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Q&A with 'Shark Tank' Judge Kevin O'Leary (part 3 of 5)

Posted by Jennifer Wang | August 24, 2009
URL: http://www.entrepreneur.com/blog/218513
kevin-o-leary.jpgThe set looked a lot more welcoming in the third episode of "Shark Tank," Mark Burnett's latest reality TV show featuring entrepreneurs pitching ideas to tough venture capitalists. The five "sharks" are now convening in a room with couches and earthy tones--but it's probably just to lull victims into a false sense of security.

This week, Entrepreneur.com shares an interview with Kevin O'Leary, who, like Robert Herjavec, was a judge on "Dragon's Den," the Canadian version of the show (based on the original Japanese program by that name). He's also the chairman of O'Leary Funds, and the founding investor and director of Stream Global Services.

O'Leary's "Shark Tank" bio describes him as "cutting," "ruthless," and "opinionated," and he's doing his best to prove it on the show. But even though he has little sympathy for entrepreneurs who waste his (and, he thinks, their own) time, O'Leary made his initial fortune in educational software, and is a self-proclaimed "eco-preneur." So don't worry, future "Shark Tank" participants: He does have a heart.

You're clearly not afraid to say when you don't like something on the show. Is this a role you're playing, or how you always act in business situations?
I've found that you have to be brutally honest when it comes to making these kinds of investments. Some candidates haven't tested the market or come before a real investor; friends and families have funded their dream or idea.

Often you find yourself wanting to be emotionally encouraging when you know, factually, it's an idea with no merit. And sometimes tough love is what it takes to drive home the truth, because they're spending their own families' assets in a way that will never come to fruition. I think that is in itself a crime, so over time, I've sort of become the "Merchant of Truth."

I know you're also a judge in "Dragons Den." What about this concept is so fascinating that you keep wanting to get your own money involved?

I keep anywhere between 5-10 percent of my net worth in venture ideas. I enjoy the process; I enjoy working with those kinds of people because it keeps you young at heart as an investor.

The challenge is always finding the deals. But here I am in a situation where a large organization scours the country for deals for me, puts them in front of me, and I get to pick and choose what I want to do. I couldn't imagine a better scenario than that.

Do you feel a connection with the candidates on the show?
Definitely. I started out like many of these people. This show teaches lessons, too. I teach MBA classes now, and I take these tapes to show the difference between success and failure. Within seconds, I can identify potential winners, and it's a piece of magic watching it happen.

Is that why you think the show works?
Yes. There's something very visceral about watching people beg for money. It's powerful. Only a small percentage is going to get it, but this is the ultimate dream for any entrepreneur: The chance to be free and to be wealthy some day through hard work and building a business.

In the end, this thing is a launching pad for entrepreneurs, and I support any effort that supports that.

After seeing so many hopeful entrepreneurs, what quality sticks out as being the most important?

Leadership is about communication, so the ability to communicate your vision in 90 seconds is so much of what's important, whether you're a politician or a social worker. They need the ability to explain how I, as an investor, am going to make money.

Because that's what matters. This is about my own money, and I want it to come back.

What's the best investment you ever made?
Investing in myself. And you have to take chances, because the one thing you can control in life is what you do.

And how do you avoid bad investments?
When you're an investor, you can look at the quantitative and qualitative elements of an investment, but there's a third aspect: What you feel in your gut. It's that instinct you have, the alchemy of your experience. All my disastrous investment decisions have been when I have ignored that feeling. I will never, ever do that again.

I do it all, and then I do the gut check.
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We were under the impression last week that "Shark Tank" would be moving to Tuesdays beginning August 25. But based on ABC's posted schedule, it will remain in the Sunday spot, airing at 9 pm.