Morning Brew Daily - Kevin O’Leary on the Future of AI, Working With Steve Jobs, and Shark Tank

Episode Date: November 29, 2024

Episode 464: Neal and Toby sit down with Kevin O'Leary, AKA Mr. Wonderful from the hit show 'Shark Tank'. Kevin shares his thoughts on the economy, the future of AI, how Shark Tank came to be and why it's so important to have hobbies outside of your job. Enjoy your shopping today! Download the Yahoo! Finance App (on the Play and App store) for real-time alerts on news and insights tailored to your portfolio and stock watchlists. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today, a special Black Friday interview episode to keep you company while you shop. It's a chat with Shark Tank Royalty, Mr. Wonderful. It's Friday, November 29th. Let's ride. Good morning and happy Black Friday.

Hope you all had a relaxing Thanksgiving. If you're still in a food coma, we've got a special edition episode that will snap you out of your slumber. It is an interview with the entrepreneur and investor Kevin O'Leary, better known as Mr. Wonderful on Shark Tank. Mr. Wonderful is known as the blunt speaker of hard truce on the show and it turns out he's not just playing up the bit for TV. We spoke with him

about the state of the U.S. economy, his time working with Steve Jobs, and how to break into watch collecting. This guy was meant to talk for a living and we hope you enjoy the conversation as much as we did. But first, a word from our sponsor, Yahoo! Yahoo! You know, I've never pitched a product

before a panel of sharks, but if I had to sell him on Yahoo Finance, it would be a berese. Okay, so how would you kick it off? Hello, sharks. Have you ever tried to stay up to date on the market but found all the existing options underwhelming? Okay, this is great TV. Keep going. Well, do I have the site for you? Yahoo Finance has everything you need to stay informed about the finance world with constantly updating news, top and bottom stock gainers each day, and insights from experts. So, Neil, can I count you in? Well, Toby, I've spent some time on Yahoo Finance myself, and it really is an incredible resource for anyone curious about the market.

So you don't even have to sell me. For that reason, I'm in. You have got yourself a deal. Well, that was easy. To see why Yahoo Finance can tame even the fiercest of sharks, head to yahoofinance.com today. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars.

Catch the Jonas Brothers return to the Yamava Theater stage on April 30th. The powerful vocals of Demi Lovato on May 17th and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at Yamava Theater.com, only at Yamava Resort and Casino, celebrating its 40th anniversary. You in? Must be 21 to enter. Kevin, thanks so much for jumping on the show today. Great to be here. Thank you very much. So I do appreciate you speaking with us, but I also want to thank you for all the likes that you have gotten us on social media because posting a Mr. wonderful quote to our Instagram goes viral every single time. You are just a quote machine. Where's it

come from? I'm just a social media and I'm I'm very proud of it actually. You're very good at it. As an investor, what sectors are you most excited about? Are you riding maybe the AI hype train at all? I am, you know, I go back to these trends as far back as gold. I mean, I look at, I'm an infrastructure investors. So I think AI is going to be huge. We use it in all of our businesses, particularly around translation. I do commercials now in Chinese and French and Arabic. We use AI. We do it out of Abu Dhabi. They have a very, very advanced lab there, and we have an office there. So, you know, if I send a message out for my watch insurance business, I'll do it in Chinese, a lot of wealthy Asian watch collectors. And my lips are moving perfectly, and we have Chinese, you know,

National is telling me that the accent's perfect. So it's advancing. But the real opportunity in AI is not just in the software. Here in the U.S., we have a huge problem. In order to just meet the demands of the seven largest hypers, the Teslas and the Googles and the Microsoft and the Amazon's, they have demand for 30 gigawatts of data centers, 30. And we used to build them at 50 megawatts.

So that's a fraction of the size. There's only five under construction in North America right now. 45% of the data centers in America are in Virginia. But Virginia's just passed a law that does not let you put a backup generator on a data center. A data center today needs to be 5.9, which means it has to be up 99.999% of the time. I'm giving you a lot of data you'll find interesting. That means it's only down 14 seconds a month. What does it cost to build one of these?

$2 billion, just for the platform and another $2 billion for the stacks of chips, $4 billion in the ground for a one-gigawatt data center. I built those, and we can't get the power. I don't care what state you go to. You go to the power authority there and say, I need, I just want 100 megawatts, can't do it. We have no power in America right now.

So is that kind of how you evaluate an opportunity right there? I mean, we started at AI, but then you took us down through the entire, basically supply chain and what needs to go into supporting this AI revolution. Is that generally how you think about these macro opportunities that a lot of people are seeing? Yep. I simply say, where's the problem? How do I fix it? And who will pay me to do that? That's what I do in every sector of the economy. me, this is a huge, huge, huge problem. And fixing this is worth billions. And so I like to do big things.

This is a big thing. So when you hear me announce data center projects, it's because I solve the power problem first. And I think the way we're going to solve it is we're going to find stranded gas in places like West Virginia, North Dakota, Texas, bring our own generators in the, middle of deserts or in the middle of the Arctic or wherever it's got to be and generate electricity from clean natural gas and build data centers there. That's the only way this is going to work

because if you call up, here's the other problem. You know, hi, Mr. Slabinsky, I want to build a data center next to your house and your electrical bill is going up 40%. No, thank you. That's the problem because when you ask for that much power, the rate payers in that whole county, their bill goes up and they get pissed and they call their local governor and say, no, no, Nanette. So it's a big problem. Speaking about the larger business landscape, since Elon Musk took over, is Twitter better off, worse off, or the same? Better. Better.

There's no question. It's not particularly endorsement of his business acumen, though, because, I mean, he bought it $44 billion. It's now worth less than $10 billion, according to Fidelity. He didn't buy it. The investors bought it. He got the investors to buy it. Right. So there's debt and there's equity in that deal.

I thought he overpaid like crazy. But the reason he didn't change the price at the last minute was he already had the bondholders teed up. So when you change the terms of a purchase and you've already got the debt, the debtor, the issuance, those that are going to take the debt on get to renegotiate too, and you lose them. So he decided to overpay for the equity, thinking long term he can make it back up. I don't know if he can or can't. You've got true social out there now. There's a lot of different platforms, but Twitter, that's his own network. he's the number one followed guy on his own network.

That's pretty interesting. And everybody in his dog is suing him. I'll say one thing about that guy. One way to measure him, whether you like him, you don't. I used to work for Steve Jobs way back. I made all his educational software for him in the learning company for the apples in schools. So Oregon Trail, Rita Rabbit, Carmen San Diego, Mavis Beach and teach us typing. We used to go there every quarter to the old offices in Cupertino

and bring my team and he would come out in his jeans and his black turtleneck and just abuse us. He was not a very nice guy, not at all. And he was just vicious. And one day one of my marketing people said, you know, we're going to do a big upgrade on the Apple platform Oregon Trail, which is a very big software product. It's been around forever in schools, 110,000 schools. We're going to spend a million bucks on research in 100, you know, maybe in, it was New York, Florida. Texas, California. And Jobs looked at her and said, no, you're not. Not any of my money is going to

market research. Nobody knows what they want until I tell them what they want. And I said, Steve, you sound like such a dick. He said, yeah, how's your sales on my products? I'm saying, yeah, we're up 30% this quarter. You're making any money? I said, yeah, we're making tons of money. He said, well, shut up and get back to work. The guy was 85% signal, 15% noise. And what I mean by that is, he would work 18 hours a day because I'd get, you know, early, back in those days, it was like rudimentary emails, like really early stuff. And at 2 in the morning, East Coast time, 3 in the morning. And he'd expect an answer like two minutes later.

He'd care about the fonts in the software, all this crazy stuff. But what I realized is he focuses on whatever he has to achieve that day for 85% of his waking hours. and he does 15% noise, which would be social stuff, maybe talking to his wife or something else. Look at what he achieved. There's only one guy that's done better than him in history,

Elon Musk. And I've met Elon a few times. He's a hundred percent signal. Let's talk about Shark Tank. The show turned 50 in this year, and the New York Times made this argument that you could track the changes to the U.S. economy by the evolution of products on the show.

What have you seen change from when you, started until now. Well, it turned 16. Did you think? Sixteen, sorry. 50? I thought, I must be a vampire. But, you know, no, it turns 16. It's one of the longest running shows in history. You know, I remember,

because I started on this, I was working in England on TV when I got a call for Mark Burnett. I'd never met him before. And I flew out the next morning to shutters, which is a hotel in Malibu where he wanted to meet.

And we're supposed to a 20-minute meeting and his head of international sales was there. The guy name was Chili, really nice guy. I'll never forget this meeting. And we didn't talk about Shark Tank. We were both going through marital troubles at the time. We ended up talking about marriage for like four hours. And at the end of that, like way past lunch, he said to me, look, I got this new show I'm taping. I'm doing a pilot.

It's called Shark Tank. It involves investors. We're looking for a reel. asshole and you're it. I said, okay, well, how does it work? He said, I don't know, just meet me there tomorrow morning. Let's see what happens. He didn't want to give me any information. You just wanted to go raw. And I met Barbara

that day and Damon John, a couple other guys on Art de show anymore. And we just started taping and it just took off. It just started to gel and because he was a genius that way. He just let people be

themselves. He said, don't go changing. Just be yourself. That's the way it is. What it's become today is an international platform for me. It's a passport. I can go to any country in the world and get a meeting with its leader. Because what I've learned is that entrepreneurship is bipartisan. Every single leader, even in communist countries like Cuba or Venezuela, even dictatorships, want to create jobs.

And so that it's transcended. tomorrow night I'm flying to Dubai, then I'm going to react. All shark tank related. You know, just all this stuff is, and I remember last year, maybe it was the year before, I was on a train from Geneva to Zurich to catch a plane. My stepdad lives in Geneva, so I often fly over to see him. And I'll take the train, the Swiss trains are fantastic. They just get you right to the airport, get on the plane.

And this couple comes up to me and says, you're the most hated man in Austria. I said, what? Everybody hates you. You're so mean. And we just got married. Can we get a picture with you? I said, okay. They were going to Zermat.

And I realized, wow, this thing's gone nuts. You know, it's really nuts. And so I'm pretty proud of what we built. I think entrepreneurship is the American dream. We've made hundreds of millionaires, and we've sold billions of dollars worth of consumer goods and services. You know, it's been great. How does being the crotchety guy,

on the show, that role make you feel? Would you like to change the perception at some point? No, no, no. I am the only shark that tells the truth. Barbara on my right, Lori on my left, oh, kumbaya. Listen, I'm not going to give you any money, but you keep doing what you're doing with your crappy deal.

You'll go bankrupt and you'll lose your home and all your parents' money, but you go, you go. And I just say, you know, your deal's stupid. It's going to go to zero because it's a bad idea. and you should realize that now it doesn't mean you're a bad person. Take it behind the barn and shoot it and try something else. I'm the only one that tells the truth. I don't think I'm being mean.

I'm being nice. But everybody else, particularly Laurie with that kumbia, you know, stuff, Kumbaya, you keep going and lose all your money. Like, it's so dumb. And Barbara, you know, oh, oh, oh, I don't want to hurt your feelings. I'll hurt your feelings. I'm happy to do it. They're pretty successful investors.

Yeah, look. That's great. The only reason Barbara gets there of year is I buy her a new broom. I think I've heard some of those lines, by the way, on the show before. It's never going to change. Yeah, you got those lines down. I do want to dig into your process of evaluating products in people, though. If you had to assign a percentage to when someone is pitching you, what percentage would you put towards, all right, this is a good product or this is a good idea? And what percentage do you go? I'm just betting on this person as a founder. Well, that's a good question, because both can work. What I look for, the most in almost all deals now is I say,

do you know what it costs you to acquire a customer? Do you have any idea what that cost is? Most people don't. And if they don't, I never invest. Because you can't pour gasoline on the fire if you don't understand the business model. And so what happens is they kind of, 80% of companies, even 85,

go bankrupt within 36 months because they're never able to get their customer acquisition costs below the lifetime value of the customer. In other words, they advertise themselves to death. You go bankrupt. So that matters. But every once in a while you get an entrepreneur that's so compelling.

And in my case, over 16 years, 70% of my successes have come from companies run by women. So I tend to invest with women because they're very good at mitigating risk. Anaskaya is my most recent success, base pause, cat DNA testing kits. What a stupid idea. but she was so compelling with her story and just I just couldn't she wasn't going to leave until I gave her a quarter of a million dollars like that was the deal and I just said okay I'll give you a 250 just to get you out of here but she turned that company into a monster success because it turns out the data was worth more than the kits and she had there's 110 million cats in America and she learned how to extend their lives and people that love cats want to have their cats longer so they because it was done.

The kit cost $29.95. A new cat's $5.5. I said, why don't I just buy a new cat? The cat goes snuff city in 12 years. Get a new cat. That was not a popular thing to say. How's the show different without Mark? He's kind of your foil in a... Yeah, you're right. Well, we don't know yet because Mark's on this season. He won't tape next season. We're casting now for season 17. I think, you know, at this point, we have, everybody wants to be on Shark Tank. And I think the producers and Mark Burnett and Sony and ABC and Disney and MGM are so good at making this show. And the people have been working on it for 16 years, the chase producers, the editors. I mean, I just let them do their thing. They're so good at it.

They're going to solve. They're going to find me the right person. and we're just going to go at it like we always do. And you want to have that different idea. You want different structures. Look at what happened with Shark Tank. We're now doing convertible to do a benches up 20%. We're doing safe notes.

We're doing all these complicated structures that no one even knew what they were. And now a nine-year-old knows what they are. So I think we've done a great job in advancing the cause of entrepreneurship and being the ambassadors of the American dream. And I don't think that's going to stop. We'll be back with more Mr. Wonderful after the break.

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and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th. Exclusion supplies to homedipo.com slash price match for details. You're a big LinkedIn poster and you spend a lot of time on the platform.

One of the most controversial features is that open-to-work banner. I don't know if you've seen it, that people who are looking for work post can put on their profile. Do you think they should? Yeah. I think these platforms, particularly LinkedIn,

should be as transparent and open and experimental as possible. Because the value of that platform, I think I have 4 million plus people on LinkedIn, and we use that all the time. It's huge for me in watch collecting. It's huge for me in asking questions of this base, what they think about products or services or prices, or anything. They're very open. They're very transparent. And I've told the LinkedIn

executives, you have a network here. You are just as powerful as any cable or linear television network today. And I respect you for that. And I want to be a contributor. I want to have, you know, what are your rules for me to be to have a narrative with you? You did tweet back in early October, and I'm paraphrasing here a little bit, that if you look at any great manager, investor, or entrepreneur, a common trait you'll find is what they do in their spare time. Often it's something to do with art or sports and nothing to do with business. You go on to say that you need a balance in your brain between chaos and the arts. Can you elaborate on why you think hobbies are so important? It's not so much hobbies. It's challenging yourself in something that you do not have. a comfort zone for. What keeps the brain active is trying to solve for a new task that it never did before. Even talk about this in loiting dementia and Alzheimer's, when you put yourself out of your comfort zone, it triggers all kinds of new neurons in your brain saying, okay, I've never been here

before. What do I have to do? What do I have to be careful of? When you're trying to advance in, let's say, the arts or playing guitar, which never ends, you never get good enough as a guitar player. You never get to be where you want to get to. It forces you to practice. It forces you to test yourself in ways that you'd never done before and explore and find new outcomes. The same in photography, the same in painting, the same in dance. So I look for those executives that have that on their resume. And I tell people, the resume should only be three paragraphs. The last one should be what you do outside of work. If it's something really interesting, I go there first, because because my greatest managers are skilled in many things.

And particularly the CEOs, I love it when they have something outside of the binary task of losing or making money in business because it's very binary. I think that's very important. And so I encourage that, even for myself, I'm always looking for a challenge outside of my comfort zone. It happened to me recently when I got a phone call from Josh Safdi,

who said, listen, Ronnie Bronstein, who's writing this new movie for me, is a huge shark tank binge watcher. And he thinks there's a character in this movie that's you. And we want you to read for this part. Movies called Marty Supreme. It's being shot in New York right now with Gwyneth Paltrow and Timothy Shalame, Fran Drescher, some others too. And I said, I've never done scripted. Like, how am I going to do that?

like TV, reality TV is not scripted. He said, well, I'm going to send you the script, and then I want you to come down in New York and sit down with the cast and read. I said, I'm not going anywhere. I had my hip replaced yesterday. I'm sitting on the dock sucking back a little mantra-chae, relaxing here, trying to recover.

He said, screw it, I'll be up there tomorrow morning. So he brought Ronnie up, the writer, with one of the producers, Eli and Josh, We started reading this part. And I realized, I am that guy. That's me. That's me in 1952. And I was reading what Ronnie wrote and said,

a billionaire in 52 wouldn't say that, Ronnie. He'd say this. And I wouldn't say that. I'd say this. And he said, okay, let's rewrite it. And let's read it again. By the time that day was over, I was in 100%. But I'd never shot a feature movie.

So my first day on the set, I went, Whoa. How many lines do you have? I'm going to be working on this movie for the end of February. Oh, that. Yeah, yeah. In Tokyo.

That's where I ended up. This is one... I don't know if you've seen uncut, uncut gems. Oh, yeah. This is uncut gems on steroids. Oh, gosh. That's one of the most stress.

This is so full of crazy shit that when I read my lines and they often change as we're shooting, I say, I'll say to Ronnie, Ronnie, I can't say this. He said, yeah, you can. You got to put yourself back in 1952. You could say that in 1952. And I'd say, okay, I mean, those guys are crazy. Like, they are absolutely

crazy guys. That's nasty brothers. I mean, you can see them how they think in some other universe. But it's watching them make the art. And what happens on a set, because we go, we'll start at three in the afternoon, we're still shooting at five in the morning. Because if you take over, you know, the Plaza Hotel, you're only going to get it for 12 hours or 15 hours or 17 hours. You shut the whole hotel down to shoot it in 1952. And you as the actor, and I'm learning this pretty quickly, you want to get it right. It's just maybe, we did seven pages last week of script, which is a ton. It took us all night. But I didn't want to leave until we nailed it. So you get

into that mode where you want to leave the very, very best take. It's always the last one. It could be 42 takes later. But that's how they work. I'm in the groove. And that was outside of my comfort zone. And I fucking love it. Your Oscars nominations, you already got the Emmy under your belt. Let's see if we can get us next. Let's not get ahead of ourselves. I can't wait to see this movie because these boys are sick puppies. That's coming from you. Yeah. So I know you are a big watch guy. You're wearing two watches right now. And I recently saw this clip of you talking to slash lecturing Marquez Brownlee, the tech YouTuber. He was wearing an Apple Watch. Why were you kind of getting on his case about that? And I'm asking you as someone who is currently wearing

an Apple Watch. Well, the only problem with it wearing an Apple Watch is you lose your soul. And so you have to be careful about that. I wear one when I work out. It's a good electronic piece of consumer electronics. Watchmaking is like contemporary art. There are watchmakers around the world. There's many brands you know already. The Rolex is Patec, Adam R.PK. But once you have all those, you start collecting.

They appreciate better than a Warhol. You can wear them. They're extraordinary in terms of what they represent. The craftsmanship, you have to give up your life at 14 to become a master watchmaker. You know, I support horology. I support young watchmakers. And I just love the community

of crazy people around the world. Once you become known as a collector internationally, they reach out and you become part of the community. And the people I've met through watch collecting are unbelievable. They're from every country, every religion, every gender, everything. And we meet up every once in a while,

in Geneva or, you know, in Asia or wherever, we'll say, okay, let's meet in Tokyo tomorrow. Everyone is capable of doing that. Yeah. I mean, but that doesn't meet, like, some are brain surgeons, some are engineers, some are investors, some are retirees, some are teachers. Like, it just, and then we spend maybe three or four days in Tokyo. So we, you know, when I was over there with them recently, a lot of people don't know this.

There's the Japanese started watchmaking before the Swiss. There's a brand called CREEDOR, which is made by Grand Saco. Saco, Grand Saco, CREDOR. CRETO, maybe they make six, four, two. They don't say. They hand paint the actual dial in the mountains, in a Zen mode. These dials are so crazy, beautiful, you can't believe it. It's like a castle.

It's very interesting. Thank you for kind of opening my eyes to herology. Yeah, get a teddy. Get something so you don't look like such a s'clock. I can't even look at you, Toby. Yeah, I have to turn away. A blinders on. Oh, my goodness.

Need a crazy chicken. All right, Kevin. This has truly been a wonderful time speaking with you. If you want more content from Mr. Wonderful, you can find him pretty much anywhere you look on social media. I can't thank you enough for sitting down with us and enjoy the rest of your day today. And I forgive you for your sins for wearing that Apple Watch. It's gone.

Look at that. It's gone. It's on right now. There you go, Neil. All right. Thank you. Thank you very much, guys.