Did you recognize one of those skeptical, skin-flinty investors from ABC’s reality show “Shark Tank” as a denizen of the Back Bay?
I’d seen a few episodes of “Shark Tank”’s inaugural season over the summer, when it scored some decent ratings. In the show, entrepreneurs pitch a panel of five investors who ask probing questions – and sometimes simply mock the contestants, in time-worn reality show style. But occasionally, the investors decide they want to put their money into one of the businesses, and then there’s a fast-paced negotiation over deal terms. Season one of the show wrapped up just last week.
But it didn’t connect for me that Kevin O’Leary, now chairman of the asset management company O’Leary Funds, had been the chief executive of The Learning Company, an educational software firm with operations in Cambridge that he sold to Mattel for $3.6 billion back in 1999. Recently, though, someone mentioned that O’Leary still has a home on Marlborough Street, and was recently spotted at a fundraiser for the Berklee College of Music. I pinged O’Leary with an e-mail, and he confirmed that he splits his time between Boston, West Palm Beach, and Toronto.
We caught up by phone this week; I was curious how the investments on the show actually worked, and whether there would be a second season.
O’Leary told me he spends most of his time managing about half a billion dollars in four mutual funds. Interestingly, he was a TV producer in Canada before he became an entrepreneur and investor, and O’Leary was one of the stars of the Canadian version of “Shark Tank” (called “Dragon’s Den”) before the show made it to the American airwaves last August.
Most of his focus these days is on investing in countries like Brazil, China, Cambodia, and Taiwan, O’Leary said. “The North American economy is dead – and I think it’s going to stay that way,” he told me. “I’m slowly moving my money out of the U.S.” He told me his funds were sector and geography agnostic, and that they’re based in Montreal, because of the “attractive tax regime for money management” there. He said he primarily buys stocks that pay dividends. “You can find many companies growing their cash flows over 20 percent annually, with six percent dividends – but very few in the U.S.”
“These other economies are kicking our butts. We’re Rome – we’re old and fat,” said O’Leary. He also serves on the investment committee of the Hamilton Trust, a Boston investment club founded in 1822, which meets at the downtown Harvard Club once a month.
He calls his TV appearances “a hobby,” but also said he’s hoping “Shark Tank” will be renewed for a second season. (No decision has been made yet, but O’Leary noted the ratings improved throughout the show’s first season – though they started low.) “I’d be optimistic that it’d come back – I really enjoy it,” O’Leary said. “I put about five percent of my net worth into venture investing, and [on “Shark Tank”], the deals come to me.”
I asked him how the investments he makes on the show work: he couldn’t possibly be actively involved with every company he puts $50,000 or $100,000 into. “If it’s a $500,000 or $1 million investment, I will take a board seat.” But after the show is shot, there’s due diligence to be done and the usual contractual back-and-forth with attorneys and auditors. “After the show, it’s into the real world.”
I also asked O’Leary about the aftermath of Mattel’s acquisition of The Learning Company, which included shareholder lawsuits and settlements. (Mattel paid $122 million to disgruntled shareholders.) “I worry about my shareholders in a transaction – and that was a great transaction for them,” O’Leary said. “Mattel made their own decision for their shareholders. The Learning Company did have a billion dollars in sales. But the time when that acquisition happened was also during the Internet bubble.” Any erosion of the business after the Mattel’s acquisition was “not on my watch,” he said.
Spoken like a true shark…
You can follow O’Leary on Twitter at @kevinolearytv. And here's the season finale of "Shark Tank," courtesy of Hulu:
About Scott Kirsner
Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.
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