Entrepreneurship

Kevin O'Leary Puts His Money Where the Profits Are

"There was a time when the majority of people on Earth were illiterate and starving, and capitalism changed all of that."

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For the past 10 years, the reality TV show Shark Tank has entertained and edified millions of viewers by dramatizing how entrepreneurs pitch their ideas to venture capitalists. None of the "sharks"—the investors who compete with each other to fund businesses they think will be successful—is more entertaining or edifying than Kevin O'Leary, whose signature insult to unsuccessful contestants ("you're dead to me") has become a pop-culture catchphrase.

But O'Leary isn't just a small-screen blowhard. Born and raised in Canada, the 65-year-old got rich developing educational and family-oriented computer software in the '80s and '90s and holding firm to a gospel of thrift, savings, and reinvestment that he has outlined in bestselling books such as Cold Hard Truth on Men, Women, and Money.

Nick Gillespie spoke with O'Leary in August at the annual FreedomFest conference in Las Vegas.

Q: You've been on the air for 10 seasons. The last season averaged something like five and a half million viewers per episode. What explains Shark Tank's immense appeal?

A: You're watching the pursuit of freedom. It's a visceral, powerful thing to watch people have dreams and pursue them. Every once in a while, we make millionaires. Not all the time, because it's very hard to run a business, but we've made many, many millionaires on Shark Tank.

Q: You embody a form of capitalism and entrepreneurship without romance. Where does that come from?

A: I believe that the DNA of a business is to provide to its constituents. Customers come No. 1; No. 2 are employees; and somewhere in there are the shareholders. You who started it, you're last.

When you try and shift a business's true purpose and say that it's going to save society, you will fail. Not some of the time—100 percent of the time. Saving baby whales is not what businesses do. I teach a lot of graduating cohorts of engineers and business students, and this is the primary debate we have. When you go out into the world, if you think your job is to solve all of society's problems, you will get fired.

Q: Are you anti-philanthropy?

A: Let's say I invest in a financial services company, and the CEO decides that he wants to give $100 million to a certain charity across four quarters. It's not my charity. My family supports multiple charities, but the CEO is not supporting the ones that I support.

My message to him or her is, "You deliver me my profits. I will decide which charities I want to support. You have no right to do that on my behalf. I don't care what you like. You should take your portion of your salary or the stock you own and the dividends you get and deploy it the way you want." The core of the business is to deliver profits to the shareholders who then will redeploy it in any way they wish.

Q: What is the best defense of capitalism as an economic and cultural system?

A: It provides a standard of living for society in a way that has never been done before in the history of mankind. There was a time when the majority of people on Earth were illiterate and starving, and capitalism changed all of that.

Q: When your mother died, you found out that she had been investing. What did you learn from that?

A: I learned that she had a fierce desire for financial independence. She had been married twice, and she didn't want a man to rule her life financially. And she was a very shrewd investor.

Here's how it manifests itself in my life today: 95 percent of my returns from [the Canadian investment show] Dragon's Den and Shark Tank have come from companies run by women. The producers say to me, "You've got to invest in some guys." I say, "Why? They don't make any money. These women made me all this money." Why should I take risks with men, who have testosterone sales targets they never hit?

I'm very biased [in favor of] people who understand financial independence. That's women. They mitigate risks. They know how to manage time. It's women who set reasonable goals. That's all women.

Every year we do a big conference in South Beach. I bring all my companies together—50, 60, 70 people in that room. And I say, "This is what these women did this year, and this is what you guys did. Now, why don't you exchange ideas? I want all of you to succeed. I'm aligned with you. I've risked capital with you. Guys, go figure out what the women are doing."   

This conversation has been condensed and edited for style and clarity. You can listen to the full conversation, and don't forget to subscribe to The Reason Interview With Nick Gillespie.

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  1. I believe that the DNA of a business is to provide to its constituents. Customers come No. 1; No. 2 are employees

    Nope, the DNA of a business is to make a profit. To the extent that you make a profit by serving your customers, you serve your customers well. But I’m not eating shit for a dollar and I’m pretty sure my employees aren’t interested in eating shit for a dollar either. You treat your customers the same as they treat you. Nobody needs the aggravation of dealing with entitled customers who think they’re doing you a favor by giving you money and forgetting that if they’re doing business with you it’s because you’re giving them something they value more than the money they’re giving you.

    I’m very biased [in favor of] people who understand financial independence. That’s women. They mitigate risks. They know how to manage time. It’s women who set reasonable goals. That’s all women.

    That’s fine if you’re an investor who values safety over risk, but it’s a good thing James Watt, Alexander Graham Bell, Thomas Edison, Henry Ford, Philo T. Farnsworth, Robert Goddard, Sam Walton, Bill Gates, and every big idea guy in between were men instead of women because otherwise we’d still be living in caves. Women may be good at running businesses in established industries but they seem to be somewhat less proficient in establishing new industries.

    1. I think you misunderstand his thought process given that he’s very profit focused. But unless a company can satisfy its customers and most of its employees, the profits will dry up. I think entitled customers tend to be a small percentage; most are satisfied if they get what it promised or advertised.

      Of course there are exceptions to every rule. I give you American and United airlines as examples.

    2. You only see the successful business men. You don’t see the failures. (And of course ditto for the women)

      Just like foreign movies — only successful movies get dubbed and/or subtitled for export.

      Or golden oldies — no one replays the flops.

    3. The purpose of a business is to make a profit. “DNA” might mean something different. I think he was talking more about how he thinks one can best go about making a profit from business.

  2. ” “There was a time when the majority of people on Earth were illiterate and starving, and capitalism changed all of that.” ”

    Libertarianism only demands support for free markets – not capitalist ones.

    Gillespie’s opinion that one specifically needs capitalism to succeed is a personal opinion only – not backed by libertarianism.

    1. Whether libertarianism demands X or Y, it doesn’t make O’Leary’s statement any different- Capitalism (not libertarianism) is responsible for lifting humanity from its default condition of cold, suffering and near death.

    2. The word “capitalism” is poorly defined. Even socialist economies need capital in one form or another to build new factories.

      What most people really mean is free markets, the freer the better. The more governments meddles the more inefficient markets are.

      The industrial revolution, the renaissance, all this lifting out of poverty — it happened because governments relaxed their meddling and let people keep their profits, and people found ways to make their natural creativity pay off. Some of their meddling, such as patents, had the facade of enhancing profits for certain people, while behind the scenes it stifled related innovation — James Watt, the Wright Brothers, etc.

      Free markets is what matters. Capitalism, whatever that means, is just a consequence.

      1. Free markets also imply property rights and individual liberty, so much so that it’s hard to define one without the others.

        Everybody tries to improve their own life, whether it’s bypassing traffic or improving recipes or making it easier to take out the garbage. Farmers try to improve crops and plow better, potters find better designs, and sailors improve rigging and rudders.

        But as long as soldiers and kings were free to take anything from you at will, there was little to be gained from investing and saving. As long as serfs were bound to their farms, and poor people to their villages and jobs, there wasn’t much point in trying to pass on your improvements except to your children.

        The liberty to change jobs, and the property right to your savings and investments, there were part of liberty and protection from government meddling, and that is why the industrial revolution started where liberty got its first big toehold — England. Probably a lot had to do with England being an island relatively immune from needing a big army for the king to resist invaders, plus having all those sailors with their independent life.

        Capitalism is just a poorly defined name for having control of your own profits.

    3. Whether or not we specifically need capitalism is beside the point. The point is that capitalism has worked to do all the things he claims.
      It’s true that libertarianism doesn’t require a capitalist system. But I have a hard time imagining a libertarian society not producing a capitalist system.
      Anyway, I think the important point isn’t that capitalism is libertarian, but rather that it has been a tremendous success in improving life for most of the world.

    4. The distinction between capitalism and free markets only applies when capitalism is misinterpreted as government created crony capitalism (a form of socialism whereby government controls the means of production via legislation, regulations or the permit process). Thus socialists and the greedy political class will disparage crony capitalism, by using the misnomer of capitalism, to attack free markets so they can get control.

      The socialists think they can plan a better and more fair economy (but they can’t, they’ll do to business what Jane Sanders did to Burlington College – it’s out of business), while the others are just corrupt.

  3. I’m going out on a very short limb here to declare that trade; merely the act of two people in a free exchange, is THE most civilizing influence in the history of humanity.
    Further, it is the sole source of the world’s wealth; trade-by-trade, penny-by-penny, since Ugh traded some Mastodon meet to Oog for a basket.

    1. Where did he meet the Mastodon?

      1. At the “edit” tab.

        1. LOL – I think there’s more truth to Ogg trading a basket to know where to meet the Mastadon’s for their meat.

          To me, it’s not so much free trade is the “civilizing influence”, though I do agree it creates incentives to get along for the benefits of trade. It’s the agreement among the citizens that others can’t interfere in their trade and take a big cut because they’re the political class working for the tribal chief. Trade between individuals is free by default – it’s the political class always demanding a cut that’s the problem.

          Many will claim that the rise of nations is what civilized society. And one can make an argument that giving government a monopoly on the use of force against individuals, so they can punish/jail criminals, is what created civil society. Of course, keeping government within the bounds of dealing with those that harm us, mostly hasn’t worked, but at least historically freedom has increased.

  4. And yet this so called literate and well fed humanity perpetrated holocausts and atrocities on scales rivaling and surpassing the madness of the past. I’m not so sure the selfish ethos of capitalism is the best we can do.

    1. Fail.

    2. “And yet this so called literate and well fed humanity perpetrated holocausts and atrocities on scales rivaling and surpassing the madness of the past.”

      Did they teach history in the 5th grade and you failed, or are you hoping they’ll do so in middle school?

    3. We should go back to feudalism!

      1. Too advanced. Hunter-gatherer lifestyle or bust.

        1. Am I free to gambol?

    4. Both the Nazis and the Communists weren’t exactly pro-freedom capitalists.

    5. If it weren’t for free markets, YOU wouldn’t be able to be the best you can. It’s not your prerogative to make others live the way you want even if they’re willing to give up their freedom to you. Are you willing to give others your freedom?

      Further free markets (aka capitalism) aren’t complete with some agreed upon means to resolve conflicts – that takes an institution that can use force if necessary.

      Regarding the “holocausts and atrocities”, those were committed by people and governments, not capitalism. In fact, they were committed by leaders of very powerful governments, that controlled the economy, and often disparaged free markets (see the Mao’s Little Red Book, or Stalin’s purge eliminating “enemies of the working class” and we know what happened to their economies when the government took control of production).

  5. It was the indifference and predator nature of capitalism that took advantage of Germany after WW1.

    1. Fail.

    2. Did they teach history in the 5th grade and you failed, or are you hoping they’ll do so in middle school?

    3. You know who else took advantage of Germany after WW2?

      1. WW2, but WW1 yes. So who else took advantage of Germany?

  6. O’Leary gets interviewed by Nick but not Peterson who he challenged in an article.

    Totes makes sense.

    I fricken hate shows like Shark Tank and Dragon’s Den.

    1. You’re free to not watch the shows you hate. While I’ve never seen Dragon’s Den (but am now interested), I personally find “The Profit” to be some of the best business education available (speaking as someone who’s built and sold a business). It’s very libertarian in the sense that it involves voluntary associations that seek to benefit all involved.

      “The Profit” and “Shark Tank” (less so) are antidotes to the typical business “education” liberal universities promote: that greedy capitalists exploit workers and our environment for money. For that I thank self made billionaire Marcus Limonis, for showing us how he’s made the world better for others by making a profit.

      “Shark Tank” doesn’t get into the details of actually building, running or fixing a business, which is why I much prefer “The Profit” and don’t watch “Shark Tank”.

      1. And I don’t. I’m just making a statement.

  7. My message to him or her is, “You deliver me my profits. I will decide which charities I want to support. You have no right to do that on my behalf. I don’t care what you like. You should take your portion of your salary or the stock you own and the dividends you get and deploy it the way you want.” The core of the business is to deliver profits to the shareholders who then will redeploy it in any way they wish.

    This sure is not the democrat think of today! Just listen to the democrat candidates for the US presidency and they will quickly tell you that they know better than you do what to do with your money!

    1. Liberals will argue that private charity won’t provide the welfare needed, and the government must. They’ll also claim the government does it better (similar to claims the government would run the economy better with more control over commerce). I disagree with both points, and Reason has provided ample to the contrary.

      The one thing you won’t hear from statists, liberals, or the political class is an explanation of how it’s moral to use government force to take from some for the benefit of others, which is as moral as two wolves and a sheep voting on who’s providing the lamb chops for dinner.

      Taking peoples’ money, is taking their freedom. It’s immoral to do so, for any purpose other than providing a government that protects our lives (from criminals and foreign invaders), our liberty (including our property and the fruits of our labor), and our pursuit of happiness.

      1. No public roads, then? No stop signs? No municipal water system?

        Enjoy life at the irrelevant fringe. Until replacement.

        1. “…Until replacement.”

          You’ve BEEN replaced. By what came off the bottom of my shoe after walking in it.

  8. “There was a time when the majority of people on Earth were illiterate and starving, and capitalism changed all of that.”

    Yeah, but socialism killed millions of people.
    So, there!
    (Sticks tongue out.)

  9. When you try and shift a business’s true purpose and say that it’s going to save society, you will fail.

    Say this in a speech at Oberlin or Berkeley. And live feed it so I can watch the mayhem that ensues.

  10. I want to stop getting political talking points from game show hosts.

    1. How about 14-YO mentally disturbed kids?

      1. How dare you!

  11. Great interview. Investors, businessmen, entrepreneurs, and capitalists are always interesting to me.

  12. OT, but the market tells harpies to fuck off:

    “A farewell to Feministing and the heyday of feminist blogging”
    […]
    ““It was this amazing moment where we were making careers out of blogging in our underwear. Now it’s not a good time for startup media,” she said, adding, “I worry that people are afraid to align themselves with publications that are explicitly feminist.”
    The gradual collapse has continued into this year. Feministing, an independent blog founded in 2004, plans to shut down in the weeks to come. At its peak, the site had 1.2 million unique monthly visitors, with most revenue coming from ads and reader donations. The co-executive editors, Lori Adelman and Maya Dusenbery, said Feministing helped popularize the term “slut shaming,” ran early interviews with chart-toppers like Lizzo and pushed for coverage of Gamergate, a cybermob that targeted women.
    “It was unclear how we could have such a ferocious audience and not be onto something,” Mukhopadhyay said. “Many of us involved in the feminist blogosphere are now in mainstream media, and that’s exciting. That said, we need independent media because they’re an important check.”…”
    https://www.sfgate.com/business/article/A-farewell-to-Feministing-and-the-heyday-of-14905536.php

    Maybe, you self-absorbed twits, you didn’t bother to see if anyone wanted your product.

    1. I blissfully was unaware of the site. It’s funny a feminist site would popularize “slut shaming”. I thought feminists wanted women to have the freedom to be promiscuous as men, and defended Clinton having an adulterous affair in the oval office with a subordinate (contrary to previous efforts to make sexual harassment illegal and sex between subordinates and superiors illegal).

      We know most feminists are just leftists trying to get government more power, but there are other more true feminists who believe both men and woman should give each other freedom, such as Reason author Cathy Young. Seems leftists want to hijack associations promoting freedom, into the opposite.

  13. that something basically anyone would do tho

  14. Mother is the first teacher and he learned all from her.
    Way to go

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  15. That sanctimonious bald prick got rich selling his ”tech” company – well-seasoned books n’ all – to Mattel, which took a billion-dollar writeoff on it.
    His funds are a joke.
    And his wife is a drunk boater who (allegedly) caused the death of another cottager.

  16. I think Mr.Kevin has a clear ideas on philanthropy; he sounds more practical but this the way it has to be when you are into business. On the other hand philanthropy has become a sort of boasting about one and their company to make a headlines in tabloid. ‘When you want to give, give with a compassion.’

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