Advice to Startups from Shark Tank's Mr. Wonderful

Kevin O’ Leary visited Sacramento on April 19, 2018 to for the “Wealth Building Strategies from a Shark” Event. In 1999, he sold his business, The Learning Company to Mattel for $4.2 billion. O’Leary is also known as Mr. Wonderful on the long running TV show, Shark Tank. To date, he has invested over $8.5 million in over 40 companies that have pitched on Shark Tank.

Three Points for a Successful Pitch

During his presentation at the majestic Crest Theater, he covered three points for a successful startup pitch. In illustrating the points, he used Wicked Good Cupcakes, a company he invested on in Shark Tank, as an example of a great successful pitch. The founders covered his three points and received a $75K investment from O’Leary despite being a commodity that can easily be replicated (You can view their appearance on Shark Tank here).  Here are the three points:

1. Articulate the Opportunity in 90 Seconds or Less

When O’Leary listens to a pitch, in 90 seconds or less, he should be able to understand:

  • What the business does.
  • How it works.
  • What the opportunity is.
  • If the entrepreneur can’t convey the above in 90 seconds, it’s doubtful that he will make an offer. In the case of Wicked Good Cupcakes, the founders quickly explained their business and revenue. 

2. Why the Entrepreneur is the Right Team

O’Leary needs to feel confident that the entrepreneur is able to execute on their business plan. He often sees a great idea where he doesn’t have the confidence in the entrepreneur. As he stated, “Execution is critical.”  Using Wicked Good Cupcakes as an example, their product was wonderful, the founders were articulate and dynamic, and they already had a proven track record. 

3. Know the Numbers

Entrepreneur needs to demonstrate that they know and understand their numbers.  If they don’t know the numbers, they don’t know their business and as Kevin states, “deserves to burn in hell in perpetuity.”   He was impressed with the founders of Wicked Good Cupcakes because they knew their numbers cold; down to the penny.

O’Leary state that if an entrepreneur is able to cover these three points in their pitch, they would be in good shape. 

Why Women Entrepreneurs Make More Money

In terms of giving advice to entrepreneurs, O’Leary did an analysis of the companies he invested in; he found that that the women led companies performed better. In his analysis, the following are things that he found that woman consistently did better.

 1. Time Management

O’Leary stated that there’s a saying that if you want something done, give it to a busy mother.He found that woman were generally better in managing their time and completing tasks.He attributed this to their experience in managing a family where multi-tasking is learned skill.

2. Set Achievable Goals

In general, he found that woman set goals for their employees that were achievable.As a result, because the employees were able to meet their goals, morale was high.In contrast, he found that men often set very high goals that were often unachievable.(He called theses testosterone fueled goals).And in contrast because these goals were not achieved, morale was low.

3. Maintain Cultures that Have Less Employee Turnover

O’Leary found that woman were able to create a positive culture that had less employee turnover than their male counterparts.Looking at the previous point, as an example, because achievable goals were created, employees met their goals, morale was high, and thus people stayed with the company.Whereas in the situation where goals were unrealistic, employees were unable to meet their goals, morale was low and consequently turnover is high.

4. Assimilate Feedback to Enhance Customer Service

He also found that women were better listeners than men.Using that skill, they were able to take feedback from their customers and improve both their business process and service.

5. Protecting the Brand as a Core Principle

O’Leary found that woman did a much better job of protecting the brand of their business.For example an angry customer can do a lot of damage to a company’s brand by going on social media and venting their frustration.Being able to listen and address issues is a core to being able to protect the brand.

These five areas that he found where woman did better than men are also good points that every entrepreneur should heed.

I’m an avid fan of Shark Tank and to be honest, Kevin O’Leary was not my favorite. But after listening to his presentation and Q&A, I have better respect for him. One of the themes in his talk is that it’s much better to be brutally honest in business.

You do people a disservice if you tend to sugar coat.