My Biggest Mistake: James Dyson

The 46-year-old designer's first foray into business after the Royal College of Art was with a company making military construction boats. His latest is a research company set up to develop a pioneering vacuum cleaner

MY BIGGEST mistake came in the early 1970s when I was developing the Ballbarrow. I was young and didn't have any money, so I needed investors. Other people were putting in the cash and I put in the patent and design.

But the way I did it was wrong: I assigned the patent to the company, which was a terrible mistake. I know now that one should license the company but hold on to the patent - otherwise you lose control, which was what happened to me.

The problem is that in order to interest investors or banks, you have to produce a working prototype. To get that far, you have to have done the design and development. Also you have to have patented it. So you have already risked the patent and development costs. Yet the investors and banks will not place any value at all on 'investment to date'.

This is extraordinary when you consider that the whole purpose of the business is to capitalise on the uniqueness and magic of the prototype. Instead, they apportion the shares according to provision of cash from that moment on - arguing that without further cash the product will go nowhere.

Having already invested in the development, I had no more money, so had to allow outside investors 50 per cent of Kirk-Dyson, the company we set up. As the operation needed more money, their stake grew and mine shrank - with the result that I lost control. Because I only had a minority share, I had to defer to their decisions at board meetings. I should have insisted on having a controlling interest in return for providing the prototype.

They had invested something like pounds 200,000. But this was towards the end of Ted Heath's government, with the three-day week and, in particular, very high interest rates. The interest was about pounds 400,000 a year and you can't run a small young business like that. It just sank us.

I tried to persuade the investors to capitalise their investment - which could have transformed things by getting rid of the interest - but they wouldn't do it.

What had happened was that the value of the product had become less and less important to the other directors, and their cash had become more important. As a result of my losing control, they were able to boot me out and, in 1979, sell the company.

I lost five years of work by not valuing my creation. It was a huge mistake. The curious thing was that I didn't protect the very thing that was most valuable to me.

It took a horrendous thing like that for me to realise that you should put greater store by your own strength, because creativity is a rare commodity. Designers are particularly bad at this; they are far too modest and nice. But most other professions know their worth.

Back then, I was not as confident as I am today; I was a self-effacing designer. But I've stopped that. At the moment, I hold 100 per cent of the company. Consequently, every decision is my decision. If you don't have control, you have to defer to outsiders. If I had kept control then I could have done what I wanted and avoided the big interest bill. Now we discuss important decisions among the company managers - and then make our decisions work - which is much better than having to live with outsiders' decisions.

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