'Shark Tank' star brings 'Cold Hard Truth' to Miami
Kevin O'Leary was Anderson Distinguished Lecture Series speaker for 2024.
'Shark Tank' star brings 'Cold Hard Truth' to Miami
may be “Mr. Wonderful,” one of the “sharks” on ABC’s popular show “,” but he’s also a serious investor. “Going into the pandemic, I had investments in 54 private companies representing all 11 sectors of our economy in almost every state, everything from wireless charging to insecticide, commercial kitchens, airlines, real estate, you name it,” he said. “And the reason you would do that if you're an investor, is the simple concept of diversification, because at no one time is every sector declining. The diversity of our economy, the largest on Earth, means this is always something good happening, happening somewhere.”
O’Leary was the featured speaker for the Farmer School of Business Anderson Distinguished Lecture Series. His talk, "The Cold Hard Truth," weaved stories about his career with advice for those who have started or hope to start their own business someday.
He explained that the pandemic led to a significant shift in how businesses marketed and sold to consumers. “People ask me, Why is the stock market at all-time highs today? Because America has changed. It's more efficient, it's more productive, and it's more profitable,” O’Leary said. “100 million people got hip to their phones. They started using every app they'd never used before, in every service imaginable. And many services started to grow in the middle of the pandemic, many great entrepreneurial companies were started then in the chaos of a basement, when people can’t even go outside, and 100 million new customers were born online in nine months, an extraordinary change.”
“When you order products and services directly from a company, you form a relationship. They know who you are, you know who they are, but there's something else, and this is the magic -- You get the data. What size did they order? What color is their preference? What flavor did they like? When did they buy it? Where do they live? How many people live in the house? All of that data that no one had ever gathered before, whether you were a small company or a large company, it didn't matter, billions of bits of data pouring onto your servers by the minute that you never had before,” O’Leary said. “There wasn't any middleman anymore. You're making your product and shipping it right to the customer, and your margins went from 50 cents to sometimes as high as 82 cents. Margins exploded because direct to consumer models also exploded.”
O’Leary also talked about some of the Shark Tank deals he’s made that used unusual methods of attracting the attention of customers, from a mother-daughter cupcake team that posted their arguments on Facebook to a cleaning fluid company that ran commercials in the middle of the night – featuring O’Leary himself.
“It's a remarkable story, but as an example of what's occurred up and down the economy, forced to do direct to consumer business was incredible, and building that relationship with the customer in a whimsical way -- in Sara’s case, with a commercial that was funny, or in the case of Tracy and Dani, a soap opera -- this is what every company is trying to do now,” he said. “The concept of CAC -- customer acquisition cost -- is now the metric of every class taught here, I'm sure. And then the idea of ROAS -- return on ad spend. So once you know what it costs you to acquire a customer -- if you spend $10,000 in advertising, you need a ROAS of over two and a half times. That's what we look for as venture investors. Do you understand social media? Do you understand CAC? And do you know your ROAS? That is the essence of most businesses today.”
“A great manager, a great entrepreneur, is able to distinguish, 24 hours a day, even while you're sleeping, the difference between the signal and the noise. What is that? Every day, if you're an entrepreneur, you have a mandate. You have to achieve a certain goal. Maybe you have to double sales in the next year. Maybe you have to do something about cutting costs. Maybe you've got to set up new social media campaigns. There's always something you have to do, and you've got to get it done. That is the signal,” O’Leary said. “Everything else around you is the noise, the stuff coming at you on social media, the phone call you don't have to take, the party you shouldn't go to because you're not finished at work yet.”
O’Leary concluded with what he called the “definition of leadership” – three things that all successful entrepreneur pitches have in common:
- The ability to communicate the opportunity in 90 seconds or less
- Being able to convince investors that they lead the right team execute the business plan
- Knowing their numbers and having a comprehensive understanding of their business model
“You get all three of these right, your chances of getting funding go up geometrically on Shark Tank and everywhere else on Earth. This is the essence of leadership, right here. This is how you lead. You can do this. It's hard, but if you get all those three, you will be successful over and over and over again,” he said.
