welcome to this special edition of hit
mojo on watchmojo.com
I’m your host – can cover solution very
special show Kevin O’Leary’s here
obviously you recognize them from shark
tank or dragons then you have a new book
out cold hard truth yes I do
I read this on the plane to and back
from New York it’s a very good book it
touches on business money and life when
and why did you decide to write a book
you know I think I did it for one
specific reason I think that any
entrepreneur that’s had success owes the
next generation a roadmap on how to get
there
not so much in celebrating the successes
of what I’ve achieved
it’s the failures that have the real
lesson in them because what I’m trying
to do here is say look here’s what not
to do here’s the mistakes I made that
very costly and if you can avoid them
please do because I think that’s much
more valuable than talking about success
okay we’re going to talk about some of
the failures some of the victories we’ll
talk about some of your weaknesses and
how you address that it’s a fascinating
book when I started reading this I was
going to ask you like the first question
was going to be money power success
respect or fame what’s more important I
think you make it abundantly clear money
is the most important thing so address
that why is money the most important
thing it’s not money per se that I’m
pursuing its freedom I’m pursuing I’m
very specific in the book saying look
the reason that you’re willing to
sacrifice so much if you’re an
entrepreneur is one goal to achieve
freedom because what is wealth wealth is
the ability to do whatever you want go
wherever you wish don’t answer the phone
if you don’t want to stay in bed all day
if you like go anywhere do anything
that’s what freedom is and I think it’s
a very noble pursuit because a lot of
good things stem from that you build
businesses you create jobs you advance
the economy and you’re free yeah I think
if I were to draw a little story line
throughout the book it would be money
equals gravity equals truth equals
freedom and I think the way you cast it
like that it was very nice although it
wasn’t Chuck’s T’Pol’s one to another
but throughout the chapters now after
money what is more important power
success respect or fame you touch on a
few of those things throughout the book
I think respect I think you know if you
if you achieve your success in a way
that others respect that’s a good thing
you know I’m not worried about criticism
and I get a lot of it for telling the
truth am i big you know mantra is look
if you tell the truth you never have to
remember what you said it’s that simple
and sometimes people get emotionally
attached to their ideas in business but
but my attitude is that money doesn’t
have a soul that doesn’t cry for you it
doesn’t have feelings and and you
shouldn’t have feelings for it it’s a
tool and so at the end of the day if you
tell the truth about a business
opportunity or you talk about
investments and people get emotionally
involved me and they’re upset I don’t
care about that it’s still the truth
yeah that’s true you touch on that
actually I think two names you use to
describe yourself are what is it mr.
wonderful and the merchants of truth
yeah you have to pick one which one well
you know mr. wonderful nomenclature came
from you know a sarcastic remark on
letting Shark Tank of dragons in when
somebody said you think yours mr.
wonderful for telling the truth and I
thought that’s a great name I’m gonna go
with that but but I I think I am the
merchant of truth because I never lied
anybody I mean I my attitude is look if
you can’t take the truth they don’t
don’t don’t even attempt to be an
entrepreneur because at the end of the
day that the cold hard facts of every
deal are gonna come to light anyways
that’s just how it is all right Greg
rhetoric okay so whenever I read about
successful people I try to see if
they’re in one of two baskets either
they’re crazy risk takers that you know
sort of overlook any fear or they’re
very conservative and they just manage
to build a business so you lessons from
your mom I could see you’re very
conservative on one side but you’ve also
taken a lot of risks so what drives you
more is it just the desire to succeed or
is it the risk of failure and you just
account for that I think that’s a great
question and and I you know I think what
happens is your profile for risk changes
as you age because you realize how hard
it is to make money you know I put about
5% of my annual portfolio into venture
investments which are highly risky I
make the assumption when I invest there
that the chances of me being successful
are very low and then go to 0 so that 5%
of my net worth is always at risk of
going to zero but it’s only 5% the rest
of my money I’m very conservative with I
buy in
instruments that generate yield so lots
of bonds with interest lots of
dividend-paying stocks which is what I
learned from my mother I do not own a
single security that doesn’t pay
interest and I look at my portfolio like
a chicken on a spit dripping cash that’s
you know what I often say about it every
month I want to check as I’m putting
money in harm’s way okay I want to come
back and entrepreneurship but now you’re
touching on investing so clearly the
O’Leary funds are you know a value
vehicle we get that you know they got to
pay a dividend which i think is smart
you mentioned you raise 1.5 billion in
three years which you said was a record
it is okay well assuming it is just
playing devil’s advocate
wasn’t that easy because it was after
the crash where people were burnt like
you I don’t I’m not doubting you but
wouldn’t have been hard to do that in a
bull market where people overlook risk I
don’t think so because I I think at the
end of the day as the population ages
you think about this massive large group
that are baby boomers going into their
50s and 60s what they need now is not
capital appreciation they need two
metrics preservation and yield it used
to be easy in Canada to get 6% return on
your money you can’t get near that
anymore so I’ve had to figure out a way
to use money managers that are able to
buy securities globally in countries
like Brazil India China Asian countries
where they have fast GDP growth but we
don’t have anymore so I can buy the
securities in these large multi-billion
dollar market cap companies but they’re
abroad then I have to hedge it back to
the Canadian dollars and there’s no
currency risk this is complicated stuff
then I can get them 6% and it turns out
there’s tens of thousands of them that
want that I did not anticipate that we
would end up with we’ve actually raised
a billion nine who knew that could
happen the banks thought it would be 50
million I think that the you know this
value yield proposition that my mother
taught me is exactly what the market
needs today
now um you’re very bullish on Brazil
everyone is always talking India or
China China or India I share that
optimism with Brazil but do you invest
in Brazil maybe not just because of the
core mackeral reality there that it’s
you know good opportunity but just
because maybe India and China have been
over invested like how much of it is one
has been you know forgotten and how much
is it that the other one we are
have way too much money in there and
prices have gone up too much you know I
don’t do geographic allocation here’s
how I work let’s say I decide that I
want to have 20% of my portfolio and
telco which I like I love telco because
it’s big infrastructure it’s a growing
market in emerging markets and it pays
huge dividends cell operators so let’s
take Brazil for example you know I’m
agnostic to whether I buy Rogers or Shaw
or the Brazilian telco I just look at
the companies individually and I say to
myself which one pays the highest
dividend as the highest growth rate has
the lowest debt on its balance sheet and
has the best let’s call it industry
characteristics maybe the largest market
share the most expensive telco on earth
in other words let’s just say the
multiple of free cash flow which is a
concept of measuring a business’s value
the number one most expensive so to me
would be the riskiest is Rogers it is
the most expensive telco on earth why is
that because Canadians don’t want to
invest outside of the country and
there’s very few large telco operators
so they’re willing to spend a crazy
multiple to own Rogers and have you’ve
done that you’ve made nothing on your
capital for the last three years because
the stock has done nothing institutions
realize it’s very expensive they don’t
invest their money there then let’s look
at something like the Brazilian telco
the dividend yield is north of seven
percent
it’s got thirty four million subscribers
bigger than all the telcos and Canada
put together the lowest debt of any
balance sheet which one am I gonna
invest in I’m investing the Brazilian
one which is where I do have my money
you’re very binary it’s always very
black and white and I’m not saying that
as a bad thing it’s something I wish I
had more but like you let’s away from
investing let’s just shift gears and
like when you talk about trouble or use
problematic employees never change let’s
now jump back to management yeah do you
really believe that yeah I do
the way I look at it cuz I’ve had a long
history of doing this many many
businesses the minute it crosses my mind
to fire somebody is when I fire them I
never think about it a second time
because I’ve learned they never get
better giving them time to fix
themselves never works and while they’re
in your business they’re poisoning it
you know an employee is an interesting
concept because they’re a cause
and you want to eliminate cost when
they’re not efficient and so let’s just
you know take an arm’s length and take
the emotion out of it you want the
employees that are adding value that are
happy to work there that are pursuing
wealth of some kind of stability you
want to eliminate the ones that aren’t
doing that so that’s what I do to me I’m
it’s like a diseased body you want to
cut that organ out of its disease so
that the rest of the body remains
healthy it’s exactly the analogy but
look I’m very fair about it and I fire
them myself and I’ve been fired many
times this is part of the other gum
scraping incident sure you know the
issue is this is the Darwinian nature of
business the DNA of a business is to
make money not to be a social club if
you want to save a baby whale you can do
that after you’ve taken your profits out
of the business and I don’t go to work
to make friends I go there to make money
so if you want a friend buy a dog you
open up two tangents so let’s stay on
the binary great okay you also say
people are either like an employee or an
employer and I love the sort of the
entrepreneurial is there any other kind
of person well no but I personally like
I was an executive for a few years and I
got a good kick out of that and then I
said I want to now start a company so I
started watching mojo now if somebody
comes and buys me tomorrow like my
little Mattel maybe this get smaller
scale I’m perfectly fine for a few years
being the executive but but you I see
you’re not like that but do you think
that it’s really that great that people
are either an employee and they can’t
lead or or can lead but not be the top
guy who has all the weight on the
shoulder don’t you think that there is a
gray matter like well I’ve tried being
an employee and it doesn’t work for me I
don’t know how to do it so you know
it’ll never work for me so I if somebody
buys my companies I generally leave and
start a new one because that’s what I
know how to do I tried working for a
while inside Mattel but I was one of the
largest shareholders of the company and
I never how much did you have share wise
I mean I know what the deal was what
happened was we took half cash half
stock and so if you looked at the
executives of Mattel they didn’t really
own much stock they had a bunch of
options so I showed up the first day of
work and I owned more stock than the CEO
did so any time I didn’t like something
I saw and how it was being operated I
would say look I’m a huge shareholder
here and I want you to fix that and okay
this is now a great opening let’s take a
short break let’s come back I want to
talk about the Mattel deal we’ll be
right back for segment two of hipbones
with Kevin O’Leary
mojo on watchmojo.com
I’m your host – can cover solution very
special show Kevin O’Leary’s here
obviously you recognize them from shark
tank or dragons then you have a new book
out cold hard truth yes I do
I read this on the plane to and back
from New York it’s a very good book it
touches on business money and life when
and why did you decide to write a book
you know I think I did it for one
specific reason I think that any
entrepreneur that’s had success owes the
next generation a roadmap on how to get
there
not so much in celebrating the successes
of what I’ve achieved
it’s the failures that have the real
lesson in them because what I’m trying
to do here is say look here’s what not
to do here’s the mistakes I made that
very costly and if you can avoid them
please do because I think that’s much
more valuable than talking about success
okay we’re going to talk about some of
the failures some of the victories we’ll
talk about some of your weaknesses and
how you address that it’s a fascinating
book when I started reading this I was
going to ask you like the first question
was going to be money power success
respect or fame what’s more important I
think you make it abundantly clear money
is the most important thing so address
that why is money the most important
thing it’s not money per se that I’m
pursuing its freedom I’m pursuing I’m
very specific in the book saying look
the reason that you’re willing to
sacrifice so much if you’re an
entrepreneur is one goal to achieve
freedom because what is wealth wealth is
the ability to do whatever you want go
wherever you wish don’t answer the phone
if you don’t want to stay in bed all day
if you like go anywhere do anything
that’s what freedom is and I think it’s
a very noble pursuit because a lot of
good things stem from that you build
businesses you create jobs you advance
the economy and you’re free yeah I think
if I were to draw a little story line
throughout the book it would be money
equals gravity equals truth equals
freedom and I think the way you cast it
like that it was very nice although it
wasn’t Chuck’s T’Pol’s one to another
but throughout the chapters now after
money what is more important power
success respect or fame you touch on a
few of those things throughout the book
I think respect I think you know if you
if you achieve your success in a way
that others respect that’s a good thing
you know I’m not worried about criticism
and I get a lot of it for telling the
truth am i big you know mantra is look
if you tell the truth you never have to
remember what you said it’s that simple
and sometimes people get emotionally
attached to their ideas in business but
but my attitude is that money doesn’t
have a soul that doesn’t cry for you it
doesn’t have feelings and and you
shouldn’t have feelings for it it’s a
tool and so at the end of the day if you
tell the truth about a business
opportunity or you talk about
investments and people get emotionally
involved me and they’re upset I don’t
care about that it’s still the truth
yeah that’s true you touch on that
actually I think two names you use to
describe yourself are what is it mr.
wonderful and the merchants of truth
yeah you have to pick one which one well
you know mr. wonderful nomenclature came
from you know a sarcastic remark on
letting Shark Tank of dragons in when
somebody said you think yours mr.
wonderful for telling the truth and I
thought that’s a great name I’m gonna go
with that but but I I think I am the
merchant of truth because I never lied
anybody I mean I my attitude is look if
you can’t take the truth they don’t
don’t don’t even attempt to be an
entrepreneur because at the end of the
day that the cold hard facts of every
deal are gonna come to light anyways
that’s just how it is all right Greg
rhetoric okay so whenever I read about
successful people I try to see if
they’re in one of two baskets either
they’re crazy risk takers that you know
sort of overlook any fear or they’re
very conservative and they just manage
to build a business so you lessons from
your mom I could see you’re very
conservative on one side but you’ve also
taken a lot of risks so what drives you
more is it just the desire to succeed or
is it the risk of failure and you just
account for that I think that’s a great
question and and I you know I think what
happens is your profile for risk changes
as you age because you realize how hard
it is to make money you know I put about
5% of my annual portfolio into venture
investments which are highly risky I
make the assumption when I invest there
that the chances of me being successful
are very low and then go to 0 so that 5%
of my net worth is always at risk of
going to zero but it’s only 5% the rest
of my money I’m very conservative with I
buy in
instruments that generate yield so lots
of bonds with interest lots of
dividend-paying stocks which is what I
learned from my mother I do not own a
single security that doesn’t pay
interest and I look at my portfolio like
a chicken on a spit dripping cash that’s
you know what I often say about it every
month I want to check as I’m putting
money in harm’s way okay I want to come
back and entrepreneurship but now you’re
touching on investing so clearly the
O’Leary funds are you know a value
vehicle we get that you know they got to
pay a dividend which i think is smart
you mentioned you raise 1.5 billion in
three years which you said was a record
it is okay well assuming it is just
playing devil’s advocate
wasn’t that easy because it was after
the crash where people were burnt like
you I don’t I’m not doubting you but
wouldn’t have been hard to do that in a
bull market where people overlook risk I
don’t think so because I I think at the
end of the day as the population ages
you think about this massive large group
that are baby boomers going into their
50s and 60s what they need now is not
capital appreciation they need two
metrics preservation and yield it used
to be easy in Canada to get 6% return on
your money you can’t get near that
anymore so I’ve had to figure out a way
to use money managers that are able to
buy securities globally in countries
like Brazil India China Asian countries
where they have fast GDP growth but we
don’t have anymore so I can buy the
securities in these large multi-billion
dollar market cap companies but they’re
abroad then I have to hedge it back to
the Canadian dollars and there’s no
currency risk this is complicated stuff
then I can get them 6% and it turns out
there’s tens of thousands of them that
want that I did not anticipate that we
would end up with we’ve actually raised
a billion nine who knew that could
happen the banks thought it would be 50
million I think that the you know this
value yield proposition that my mother
taught me is exactly what the market
needs today
now um you’re very bullish on Brazil
everyone is always talking India or
China China or India I share that
optimism with Brazil but do you invest
in Brazil maybe not just because of the
core mackeral reality there that it’s
you know good opportunity but just
because maybe India and China have been
over invested like how much of it is one
has been you know forgotten and how much
is it that the other one we are
have way too much money in there and
prices have gone up too much you know I
don’t do geographic allocation here’s
how I work let’s say I decide that I
want to have 20% of my portfolio and
telco which I like I love telco because
it’s big infrastructure it’s a growing
market in emerging markets and it pays
huge dividends cell operators so let’s
take Brazil for example you know I’m
agnostic to whether I buy Rogers or Shaw
or the Brazilian telco I just look at
the companies individually and I say to
myself which one pays the highest
dividend as the highest growth rate has
the lowest debt on its balance sheet and
has the best let’s call it industry
characteristics maybe the largest market
share the most expensive telco on earth
in other words let’s just say the
multiple of free cash flow which is a
concept of measuring a business’s value
the number one most expensive so to me
would be the riskiest is Rogers it is
the most expensive telco on earth why is
that because Canadians don’t want to
invest outside of the country and
there’s very few large telco operators
so they’re willing to spend a crazy
multiple to own Rogers and have you’ve
done that you’ve made nothing on your
capital for the last three years because
the stock has done nothing institutions
realize it’s very expensive they don’t
invest their money there then let’s look
at something like the Brazilian telco
the dividend yield is north of seven
percent
it’s got thirty four million subscribers
bigger than all the telcos and Canada
put together the lowest debt of any
balance sheet which one am I gonna
invest in I’m investing the Brazilian
one which is where I do have my money
you’re very binary it’s always very
black and white and I’m not saying that
as a bad thing it’s something I wish I
had more but like you let’s away from
investing let’s just shift gears and
like when you talk about trouble or use
problematic employees never change let’s
now jump back to management yeah do you
really believe that yeah I do
the way I look at it cuz I’ve had a long
history of doing this many many
businesses the minute it crosses my mind
to fire somebody is when I fire them I
never think about it a second time
because I’ve learned they never get
better giving them time to fix
themselves never works and while they’re
in your business they’re poisoning it
you know an employee is an interesting
concept because they’re a cause
and you want to eliminate cost when
they’re not efficient and so let’s just
you know take an arm’s length and take
the emotion out of it you want the
employees that are adding value that are
happy to work there that are pursuing
wealth of some kind of stability you
want to eliminate the ones that aren’t
doing that so that’s what I do to me I’m
it’s like a diseased body you want to
cut that organ out of its disease so
that the rest of the body remains
healthy it’s exactly the analogy but
look I’m very fair about it and I fire
them myself and I’ve been fired many
times this is part of the other gum
scraping incident sure you know the
issue is this is the Darwinian nature of
business the DNA of a business is to
make money not to be a social club if
you want to save a baby whale you can do
that after you’ve taken your profits out
of the business and I don’t go to work
to make friends I go there to make money
so if you want a friend buy a dog you
open up two tangents so let’s stay on
the binary great okay you also say
people are either like an employee or an
employer and I love the sort of the
entrepreneurial is there any other kind
of person well no but I personally like
I was an executive for a few years and I
got a good kick out of that and then I
said I want to now start a company so I
started watching mojo now if somebody
comes and buys me tomorrow like my
little Mattel maybe this get smaller
scale I’m perfectly fine for a few years
being the executive but but you I see
you’re not like that but do you think
that it’s really that great that people
are either an employee and they can’t
lead or or can lead but not be the top
guy who has all the weight on the
shoulder don’t you think that there is a
gray matter like well I’ve tried being
an employee and it doesn’t work for me I
don’t know how to do it so you know
it’ll never work for me so I if somebody
buys my companies I generally leave and
start a new one because that’s what I
know how to do I tried working for a
while inside Mattel but I was one of the
largest shareholders of the company and
I never how much did you have share wise
I mean I know what the deal was what
happened was we took half cash half
stock and so if you looked at the
executives of Mattel they didn’t really
own much stock they had a bunch of
options so I showed up the first day of
work and I owned more stock than the CEO
did so any time I didn’t like something
I saw and how it was being operated I
would say look I’m a huge shareholder
here and I want you to fix that and okay
this is now a great opening let’s take a
short break let’s come back I want to
talk about the Mattel deal we’ll be
right back for segment two of hipbones
with Kevin O’Leary
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