Cleaning up: Vacuum cleaner

Company: Dyson Ltd
Founder: James Dyson
Age at start: 45
Background: Designer and inventor
Start Year: 1992
Business: Vacuum cleaner manufacture

Today Dyson is very much a household name, yet a mere 15 years ago you literally couldn't buy a Dyson vacuum cleaner anywhere in Britain.

James Dyson prefers to think of himself as a designer rather than an entrepreneur; but he excels at both. The business he founded currently exports to over 40 countries and has achieved sales of more than £3billion worldwide. Yet it all started with one man and an idea.

To accomplish this, he endured 20 years of debt, faced multiple lawsuits and learnt countless lessons on the temperamental nature of vacuum cleaner licensing agreements.

Innovative pedigree
James Dyson is an engineer and designer. While studying at the Royal College of Art, James developed his dream: To be a modern-day Brunel and to revolutionise the way products are designed.

James' first product, his graduation piece, was the Sea Truck - which he designed for British inventor and entrepreneur Jeremy Fry in 1969. It was sold in more than 50 countries and has achieved sales of over $500 million to date.

Jeremy gave James his first job, at Rotork Engineering, after he graduated and James was promoted to director

only three years later. In this position, James discovered the difficulty of selling the commercially unfinished Sea Truck and learnt the importance of perfecting a design before its production.

In 1974 James chose to pursue inventing for himself, and left Rotork to design the award winning Ballbarrow, a deviation from the wheelbarrow, using a pneumatic balloon in place of the usual wheel.

He needed capital to fund his first venture, and persuaded two wealthy people he knew (one who was his brother-in-law) to invest, and Kirk-Dyson was founded.

By March 1974 they had a prototype but six months into production the manufacturer they had chosen began raising its prices, leading to a decision to borrow another £45,000 to buy machinery from America and manufacture it themselves.

Here, James had his first taste of selling consumer goods. A journalist from The Sunday Times picked up on the invention and soon they were selling 45,000 Ballbarrows and turning over £600,000 a year.

The company tried to export its products to America to grow sales, but ended up in a costly lawsuit with an American business which had produced a very similar product after taking on one of James' staff.

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Cleaning conundrum
During this time, James was renovating his house in the Cotswolds and was amazed at the inefficiency of his vacuum cleaner.

Surprisingly, there seemed to be no obvious improvement if he used a new bag. Even investing in the most advanced model on the market, it clogged after use in just a few rooms, losing its suction.

At Ballbarrow's factory, he was experiencing similar problems on a much larger scale: the industrial cleaner was also clogging up with dust during production.

James found out that cyclones were often used for large-scale industrial cleaning, and was quoted £75,000 to install one.

Instead of paying this colossal sum, James was inspired by a 30ft cyclone at a nearby sawmill that spun dust out of the air by a centrifugal force. After putting this technology to the test at the factory, James realised the potential of a miniature version of this to solve his domestic problem.

He ripped the bag off his vacuum cleaner and "rigged up a rudimentary cardboard cyclone" with cereal packets and masking tape. This foetal prototype essentially worked and drove James to seriously consider the potential of this creation.

Taking this idea first to the Kirk-Dyson board, presenting an opportunity to diversify from the limited gardening market into domestic appliances, James was met with pessimism.

Not long after, financial friction eventually led to James being ousted from Kirk-Dyson by the other shareholders. As Ballbarrow's patent was owned by the company, not the designer, James left without his design - a mistake he vowed never to repeat.

He set about designing a cyclonic vacuum cleaner through the gruelling process of trial and error - and approached an old friend with his prospective invention.

Jeremy Fry provided £25,000, which James doubled by borrowing against his home. So James set up the Air Power Vacuum Cleaner Company, and began experimenting in an old, draughty coach house next to his home.

For five long years, he toiled over the design, attempting to develop his idea and win investment to construct his product. In 1983, after making more than 5,000 prototypes, he came up with a design which worked perfectly. Unlike most vacuum cleaners, which used a bag to store any dirt they collected, James' design used two cyclones to separate the dust from the air to stop the machine from clogging.

James had intended the Air Power Vacuum Cleaner Company to manufacture the products itself, yet due to the lengthy and costly process, the company was deeply in debt and James was exhausted.

Changing the company name to Prototypes Ltd, the business partners changed tack, now opting just to invent, and not manufacture. In the same year, the vacuum graced the cover of Design Magazine, festooned in bright pink plastic.

Sucking up the Courage
James now needed to find a manufacturer, ideally in Britain or Europe.

He visited all the established manufacturers but found their main concern was to protect their own models: he was met with "a staggering reluctance" to invest in new technology.

The vacuum bag market was valued at £100million a year in the UK alone in 1984, and although a few manufacturers did eventually offer to license his design - knowing the significance of his technology - the deals were not good enough.

It would have been easy to sell his technology in a one-off payment but after the Ballbarrow experience, he was adamant that this time he would retain ownership. James also suspected that if he succumbed, his design would get swept under the carpet and never be made.

Jeremy Fry's Rotork came to his aid for a brief spell in 1983 and manufactured a few hundred vacuum cleaners.

Meanwhile, James was still working hard trying to secure deals, always being disappointed when they fell through, mostly due to licensing disagreements.

Aware that business culture in America was much more conducive to new technology, he started targeting the American market. Yet again, deals fell through with Black & Decker and Conair, both at the last minute.

A deal was signed with Amway in April 1984, a cause for celebration, but within a matter of months it withdrew from the contract, accusing Prototypes Ltd of deceiving it as the product was not yet ready.

A legal battle ensued lasting eight months, denying James the opportunity to re-license his product elsewhere until early 1985. He settled quickly due to legal costs and had to give back everything Amway had paid him, but eventually was free.

Eventually, in 1985, James stumbled upon a Japanese manufacturer offering him a reasonable deal. He sold the rights to the technology in Japan and at last began manufacturing vacuum cleaners.

The machine, named "G-Force", went on to win the 1991 International Design Fair prize in Japan and so impressed were Japanese consumers with the model that it became a status symbol and sold for $2,000 a pop.

With a retail product on the shelves, albeit not in the UK, James hired a small team of graduates from the Royal College of Art to develop the product in his coach house-turned-workshop; James imagined it would be easier to sell a ready-made product in America.

However in 1987, as he was just about to sign a deal with Canadian company Iona to manufacture a carpet-cleaning version of the design, he discovered that Amway, the manufacturing juggernaut that had pulled out on a deal three years earlier, had begun producing vacuums with the cyclone design.

James began what turned into a five-year legal battle, which meant that he had to spend all his royalties from the Japanese company on legal fees. More successfully, he also secured an agreement to sell his technology in the commercial market, and Johnson Wax launched an industrial cleaner.

By early 1990, the royalties from Japanese and finally American sales placated the company's bank manager and made the prospect of manufacturing in Britain vaguely feasible once more. The lawsuit with Amway had been settled, relieving funds but not enough to go into business alone.

James approached potential investors, but was categorically turned down. Multiple applications for a bank loan were also dismissed, until eventually a sympathetic bank manager wangled James a £600,000 loan, guaranteed by a mortgage on his homes in London and Bath.

Product perfection
In 1992, James recruited design engineers from the RCA to work on what he called the Dual Cyclone" design, which was to be, for the first time, manufactured in his own name.

Determined to perfect the design before its release, the team took their time, even though competitors were copying some of their unpatented design elements.

In the long run, James believes, this paid off, and the perfectionist designer released an unrushed, finished version.

The first DC01 was completed in May 1992. Its fundamental design, not only the technology, differentiated from other vacuum cleaners. Early market research had suggested the consumer did not want a clear bin, yet now, it is one of the make's most popular features and competitors are copying it.

James sold it from a practical perspective - you could see the machine working, and knew when it needed to be emptied.

To be able to manufacture, still more money was needed, so James decided to sell all the rights to his technology to the manufacturer in Japan. This generated nearly all of the £900,000 he needed to go into production: Dyson Ltd was born.

As production began, Dyson Ltd's first sale was made in July 1992 to Great Universal Stores, the largest mail order group in Britain.

James recalls that after six hours of negotiations, he finally admitted to its chief buyer that he found its catalogue boring and felt it needed an injection of new technology, in the form of his Dyson DC01 cleaner.

He reminisces that this candid approach "finally sealed the deal - he took a thousand".

Littlewoods also took the machine, as did John Lewis and Rumbelows - production was going well and the future looked rosy.

Fifteen years after his sawmill epiphany, James finally had his own business manufacturing his revolutionary cleaner. He had spent the staggering sums of £1.5million on patents and £2-3million on development.

Word spread as the "intrinsic excellence of the machine" spoke for itself, receiving much acclaim through editorial coverage without a rigid advertising campaign. In under a year, Dyson Ltd turned over £2.4million and after one year of retail, this had risen considerably to £9million.

Through the first few years of retail, sales grew healthily, but only really took off when superstores Comet and Currys started to sell the DCO1, which they did in 1995.

Almost immediately, the DC01 became the best-selling vacuum cleaner in the UK, where it has stayed ever since.

Where are they now?
James Dyson is still the sole owner of Dyson Ltd, which in 2005 made a profit of around £100million.

Dyson Ltd continues to innovate and offer consumers new alternatives to old appliances, like the recently launched Dyson Digital Motor and its innovative hand dryer, Dyson Airblade.

In 2000 it launched the Contrarotator washing machine and in 2003, took the American vacuum cleaner market by storm, exceeding targets by more than 180%. Predictably, countless patent court cases ensued, including a battle with Hoover, from which Dyson emerged victorious.

David Lester is a successful entrepreneur, the founder of the small business website startups.co.uk and the co-author of How They Started (Crimson Publishing, £12.95)