Businesses come and go. Your reputation stays with you for life.

    ——————–
    Hi Mark,

    You are absolutely right. “Businesses come and go. Your reputation stays with you for life.” Again, it is sad for me to see the young JobLoft entrepreneurs starting their career in the wrong foot. And I am not sure if they know they need the fastest response to things right now (e.g. being interviewed by the media) as oppose to the “wait out the storm” approach.

    Kempton

  5. L.K. says:

    It might look like a bad move, but give it time: You Jobloft guys should be THANKING the professor for basically killing what was really a BAD DEAL.

    You not only got more than a couple hundred thousand dollars in free publicity from your appearance on “The Dragons Den”, you also proved you had a commodity that people wanted.

    The $200,000 for %50 was a horrible deal. You could easily get that money for under %10 of the company or even less

    The fact that you were going to have “All five Dragons” onboard meant that each Dragon was only going to invest a fifth of their time into this venture.

    Translation: It would of been a pain in the ass dealing with these five and for the percentages you were giving up the company for: NOT WORTH IT.

    I saw the website jobloft.com you’re onto something amazing where you will find the venture capital and a more even keeled (cooler headed) investor.

    Your professor was just looking out for your best of interests and he made a GOOD CALL.

  6. kempton says:

    Thanks for your feedback.

    The deal being good or bad is one thing. The way the deal was broken off was a different matter that could have been handled much more professionally.

    It should be fun to watch the season 2 of Dragons’ Den tonight.

    – Kempton

  7. TJB says:

    What has happened since the deal fell through?

  8. kempton says:

    If you are interested, I think Robert talked a little bit about JobLoft in his book.

  9. Nick says:

    One question, 3 years later… did it work out for these guys? I just googled JobLoft, and I can’t find anything but articles about their appearance on Dragon’s Den. No JobLoft website, and the link in your article, to their blog, is dead now.

    PS: I guarantee the poster above named LK, is either related to, or friends with Dr. Norrie.

  10. kempton says:

    Moneywise, I think the JobLoft guys sold their business for more money later. In terms of their “reputations”, I am not as sure about the long term impact because of the way the deal blew up on TV.

    P.S. Since there is no website for JobLoft, I am not surprised that the link to their blog is no longer active. I do wonder if one is determined, can the Wayback Machine http://www.archive.org/web/web.php be used to find the old postings?

  11. Tuzo says:

    Wow, this thread is back from the dead. You can find the blog entry at: http://web.archive.org/web/20080609004229re_/www.jobloft.com/blog/2006/11/22/jobloftcom-the-suns-still-shining-outside-the-den/.

    As CBC airs these old Dragons’ Den reruns I find myself constantly searching to find out what happened to the businesses all these years later.

  12. kempton says:

    Thanks Tuzo. Looks like the Wayback Machine still works and the old entry has been captured and perserved.

    Yeah, I think part of the fun is to find out what had happened to these businesses since the show airing. I can guess/tell that CBC must be re-running earlier shows as I see people searching for JobLoft. :)

    My hope for Dragons’ Den is that Canadians will pick up something useful about “business” and be inspired to be brave to try and start their own businesses.

  13. Dave out West says:

    Professor James saw this as a bad deal and deliberately said those things to cause the Dragons to walk away. If it were done another more professional way there most likely would have been litigation and the Dragons would have won a chunk of the business or damages.
    It was rude, but made for good TV and as Kevin says: its just business!

  14. kempton says:

    thanks for sharing your thoughts.

  15. MarkShepherd says:

    Just saw the clip posted on YouTube. Wow.

    200K for a bloody job board web site? 120 days & a 5000.00 CAD retainer. That’s all it’d take.

  16. JonG says:

    I just wanted to say that Dr. Norrie is an ungrateful and disrespectful individual who only sits in a classroom all day and keeps convincing himself and thinking that just because he holds a Ph.D, he knows everything about business, when he actually doesn’t because he doesn’t know 1/16th of what the Dragons know in business. He never really lived it and has just been theorizing about it. He thinks that you need a business degree to be in business, however, the most successful businessmen in this World did not even hold a Bachelor degree in anything when they became successful…

    He is a very sorry person.

  17. kempton says:

    JonG,

    Have you attended one of Dr. Norrie’s class thus speaking from experiences? I haven’t met him personally and have only seen him through that episode of Dragons’ Den, so I don’t know if what you wrote are valid or not.

  18. amrojare says:

    They aired this in my country just recently and I was amazed of how old this was (aired almost fresh Shark Tanks before DD).

    About the incident I saw on Google video. I don’t know if it was the editing but something must have happened since mr phd got so aggressive. And I couldnt believe my eyes that no one of those 4 guys stepped up and intervened. Im pretty sure the numbers were on dragons side when talking about making business a success!

  19. ectsy says:

    ^ I honestly wouldn’t have stepped up and intervened either, my business mentors > dragons anyday.

  20. Atariboi says:

    Those who can’t do … teach!

    Dr.Norrie is a moron. He’s probably way overpaid a teacher as it is. He had no part in the negotiation process to begin with and so should’ve let these guys who actually did all the work move forward and learn from life. They were trading a chunk of their company for the experience that the dragons were bringing to the table.
    All dragons were interested which meant there was something there and it could’ve gone somewhere. I recently checked out the jobloft site and it was nothing that stood out for me against what is already being offered by Monster.ca, Workopolis, Etc.
    I would’ve fired the teacher on the spot and gotten him out of the room ASAP.

  21. Dianna Stephenson says:

    These guys are so dumb!

    Editor’s note: I moderate all comments posted here. One may agree with disagree with something or someone’s action. But offensive or out of line personal attacks will not be tolerated and will not be posted.

  22. DANNY says:

    Just watched the episode again and it still leaves me shaking my head. I don’t believe the professor was deliberately being rude as a strategy to kill the deal. If they didn’t want the deal, a phone call would have been much easier. They destroyed their reputations on a national, and now due to youtube, an international level. I wouldn’t want to invest in that company, knowing that a person like the professor was deeply involved.

    The dragons’ don’t need to make these deals. They already have huge amounts of wealth. I doubt any of the dragons’ are losing sleep over what turned out to be a minor opportunity. They might have been able to get a bigger acquisition deal if they had the backing of the dragons’. It’s all speculation at the moment.

    • kempton says:

      Thanks to re-runs (and YouTube), the actions/inactions of the entrepreneurs and their professor will be seen for a long time to come.
      On some level, one has to realize our reputation is a key part of our “asset” or “liability” and will stay with us.
      P.S. We are almost six years after the original air date! May be the entrepreneurs and the professor don’t care about people’s views of them, but then some may disagree.

  23. collins says:

    just saw this a few days ago and I must say that is the saddest fall-out that I have ever seen. clearly the 4 jobloft guys were inexperienced in handling a business as much as their admired professor is inexperienced into how to make a deal or go out of a deal. the dragons are investors and have connections which would either make or break their business. in business, you have to keep your reputation as no sensible investor would risk his money on investing on a people that are difficult to deal with or make up their minds.

    problem is, the jobloft guys got greedy. the valuation of their startup company was just fair considering that they have to show sales on what they earned, not just relying on a premise of potential. as an investors’ point of view, they are also wary of their money as well. the professor didn’t undervalue the $200k for 50% of the company, he undervalued the worth of the investors could bring to the table which the professor has failed to analyze on his business theory. it’s too bad. they could had been millionaires if they used their heads.

    instead, they sold their company for $1 million a year later and divided it up among themselves just enough to pay for a student loan.

    this should be a lesson to all would-be entrepreneurs. study what your investors are capable of doing for your business and never let a professor with no business experience to deal with real business people.

  24. David says:

    This “Professor” will forever be red flagged. And he only has his own rude ego to blame.

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