“Of all the business problems you can face, running out of your product because so many people want to buy it is about the best one you can have,” Steve Smith tells Startups when we meet a week after his appearance on Dragons' Den. Nearly 2000 units of his TrueCall device, which blocks nuisance calls, were sold in the week after his TV debut. Total sales before the appearance stood at 1200.
The limited period between the recording and airing of the show meant there wasn’t enough time to ramp up manufacturing, but it’s a situation Steve insists they won’t be caught in again soon. A serial entrepreneur and angel himself, Steve is no novice when it comes to sniffing out a good business proposition. Several multi-million pound exits in the IT and telecoms sectors paved the way for TrueCall to be started with business partner John Price.
“Both myself and John had worked in the call centre industry for a long time and we felt that over the past ten years, all the good things about the sector had been undermined. The industry will admit that nuisance calls are a bit of an annoyance, but we spoke to people that would not leave their home for the rest of the day after a silent call for fear the house was being watched.”
With around 2.5 billion telemarketing calls received annually in the UK, Steve and John were confident in the market for their product, especially after initial research revealed no similar offering was on sale. After building a prototype, the pair needed a way to test the product effectively. The solution came in the form of a deal made with two charities. A donation was offered for each tester the charities recruited, giving TrueCall an effective unbiased focus group.
“These were people that had no relationship with us so they honestly told us what they thought about the product. You just can’t get that kind of response from friends and family, and it resulted in a lot of ideas and fine tuning.”
Most of the TrueCall operation is outsourced but Steve relies on a ‘great virtual team of people pulled in to do various jobs’. However, he admits his international plans for the business required more specific expertise, and that’s where Dragons’ Den came in.
“I went on the show for the Dragon and it couldn’t have worked out better. We wanted Peter Jones but to get all of them competing for a share was amazing.”
After offers from all five dragons, Steve eventually negotiated Peter Jones down to a 12.5% stake in exchange for £100,000. They say practice makes perfect and Steve certainly made a point of rehearsing thoroughly before the pitch. Drilled on all the numbers by his son, every last business figure was committed to memory. There was also a spot of role-play too. Steve’s wife, an actress, brought home some fellow thespians to form a mock panel. “They’d been briefed on the type of questions to ask so they were brilliant. One of them even put on a Scottish accent.”
The rehearsals clearly paid off as the real pitch resulted in one of the most successful deals brokered by an entrepreneur in the Den. However, Steve insists he would never have given the company such a low valuation had he been dealing with an investment company. “I discounted to that level because of what Peter could bring to the business. I think the Dragons appreciated that.”
Steve now wants to use the investment, and the Dragon, to expand the business outside the UK, and he’s confident the demand for the product can be sustained overseas. “The US gets three times as many nuisance calls as us, so while the UK is a fantastic market, the world beckons.”