Dragon Lessons

What’s the next million-dollar business idea?” was the question often posed by Michele Romanow and her two Queen’s engineering buddies, Anatoliy Melnichuk, BSc’07, BA’08, and Ryan Marien, BSc’08, BA’08, during their time at Queen’s. Michele brought entrepreneurial experience to the freewheeling debates, having already co-founded a successful business, The Tea Room, a zero-consumer waste coffee house on campus that’s still going strong today, ten years later. Her partnership with Anatoliy and Ryan continues to this day, with the trio having launched a caviar business and tech companies Buytopia and SnapSaves, the latter of which was acquired by U.S. group-buying giant Groupon in late 2014. The purchase price was not disclosed, but reliable sources claim the deal surpassed eight figures.

Michele’s latest gig, as the youngest Dragon on the hit CBC-TV show Dragons' Den, is just another iteration of the same million-dollar business game. A big difference is the deals come to her, pitched by eager would-be entrepreneurs looking for investors to make their business dreams come true. Of course, having the entire process broadcast to a weekly television audience of about a million viewers is a far cry from the trio’s brainstorming in pubs and coffee houses on campus years before. 

“It was a great learning experience,” says Michele, of days spent working on a business plan for the group’s first joint venture, a caviar business they developed while Michele was completing her MBA and Anatoliy and Ryan were finishing dual degrees in Economics. They competed on the “business plan competition circuit,” as Michele calls it, honing their plan in response to critiques from Michele’s MBA professors. Their diligence paid off; they scored five wins in competitions across North America, including the Queen’s Entrepreneurs Competition (QEC), and landed a $15,000 Dare to Dream Internship from the business school. Their winnings totalled more than $100,000, which enabled them to fund a pilot project in New Brunswick. The caviar business was showing a profit until two disasters hit almost simultaneously. New federal legislation put an end to their ability to export the product and the 2008 market meltdown drastically affected demand for luxury purchases such as caviar.

Michele and Joe are charmed by cuddly puppies during a pitch for support of a natural fly repellent for dogs and horses.

The partners went their separate ways, Michele to a corporate position at Sears Canada in Toronto. They stayed in touch and continued to keep tabs on trends and potential business ventures when e-commerce started to take off. They jumped into the market, launching Buytopia, a Toronto-based daily-deals website, in 2010. This time, the need for speed meant there was no time to fine-tune a business plan. A Canadian Business Magazine cover story (June 2016) called Buytopia’s launch “a shambles.” The website wasn’t ready on launch day, so the team put up an image of the site with the only workable button being a “Buy” link to PayPal. Even so, the first three deals offered brought in $10,000. “We figured it was a business worth pursuing,” Michele says, recalling the excitement of that day. 

After attracting national brands such as Sears, Cirque du Soleil and Staples, the next step was to consolidate. By 2013, the company had acquired seven smaller competitors, thereby strengthening its industry-leading position. This growth led 2.5 million subscribers to sign up, generating $10 million in revenue in the second year of operation. By its third year, Buytopia was the “#3 fastest growing company” on Profit Magazine’s Hot 50 ranking.

Even as Buytopia was growing, Michele, Ryan and Anatoliy continued to look for their next million-dollar business. They tested several business ideas: a scheduling software to enable customers to book appointments online for such services as spa visits or salon treatments; and a beauty-supply subscription box, among many others. “We never called them businesses,” Michele explains. “We called them projects. By the time you call it a business, it can feel like it’s too big to fail.” 

Failure, it turns out, is not a bad thing, in Michele’s book. “I often tell prospective entrepreneurs that for every successful project, there were five others that failed. I think that’s a good ratio.”

"We never called them businesses. We called them projects. By the time you call it a business, it can feel like it's too big to fail."

Another project that succeeded was SnapSaves, a mobile couponing app that gives shoppers cash back on the products they purchase when they photograph and upload their receipts. “We discovered that billions of paper coupons are redeemed in the U.S. each year,” Michele explains. “We thought that it was crazy that people had to remember to clip a coupon and bring it with them to a store, then deal with the cashier to have it honoured. There had to be a simpler way.” They developed SnapSaves to offer an easy, digital experience for customers that would also collect better data on these shoppers for client consumer packaged-goods companies. After hitting Silicon Valley in search of investors, “Groupon found us,” Michele explains. With its 50 million active customers, it was an ideal fit. By the end of 2014, the deal for SnapSaves closed and Michele and Anatoliy moved to Chicago to work as heads of sales and marketing, respectively at the renamed Snap by Groupon. They severed their ties to Buytopia, which Ryan continued to lead as CEO.

Buytopia’s success and the SnapSaves deal brought considerable media attention. Michele was named one of Forbes ‘Top 20 Most Disruptive Millennials on a Mission’ in 2013, and one of Canada’s Most Powerful Women by WXN in 2014. Even so, when a Dragons' Den producer called SnapSaves’ customer service line in the summer of 2014 asking to speak to Michele, “I thought it was a prank call,” she laughs.

“I went to the audition and I remember thinking I was really bad,” Michele recalls. “It was hard, being on a panel with five other leaders of companies, none of whom were used to being interrupted. It was hard to get a word in edgewise.” 

She did well enough to be offered the role as a Dragon on the web version of the show, Next Gen Den. She prepared by watching episodes of the TV show online to pick up tips on how to be heard. Producers of the TV show were watching and liked what they saw. Michele was soon signed to a panel of new Dragons with fashion icon Joe Mimran and brewery entrepreneur Manjit Minhas. They joined Michael Wekerle, the Bay Street savant, and 10-year veteran Jim Treliving when the show launched its tenth season in October 2015. 

“It’s been really fun being a part of the new panel, all of us learning from Jim, who has been very generous in showing us the ropes,” Michele says. There have been fireworks, too, most notably when Jim’s old-school style has conflicted with Michele’s Millennial approach. In one memorable instance, Jim tried to interrupt Michele, saying “Hold it, Sweetie.” Her retort was swift and firm: “Don’t call me Sweetie,” she snapped. 

Heated discussions between panellists come with the territory in an unscripted show like the Den. The Dragons walk into the den without any advance information about the companies, the pitches or the industries involved. All that you see on TV happens in real time, with deals being pitched, discussed, accepted or rejected at lightning speed. 

“I like to give people the chance to give it their best shot,” says Michele of her tendency to not interrupt in the first couple of minutes of a pitch. Having been on the other side, pitching her own businesses to venture capitalists who can be a hardened bunch, she’s sympathetic to the pressures facing the Den’s wanna-be entrepreneurs. “I want to see the potential, but you have to balance that with the need to test them on their concept, their knowledge of the marketplace and their grasp of the numbers.”

Michele was often so effective in poking holes in pitchers’ business models and demonstrating her knowledge of a wide variety of industries that one of the producers asked if she had found out about the pitches in advance. “I had to explain that I was knowledgeable because some of the pitches were for the same types of businesses that my partners and I had already tried to launch,” she laughs. 

It all makes for great TV, but there are real dollars at stake, and the Dragons aren’t in the business of losing money. The deals negotiated on the show are for an agreed dollar investment for a specific equity stake in the company. One of Michele’s first deals generated one of her fieriest exchanges with Jim Treliving. Two brothers from Vancouver were looking for $200,000 in exchange for 10% of their company. Daily Delivery, an “on-demand marketplace that empowers businesses and individuals to request affordable and reliable delivery services,” had successfully used a crowd-sourcing model to attract drivers to deliver meals and other commodities. Jim was adamant that crowdsourcing wouldn’t work, that non-employees couldn’t be trusted to be reliable and that their actions could negatively affect the reputation of the company whose goods were being transported. Michele countered that the Uber model proved that crowdsourcing is very effective. She joined forces with Joe Mimran and the pair split the $200,000 investment in exchange for 33% of the company. And post show? Michele closed the deal. 

After a deal is struck on the show, the due diligence process begins. The Dragons access legal and accounting expertise provided by the show and use their own diligence teams to review the terms of the deals before formal agreements are signed. During this process, the terms of the original deal may change or one or all of the players may walk away if the conditions aren’t right. “Sometimes the market changes, or we discover that what was presented on the show was different than the reality of the business proposal, and sometimes the entrepreneurs just aren’t ready,” Michele says. “Not every pitch closes, not every investor-company relationship works out, but that’s the way it works in business.” 

The businesses are usually at different stages of growth, with some requiring more hands-on work than others. “I see it as an opportunity to invest in the management team that is actually running the company,” Michele explains. “I’m there to open doors and to provide advice and guidance on big transactions. I’m not joining the management team. I’m an investor and I’m there to help them grow.”

Dragons Jim Treliving, Michele, Joe Mimran, Manjit Minhas and Michael Wekerle react to a pitch on the Den.

Taping for her second season of the Den started in April, with more surprises to come, Michele promises. Her Den responsibilities, while time-consuming, are balanced alongside her full-time job. Anatoliy and Michele’s commitment to Snap by Groupon ended in March, freeing them to pursue other new business ventures. 

Meanwhile, Michele’s been on the speaker circuit, having wowed a Toronto audience in March at a Women of Influence event with her co-Dragon Manjit Minhas and a Queen’s crowd in April, when she was in town to pick up an award from the Queen’s University Alumni Association. Next up is a panel presentation in June at The Economist-hosted Canada Summit in Toronto, which also features Prime Minister Justin Trudeau and Finance Minister Bill Morneau. The Summit’s aim is to identify the key trends that are reshaping Canada’s role in the global economy and investigate how the country can be more competitive. 

“My priority in terms of my public life is to give back to the next generation of entrepreneurs and to help our country do more to promote entrepreneurship, because it’s so essential to our economy,” Michele explains. 

As her public profile continues to grow, Michele is often recognized and nearly as frequently asked for advice about new venture ideas from people in the street and in the seat beside her on airplanes. “I try to be honest,” she says. “The most frequent piece of advice I give is that they should start now. People are often waiting for a perfect time to get going, and there isn’t one, or for their business plan to be perfected, and there’s no such thing as a perfect business plan. You just have to go for it, be resilient and keep trying.”