How James Dyson Created a $3 Billion Vacuum Empire
James Dyson hated the dust-filled bags and loss of suction of conventional vacuum cleaners. His solution, a bagless vacuum, became the start of a global company that today brings in $3 billion a year selling air purifiers, hand dryers, lighting, hair dryers, and of course, vacuum cleaners.
My father died when I was 9, and I remember doing the household chores to help my mother. I loathed changing the vacuum cleaner bag and picking up things the machine didn’t suck up. Thirty years later, in 1979, I was doing chores at home alongside my wife, Deirdre.
One day the vacuum cleaner was screaming away, and I had to empty the sack because I couldn’t find a replacement bag. With this lifelong hatred of the way the machine worked, I decided to make a bagless vacuum cleaner.
I had trained as an engineer and as a designer, so how things work really interests me. Back then I was making the Ballbarrow, a wheelbarrow with a big red ball instead of a wheel. I had investors for the wheelbarrow, but they weren’t interested in the vacuum cleaner, so I went out on my own.
From 1979 to the early 1980s, I worked on developing the Cyclone technology and was getting further and further into debt. Thankfully, my wife was very supportive. Bankruptcy didn’t worry me because I can make things, but I did worry about losing our house. My wife sold paintings and taught art classes, and we borrowed, and borrowed, and borrowed. We grew our own vegetables, and she made clothes for the children.
I’d always been an entrepreneur, but I never thought of going into a business with the vacuum cleaner. I just had a passion for it as a product. In the early 1980s, I started trying to get licensing agreements for my technology.
I wasted so much time and money trying to meet with those who are now my competitors. Some companies—like Conair and Black & Decker—were quite keen on licensing the machine. The talks went a long way until it got to the in-house patent counsel, who then blocked it. In a couple of cases, the companies decided not to diversify their product line, so the talks ceased. The people who rejected it did so for no good reason, which told me they were not interested in technological advances. That gave me the courage to keep going.
We had a breakthrough in 1986. I got a licensing agreement with a little Japanese company named Apex, so we had some income coming in. However, Apex wasn’t very successful with it. They sold the machine as a niche product called the G-Force for a quarter-million yen each, nearly $2,000 at the time.
In the early 1990s I decided to make the machine myself, but soon after, other companies that I had talked with started making machines like mine. I ended up fighting legal battles on both sides of the Atlantic to protect the patents on my vacuum cleaner. It all eventually got settled. (In 1991, Dyson and Amway Corp. settled a patent infringement lawsuit. Amway continued to sell its product, and the two sides became joint licensees.)
None of the venture capitalists and banks would lend me money until 1993, when my bank manager, Mike Page, personally lobbied Lloyds Bank to lend me the money I needed for tooling. The bank agreed to lend me $1 million, and I was able to go into production. I got one mail-order catalog to buy it, then another. British department store John Lewis began selling it, and we got into more retailers. Within two years it was the best-selling vacuum in Britain.
Once we established ourselves in England, getting to retailers in other countries was easier, but the fact that it sells in England cuts no dice with people in the United States or Germany because every country thinks it’s different. It didn’t particularly surprise me because brands are well known, and people trust them. When a new one comes along, people are suspicious. But someone will eventually take a risk with you.
In 2002 our first customer in the United States was Best Buy (BBY). A buyer there took our vacuum cleaner home for two weeks and told her boss it really does work. From there, other retailers saw it. Americans recognize success very quickly.
For the U.S. launch, we filmed a television commercial in my house. I took apart vacuum cleaners and explained how the technology worked. The vacuum cleaner had notable early advocates, such as Friends actress Courteney Cox. The machine even appeared on Friends on a couple of occasions.
We never had a plan for going into the markets we did. Following a logical business plan would be boring for me. Instead we develop new technology and make products where that technology will make a difference. In 2006 we launched our first hand dryer, which is better for the environment than paper towels, then did the Air Multiplier, which is a fan without blades. We did a washing machine with shorter wash cycles for a few years, but we stopped because we weren’t making money on it.
Once the sale is made, my philosophy is that we continue to be responsible for the product. We were the first to go to five-year guarantees, but it’s more than a marketing thing. If anyone has a problem with our product, we have a problem. If someone spends $400 to $500 on a Dyson vacuum cleaner, they should enjoy the investment they’ve made.
In the end, it was the rejections or outright thievery of my ideas that galvanized me to do it myself. The recession did not affect us. People have to go on cleaning their homes, and they buy things that will last longer. What is a relatively expensive vacuum cleaner has done very well.
Dyson’s Best Advice
Product is king.
Whatever your product is, make sure everyone in the company understands the product. We have every employee on their first day make a vacuum cleaner—even if you’re working in customer service.
People live off memos and emails and don’t speak to one another. The real value occurs when we meet each other at work, spark off each other, argue with each other. That’s when creative things happen. Having a philosophy of disliking emails is healthy.
Create an open environment where everyone’s involved and appreciated. If you don’t put people down for making a silly suggestion, you can get great ideas. A lot of great new ideas come from silly suggestions or wrong suggestions.
A version of this article appears in the Sept. 15, 2017 issue of Fortune with the headline “Fighting His Way Out of a Paper Bag.”