Shark Tank’s “Mr. Wonderful” Kevin O’Leary shares his secrets to success, his love of Nantucket and the deals that got away.
Sharks are nothing new to Nantucket, but Kevin O’Leary is indeed a rare breed. One of the stars of the hit NBC show Shark Tank, O’Leary has been spending time on the island for decades. Known as “Mr. Wonderful,” O’Leary was born in Canada and has been involved in a wide range of business ventures, beginning with SoftKey Software Products, which later became The Learning Company and was sold to Mattel. Today, while acting as the most biting Shark on the show, O’Leary has been involved in everything from television production to fund management to private equity. N Magazine sat down with Mr. Wonderful for an expansive interview during which his direct, humorous and colorful television persona came through clearly.
I moved to Boston in 1994 where I raised my family. Nantucket became part of our world each summer, particularly around the weekend of the Fourth of July. As I progressed in business, Nantucket also became a place where I would meet up with my bankers from New York, from Boston, from, frankly, Europe as well.
There’s no place like it on Earth. You can mix business with pleasure, as I’ve been doing for decades. I’ve traveled the world and I don’t know another place like it. Even the Vineyard is different. The history of it, the cobblestone streets—I just love it.
Any favorite spots on the island?
The Chicken Box is a classic location. They call it the five-star dive bar because that’s what it is. It’s got such a history of bands and musicians and artists and business guys. Half of the New York banking community was there with me in their jeans and flip flops one night. We were talking business and enjoying the music. When I get back there each summer, it’s like I’ve never left.
Most entrepreneurs were inspired at an early age; can you talk a little bit about your early years and what sent you in this direction?
I had a rather unique experience when I was in high school. There was a girl whom I was really interested in who got a job at a shopping mall shoe store. Right across from that shoe store was an ice cream store that was looking for ice cream scoopers. I took that job, knowing that we could probably meet up after the mall closed. At the end of my first day at the ice cream store, the owner said, “Before you leave today, I want you to scrape the gum off the floor. You’re going to do this every day.” I had a huge problem with that. I didn’t want this girl to see me on my knees, scraping gum off the floor. So I said to the owner, “No, no, no, you hired me as a scooper, not a scraper. That’s what I agreed to. I am not going to clean the floor.” She said, “You’re going to do whatever I say. I own this store; you’re my employee.” And I said, “I’m not doing it.” She said, “You’re fired.” At that moment I realized that there are two types of people in this world: the people that own the store and the people that scrape the s**t off the floor. And you have to decide which one you are. In no way am I dissing employment or being an employee, but that was not for me. I didn’t want somebody else controlling my destiny.
Did you ever go back to that ice cream shop?
Decades later, I went back with a camera crew to find my old boss and thank her. I could now afford to bulldoze the mall if I wanted to, all because she gave me that directional push. We could never find her; the store was long gone. But, just a year ago, I got a FedEx package with a rock in it. It was a piece of the mall. Somebody had heard this story and went there when they bulldozed it and sent me that rock. I have that sitting on my desk in Florida.
Most people who are successful like yourself have also faced some type of challenge along the way that they had to overcome. Was that the case for you?
Yes, I had dyslexia when I was young. Most dyslexics fall behind almost immediately between the ages of five and seven, which is exactly what happened to me. I was very, very fortunate at that time, because I was living in Montreal, Canada, where Margie Golick and Sam Rabinovitch at the University of McGill had an experimental program for severely dyslexic children. Their thesis was that dyslexics are high-performance people. At that time, I could actually read a book upside down in a mirror. That’s how my brain was operating. They said to me, “How many people in your class can actually read a book upside down in a mirror? You have a super power. It’s not hurting you in any way; it’s actually a super power. So, if you have to be in class and read a book in a mirror, upside down, read it that way.” Which I did. Today, when I talk to classes full of dyslexic kids, I say, “This shouldn’t hold you back. You should be able to deal with it.” That’s the way I looked at it.
I have a theory that to be successful in business— particularly if you’re an entrepreneur and you’re trying to pivot all the time—having an anchor in the arts is really important. My theory is that business is really binary. It’s black and white. You either make money or you lose it. The arts are sheer chaos. For me, that passion for the arts manifests itself in multiple disciplines. I’m a huge watch collector. I love photography. I have a massive camera collection. I love the guitar. I was a shareholder in Fender and I have a massive guitar collection. I always travel with one. It just seems to me that when you meet up again with successful entrepreneurs, you’re going to find they pursue other disciplines.
Let’s talk about Shark Tank for a minute. What was your biggest hit on Shark Tank in terms of investments?
The largest exit in history on Shark Tank was a company called Plated out of New York. These were a couple of great entrepreneurs on Shark Tank that started the company thirty-six months prior. Plated was in the meal kit business at the same time that Amazon bought Whole Foods. Albertsons decided they wanted to own a digital platform. There was a bunch of grocers that started bidding for it. It sold for $340 million. That was my deal. It was an incredible journey for them, but it just shows you, in entrepreneurship, it’s serendipitous sometimes. That’s my largest and the most successful deal in Shark Tank history from just the size of the exit.
Have there ever been any local success stories?
The highest IRR [internal rate of return] in Shark Tank history is a company called Wicked Good Cupcakes, out of Cohasset, Massachusetts, that was started by a mother-daughter team. It was the first royalty deal in Shark Tank history. Nobody understood the power of Shark Tank in those days. This was an unknown cupcake company that put cupcakes in a mason jar and shipped them to you. I put up $50,000 and a royalty of a dollar per jar. That dropped down to fifty cents after I got my $50,000 back. When the show aired and I got my $50,000 back in ninety seconds. It was incredible. It just exploded. People loved it. They loved the honesty of it, the mother-daughter team, the different flavors. It made royalties famous on Shark Tank. Just last week, it got acquired by Hickory Farms.
What was your most painful missed opportunity?
Not all deals are successful. In venture capital, the average is that about 20 percent work. We’re a little higher on Shark Tank; more than half work because the secret sauce of Shark Tank is the hundred million eyeballs that see the product over a year’s period through syndication. So your customer acquisition costs go straight down. But we’ve had plenty of losers. When I go to the Shark Tank set, I’m going to try and do fifteen deals and hopefully close ten of them. Five of them are going to work and the rest are living dead.
It’s not true that they all passed. I offered Jamie $600,000 cash as debt, a thirty-six-month balloon payment at 7 percent, plus 2.5 percent warrants in the company. I would have made about $600 million had he taken that deal, but he didn’t. Today, we still rib each other about it. We’re very good friends now. He eventually sold it for $1.2 billion to Jeff Bezos. It’s a very, very famous deal. Jamie is a really strong entrepreneur.
There have to be a lot of funny stories out of Shark Tank with contestants. Is there one in particular that jumps out at you?
There was one where a woman came on and said that she has a giant five-gallon drum of water that she sings to for twenty minutes a day. She said her singing splits the water into three elixirs: one makes you rich, one helps you fall in love, and one solves for jealousy. And she sells these vials for $20 a piece. Now, you can imagine the skepticism that I had along with the other Sharks. However, at the end of this, she said, “OK, if it was 110 years ago, and I came in here with a boiling cauldron of syrup, and I told you it was full of cocaine and molasses, and that I was going to sell it and make a fortune, you’d laugh at me too.” And I said, “Sure, I would.” She said, “Well, that’s Coca-Cola…you’re getting a chance to buy the next Coke.” That was pretty good. I didn’t think she was that crazy after that.
From a ratings standpoint, Shark Tank is incredibly successful. But is there a particular demographic that the show really resonates with?
I was in the San Francisco airport and this nine-year-old girl came running up to me and said, “Are you Mr. Wonderful on Shark Tank? That really mean Shark?” And I said, “Look, I’m not mean—I just tell the truth—but I am Mr. Wonderful.” And she said, “You should have done a convertible debenture up 20 percent last night.” And I went, “What? How old are you?” She said, “I’m nine.” I learned later from her mother that she was a phenom in mathematics. Maybe she was dyslexic. She didn’t know what a convertible debenture was, but between the Friday when she watched the show and the Saturday when she met me in San Francisco, she went online and learned about it. The point is our demo is nine to ninety. People love entrepreneurship; they love the American dream.
Inflation on Nantucket has gone wild. Gas is over $4. Food prices are at historic highs. Housing has gone absolutely through the roof. What do people do to protect themselves in what appears to be a new era of rampant inflation?
Nantucket is unique in its geography. Let’s talk about housing inflation. That’s built in with the Land Bank. More and more land is being taken off the market, which is making housing expensive to attain. It’s designed that way. So you know that buying a home will be worth more over time. There’s no question. It’s a false sense of inflation.
The rest has to do with supply chain problems. Gasoline, food prices, restaurant prices— that’s because we have disruption globally right now. What’s occurring on Nantucket is occurring in every place in the country right now. We’re broken in America right now. This is going to take a while to fix. You think of the president asking companies to chip in to help fix the supply chain problem and then at the same time he’s thinking of increasing taxes—that’s crazy. Because we have to take that money and invest it in infrastructure at the corporate level to solve it, not the government level. Each company has to figure out their supply chain issues, so we’re in a really difficult time. I don’t think inflation is going to stop. But it is temporary. When we fix this over the next two years, you will start to see the pressure off Nantucket—but not on housing on Nantucket. That model is self-inflicted.
There’s a tremendous amount of talk now about income inequality and the fact that there’s a certain segment of the population that is somehow blocked out of the wealth-creating system. How would you draw the inner-city student or young person into entrepreneurship?
This inequality issue has been around a long time. It’s not new to this generation. If you look at successful American entrepreneurs, nobody has a monopoly on good ideas. You do not need a Harvard MBA to be successful. Many very successful people have not even graduated high school. Entrepreneurship is about street savviness. It’s about working twenty-five hours a day. It’s about myopic focus on your business and having a passion for it. It has nothing to do with education. It’s very helpful to go through the secondary educational process, but it doesn’t determine success in entrepreneurship in any way.
Politics are turning very progressive and success is often vilified. There are those who view somehow wealth creation as some type of evil. What would you say to politicians who feel that the wealth generators have too much wealth and don’t give back enough?
First of all, that’s not true. You just look at how much capital Bill Gates has given back, Warren Buffett, Bezos…Bezos’s wife, she’s now given away $8 billion in just the last thirty-six months. That’s just not factual. Most people believe in karma that are successful. My mother taught me that you have to be philanthropic. There comes a point where you don’t need any more money—why not give it back?
I’ve lived all over the world. My stepfather worked for the United Nations and I went from one country to another. I’ve lived in Cambodia. I’ve lived in Tunis. I’ve lived in Tunisia and Ethiopia. And I’ve met Haile Selassie and Pol Pot. I’ve lived everywhere. Show me a country that you’d rather live in than the United States of America? Show me one, for all of its faults, show me one.
Every system has its issues, but if you want to live in a society that’s progressive, democratic, at the cutting edge of health care and medicine and technology and supports family values and all of that. You want to go live in Russia? How about Cuba? You like Korea? Would you want to be in China? No. So, there is nothing better. So, let’s not try and fix something that isn’t broken.