Kids just don’t know how to say “thank you”. As a child who grew up in a foster home, I was very lucky to have had some wonderful schoolteachers who looked out for me and made getting an education enjoyable. When I finished high school at 17 though, I just walked out of the school yard one last time without as much a “good-bye”, let alone expressing any gratitude. Years later I looked back on that and felt truly awful; I just hoped my gross selfishness didn’t at all impact on those teachers’ enthusiasm and willingness to give time to students who followed me. So I was thrilled when one of my favourite teachers, Peter Rolfe, contacted me on his way through London and I could treat him to dinner at a good restaurant. It was over 30 years since I’d seen Peter and hearing about the rest of his teaching career reminded me that some people have that wonderful ability to just keep giving, no matter what they get back. And I was able to remind him that it was he who had ingrained my lifetime love of economics.

Whoever said economics is the “dismal science” was wickedly wrong. Economics draws from many fields; it’s like a melting pot for things like psychology, logic, the scientific method, statistics, and mathematics. That’s why it can be so fascinating. This week and next, I want to mention a few that Peter used to ignite my imagination.

Giffen Goods. Normally if something goes up in price, people buy less. Giffen goods however, behave in a strange way. They sell more because they are expensive. The example Peter gave was Rolls Royce cars, which like other luxury goods give the buyer prestige as well as a product. And the reverse can be true when Giffen goods don’t sell despite their low price. I was reminded of this when I tried, but basically failed, to sell high-quality cheap tennis racquets on line. People assumed they were rubbish even though they were every bit as good as the expensive models.

Hotelier’s theorem. On a one-mile beach packed with sunbathers, there are two competing hot dog stands. Where’s the best place for them to be positioned? Answer: a quarter of a mile from each end. That way the maximum any buyer has to walk, either from near the middle or near an end, is a quarter mile. The trouble is, the businesses will move towards the middle, almost to the point where they are both positioned next to each other, and some unlucky sunbathers will have to walk nearly half a mile. The hot dog sellers know that on each side of them there is a “captive market” who have no choice – the competition is even further away. Now, we see this movement to the middle all the time. Areas of competition start out offering a real choice but end up being very similar. Politic parties, for example, used to offer a choice between near socialism or elitist capitalism; now the parties are all basically in the middle offering market oriented policies with a social conscience. Consumer products also converge; look at PC’s or printers and try to find any real differences. It makes me wonder how similar the iPhone and Samsung Galaxy will be in a few years time.

Substitution. When incomes go up, people buy more sausages, because they can afford to. But they also buy less sausages, if they substitute-in more expensive meats such as steaks. Whether the “income effect” or “substitution effect” dominates will determine whether sausage sales rise or fall.

Sausages, hot dogs and Rolls Royces. There was a lot to reminisce with Peter about. More next week.

It would be unfair to blame it on the crocodile. This, I thought, was definitely the strangest technique of any player, in any sport, in the history of the universe.

And I thought what I had seen back in Monaco a few years earlier would never be surpassed. On that occasion I was playing doubles tennis and one of the players was rather uncoordinated, a bit like a Mr Bean with fleas. Nevertheless, he loved to try to put lots of spin on his shots. So when he hit the ball he would flick his racquet from very near the ground to above his shoulder. At the same time, he was kind enough to shout a friendly warning, “Top spin!” which in his heavy Austrian accent, was more amusing than alarming. Hitting the ball like that though, he would often do mis-hits, which would sometimes send a ball flying over a fence. But on that occasion it wasn’t the ball that misbehaved. As my mate yelled out “top spin!” his racquet came loose from his hand and went rotating high in the air, seemingly flying like a helicopter. There was a moment of panic for all of us, as we watched this out-of-control rotor as it chopped up the sky. Fortunately though, there were no injuries because the racquet came safely to rest in a neighbouring garden. Technically that garden was in France, not Monaco, so my mate is surely the only person ever to accidentally launch and land a tennis racquet into another country.

On this occasion though, I was playing golf in the northern part of Australia with two Aussie mates, Tim and Will, and the friendly warning was from the guy at the golf shop. “Just be careful out there today, cobbers [friends]. We think there might be a salty [croc] in one of the billabongs [pool of water]”. That worried us as we went out on the course. It was remote and quiet, and no one else was around. “Struth! Was he fair dinkum?” [Is it the truth!? Was he serious?]. It worried us enough that we made a plan: whenever we had to retrieve a ball from near any water we would form a human chain linked with golf clubs. The instant any hungry 20-foot reptile jumped out we could yank ourselves to safety. As if!

Will is actually a very good golfer and the plan that day was for him to give Tim and me some tips. I hit off first and the ball went a fairly short distance into some long bushes. Will was then immediately able to summarise my talents. “Ricko, you’ve only got three things wrong: your stance, your grip, and your swing.” Then after a little moment he added dryly, “But that’s really all there is in golf.” Thanks mate.

Tim was up next and what I saw will stick in my mind forever. He first readied himself about 6 feet from the ball and started doing practice swings. They were not high swings; only his arms and the club moved while the rest of his body stayed completely still. And there was no pausing; he just kept going like an upside down windscreen wiper. It was like he was sweeping a broom in both directions. This was already rather odd but what followed set a new benchmark in bizarreness. He started walked forward, but, wait for it, he didn’t stop swinging! Tim was now a moving pendulum, like a walking elephant. After a few steps he reached the ball and somehow, somehow, made contact. It was not a big hit, but it was fairly straight.

The rest of the day’s golf was pretty similar. Will played well, I played poorly, and Tim elephant-trunked his way around the course. I tried to lift my game, but by the end of the round I scored worse than even Tim, who really couldn’t care less. It made me think that sometimes rather than being mundane, its better to be different and to take your chances. Just not with the crocodiles. Thankfully we never saw one.

I like people with strong views, especially of course, when I agree with them. Here are a few of my own. They're rather radical.

1.The current economic crisis was caused by China. In warfare, you can bring an opponent to devastation by dropping bombs. China didn’t need war or bombs, they had a Weapon of Mass Financial Destruction, which proved far more powerful. By keeping a low value currency and lending cheap money to the West they brought western economies to their knees, for at least a decade. The cheap money caused the wrong decisions: consumers and businesses had cheap money to push housing and other asset prices ever higher, bankers had cheap money to gamble, and politicians cheap money to buy votes. Now as alcoholics with hangovers, we blame each other for our drinking binge, while the barman stands smugly in the corner, having served us ridiculously cheap drinks all night. Was it a deliberate Chinese strategy? All I can say is that no economist or economic theory would have predicted a poor country lending huge amounts to rich countries at about 4%, while economic opportunities at home were over 10%.

2. The UK economy was saved by the weakness of the pound. For a long time £1 bought €1.50, now it buys less than €1.20. Similarly, against the dollar the pound dropped from $1.75 to $1.50 over the same period. With the global financial crisis dominating events, the devaluation has largely escaped public scrutiny. If the UK government had made a plan to devalue the pound by 20%, there would have been widespread debate and maybe even protests from importers and the rest of Europe. With a floating and weak currency, the UK has quietly enjoyed what countries like Greece are desperate for. It means that wages and prices have been slashed in global terms and have remained competitive. Thank goodness the UK is not in the Euro, or here may have been worse than Greece. I’m amazed that the Euro-sceptics don’t make more of it.

3. The “Arab Spring”, the evolution/revolution that started in Tunisia, transformed Egypt and is surging in Syria, was not really sparked by politics. It was food. Global food prices doubled through 2006 and 2007, and hungry people are unhappy people. This is an incidence of what I see as a fundamental phenomenon: economics leads politics. Thatcherism, another example, was a dose of medicine that was only tolerated because the British economy was a basket case by the late 70’s. France needs a Thatcher, but wont get one until things get worse.

4.Governments cannot be trusted to choose the size of the government deficit (or surplus). Instead, an independent, non-political board within The Treasury should set the levels of total spending and taxation, according to the prevailing economic cycle and without pandering to winning short-term votes. Keynes taught that running deficits was an effective treatment for recessions, but governments have abused that in boom times. Gordon Brown‘s worst achievement was his overspending, which left government finances perilously weak going into the current crisis. Brown’s greatest achievement was in 1997 when he gave the Bank of England complete freedom to set interest rates, free of political pressures. Now, the same should be done with the size of government. It will impose a new culture. No more “bottomless pit” and expectations that our kids should fund our lifestyle.

5. Wages will equalise around the world. It may take 20 years, 50 years or 100 years, but it is inevitable. With falling trade barriers and ever-greater mobility of production, finance and labour, it simply doesn’t make sense that workers will be paid dramatically more in one country than another. There will be an averaging of labour rates – real Western wages will fall relative to rising wages in the East and other emerging economies. With two billion unskilled workers becoming “available” to the global economy, the gap between skilled and unskilled labour rates will widen. Expect more social dis-harmony, and make sure your kids are educated or entrepreneurial.

As I sat in my apartment in Monaco and opened the package, my excitement quickly turned to disappointment. Friends were visiting and they were unanimous. “That’s not a painting, that’s a print!” someone said, with nods of agreement all around, and some pitied glances were directed my way. I was very confused. The work of art was expensive and I had bought it unseen through a reputable and knowledgeable dealer. I looked closely and there were no visible brush strokes or blobs of paint. “I’m sure it’s a painting. Well, it was supposed to be.” Time to call the dealer. “Err, hi mate. I must have made a mistake; I thought I was buying a painting, not a print.” “Yes, don’t worry Richard. It is a painting. It’s acrylic and ink, and so looks very flat.” “But no one will give it a second look. Surely it would be better to buy a cheap print that looks like a painting, rather than an expensive painting that looks like a print?” But he assured me that it was an exciting piece of art that would also be a good investment. I hoped so, because I didn’t particularly like it anyway. It is basically a sign saying “The End” and I didn’t think it was very profound, even if the artist, Ed Ruscha, was world-renowned. Indeed, soon later another friend, who fancies somewhat as an expert, urged me to sell it. “Just try to get your money back if you can, Richard. It’s nothing special. Even I could have done that.”

So faced with conflicting advice, I tried to art-educate myself. I knew that historically, before photography, portraits were important and technical ability was paramount. But why did that change, so that even say, “something a child could have scribbled” could become valuable?

This led me to the story of Marcel Duchamp. In 1917, he submitted a work to the Society of Independent Artists exhibit in New York. It was a urinal, and he called it the “Fountain”. Despite being open-minded and exhibiting a huge number of other works, the Society refused to display it, insisting it was not art. A rather bad call – the Fountain achieved notoriety and a few years ago was voted as the most influential piece of modern art ever! Duchamp had for the first time redefined a “readymade” object as something oddly beautiful in its own right, and in doing so redefined conventional ideas about art. Technical expertise required? Zero. Brilliance? In abundance. He invented a genre and made us think. Tracey Emin’s unmade dirty bed and Damien Hirst’s pills in a box might annoy some people who “could have done that”, but they too forged new frontiers.

With this newfound respect for the creative process, I kept my painting that looks like a print, and have grown to love it. So has the market; it has soared in value. And Duchamp? Eventually he gave up art to play chess, and became one of the best in the world. He believed that the real beauty lay on the chessboard. Perhaps his wife didn’t agree. She tried to stop him – by gluing his chess pieces to the board! Hmmm, I wonder if Marcel thought that that was art.

Dragons’ Den is a great TV show. When I appeared as a panelist, it was into its third series so I knew what to expect. It is reality TV, but it’s not people doing stupid and unreal things, it’s people doing business. And it has brought a lot of concepts into people’s living rooms – like first mover advantage, patent protection, business plans and margins. It has also de-mystified to many people the process of assessing a product, gaining investment and launching a business.

The range of viewers is also apparently very impressive – the show attracts all ages, many backgrounds, and both genders. And I thought the panel did a good job of backing potential winners, which isn’t really that easy given that there is no ability to, for example, access market research on the internet, or do reference checks on the contestants, or even to “ask the audience”. I decided to be relaxed with the contestants, which quickly earned me the moniker “Mr Nice”, even though that was fairly easy when compared to the other Dragons. I also decided to try to evaluate every decent idea that was presented to me, and make some sort of offer, even if it was a long way off from what the contestant expected. The BBC liked that, since it enlivened the debates. But of course it meant I got knocked back more frequently, and I was soon jokingly called “Richard the Reject”.

Having said all of that, I do wonder what would happen if Alexander Fleming came on as a contestant. “I’ve been working with growing bacteria on Petri dishes, and some tiny airborn substance, a fungus, blew in from outside and seems to kill the bacteria. Even when I massively dilute the substance, which I am calling penicillin, it still kills it. If there is a way to get the penicillin into the human body, a lot of illnesses could be cured. I need investment, please.”

Then the questions would start. I would obviously see the potential of this and make him an offer! However, true to form, I would be rejected by the polite Sir Alex Fleming. Then Duncan Bannatyne would inquire, “what’s your third year gross margin forecast?” “Err, I don’t know what that is. I’m just a scientist. I thought you investors would be able to help me with things like that.” “That’s ridiculous,” the Scot would say. “You have no understanding of business. I’m oot.”

Theo Paphitis would take over. “Show me one of the Petri dishes”, and he would break it with his hands. “What sort of prototype is this? It’s terrible. I’d rather stick pins in my own eyes than waste my children’s inheritance on this silly idea. I’m out.”

Deborah Meaden would be nice and say, “Well, I’ll invest if someone else invests.”

Finally Peter Jones would have a turn. He’d toss in a cheap pun, before either, “I like the idea but I don’t like the way you are dressed”, or “This is a good idea, Alex, but I’ve got guys who could easily replicate this whole thing in about a week. It’s got no real value. I’m out.”

Perhaps we Dragons are just sometimes too clever to understand a brilliant idea.

My oldest son, Tom, came to me with a confession. “Dad, I’ve got a bit of a problem: I think I’m lazy.” “What?” I said. “You're lazy? And on top of that you want sympathy for your condition?” I kicked him out of the room with a smile on my face. “We are all lazy! We just get off our butts and go and do things. Get outta here!”

I don’t have a lot of sympathy for slackers. I’m often at my desk early in the morning and usually start by scribbling out a “to-do” list on some scrap of paper. I must admit though, I love including a few things I’ve already finished, then heavily crossing those out and going to grab a well-deserved cup of coffee.

When I return to my office I’m usually doing things that are urgent or even over-due. Work is so much easier when it’s fuelled by adrenalin and anxiety. Some things though, I just put off eternally. They appear continually on my to-do lists but whenever I even half-think about doing them, something else seems far more important, such as tidying up a drawer or buying spare toothpaste. No wonder I’ve never got around to learning the piano or speaking decent French.

My to-do list has to be on paper, not electronic. I can’t stand a pesky computer or smart phone bugging me about something I’d hoped to do by a certain time. Every time you hit “remind me later” you feel like you’re cheating on a digital device. Save any such guilt for humans! Paper versions of anything though, can have their disadvantages. A friend of mine insisted on using a paper contacts book, until one day she accidentally dropped it in the loo. She managed to fish it out but by then a lot of the pages were unreadable. For a few weeks or so she couldn’t contact anyone whose surname started A-H…

Lists can also be used to make important decisions. I’ve used the mighty “checklist” approach when investing, and I sometimes use it when I’m assessing small companies. I put all the major factors in there, such as the quality of the management, uniqueness of the product, time to market, competition, market size, economic environment and so on. Each of these gets a score between +3 to -3. Then everything is added up and, hey presto, the total score helps me form an opinion. A big plus score usually means of course, that I am very confident. The advantage of a checklist is that it encourages me to look at all angles. It then helps me to restrain my enthusiasm, with say, a great product if the management is a bit iffy, or if the market is too competitive. It also gives me a historic record of my view at the time. I’ve taught this approach to co-workers and when one of them was moving back to Australia, he called me.

“RF, I’ve just been trying to decide whether to live in Sydney or Brisbane, so I have done myself a checklist. Can I run it by you?” “Er, of course mate.” “Climate: Sydney plus 3, it’s not as humid. Cost of living: Brisbane plus 3, it’s much cheaper. Social: Sydney plus 2, I’ve got more friends there….” He went on to list about ten things, including a “big male fish” factor. “I’ve have made a few bucks, and the girls will be much more impressed with me in Brisbane. Plus 2… What do you think?” “Um, I guess that all makes sense mate. What are you going to do?” “I’ve added it all up and Brisbane wins by 2, so I think I’m going to move there.” Wow, I thought, he’s either mad or brilliant.

Years ago, a world-renowned musician took a yellow cab back to his New York hotel, carefully placing his 18^th century cello in the boot. When he arrived he grabbed a receipt from the driver and happily hopped out. It was soon later that he realised that he had accidentally left the multi million-dollar Stradivarius behind. Fortunately he had the receipt and with the help of hotel staff and the police, the driver was contacted and the instrument was returned to him several hours later. The musician was of course, delighted, and the feel-good result was worldwide news. Reading about this though, I was amused and perplexed. His comment was “Thankfully, I'd taken the taxi receipt. Always take the receipt.” Wow, I thought, if you hadn’t have been so obsessed remembering your bloody receipt for a few dollars; you might have managed to remember the priceless bloody cello sitting in the boot!

For me, he cited the wrong message. Similarly, when Princess Diana died, all the news was naturally about her and her family, and speculation about who was at fault. But in the overwhelming mass of press coverage, I noticed, almost in the small print, that she and her boyfriend hadn’t been wearing seat belts. I was amazed that anyone could sit in the back of a car, apparently swerving left and right at over 100 mph, without belting up. The fact that the bodyguard survived, sitting in the more dangerous front passenger seat, but wearing a seatbelt, made me think the lesson was obvious: a major factor in Diana’s death was her failure to wear the seatbelt. Any conspiracy theory about her death has to explain how the perpetrator knew in advance that she wouldn’t buckle up. An opportunity was also missed by safety campaigners to really bring home the message that if a princess can die not wearing a seatbelt, so can you.

In business, and in life, I think there are two, very common, flawed approaches: the emphasis on winners, and the neglect of randomness. The world is awash with books and other information about successful people, and the message is that you can learn from them and imitate them. I myself am very cautious. As a parallel, if you analyse the winner of the lottery, you learn the technique is to buy a ticket and wait to win the prize. This rarely works (sadly), but we only know about that because we know there is a huge amount of losers.

So in business, I want to know how and where money is being lost as well as made, otherwise I cannot really know what is a genuinely successful, high-probability behaviour or sector. Perhaps behaviour such as being aggressive (like Steve Jobs) or slightly eccentric (like Richard Branson not wearing shoes) or coming from a deprived background (like many entrepreneurs, including me) actually causes far more failures than successes.

Similarly, high profile sectors may not have a good win-loss ratio. Smart-phone apps and social media websites are all the rage at the moment and remind me of a gold rush. I baulk at getting involved though, because with the high number of quiet failures, the chance of success may be poor - even worse than the odds in the lottery!

The role of randomness is also misunderstood. Why? Successful entrepreneurs prefer to dwell on their talent, and luck is almost a dirty word. However I see very few successes where skill and hard work were not matched by a dose of good fortune. The real lesson should be to plan for a range of possibilities, especially bad luck. Watch the spending and make sure you're cashed up, even if you’re diluted by fund-raising. And in a car chase, put on your seatbelt.

Imagine in a world of only pencils you invent the pen. You are so excited – you are going to change people’s lives! Pens are easier to write with, easier to read, and don’t need sharpening. You dream of success and millions of pounds.

Mixed in with your excitement is a dose of paranoia. Of course, anyone will steal your fantastic idea. So you protect yourself by applying for a patent and registering the design.

You consider producing it yourself but decide that life would be easier with a partner. A big pencil company could introduce the pen under their brand, and just send you a royalty cheque every month. So you search the web and send out emails to pencil manufacturers. You try to whet their appetite without giving too much away, too quickly, about how your pen works. Despite the global opportunity, you don’t get many replies, but eventually you are invited to a meeting. You're nervous as you rock up, prototype in hand. The meeting goes well and everyone seems convinced. “This could be absolutely revolutionary!” someone says. Well, you think, if they can just crack a tiny share of the potential market, I will make a fortune. Negotiations begin, but they are painfully slow. The offer the company eventually makes seems very one-sided. They want exclusivity, they are not paying much, they will not commit to any minimum sales, and if they improve on your pen design, that’s to their benefit, not to yours. You haggle about these things without really making progress, and you start to wonder if they are secretly working on their own pen invention. You read about the Apple – Samsung patent dispute and realise you could never afford to fight or wait out such a battle against a big corporation. And you begin to suspect that perhaps the pencil company doesn’t really want the pen to become successful; perhaps they think it will merely cannibalise their pencil sales; perhaps they are just hoping you will run out of money and disappear.

In frustration, you change course and decide to manufacture and sell the pen yourself. You fly off to China, which is what everyone does, and look for a manufacturer. Even there though, you realise it will be expensive to manufacture. The unit cost is very high unless you make a large order, and invest in tooling. But you re-mortgage the house, cut back on family holidays, and produce some stock. You create a website and start cold-calling stationery stores. With just a few sales you are welcomed to the world of retail: warehousing, advertising, collecting payment, distributing product, low margins, product returns and warranties. You are overwhelmed and need to hire staff, and you are continuing to burn cash. You lose a potentially significant order when there is a mishap and a pen leaks in someone’s suit, ruining it. Frustrated and nearly broke, you give up, just as you see something very similar to your pen hit the market.

As a backer of early stage businesses, these are my daily struggles, but struggles teach lessons. An idea is worth nothing. Brilliance in invention needs to be matched by brilliance in commercialisation. “Day zero” is the day a deal is signed or the product hits the shelves. Over-night successes are rare– most products take years to perfect and launch. Most new businesses fail. Sadly, not every new pen is something to write home about.

The girl was clearly nervous as her job interview got underway. I asked her why Australia had such a high inflation rate and I was incredulous at her answer: “I believe it is mostly “imported inflation”. I pulled a face. “Imported inflation? How could that be possible when our biggest trading partner, Japan, has a fraction of our inflation rate?” She didn’t say much and I moved on. “What would you say about Australia’s high interest rate policy?” “It’s completely unfair,” she claimed indignantly, “I’m from a working class area and I’ve seen people lose their house when they can’t afford the mortgage”. I thought about it and quickly decided it made no sense. “That’s your answer? Really? Sorry, but that is terrible. What about our trade deficit and weak currency? You have an economics degree but you’re not showing any understanding of the situation at all.” It was around about then, that a tear rolled down her cheek and she stifled back a few sobs. Fortunately there was another interviewer there who quickly switched to a softer line of questions about family and hobbies, and the girl cheered up a little.

It was the late 1980’s and I was a young director at Australia’s leading investment bank. First class honours graduates and other top quality candidates were clamouring to get a job there, with the potential of success, prestige and riches. I was an experienced interviewer, often asked by other department heads to grill fresh potential hires on economics, markets and politics. But this episode shocked me. Had I been unfair? Was I too tough? It certainly felt terrible making someone cry, and it really made me think about what I was trying to achieve so I made some changes to my interview technique. I did not stop asking difficult questions, because I needed to drill down on what a candidate really knew because academic performance does not always demonstrate practical intelligence. I also wanted a little bit of pressure during the interview, because that was our typical work environment. However I decided to smile even at the wrong answers, and to give encouragement where possible. Maybe that was the genesis of “Mr Nice” on Dragons’ Den. I also decided there needed to be relaxed moments during an interview, where I could test for other skills such as imagination. I started to ask unexpected fun questions such as “what will happen to the economy if we all became immortal?” (Interest rates fall) or “what happens to a small island economy if it discovers a massive amount of gold?” (Their currency goes through the roof).

I didn’t realise at the time, but learning to do a good interview was a very fundamental business skill. Ultimately, of course, it’s about choosing people you can work with. Something one candidate forgot perhaps, when he told me “I want to be your boss”. As soon has he left the room, his CV was fast tracked - into the bin.

The French policeman, or gendarme, didn’t look happy as he got off his motorbike. He had waved over my car after seeing me talking on my phone and driving around a roundabout twice. However his expression changed to one of utter disbelief when I greeted him with “Thank god you are here!”

Before he could react, I continued. “I have children in the back plus a friend following me in a car behind with his kids. We are trying to find Marineland but it seems to be closed. I am sure it must be open, so I am looking for another entrance.” “I don’t think it’s open at this time of the year.” “Oh no! Really? The kids were so excited to go,” I said sadly, before asking “Do you have kids?” “Oh yes, two” he said. “What do you think I could do with mine near here?” I don’t really know this area” “Well, I guess you could take them to the old town in Antibes. They might like that on a sunny day like this.” He helped with some directions. “Ah, that’s a good idea. I will do that. Thank you very much for your help.” “That’s okay. Have a good day. But please, don’t use your phone while you are driving.” He smiled at us and walked off to his bike.

The gendarme is obviously a nice guy and I was lucky to be given help and let off without a fine, but I must admit there was a little bit of psychology involved. People do like to feel important and useful, and I managed to switch his source of pride from being a prosecutor to being a caring father. Getting people to feel one way or another is obviously very useful in business too, and I love seeing it in action. There are many examples. Apple has done a tremendous job of making fairly drab pieces of computer equipment look more attractive. Even better, they have managed to make mobile phones a fashion item. People’s urge to be seen with the latest iPhone causes huge demand even though they may be only fairly minor upgrades from the previous version. Big retailers are also very clever. There is a lot of thought about where things are positioned in the store, especially at kids’ eye level and for the impulse-buy products near the counter. Their offers of “limit five” items are designed to get you to do exactly that: buy five when otherwise you may have just bought less. Airlines are clever users of “market segmentation”. In most instances, the business class or first class services are not very good value compared to economy class, but it is important to have an offering for those customers who have plenty of money or an expense account. Other companies will deliberately offer some overpriced options in order to make their other products look good value. So there are lots of tricks, and not just nice policemen are fooled by them.

My foster brother Ian called me from his home in New South Wales after a few beers. “I got to say I really love ya bro, but there’s one time I really thought you were a bustard.” I tried to remember if I’d ever been nasty to his teddy bear as a kid or something, but he continued “It’s when you got that bloody Ferrari. As a mechanic I love those things but I’ve never even sat in one. It’s unfair- you wouldn’t even know where the engine is!” I thought I’d wind him up a bit and said, “No, I know it’s at the back because I went to put some luggage there once but couldn’t.” He just groaned.

That was in the days I lived in Monaco and had nice cars and a boat I’d bought from Ralph Schumacher. At some point I went off the whole boys’ toys and decided there was an emptiness in the “poverty of possession.” Now living in London, I have a basic car but barely use it. The hassle of parking and fighting traffic lights have made me a Cab and mini-car user, and recently I’ve noticed interesting things going on in their business world.

Cabs have had two unique selling points. Unlike minicabs they can be legally hailed from the street, a huge advantage when so much hiring is done on the street on demand. Secondly, they have “The Knowledge”. Cabbies have such an amazing and unmatched memory of streets and locations that research has been done into their ability and techniques. At times it’s been a booming business and I remember a number of years ago when they increased their prices and were the most expensive in the world. That has probably changed with time and the weakness of the pound. Cabs have also benefitted from their awesome reputation and branding, while mini cabs have been seen as unregulated and even unreputable.

Then a number of years ago, that started to change. The minicab company Addison started to get organised and eat cabbies’ breakfast. Their distinctive branding and recognisable name brought a new respectability to mini cabs. But it was more than that. They hit at the heart of the cabbies’ USPs. Firstly, the advent of GPS has probably meant a severe devaluation in the value of the knowledge. Relatively novice and even foreign drivers can find their way around London with ease of inputting a postcode. Secondly, smartphone apps have made booking a car really easy for the consumer. They find the location, can remember past destinations and give you fixed price before the journey starts. It’s not been a surprise to see Add Lee cars more and more on London streets. To me there is a huge question looming: if you stand on the street and use an app to order a nearby car, is that not “hailing” a car, just because you don’t wave a hand in the air? If you can hail a car so easily, what’s the justification of an expensive cab license? And I don’t know if it’s this competition or the recession or just and exaggeration in recent gossip about cabbies being grumpy lately. Recently I got abused for not giving a big enough tip after paying £15 for a £13.60 fare. The guy recognised me and shouted “the way you tip no wonder you live in Belgravia”. A mate got abused after a cabbie forgot to put his meter on for a few minutes. “You must have noticed” he shouted. If they’re struggling for business, perhaps they could lower their prices, which I’m not sure they’ve ever done. What they have done though is to finally release an app of their own. “”Hailo” works wonderfully and makes ordering a cab inexpensive and easy, so maybe they’ll claw back some market share. It’s certainly interesting, a US company, Uber, has launched a luxury car app service at a reasonable price. They asked me to be their first London customer and I have to say I enjoyed it.

Whoever wins this battle, it is probably good for you and me. No more standing in the rain, jostling against others, looking for a cab while a few streets away a driver looks unknowingly for passengers. In this age of information, that shouldn’t be possible.

I think I closed my eyes as the other boy pounded my face, punch after punch. It seemed I had no defence, trying to hit him back or to block him was just useless. The minister eventually broke us up though, and it was only then that I burst out crying. “I didn’t come to church group for this! I don’t want to box!” He looked at me sadly. “I had you do this for a reason: it’s good for 14-year-olds. It helps you grow up.” A hundred thoughts filled my head. I was normal, why did I need to grow up? How does getting beaten up somehow mature you? Is there something religious about salvation through suffering? But I just replied meekly, “I just want to play chess”. He shook his head slowly. “Chess? Chess will never get you anywhere.”

Despite the advice, I never boxed again, and I played lots of chess. I played competitively, all over Australia and later internationally. I loved it. To me it was gymnastics with the mind, a pure contest, one-on-one, with no discrimination for wealth, education or age. It was perfect for me too, a small, shy, lonely, backward and awkward boy growing up in a loveless foster home.

Beating adults was the most fun. It was puzzling that despite their supposed superiority they were so clumsy with their pawns and bishops. I improved quickly and by the time I was 15 made it into the newspapers by beating the adult state champion. As a top junior, I gave exhibitions playing lots of people at once in supermarkets or schools. I made good pocket money and learnt to hustle playing the park players for stakes.

Chess was good for me. Despite the obsession, my school results soared, my confidence blossomed and I made lots of friends. A beautiful girl fell in love with me, watching me win two games at once – I was blindfolded. I learnt to think too. After all, are there any other activities that will get a teenager to sit quietly, absorbed in deep concentration and mental analysis, while carefully choosing an option? Certainly not computer games.

But at around about 20, I abruptly gave it up (until recently). I realised I wasn’t world class, and I also realised the diminishing returns involved – more and more effort to get a little bit better. I also realised that chess has its limitations. It’s a strange game; you don’t talk to an opponent while playing, it’s rude to even look at him. The big weaknesses though, are that in chess there is no randomness and that all the required information is in front of you. If you play the right moves, you’ll never lose. My finance and business careers were held back until I realised that, just like in life, the right decision doesn’t always win, and success doesn’t always reflect the right decision. You need to expect the unexpected and anticipate human reactions. Observing the world around you is not required in a chess battle.

So I’m far more worldly now than when I was beaten up in church. But I’ll always be happy to be a little bit of a nerd, because, far from getting me nowhere, chess was my salvation.

What are the three words in the English language beginning with Dw?

Our boozy boys’ lunch suddenly took an intellectual turn when someone lobbed in this cracker of a question. Our bodies momentarily froze and we stared into the distance, slight frowns, deep in thought, competition now upon us. “Dwarf!” someone yelled, and at first I thought he was commenting on my height, but he was just triumphant to find the first word. As the mental search continued, I talked about the movie, Snow White and the Seven Dwarfs.

“Guys, speaking of dwarves, you know someone that I admire? Walt Disney. He was a genuine entrepreneur; a risk-taker and an innovator in an innovative industry.

As a child in the early 1900s, he loved to draw cartoons, and he honed his skills sketching for a neighbor, a retired doctor known as “Doc”. As a youth, he passed up acting and, err, ambulance driving, to pursue this artistic passion. His talent was timely for the movie industry. Animation was proving popular as silent films evolved from flickering black and white images into sound and colour. Popeye and Betty Boop became as big as Brad and Angie are today.”

“Fine Richard, but you don’t need to dwell on that!” someone interrupted with exaggerated exuberance.

“By the early 1930’s Walt had started his own studio, gone bust and bounced back, and was riding high on the success of Mickey Mouse. That’s when he decided to risk everything and make Snow White, based on a fairy tale he had liked as a child. It took three years and cost over $1 million, a huge sum. Everyone thought he had gone dopey, and in local Hollywood the project was disparagingly labelled as “Walt’s folly”. Walt’s wife Lillian wasn’t happy, “No one’s ever gonna pay a dime to see a dwarf picture, you idiot”. Okay, I added the last two words, but do you get the picture, about the picture?”

“Ah yes!” someone answered unbashfully, “confidence in Walt had dwindled!”

“For the production, it is incredible how hands-on and what a driving force Walt was. He agonized over the storyline, and changed the plot to emphasise the dwarfs over the prince. He debated the choice of the dwarfs’ names, rejecting other choices such as Burpy and Flabby. Right decision there, Walt! And can you imagine the amount of effort involved in managing over 500 people and over 2 million illustrations?”

“No one was grumpy when the movie was released though. It was an instant success, the highest grossing movie to that time. Everyone loved it, Oscar included, even though kids peed themselves in abundance at the scary bits. With the release of the first-ever soundtrack, the music was popular too. The film’s success ushered in a “golden era of animation” and enabled Walt to move on to things like Bambi, Dumbo and Peter Pan. ”

“Interesting, Richard. But can we talk about something simpler? I think I might have dwunk too much!” Groans all around.

I looked like something out of a Frankenstein movie, but it was going to be a fun party and I didn’t want to miss it. Fingers were soon being jabbed towards my forehead by friends who looked puzzled and slightly repulsed. “What happened to you?” they demanded. I had dotted lines of dark and blotchy marks from one side to the other. It was no point lying. “I did Botox. A friend offered to do it, so I decided to give it a try. I thought she knew what she was doing. Before injecting, she marked the locations with a pen and said the marks would wash away, but they didn’t. I almost scrubbed to the bone trying.” “Sure Richard, but you’re mad to use an amateur.”

She was no amateur. She was Miss Rozina Ali, one of the UK’s leading plastic and reconstructive surgeons. She’d made a simple error, which we laugh about now: using a surgical pen, which is like a permanent marker. Rozie is a brilliant woman, her range of skills includes reshaping breasts, reattaching hands and rebuilding faces. She also works on helping people look younger.

The only good thing about getting older is that it happens gradually. The mirror, the scales, and the exercise machine all break the news to us very gradually. So gradually, we barely notice. Then, as you turn 40 and 50, you get just little reminders of the aging “disease”. You see the first grey hairs, you read about sports stars being “too old” at say, 32, and you start to make a little grunt every time you bend down to pick something up.

So, as we hit the gym to silence the grunt, what can we do about our aging looks? Rosie believes that the anti-aging industry is rapidly changing. Cosmetics are hitting the market, which are clinically backed and not just hype. Know-how has also improved dramatically in the last ten years. The most exciting area may be lipo-sculpturing, where fat is moved from other body areas to fill out wrinkles on your face. Not only is it effective, but it is also believed that the stem cells in the transplanted fat may cause the facial skin to regenerate. We would all like a bit of that!

Society is changing too. Rosie says the days are approaching when getting cosmetic surgery will be considered standard, even fun. “Look at my new nose!” Far from carrying a stigma it will become a status symbol, a trophy. The rich and poor won’t be divided just by what cars they drive, but by how young and attractive they look.

In the meantime, if you suspect a friend of using Botox, you can use my technique. Tell them some outrageous lie, such as “Elvis really is alive!” and watch their forehead. If it doesn’t wrinkle, they’re guilty! Or you can always look for ink blotches on their forehead.

It could’ve been the most embarrassing thing I’ve ever done, but I decided to do it anyway. The offer was to appear on the TV series Celebrity MasterChef, and the main problem was that I could cook about as well as I can speak Swahili. But that oft-repeated mantra of “take yourself out of your comfort zone” and a desire to learn something new, took hold. As preparation, I booked myself some private lessons. I found myself grilling, frying and roasting, things I’d seen more in business meetings than in kitchens. I was told there’s less risk of cutting yourself with a sharp knife than a blunt knife, a logic I understood but which didn’t prevent me from arriving for the first day’s filming with several band aids on my fingers; blue in case they slipped into someone’s stew.

For my first task I cooked chicken breast filled with Gorgonzola cheese and wrapped in Prosciutto ham, just like I’d been taught. Then I selected a bunch of vegetables and, just like I’d been taught, I cut them into small pieces so they’d roast evenly, and quickly enough for the ticking clock. As I was putting them in the oven, I had a sudden “inspiration”, and just like I hadn’t been taught, I cut some apple into small pieces, and mixed them in as well. Soon it was time to present my output to the judges. They liked the chicken. That’s great, I thought to myself, the producers had assured me that my complete lack of experience would be taken into account. A bit like a one-year-old learning to walk, I’d be judged on promise not on performance. Then the judges saw the roasted vegetables. The Aussie judge, John Torode, was incredulous. “When was the last time you had apple with your garden vegetables Richard?” he demanded loudly and sarcastically. I didn’t like him; even when the cameras were off, he stood with his arms folded, scowling at everyone like we were morons. “Yes, it might be unusual, but isn’t invention and creativity a good thing? Besides, you can always leave the apple to one side.” But John just sniffed at such naivety. I suspect if he had been in charge, newly invented fusion food would have gone the way Decca booted the Beatles.

The next task was a tempura vegetable dish. I was confused but with a lot of mess I managed to make mayonnaise from scratch. However, unsure of how much to cook the tempura, I made two attempts, which the judges thought were both over-cooked. So I tried a joke. “I'm not sure how, err, burnt, people like them." John didn’t laugh.

Eventually all the contestants were lined up to be told who would be cut. Nerves all around. My nerves were different though – I was worried that somehow I wouldn’t be cut. The next day’s task was making desserts, something I hadn’t learned. Luckily for me, I was sent home, back to my comfort zone.

The girl was absolutely gorgeous and I was thrilled to be chatting her up. It was about 2.30 in the morning and I sat with her in Jimmy’z in Monaco, a very expensive nightclub, drinking Cristal, a very expensive champagne. “What do you do?” she asked, music thumping in the background. I tried to adopt an air of complete coolness and proudly said, “I’m retired”. We kept chatting and about 20 minutes later she looked puzzled and said, “but you don’t seem retarded?”

At 34, I had just walked into the sunset after a 12 year career in finance. Is it the most stupid thing I have ever done? I had a spectacular record of correctly predicting big moves in the interest rate, currency and commodity markets and, in 1995, I was one of the highest paid people in the world. Surely, if I had stayed in the hedge fund world, I’d be a billionaire by now. But I hadn’t and I had moved to the south of France. I wanted to escape the life of economic data and computer screens, and to enjoy a life of leisure. I bought myself a Ferrari, a 58 foot motor yacht from Ralph Schumacher, the formula one driver, and I played tennis almost daily at the Monte Carlo Country Club.

Deep down though, I was still struggling with the right balance. I had stopped being a slave to money, but I had become a slave to my possessions. After a while, the Ferrari annoyed me. It looked great, but it was damned uncomfortable and you were always worried about scratches. The stereo sucked. And while I enjoyed trips on my boat Terra Australis, going out more than once a fortnight was boring. Meanwhile, like a high maintenance mistress, it required constant care and attention. Rather than a “gin palace”, I started to see it as a floating caravan.

Friends too, were falling into the trap. They spent their riches on houses around the world, but then spent their time worrying about them. Their conversations were about getting air conditioning fixed or changing light globes, and the endless problems with domestic staff. Their standards of living were high, but their expectations often even higher. I remember a billionaire friend being extremely agitated because his private jet was 20 minutes late. He was shouting at someone on the phone; not a great way to start a family holiday. Other male friends spent their time discussing their choice of buttons on their blazers, and some were even getting manicures along with their massages.

So not long after my Jimmy’z conversation, I gradually started to change. I learnt to ski, wrote my book Taming The Lion, started playing competitive chess again, and reached out more to friends and family. At the same time, I got involved in the wonderful world of business start-ups. I realised that life is about experiences, memories and personal relationships. Now, hopefully, I’m no longer retarded, and I’ll never really retire.

My mate and I were thrilled when a beautiful young lady, Sarah, sat down between us with a smile, and as two Aussies we immediately battled for her attention with our attempted cool charm and quick wit. The event was a 25th wedding anniversary dinner for about 60 guests. Sarah was very relaxed and easily held her own in the conversational crossfire. As the speeches began, Sarah got up to say a few kind words about the wife, Mandy. Then she did something bizarre: she suddenly burst into song, screeching out Barry Manilow’s hit, “Mandy”. I don’t think, “Oh Mandy, well you came and you gave without taking. Oh Mandy…” has ever sounded so bad. It was so painful that a waiter felt obliged to interrupt and gently usher her back to her seat. I thought to myself, “this girl is a bit strange”. But my mate and I quickly returned to telling jokes and stories with her as our umpire and audience. Then the night took another twist: two of the waiters started singing opera! Everybody looked on in amazement and delight as the tenors soared through their notes. Sarah was so impressed she decided to sing along with them; I tried to stop her as she got to her feet but to no avail. “This girl is actually an idiot”, I thought, “She’s going to ruin it”. But this time, instead of screeching, she sang unbelievably, with a beautiful, powerful soprano voice. She was actually Sarah Ryan who has performed all over the world – we’d been duped! The three then put on amazing show and it was all the more enjoyable because of the surprise element.

I chatted later to one of the “waiters”, Geoff Sewell. He owns the business, Incognito Artists, which provides and directs the performers. Geoff has a great story. A cool kiwi living in London, his passion was singing but his job was accounting. So he took the drastic step: he dumped the job and started his singing and impersonations company. He soon regretted it. Despite endless cold calls, pamphlets and meetings, a whole year later he hadn’t had one single booking. There did seem to be an interest for corporate and social events, but Geoff lacked testimonials and a track record. He was running out of money and motivation. Dejected, he went to the gym for a hard workout and a hard decision. He felt like a fool; so many people had advised him not to give up the day job, now he was going to have to tell them they were right. Before he could though, his mobile rang. Talk about timing; he got his first gig. Twelve years later Incognito has flourished internationally with 72 singers on the books. They’ve fooled and delighted many people - even those that thought that Aussie banter could impress an accomplished opera singer.

I DON’T want to study rocks!” My teenage son Tom looked at me like I was an ugly alien. We were discussing what he should read at university and he was keen on economics and maths – to pursue a career in finance or business.“But I think the big finance boom is over, Tom. And mining is more than rocks; there are lots of opportunities for exciting work and travel. You could start by studying geology and, if you want, do an MBA later. Think of the mines as regular businesses and the rocks as their products. It’s not that different.”

To illustrate my point, I told him about an Australian mining operation I’d been following and investing in, led by a very capable man, Peter Cook. “Cooky” is a trained geologist with an impressive record in mining. His successes include the sale of a gold mine for $250m (£156m) that he bought for $20m. His latest passion is tin, and his company Metals X is a partner in one of the world’s largest tin mines, located in Tasmania.

He says that tin is facing a “perfect storm”, though I would say “perfect sunshine” because it sounds so good. Firstly, tin is benefiting from an increasing aversion to its competitor, lead. Lead has been blamed for the madness of Caravaggio, the death of Beethoven, and spuriously for the infertility and decline of the Roman Empire. In the last few years, there’s been increasing legislation against its use and tin is being used as lead’s replacement. Perhaps you’d call it “lead led” demand. Secondly, there are expected problems with supply. For example, the world’s biggest tin mine in Peru is headed for depletion by 2017. Thirdly, there’s a bunch of newly-discovered uses for tin, such as improving solar panels and tripling the life of lithium batteries. “Tin will be the Viagra for the hybrid car industry,” says Cooky. So mining is even sexy.

Now you would think that with the “China story” of industrialisation and urbanisation, the mining sector would be booming. But that party was a few years ago and now the sector has a horrid hangover. Everywhere there are unstarted and unfinished projects scrambling for funding, and company valuations are desperately down, including for Metals X. But Metals has actually done well; the tin has made it profitable and generated a cash pile. So rather than whinge about the cycle, Cooky has used the opportunity to buy cheap gold and nickel assets that could generate enormous value.

“So, Tom, mining has everything. Competing products, cycles, funding issues, strategy…you name it. It’s exciting – I would guess that more money has been made and lost in mining then in any other activity.” And what did Tom do when I passed on this invaluable insight? He did what every sensible teenager should do – listened to the advice and chose his own destiny. It won’t be rocks.

When I started swallowing water I gave up hope. I was so tired I didn’t want to swim anymore. The “rip” or “undertow” had dragged me a long way from the beach, which was now just a long white band topped with greenery, a meaningless mirage I couldn’t reach. I had no surfboard; I had simply headed out for a light-hearted body surf, a splash around in the sea. That was more than an hour earlier. The rip at first had seemed very gentle, and she lured me in like a femme fatale. I was grateful when she helped me easily reach the surfing zone where the breaking waves offer the best rides. But then she showed her dark side, and dragged me way further. Foolishly I didn’t swim crossways but attempted a beeline back to the shore. Rocked around by the big silent waves, it gradually dawned on me that I was going backwards. My head was sometimes up, sometimes down, and confused I lost track of when to breathe. I was trying to cough up the salty water but losing the battle.

Years earlier, in my mid-teens, I had been quite religious. For about two years, I read the bible daily and harboured a silent ambition to be a protestant minister. The stories of Jesus’s kindness and persecution fascinated me. I was uncomfortable with the Old Testament, and I couldn’t reconcile Moses and his “eye for an eye” with my humble hero. But the person who really challenged my belief was, of course, Judas. I could never justify his betrayal of Jesus. Either fear of Jesus’s super powers, experienced first hand, or a beautiful brotherly love would have prevented it. So, true to myself, I abandoned the whole thing.

Or so I thought. About to drown, I somehow found myself talking to God, offering a deal. “Save me, and I’m yours again. Church, every week. Devotion. Anything.” In a few moments a different wave pushed me and carried me inwards, not outwards. Five minutes later I was lying on the sand, exhausted but safe. It was unbelievable. I don’t believe in miracles, and quickly decided that statistics had saved me, not any God. Random things happen, I told myself, and I skipped the church and devotion. If I’ve been wrong, I guess I’m really going to burn. Hell would know the fury of a ripped-off deity.

Perhaps helping charity will lighten any wrath. I used to find it frustrating that there are so many charities doing similar things. Amalgamate them, cut costs, bring in efficiency! But it’s dawned on me that having so many charities is a good thing – they become people’s pet projects and a lot of work is done for passion not for money. One superb one is the Sick Children’s Trust. Come join me on Thursday at their celebrity Christmas Carols and Readings at All Hallows Church, London.

www.sickchildrenstrust.org.

In 1814, my ancestors, Mary and William, met and fell in love on a cruise from England to Australia. It must have been romantic sailing the 3-month ocean journey, eating fresh fish while watching the crimson red sunset merge with the sapphire blue waters. Except for one thing, of course. They were convicts. Both were sent to Tasmania for 10 year-plus sentences, doing hard labour. Eventually freed, they made their way to the mainland and started the long chain of sheep shearers, farm workers and the odd criminal, that I was born into, with my 10 brothers and sisters, six generations later.

We Aussies love to bang on about the unfair sentences inflicted on our convict forebears. “They were sent out just for stealing a chicken! Pommy bastards!” But the truth is, anyone who did anything hideous, such as murder someone or insult the king, was hanged. So a trip to Oz might have been a relief. And once there, according to our version of history, the “English” settlers did the bad things, such as the early mistreatment of the aboriginals, while the good stuff, like discovering the continent’s interior and learning to grow wheat, was heroic deeds by early “Australians”.

The fellow who researched my ancestors told me that William’s crime was fraud, and he arrived in Tasmania with a shilling, apparently a lot of money in those days. He suggested further research into how William got such an amount, but I said, “Don’t bother mate. It’s obvious. He nicked it.”

Despite any genetic influences, I’ve managed to stay on the right side of the law, and now days, in business, I rather find myself as the occasional victim of crime and dishonesty. In fact I would say I rate dishonesty as the biggest single business risk.

In the late 90’s I bought a small diamond mine in Sierra Leone. No blood diamonds, a completely legit operation doing wonders for the workers and local community. I’ll tell the story next week, but the summary is, the business failed. After months mining we found almost no decent sized diamonds. There was theft going on, but how? We had tight security. I was flabbergasted to discover it was the English manager, who was also siphoning cash.

Around the same time, I backed a friend in Monaco into two start-ups. Graham, a rather nerdy maths PhD, sat in my living room, while our sons played together, and told me outright lies. With the kiddy connection I trusted him. Later, one of the businesses lost everything when five small oil wells all mysteriously failed. The other, a listed US software company, announced a large “Microsoft order” that wasn’t legitimate. Graham is now wanted by the FBI.

Fortunately, these are probably my worst cases of being deliberately misled. More often, the problem has been somewhat more innocent. It’s almost human nature when staff exaggerate or downplay developments, particularly about sales prospects. Maybe if Tasmania beckoned, they’d be more careful.

The aboriginal guide’s eyes widened in disbelief when he saw the bright yellow pyjamas, and he said “you had better take those off mate.” So David Norwood stripped down to his underwear and we started off on our wild pig shoot in the north of Australia. Asked why he had worn them in the first place, Dave just shrugged and said “they’re comfortable” and he didn’t seem to mind trudging through the bush in his Calvin Klein’s. Not long later, Dave and our guide trekked ahead and shot a pig, causing the rest of the herd to stampede in my general direction. Seeing an opportunity to shoot a second one, Dave’s swung his gun around and took aim. The only problem for me was, I was 50 yards behind the pigs and directly in the firing line. “Don’t shoot, don’t shoot!” I yelled as I tried to shelter behind a tree about as thin as a broomstick. Dave didn’t hear me and continued to take aim. Then I felt intense pain in my eyes. I had burst an ants’ nest made by some Aussie species that make a football-shaped home in the trees out of leaves, and there were hundreds of them biting all over my face. Dave fired a shot, but all he may have hit was an unlucky hawk or eagle, because our guide pushed the gun towards the sky. Now of course, we are best friends.

Dave is slightly mad and completely brilliant. A fantastic chess player, he gave up the game after becoming a grandmaster to follow a career in business. It didn’t start well when he was hired by an investment bank. They were keen on his brain but didn’t show many brains themselves by giving him an incredibly mundane job, which bored him of course, so he performed terribly. He later excelled at a smaller bank where he became involved with small businesses. It was this activity as well as his links with Oxford University, where he had read history, that saw us become business partners. In the late 90s, very little had been done to commercialise research from universities, and we were fascinated by the potential in providing money and management expertise in what we saw as a vastly undervalued source of intellectual property. So we created an advisory company, Index IT, which would take small stakes in new spin-outs in return for offering these services. I was no more than a silent partner: I watched and learned from Dave in action. His creativity and powerful logic, combined with a complete lack of dress sense and a strong Bolton drawl with northern humour to match, allowed him to give amicable but no-nonsense advice. He fixed faulty business plans and presentations, and excelled at the underestimated task of getting reluctant scientists and standoffish fund managers to communicate. People listened to and respected him, and some of the companies flourished, and went on to stock market listing. In 200X we sold the business for a staggering £20 million. We couldn't believe it, but perhaps we should have: Index IT evolved into IP Group, now worth more than £400 million.

IT IS one of the saddest scenes in nature. On a deserted beach, mother turtle struggles up the sand, and laboriously digs a hole to lay her eggs. Sometime later, hundreds of tiny baby turtles scramble out and start heading down the beach towards the water. The birds, in a frenzy, scoop up such an easy meal. That any turtles make it to the water is a miracle but, once they’re there, it’s still not safe. Fish start gobbling them up. Of the tiny few that sneak by, some survive to adulthood and the turtle species lives on.

That scene reminds me of the business world. The big business names, so familiar to all of us, came from somewhere. These “big turtles” were once just someone’s brainwave and ambition. To get to where they are now, they needed many things to go well just to survive. For every big survivor, there are countless others that never made it. In addition, these failures caused many people endless heartache and financial loss. This is your world when you start a business: the risks are very high, but so are the potential rewards.

One way for an entrepreneur to reduce their risks is to join a “business incubator”. It can be a very lonely life in a small company. And sometimes, even though you and your team may be experts in your field, there are bound to be gaps in your business knowledge. An incubator can help tremendously.

I came across a very good incubator the other day, operated by Bristol University. It’s called SETsquared and is part of a partnership with four other universities. Nick Sturge runs the operation for Bristol and he impressed me immediately. I had expected the standard cultural confusion when academia meets business. But Nick is very hands-on, probably due to his own previous experience in business.

He currently supports over 50 companies, of which five have been spun out of the University. The others have come from the local community. The focus is on technology businesses with high growth potential, and Nick is picky about who he accepts into the incubator. He is only interested in innovative and scalable “gazelle” businesses, and avoids start-ups with no ambition. Once admitted, help is given in the form of coaching, mentoring, workshops, accounting, marketing and legal assistance, with the option of renting space in the business park. Now, all of these are initially offered at extremely reasonable prices. But the fledgling company has to grow up, so the charges are gradually increased over a few years towards market rates. Some companies don’t survive. The fairly modest expenditure by the university seems to represent very good value for society. In ten years, many of Nick’s companies have successfully raised large amounts of private funding and some have gained stock market listing. If only it was as easy to help the turtles.

"I've been doing this for four years. I've put a huge amount of money, my money, my wife’s money, which is our future, on the line. I can't make a mistake now. I don't want to be the founder that ended up with the tiny little minority share of the thing he started, while other people made all the cash." These were the clear sentiments Andrew Slorance made to the BBC for its documentary, The Perfect Wheelchair, which aired last week. He was explaining why he rejected my own offer for expertise and investment in return for a 50% interest in his carbon fibre wheelchair invention. Was he right? His wheelchair certainly looks much better than any I'd ever seen. Instead of being all chunky, metallic and industrial looking, it looks like something Batman would use - black, sleek, strong and lightweight. And there is no doubt the invention is his baby. In a heart-rending story, Andrew fell out of a tree at the age of 14 and lost the use of his legs. For the 24 years that he's been wheelchair bound he's wanted to design a better one, and so he did, inspired by Formula 1 racing cars.

Then, four years ago, convinced the design could be commercialised, he left his job as a film editor to pursue it as a business. As a Scot, he was given money by Scottish Enterprise, and by Highland and Island Enterprise, and when that ran out, he remortgaged the family home for £50,000. The problem was finding a way to reduce the production cost of the wheelchairs. Indications were that it would need to retail at a staggering twenty thousand pounds, more than eight times competitors’ prices. Andrew went through about six prototype manufacturers, always trying to get the cost lower. Getting his target weight of about 6 kilos was also a big challenge and he struggled to do even better than the normal, non-carbon fibre chairs. He argued with many of the suppliers before moving onto the next, blaming their inability to meet his specifications on them only being interested in doing their day job, no more. They responded that he kept changing the specifications and the design. Interestingly too, he never sought the opinion of any other wheelchair users, and at one point said “it doesn’t matter if I go to a user group and they don’t like it, I’ll go on regardless”. So when Andrew tried to eventually demo it at a trade fair, it was perhaps no real surprise that a potential customer hesitated about the design, worried she’d fall out. She also shrieked when told the price. The Beeb interviewed Andrew’s family, who talked about the strain, emotionally and financially, on all of them. So I would say to Andy, the value of expertise, experience and contacts is worth far more than inventors often think. And investor’s cash, like their own cash, represents a lot of hard work and sacrifice. Sometimes the smaller piece of a successful pie is the best business strategy on the menu.

I WAS shocked when a good friend in Australia mentioned he’d invested $100,000 into a new business, planning to export kangaroo meat. It was a lot of money for him, and he came to me a little concerned that things weren’t right. He only shrugged when I asked “mate, you know I’ve been doing a lot of this type of investing. Why didn’t you ask my opinion?" Anyway, I agreed to meet one of the managers, the one who had persuaded my friend to invest.

The company was a complete start-up. There were just a handful of people involved, no one full-time. They had no sales team, and were putting efforts into trying to open up the US market.

Apparently, kangaroo meat is the only meat that can actually lower, not increase, cholesterol levels. The plan was to catch the interest of health-conscious Americans. The company believed they had a unique selling point because they had technology to make the meat easier to prepare. Kangaroo meat can be notoriously tough, but by selling it precooked, the consumer only needed to boil it in a special wrapping, and it would be nice and tender. I had a few concerns. Why was a tiny business trying to open a completely new market on the other side of the world? Why not Australia where cholesterol is a problem too? And the funding – it just seemed to be running on my mate’s hundred grand, which had run out. As I raised this issue, the meeting turned a bit frosty. My mate naively had no idea what percentage of the company he had received for his investment. So I asked the manager. “He’s getting ten percent,” he said, as the meeting suddenly felt Arctic.

If you put $100,000 into to a business and receive ten per cent of the shares, this puts a valuation of the funded business at $1m. There is no way you could value this business anywhere near that. The manager didn't agree. "This business could be worth zillions", he said.

It got worse. The manager had given himself thirty per cent of the shares. His justification was that the business was his concept, and that he received no salary. I pointed out that $300,000 was a lot for an unproven idea and a part-time commitment.

“I haven’t made three hundred grand on this. But my mate has paid one hundred grand in cash for a third of the shares you have. So yours must be worth three hundred. That’s if he hasn’t paid too much.” “That’s if you want to believe that ‘text book’ stuff. We operate in the real world here.”

The business went nowhere. It proved too difficult to open a new and remote market. Either way, it would have taken a miracle for my mate to make any money at that valuation. Happily, kangaroos are still safe from millions of hungry Americans.

They crowded around, smiles beaming, and there was no way to say "no" to the "Pepsi boys". We were on the beach in Mahabalipourum, India and my mate and I had just finished our daily game of volleyball with some local kids. We'd been playing each day and the custom had become to buy Pepsi Colas for the boys after the match.

What they really loved though was my new gadget, a digital camera. It was 1995 and before flying from London on holiday I had splashed out about a thousand pounds for one of the first cameras for the consumer market. Nowadays it would seem Stone Age, with a storage capacity of 12 photos and a twentieth of the quality of most cameras today. But back then, in India, it was a sensation. The boys jostled to get their shot taken and it was a marvel seconds later to see their picture on the little screen. Even the grandparent’s faces lit up in gappy grins at seeing their own image on an electric device.

Another mate of mine, Rob, sat in the shade watching. He wasn't into volleyball and he wasn't into my digital camera either. “Ricko, that’s just an expensive toy" he said afterwards using my Aussie nickname. "The quality is rubbish. They're all grainy and the colours are terrible. I can barely see them on that little screen". "Yes, Rob but you can see them better if I download them onto my computer". "Download them?? Will you ever print them?" "Maybe some of them". "Maybe?? Photos are to be seen. Put in frames and admired."

Rob spoke with authority. Photography was his passion. He'd been a photographer for years. From Vogue to violins, he'd shot the lot. It was also his livelihood. He had three photo labs in Sydney selling film and frames, and developing prints. It was good business: he drove a Merc and lived in a million dollar house on Sydney Harbour.

"Yes Rob, you're right. It's crummy. But I think you’d better be careful, digital is a torpedo heading in your direction. The quality is only going to get better and better, and the price lower and lower." Over the following days, I urged him to sell up his business. A bit radical you might say, urging someone to completely change their life and abandon a passion, but I was convinced. Occasionally we are all right about something and sadly I was right on that one. Over the next decade digital cameras boomed and photo film sales virtually stopped.

Rob put up a battle but blamed everyone except the new technology. Desperate for market share, other photo labs started lowering their prices on film and prints. Rob grumbled about the supermarket chain up the road, which kept undercutting his prices. "They're cheap, they look cheap and their colours are terrible."

Then with customer visitors dropping slowly but steadily, Rob blamed his shops' landlord and sued. The landlord was the Church of England. "The nearer to the church the further from God" Rob said, which got him in the papers as the classic "Aussie battler" fighting for justice. Eventually the case was settled but his pyrrhic victory involved hefty legal bills.

Then it was the photographic film companies who stopped subsidising branded photo labs like Rob's. "They're abandoning us. They don't understand the industry."

Finally Rob went broke. He closed the last of his 3 labs and lost the house and car. He should have exited. But so should have big companies like Kodak. Obvious? Ask Nokia or Blackberry.

The two charming young people sitting opposite beamed with enthusiasm as they started to describe their new business to me. “We’re graphic design artists and web designers” they said as they handed me their brochure. Then, it got confusing.

All I saw were lots of pictures of little squares, each filled with a capital letter in a fancy font. “We designed those ourselves”. “So…the idea is that people will use these on their websites?” ”No, you can make up words with them. They’re used in posters.” It clearly wasn’t a web business, but like Sherlock Holmes I pushed on. “Oh, you can hang words on the wall?” “Yes, they look great. People love them.” “What words would people put up? Slogans? Commandments? Their children’s names?” “Yes, mostly their kids’ names.” So I eventually realised they were selling art. I asked how many they’d sold. “A few. We’ve sold some at Tupperware type parties” “How much do they cost?” “It depends how many letters in the poster.” This wasn’t getting easier, but I established they charged about £15 a letter, so typically £75 to £105 a poster.

The little start-up, Alphabet Designs, was the winner of a draw at the B2B event in Kent, winning them 15 minutes of my advice. It’s never easy to pretend you’re an instant expert on someone else’s project or passion but I tried to come up with a strategy. “I think the good news is, guys, that the lettering and colours are imaginative and pretty. I can see how people would like them. What you need to do is clarify your message – to others and in your own mind. You are too vague about what your product is. If you don’t know, how can a customer. The letters are just the nuts and bolts; it’s the end product you need to push. Your posters could look pretty cool on a child’s bedroom wall. Other “word-art”, I’d say ‘forget it’ for the moment. The family market is your low hanging fruit, the easiest and fastest market. So your strategy is: fill your brochure with pictures of bedroom walls with posters of children’s names.” The lack of direction caused more problems than just a confusing brochure. “Your business strategy then also revolves around the family market. Try approaching toy stores, children’s furniture sellers, photo print shops etc, and do deals with them. Get them to display and sell your product. Split the profit. Let them be your sales force.” They were clever, but were too close to their business and had lost the big picture.

At the same event I was approached by a furniture seller, the owner of Oak Fresco and I asked what was special about his furniture. “We make the best oak outdoor furniture in the UK. It’s thicker and better finished than anything out there.” That sounded like a good business so I looked at his pamphlet. On the front it just said they made oak furniture. You can imagine my advice. If you’ve got a special product, don’t be shy. Know why it’s special and make sure potential buyers know too - in seconds.

It was depressing: the business was making continual losses. We’d tried everything we could think of, but nothing seemed to work. We’d made many mistakes and had an unfair share of bad luck. We reached a decision: find a buyer and sell it. It was fundamentally sound, so in the right hands it had to have value.

Things went well and we found two serious buyers. I was running the process and got the dream result, a “bidding war”. The price went higher and higher, just what I wanted. I played my hand badly though, and overconfident, let one buyer drop out. I was happy the other would deal, at £2 million. Then I got the early morning phone call from the French buyer. “The contract is ready and all is agreed except…we are changing the purchase price.” “Oh really?” I asked, “What to?” Just a few seconds pause and he said softly “Zero.” “De rien?? What do you mean?” “I’m saying we’ll take it off your hands for you”. It’s probably the rudest I’ve been in a business conversation, and I hope his English was good enough to understand my Australian response. I ended up selling to a third buyer at half a million.

An unhappy result, but selling a business is tricky. Even after things are agreed and contracts signed the “due diligence” can throw up something the buyer is unhappy with. That nearly happened with one tech company we had when a patent wasn’t as complete as the buyer wanted. Fortunately we convinced the buyers it was sufficient for their needs and they didn’t demand a price reduction.

Even your own staff can be tricky. Often the buyer wants key people to stay with the business. When a friend of mine sold a recruitment company she’d started years earlier for a decent price she was amazed when her top manager suddenly demanded about a third of the proceeds. The manager was seen as very important to the business but had never bought shares or done the start-up work. He’d always been on a good salary, and was even due to get a pay rise after the sale. The two were good friends but jealousy, greed and a sense of entitlement took over. He got his third.

For another company of mine it was the bank. Our business had a lot of debt, but was profitable and gradually paying it off. We had been in slight breach of a few accounting ratios, but the bank had accepted it for years without complaint as it didn’t want to lose us as a customer if we refinanced elsewhere. Then we hit gold. The business was to be sold for a great return. What did the bank do? Knowing there was no point us changing bank and that they’d be losing us as a customer, they started charging enormous “monthly fees” for our technical breach. I think they grabbed about thirty-five grand from us as we sold. And it wasn’t even a French bank.

I am one of 11 children born in the outback of Australia. My father was an itinerant farm labourer so sometimes we were given accommodation and sometimes we stayed in a big tent. Strong as an ox, “Dad” was a good worker but also liked a drink. He was violent towards his wife and us children. Even years later, at the age of 51, I get irresistible urges to hide. From what, I don’t know, but sometimes I have to. At the age of two, six of us children were taken away. I was child number eight; a sister had died before I was born, from drinking polluted river water, and “Mum” had given one sister away to another family. We were sent to an orphanage, then to foster homes, and I didn’t see the others for twenty years. My parents stayed together. He had supposedly rescued and protected her from her own abusive father, so her loyalty knew no bounds. They then had 3 more children, keeping two and giving one away.

My foster home was no refuge. I was sent for a month, till my real family sorted themselves out. They never did, and I waited heart broken. I was also traumatized, shy, and backward, and I believed I was stupid. My foster father, a cruel man, responded by giving me nicknames such as “space-age boy”. Space between the ears.

My rescue was education. Being quiet and wanting to stay out of trouble had its advantages, and the refuge of reading and playing chess somehow started up my brain. I eventually got a well-paid scholarship and graduated with a first in economics/maths. Then I got a good job and life was easy.

So when I’m asked, “what made you successful?” where do I start? For anyone, there are so many things that could have an impact: brains, education, family connections, personality, looks, financial security, memory, imagination and drive. If I am average at all of those, but could be a lot better at just one, which would I choose? Which would you choose? For me, it would be personality. People with personality fall on their feet; opportunities come their way. But maybe I favour that one because for most of my life at least, I’ve been devoid of any. Imagination, I feel, is a big one too. Business success stories often reveal a vivid imagination. I’m suspicious of my own savior, the education system, which steals young children’s personality and imagination with time spent memorising countries’ flags and other useless junk. Let them play! Oh, and what about brains? Who impress me are people who can simplify complications, see through the mist. That definitely would come in handy. So you have my wish list of three: personality, imagination and intelligence. But at the end of the day it’s all about one variable, happiness. Other things are inputs to that output. One thing I’m looking forward to right now is a simple boating holiday on the Murray River in Australia. Just five of us. Me and four brothers and sisters.

Richard - recently named as the University's new Chancellor - received an Honorary Degree for his contribution to the UK technology sector and his passionate commitment to encouraging and promoting entrepreneurship.

Read more on the London South Bank website.

When the price went up by yet another million pounds I had to say yes. But it was with a heavy heart because I was proud of what we had created from scratch against the odds and against popular advice. I’d also had a lot of fun. The business was the now famous London club, Home House.

Eight years earlier, Brian Clivaz had shown me a magnificent Georgian building, which was built by the famous architect Robert Adam for the Countess of Home in the 1770s. Empty for twelve years, it was derelict but with a proud history. It had been home to all sorts of people, such as Earl Grey, of the tea fame, and Anthony Blunt, of the spying game. It was the French Embassy during the revolution. With its amazing staircase and ornate rooms, it was absolutely stunning and I fell in love with it.

Brian's idea was to create a members’ club with fantastic drawing rooms, a health spa, 18 hotel rooms, a restaurant, a bar and a courtyard. I liked his concept, and I had a few ideas of my own.

I didn’t want just another London club. To me, these were anti-businesses: stuffy and old fashioned. Dress codes usually required men to wear a tie, and if you didn’t have one you could be kindly offered a wide yellow polyester one. Oh, and women were rather discouraged. So I insisted to Brian that the club allow casual dress, allow mobile phones, and have…lots of women members! I knew that if the girls came to the club, so would the guys.

I sounded out my friends. Most were against it. “£1500 a year is too expensive Richard. No one will pay it.” “Its just outside Mayfair. That won’t work.” That one I laughed about: “yes, but why are all your London properties named after the Monopoly board anyway?”

I decided to back the idea and I was the largest investor and later chairman. The restoration and decoration took nearly two years, and cost over £10 million. Brian's struggle to get the work finished and the club open on time was the subject of a BBC documentary, "Trouble At The Top". I was portrayed as the worried money guy but the delays were not really a concern to me. For me, the success of the business would depend on enough people eventually joining, even if that happened six months later than planned.

Eventually, we got the thing going.

At first, there were many issues with the service, since it was not easy opening a business with over one hundred employees. But even that quirkiness seemed to add a charm to the place and it attracted 2,500 members. Celebrities were everywhere. Madonna stayed there. Bill Clinton tried to get in after closing time. I had a memorable moment at a party when Paul McCartney's first words to me were "I know you!". He’d seen the show and booked the club.

We invented a genre - the combination of a historic and beautiful building with a casual atmosphere. Foreigners loved the Englishness, and the English loved the foreigners.

The blond haired, middle-aged PR guru slouched back in his armchair and confidently announced his “stunning” idea to me. The little girl, Madeleine, had recently disappeared in Portugal and there was massive public sympathy and frenzied press coverage. To my sensitive agent, struggling to justify his hefty monthly fees, this represented a fantastic opportunity. “A major newspaper is looking for 10 wealthy people to each contribute equally towards a £1m reward for information leading to Madeleine’s recovery. I think you, Richard, should just offer the whole £1m. You’ll be a national hero and it will cost you nothing, of course. They’re not going to find her anyway”. Like any normal human being, I was repulsed at the idea of somehow benefitting from others’ misery. My response was to politely terminate his services.

Why had I hired him anyway? From experiences like this, I’ve become sceptical of these expensive experts and found that, like many business skills, you learn most by watching others in action. Marketing is all around us, it’s very hit and miss, and it’s fascinating.

Sometimes, simple ideas are clever, such as Apple’s choice of white, Nike’s swish of a logo, or even a name: “Nikki Beach”, which is a restaurant/bar venue in the south of France that has a pool but no beach. Sometimes there’s controversy. French Connection scored a coup in the UK with the inspired branding “FCUK”, making us all think for a moment that we’re dyslexic. On the other hand, a pest control company in Australia, Flick, shied away from a similar opportunity when it advertised on motorway billboards. For a while they had their name spelt in big capitals before they realised what the word looked like approached from a distance. They quickly changed it to inoffensive lower case lettering.

Sometimes though, it can be best to let things be as they may. A while back a mate of mine, Peter, started a chess shop in central Sydney selling sets and books. He is incredibly untidy and there was stuff everywhere. “This will be a disaster if you don’t tidy it up Pete” we all said, with no impact. To our surprise, people loved his shop and business boomed. I can only think that customers assumed a shop that messy must be the cheapest. They also liked spending time rummaging around the disorganised books, with the joy of discovery being a bit like a garage sale. “Brilliant branding Pete!”

To top it all though, the best marketing stunt I have heard of was a few years back when a clairvoyant made worldwide news. She was suing someone. Nothing unusual about that, except that the alleged infringement hadn’t happened yet: she had “seen” it in the future!

Prime Minister Gordon Brown looked determined when he said to me, “We’ve got to get more small businesses started”. My response astonished him: “As you know Gordon, nearly nine new businesses fail for every one that succeeds. I’m worried that we will just add to the nine, not to the one”. “Oh, yes of course” he said, as he wondered if dabbling with the business world was worth the hassle.

Why do so many fail? What grand scheme of unhappy occurrences connives to defeat all the optimism and dreams behind a business launch? To me, problems arise from one of three causes: the original idea is no good, the execution of the idea fails, or “unknown unknowns” emerge with disastrous effects.

Despite all the brilliant ideas out there, I am sorry to say, there are also some plain silly ones, and I get emailed my fair share. One was the electronic “nappy wand”. The wand is waved over the baby and changes colour if the nappy needs changing! A brilliant invention looking for a cause. How it works, I’ve got no idea. What I do know though, is that having had children of my own, if a nappy needs changing you can either hear the baby from the next room or maybe smell it! The wand is portable and battery powered - great for parents, who really need something else to carry around on a day out with Junior.

While there is no shortage of these wild ideas, it is poor execution of more reasonable ideas that causes most businesses to fail. High profile businesses have made high profile mistakes, such as Kodak (underestimated digital photography), Woolworths (out-competed on price) and maybe even Nokia (missed the convergence of phones and computing). But at least they savoured success for a while. The usual mistake for anonymous small start-ups is to spend too much. The lure of the fancy website, plush office, trade fairs and expensive advertising lead many to their demise. Others find that for whatever reason, the anticipated sales, outlined so precisely in their “business plan”, just don’t happen.

Finally, as on the battlefield, there are the “unknown unknowns”. Business can be like playing at a casino where you don’t even know what game you’re playing. One company of mine didn’t recover after a million dollar piece of machinery we had sold to a US customer was accidentally dropped from the back of the delivery truck and smashed to pieces. We were insured but the loss of time opened a decisive window of opportunity to a competitor. Another, a software company I had, died because software developers prefer the fun of writing their own code to buying our cheap off-the-shelf libraries. I didn’t know I didn’t know that.

So how does a start-up be part of the one and not the nine? Use the first year as a research project: test the idea and business plan as much as possible, for as little money as possible. Oh, and hope the unknown unknowns are on your side.

PLEASE ensure you’re sitting down because I want to shock you. Despite the popular wisdom, most “amazing” and “brilliant” business start-up ideas and inventions are worthless. Yours, mine, and just about everyone else’s. They have no value. Scream and shout all you like, but after backing over 80 start-ups and reading more than 10,000 business proposals sent to my website, I’m convinced of this. “But that’s rubbish”, I hear you say. “What about Facebook or Skype, or closer to home, Dyson? These were all brilliant ideas, and they’re now worth zillions.” Yes, but I would argue that their value now is due to their fantastic commercial progress and talented management. “Fine, but surely when they were just at the idea stage they were worth something?” Not much. There have been plenty of ideas, just as clever, which crashed and burned. It’s a bit like saying a winning lottery ticket is valuable before it is even drawn.

The general reluctance to accept a low investment value means many inventors and new businesses struggle to get funding or to involve other people. Not long ago, I was presented with the idea of launching an upmarket consumer magazine. I was shown a few sample pages and a draft supporting website. It all looked good and the two founders were certainly talented and very bullish about their idea. Their valuation? They wanted £100,000 invested for 20 per cent, valuing the idea at £400,000. My valuation? You guessed it, zero. I didn’t invest. Similarly, a few days ago I received an email from a fellow in Australia who has researched on-line gambling there and believes he has found a niche to start a new business. He wants Au$250,000 (about £150,000) for half of the company, which hasn’t even been incorporated yet. He gets his half for free, so he’s valuing his research efforts and idea at Au$250,000. Looks like his hourly rate for dreaming up business ideas may be well over £10,000. On-line gambling? Hardly earth shattering innovation. Life wasn’t meant to be that easy, and it isn’t.

I am not saying these ideas won’t work; it’s just that all their risks lie ahead. Interestingly, the businesses are also asking me to give ongoing input and management advice, but they place no value on my time or expertise. They will probably need guidance from somewhere – my view has always been that the bigger role in a company’s success or failure is the quality of the management rather than its product. I will concede something though. Some research, such as that coming from universities, can be extremely profound. You often have very talented teams of people, leaders in their field, who put in years of work to generate innovation and knowledge. I find that exciting, especially given the quality of research done here in the UK. Interestingly, university spin-out companies tend to raise commercialisation money at modest valuations. Perhaps like me, they know that the real challenges lie ahead.

I AM inspired by new products and ways of doing things – what is called “disruption”– and this led me to meeting Nigel Coole, an inventor. “Think back Richard, to when you were a teenager fumbling around on a date and got lucky enough to undo a bra. Do you remember the struggle and embarrassment with the clip?” Vague memories of a tangled mess came to mind, and I knew what he meant. “Well, it’s not just a problem for the boys,” he added. “Women who wear them can struggle too. On top of that, the hook and eye is ugly, lumpy under clothes, and an expensive component for manufacturers.”

Problems in a global market? Nigel had piqued my interest. “Great. But what’s the solution?” “A new type of bra hook, which is simpler, cheaper and prettier.” He laid out two small pieces of metal on the table. They fitted together like cupping your hands and linking them. “These clips are really easy to undo, and as long as there is tension pulling them apart, they stay locked.” “Really?” Nigel showed me a video of a female gymnast doing leaps and bounds wearing track pants and the bra. The bra stayed on. I peppered Nigel with questions. “Sales? Orders? Joint ventures?” “No, no, nothing.”

“What about patents?” “Yes, I’ve applied.” “Anything similar out there?” “No”.

So it was basically a good invention with no commercial progress. I thought I could add value, and I agreed to put up seed money and expertise in return for half of the business.

Like singers on X Factor, inventors have to be careful: no one likes to tell them they’re no good. Friends, families and fools will usually say “that’s great”, so I’ve learnt to look for dispassionate opinions of industry people, and their opinion means more if they spend some money.

So, the first thing I did was organise as many meetings with industry as possible, here and in Europe. The verbal response was overwhelming. “This could be the biggest thing since Wonder Bra” one expert said. We were asked to do “wash and wear” trials and these were successful. Some said plastic would be best, others metal. We got to the point of negotiation. Everyone wanted exclusivity for up to a year. That was fine by me; in fact, they could have exclusivity for nothing. In my mind, they would be doing us a favour by getting our product known and used.

Then things stalled. The next step would be to “tool up” to produce high quality samples, and everyone wanted us to do it, which made no sense. “But why? You’re better at that,” I said. The wholesalers wanted orders from retailers first, and the retailers wanted to see samples before ordering. Chicken and egg over a relatively small cost. So often I sense a resistance by the big players to change, to risk, to disruption.

We haven’t given up. I respect the industry for its opinion, but maybe not its innovation.

As the ceremonial head of the university, he will perform a range of duties including awarding degrees at graduation ceremonies and serving as an ambassador for LSBU.

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Richard Marsden describes his meeting with University of Southampton scientists in 2003 as one of the most memorable moments of his life. That very meeting, about a potential new medicine, could prove pivotal to the health of millions of people. If Richard hadn’t been there, the idea may never have been developed. The discussion was all about lungs. The scientists had discovered that a vital defence mechanism didn’t always work. When the lungs are under attack, they normally produce “interferon beta”, a protein that helps fight off nasty viruses. This reaction can be key to stop say, an ordinary head cold travelling south to the lungs where it could do real damage. People such as asthmatics and smokers don’t always produce enough of the protein, and can suffer badly, even fatally, when they have a cold.

Having discovered a possible cause, the obvious idea was to create an inhaled drug containing the protein to “top-up” the levels in the lungs of those at risk. And so the journey began. But it almost ended right there: in the academic world, it can be publish or perish, and the scientists were keen to publish their results, without patents, saying simply “We don’t know how to patent”. Most people new to business are in a rush to patent, whilst I am usually more of a believer in first -mover advantage and business expertise. Patents are tricky to get and expensive to defend. In the pharmaceutical world though, they are a necessity. It’s not about greed, it’s about cost. The average cost to market of a pharmaceutical drug is over $1 billion. A drug company needs to get a good price to recoup these costs. Without patent protection another company without those costs can copy the drug’s ingredients and sell at a fraction of the price. Sometimes, only a monopoly position makes sense.

Thankfully, Richard organised the patents, and the new company, Synairgen, partly owned by the University and the scientists, looked for investors. Hearing the story, and imagining the opportunity, I joined in, with a cheque for nearly half a million, and Synairgen was listed on the stock market. Richard and I chat regularly ever since about strategy and results. Now, business isn’t as easy or quick as things like Facebook or Skype could have you believe. It’s taken eight years, and Synairgen has been looking at the drug as an asthma treatment: testing for safety, dosages, patient choice and effectiveness.

This month it announced that a trial of 147 patients demonstrated significant benefits to vulnerable asthma sufferers. There’s still more trials needed, which could involve partnering with a big pharmaceutical company, but that’s a huge step towards a possible treatment against a broad range of viruses for a vulnerable population. The company has also become more confident that a similar treatment could be effective for things like bronchitis and emphysema (smokers’ curses) and it could even be stockpiled by governments as a defense against unknown viruses such as bird flu. Eight years, and I am as optimistic as ever.

When Pat Cash won Wimbledon in 1987, he was asked how it could be improved. “I guess they could hold it in summer” he replied with classic Aussie irreverence. So when we met years later, I knew we’d get on well, and I ran my new idea past him: a website to sell high quality tennis racquets. There were no patent issues, and I would sell a close replica of a very successful well-known racquet, and even source from the very same factory.

What was radical was that I wanted to sell mine at cost price – about £20. Well-known brands sold theirs at up to ten times that price. “Er, you won’t make any money doing that, will you Richard?” “No, you’re right Pat, but I want to build a brand. The business, MegaAge.com, will become known as a reliable seller of good quality, low priced racquets, and as we add other products we will get lots of sales. With the brand name and lots of people visiting our site, we can figure out how to make money later”. “Not quite sure I understand all that mate, but I’m sure you know what you’re doing”.

So Pat agreed to endorse the product and MegaAge.com kicked off (or opened serve?) in mid ’97. Not being completely mad, I limited my investment in the idea to £250,000.

Then my mistakes began. Like many new businesses, I proceeded with unbounded confidence. I was so sure the racquets would sell, I ordered ten thousand and sent them to warehouses in the UK and US. So with that and building the website it only left about £50k for other costs. I thought marketing was a waste of money, and I only budgeted for newspaper ads over a few days as a launch. The ads were small but cool, “Pat Cash in Love” - with MegaAge racquets. When we ran them we sold about 25 racquets a day, but when we stopped, the sales dropped to a handful. Weird things happened too. Because of the low price, people questioned the quality, which was nonsense. And the Aboriginal colours I chose happened to match the German flag (a big mistake in the UK!). The big sales revolution I expected didn’t happen. The only time I laughed about it all was at a charity function, when I won a door prize: 2 tennis racquets!

I even hired a guy to push sales, and off we went to a trade fair in Atlanta. He was expensive but little use, which dawned on me when I saw the big posters he’d prepared didn’t have the name of the company or product.

So having blown the budget, I called it a day and sold the business for almost nothing. Lessons? Use the first year of a business as a research project, and test the concept by spending as little as possible. Marketing is not a waste of money, but too much stock is.

I think I was with friends having a coffee when one of them, Natalie Massenet, casually asked me to back her new idea, Net-A-Porter.com, an haute couture website with access to the top labels. It was early 2000 and the tech-boom was raging. Valuations were sky high and every man (or woman) and his dog (or bitch?) had a “brilliant” web idea, sometimes dreamt up in the bar the night before. I was not keen on any of them, including Natalie’s, which I thought was just as uninspiring.

I also wasn’t sure that Natalie could execute the idea anyway. As a fashion journalist, she knew the industry as well as anyone, and she is a stylish and beautiful woman with charm and drive. However, she’d never run a business before. Even though I was looking for business opportunities in other sectors, friendship was the only reason I reluctantly contributed an initial £10,000 to this dot-com.

What happened next?

Natalie got going. Her advantage was her contacts in the industry, and she was able to secure exclusive access to haute couture products that were not generally available. This would not be an easy task for most people, and I had underestimated its value. Around this product base Natalie built a great website, on-line magazine and delivery service. I am not normally a big fan of new businesses spending too much on websites, but an up-market clothing site needs to exude luxury, and Natalie spent the investment money wisely.

With the business up and running, I was able to witness, first-hand, the customer experience. I remember one night staying with a bunch of friends in the countryside. After dinner, sitting at the table, the girls gathered around a computer and started browsing the Net-A-Porter website, credit card details ready. What a great way to shop – no rush, no travel, red wine in hand, and with girlfriends’ advice on tap! The nervousness of the men about the spending was more than matched by my silent excitement about the business potential. Then one day later, the packages arrived. The amazing gift-wrapping made onlookers immediately envious. A solid black cardboard box with a red ribbon opened to a delightfully tissue-wrapped fashion luxury item. Any returns would be accepted without question, postage paid. It was almost enough to get the men wearing dresses. At the next fundraising I put in another £50,000.

There didn’t seem to be any competition, and sales grew rapidly and internationally. For me, the biggest internal issues for a business are the staff, the space and the systems. Natalie handled these in her stride. She didn’t waste money, and she adapted when necessary. That built value. Finally, the company was sold last year to a trade buyer for about $500 million and I made a phenomenal return. Natalie is still there and now fabulously rich, and has just launched Mr Porter for men.

Richard has started writing a new book, "Confessions Of A Serial Entrepreneur". Excerpts are being printed Mondays in CityAM, and appear here as a weekly blog post.

When Levi Roots sang his way onto the set of Dragons’ Den in 2007 with “Put some music in your food for me, I’ve got some Reggae Reggae Sauce, Reggae Reggae Sauce, It’s so good I named it twice” I didn’t think he was an entrepreneur. Along with the other dragons, I tasted his spicy “jerk” sauce, and didn’t have a clue if it could sell. Sure, he’d been “marketing” it for 15 years at the Notting Hill carnival, but he’d never really sold any. Besides, to give the sauce a real test, you’d need 20 similar sauces in front of you and to do a blind tasting like they do with wine.

Levi was fun though, and his serenading was a nice break from the tedium of long, drawn-out, boring presentations on the Den, only a tenth of which gets inflicted onto the viewer via the telly. However, his nonchalance when asked how he got such a cool name, with the response that it’s really “Keith Graham” was soon put to the test when I challenged him about his numbers. He thought the “order” he had was for two and a half million litres, but I spotted he was out by a factor of a thousand to one! Rather than making the business a no-brainer, the order was insignificant, and Levi, can’t you even count? So the usual reality TV moment arrived: okay you’re a cool Rasta Jamaican with dreadlocks Levi, but now perspire, mumble, and shake for the cameras, and get off our set! But Levi didn’t do the normal thing. Instead, his response was like, “Fair enough. Any other questions?” I was amazed.

Theo, “there’s no business in this” and Deborah, “not big enough scale for me” joined Duncan in going out. Peter stayed in with me, but had doubts too. “This is a hugely complex, difficult business to get into major super markets”. As I found out later, before filming Levi’s string had broken on his guitar, so the BBC had wanted him to go on set without singing. Like his string, Levi too was broke, financially. But he had the nerve to hold out till the Beeb found a new string and his song could be part of his presentation. Now he felt his “spirit hovered over [his] own body on the BBC floor” as we two remaining Dragons pondered.

Then it finally dawned on me: the sauce was not the product, Levi was the product. Invest.

The rest is jerk sauce history. Peter and I gave £50k for 40% of Levi’s company (double the 20% first offered). With our help the sauce was Sainsbury’s fastest ever product launch and became one of the biggest sellers in the UK. Levi has become a celebrity and speaks at business conferences. He found his strengths and wasn’t embarrassed about his weaknesses. That’s what investors want to back.