Find more alumni stories and tips for your success in Phoenix Focus.
Q&A Lessons from Shark Tank's Kevin O'Leary
Kevin O’Leary: People who don’t know their numbers! There is no excuse for not being prepared to talk numbers—if you aren’t a numbers person, bring someone who is.
PF: What are the qualities of a successful idea and pitch? In other words, what makes you take the bait?
KO: Show me in 30 seconds how I can make money. That’s what business is really all about. It sounds like simple advice, but I’m always amazed at how many entrepreneurs forget this simple truth.
PF: What are some of the most creative funding ideas you have encountered?
KO: I see more and more deals where the company finds ways to return capital to investors as it grows—instead of making them wait for an exit. And that’s a trend I can really get behind. I like getting paid while I wait!
PF: What percentage of ideas do you fund? What has the success rate been and what are the contributing factors in that success or failure?
KO: Every deal I look at is a deal I’d love to close. But in life and in business, things aren’t always what they seem, and so we go through a whole process to go under the hood and uncover the real story of each business we look at. In the end, I close about the same percentage of those deals as most sophisticated investors—and much more than many well-known venture capital funds.
PF: If someone had just one minute to pitch an idea, what key elements should be included in that 60-second period? On average, how many seconds does it take for you to make up your mind?
KO: I can usually make up my mind within a minute because that’s how long it takes for someone to show me three things: that their No. 1 priority is for me to make money, that they can communicate their vision, and that they’ve got what it takes to execute.
PF: What is the essential trait of an entrepreneur? How much of entrepreneurial success can be attributed to the product versus the person pitching it?
KO: I love people, but let’s face it: Even the best people are easy to replace. What I like to see is a business with a product or service that’s proprietary, different from competitors, and with the right cash-flow model to grow really big, really fast.
PF: Sometimes someone can be a successful entrepreneur in one area and yet fail at a new endeavor. Can you explain this?
KO: I don’t think failure is necessarily a bad thing, in fact it can be motivating. I like to see that an entrepreneur has had one big failure in their past, so that they have experienced that painful sting and so are driven to never, ever feel it again.
PF: Is there a formula for a winning startup?
KO: I know it when I see it, but let me give you a hint: it’s all about the money!
PF: Please complete the following sentence: Don’t even think about starting your own business if you haven’t____________ .
KO: Figured out how to make a lot of money for your investors.
PF: In your opinion, why are so many Americans pursuing entrepreneurship?
KO: America is the land of entrepreneurship, so it’s a natural fit. And since entrepreneurs create jobs, I expect to see more entrepreneurship whenever the economy goes through rough times.
One thing I love about Shark Tank is that it’s teaching that entrepreneurial spirit to a new generation of Americans—which is just what the country needs, now more than ever.
An entrepreneur himself, Kevin O’Leary started his software company, SoftKey Software Products, in his basement. Unlike many other tech startups, he saw overwhelming success, eventually selling his business to Mattel Toy Company for roughly $4 billion in 1999.
He is founder and chairman of O’Leary Funds, an investment fund company, and he’s the author of Cold Hard Truth. In addition to his role on ABC’s Shark Tank, O’Leary has appeared on numerous television shows, including Discovery’s Project Earth, CBC’sDragons’ Den and Lang & O’Leary Exchange.