A Conversation with Shark Tank’s Kevin O’Leary

Since 2009, entrepreneurs have raised investment capital of over $70 million after entering the shark tank.  These brave souls are put through their paces, having to pitch to a group of some of the world’s most successful entrepreneurs and investors- before undergoing a vicious questioning session, in the hope of walking away with that all-important cheque.

Alongside the money, entrepreneurs get the support of a high-profile investor and- of course- the benefit of prime-time media coverage (on a show watched by millions).  Some of these investments have gone on to do extremely well.  Scrub Daddy received $200,000 in 2012, and is on track to achieve more than $50 million in sales – Squatty Potty received $350,000 in 2014, and is now on track to achieve over $25 million in sales, and the list goes on…

Kevin O’Leary is a Canadian-Irish serial-entrepreneur and investor who has been a shark since series 1 first aired.  I caught up with him to learn about what it takes to be a successful entrepreneur.

Q: When did you realise entrepreneurship was the life for you?

[Kevin O’Leary] Whilst I was in High School, I had an interesting experience on my first job.  I got hired as an ice cream scooper at a place called Magoo’s Ice Cream, in a shopping mall where girls from my class would hang out.

I remember on my very first day noticing that people ordered their ice-cream, and before they ate it – spat the gym they were chewing out on the floor.  At the end of my first day, the woman I was working for said, ‘Okay you’ve got to take care of the scooping, then get down on the floor and scrape the gum out of the Mexican tiles’, I said ‘no! you hired me as a scooper, not a scraper.  I’m not going to do that’.  My concern was that a girl I was interested in was working in the shoe store across the road, and she’d see me on the floor scraping.  This woman fired me on the first day of work

I didn’t know what that meant to be fired, I had no idea.  It was humiliating, and it was a great experience for me, because it taught me the difference between the two types of people in the world.  Those that own the store, and those that scrape shit off the floor.  You have to decide which one you want to me.  I didn’t want to scrape shit off the floor.  I wanted to own the store.  And that was it.  I owe her a great debt of gratitude, because it was so humiliating, I had to go back on my bike and tell my parents I’d been fired… they were concerned that I didn’t understand the working relationship between a boss and an employee.  I knew that being an employee was a really bad idea, for me anyway.  I’ve never worked for anybody since then.

Q: How important is financial literacy for entrepreneurs?

[Kevin O’Leary] Today’s entrepreneurs are simply not geared up with an understanding of finance, debt is and how to invest for the long term; that’s not really what entrepreneurship is about at the beginning.

What motivates great entrepreneurs is fear of failure; and here’s the thing – most entrepreneurs fail several times before they achieve success, and the more you fail, the more fear you have.  There comes a point in every entrepreneur’s life where you realise that if you’re going to prove yourself, you’re going to have to do it in spite of the odds of success being very low.  I think that’s what drives people.  I never thought about investing or financial literacy or any of it until I woke up one day and I was a multi-millionaire… It just happened… and most entrepreneurs say the same thing.  They don’t see it coming, they’re so impassioned driving their business and competing, one day they wake up and say ‘whoa, how did this happen?  I’m rich!’

Q: What is the role of wealth in entrepreneurship?

[Kevin O’Leary] Entrepreneurs that do it for greed of money fail.

Entrepreneurship isn’t about greed, it has nothing to do with that; what matters is personal freedom.  The goal of an entrepreneur is to provide for themselves, their family, and to be able to pursue any interests they have in their life.

The great thing about being successful financially is that I can do whatever I want, any time I want to.

I love my work, I enjoy it, I like to compete and to build businesses- but now? I don’t have to pick up the phone, I don’t have to go anywhere, I don’t have to do anything, and I enjoy that immensely.  I’ve been that way for a long time, because I was able to achieve success when I was young.  And that’s what I teach young entrepreneurs.  The sacrifice is perhaps a decade- and it’s a total sacrifice- you may not see your kids, you may miss an entire cycle of your lives, but you’re doing it to provide for them in the future in a way you never could if you were an employee, scraping gum off the floor.

Q: What are your views on Silicon Valley culture?

[Kevin O’Leary] When I get pitched a typical Silicon Valley $5 million pre, looking for a $3 million raise, I just don’t even bother to entertain it, that’s all crap to me.

The entrepreneurs I like are the ones running real businesses without all the bullshit about the hype and the valuations.  I’ve made the most money with people who put their nose to the grindstone and don’t talk about valuation.  They talk about running business and growing it, and any way I can help I do.

I think a lot of investors now are tired of the BS around you know, ‘I’m part of very successful Silicon Valley, or Boston based team, I came out of Dallas, and my idea is worth $10 million so you’re lucky I’m even talking to you’.  That’s all crap to me, total crap.

Q: What does it take for you to get excited about a venture?

[Kevin O’Leary] I don’t consider myself an ordinary investor anymore.  I don’t care what the last round was valued at.  This may sound arrogant, and perhaps it is, but I’m Mr. Wonderful.  What I can do for businesses is remarkable, I have a huge team that supports social media, I can open doors for entrepreneurs that have been shut to them for years, I bring a lot of value to the businesses I work on and I want that reflected in what I put in.

The first thing for me is, how can I help that person? I have 44 companies in my portfolio- and with every single one, I’m constantly thinking – how can I help them?  How can I make a difference?  If I can’t add any value, there’s no point putting any money to work, but when I get behind it and put my name to it, I want it to be successful.

The first thing I worry about is this: if I get involved with this deal the last thing I want to have happen is for it to fail, because it taints my brand.  I don’t want to have losers in my portfolio.  I have a great team working on this alongside employees and interns in marketing, due diligence, accounting and every aspect of the deal. We work really hard before we pull the trigger, and when we pull the trigger, we go full bore behind it.  We do everything we can to support it, in the media we talk about the companies, we introduce them to our platform of users… if it’s an online business we can significantly reduce their customer acquisition cost, because we get our companies on television every day.

One way or another, they’ve been part of my shark tank family or my media family or my CNBC family or my Good Morning America family; I bring the media to the focus of what they’re doing, that’s my job.  And for me to get involved, I don’t care what your last round is at.  I’ll decide what I’m willing to throw money at, and you can take it or leave it.  I couldn’t care less.

Sometimes I have to coach them, but often if it’s a family business I’ll say to them ‘look, if you don’t want to give up any equity, I’m fine with that, because I have a lot of other structures I can offer you’.  What matters is that interests are aligned- if they are? I’ll give you venture debt, I’ll give you half a million or a million dollars in debt, and I’ll take warrants, maybe 5%, plus a royalty. In other words, you give me a dollar off every unit sold towards paying down the debt, and you keep the majority control, that’s fine with me.  All I want is my interests to be aligned with that of the entrepreneur, and if they’re having a hard time getting their head around valuation, I’ll structure something else.

The question is this: is it a mutually interesting relationship?  Can I add value?  And do they want me to add that value?

When we get to a place where we both understand each other’s goals, then I want to be a part of the team, and I want them to be a part of my team.  Any of the companies that work with me would tell the story of how synergistic our relationship is, how we work together, how Tristan who runs our social media makes sure they stay at the forefront of what we’re doing online, or Nancy’s promoting them on the television network or they’re getting a speaking engagement somewhere in their trade association.  All of the things we do are unique.  We’re not like a regular venture capital firm where we just throw a million bucks in and attend board meetings.  Recently for example, one of our deals was Plated, was sold to Albertson.  That’s the highest exit on Shark Tank history, it was $300 million.  We were very actively promoting that company, and meeting with the CEOs of their competitors.  Because the great thing about being a shark is everybody returns your call.  It’s just wonderful.

Q: How does Shark Tank help businesses?

[Kevin O’Leary] In the week of the main broadcast and all the syndications that come with it, 10 million people see you on Shark Tank; it’s a massive launch platform, reduces customer acquisition cost dramatically and it helps companies immediately get their product in front of consumers.

If people tell me, ‘you’re the mean shark’, I say ‘no I’m not, I’m the nicest shark – I tell the truth.  I’m the only shark who tells the truth.  And if you can’t get past me on shark tank, wait until you get in the real world – you’ll get shredded.  You’ll get torn to pieces’.

If you can’t get on that carpet and be successful pitching, you’re probably not going to make it anyway and I’m not going to cry any tears over it.  People sit there crying in front of me.  Why?  What’s the point?  The real world is much tougher than Shark Tank.

Q: What would be your advice to entrepreneurs at the start of the journey?

[Kevin O’Leary] You have to explain why you’re the right person to execute the business plan.  What do you know?  What makes you unique?  What has your experience been?  Why are you the right person?  A great idea with a bad execution is a horrible investment, so you have to prove to me you can actually execute.

Lastly, and this is the one that I take personal pride in.  If you don’t know your numbers, I will make sure you burn in hell and perpetuity.

You have to know your numbers.  If you’re going to get in front of me and talk about a business, you’d better know the breakeven analysis, the gross margin, size of the market, number of competitors.  All of that stuff.  I expect you to know that, that’s just a given.  If you don’t, you’re going to fail.

Humble Beginnings

Kevin O’Leary was born to a middle class family in 1954. The combination of Kevin’s mother’s family heritage as merchants and his father’s Irish charisma truly meant that O’Leary was born for business. Kevin learned most of his business intuition from his mother. She taught him key business and financial insights from an early age. These became Kevin’s core philosophies, and the pillars upon which he would one day build his empire.

The Turning Point

Kevin’s approach to business went through major changes as a teenager. During his second day on the job at a local ice cream shop, his boss came into the front of the store where Kevin was scooping ice cream. She looked at Kevin and asked him to perform a task that he wasn’t expecting. What happened next had a profound effect on Kevin – one that stayed with him for the rest of his life.

Foundations of an Empire

As a university student, Kevin’s innate business sense led him along several different paths – including some very unusual, very entrepreneurial ways of making a profit.

Not long after he finished his MBA, Kevin had a meeting that changed his life forever. He met a man who had a strange idea for a software product – an idea with huge, high-profit potential that Kevin immediately recognized.

After years of ups, downs, sacrifices, challenges, and lessons learned — not to mention a critical phone call that nearly cost him everything — the opportunity that Kevin saw eventually turned into a computer software giant that was acquired for more than $4 billion dollars.

Investor Extraordinaire

After his extraordinary success at the software company he founded – and a difficult period of obstacles and legal disputes – Kevin eventually found himself on television, quickly becoming a sought-after host and personality on a range of shows – including Discovery’s Project Earth, CBC’s Dragons’ Den, and ABC’s Shark Tank.

Kevin has since launched O’Leary Funds, an investment fund company; O’Leary Fine Wines; and a best-selling book series on financial literacy.

In 2014, Kevin founded O’Leary Financial Group – a group of brands and services that share Kevin’s guiding principles of honesty, directness, convenience, and above all, great value.[/bios]

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.