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In this exclusive Q&A, the hard-nosed investors of CBC-TV’s Dragons’ Den identify what too many entrepreneurs get wrong — and why they have trouble getting it right.
Kevin O'Leary, Managing Partner, North Coast Capital LLC, Boston
Although he sold his educational-software firm The Learning Company to Mattell for $3.7 billion in 1999, Kevin O'Leary hasn't rested on his laurels. The former TV sports producer sits on two boards and hosts TV programs on Discovery Channel in the U.S. and Business News Network in Canada. Most recently, O'Leary and his partners sold Toronto-based StorageNow, a fast-growing storage company, for an undisclosed amount.
What's the best business mistake you've ever made?
At The Learning Company, we bought over 37 different companies. There was one that, the night of the deal, didn't feel right in the pit of my stomach. But I didn't listen to my intuition. It turned out to be an awful deal. It caused huge amount of problems, and ended up in litigation. Now, I trust my gut. I look at all facts, then I sleep on it and, until it's aligned in my gut, I don't do it. I think all entrepreneurs have a visceral feeling about a deal. They just know when it's right and they know when it's wrong.
Complete the following sentence: You can tell I'm interested in your opportunity when...
I ask you the second question.
What element is most commonly missing from entrepreneurs' pitches?
They don't know their numbers. When you ask them a simple question, like "What are your gross margins?" and they don't know, that turns me off 100% of the time. If they don't know, they should hire a CFO who does understand. Eighty percent of pitchers have no idea of the numbers. They have no grasp. That's a huge mistake.
Which Dragon would you least like present to?
I guess it would have to be me. If you don't have the facts and you don't really know what you're talking about, I'm going to be tough on you. I should be, because that's how the real world works.
What's the best business lesson you can share with aspiring entrepreneurs?
You have to get up in the morning after the worst day you ever had and go to back work. So many absolutely disasterous things happened to us during the growth of The Learning Company, but we'd just come back, fight it, fix it and move on. What doesn't kill you makes you stronger. That's so true when you're an entrepreneur.
What's the key to startup success?
Not running out of cash. Cash is the blood. The minute you think you can squander money, you will die. Stay in horrible hotels when you travel, travel in the back of the bus, chintz and scrape, because access to capital is everything.
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