Kevin O'Leary | Why you're NOT getting richer everyday

I can sit in a room with somebody for 15 minutes and know if I've got a winner or not and 99% of the time I'm right so I listen to the gut and I listen to the person I listen to the plan I know it's gonna work or it isn't I just know I'm that good this episode is brought to you by ak8 a collection of luxury serviced residences specializing in longer stays in places like New York City Los Angeles Philadelphia Washington DC and London it's nice to have a full-size kitchen room to spread out and have our production meetings all the luxuries of a hotel and still feel the comforts of home you've got to check them out hey mr. wonderful here from shark tank yeah Kevin O'Leary and you're watching behind the brand with Bryan Elliott hey I'm Bryan Elliott welcome to another edition - behind the brand today I'm here with the one and only Kevin O'Leary Kevin welcome to show great to be here thank you I usually ask my guests how'd you get this job well you know life is serendipitous I really believe that and how the outcome occurs is you know everybody has a path in their career they plan on but it generally doesn't work out that way there's a series of events that happen to you along the way and you don't know as they're happening because you've only realized how important they were maybe a decade later when you realize it was a huge pivot point for you mine was when I was working in a summer job in college for a pet food company and I had a German manager a real interesting guy and he taught me that most pet foods at that time were made from sea of japan' tuna and chicken faces and beef lips and rendered you know protein using mango juice to crush it up sounds horrific but those are two basic engines and then they'd add some peas or you know some carrots and they create cat food flavors decades later when I was in the software industry I realized that you know we were the leader in math and reading software and here's where this story comes into play all my competitors were spending a fortune building unique applications to advance reading and math scores those are the two big things you actually create software to advance through an education and I thought to myself that's crazy this is really just sea of japan' tuna and chicken faces all we need are two engines and we'll just add characters to them and that was how the learning company became the largest software and company in the world in reference in education we sold them a 4.2 billion but that manager gave me the idea to synergize around to development groups so we we we hi can we buy a company fire everybody and just take the characters they had and we cut our costs dramatically you know our cost of Rd or half the industries everybody was complaining but how are we doing it we're doing it because we understand that that software is no different than cat food that's amazing it also sounds and I want to dig deeper into this like what you're gonna it sounds like you're really good identifying patterns it sounds like you know that was a model or template that you used but also pattern before you go into that I want to go back in time a little bit too young Kevin yeah I want to talk about you know your early origins you know your your influences like what did you want to be when you grew up as a young kid what were you thinking about well when I was growing up I was born from immigrants as Irish and Lebanese and Irish father Lebanese mother and by the time I hit seven it was clear I had some really big problems in math and reading going back to the education because I had a really bad case of dyslexia and so in those days dyslexic you know outcomes were bad because you really fell behind in school and they didn't really understand how it worked and luckily I was very fortunate my mother was desperate she was trying to find a solution for this because I was falling behind really quickly in those critical years in in early school and so she found this woman named Marjorie garlic who had an experimental Sam Rabinowitz and Marjorie golfer researchers they're published all around the world now but they basically thought they could take dyslexic children after school maybe 12 or 18 and put them into an experimental program where they try and convince the kids that dyslexia is actually a superpower that other people don't have so that your confidence really advances and that's that's what they ended up doing with me they said look do you know anybody else in your class that can read a book upside down in a mirror no you're the only guy that can do it that's power they wish they could do it they can't and so that started give me the confidence because this Lexi doesn't really learning it just makes the the the incumbent tools in schools useless to you I mean nobody gives you a book upside down in a mirror you have to learn how to deal with what dyslexia does and that once I had that solved it was a very interesting acceleration that occurred and you find in business today all kinds of founders of companies like the guy that found in JetBlue a really bad case of dyslexia I think it it helps you think outside of the box and I've always thought business is half creativity that comes from the chaos of the arts and half the discipline of science business is binary you either make money or lose it I think great CEOs great entrepreneurs combine the chaos of art with the discipline of science and and I believe that to be the case and I look for that and the people invest in now and I think that dyslexic you know chaos for me was was a pivotal point and a catalyst that I could build some of my you know direction off so where your parents really involved with giving you like some guidance like you should go into law or you should go into you know this or that they give you specific directions not in those days what happened is around that time my father was only 37 years old died and so that was a very traumatic moment and my mother remarried about two years later and my new father was a completely different character than my biological one he was finishing off his master's or than his PhD at the University of Illinois champaign-urbana and he joined the United Nations and we started moving every two years to a different country so I've lived in Cyprus Cambodia Tunisia Ethiopia Japan England Switzerland every 24 months I mean I I met you know Paul Pott while he was a lieutenant for C anoke in Cambodia I've met hailey Selassie and his lion cubs before I became a deity these are just random outcomes in my life but it's certainly later as I always say you don't know these things are happening to you but they are for a reason and it may it's made me a relatively successful international investor because I was able to see trends I mean I lived in Cambodia I saw when the French and Germans are going into real estate there to follow them in I knew exactly what the industries were in Ethiopia and what you should invest in Cyprus I already saw the banking system and the oil business growing there and it was an investor there so there's all kinds of cues you get from your youth that you should really apply to your business later and that was a remarkable experience and certainly he was a major influence in my life because when I graduated from high school I wanted to be a photographer and I was really into photography I had my own lab downstairs and I was doing all the things I love to do and he said you're not good enough you're not good enough to be a photographer and you'll starve to death you should go to college and get a degree and I listened to his advice because I thought he really understood and and I went on to do an MBA which ended up being a very important tool for me later but I went back into production my first company was special event television which produced all the programming for the East Coast Hockey feeds Bobby Orr in the hockey legend Don Cherry's grapevine we would shoot it all week much like we're doing right now and then edit it and sends up to a satellite in the you know mid 80s and I was an editor or a producer or a cameraman I used to work with nagra's and we had a steenbeck editing table I did it all and I was trying to get back to the thing I loved which was photography and production and make money doing it and and there was that science and that art coming together in my life and we sold that company because Don Jerry's vape vine became a very successful television format and that was my first transaction we sold the company the three founders I took that money and started the software business that eventually got sold for 4.2 billion things happen in life you don't know why and you only get to look at them in retrospect a long time later but all of that stuff you know made me what I am today the good the bad and the ugly and and I wouldn't change a thing what I pulled out from that as well as it seems like all that moving and all that you know uprooting and going somewhere else you had to sort of adapt or die right like you had to really sort of I think it's a Bruce Lee quote right like yeah you know you have to be like the water in the vase you know not the vase you have to conform to whatever shape that you are poured into it sounds like that's kind of what you did and also it sounds like that it's also made you very scrappy or resourceful right like so you were battling with dyslexia you're also you know dealing with probably different cultures and different foods and different languages you had to be resourceful and creative and you know be that water yeah yeah that's a very intuitive way to look at it and you're right I didn't like living in places like Cambodia Phnom Penh I didn't want to be sequestered with the expats that that was not interesting for me I wanted to live with the people and we ended up with a couple of tutors we used the Calvin system then which is a system that is sort of a direct mail learning system and better than nothing right trying to stay advanced in in in high school years but Tia and dang were a couple of you know people in my life then that very influential and I had a French tutor she was from France she spoke a little English and she tutored me you know at home and in where we lived in Cambodia and I and I slowly got immersed in that culture which is a beautiful culture of Cambodian people are almost mystical and they're beautiful and I didn't want to hang out with everybody from chef Cabana I want to hang out with the Cambodians and that's what happened I took my kids back there a couple of years ago to show them where I grew up and to take them into the jungle and see how Cambodia works and that's unique experience for them they were blown away they've never even thought about it so to me it's all those experiences and I certainly in Cyprus hung out with Cypriots you know in Ethiopia the Ethiopians are the most remarkable people because you're living a mile high they're very tall very lanky they're beautiful they obviously win almost all the marathons they get involved in so I got into that I didn't have a bicycle I rode a horse I mean the first barbecue I ever did with my family and friends the sky turned black with vultures they'd never smelled burning meat before that way we had a thousand vultures circling and I looked up and oh what's happening here and that was the kind of thing you learned just I was showing these guys here's how you have a cookout here's a barbecue and they said we don't think it's a very good idea and it I think now you know it's a great resource for me in why you say in thinking about how to do things a little differently particularly in global businesses I'm involved in global financial services now I just came back from Dubai last week in Manila you know I feel very comfortable going to those countries I've been there before there's nothing new or mystical about it for me and I think people feel that in you and they appreciate it I would agree with that and I think that's a really good lesson I want to just underscore for the people who are watching I know a lot of them working or nationally unfortunately I think a majority of the tendency you know we go into a country and we just sort of snowplow there they're culturally we ask them to speak our language and big mistake it's a big mistake yeah yeah but just you know culturally I think traveling internationally really rounds you out right yeah and I've done a little bit of travel myself just being in a different country you realize oh there are different ways to do things yeah and they are good yeah and they also if you respect their culture and then you can make reference to your history and they appreciate you know when I go to Cyprus people knew I went to the British school there and then I went to the Cypriot school there and and I know the street names and I know we're family who stays in Karenia and the beaches and Troad us and all the places where the current population hangs out and I've been there been going there for 30 years that is a huge financial hub people don't realize how big and how many transactions occur in the Cypriot banking system because that's where sort of the East meets the West Russians are very active there there's a ton of capital for the Middle East there it's sort of like a neutral ground but a very important place to have relationships yeah I know the good lesson I mean you know when you show respect to get respect and I'm sure that's a big part of your success I want to pivot a little bit and talk about how money has or has not changed you sure my first lesson which is you know encrypted in my DNA now was the idea of working for it you know pay and my first job was in high school and I got it specifically because there was a girl in my grade that I was really interested in and she got a job at the shoe store in the mall and I was able to get a job across in the ice cream parlor and my plan was you know when the mall closed down we could go out you know and hang out together which was a good plan and so I told her look I got a job across the way and my first day on the job I'll never forget it you know she was in the window putting in the shoes there it says small mall and I was in this ice cream store scooping ice cream and what people you know my first day was owned by a woman I'll never forget it she's look when people ask you for a sampler here's a little wooden spoon give them a little sample but what happens when that occur when people do samples they take their gum out of their mouth and they throw it on the floor so all day long gum was piling up on the floor Mexican tiles in this place so the first day is over and she said you did a great job you know he sold $4,000 of ice cream whatever it was but now you've got to finish up and you got to take all the gum off the floor now at that moment the girl I was interested in was looking at me waiting to see was gonna walk out of the store and I realized if I could down on my knees and scrape gum I'm in trouble here this is not a good look I said for a look you hired me as a scooper not a scraper and she said no no I hired you as an employee you do whatever I say I own this store whatever I say you're gonna do and I said I don't think so if you want to hire somebody to come off the floor that's a different job if I'd known that I probably wouldn't take this position she said how about this you're fired and I went whoa what's that mean she said means you get back on your bicycle go home don't come back here I'll send you for your today's pay I was so humiliated when I got home and explained that to my mother she said you should have done what she has to and I realized right then this is the important lesson this is one of those pivotal moments in life there's two types of people there's the people that are on the store and there's the people that scrape the off the floor and you have to decide which one are you I'm not saying it's bad to be an employee but she taught me such an important lesson the humiliation of not controlling your own destiny is evident in that story because that's the way I read it I thought this is horrible whatever she says I have to do I'm not gonna live my life that way I never worked another day in my life for somebody ever again now that case later I can afford to bulldoze the whole mall if I want and I go back there to meet her because I wanted to thank her for that that moment for me that amazing moment but she just reset my whole dial all my DNA I just didn't want to scrape stuff off the floor ever I wanted to own the store and I couldn't find her the month at the store was gone I looked I hired somebody to find her because I wanted to thank her and help her out for making that moment happen to me but there's a story that tells you a defining moment for one random person deciding what path they were gonna take entrepreneurship for me I've never looked back you know I could probably buy a whole bunch of malls now if I wanted it's not that important today as it was back then but that's what happens yeah and I think that's a great lesson I often ask my guests you know how do you know what you're good at how do you know where to find your passion because you know the sort of the default advice is follow your passion and that may or may not be good advice but I think the point that you sort of crystallized for me is sometimes you have to do stuff that you don't like doing to figure out what you do like that's a great point that's an absolutely great point and you want to do that early in your career to understand what motivates you the perfect situation I mean I tell entrepreneurs today I invest in so many of them you know when I say to them look you're starting this journey I want you to understand something this is not going to be fun all the time you're gonna work twenty-five hours a day eight days a week because there's some die in Mumbai or Shanghai that's gonna kick your ass if you don't and it's forever and it's forever but what will happen if you're successful and you won't see it coming you wake up one day and say oh my goodness I I'm wealthy beyond my wildest dreams you'll probably go right back to work but the point is you created something of tremendous value and the and the way it manifests itself to you later in life is it gives you freedom to do whatever you want my number one message to entrepreneurs and I teach today is never pursue entrepreneurship for the greed of money it has nothing to do with it at all the whole reason to be an entrepreneur is the pursuit of freedom that's why you do it you do it because you want to be free one day to do whatever you like I'm here because I want to be here I don't have to be here I don't have to ever listen to a phone call again if I don't want to that's not what I want to do I enjoy spending my time doing the things that I want to do and I and I deserve it because I worked like hell to get here and so I'm a huge you know advocate of capitalism I defend entrepreneurship every day would people say you don't deserve that I say I deserve everything because I started with this everything I have I created myself and I deserve what I have and I and I feel ferociously about that and I tell other entrepreneurs do not be embarrassed about success wear it own it it's yours and you deserve it so how has success changed you if any like in a personality or your there's certain things I really enjoy about you know being able to pursue them for example photography I own every single camera that I want every lens that I want I work with all the manufacturers to shoot with their cameras now because they want me to I'm going to Botswana next week on Safari I have some of the most eclectic lenses ever made because the people that made them want me to shoot with them and I'll sell the work for charity I achieved what I couldn't do back then you know and I'd say to my dad who's still alive my stepfather look at this and you can see look this is a passion it's not a business I said but I'm doing it is the whole point so that's freedom that's a wonderful thing and that's because of what I've achieved I collect watches some of the rarest watches in the world as an asset class and I get access to them because I've been successful well so that's lifestyle stuff I have a personality stuff like as it made you jaded or has it made you more optimistic or I talked about how you know the emotional side or the emotional risks of wealth because yeah that's a good point I mean you know one of the biggest challenges well look let's go to telling the truth in business because shark tanks a great place to show this as an example people the show's been on for it's going to the second decade it's but we've crave like tens of thousands of jobs we've invested hundreds of millions of dollars you had phenomenal successes catastrophic failures we've had at all but the point is when people come out there and you hear an idea and you've had a lot of experience in that space perhaps that's the great thing about Shark Tank each one of these is a self-made millionaire billionaire they've done it themselves it's not like they were given anything and so you have to respect that opinion it's like a venture capital firm on steroids he's a real operators a lot of VC firms hire a bunch of bean-counter MBAs and they try and analyze stuff against the market uh that that to me that that ain't the real thing the real thing is a one Operator to another trying to figure out what the path of least resistance is that's what shark tank is but you have to make a decision and I have this fight with Barbara all the time or Lori you're listening to the pitch you know the chances of success are practically zero they're burning their family's money why not tell them the truth why not say the idea has no merit its bankrupt it's going to zero it doesn't mean you're a bad person it just means the idea is bad and maybe you want to take this life example that you've learned and try something else you've made a mistake that's okay the sting of failure can be the greatest motivator for an entrepreneur and you know Barbara say I don't want to hurt their feelings and I say well then you're just gonna give them you're gonna lie to them and that's disingenuous use a burden hell for that Barbara you Lori all of you I'm the only one that tells the truth and everybody says I'm the mean guy I'm their best friend I'm the only one telling the truth and I'm never gonna change on that no good deed goes unpunished right well the point is in business it's binary you either make money or lose it right and I say in a start-up if you can't make money within three years it's just a hobby it's not a business it's gonna go to zero so what you're saying is if we pull peel back some of these layers of the onion of mr. wonderful this is this is at your core you really your intentions are great you want to save them time and money blood sweat tears you just want to you have this experience this hindsight you want to say listen I'm going to tell you right now today this is not working just you know cut bait and do something else and it comes off as kind of you know being a hard-ass or whatever but you know at the heart of it you're really trying to do them a solid well I want every entrepreneur to be successful but that's not going to happen the truth is eight out of ten businesses fail in America within three years for one singular reason they're never able to get their customer acquisition costs below the lifetime value you know fancy way of saying they blow their brains out advertising because they can't get traction they can't get viral they can't get people to their site or their business in an economic way and I'd rather deal with that and I think I want them to be successful but the markets a very competitive place the barriers to entry today's world economy are practically zero and so you need a great idea you need a certain type of motivation you need a team most often that helps each other and augments the weaknesses or helps mitigate them and and you know I look at it that way and I've got you know thirty nine portfolio companies in any one day that phone's gonna ring and it will today some time with some euphoric outcomes something amazing happened to one of my companies and some disasters happening to another one that happens every single day that is the ebb and flow of life as an entrepreneur and I'm used to it but if you're just starting off it's very hard to stomach yeah and there's there's a lot of questions I want to ask within that one of them is this burning question I always think about which is you know our entrepreneur is born or is it something we can learn and maybe frame or answer in the context of it what do you look for you know when someone goes instructing are you looking at that individual their personality or the way they present and how how are you sort of judging them aside from the numbers let's talk about maybe the more touchy-feely or emotional intelligence side of things I'm going to answer that by telling you a story from decades ago and I think you'll understand the analogy when I was in my final months of getting my business Master's my MBA in that class of maybe a hundred and sixty cohort you know that was at that size we thought we were such hot I mean you know you're finishing and you know everything and you're ready to go and just take on the world and in comes this guy and he says he looks up he was a guest lecturer but usually a guest lecturer you know get some slides up or starts talking about a presentation about the company there worked for he was different he walked in no slides no PowerPoint nothing he just walked around and looked at all of us and he said you guys think you're so damn good don't you well when you walk out of here the real world is going to kick the living out of you and you won't know what hit you it'll be brutal about a third of you will be a complete failure another third will be spinning their wheels a decade from now in the other third will be phenomenal successes too too bad about the other two-thirds but I'm just telling you the truth and I look down at him and I thought what an what he claimed in that presentation was that experience is very important in life and that in fact intuition is just experience distilled the longer you're at something the better your intuition is about businesses and people and I thought what a load of crap today I'm that guy I'm that guy walking in those MBA classes at Harvard and MIT looking at them and saying you know nothing and the real world's gonna kick the living out of you and I can't believe this has happened to me but he was absolutely right and so today with all of the experiences I've had all the good the bad and the ugly and all of the horrible things that have happened the businesses I've invested in and all the euphoric ones and the amazing outcomes that experience is distilled to intuition I can sit in a room with somebody for 15 minutes and know if I've got a winner or not and 99% of the time I'm right so I listen to the gut and I listen to the person I listen to the plan I know it's gonna work or it isn't I just know I'm that good but he was right the only way to get to where I am today is having spent 30 years doing it it's the only way you can do it you can't you can't buy it and so I really really believe that about in entrepreneurs and investing in them and supporting them you need the experience that the road traveled gives you that turns into when you wish intuition and that becomes a very powerful tool how much of your success let's just lump it in one bulk statement some of your top success how much of that you think is luck now you know you could say I made my own luck yes parent and I think you're right you do make your own luck yeah but like sometimes like come on Marc human right place right time you know right cashed out that was lucky yeah I think timing he's a very smart guy ya know and he's gone on to do it and we all have we've all had we've all had you need the first big one that gives you the capital to do the next 10 that's what I've learned you know somebody told me once way on the beginning when I was in the second year of you know my my software adventure he said the first 5 million is impossible it's just impossible the next five to get to 10 is really hard getting to 25 is pretty easy after you get to 10 and the rest he was right the first 5 was hell it was hell the second five was hell then it got a lot easier because you by then you've got you're deploying capital with an understanding of how hard it was to make the first 5 million and I tell my entrepreneurs that in America if you can acquire 5 million dollars of wealth and have it sitting in a bank you can live off that the rest of your life it's it's it's a great thing to have happen but in acquiring it if you're trying to over-talking numbers now you're just in the middle of the game at your first 5 million you don't want to stop there you want to what it lets you do is take capital to invest in a whole lot of other ventures that you're maybe an operator in or maybe investor in or both and my path has been you know the big exit of the learning company mattel there were nine of us is a 4.2 billion dollar transaction that set me up for a lot of different things of which I had great successes and crazy failures losing millions of dollars on some making millions on others and what I've learned is goes back to what you just said you need a little luck so if you're gonna have a portfolio if you're gonna be an investor like I am you need a lot of companies because the ones you think are going to be your best winners never are and the ones that you think are going to be dogs that you know maybe you're taking a huge risk and end up being fantastic successes and and the path that this occurs on is very serendipitous markets change economics changed products change poopoo happens and the outcome of that is never known until you get to the end of the road and so I consider myself a pretty good investor today I have a very good track record I use the intuition that I learned from that guest lecturer as my guiding light I have a huge team that I work with that does all the due diligence but ultimately when I deploy the capital you know it's just a gut feeling and I say to the guys okay great analysis great spreadsheets I want to sleep on it I do that every week I mean we're putting money to work all the time whether it's that second or third round or a new deal sometimes it feels right sometimes it doesn't and what I have to tell the much where I'm not going to invest they said why not I've got a feeling that's my answer so I want to go back I don't really feel like I got exactly the answer that I wanted out of you I'm sort of the emotional intelligence side I want to you talk about lifestyle you talked about how your business transactions and your your experiences have made you wiser and smarter better an investor then you're more intuitive about what's gonna be successful or not but I wanted to know if if you know money corrupts right because I don't have 50 million dollars sitting in my bank account or even ten million dollars maybe someday but I think a lot of people are curious about that because I don't believe that money is the root of evil right I think that maybe if your only focus is on monetary things or you know whatever that's where you start to get corrupted but I want to talk about how you know this the emotional side of success has affected you are not affected you or how you dealt with it I'm sure it's something that you have evolved with or grappled with can you talk about that a little bit it's a really good question and you know I'm often asked about it you know I go back when I had none and back to when I was meting married I couldn't afford a reception and or dinner for anybody we had no money nothing so and I know you know for certainty that this woman I've been with now for over 30 years knew she was buying into the hope and a promise that we'd figure this thing out because we want to have some kids and they're expensive but we had no money and what I learned at that time in terms of how it forms a person you know the the fear of failure in my view in the in the pursuit of any entrepreneurs path is perhaps the most important motivator they've got because they start their journey saying I'm going to quit the security of a salary and I always tell my entrepreneurs a salary is the drug they give you when they want you to forget about your dreams because it's very easy to stay in that world where somebody is mitigating your risk you just have to perform certain tasks do them well for a third of your day and they will feed you a salary and and you don't have to think about anything else and that for a lot of people works there's nothing wrong with that it's very noble great employees are extremely valuable to build enterprises but when you leave that path and you put it risk income that you need to eat with you're going on a different journey and and that fear of failure is an extremely motivating factor you know you ask any entrepreneur about the journey and they're going to tell you the dark moments when they face the abyss and they didn't know what's going to happen and I think that gives a tremendous amount of emotional fiber to a person and and you know I think you it manifests itself in a certain amount of confidence over time but money can corrupt people if that's all they care about I don't need more money I need more time and that's why I really care about how I spend my time and the whole point is when you when you look at your day and this is how it manifests itself later in life no matter what that bogey is for you I yeah I don't know what amount people consider you know enough you know there's a point where you just can't even spend it so it doesn't because it's making more of you every day in interest than your other investments but you start to ask yourself the real benefit of having it is that you map out next week I know what I'm doing next week the schedule fills up things get booked I look at it on the calendar and I call back to the people to coordinate my week in places I'm gonna be in and I say why am I gonna be in Mumbai next week what's the reason for that and they tell me and if or Manila or Dubai or Geneva whatever and they said well you're meeting with so-and-so for this deal of that deal and I and if I don't want to be in in Zurich I don't have to go to Zurich yeah that's the luxury of having that right and I just say I'm not going to Zurich I've changed my mind and to me that's the 99% of why it's great to have your own financial independence because that goes right back to the store when you're scraping the gum off the floor there's nobody telling you you have to be in Zurich you don't have to be anywhere you can be wherever you want and that is why it's worth it because that's a form of freedom that you can't get any other way yeah well you're preaching to the choir here and and I completely agree that's why I jumped ship from my you know job at the studio table you're open or because you were personally motivated to stop living that way yeah but can you talk about the dark side because I think there is a dark side you know Mo Money mo problems right yeah you know how does one and I think maybe people watching will want to know sort of like how do we navigate those choppy waters cuz it's not just it's not so simple right when success starts to come no you start being less kind to the hospitality people or the you know the person who brings you your food you know right you used to be the bottle washer or the the gums paper and now you're the owner so like how do you navigate around staying grounded staying a human being and not-being becoming such a rich jerk that's a great question perhaps your best one of the day in some ways because it's easy to slide into that Ric Rich Jerk mode the answer is you have to have respect for people for their own talents for who they are what they do the guy that delivers your breakfast in the you should respect him like anybody like that like the like Warren Buffett it's this it doesn't matter he's a person he's trying to do his job she's trying to do her job they deserve your respect if you if you can't give them respect and you treat them without respect you have become an and you deserve in my view the Karma that comes with that I believe there is karma and I think if you're a real you're gonna pay the price one day that's why I have to get back that's why I've to treat people with respect and you have to remember that that there's always the weighing weighing in during your life and karma is how that gets settled the other big area that it manifests itself as a huge problem is in children if you D risk your children's lives you are giving them a disease so you're talking about kind of how Bill Gates and Warren Buffett's deal with their children they say you get nothing you're entitled to nothing what is your outlook on you know the the success you've had do your children feel entitled to it do they know they're getting something nothing or all of it well here's here's the lesson I learned when I was graduating from college my mother said to me I'm coming to graduation I've got the great news I'm coming I want to see this happen but no more checks that's it I've paid from birth the last day of college you're on your own and I said mom I don't have a job I have no money you know and she said the dead bird under the nest never learns how to fly and I said mom that's great poem but I need some cash she said no and it was a very traumatic couple of years after that trying to find my way and I had no money and I was really in a bad bad shape but the whole point was she felt that the journey of you know paying for right to the end of college was on her back and that she had done that and now it was my turn to launch and go on that was such a powerful experience for me that I've now mandated that into my family Trust which is a generational skipping trust that provides from children born into future generations even out of wedlock I don't care it's a full freight pay from birth to last day of college and then they get this nothing now when I put the structure in place on my first liquidity event was the sale the learning company I walked across the river to Cambridge now with the lawyers and said I want to structure this thing this way and they said you sure I said I've talked my wife about it we had you know when we were married we had no money and I went back and explained the structure and my kids after I'd locked and loaded it they were four and six decades late well you know I guess twelve years later my son was doing very poorly in high school I think it around grade 10 he was not gonna get to college and and he came to me and said dad walk me through the trust deal again I said sure Trevor and it's very easy here's how it works if mom and I go what go to a movie tonight we get run over it's you're gonna be okay because you're gonna be taken care of right to finish high school because it doesn't look like you have to worry about college and then he said well what happens after that I said you're on your own you get nothing he said I get nothing I said yeah the dead bird under the nest never learns how to fly and he said that sucks I said why don't you take advantage of the runway you've got your grade 10 it's full frame now he's in third year electrical engineering maybe that was a night that it hit him were the fear of the unknown you know could be avoided by finding a path and he's used it and he's spent a lot of money getting his education but I'm sure when he graduates he'll have a job and I told him if you want to start a company don't come to me I'm expensive I want a royalty but then raise some dough and come to me later for second around financing or something because I really think you know that's the whole point of helping you know having everything taken care of from birth class they've college is a good deal for anybody yeah but I'm not giving them a dearest life and I think that's another you know issue you have to deal with and so that money will sit in trust and just roll on and long after I'm gone and do whatever it does I won't care I'll be dead let's talk about the F word let's talk about failure yeah a lot of people try to avoid it at all costs we've talked a little bit about your experience and how you you know the only way you got intuition or wisdom was through making mistakes it sounds like what can you identify as maybe one of your greatest failures that you got wrong in order to get some right in other words was a huge lesson turning points well I had a deal that I've invested millions in it was one of my ideas and they're not always they don't always work that's just the nature this had to do with multiplayer online gaming and I won't mention which telco it was but a very very large telco I was dealing with at the CEO level and we were going to roll this thing out you know the great thing about having a big success is you get access to a lot of interesting entrepreneurs they all return your call and so I called up the head of it you know the world's largest telco and said look I want to do this deal give me a team of engineers I'll bring a team of entrepreneurs into play I'll fund it and I'll give you a third of the equity in it and what I what I learned about that experience is is when you want to build an entrepreneurial change agent inside a giant company any giant company telco in this case you just can't go ramming through like a bull in a china shop because you're dealing with Committees of 20 people yeah and I spent millions of dollars trying to fight the natural tendency of a large company not to do things outside of their comfort zone and I lost a lot of money doing that that was a very important lesson I had I done it where it was a we're skunks work that I'd started myself till I got it operational and then sold it to a telco that would have been a better outcome that cost me a lot those millions I lost millions on that and that was a failure but what I look for you know I've had luckily great successes I paid for all those failures you as long as you have more successes and failures the path kind of works out and so I paid for it through some other deal it was very successful can I try and summarize the advice you just kind of gave which sounds like you're saying if you want to have you know any amount of success it's far more difficult to try and go in and retrofit your idea to an existing organization it's better to just maybe start from scratch build it up yourself you know with your own people your own ideas even if it's small and scrappy at first yeah that's much easier than trying to go against the current of something that's already existing you know you've got maybe personalities culture you know true consensus but there's another very important element you have to put a timeframe on it because as an entrepreneur you've only got so much time my role is 36 months after 30 months of doing that realizing it was going to fail having invested millions of dollars I took it behind the barn and I shot it I fired everybody I closed it down I stopped it completely because I needed to move on to my next thing whatever that was going to be because the worst mistake you can make is in entrepreneur is not to admit your failures and continue to try and resuscitate them with yours and other people's capital even though the idea has no merit for whatever reason whatever reason it is well that's I was gonna ask too so 30 months is your time since three years is the number okay so you start but after 30 months you know you know but what are some of those metrics is it just about sales and revenue is it just about the dollars and cents on the P&L or their other success metrics that we should be looking for I mean Bezos is a great example Amazon is unprofitable for ten plus years and now he's the richest guy in the planet but he had tremendous revenue growth the metrics you look for is it is the idea getting traction with the customers yeah that's what I want to get to is what do we wish we'll be looking for and great entrepreneurial you know endeavors great ideas solve problems for people Bezos saves time the reason I use his platform is to save time I get really low cost products and I don't have to do anything to get them they had come to me it's that simple but because it has such merit in that respect it had tremendous traction as measured by the number of people that use the platform it's very easy to see when an idea is working when it isn't half the time with my entrepreneurs I have to I get all the numbers every quarter I don't talk to the ones who are having phenomenal success they don't need me to cheerlead them I talked to the ones where clearly it's not working it's not working and I know why it isn't working you know I mean it just I've done so many deals that I now understand the cogs of why things don't work and I mean look you know it sounds arrogant I don't care it's true and so I call them up say look we have flat growth here work we have no traction we continue to spend more and more money trying to get momentum and nothing's happening maybe people don't want this product or service no no that can't be true you know because think about it you're telling them and it's over and the going concern the going concern tests that occur in the fourth quarter of every year he's an option for me the investor if I have a control position through debtor equity to basically take that idea behind the bar and shoot it and let its DNA help the other because it's a tax loss that gets capital back into the ideas that do have merit that deserve to grow and so I'm always harvesting the death and destruction of which is a natural Darwinian force in business and helping the ones that have shown life that their cells are splitting they're growing and you know that it's very traumatic these processes there's tears you know I go to sleep like that every night I don't I don't get emotionally involved in this stuff this is the Darwinian force of business you either embrace it and understand it but you don't get emotionally involved in it shutting down a business as a tax loss after it's over I don't even think about it again it's over done the losers a dog it's over and something great will come from that entrepreneur from the sting of failure that motivates them to go do it again and I'll back them then like a dog is a dog it's a bad idea embrace the failure embrace the loss embrace the fact that you have to take old yellow behind the barn and shoot it and I'm happy to shoot it with you and then go to my cellar get out a $2,000 bottle of wine drink it and say never think about that deal again only remember the lessons of why it failed but you don't have to you know revel in the failure you just got to get motivated by the sting of failure and go or something new that's the lesson and you know people oh my goodness we can't let this die it's been my dream forever I don't give a it's a loser don't get romantic about it no it's a dog it's like 80% of startups in America fail what are you gonna cry about everyone you'd spend your whole day in tears how often are you pivoting you know pivoting is kind of a buzzy word but like is it that binary it's either live or die is there any pivoting oh yeah oh so there's a queue you know there's a you bring up a very interesting point about businesses that actually achieve success let's say and I see this manifest itself in the 3 to 5 million dollar revenue which only happens in a good idea in the second year it's getting traction things are moving so the most powerful aspect of an entrepreneur at the beginning of their journey when they're starting the business is their myopic vision of what they want to do and they don't listen to anybody that is telling them it's not going to work they don't listen to naysayers they don't even listen to advice they have a vision and that is the motivation that gets them working 25 hours a day eight days a week very important then they get traction they get their first one or two or three million in sales now this is where the transition occurs between a great CEO and one that's going to fail because they can't give it there comes a point where that strength that was your myopic vision and shutting out all the noise because the greatest weakness because you don't listen to the market the minute you get to three million sometimes it's sooner you got to put your ear to the rail to hear the train ripping down at you that's the market things are changing competitors are changing products are changing markets are changing everything's changing and you have to assimilate the data listen to it every day and there's three constituencies you have your customers you know the business of the customers your employees who are at the front line and see all the mistakes are making every day is to listen to them and you have to listen your investors all three you have to assimilate the data and when the time comes you have to pivot if you can't pivot you will fail and you're gonna fail between 3 and 5 million I see it all the time and the reason I do control deals and a lot of companies when I think there's risk in the entrepreneur then a woman that may or may not may or may not have the ability to listen and I'm assessing it from my own gut is I'm gonna put a structure in place that if they don't get there if they can't pivot and I recognize it and they're a partner of mine either through the dead I own or you know the control of the equity I own I'm gonna say to them look you've done something incredible you've started a successful business but you are not the right person to take it to the next level so I'm gonna kick you up to the board I'm gonna make you may be the chairman which everyone is company anymore I'm gonna find someone who can listen and give it it will make you very wealthy because you still have your equity some people can handle that some people can [Music]

Channel: Behind the Brand

Views: 341,560

Rating: 4.8714108 out of 5

Keywords: Ask Mr Wonderful, That Will Double In Value, iconic, Kevin O'leary, Mr Wonderful, wealth, wealthy, millionaire, Business advice, hustle, luxury lifestyle, Shark Tank, Lori Greiner, Ask Kevin o'leary, shark tank best pitches, shark tank behind the scenes, kevin olery, kevin o'leary best advice, How to start a business, best advice for entrepreneurs, how to make money with no money, Kevin Oleary origin story, Kevin O'Leary Origin

Id: EPT5_RMSO_U

Length: 49min 40sec (2980 seconds)

Published: Wed Mar 06 2019