Plus: Get a sneak peak of tonight's episode on ABC
Here’s the deal: The shrewd investors who have made ABC’s Shark Tank the No. 1 show on Fridays that has bankrolled an astonishing $100 million on new products since launching in 2009. We asked shark Kevin O’Leary to look back at the show’s evolution —and why it’s so important to know your numbers before entering the tank.
ENTERTAINMENT WEEKLY: Can you recall what type of pitches you were getting at the beginning versus now?
KEVIN O’LEARY: We were getting what we called turbo basters, absolute crap. In other words, people would come in with a piece of paper and a picture of something and they wanted a million dollars for an idea — that kind of thing because nobody understood the power of Shark Tank. Nobody knew that if you get your product on it, you’d sell millions of dollars on Saturday morning, which is what happens now. But it was the beginning of the show and the first couple years was really rocky. I think we got cancelled three years in a row and then it just went geometric. Today there are thousands of people who want to show their products on the show and if your product is already on sale, as in a distribution your sales go up 30,000 percent the next day.
Are you told ahead of time who is coming in to pitch you guys?
No, we have no idea. I think that’s — the discovery is a journey we take with the audience, and by now we’ve being doing this for so many years we don’t even notice the cameras anymore. We’re in there, we’re competing, we’re putting real money to work, we’ve been doing this a long time, we don’t notice that we’re making TV. It just happens, and everybody’s got a big ego and everybody can afford every deal and everybody came from a different place, so there’s a competition and we know how it works. So I think the magic happens when a great entrepreneur has a great idea, and you can just feel it starting to sizzle in the tank and stuff happens. I watch the show every week and I was there — it’s memorizing. People ask me all the time, “Why do you think it’s successful?” And I think the answer is, what are you really watching when you watch Shark Tank? You’re watching the pursuit of freedom. What does it mean to be successful in America? You’re free. It’s not about greed of money; it’s about greed of freedom and being able to do the things you want with your time while you’re on this earth. You do that by becoming successful as an entrepreneur, and we capture that essence on Shark Tank — that’s what we capture and we make it happen. This isn’t some reality show where we throw you in a bowl of mud — this where we take real money and turn people into millionaires.
It seems now the only way you can get in the door is if you have a strong sales base.
Well, I think you’ve got to understand what the platform is. The platform launches entrepreneurs. The platform builds businesses. We feel a responsibility now to America. We want to create jobs, so we’d rather have something that at least has been tested by the market, at least has sales, at least has got some revenue because we like deals like that. We’re not against brand new ideas, but the whole idea is Shark Tank can really catapult a company. I mean, it can change your destiny. It can make you a millionaire overnight. It’s true — we’ve done it many times. So why not use it for what it can do? Why waste that power? Why not just get it done? And so bring companies that are starting out, that have proven there’s customers who want the product or service, and we’ll make the thing huge.
Do you give yourself a budget at the beginning of each season for how much to invest?
Every entrepreneur that’s on Shark Tank has a fair pool of capital, so the deal sizes have been growing. I mean, we used to do $50,000. Now we’re maybe on average $250,000, $300,000. You’ve got to bring a few million bucks to Shark Tank if going in. But you’ve got to remember something too: Every one of us, me included, have had some big exits, you know. I sold GrooveBook for $14.5 million in cash. We put $75,000 into that deal. So what nobody calculates in venture capital is, yeah, not all deals work, but when they work, they really work and you make a ton of money. It pays for all of the bad ideas you invested in, and that’s why you need a portfolio. So I don’t go in with any specific amount — I just go in and close good deals that I hope are going to work out, and then I wait and see what happens. And because we’ve been doing it for so many years, we’ve many exits — and it’s a return capital times 10, times 20, times 30. Lovepop cards, I’m just negotiating my third round of capital with those guys. I’ve made 10 times on my money already.
Do certain business ideas trend each season?
No, it works differently. What happens is you see a monster success. Let’s take an example like Wicked Good Cupcakes. You know, everybody thought cupcakes were a commodity. Then four years ago Wicked out of Cohasset, Massachusetts… We put in on Shark Tank and the next day, we were doing $15,000 a month in sales. They weren’t making money, and in one day, they did $365,000 just because it was on Shark Tank. So then the company’s everywhere. You see it in Cinnabon now. It’s the fastest growing cupcake company in America. It’s the No. 1 FedEx cake by FedEx. People know that story, so all of a sudden we get a lot more cakes. You know, every guy and his cake idea says,’I want to be Wicked too,’ and so that’s what happens. It’s based around the success of a product or service that came on and was phenomenally successful, and then there’s a whole bunch of “me too” people trying to knock it off.
I read somewhere that you get 45 cents per cupcake.
That’s right — that’s why they call me Mr. Wonderful.
Who nicknamed you Mr. Wonderful?
We’re still trying to figure you that out. We’re still trying to find the tape. We think it happened in season 1. You know, it might have been Barbara. She flew in on her broom that morning and she was in a nasty mood. That’s what happened.
You weren’t the original man to call a woman a “nasty woman,” were you?
No, I said she flew on her broom, but I think she’s great!
Shark Tank airs Fridays at 9 p.m. ET on ABC. Get a sneak peek at this week’s episode in the video above.