Tinker your way to scale: James Dyson

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Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. The very first person to stock up vacuum cleaner was a male order catalogue. I was trying to sell to the buyer from this catalogue.

And I was able to demonstrate it. We sell our dry powder carpet shampoo. that you can use with it, as opposed to wet shampoo and carpets. And he said that won't work. So I went off to the local petrol station, gas filling station, and and got some ribena. Do you have riben? This black currant juice, concentrated black currant juice drink. I came back and threw it on this carpet.

And then put the powder down and vacuumed it up and it worked. He said, Why should I chuck out? Well known brand out of my catalog and put in your thing. Very expensive. Nobody understands it, and who are you anyway.

And I said, Well because your catalogue is boring. And he saw looked at me at her for five minutes and said, Okay, I'll give it a try. That's engineer, inventor, and entrepreneur James Dyson, who founded the Dyson Company over 20 years ago. He's probably best known for his breakout product, the Dyson Vacuum Cleaner. With its bright colors, sleek design, and clear body, it looked like nothing else.

And it worked like nothing else. It used patented dual cyclone technology. Separating dust from air at a speed of nine hundred twenty four miles per hour. James Dyson's road to his first hit product was long and it was rough. He turned that success into an invention empire, starting the Dysing Company in 1993.

Driven by engineering challenges, Dyson has developed a plethora of innovative household items. Like hair dryers, air purifiers, and fans. He's also stretched to electric cars, robotics, and now AI. James is driven by exploring what is possible. That mindset is what helped him grow his breakthrough vacuum cleaner into a technology company with thousands of team members worldwide.

His scale story is one where innovation leads the way. And business decisions follow. I'm Jeff Berman. Your host. You gotta have incredible talent at every position. It's like this huge push. There are fires burning when you're going out. Can you believe it? And then you go back to this is totally gonna be amazing. There are so many easy ways. I have no idea what it is. Sorry, we made a mistake. But you have to time it right.

Oops. Working out of a free bedroom apartment. It just seems absolutely nutball. Ten years later, but well that's just how you do it. We haven't made it just how you do it. This is masters of scale. James Dyson, good morning. You are joining us from the Dyson Shoom in New York. Welcome to Masters of Scale. Good morning. Good to see you.

I got caught in this torrential rain as I came in. It never rains in England, you know, so I'm I'm completely unused to this. Wouldn't it be wonderful if you had a hair dryer? That you could use. Uh funny you should say that, but actually we put three hair dryers on me as I came into the shop here. Dyson's hair dryers are highly coveted, even at a price point far higher than most of his competitors. It took three of them to dry me, which is not a criticism of hair dryer, it's just that I was very wet. Like all of Dyson's products, the Supersonic hair dryer uses pioneering technology like temperature protection for your scalp and remembering your go-to preferences.

But James Dyson didn't always dream of creating beloved high quality household helpers. Growing up. He wanted to be an artist. So let's go back to rural England in the nineteen sixties. When James was an art school student.

And his path. Took a turn. The principal of my first art college. saw me painting and drawing, and I suspect decided The world didn't need me as a painter. And he suggested design.

This is nineteen sixty five. I'd never heard of the word design. So I said, What's design? And he said, Oh well you can design furniture, glass, ceramics I said I'll do furniture because I've sat on chairs. So I I w I went to the Royal College of Art and Design to design furniture. And when I was there, I discovered the architecture department.

The scale of architecture and the complexity of architecture really interested me. And while I was doing architecture, we had a a rather brilliant a structural engineer. Talking about structures. And I suddenly realised that I loved engineering. I'd never been exposed to it.

Historically in architecture, architecture had been about concrete and bricks. But in the sixties with Fry Otto and um but Mr Fuller, the wonderful American inventor and architect, that Now the engineering would be the thing that mattered. Buildings would change because of engineering and the buildings would express the engineering. So that's how it got into engineering. When you made that turn into engineering, you were working on such an incredible range of projects.

Something called a sea truck, a a better wheelbarrow. How is it that you came to decide that you were going to develop a a better vacuum cleaner of all things? Oh frustration. I had a He was called a Hoover Junior. Which was typical of a vacuum cleaner of that era. Which had a bag.

And I was vacuuming one day and it wasn't picking up. And I thought, Why isn't it picking up? Because it needs a new bag. I went and emptied the old bag out. Because it was full. I sealed it back up again, put it back in the machine, and still no suction. My first thought.

Why isn't it sucking? And I suddenly twigged The Bag was empty. But the paws in the bag were clogged. And it's the paws of the bag that result in it being a filter.

So I re I realised how frustrating this was because the first dust that goes into there goes straight to those pores and blocks them. So I looked around for Something that would solve this problem. And like so many inventions, it came from your own need, your own desire for something better, but it took you, as I've read, something like five thousand prototypes in four years to arrive on your final design. Can you help us understand what lessons you learned in that process and why it took so much iteration to get to something that you felt was right?

When you develop something, you o only make one change at a time. It's not a a question of brilliance. Oh I wonder if this complete thing would work. A it doesn't, and B you don't know why it doesn't work. So what you do is you start off with your basic idea, in my case a cyclone. Which separates dust by centrifugal force. You typically see them outside factories and cement works and sawmills as a means of collecting very fine dust. But I was doing it on a miniature scale.

Moby's making one little change at a time. Development by iteration. It was before the age of computers. His book, Invention, A Life of Learning Through Failure. describes how he tweaked his vacuum to capture smaller and smaller particles, changing the angles of key parts, the length of the main chamber, and any other detail that might yield a better result.

At the time. Dyson was building with the equivalent of caveman tools. It took what felt like forever. Today powerful computing speeds up designs like James Dyson's. But the need to iterate remains the same.

Making precise control changes to your product can unlock innovations that create a massive impact. I had to do everything empirically. Very painstaking. I always like to say I had five thousand one hundred and twenty six failures over a period of four years. And then finally the five thousand one hundred and twenty seventh worked.

I came in covered with dust and there were highs and there were lows. But it was just fascinating discovering what works and what doesn't work. So what did you do when you finally got it right? After those more than five thousand efforts, more than four years. What did you do once you had it? I went off to try and license it.

To all sorts of people, including All my competitors. They all had a good look at it, but none were interested in licensing it. Why not? They didn't really want to change. It had become a very boring industry. They were all selling the same things, same technology.

And presumably making money. They don't want to improve. They don't want to make a better product. They don't want to get rid of bags and the problems of bags. They're quite happy as they are. Quite happy not just making the same vacuum cleaners with their dusty bags, but also happy selling those bags as a revenue stream. And it's in that complacency. The other company's incentive to shoot down his improved technology.

That James Dyson understood his business opportunity. I ought to set myself up and compete with them. So I decided to set myself up As a manufacturer from scratch to take on these big multinationals. Did you raise money at that point?

Or you were just going into debt to do this. Well, I discovered I was hopeless at raising money. I went to venture capitalists and the people I suppose to ought to have lent the money. But they they wouldn't'cause they say we're not lending it to an engineer. Especially an engineer who might have seemed more of an eccentric inventor, perhaps not practical enough to run the financial side. Eventually, Dyson gave up on investors and took out a loan from a bank. He had to get a friendly manager to appeal on his behalf to get the funds.

It was about six hundred thousand British pounds, or nine hundred thousand dollars, as he recalls. This was nineteen ninety two. Quite a lot of money. Which I I take it you took on personally. Yes, exactly.

Putting my house out as collateral. Yeah. So you you went Deeply into debt. Yes. How did you think about functionally where to bring people in and when to bring them in? Because if you're taking on debt, you've got expensive manufacturing, you've got a supply chain you've got to manage, et cetera, et cetera. And you must have been very cost conscious, right? If you're dealing literally with borrowed money and and you're personally liable for it.

So I'm curious just about how you made the decision, okay, I'm going to invest money to hire someone and when you did that. Well the best thing I do, Mr H three Graduate engineers. The business started with the four of us, doing the drawings for all the components. And then we as engineers went out to the subcontractors, to the toolmakers, and to people who might assemble the product for us.

As it happens we couldn't find anyone to assemble it. The people who are doing the mouldings for us at a half empty factory. So I said, Can I rent the other half to do the assembly? So we didn't have to buy a factory. We did have to buy tooling, and that was our biggest investment. It's about six or seven hundred thousand pounds worth of tooling.

And the tooling is the um means you inject plastic into the into the moles and the moles are called tooling. We as engineers did that. So we had no production manager. No quality control person. We it was just four of us engineers doing that. Then we had to hire someone to run the assembly line and of course people to assemble on the assembly line.

James and his team succeeded in solving the assembly line problem. So it was time to turn their attention to sales. The vacuum market was packed with big established brands. James could promise his technology was better and more innovative than theirs. But he could not promise store owners that the vacuum would sell.

So when I approached the retailers, they weren't interested at all. They said look, we're selling all the big brands. Why on earth should we sell a Dyson? Looks strange. Why would they buy it? And of course you can't

Say why they were buy it. Why would they give over space in their shop to you? The reputation is on the line. I quite understand that. At the time, in in the early nineties, everything was sold on discount and price. And I thought that was wrong.

It's boring for a start. It is all you're looking at is price rather than looking at specification and how things perform. And I I think performance and durability, enjoyment of use, ease of use, not having to have bags and filters. I thought all that was important. One of the problems in the early days was getting retailers to allow us to say Next to our vacuum cleaner.

On the stand. what the difference was, what the technology was all about.'Cause in those days they just wanted people to buy on price. So that that was quite a big breakthrough getting what we call point of sale display material. Onto the project. That made a huge difference for us.

It wasn't just a bet that performance could be a selling point. It was a bet that high performing vacuum technology could command a big premium. Dyson's Model One Dual Cyclone DCO One cost$275. That was more than double the average household vacuum at the time. His bets paid off. Only a year after the dual cyclone model hit the UK market, it was the number one selling upright vacuum in the UK.

After two years, Dyson was outselling the classic Hoover brand. By nineteen ninety seven, Dyson Vacuums were earning about one point six billion in sales. Technology. Design and performance for women. And as the product started to take off, I have to imagine that half of a manufacturing plant was not sufficient.

How did you make the transition from small scale to large scale manufacturing? what had to happen for you to get there. It's a painful growing process. You have to employ a lot more people to assemble the product. And finding that maybe some people you recruit initially just couldn't cope with the scale.

You keep having to move factory. You have to find more suppliers. Some suppliers don't want to make more product. So it's it's it's a painful growing process. It is fascinating. A lot of people think it manufacturing is very boring, it's a repetitive process, actually.

Everything goes wrong every day. So it's it's a matter of solving problems all the time. And I was able to recruit good people. to help me and and ultimately to run all that for me. But you know, I learnt it all on the way out. I mean it it is interesting. We went into Japan very early on.

For various reasons. And Japan wanted everything to be much smaller. They love miniaturizing things. And we started. Developing vacuum cleaners just for Japan.

Small ones. And then we discovered that the rest of the world wanted small things as well. So it's interesting how designing things are one culture. Sub the gives you innovation in another culture.

James released several more iterations of the DCO1 vacuum, focusing on designs that were more compact or had special features like a power nozzle. But the company was not going to stop at simply sucking up dirt. Coming up after the break, how James Dyson decided where to innovate next. When you build substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious.

Creative planning works with business owners to build a strategy around concentrated equity. When to diversify, how to manage tax risk, and how to protect what you've spent years building. Creative planning where wealth works together. Learn more at creative planning dot com slash masters of scale. Humans will never be more intelligent than I there's gonna be two types of companies

Those are great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Chaoyubi. And on my podcast, Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives.

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Welcome back to Masters of Scale. We're exploring the scale story of James Dyson and his life of innovation with the Dyson Company. You can find this full interview and more at the Masters of Scale YouTube channel. It feels like such a shift from artist and engineer inventor to entrepreneur and scalar of a company.

Somewhere along the way you realized and then made the decision that Dyson couldn't just be a vacuum company. that you had to expand into other product lines to scale to fulfill your potential. Could you share with us how you made that decision and then how you chose what directions to go in in in exploring new product lines?

First, I wanted to do other things. It wasn't that I felt I had to. Because I didn't have to. You can be have a very lovely relatively simple business just making vacuum cleaners, but I wanted to do other things. And The other things I didn't do as part of a business plan.

I did them because I had some technology that could make that product work better. So that that's how I approached it. Just doing products that we find interesting and fascinating and that solve problems. It wasn't a conscious decision, for example, to go into the beauty business. It's just that.

We had a particular motor, this tiny little motor, which could replace This huge major that you see, you know, in hair dryers. And be quieter and um more efficient and dry hair better. With hand dryers, we had no idea of the market size,'cause it's quite a sort of conceal business. But we felt we had a much better hand dryer that used um seven hundred watts instead of three thousand watts.

And dried much quicker. So we we thought it was a better product. We we didn't research the market to see how big it was. We just wanted to sell it because we thought it was a better hand dryer. So it it's always the technology that decides that we should go into a certain product area. It's not a business decision. I mean you could say that's a stupid thing to do.

But it's the way we are. We go where our technology takes us. Going where the technology leads instead of building the business plan first. That's a risky but captivating theory of scale. And it's worked in Dyson's favor many times.

But sometimes it fails. That's what happened when James Dyson went after the electric car market. the b industry thought that only two percent of cars by twenty thirty would be electric. We decided that couldn't be right. more than two percent of people were gonna go electric. People vote with their feet. And the interest wasn't taking your notice.

We made electric motors. new technology batteries, and we know quite a lot about air movement and air treatment. And that's pretty much a car. We were quite interested in having one big project. And uh Carl certainly answered that. That question. And we developed it with huge enthusiasm. We were all very keen on it and were passionate about it.

And probably that was a bad business decision. The electric car project hit a snag that James could not have anticipated. In two thousand fifteen, a major scandal erupted. Dieselgate. Volkswagen.

One of the world's biggest car makers was cheating on diesel emission tests. This caused public uproar in Europe and the US and resulted in stricter automotive industry regulations. Car makers had to get in gear to make cleaner cars and fast. You might think this would have benefited Dyson and their plans for an electric car, but suddenly they were not ahead of the curve. The heavy hitters rushed in, and now Dyson faced heated competition.

Just to give one example, if you're a new manufacturer starting out. small scale, you're paying thirty to fifty percent more for each component than an established manufacturer. And that's because they can buy at much larger scale, so they they have pricing power. Exactly. They've been in the market for ages. They know the suppliers. They they've got a reasonable price. But we were the new kid on the block and we were probably being taken advantage of on cost. And to be small scale in the car business is very difficult.

I don't have Tesla's type of money. So we recognize that it would be a really long haul To make it profitable. And very sadly we had to tell everybody. Involved in the project that we were stopping it. And we'd spent five hundred million pounds, the seven hundred.

million dollars on it. And it didn't really teach us that much. We didn't really get much from it, except some very talented people who we'd recruit to do the car project who came Into the existing business with us. When you make that big of an investment, you put that much time and money into it, and then you pull the plug on it.

How do you explain that to your internal stakeholders? What is that process like at Dyson? Well, I'm the investor, so I'm talking to myself, so I don't have to explain things to investors. I do have to explain things to the workforce. And we had to explain the commercial reality. That

it would be very unlikely in the short term that we're make any money from it. We might in the long term. But to struggle through to the long term making losses is not a good thing to do. And they understood that. And actually the world was looking for

electric car engineers. So those who wanted to go off and continue in cars went off and continued happily in cars. Whereas those who wanted to stay with us stayed with us. But it's a sad moment and As you say, no it's not just the money, it's the hard work, all the emotion, all the enthusiasm, all the long hours that have gone into developing it. But that's what our life is. Our life's a risky life.

We spent a lot of money developing new technology. It can take years and years. We've been developing new battery technology for ten years. And we're still not on the market with it. These are big, big investments, which are risky investments. And the innovation is a risky business. When James looks back on the failed electric car initiative, the biggest takeaway may be to control what you can control.

Like your own iterative process. And to let go as much as possible of what you can't. The only thing we did wrong probably was making the decision to go in in the first place. When we set out to do it. There was wonderful Tesla, but nobody else.

We felt the industry was wrong about that. But of course circumstances change. And we probably should have stopped. The moment Dieselgate happened and we saw what the big car manufacturers were doing, we probably should have stopped at that point.

But we carried on for another two years. And then realize that our worst fears were being realised and that we should stop it. You can't really learn anything from these experiences because Things that happen in the future have different circumstances. I mean I've never believed that experience helps anything.

I prefer Naiv. And I tried and it sounds ageous, but I try to employ young people who are unafraid of failure, unafraid of trying something new, and unafraid of pioneering. Ex experienced people always know why you shouldn't do something. I want people who don't really have that problem. Who who

with in their naivety question things and want to do things differently. And uh Prepared to ignore the doubting Thomases. There's an inherent tension in this, right? Because

It's essential that you have people with the right experience and expertise in understanding How things work, how to build things. And yet you you want that naivete. So how do you balance the need for specialized expertise with that outsider's perspective and the fearlessness of youth or lack of attachment to way things have historically been done in a certain industry? Yes, now you're m you're making a very good point. You need that mixture. But you need

A lot more of the naivety and very little of the experience. If you have too many experienced people though. general mood is one of doing things in the ordinary, expected way. Uh what you need as an experienced person. For example, running on manufacturing operation.

Who's done that before? But all the people supporting him, hopefully would be people for whom this was the first time. They're pioneering. Then they're pushing that person. to do things differently and not be afraid of doing things differently. A culture of invention feels critical for a company like yours. It can't all come from your brain, I imagine.

I appreciate bringing in people who have that outsider's perspective. How have you scaled the culture of innovation so that it's not just you coming up with these product concepts? I don't come up with any of them now. I've got lots of bright people who come up with the ideas. It's just simply an attitude. Every day, every minute of the day.

When someone has an idea, you say that's interesting. Why don't you go and work on it? As opposed to saying, Well, that might not work. If you suggest such negativity. Then that spreads.

But if you Have enthusiasm all the time for new ideas. And you're known as a business. F fostering and nurturing new ideas.

Then you tend to gather around you people who Do have ideas. So it's an everyday thing. If an idea is a bad idea, explain carefully and sensitively why it's a bad idea. James emphasizes a beginner's mindset to drive innovation.

To design outside and beyond the molds we know. In the spirit of scaling innovation, he opened the Dyson Institute of Engineering and Technology in two thousand seventeen. As is so often the case with James, the institute started as a solution to his own problem. James saw the massive shortage of engineers and the urgent need to train more of them. I'd been going to every new government minister of education saying we need more engineers to solve all the problems. But also because

Products now. are much more complex than they were thirty years ago. You have AI now, you have software, you have electronics. You've got to use fewer materials, you've got to make things smaller, you've got to consider the environment, and so on and so on. So you need five or six times the number of engineers now to do a product than you did thirty years ago. So I've been badgering the government to do something about

getting more people into education and science. And of course, as governments they've done nothing. About eight years ago. I went again to the new minister. And he said, Well, if you're so worried about it, do your own university. I said, but I can't, and he said, Well I'm gonna change the law.

And he changed the law in two thousand seventeen. We set up our own new university and took in our first intake of forty five school children. One or two of them even seventeen. The law that was changed was the UK's Higher Education and Research Act, which makes it easier for new providers like the Dyson Institute to award degrees. At the Dyson Institute, students go to school while also working at Dyson. By designing new models for higher education, James has built a new pool of talent and has created economic opportunity where it previously did not exist.

I'm simply horrify by the debt that students have to take on now. for their living accommodation and their fees. It's completely wrong to me that at that stage in your life you should leave university, owing Sixty thousand pounds, ninety thousand dollars, whatever it is. As you start to make your way in life, it's wrong.

So I think I found a way to stop that. They have a contract of employment with us, we pay them. In fact I always joke that the the only students who pay tax And the net contributors to the state. They work three days a week with our scientists and engineers and we teach them for the other two days.

They do have forty seven week. They didn't do an academic, yeah. of undergraduates who are being taught by practitioners. Not by academics. They were wonderfully enthusiastic lot. They are naive and question our experienced engineers, which is exactly what I wanted. They invent things and they're inspired.

To do their academic studies. As we think about the need to reimagine education globally, do you view this as a scalable model? I do. Yes. Yes. I mean there's a cost to it. It costs us. But I think we get back more than it costs us. James, let's wrap with this. I have to imagine that you are stopped on the street, you are accosted by aspiring inventors everywhere. What's the one piece of advice you make sure to share with them?

I never give advice. Because you don't know the s their situation. And in any case, you know, what's happening tomorrow is totally different to Today. Th the one thing I do say is never give up. Often the very point where you're exhausted, depressed, everything's going wrong.

And you want to give up. Success is just around the corner. I liken it to running a mile,'cause I used to be a long distance runner. And the moment you want to give up is the sort of end of the third lap. Everybody else is exhausted. And that's the moment you should accelerate. Because you'll win and get to the finish line.

Thank you so much. Jeff good conversation. Thank you. James Dyson has dedicated his life to inventing. That's given us uniquely designed products that have become household staples. And an inspiring story of scale.

Instead of fixating on market demands and profit projections, Dyson is driven by a passion for technological innovation. James Dyson embraces the risks inherent in innovation. And views failures as stepping stones. He successfully fostered a culture of invention at the company that bears his name while building a team that spans the globe. His model of scale is built not just on selling more of what you already buy.

But on constantly inventing. and investing in the future by training a new generation of innovators. I'm Jeff Berman. Thank you for listening. Masters of Scale is a Wait What original.

Our executive producer is Eve Tro. The production team includes Tucker Legerski, Masha Makatanina, and Brandon Klein. Special thanks to Juliette Luini. Mixing and Mastering by Aaron Bastanelli and Brian Pew. Origin Music by Ryan Holiday.

Our head of podcasts is the tall Malad. Visit masters of scale dot com to find the transcript for this episode and to subscribe to our email newsletter.

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