Kevin O’Leary is on Shark Tank, analyzing products and services alongside fellow Sharks Mark Cuban, Barbara Corcoran, Lori Greiner, Robert Herjavec and Daymond John, and deciding if he wants to invest. O’Leary has made a bundle of smart investments in his career, including selling a climate-controlled storage facility business for $110 million and a software company for a cool $4.2 billion.
O’Leary answers to Mr. Wonderful, the moniker reflective of an occasionally charming manner mixed in with his austere assessments of products and the entrepreneurs standing next to them.
Shark Tank debuts season 12 on ABC Oct. 16. It airs in syndication on CNBC. O’Leary spoke to Multichannel News about how the show captures the American dream. An edited transcript follows.
MCN: Do you make money on most of the entrepreneurs you invest in on Shark Tank?
Kevin O’Leary: I have, actually. What people don’t understand about the Shark Tank platform, if you look across the continuum of venture capital today, the No. 1 issue for startup companies is customer acquisition costs, because the majority of them have done the digital pivot to online. A typical startup company in America, 20-25% make it and the rest die over three years — they’re never able to get their customer acquisition costs below the lifetime value.
That’s the big advantage Shark Tank has. You get 3 or 4 million people seeing the show and you get eight minutes of exposure for your product or service.
Then it goes into syndication. It’s continually brought forward year in and year out on TV, in addition to the millions of [social] followers that each of us Sharks has. We change the equation completely. We can get companies zero customer acquisition costs and they really, really, really thrive with that. Our returns are significantly higher than the industry’s because of this weapon, if you want to call it that.
I would argue we’re the most successful venture capital firm that ever existed. We have capital, we have Sharks, we have fantastic products, and we have tens of millions of people watching the show all over the world.
MCN: What has been your most successful investment on Shark Tank?
KO: The largest in history was actually a Shark deal [involving all Sharks], when [meal-kit business] Plated sold to Albertsons for over $300 million. That was extraordinary for me, and paid for a lot of mistakes.
My assumptions are always wrong. What I think is the hottest deal of the season doesn’t necessarily end up that way. Some crazy things I did like Potato Parcel — putting people’s faces on a potato and mailing it to them — who would’ve thought that would have such an extraordinary return? During COVID it went crazy. How about cat DNA? Basepaws. You swab your cat’s cheek — why would that be a business? It’s huge. There are 100 million cats sitting at home with people beside them, wondering, where did you come from?
That’s why you have to do a bunch of deals, because you never know the outcome of any single one.
MCN: Give us a teaser for the new season.
KO: No. 1, and I say this practically every season — I can’t believe how big the deals are getting. Valuations over $50 million coming into the Shark Tank. Five years ago, I would’ve said, that’s insane. I actually invested in one this year. It’s such an incredible project that it deserved that valuation. I get criticized all the time for being the mean Shark. I tell the truth. When I see a great value, regardless of the valuation, I invest in it.
No. 2, I call it the Great Digital Pivot, America 2.0. Everything we saw this year had a digital strategy, ship direct to the customer anywhere in the U.S. or abroad. They’re starting to realize the world is shifting and people want the convenience of having products and services delivered right to their door. Every entrepreneur gets that. All of these new deals talk about that channel. They’re not abandoning retail, but they’re focusing most of their energy on direct-to-consumer.
MCN: What keeps viewers watching?
KO: I was there when the show was made. I love to see how the editors take an hour pitch down to eight minutes. I’m glued to the TV like everybody else. It’s the essence of the American Dream. It’s the visceral power of success and failure and drama and human desire — all those things are encapsulated in eight minutes.
We don’t see those cameras anymore. Every Shark, we are so engrossed in the competition, the pitch, the deal, what’s happening in front of us, we forget we’re making television and just go after it.
Every year it gets more intense. You really have to hand it to Sony and ABC and Mark Burnett and MGM. The first year, people said, this will never work, nobody’s interested in watching a business show. How wrong were they? Look at it now. It’s insane. I get pitched every single day, everywhere I go: I want to get on Shark Tank, how do I do it? Can you look at
my deal?
I’m not talking about just adults. I’m talking about 10-year-old kids who are inspired by this and want to pursue their own deal. I think it’s fantastic.
