Kevin O'Leary on What it Takes to Get Rich

[Applause]

Tell you what, I'd like to do tonight. I thought I'm going to have some fun. You know, people always ask me, "Why do I do television? What does that have to do with being an investor? Is there any synchronicity between the hobby of TV?" Really, Dr. D. Shar vinary exchange. I work with Discovery Channel now as well. What does that have to do with making money?

So, let me walk you through just the way I do it. You tell me when this is over; maybe it makes sense. Some of you know this woman, Mandel. I've been working with her for 9 years now; she's the most attractive communist on TV. Some of you may remember Pierre Judeau, but her father was in Pierre's actual was Auto, famous Minister—very famous liberal family. She's very intelligent. I like to say about this show: I can never do it with a hangover because if I'm not there, I'm not 100% there. She's slau; she's really good. I think that's why it's great television.

Now, let's think about this show. I just finished it about 18 minutes ago. Today, we had five guests. Now, what does every Economist, every CEO, every author, every artist, every politician, every hedge fund manager, every pension fund manager, every private equity guy—what do they all want? They all want to be on television—every single one of them.

Now, if you're an investor, how could you ever get access to these people? We tell you the rules of TV. Way back in the Johnny Carson days, he was a very eclectic comic. He had a huge successful show. He made a rule: he used to invite his guests in green. When you go on TV, before you can get on the camera—I still have it on my face right now—you have to put a very thick powder on your skin, the same you're going to wear when you're dead. That stops the shine of your skin from getting in the cameras.

It takes about 18 minutes, depending on how much real estate sh in your head. So in the Green Room, there are two chairs, one makeup artist, two chairs. In the days of Johnny Carson, he used to invite his guests in and say, "Look, while they're putting on your makeup, just so you understand the way I want my Green Room is whatever we talk about will never go on the air. It's off the record." This is something that started years and years ago—in the 60s when Ted Turner set up CNN. He made the same rule as well. He told everybody that came into the Green Room, "Whatever we talk about in The Green Room is off the record."

So if you're in the television business, and some of you probably aspire to media with it, this is a rule that is accepted all around the world. Whatever is discussed in the Green Room is off the record.

Now, let's get back to tonight's show. On our show tonight was an economist and a CEO of a security company—very interesting sectors for me. So knowing that they were going to be on the air, I got there 18 minutes early, and I went in the makeup room. I sat there while they were getting their makeup on, and we talked. Can you imagine the information flow over the years that I get—getting access to poity prime minister, every CEO who's ever running all the pension plans? I could never get to these people ever if it wasn't for TV, and I've got them to myself for 18 minutes every single day. And everybody knows whatever we talk about is off the record.

Let me give you an example. Some of you may know Ariana Huffington. Remember her? What's remarkable about this woman—3 years ago, with $10,000 she said the helped to Post online. It now challenges the New York Times for ad dollars. That's an institution that's over 100 years old, and she's getting the same ad rates on her Hood post, which is incredible.

So, she's a lot to do with what's disruptive on the internet, and here she is coming up to the CBC to be interviewed. We decide to do it wrong, and you can see at the feet here as the makeup artist applying that U makeup on my head. Now, this is just like being in the Green Room. She knows the deal, and I say to her, "Listen, you know, Ariana, I'm thinking of buying some Tribune bonds. I'm a big bond sh; I like to buy bonds. They just came out of bankruptcy. These bonds were yielding about 11% assumed in the market. Today, is that every quarter, every 90 days, the ad revenue for crate goes down 5%? So the propensity of a company to be able to pay back those bonds is something you can calculate just using a spreadsheet."

So, I said to her, "Look, I'm thinking you're investing a lot of money in Tribune bonds; I really like them." She said, "You know, Kevin, if I were you, I would wait till the forwards came up next week." Advertising is a concept called the forwards, where every 90 days they say how much commitment was sold by how many large companies at what price on advertising. I said, "What do you know, Ariana, that I don't?" She said, "I don't know; I just got a feeling. Why would you just wait before you make this bond commitment to see how the forward looks?"

So I call up the trading guest in Boston and say, "Hold on, bub. Lou, let's not buy those bonds yet." I said, "What? What are you talking about? Boston? M $35 million in the portfolio you asked us to work on it all week!" I said, "No, I have some ingestion. I want to wait." Sure enough, 4 days later, forwards come out. It was not a 5% attrition; it was a 177%. It lost that quarter; bonds collapsed. Obviously, because the propensity of the companies that are now selling advertising and print may not have enough money to pay back those bonds in 5 years, because it's an accelerated attrition to online advertising.

I saved a fortune from that little interview, and how could I've ever gotten to her or ever had that few minutes of conversation?

I'm going to keep doing TV until I die. There's no business like show business, no question about that. Some of you know this show. Sean talked about it; he's been part of this phenomenal success. I don't think even the CBC can fathom why this thing is so successful. This is a monster hit for them. 9-year-old girls to 9-year-old men watch this show.

Let me give you some metrics. The news peaks about 785,000 people on a weeknight watching the national news. A hockey game peaks about 1.2 million, and if it's not a playoff game, that's a big number in Canada. Dragon 10, 2, and 5 million people in P—that's huge!

Now, I have my own theory why this is happening, and I think it's this: it's one of the reasons you're in this room tonight, watching the process of Dragon's Den unfold—it's watching people pursue the most noble effort on Earth, that of freedom.

What is financial freedom? It's pure freedom. It means to you, you'll never have to take another phone call if you don't want to. That's what financial freedom is! You have complete control of your time. You can do whatever you want in your life and pursue any interest you have. That is a noble pursuit; there's nothing more noble than the creation of wealth.

I think even a 9-year-old girl gets it when they watch people pursuing these dreams. Even though the probabilities are low, everybody out there is trying to figure out, "How can I become free? What is it going to take for me to make enough money that I completely remove the shackles of any hold on my life?"

That's what the pursuit of wealth is about, and that's what you're watching on Dragon's Den. I think it's a powerful, visceral force that creates amazing television shows that never last this long. This thing keeps growing every year. I think it's absolutely wonderful; I think it's a great platform.

I think Dragon's Den and Shark Tank and the other show Sean talked about become the American Idol of venture capital. I think you can launch a business on this show. I think you can take a product that's unknown, that has no distribution, and get it distribution and make a business out of it. And who wouldn't want to do that?

I plan on doing that over and over again, if I can. From the success of Dragon's Den, as Mark mentioned, Mark Berett came knocking. What an interesting opportunity! But who wouldn't go to Los Angeles and hang out for a week? You have no idea how crazy that is! Definitely enjoy it again.

Let's take the television. I got a phone call from ABC saying, "Kevin, why don't you come down to the set of Dancing with the Stars?" I said, "Well, I don't go dance; I'm not really a dancing deal." He said, "No, no, no, you sit in the front of the audience, and when the camera zooms in, we got a bug in your ear, and you shout, ‘Watch Shark Tank at 9:00 right after Dancing with the Stars!’"

I said, "I'm going to fly all the way to LA to say that for 10 seconds? You out of your mind? Take me a day to do that!" And they said, "Well, look, if you do it, we'll sit you beside somebody waiting to meet your whole life because we know you're a money company store." I said, "Well, okay, come out! Got me interested! Who is it?"

Some of you know who's the creator of Apple. Everybody knows Steve Jobs, but you remember Steve? He was the engineer; he's the guy—he never takes meetings. He's a legend; he's one of the most savvy tech investors on Earth; he's really rich; he has Apple stock at 15 cents; he still owns Bo bucks. This guy is well known; he's a genius, and nobody gets to meet him.

But guess what? He loves Dancing with the Stars! He was on Dancing with the Stars and he sucked; he lost right away, but he goes every single tap! He sits in the front row. They said, "Look, if you do this for us, we'll get you together with dinner with Woz, and you two can talk about what you both love to do: investing in technology."

So, here I am with David in the front row just before it happens. There I am with Woz afterwards—you can tell this guy sucks as a dancer, but who cares? Amazing guy—he was absolutely fantastic.

Again, the theme of television: how could you ever get near this guy without TV? He doesn't want to take a meeting with another investor. He's sick of all that; he's way past that. And he's a legend in the space.

I came out of the software industry; I created the first Apple. He's an amazing guy—still a big player for my son, who didn't care about W, but loved Dono.

Let me spend a couple of minutes just talking about the philosophy of what I think need to be successful. Everybody has a different opinion on this stuff, so you know you should know my politics. I'm slightly brighter till of the H, and so you may not agree with everything I say, but I only bring it forward as something for you to consider.

Because this is my interpretation of what it takes to be successful as an entrepreneur, and I think every entrepreneur that has had some success—and the thing about business is you can measure success because you monetize it. In the end, it's really the thermometer of what you're doing. Is it working or not? There's no gray in business. You either make money or you lose money. That's it!

So I think every entrepreneur that has success making money should go back to the next generation and say, "Here's what I know. Here's what I know; here's mistakes I made, and here's what I think works for me." And maybe you can pull from these ideas for yourself, because in this room statistically, there's going to be about 15 of you that become very wealthy, and about 5 of you are going to be stinking rich.

So you don't know which ones you are, but it's going to happen. There's no question about it, and I hope the rest of you will do well as well. But the stats are really interesting: you know, becoming a successful entrepreneur requires certain metrics, and I'll tell you what I think they are.

So I'm just going to keep this really simple. The reason most people fail in business is they make the assumption they're good at everything, and they're egotistical maniacs. And even when it starts to fail because of their own inadequacies, they don't stop themselves. And they go, "That's a typical situation for an entrepreneur."

So you have to look yourself in the mirror; this is hard to do sometimes, and say, "What am I really good at, and what do I suck at?" Because you don't want to spend any of your time doing things you're no good at.

I'll give you an example: I hate logistics and operations. Now, when you run a software company, you have to make 10 million discs a month, and you don't like that. You better find a guy who knows how to do that, and you better make him your partner very early on in the process. And I mean partner—I mean you give him something; you give equity up to fulfill the weaknesses in your own portfolio.

That is the key to success. I have never made any money doing it all myself—ever. I've sold many businesses now, started many, failed at many. The only ones I really made money on is partnerships where I found people that were good at things that I wasn't good at. I don't mean employees; I mean giving them equity in the business so that they have the same risks and desires that I have.

There are only two things in business that matter: one is owning it, and the other is being an employee. Guess which one you want to be? I just fired an employee today; it cost me money. They all cost me money. I'd rather have less of them. I did that because the rest of the partners in the business have equity. I want to make them rich along with me.

You have to be darwinian about this. So you need to own a piece of a business if you're going to be successful. That's where the leverage is, but the only way it works, as far as I'm concerned, is that you only focus on your strengths. And don't ever tell me that you're good at everything because you're lying to yourself—there's no question about it.

Here's something else you need, and sometimes you can acquire this, teach it, or sometimes you're just born with it, but it's something I think we don't spend enough time on in business schools. Everybody in this class should be forced to come down in here where I am right now and present their idea for the rest of their classmates—even though it makes you sick to do it or you're nervous.

I'm always nervous when I present to people; you have to get over it. Because communication skills are probably the most important thing you can have if you're a business leader or an entrepreneur. You have to be able to get up in front of a room, explain your idea, your vision, how you're going to make money for shareholders in 90 seconds.

You have to be able to communicate your vision and articulate it in a way that everybody can understand. If you can't do that, you better start practicing in front of the mirror. You better get some professional coaching; it really matters a lot. In fact, in business schools, as far as I'm concerned, it is the number one attribute we should have—the ability to stand up in front of a group of people, whether they end being your employees or whether they end up being investors, and explain exactly what your vision is.

This is absolutely crucial, and it should be the top of your list. I don't care if you're good in finance, operations, or marketing; what I care about, if I'm an investor, is can you lead people? Can you communicate to them? Are you able to explain to me your vision and to your employees?

When people work for you—if you're going to be a successful entrepreneur, you're going to have employees; they have to go to war with you every day. They have to go into battle. You have to lead them into battle. They have to trust you even when you're wrong, even when you doubt your own decisions. They can't see that weakness in you; you have to stand up and say, "Here's what we're going to do today, tomorrow, next month, next year. Here's the plan, and here's why it's going to work." They have to believe you.

Those are communication skills you have to have—absolutely important. I can't say enough about that. And if you're not learning them here, tell your professors to get on it and start teaching that to you because that's more important than anything else.

Laser focus on shareholder returns—you know what that means; money is the blood of business. You always have to respect the money number one. That means you have to fire your mother—fire your mother! You have to keep your business alive to keep the shareholder value—the people that risk their money and gave it to you. That's all that matters!

You know this idea of balance? If you can balance your life and your entrepreneur—if you have enough time for your family and your dog and your sister and your school and your charity—that's all crap! That's all completely crap.

You start a business; you're going to spend 25 hours a day running that business. You live in diet; you won't get married till you get rich. That's the way I look at it. There's no time for anything else except the business; that's it! If you want freedom, it's going to be because you made money on a business that you focused on so hard that when you weren't looking, you became rich.

You love it so much, you're so passionate about it, you spend all of your waking hours working on it, you wake up one morning and say, "I'm rich!" That's exactly how it happens. You just pursue wealth for the sake of money; you'll never get rich. It's because you're so passionate that people follow you into war. You create wealth, but there's no balance—there's no balance ever, there's no balance whatsoever.

That's all crap! It's a winners are so myopic, folks, that will sacrifice their lives for success. Those are the kind of people I want to invest in. If you don't think you can do that, I'll never give you any money. If you don't think you can do that, you will not be successful.

Does anybody in here doubt that you become a slave to your business? Does anybody even think that's not going to be the case? If it's the one thing you take from this meeting tonight we're having with me, it's you will live and die for your business if it's yours, and you will have no balance in your life!

And you may fail once, twice, three times, but that's what it takes to be a winner—complete personal sacrifice. Get over it! That's what matters.

And I teach like everybody I can. Some people say, "What an..." I don't care! I think it's the most... I'm serious when I say this: it's all about the money, that's it. That's all that matters! You don't make friends in business; you make money. That's what matters!

You cannot have a conscience about this. If you have to fire your best friend, like I did, you got to do it! It was brutal, but it had to be done! Sometimes the people you bring into a business—initially, your relatives, your friends—are not the ones that you need to be successful.

You have to make those tough decisions every single day, over and over and over and over again. Very hard to do! Every time I sit down with somebody that's working with me for a year or two, and I have to terminate, like today, it hurts! But I have to do it; it's for the business.

You know what? I sleep very well, no problem! No problem, no conscience, no mercy, just the pursuit of wealth for the shareholders—that's all that matters, period! Of which I'm usually a large shareholder. Think about that!

What else do you need? I'm going to end on this topic; here, get to our fireside chat next. But listen, the poll was once asked, "What kind of generals do you like?" And I love his answer. He said, "I like lucky generals!" What the hell is that answer?

He said, "There's something about a winner that's part of their aura, part of their being." And you know, when I meet successful entrepreneurs or people that I think are going to be successful, there's another element to them. I'm not sure where it comes from, but over the years, I've learned that luck is really important.

And I think it's a karma thing; I don't know where it comes from. But I listen to an entrepreneur—there are three things that have to have: the ability to communicate and articulate their vision in 2 minutes so I get—I understand what they're trying to do. Then they can spend maybe 5 minutes explaining to me why they can execute on the business plan.

Because there's a difference between a great business idea that an entrepreneur has and the ability to execute. Because when I form a partnership with an entrepreneur, usually I take control so I can fire that person if they can't execute the plan. And I'll hire somebody else; they still remain shareholders, and I'll make them rich! But I don't want them bugging me as I run the business because those are two different things.

But sometimes—and you see this—it's like an isotopes; somebody standing in front of you just articulating their vision and their ability to execute the plan—and then you see it—they have that "it," they have that magic! Those are the guys that are ready to check for. Those are the women that get the money; they have that certain something.

I don't know what it is, and maybe it's part of your ability to project your vision, your energy on people. This is something that investors see over and over again, but you can only see it when you're in the presence of greatness. I'm sure some of you have in this room, but that is what makes the difference.

I'm going to leave you with a rather sobering statistic because all of you are going to pursue wealth in the world. It's one chart from a presentation on Al, and I give it a lar funds—I run over a billion dollars today, um, as an investor. Did you know this happened last August? There are more billion-dollar market cap companies outside of North America than in it for the first time ever!

How did that happen? Our great society do all this wealth of the last 2 years is no longer the fastest growing on Earth. There are more companies making more money, growing faster outside of North America than in it: Brazil, India, China, South Korea, Thailand, Cambodia. That is the future for entrepreneurs. That is where the action is!

We're old and fat; we're slowly... we have an aging society, and everywhere else is on fire. If I were you guys, I'd get on a plane to go to Brazil right now. 34 million people emerging in the middle class there wanting everything you already have, dying for it! If I were young and starting again, I will not do it here.

This place is never going to grow at 8% GDP again in your lifetime! All those countries are! Think about that—a very interesting observation, by the way. Weather is good there; lots of super BS—pretty interesting society, but I'd go there! I really would!

I'd just land on a plane and figure it out. Sean. Kevin. Let’s give my hand, ladies and gentlemen!