How failure and lingerie ignited fire in belly of business dragon

BOOK REVIEW: CIARÁN HANCOCKreviews Enter the Dragon - How I Transformed My Life and How You Can Tooby Theo Paphitis

THEO PAPHITIS isn't short on confidence as regular viewers of the popular BBC television programme Dragon's Denwill know only too well.

With an estimated wealth of about £125 million (€160 million) and a hard-earned reputation as one of the best turnaround entrepreneurs in the UK, he has every reason to feel good about himself.

But he's also refreshingly honest and upfront about the mistakes he has made in his career, something that emerges in his recently released book about his climb to the top.

It lends a certain weight to the old saying that to be a successful entrepreneur you shouldn't be afraid to fail.

It was 1988 and Paphitis was in charge of the Astra Industrial Group, the first public company he had led.

He was persuaded to make a bid for a souvenir company called Splash that had a chain of stores in London and sold policeman's hats, clapping dogs and singing flowers.

It also had the licence for Garfield and Batman T-shirts.

As it turned out, Splat might have been a more apt name because it was ultimately to bring down the whole house of cards.

"We had based our bid on the publicly available information - the reports and accounts that companies have to publish every year," Paphitis recalls. "But there were aspects of the balance sheet that were absolute nonsense.

"For example, a large part of their stockholding was in fact old stock that had now gone out of fashion and was consequently worthless."

It was the aftermath of Black Monday and Splash's difficulties that eventually forced Astra to seek new investors, who duly showed Paphitis the door.

"I was being booted out and for the first time in my life I was unemployed," he states. "My confidence was shattered and I had no idea what the future held for me."

Paphitis admits to bouts of depression as he struggled to come to terms with his new status and "most people" wouldn't return his calls.

He bought a boat and sought sanctuary on the Thames.

"I was anonymous and would go on day trips up and down the locks. I even had a portable TV and forgot all about work and business."

Fortunately for Paphitis, he had some "walking the street money" - £75,000 to £100,000 - stashed away for a rainy day.

Eventually, he got a call from an old contact and before long he was in pursuit of a company called Movie and Media Marketing, which sold perimeter advertising around sports grounds.

The company was in receivership and using a third-party intermediary. Paphitis made a bid with his rainy day fund using a well-worn trick he had picked up.

It involved his intermediary informing the receiver, who wanted £50,000 for the business, that he had bank drafts for £40,000 - take it or leave it.

In fact, Paphitis had another bank draft in his back pocket for £10,000. The receiver bought his bluff and the Cypriot-born entrepreneur was, literally, back in business.

The rest, as they say, is history. Paphitis ended up buying struggling stationers Ryman and Partners, and loss-making lingerie businesses Contessa and La Senza, which went on to wipe the eye of Marks Spencer, then the biggest seller of women's undies.

The group's turnover exceeded £170 million and it employed 3,000 staff. Paphitis later sold the lingerie business for £100 million.

This wealth also enabled him to indulge one of his many passions: football. He bought Millwall FC in London in 1997 and was chairman when it reached the FA Cup Final in Cardiff three years ago against the mighty Manchester United.

His book has some good yarns to tell about his dealings with agents and players and their outrageous demands, most of which he gave the boot.

Paphitis also gives an insight to the workings of Dragon's Den.

"There is nothing fake about Dragon's Den- it's real in every sense of the word. We haven't a clue who - or what - might be coming up those stairs. People think we're primed about the people and products in each programme, but we're not."

Peter Jones is one of his "dearest friends", Duncan Bannatyne is the "archetypal Scotsman", Deborah Meaden has become "one of the boys" and James Caan is "quite happy to laugh at himself".

It's not all sweetness and light in the Den and Paphitis describes how he and Bannatyne had a heated exchange in a "naughty room" in advance of series five to sort out their personal differences.

It seems to have worked and the Den continues to be a ratings winner for the Beeb.

Paphitis came from humble origins, leaving Cyprus as a six-year-old with his family to go and live in England.

They had little more than the clothes on their backs.

By his own admission, he's never been good at coming up with ideas. His talent lies in taking the ideas of others, nurturing them and executing them so that it comes good for him in the end.

Through a lot of hard work and a bit of nous, he made himself into one of Britain's most successful entrepreneurs.

To close the book, Paphitis gives his 12 rules for business success. Rule four is that cash is king, something we're all learning in the midst of the current credit crunch.

"Don't be without cash. You can live without profit, but not without cash. It's very basic and simple advice."

Hear, hear.

• Ciarán Hancock is Business Affairs Correspondent with The Irish Times

Enter the Dragon - How I Transformed My Life and How You Can Tooby Theo Paphitis; Orion Books; £19 (€24)