We hosted Kevin O'Leary from Shark Tank, aka "Mr. Wonderful", at the Kaplan Institute for a talk and a fireside chat last week in front of about 400 of our student entrepreneurs. He shared some important and serious thoughts about the entrepreneurial journey in general and about his own education as a successful investor in so many different startups (more than 50 in his portfolio as of now). He covered both things he learned through the TV show and, more importantly, some lessons for anyone looking to start or invest in a new business.

Here are a few of the most interesting notes and comments.

1.  It's all about sales and the costs of customer acquisition.

Kevin likes to meet the CEO of a potential investment and ultimately the main players on the management team, but the person he wants to meet first is the head of sales. Because if you don't have sales, you've got nothing. And, if you don't understand what the cost is for your business to attract (CAC) and retain new customers, you're doomed. So, he likes to meet the person who's putting the meat on the table right off the bat.

With the World Series under way, I'm reminded of an old baseball truism: "pitchers in baseball can never win a game, they can only lose it." It's the hitters who get it done. Raising money is easy for a lot of people -- they're great storytellers -- selling customers is much harder because when you make them part with their rubles, that's where the rubber really hits the road.

2.  We're much more brand loyal to consumer products than to tech products.

We may use a favorite laundry detergent or shampoo our whole lives, especially if it's what our parents used, but that kind of loyalty doesn't play in the tech world today, where everyone only wants the latest and greatest. If you show me something that's better, cheaper, faster, easier and available today, I'm yours.  And no one worries a bit about changing horses in midstream as long as switching costs like equipment replacement, re-training, etc. are modest.  

In the software business, it's certainly important to take care of your existing customers. But as I always tell our portfolio companies, the real measurement of your long-term success isn't simply the size of your installed base, it's your ongoing share of installations of your products on new machines and new technology implementations because those are the customers who'll matter the most in the future.

3. Winners on Shark Tank do three things well.

After Kevin had watched zillions of presentations and studied exactly who won and which deals got funded on Shark Tank, three specific attributes of winning pitches emerged.

  1. They could convincingly tell their story in 90 seconds or less.
  2. They demonstrated that they had the right team to execute their plan.
  3. They knew their numbers (backwards and forwards) and they had a full understanding of the economics of their business model.

Everything else was fixable especially with the vast benefits of the exposure these companies received on TV which often drove their customer acquisition costs close to zero.

4. Women make the best startup CEOs.

He said he was a little worried about being accused on being a reverse sexist because such a huge percentage of his investments are made in companies with female CEOs. But here again, he has consistently observed a set of skills and attitudes among these leaders that he even goes so far as to suggest to the other male-led companies in his group. The four skill sets that were most important were:

  1. They have great time management skills. They didn't run around trying to do everything at the same time or taking on too many projects or challenges all at once. They are focused and centered and consistently triaged and reproritized what they need to get done in the moment.
  2. They set goals that are achievable and hit those goals far more often than their male counterparts. He said that he encourages this strategy of manageable and somewhat modest targets even at the cost of some rapid growth, because it makes for successful employees, which leads to the third differentiator.
  3. They build company cultures that have lower overall employee turnover, which in turn dramatically reduces their operating costs. Happy workers are healthier, more productive and stick around.
  4. Women executives are simply better listeners.

There was a lot more in the conversation, but these seemed to me to be the key items.

Published on: Oct 29, 2019
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