"The SECRET To Business Success In 2021 IS THIS!.." | Kevin O'Leary & Gary Vee

So in this crazy outcome that I could have never foreseen, 80% of the portfolio, even though revenues are down, are actually ahead of free cash flow forecasts. You cannot, people, you can't lie to them. You have to be totally transparent, whether that's good, bad, or ugly. You've got to tell the truth.

Kevin, it's a real, real, real pleasure to have you here. Um, first of all, have you done through this pandemic, both on a personal level and maybe a macro kind of like a business level? You know, because this pandemic has created a lot of, you know, winners and a lot of losers. It's been very all over the place. You have a vast portfolio, you know how you and then karma—how is your business world?

Well, you know, Gary, that is the question for everybody in America today, and you're right, there are winners and losers. But, you know, personally, I'm adjusting just like you are to living the world in a digital way. Just every day I communicate, as we are right now, and all of my companies, I have over 50 portfolio companies, now have gone through this incredible transition to what I call the digital pivot America 2.0.

The ones that have survived, um, you know, first of all, we've gone through this seven months now and have been able to tell a story online, shift to direct-to-consumer sales, become very proficient at logistics, and have been able to just take away what they lost from retail sales and sold it direct to customers. So in this crazy outcome that I could have never foreseen, 80% of the portfolio, even though revenues are down, are actually ahead of free cash flow forecasts.

Why? Because they've gone from just doing 10% direct to consumer to doing 40% to 50% direct to consumer at almost 100% gross margin. And they've saved their companies. Now, the ones in travel, the ones in entertainment, the movie theater businesses, uh, the weddings, those live event stuff—I'm sorry, they're going to zero, and that's 20% of my portfolio. But 80%? That's fantastic, they're going to make it.

So let's frame up the question that this whole show is going to be about, and we have an incredible lineup starting with you. Where is the customer's attention? How do you synthesize that question, and what is the answer?

Well, never in our lives, Gary, have we had the opportunity to have such a captive customer. They are sitting at home just like you and I are; they are looking to be entertained, communicated with. They are willing and able to purchase products and services, but they want it done conveniently and delivered directly to them. They are not going to go get it anymore.

This is the digitization of America in a very fast way, and what I've learned—and this is really binary—I used to have this joke, Gary. I used to tell people what career should you have, and I'd say, well, there's three careers: if you're going to go to college and invest in yourself—engineering, engineering, and engineering. But now you know who I'm hiring? Story writers, videographers, photographers, editors.

I'm having to compete all around the world to hire some people in Israel, in Italy, and France to cut video because all of my companies are telling stories on their websites. And so we have now empowered a whole new generation of artists who are doing phenomenally well that I would have never guessed. Storytelling, direct communications with your customer, compelling them to watch that 19, 20, 39, 49-second video that communicates what your product or service is, is what the successful companies are doing.

And we are spending millions of dollars doing this digital pivot. Obviously, because of Dragon's Den and then Shark Tank, you have a personal brand—how have you, the human—because you're talking, you know, it's, yeah, obviously, as you can imagine, I'm listening to the first five minutes of this conversation. I've been spending the last 11 years building a communications death star to do everything you just talked about because I basically believed that the internet was going to squeeze the middle. Everything was going to be direct to consumer, whether that's OTT or e-commerce, and that the ability to storytell and run the arbitrage of distributions was actually the game.

So I like those chess moves of how they played out. To me, I'm curious because I'm sure a lot of people who are watching are curious right now. What about you yourself within social media? Have you in these nine months—because I'm sure you've been busy helping mentoring, like I'm sure you're constantly on calls with entrepreneurs of these 50-plus businesses—but what about you and your own personal brand?

Have you picked up a platform? Have you started to use LinkedIn from a content standpoint? Have you downloaded TikTok? Where are you, the man, the shark, the people? Where do you sit personally right now with social or content creation, whether first party because you grab the phone and do it or whether you live a little bit of the game? I play.

Drock, ironically, is here for the first time in seven months—have somebody producing for you, the personal brand. What's the production around that, if anything?

You know, Gary, you are the role model for guys like me. You got it right; you guessed it right. The middle did get squeezed out, there's no question. And I really got involved in social about two and a half years ago. I hired a team of producers, editors, and storytellers to work within my own production company, Larry Productions.

And what I learned—and this is the paramount, maybe I'll give you credit for this, because certainly watching you—you cannot, people, you can't lie to them. You have to be totally transparent, whether that's good, bad, or ugly. You got to tell the truth. That is what a personal brand is built off.

The minute—it's almost like the analogy I use and I teach this stuff now. I'm here in Boston; I do—I used to do lectures in person, but now I do them virtually at Harvard and MIT and Temple and Notre Dame. I talk about this stuff primarily to the graduating course of business students and engineers about entrepreneurship.

It's like dating; you know, when you fall in love and you meet somebody, and you're just empowered by that magic moment. And I draw this analogy all the time. You just—it's so wonderful, and everybody should fall in love with whoever it's going to be. But then as time passes, things change. And maybe a year or two later, you're thinking about cheating, okay? And you do. Now you have a decision to make. After you've done that, do you tell the truth to your significant other, or do you keep it a secret?

And here's why I bring it up for business: you're going to get caught 100% of the time when you cheat. You're going to get caught because you didn't tell the truth. Your significant other can never look at you the same again. You've lost 50% of the equity in that relationship forever. It may not break up; you may go on, but it will never be forever the same.

Yeah, and in business, the first time you lie to your customers, your constituencies, your shareholders, you lose 50% of the equity forever. Better to tell the truth and take the hit and the ownership and transparency and intent around the, "I'm sorry."

That's absolutely right. Everything out of your mouth, comma. There's also the half-pregnant "sorry," and there's the real "sorry." And I think corporations—the standards in which people want from companies is completely, completely impossible for most companies. They may be good at the environment, but they're bad at wages. Companies are a convoluted animal just like people.

And this thought that you don't understand how to say "sorry" when you're trying to fix something—people would rather dance, look over there, a bird—instead of owning it. And to your point, that lack of apology creates more damage sometimes than even the event itself.

Yes, and that's exactly it. And I tell all my CEOs now: Look, do not lie to the customers. Don't lie to your employees. Don't lie to me. Don't lie to anybody—your shareholders even. Take the pain, take the hit, admit the mistake you made, and you will build a relationship, particularly with customers.

What we're learning online is if you have a direct relationship with a customer, and you're honest with them, and you tell them, "Hey, the product's going to be delayed," or "Sorry, you've got a bad product; we'll replace it; we'll give your money back," whatever it is—that communication ends up being very, very valuable over time. Those customers stay loyal.

We've learned that a hundredfold in our companies now, and now we're across the portfolio—we're now at 48% direct revenue to customer. That's magic, Gary. That's friggin' magic because that's 100% gross margin business.

One of the, uh, we've run out of time; we're going to move on. We really appreciate your time. But one of the fun topics in the chess game of what you're talking about is channel conflict for the people that still rely on a lot of business from retail as retailers watching them go around them. And that is going to be interesting battles of the next decade of business.

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