Austin Strykowski

On October 1, 2024, Kevin O’Leary came to Miami University’s Millett Hall as part of the Anderson Distinguished Lecture Series of the Farmer School of Business. He titled his lecture “The Cold Hard Truth” as he spoke about his upbringing, personal business decisions and experiences, and businesses that he has invested in. The central focus of these, however, is how college students can become successful entrepreneurs in a vastly different labor market than that of 2020. 

Introduced by Dean Jenny Daroch of the Farmer School of Business, O’Leary began his lecture by showing an introductory video. In this video, O’Leary described his upbringing beginning with his father who passed away when he was seven years old which was very tough on him during his early life. Next, he remarked on his later childhood after his mother remarried his stepfather who was a member of the International Labor Organization, a part of the United Nations, which caused the O’Leary family to move around the world, causing him to grow up in a variety of countries. After this, the video fuses on his investment pursuits and shows clips of him on the TV show Shark Tank. One of these clips quotes him as saying “I don’t care about your feelings, I care about your money” which became a central purpose of the lecture.

For those unable to catch the lecture on campus, here’s a recap of the reflections, business analysis, and cold, hard advice O’Leary offered Miami students.

Introduction

Following the video, O’Leary remarked on the beauty of Miami’s campus that he had seen during his first time in Oxford, OH, calling it “Picture Perfect.” While it was a gloomy day, he still found everything beautiful. 

Next, O’Leary began the main portion of the lecture by speaking about the transformation our economy has gone through between 2020 and the present day. He mentions that, in 2020, he had 54 companies in all 11 sectors of the economy. O’Leary says that he is a believer in diversification of one’s portfolio which has helped him become successful financially, saying that “there is always something good happening somewhere.” 

Then, he mentions that he typically receives a fifteen percent return on his investments before taxes. Moreover, he is able to grasp a sense of the financial stability of a company by looking at the total sales revenue and the free cash flow (tear sheets) of each company once per week, in order to gain a grasp of where things are and are not working from a financial perspective. 

He claims that “every day, there is either a catastrophe or something euphoric,” which is the nature of diversification.

In the second quarter of 2020, O’Leary was reviewing his tear sheets for the week and was struck with the unprecedented reality that every company had negative cash flow. This was due to the fact that companies had to shut down distribution and had no idea of where to go next.

Long-Term Effects of the Pandemic on Businesses

The first effect that O’Leary spoke on was that the Covid-19 pandemic forced everyone to operate remotely. Every company shut down for some period and its workers were isolated. This led to the rise of companies such as Zoom which have now become essential to the way that businesses operate.

Second, the acceleration of the adaptation of technology became the forefront of society. Before 2020, there were roughly 100 million retired people living in the United States who, in general, did not know how to use their cell phones for anything other than calling and texting. Because of the shutdown, 100 million people were forced to learn how to use their devices so that they could shop for essentials online since they could not go and get them on their own. In turn, this created 100 million new customers participating in the online economy. One of the principles of macroeconomics is that emerging technologies will always drive economic growth and the emergence of this usage of technology prevented an economic depression in the US.

Third was an enhanced focus on direct-to-consumer marketing strategies. An increase in the gathering of user data such as clothing sizes, brand preferences, household size, etc. began to be the primary focus of companies’ ability to market their products. They would send a person reminders when they were projected to run out of items and this is still a hot-button issue today regarding its helpfulness or harmfulness in society.

Fourth was the potential for long-term operational enhancements. Since everyone was confined to their homes, the middle-man (retailers) was removed, so companies had to market their products directly to consumers to make sales. Before, companies were making 50¢ on the dollar through retailers, but could now make 82¢ on the dollar for every purchase. This was helped through apps such as Shopify, TikTok, and other online shopping sites that received an influx of elderly and young consumers who had no other way to get their goods.

Last was the emergence of community-based models for marketing. Every consumer forms a bond with the brands they like, for example, I am writing this article on an Apple computer while wearing a Vineyard Vines sweatshirt, and they will continue to stay loyal, no matter the change in price. 

O’Leary gives the example of a time when he worked for Steve Jobs at Apple assisting with educational software. Jobs was approached with the idea of spending money on market research, which he shut down immediately. O’Leary asked him why he didn’t want to spend the money and Jobs remarked that “people don’t know what they want until I tell them what they want,” largely holding true today. Apple is the most profitable company in the world and Jobs’ point was correct. Much like O’Leary, he didn’t care about people’s feelings, yet was extremely successful and established an extreme amount of brand loyalty.

Social Media in Customer Acquisition

O’Leary then turns the topic of the lecture to a company that he invested in on Shark Tank called Wicked Good Cupcakes, run by a mother and daughter. This company shipped cupcakes in a mason jar to the consumer without using preservatives. While it didn’t seem like a good idea at the time, O’Leary made a deal with the pair, and an influx of sales came in immediately after the episode aired. The key draw for consumers was the liking of a family-run business.

Later on, O’Leary’s team came to him with a few videos that the daughter had posted on Twitter, now called X. These videos showed the mother and daughter arguing in the kitchen about recipes and roles in production which O’Leary believed would be harmful to sales. However, after speaking to the daughter, he was informed that there was actually an large amount of sales that had come in as a result of the videos. They then decided to post more videos, leading to more sales coming in. Consumers liked the relatability of the pair as families frequently argue and they could find comfort in a company that was “just like them.” 

This was the first time that we saw social media being used in this way to help a business grow in revenue. Their consumer acquisition cost (CAC) was $0 and the returns were massive. This was an unprecedented source of revenue at the time and helped shape the marketing landscape that we see today.

BlueLand

O’Leary began this next section of the lecture by speaking about a company featured on Shark Tank in which he invested $270,000 in for a 3% stake and a 50¢ royalty on every product sold. This product was a tablet that you place in a glass bottle of water, that they send you, to cut down on the environmental impact of traditional cleaning products which were comprised of 90% water in a plastic bottle that was rarely recycled and harmful to the environment. BlueLand’s product cost $39.95 and was sent to retailers in 2020 since few bought the product online before 2020.

In the second quarter of the 2020 fiscal year, BlueLand wanted to roll out its product, but the pandemic hit, shutting down all production. One day, O’Leary received a call from the company’s owner asking him to fly to Brooklyn, NY to shoot a commercial for BlueLand before the Screen Actors’ Guild shut down all production. 

Their plan in making this commercial was to market to consumers who were locked in their homes, without cleaning supplies, watching television late at night. BlueLand bought commercial slots between 2 and 5 AM for those who were staying up late and likely hadn’t cleaned in days or weeks. The company began by airing in parts of Texas, such as Austin and Houston, expecting the typical 2.5% response rate that commercials receive. However, their commercial received a much larger response rate and they sold 50 million items of inventory and were able to gather consumer data so that they could message past consumers to try and gather more sales when they inevitably ran out of supplies. 

Their use of AI metrics and a funny ad aired at an odd time led to a massive boost in success for their company. Nearly every other company followed in their footsteps and it is nearly impossible to imagine a company without a similar marketing strategy.

How To Craft the Perfect Pitch

O’Leary noted next that “the essence of entrepreneurship is the pitch” and that most companies fail, only using a pitch to finance the baby steps of their business. 

There are three things that O’Leary believes allow pitches to be successful and also allow for effective leadership in a person.

First, an entrepreneur should be able to articulate their business opportunity in 90 seconds or less; in fact, 25 seconds on average for a pitch. For leaders, no one will follow you if you ramble on about pointless bluster and don’t establish the main idea of what you are conveying.

Second, one must be successful in convincing investors that they can lead the right team to execute the business plan. The primary focus is on what specifically about you can make a business successful. Have you succeeded before in a business? Failed? The investors will want to know this. Moreover, O’Leary believes that someone who has “felt the sting of failure” is better suited to run a successful business than anyone else.

Last, and most importantly, a prospective entrepreneur must know their business’ numbers and have a comprehensive understanding of their business model. If you are not knowledgeable about your own company and the field it’s going to be entering, then you are doomed to fail.

Conclusion: What is the Key to Success? 

O’Leary finished his lecture by leaving the students with one central takeaway: “The greats are able to distinguish between the signal and the noise.”

What is the signal? It is everything that needs to be done. Whether it’s a meeting with a CEO offering to buy a company, a lawyer updating a lawsuit, or a call from a family member, one must be able to set their priorities at the forefront of their vision an work toward their goals with the signal.

What is the noise? Literally everything else that is nonessential. Whether it’s a lunch with a friend, a weekly staff meeting, or a call from someone who can leave a voicemail, you must have your priorities straight if you plan to run a successful business.

O’Leary remarks that people like Steve Jobs and Elon Musk are both 100% signal. While they did not have a lot of friends in their companies and industries, they received everyone’s respect. Neither person cares about feelings and will walk away from a conversation if it is deemed unimportant within a few seconds. 

The key idea is that in order to be successful, you won’t make everybody happy, but you must pursue the signal above all else. That can be anything from religion to family to operating a business, but you must determine your priorities if you plan to be successful in the field that you choose.