In part two of Lord Alan Sugar’s insights at Business 2012, the Amstrad founder and serial entrepreneur talks about his most difficult deal, why entrepreneurs have to stand on their own two feet, and why competition in business comes down to more than just price.
In your experience, have you come up against a situation where the market isn’t there despite your hard work? What would you do?
Cut and run. You can’t flog a dead horse. You’ve got to know when enough is enough. Respectfully, stop blaming economic climates and all that. One of my best attributes was to say ‘we’re out’ when a product wasn’t working – not technically, but wasn’t selling.
Have you cut and run too early?
I cut and run far too early with Palm. Every single product we sold in the 1980s sold 100,000 in no time. There was one product that we made that was a derivative of an iPhone, which was a Palm Pilot. It was far too early. We made 100,000 of them, they didn’t sell, and I cut and run. The rest is history. Palm Pilot went on and sold 50 million of them. Apple came out with similar products…
What drives you every day?
That’s a good question. What gets you out of bed? Me personally, I like a deal. I like to see an idea, a concept get off the ground. Once I’d made my first bunch of money, people ask ‘why didn’t you stop there?’. It’s because I enjoyed getting out there. People should be self-sufficient and get out there and apply what they’re good at. And when they find what they’re good at, stick with it.
You’ve got to avoid just doing things that become fashionable – I’ve seen so many people start something that’s fashionable, from a fashion designer to a candy store. They all fail, because you have to become an expert in something. And it follows that you become an expert in something you’re interested in. If you don’t you’re going to fail.
How important are entrepreneurs for setting out the vision for what the government can do for business?
It’s very important, but the problem is, who determines whether you’re an entrepreneur or not? It’s the ones that stand up and say they’re an entrepreneur that I’m most wary of. And don’t rely upon any government to help you. You’ll be in big trouble if you wait for them. The current business secretary has never even been in business.
What’s the most difficult or most challenging deal you did?
When you start, the most difficult is the first one. It could be selling a bunch of car aerials out of the back of my car. I bought a second hand mini-van and some stock with the rest of the money I had. The stock I bought was something I understood, so I knew what I was doing.
When you make your first deal, mine was £4, that’s a great deal. When you sell a company to Bosch for £96m that’s exciting, but possibly not as exciting as the first deal you did. I remember walking out of BskyB with corporate lawyers for one single order of £120m. They were jumping up and down saying ‘I can’t believe what we’ve done’ but I felt it’s just what we do. They were shocked about me not jumping up and down.
If there were five businesses offering the same product, what quality would you look for in that product?
Price is not everything for a start. It very much depends on the commodity or service in question. What matters is your perception of whether they can deliver what they’re offering. You would tend to choose a product on what the company has done before. That’s what makes it hard for start-ups as you’re breaking into a market. Make sure you’re ready and armed with a portfolio of questions. How you’re going to deliver it. How you’re going to go about it. Make the customer feel comfortable. Price is certainly not everything.
Lord Sugar was speaking at Business 2012 at London's O2 Arena
Part one: Start from scratch, with your own money
Part two: Don't rely on the government to help you
Part three: I only take risks in things I understand
Part four: We need to create a culture of enterprise