Kevin O'Leary: Business Is War | E12

never easy to do. We all have different backgrounds, personalities and surroundings and we all have different routes on how we hope and want to get there. today. My guest is Kevin O'Leary. Kevin is an incredibly successful serial entrepreneur and investor. He was a co founder of soft key software products and educational kids software company, which ultimately became the learning company in which Mattel bought

for $4.2 billion in 1999. Since then, he has successfully co founded funded and sold many companies. Among other ventures. Kevin is the founder of O'Leary funds and investment fund company, the founder and CEO of Alarie Financial Group, the founder and CEO of Alarie ventures and the founder of O'Leary fine wines. For the last 13 years. He's been on the amazing TV show Shark Tank, where he's universally known as

Mr. Wonderful. He is the host of the CNBC show money court and is an avid guitarist and photographer, and is the author of three best selling books about financial literacy. Kevin, thanks for being here today and Welcome to In Search of Excellence.

old. Can you tell us what that was like and how his alcoholism and his staff at a young age for you influenced your childhood and your future?

separated. And while he was alive, and I think he was very lonely at that point, and he died at a very young age at 37 years old. So that was very traumatic. Obviously, my mother was trying to retain custody. And she, in fact, had to go to Europe with us to leave the country. And we traveled around Europe for almost a year. Going through the legal process of separation, which was an extraordinary experience for me.

I mean, I went to all those countries at a young age and ultimately, she remarried a man who, what, who basically fathered me the rest of my life, he's still alive. They ultimately settled in Geneva, Switzerland. And but during the journey, my dad was my stepfather. George became a member of the International Labour Organization, the ILO and he was an expert in infrastructure. And so the ILO would go do projects in multiple countries and he get two years

stints in each one. So I've lived in Cyprus, Cambodia, Tunisia, Ethiopia, Japan, Germany, Switzerland, France, you name it. I've been there and went through all those different educational experiences in different schools. I met some extraordinary people I met Pol Pot, I met Haley Selassie, I met SENuke. I met them all, and because they were part of the international community. And so we, you know, the expats would often, you know, mingle with the

government quite often. And so that was, it was a really incredible experience for me, that I didn't realize was happening. At the time. I thought everybody lived that way. And that's what you do. When you're a child, you you assume that everybody's growing up the same way. But in looking back, it really formed, how I think about investing how I think about other people. That's how I think about other cultures, and indeed, the way I invest in travel today.

around you. And she became sort of the matriarch of her sisters, and indeed, the whole family she, she was a very pragmatic, disciplined woman about money. She was she was very, very liberal in her thinking, which is completely different than I am. And yet, she, she was a great matriarch. So politically, we didn't agree on anything. But around business and family values, she was very strong in that respect. And she always believed in charity, and she had

a great idea of karma. And she'd always say, look, two things, if if you talk about money, and you brag about money, one day, you won't have any money. And also, you have to give back if you're successful. Karma will get you if you don't give back. And I've lived by those, that those mantras as she taught them to me when I was a teenager.

members. She at a very early age in her early 20s, took 20% of her paycheck and invested in the s&p 550% of it and a bunch of telco bonds, bonds of telephone companies. And because she believed people would turn their heat off before they'd cut off their communications. And so she owned all these bonds her whole life for almost 50 years. They those days, were making six and

7%. And I found this out because upon her passing, the executor called me and said, You've got to come down here, your mother died a very wealthy woman. And you're the executor, you're the older brother, I said, That's not possible. She basically hidden her her account from all of her husband's her whole life. And it was in her name. And I looked at the portfolio, she was

not a stock analyst. But she she had amassed a fortune by simply only spending the dividends and the interest on the bonds and letting the rest continually to compound for 52 years. And I was stunned. And it hit me right there that changed my investment philosophy forever. You know that the idea of putting something aside and only spending within your means of your income. It was stunning. And I called my brother up and said, You're not gonna believe this, Shane, you're just not

gonna believe this. And and you know, as an executor, I dispersed the money to extended family members. And it's still around, I mean, my goodness, what a lesson that was for me. And it was after her passing, she taught me something in depth.

the end of the month? And the answer, and it's a question that I like to, to give people I think there's only three people of the hundreds who have gotten the answer right is two to the 30 of power, which ends up to be $10.6 million. People are astonished when they when I tell them that in the lesson, there's the value of compounding and I think it's important for our younger and even the older listeners and viewers to note. You don't have to be wealthy to

save. And if you save and your money compounds over the long term, that is the key compounding is the key to financial freedom.

Ethiopia. And in Addis Ababa, you know, we were in a in an expat community, lots of different people from different countries living there, servicing the United Nations or the military, whatever. And that for an example, there, there were no bicycles, we rode horses, we rode horses in the open plains of Ethiopia. And, you know, I just thought that was normal. And that it was incredible. I remember the first time I ever put a barbecue out

when we arrived there. And I remember specifically it was it was December of 1969. I remember that because the white Beatles album had come out and I received that for Christmas that year. And I was, you know, I went outside and lit up the fire and put, put a couple of hamburgers out and win in about five minutes, the sky blackened with giant vultures circling massive birds prehistoric looking, you know, shuttering

the sun from me. And those are the kinds of images I remember from have extraordinary outcomes of, you know, living in countries like that you do not barbeque in Addis Ababa, because there are really, really big vultures hanging around. And they when they smell that meat, they can't, we can't it's it's really an extraordinary experience. And so it was for fun, we would we would get together and just make up our own our own fun with whoever was

around. And that that was the nature of, of living as an expat in all these countries.

they should know it. And, and it's a fact it's the truth. And sometimes that rubs people the wrong way, particularly in business, when you tell them their idea has no merit. And it's and it's worthless. And I tell them that so they don't waste their time. So I'm comfortable doing that.

may get 5050 or 1090. And in some cases, I think this one will be 100 to zero. So I I share your views on that. But definitely, people don't like it all the time. No, they don't. At what age did you think I want to be the best I can be no matter what I do. I want to be great. Excellent. And at what age did you learn the value of hard work and get a work ethic? And what's your view on that? How, where does work ethic rank in terms of ingredients to success?

And I've told this story many times, but I'll never forget it. I was working in high school now. In the evenings in an ice cream store, it was my first job actually, it was called the goos ice cream parlor. It was owned by a woman and she hired me as the first time I had a job and

the first day I had a job. And when you are scooping ice cream, people want to take samplers and you use a little piece of of wood like a wouldn't wouldn't stirring thing, you'd put a little bit of chocolate ice cream on it and let them taste it and they make a decision based on what they like. But when they do that, they often take their gum out of their mouth and throw it on the floor.

And at the end of the day, there was quite a bit of gum and it turned black, it was stuck on the Mexican tile in that store. And the woman said to me, before you leave, you got to get down to your knees and scrape all this gum off. And I didn't want to do that. Because the only reason I took the job was the girl I was interested in grade 11 was working at the shoe store right across. And she was watching me and I was hoping that we could go out afterwards, you know, just hanging out. That

was my strategy. And by working there every day, I'd see her every day because she was working at the shoe store every afternoon. So I said to the woman, you hired me as a scooper. Not a scraper. And I don't scrape by scoop. And you probably have to hire somebody else to do that. And she said, No, no, no, no, no, I own the store. You're my employee, you'll do anything I asked you to do. You work for me. That's

why I pay you. And I said, Well, I'm not getting down on my knees and and scraping that gum off because I knew she was looking at me from the shoe store right then. And she said You're fired. And I said, What does that mean? She She said leave, I'll send along your eight hours or four hours of pay whatever it was, and don't come back. Now that was very humiliating for me. And I didn't, till that moment understand the difference in the world. There. There are people

who own the store. And there are people who scraped the shirt off the floor. And that moment, I made my mind up which one I was going to be and I never worked again and for anybody else. And so now I'm not dissing employees, I mean, you can have a great life working for someone else. And the majority of the population does that. And they have time for soccer and picnics and all the wonderful things that life offers. But that's not my life. I work 20 hours a day,

18 hours crazy amount of work. I work harder now than I ever had in my life. That is who I am. And that's how I define myself. And it has nothing to do with money anymore. I don't need any more money, I need more time. And the whole idea of of that moment and years later, we went back to that mall with a camera crew to find her and I wanted to thank her because at that point, I could afford to bulldoze them all if I wanted. But it was all

because of her. She was the one that tilted my path and pushed me in the direction of entrepreneurship. And I am forever indebted to her. So I just you know that that was an incredible moment. In fact, a couple of months ago, I got a FedEx package that had a brick in it. That mall had been demoed and turned into condominiums and someone who knew that story found me and sent me that break it sits on my desk.

And there there was the office manager and my boss saying we don't have any work for you. You can leave today. And like you that was humiliating. I read that you went home and you cried Your stepdad and you had a talk. And I went home. I didn't cry in the office there. I went back to my office close the door for three minutes cried it was my mom's birthday. I said Mom, Happy Birthday. I've got some

bad news. The irony is that October 27 is my mom's birthday and through a lot of hard work I didn't have I always wanted to. I was I had a business in college. I sold T shirts I went to Door to door, went through the dorms got kicked out on one floor went through the other floor and I did this for all 12 dorms at Michigan. And I did okay, but I couldn't start a company then I was new in LA I had free $1,000 in the bank, but I did well, my career, I worked hard, I save money to take a

risk. To bet on myself. The irony is on my mom's birthday, and on October 27 1999, our company went public. And that was, for me one of the most important days of my life and obviously changed my future forever. So we all have to bounce back. We all have to work hard and we all have to realize what what we want to do at that point in time. Let's talk about the value of education which is one of the building blocks of our success and our search for

greatness. You attended stands at a college in St. George school both in Quebec you got to be a in environmental studies in psychology from the University of Waterloo. Then you got a MBA in entrepreneurship, from the Ivey School of Business at the University of Western Ontario. For those of you who may not know anything that in states, the Ivey School of Business is probably the best school in Canada. Let's talk about two things with respect to your

education. First, I want to talk about a challenge you face when you were in school, you had dyslexia and you managed to overcome that and graduated with honors. At what age were you diagnosed? And how did you overcome that?

happens to dyslexics. And I had, I had the ability I could read but I could read upside down in a mirror which is pretty strange. And they don't really let you bring mirrors into the into the classroom. It you know, I was falling behind in math as well. And my mother was really stressed about it because back in those days, they didn't know what this was. And there was a

woman named Marjorie Golic. And a professor named Sam Rabinovich that were doing some research at McGill University in Montreal, Canada, that had an experimental program, where they were taking dyslexic children in and trying to help them in various ways.

And one of the things that happens because I've met lots and lots of Dyslexics since because it's, you know, people know about dyslexia now, and there's many famous business leaders that had were severely dyslexic, I work with Daymond, John, he's dyslexic on Shark Tank, for example. So we, we, I went into this program was very,

very fortunate. And what they taught me in there was they said, listen, because the biggest problem you have as a dyslexic is lack of confidence, you think you're broken, you think there's something wrong with you, and that that erode that really erodes your ability to keep pace with the class or even have the confidence to do anything else. And what they did, which was so extraordinary, which I think is common practice

today. They told me at that age, I might have been, you know, seven or eight years old, maybe six, I don't remember. You actually have superpowers, Kevin, you have something that no one else can do. You can read in a mirror backwards upside down, nobody can do that. Ask them to try it. That's a superpower you have. And you were born with it. You're unique

that way. And when I kind of listened to that over and over again, I started saying to myself, well, yeah, I do have superpowers, and no one else has it. And it really bolstered my confidence to excel. And, you know, I would often say to you know, people would make fun of me, you can't read I saw I can, I actually can much better than you can actually. I can read code, I can read things that you can't even see. And and that

really accelerated me. I remember it fondly as something that it was it was a mental switch in the way I thought of myself. And so from that day on, you know, I can still read it upside down in a mirror and I can read regular way as well. So that was a great gift and a great opportunity and a great outcome for me and I'm very fortunate

the other. But I still know that cohort of people, and they have assisted me in my businesses all around the world, because they're the leader of banks, or they're running industries, or they're running companies. The secret to education is not the education. It's the people you meet on the journey. Now, obviously, professors don't like to hear that. But it's the truth. And that's why you do it. That's why you try and go to college if you can, to meet

those people. So all of these paths and doors opened for you that wouldn't had you not had that opportunity. And, you know, the only lesson I remember, from my graduating class, my second year of my MBA, the only lesson a guest lecturer came in, he went to the bottom of the round, it's sort of like the case study, Harvard classic, you know, classroom with 180 people in it. And he looked at everybody for like, three minutes, uncomfortable silence. And he just, I remember, he

looked up at me. And I was sitting beside a guy named Barry Nicole, who had been with me for two years to my right. And this guy said, you know, you guys think you're so hot. You're graduating next week with your MBAs, whoop dee doo, who gives a shit? The world is going to eat you alive, a third of you are going to fail. Another 30 will work forever for someone else. And the lucky ones, maybe we'll be successful in entrepreneurship. And the reason that's going to happen to you is

you have no experience. You don't know what you're doing. You've done all these cases, who cares? The real world will spit you out as soon as you get out there. And I leant over to Barry, and I whispered in Barry's here. What an asshole this guy is. Because I was really feeling pumped about the fact that I had my MBA and I was gonna go change the world. He was 100%, right? Today, I met guy. I get emotional. Just remember give me a moment here. Sure. It was really quite something.

Because he was right. I'm just gonna get a Kleenex

live it. And I've lived my life. I've lived that way ever since because he was my education. That one hour session was the only thing I remember.

The interesting thing is on average, the kids and the students from the lesser ranked schools they outperform the kids from Stanford and Harvard, most of the time, they have a desire to compete, they walk in, nervous and look around the room. But it's been very valuable. We teach the interns I spent one hour a day with them, we have speakers come in each week, one one year, I took all the interns to Tony Hsieh at Zappos, which is life changing

for many, many people. It's been something very good for me, I love to give back. And and I think the intangibles, many times are greater than the tangibles to your point, you can learn whatever you want in school. But if you learn things like being the first in and last out every day, no matter what you're going to get ahead. And there's all kinds of things in there that we teach you between your first and second years of your MBA program, you work at

Nabisco. And then after you graduated, they hired you, as a parent, as a brand manager in their cat food brand, can share with us how this experience and what you learn there about beef paste and toothpaste contributed to your later success at The Learning Company and in your career.

on the shelf. So the whole idea of cat food is, the more facings the more market share you get, the more flavors you have on the shelf that are maintained by the grocers. And so when I got to the rendering plant, there was basically two production lines. One was was taking. And I am not exaggerating, when I tell you this, you know, the faces of cattle and chicken faces and renderings and certain fat off organs. I mean, it was just

brutal. But every piece of protein is used when it when an animal is slaughtered it was it was rendered using papaya juice to break it down and then pressed into a patty. And that was the basis upon all flavors that were beef flavors. And then sea of the Sea of Japan underbelly tuna that is not sold in premium markets is what makes all of the fish flavors of most cat foods. And so you add some bacon bits, you add some corn, you add some, you know whatever to change the flavor and call it

something else. But everything is those two pastes. And what he explained me was look, human beings like to open a can of cat food and have it very stiff so they can turn the cat over and drop it into the food plate. And it keeps its round shape. They were like little tins. But cats like liquid, they want a soup. We've tried to sell soup for the cats, but the people won't buy it, they think they're getting

ripped off. So you have to find a balance of making it moist enough so the cat will eat it versus the person that wants to just have a puck there. And we had a plant that had over 500 cats in upstate New York that we would sample all these things. And we would try it and test it until we got it right. So I went to see that and that's where I met fluffy, a cat that was 27 years old. It had no hair. It was leaking out of every orifice had no teeth, but it was still

alive. And it had lived his whole life on dog food, not cat food. So you know, these are crazy stories. But you know, you can't forget stuff like this. And what what really what he was trying to tell me was you only need two engines. You need the chicken, beef mixture and you need the tuna fish and everything else you just dream

up. And that's what I did. And I remember you know at the end of the session just before I went back for a second year of MBA, I had to go to the head sales meeting hundreds of sales reps. And I learned by fire how that worked. I said guys, I you know, in order for me to get a good mark on this you got to get this sold at every grocery store and North America. And the head of sales got up. And you know, in the summer back in room said, Kevin, how good is this flavor?

And I said, it's fantastic. I worked with the cats. I know they love it. And he said, No, you're going to eat some right now prove it. He made me eat the whole tin in front of the entire sales group. And later I found out that was what they did to every intern every year. But it was a successful launch, it went into all the but the reason that's important. I didn't realize at the time, not the eating in front of the Salesforce, but the what the, the head Dutch guy taught me

about the two engines. Because that changed my entire life. It's so amazing the lessons you learn that you store in your memory, and they bring them back later, to apply them in a different way. That becomes very powerful.

garage or basement. That's where a lot of companies get going. With two partners. The company was a publisher and distributor of personal computer software for Windows and Macintosh computers, which like it is now was a very crowded field with many competitors doing very similar things. What on earth? Did you know about computers at that time? And what was the aha moment where you said yourself? There's a need in the market and I want to fill it.

skills. Every weekend, I cut something for our social media, we've got lots of editors, but I want to keep my chops up. So I still at it. And the way in those days when you when you had to when you were doing film and you needed the title of let's say, you know, a hockey player or something, you had to actually create the font and burn it into the film. And I had met a man named John Freeman, because these are expensive, you

know, just doing this. You know, with actually drawing the fonts or having an artist draw the fonts. He had taken a Hewlett Packard, single pen plotter a device that drove up a PIN in an X and Y angle. And he'd wrote some software to actually write fonts to to write letters. And I met him in the basement of what was called the Osborne Computer Club. I bought an Osborne computer, which was CPM computer, the first portable computer ever. You can look it up online, it's it was a

remarkable device. And he, he and I met at this club. And he was a programmer. And he showed me the software. And I said, John, that's incredible. That's going to change the world for a lot of people, because you're allowing him to do charts and bars and graphs with letters and everything else. Why don't we

form a partnership? why don't why don't we go 5050 I'll be the marketing guy, you'll be the programmer and I'll go sell this software to every single plotter manufacturer all around the world in Japan, the US, Germany, you name it, because there's millions of plotters at that time being made. That's exactly what we did. I went instead of trying to sell it for $300 a package, I went to a woman named Mary Zoeller, who at the time was the brand manager for Hewlett Packard, all plotters in

San Diego. And I met with her and said, Mary, why don't you just give me 10 cents a copy and put this in every single plotter. She said, Kevin, very interesting idea. But I'm the top of the pecking order. I can do that anytime I want. Why don't you sell it to somebody else? That was one of my competitors first and she pointed me in the direction of a couple of Japanese manufacturers. I went to see them next. And they said yes.

And from no sales at all. We started getting checks for millions of dollars because we're we were selling it at 10 In 2030 cents a copy for millions of plotters, and that was the beginning of soft key software products. And that eventually became the learning company that started in my basement. And I was I was traveling all around the world, it was just the two of us in the beginning. And then of course, it was 1000s of employees later

on. But it was the idea of OEM bundling is the idea of marrying the software with the firmware with the plotter, that was the success of soft key software. And then, of course, we became the largest educational software company in the world, the largest reference company in the world. We did competence encyclopedia before Wikipedia, we did all that stuff. And I never never forgot the lesson. Because when we had competitors, like a company called broader, but we did a hostile takeover of

them. And I said to my board of directors, I told them the story of the cat food. My thesis was this. Let's buy everybody in because in educational software, there's basically two directions that you're trying to go math and reading scores, you're trying to advance math and reading scores at children, between four and eight years old, because that's how they get through high school. That's how they get to college. It's all math and reading scores still is today. And I said, Guys, let's

buy every brand. And let's just do two engines, one for math, one for reading. And we'll fire everybody else, we don't need all that overhead, we'll just have to, and they will add characters like Big Bird. And we'll add characters like Barbie. And we'll add characters like read a rabbit, on top of just like you added the bacon bits to the the beef patty in the cat food thing because the kids don't buy the software the parents do. So it really worked.

I mean, our cost of capital went down because our profits went up, our stock price went up our access to both debt and equity at much higher prices reduced our cost of capital and we started buying everybody, we acquired the entire industry and became the largest educational software company in the world until Mattel bought us because we were actually encroaching on the toy companies to kids who only have so many waking hours. And when they stop playing with dolls. They were using reader

rabbit. And so that was the thesis of why they bought us. But thank you for that cat food store you maybe you right reminded me that I owe it all, you know to two people. One was the woman who fired me from a goose ice cream parlor and the other was that Dutch product manager who taught me about engines. That's what it boils down to.

$10,000. With that. We start with friends and family and you've already walked us through now, the growth of the company buying the competitors. As you said, you took the learning company name when you bought it for $606 million. And when that deal closed, you move the company to Cambridge, Massachusetts, home of Akamai Technologies. And then six years after that took six years Mattel buy it for $4.2 billion. I mean,

that's a monster deal. Massive homerun, but it was soon called one of the most disastrous acquisitions of its time, what happened there? Can you take us through it from starting a company, to growing it to all of its challenges and all of its successes to the massive sale? And then what happened? After the sale? And can you tell us how you bounce back from that? That could not have been fun?

by the millions of units. And so when when I got there, I immediately moved to, to LA to start working with the product managers to get these projects out because we'd already pre sold them to Walmart and Target and some of the big distributors all around the world. And my assumption was as we always could get out a product we could do it in four months, because we already had the engine we just needed the graphics design and of the of the doll or whatever

it was going to be. So I explained that to the management at at Mattel and I said look, here's the path here's the order size. Here's what's going to happen here's the trajectory. Here's the target sales Two years later, we still hadn't released Barbie teaches math or Barbie helps you read or Teaches Typing or anything. The culture was so different it was so not entrepreneur, entrepreneurial, a toy company has been around for 100 years, does not move

quickly. They had a whole procedure in terms of how to integrate it and checks and balances on the brand and everything else. And it was extremely frustrating for me, because we, you know, we were trying to harness the entrepreneurial spirit in a very large corporation, which was impossible is a pretty big lesson. And, you know, in retrospect, that was a huge mistake, because, you know, we should have recognized that it would it wasn't going to wasn't

going to work. And worse, there was huge conflict between myself and the board of Mattel, because I was, for a while the largest shareholder, they had, personally, I own more stock than most of the board members did. And I just said, Guys, this isn't working. And as a shareholder, I'm, I'm unhappy, we've got to fix this. And I know how to fix it. So let's get out of the way. And let me do it. Otherwise, we're gonna lose a lot of value here. That's not what they did. They fought it

tooth and nail. And that was a, it was a, you know, important lesson for me. culture matters in a business. And if you're going to sell your company, don't stick around afterwards, start a new one. That's what that's what I did after that, because I've been very fortunate since then, I've had many great successes and many great failures. And I've started started lots of things and invested in lots of things. But that that was an important

lesson for me. And you know, it's, it happens in corporate culture. And you never do it twice. I mean, I never do what that what happened there again, because I know to avoid that that's the whole idea of experience, that you wouldn't have seen coming. But yes, it was challenging, no question about it. And later, in later years, in fact, just a few weeks ago, I had, I had lunch with Alec Gore, who is a very famous private equity, one of the big

SPAC operators. And that's where he and I met years and years ago, because he bought some of the assets. What I eventually tried to do was buy back the learning company from Mattel. And they wouldn't sell it to me, they sold to ALEC instead. But we've become great friends since then.

win, you won't win. Now I have nothing wrong with miffed MIT mission driven businesses, if you want to give $1 away every time you sell a product or plant a tree, I get it. And that, in fact, is a good strategy. Because a lot of people care about that or eliminate plastic waste, which I'm a big believer in for my environmental days. But the whole idea is that you have to set some parameters that you have to achieve. And you've got to get the whole team

following in that direction. If anybody is not green on that direction, get rid of them. They're destroying your culture. Everybody has to agree. And what I would do with my management is always say, look, here's the plan for the next quarter. Does anybody have an issue with it? Is there anything you don't like about this plant? Is there something you want to change in this plan, speak your mind now, or forever be at peace, because we're going to go achieve this

plan. I don't care how hard we have to work to get there, how many hours we have to work, or where you have to go to to make it happen. We're going to achieve this plan because we're going to turn around and tell the street, this is what we're going to do. And shareholders are going to listen and we're going to do it. And I think that is business that that really matters. Now. You may not agree with me. I don't know any other

way to do it. You need to motivate people, they have to believe in your leadership, they have to want to follow you and if they don't, you've got to help them find someone else to follow. That's your job. And I would always give great severance packages to people that didn't want to get on board. I just got rid of them. And everybody that worked with me understood the challenges we had and faced it and we work together to make it work and we all did well together. That was the whole idea.

of money. It's the pursuit of personal freedom. And so when I meet people that have a burning desire to be free, then I know I'm, I'm working with an entrepreneur, because you may try five or six different ideas, and they may all fail. But the fact that you keep going back and trying, again, is that

burning desire. And I don't think you can teach that you either have that desire, you don't, and it's only present in about a third of the population in every country is the same, you find two thirds of the people work for the other third, and of that third 10% are

remarkably successful. And so, you know, it's sort of, if you think about it, it's a very small fraction of people that change the destiny of an economy with, you know, profound businesses that grow and grow and grow, because they're very successful at solving someone's problem. But the the motivation they have is that to pursue personal freedom, you will find that in today's modern entrepreneurs, Elon Musk, for example, I look at what look at what that man is achieved. And

he's just getting going. And so he has a burning desire to do things his way my son works for him at Tesla, the company has remarkable culture of getting stuff done. It's interesting.

right all the time. But I certainly have been successful. And I'll let you in a little secret about 70% of my success over the last decade. Now it's more, it's more like 12 years, has been with women entrepreneurs. Which 70% of the really good outcomes have been managed by women. And I think, you know, I have a theory about it, that they mitigate risk very well. They focus on return of capital first, not on capital.

And that old adage, if you want something done, give it to a busy mother is true for a lot of women, they can judge and balance a lot of things at the same time. And so I'm a little biased. Now, if you look at the deal flow, and I do a lot of deals we have currently, we just closed another one last week, we have 35 portfolio companies right now. That's a lot for any venture firm. But I have the benefit of social media so that I am able to help them reduce their customer acquisition costs

in an incredible way. And so that that's sort of our secret sauce and my venture firm. I basically go work for these people to help get their story out, reduce their capital costs and their customer acquisition costs. And in exchange, I get very proprietary deals. And I know what my value is. So this model really works for me. But I really look for that ability to pivot because you know, I don't have to tell you this, you're gonna go through a lot of hills and valleys before the deal is done.

the exact same thing. On average, the success rate is higher with female lead founders than with male founders, and we have a number of very interesting fun companies in the portfolio that are doing exceedingly well. I also invested in Jesse Draper's fund. As you know, Tim Draper, one of the most successful VCs of all time, his father, his kids, fourth generation VC, Jesse, she only invest in female founders. And she's killing it right now.

So we share that that same view, what's your investment strategy as a whole? We're watching Shark Tank, I see you invest in all kinds of businesses. Now on that show, obviously, you don't know what's coming. I mean, you you've invested in from A to Z nonrelated. You have your venture firm, what are you looking for? In terms of a strategy? Is there one? Or do you just take every deal? Kind of one off, and you look at every specific situation?

arrogant. But when people come to me and say, Look, we're doing around at a, you know, 10 million valuation, or 25 million valuation, and we're closing it, there's a million left, I say, Look, I have no interest in doing that, you're, you want to put my name on your cap table, we both know why you want to do that, I get it. But that's not a deal I'd ever do. I am not like

any of your other investors. If you want me as an investor, you have to make me a founder, which means you're going to give me founding shares of the company for free. Now, a lot of people choke when they hear this, but then hear me out, I say, here's what I'll do. I don't care how many rounds you've raised. After we agree on the founder shares, and I'm going to take from you you're going to give me for free. I'm going to parry pursue my percentage ownership into every round you've ever raised

at that price. So if you did around 5 million valuation, I'll give you cash for my 7% of the ownership, I generally don't do this, I start I asked for 9.9% of 100 shares. So I'm not an insider. And you don't want me as an insider, because social media is what's so valuable, I have to be able to speak about why I invested in it. So I don't join the boards. And then I then I invest in every round. For for my 9.9% 50% of the companies absolutely choke when they hear this. They say why would we ever

do that? And they don't, the other half do. And the reason they do it is I simply let them talk to my CEOs, I don't sell myself, I let my CEOs sell myself. They do the work. They explain how my organization changes their path, and makes them far more successful in raising capital at a lower cost. Because now there's a direct correlation between social media and market cap. I mean, you've seen it, read it, you've seen it in Robin Hood, you've seen it on mean stocks. It's very powerful.

And I know it's a fact. And then I helped them with customer acquisition, there isn't a single retailer on Earth, that what returned my call, that's one of the great things about being a shark right at the president or CEO level. And so, you know, we can do a lot of things together, but I don't do it for free. And obviously, that gives me a huge advantage against just some random VC. And it works.

retail investor? And as part of that, does it make sense to put all of your money or most of your money into the s&p 500 Given that there are probably less than five investors in the entire world who have beaten it over the last 30 years in the chance of the next Warren Buffett showing up at your door and Topeka, Kansas or wherever you're living is way less than getting struck by the odds of lightning, which by the way, is one in 700,000?

upside down at the pandemic. Big United had something like 8 billion of debt now it's got 23 billion happened in 18 months, I would never own that. That's just a speculation now. So, you know, there's certain rules I have. But that's way different than investing in private companies. And being a venture capitalist. I mean, the majority of the money I make is not from the indexes I'm the majority of the money I make is from bets I make on men and women that I

invest in. And that, you know, for example, three years ago, someone came to me in Florida and said, Would you like to be an investor in LSD? And I said, No, that's an illegal scheduling narcotic. And he said, No, no, I'm going to do FDA trials towards turning it into a medicine. I thought that was pretty crazy. That was my mitt, I think, you know, I bought into that when it had a valuation of $10 million. And it's trading at

a billion and a half now. And I was a founding shareholder of that, I believed in the idea of taking psilocybin and LSD and going through clinical trials to see if it could help opioid addiction and, and, you know, things like, anxiety, there's all kinds of research going on in this space. And in fact, there's many other companies that have pursued it, we were the founders of that whole space, and we're the first to

ever do it. The same thing with recent investments are in wonder phi, a company that is doing decentralized finance, in a very on an app, so to to democratize it for for people that can't understand the complexity of, of staking and loaning and all the things you have to do to use, defy just bought a piece of immutable holdings company that owns NF t.com. And is building out the NFT platforms. They're a large piece of it. So I'm very involved in that space. Looking at two more deals next week, I

mean, the deal flow is huge. And I and I have a whole team of people that I work with, but you know, I'm intrigued by entrepreneurship, I'm intrigued by the magic of what happens when you when you put capital to work with with with a strong leader, and just watch it blossom like a flower. It's just incredible and and all the twists and turns that occur. I give them advice I can I help them with social media, obviously, and I help them with

customer acquisition. But generally, it's it's them, it's them, it's their idea. In my mind, money is just, you know, gasoline on their fire.

too. You lost $2.5 million. In a partnership with a large cable company, you wanted to create an online dating service with them. As we now know, we have matched Tinder, Bumble and a whole variety of similar companies. It's great idea the deal didn't work. It was a bad partnership. But let's talk about work life balance and family in a few minutes, too. I want to ask you about the expression that failure is not an option. Is that right? Is it okay to fail?

And going one step further? Is some failure a good thing? What's your advice to people, for example, who have been fired once or multiple times, or those who have started a company have failed, or multiple companies that have failed. Or if you're one of the 1.5 million people who declare bankruptcy every year and you want to start a company.

perfect track record. No one will, particularly investing in venture. I mean, that's so risky and itself anyways. There are some rules, though, you know, it's important to understand why you failed. If you know I'm talking to an entrepreneur, and they're telling me about, you know, something that didn't work out, and they can't explain to me why it didn't work out, then I won't invest with them because I haven't learned anything, they

just have failed. So I would say failure is an option, a very good option to make you better as an entrepreneur. And, you know, thinking about the motivating aspect of it. Entrepreneurs hate to fail. So when they start the next journey, then they try even harder. And unfortunately, and I say this to my Graduating cohorts, there is no life balance for an entrepreneur, the whole idea is you sacrifice your early years to have freedom in your later years. That's the

whole idea. Unfortunately, you find out in your later years, you want to even work harder, because all you know is work. And you do sacrifice a lot of family time you don't go to picnics, you don't go to soccer games, you're not free on the weekends. I'll tell you a story about a class I was teaching a few years ago and night class. It started at six, and went till nine o'clock as these do. And this was a big cohort. I mean, it must have had 300 people in

it. It was a very big room, microphones, cameras, you know, big speakers and screens so they could see you down at the bottom. And at the end of the class, like five minutes before nine, this, this fellow at the back raises his hand and he says, you know, can I ask you a question? And I said, sure. You haven't said you haven't contributed anything to this class? You haven't said a thing in three hours. So, you know, welcome to ask a question. I said cynically to him, because

he hadn't said anything. And he said, I want to tell you a story and ask advice. Basically, the story was this. He was in his graduating year of engineering, electrical engineering. And he was also a coder. He was also he could write code. And he had designed a compliance cloud based platform for hedge funds of 250 million and under. So he found that niche market, it was a royalty based system, he did all the mark to market compliance, so they could be compliant. And they're reporting

to the regulator. And he was able to acquire his customers just by word of mouth. He was the run rate was $5 million of free cash flow a year while he was in his dorm. Wow. So he says to me, my girlfriend came to me today and said, I have to make a decision. I said, What's the decision? Well, we're engaged, but she doesn't want to live this way. I have no time for her family. I have no time for her. I work every weekend, I work all night. And I'm running this business. And I'm trying to

graduate from engineering. And it's the guys at the top of his class. And also, he's very gifted. What do I do? She's She, I don't want to lose her. But she's gonna walk out on me if I if I don't change. And I said, Okay, and now the classes, you could have heard a pin drop. Half the class was women, half men. I said, Listen, let's be pragmatic about this. Which one is easier to replace? Your business that you've worked for three years to build is now generating 5 million of free

cash flow? Or are your fiance? And a lot of people didn't like that answer. And he said, Well, what do you think I said, I think she's the wrong person for you. I'm not Dr. Phil here. But you're an entrepreneur, a successful one. There isn't a woman in this class that would want to date you next week. You're a good looking guy, you have $5 million. I think you could find someone else that understands your journey.

entrepreneurs need to understand that their partner has to understand them was my point. Anyways, that class was a shitshow. It didn't end till 10 o'clock, as we debated this whole thing. You know, romance and all this stuff. I get it. But it was an important moment for him to understand the journey he had chosen, there was no going back. And from what I understand he's he's had has a family is very happy, but not with that woman. So maybe I did something right that night.

than you ever have. It's funny, because when our company went public, and I began my own firm, I mean, the ACA my thing working 100 hours a week, I was commuting from Los Angeles to

Boston. And it was hard and I thought all right now now I have my own firm I can be my own boss and I worked harder and have since then, but in your and and I have five kids and it's important to me to be home for dinner every single night and there's a small handful of nights over the last two One of the years that I have not been able to do that I've the freedom as you've said, the success has brought me freedom. But in your case, it took a serious impact.

Have you changed your view on this a little bit, given the the issues you've had with your own family and the sacrifices that you've made?

I'm just going to pick a place and and you make all the arrangements. And let's go there. So we decided to drive down the California coast through Big Sur and Carmel and everything else, and just stay in different places, post ranch and all that all the way down. And just, you know, flew into Napa spend some time at our we have a wine business there. I'm going to shareholder and vintage estates where we make all very fine wines. And we run our direct consumer business there.

So we spent some time there shooting some commercials. And then we, we just drove we just drove south. And it was great. You know, I still did, you know, I still had to do a few calls. But it was a great time to be with our family. We did corny stuff, like went to the Monterey Aquarium. And we had, you know, lunch on the beach and all that stuff. You need I agree, you need to stop and smell the roses. And I can certainly and very fortunate to be able to do it any way I want. And so, you

know, I try and do that. And it's for my kids. I'll say, look, pick any weekend, anywhere, anywhere you want to go, and your friends and girlfriends, everything else. I'll make it happen. And I do that occasionally. That's the only way because my kids are now 25 and 28. I mean, they're not toddlers anymore. They have their own lives and they're working and they have all the new stresses that life drives on you but but we do get together.

$17 billion. Today, it has a market cap of $1.2 trillion. What's happening here, Kevin?

that of scarcity. I have over time come to appreciate that asset as property not as a currency and people have different beliefs and it but I don't sell my coin. I'm going to own it forever. And so I look look at it as an asset to hedge against inflation the same way I do with gold, gold is a 5% weighting in our operating company's portfolio but bitcoin is more than that now and so is this theory and but I think the way to look at it, and everybody

has a different opinion. But what has turned me around on this, first of all, was the regulator's starting to loosen up in countries like Switzerland, Germany, France, England, New Zealand, Australia, Canada, where I also invest. And so I had more crypto assets there before the US because right now, we're still in limbo with regulators here. But you can buy an ETF with Bitcoin underlying itself, not futures in Canada. And many, many more of these are coming in other

countries. But here's the way I think you should look at it. cryptocurrency and decentralized finance is nothing more than software. It's productivity enhancing software. And if you own Google, as I do, and you own Facebook, as I do, and you own Microsoft, as I do, these are large weightings in our overall

company. Why wouldn't you own blockchain, the potential that it has to enhance productivity, to reduce costs in the largest market on Earth, the currency and financial services market is so incredible, that it should be part of your portfolio. Now, in saying that, I don't just own Bitcoin and Aetherium I own 20 other positions in minors of Bitcoin in companies like immutable holdings and wonder phi in their equity. I also own many different tokens, level one and level two chain companies.

You know, I have a I have a team working on this now. So we manage it, just like we would any portfolio or ETF, where we actually have position weightings in these things. And we mark to market them every day. I've recently became a shareholder, one of the 69 shareholders that did the private placement in FTX. And I'm their paid spokesperson, along with Tom Brady. I mean, this is a remarkable company run by Sam bank, when freed is only 29. He's worth $22 billion. I love working with him. He's

fantastic. But you know, I'm using his platform we have to X platform to be compliant. In all the work I do in crypto. So that's to me, that's the most compliant platform there is it's the largest global platform that I think has institutional compliance built into it. So you know, and I was last week, when we were looking at our deal flow 40% of what we're investing in now is either crypto or in new deals or in decentralized

finance. I mean, it's the most exciting thing that's happened since the birth of the Internet. So I think it has tremendous potential. And yet you will find naysayers, you will find people that think it's worthless. And they've said it publicly, I was one of them. I was I was one of those skeptics, and I forever get that video shoved in my face when podcasters you know, interview me, they love to start with that. But you know, when

things change, I change? And I'm glad I did, because, you know, it's one of the best performing assets I have right now. So it's sort of, you have to get your head around it. And if you think of it as productivity software, which everybody has been investing in for decades, that might get you over the hump. You know, it's sort of a and if you you know, by its binary, either you want to invest in crypto and defy or you don't, and if you

do, how do you invest? And that's the challenge and educating yourself and getting a diverse portfolio.

things is fun. You're a huge watch collector, and at some point that has become a asset class for you. I'm an art collector. I'm the kind that hangs paintings on my walls, put sculptures on my floors. But the NFT world in art is a teensy bit different. In that world, there was a guy named Mike Winckelmann. This guy was a graphic designer turned digital artist who is known as people,

or before that people crap. He made a digital picture, some point in 2021 that was sold at a Christie's online auction for $69.3 million. This is a JPG file, not something you can

touch or hang on your wall. You have people who are buying eight second video clips of LeBron James dunks for $600,000 It's an NFT frenzy out there and you and the best venture capital firms in the world are backing them calling them this calling this the next big thing What are your thoughts on people and non fungible tokens and all of this and is it going to be like the early.com days that I I was a part of where so many of your friends were a part of, and you are probably a part of where the

frenzy is going to die down and investors lost 10s of billions of dollars. And more than 95% of these companies are going to crash and burn.

you don't actually own it. The ownership is the person that owns the NFT with the smart contract built into the Etherion blockchain. And so that has tremendous value. Where I think the most interesting market is and where I'm going and where I'm investing in NF T's is where you can tie a physical asset that has already proven itself in the physical world, to the digital NFT world and the example I'm going to give you is the watch industry. Now I am a

large watch collector. I know the largest watch collectors in the world. I know the CEOs of all the watch companies I'm very fortunate to have been collecting watches for decades, I have unique one of a kind pieces, they've gone up in value immensely. But every time I want to buy a watch, and this is a $20 billion market annually. So let's say you want to buy a Patek Phillipe 75th Anniversary World Time very famous watch,

they only made 1700 of them. And I wanted to buy one that was still in its box, there are collectors that buy these pieces and never opened the box, never wear them. And they wait a decade and they wait till someone like me comes along this way to pay a significantly higher price than it was sold at 17 years ago, or 18 years ago. Here's the challenge. How do I

know it's real. Now, in the case of a Patek watch like that, there's only one man that can authenticate it for me named John Reardon in New York City. So I have to find him, I have to get his time I have to ship the product in bond from Hong Kong where it happens to be sitting, get him to open and look at it

and tell me that it's real. That in fact, it is a potentially but not a knockoff, I could have avoided all that had there been an NFT of this watch created to authenticate it with all of the information that I need to have built into the chain in the contract. I want my entire collection to be NFT. Because there's so many people that want to have my NFT of my steel, white faced a toner that I wore for 13 years on Shark Tank, or my one of a kind Ming, they'll

never own the watch. But they'd love to buy the NFT of that watch. And so we know what the watch is worth in the physical world. And we'll find out through the auction then the cry of price discovery on the NFT world. And so I'm working very hard to create the standards along with the horological societies in New York to determine what the protocol is going to be for all watching NF T's everywhere. And I'm very fortunate to have some of the largest collectors in the world

as my partners in this. They have huge collections as well, as well as some of the thought leadership in the watch industry. So we're negotiating now what that protocol is going to be and then we're going to develop it. And then if you have a watch and you want to create an NFT, you'll be able to do it with your phone. We'll give you the app to do it. But we'll tell you exactly what the protocol is going to be to make it have the checkmark that it is approved as the true watch protocol NFT.

That's just one use case. There's so many others. And I think NF T's will actually become bigger than Bitcoin. The value inherent in the NFT market in a few years will outstrip you know, whatever bitcoin is going to

image. I can't reproduce that image. It's why you see in the auction catalogs when the sale is finished, and you go to look for the painting on online. There's a gray box there.

Origination. In other words, when the watch first leaves the factory, that piece forever will pay you a royalty every time it trades hands in perpetuity while it remains a piece. So in other words, you know, if you're if you're a very unique watchmaker, and you're only making 13 or 14 watches each year, you'll start building revenue stream, even after you stop making watches because you'll be in the smart contract and your estate will be paid a royalty every time the

watch trades. That's the likely outcome. Because the watch industry cannot make enough watches to fulfill the demand anymore for watches, particularly brands like MRP K, Rolex, Patek Phillipe FP Jorn, meaning they just simply can't. If you if you order one of those watches, you may wait two years before you get it if you ever get it. And so the NFT market will fill up the slack for those who really want to own the dials

in a different way. And I'm a believer, we'll find out what we're going to learn so much in the next 24 months. It's such an exciting time to be investing in digital. And I think it's terrific and very exciting and I think has tremendous upside potential. There's no question about it