Kevin Harrington of Shark Tank: Investing During The Pandemic; What Should I Do With My Money Considering All of the Volatility and Uncertainty Today
I personally believe in investing in yourself and your future business, but for the vast majority of people, investing in an S&P index fund is the preferred route. Data shows that most people who attempt trading on their own eventually do quite poorly. Therefore, the lower cost index funds are ideal for those who aren’t very familiar with stocks and trading.
As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Kevin Harrington.
Kevin Harrington is an original “Shark” on ABC’s Shark Tank, creator of the infomercial As Seen on TV brand and prominent business executive. For more than 30 years, he has empowered entrepreneurs and innovative business leaders to turn dreams into mind-boggling reality. Harrington also serves as a strategic advisor and brand ambassador for Cannapreneur Partners, a cannabis investment firm specializing in early-stage startups.
Thank you for doing this with us Kevin! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
I grew up in an entrepreneurial, blue-collar family in Ohio. My mother owned a nursery school and my father opened up multiple restaurants and bars, so I developed a passion for business at an early age. While working one day, my father told me that I needed to own my own business, advice that set me on a path to serial entrepreneurship.
At age 15, I started my own business sealing driveways and worked 40 hour per week at my father’s establishments — all on top of going to high school. I was also selling high-end baby high chairs door-to-door, but didn’t have the skill-set for breakthrough success. That’s when I met one of my lifelong mentors who taught me the secrets of selling success and introduced me to resources such as Napoleon Hill and Zig Ziglar.
In college, I found myself needing more income to pay for my expenses, so I started a heating and air conditioning business during my freshman year. This turned into my first million-dollar enterprise, which I sold to one of my 25 employees during my junior year, freeing me up once again to focus on something new.
I was up late watching TV one night when I realized that the Discovery Channel was going dark for about six hours each night, so I decided to inquire about these blackouts. Discovery executives told me that they were a new cable network and didn’t have the budget to air content 24/7. After a few conversations, I ended up signing a multi-year contract for exclusive rights to six hours of the channel, which I filled with the world’s very first As Seen on TV brand infomercials, and they took off.
Once we were profitable and the company went public, my role shifted to financing projects and products, marking the beginning of my venture days. I don’t really think of myself as being in the finance industry, but my responsibilities are predominantly finance-based and investment related. I’m truly just an entrepreneur with the right skills and background.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
One of my more amusing stories stems from my mentoring business. I was mentoring a gentleman who had a track record of selling his businesses once they hit a million-dollar valuation. I noticed the missed opportunities when selling so early and asked him why he didn’t take them to $10M, or even $100M? He simply didn’t understand the concept of scaling a business to build value and reach and I was baffled that an entrepreneur wasn’t aware of this strategy.
From that experience, I realized that I, too, needed to focus on scaling my own business. The Discovery Channel was taking in a hundred million dollars a year, but I knew there was more ground to cover. Our infomercials reminded me of movies, and what do movies do when they see massive success in one country? They go global and scale into Europe, Latin America, Asia and so on.
I attended the International Market of Communications Programmes and the Cannes Film Festival in France every year to meet all of the most important people in the TV industry. In 1990, I opened an office in London after securing a deal with Rupert Murdoch for Sky Channel, with distribution in 16 countries. I then went to the Middle East to speak with Sheik Saleh Kamel, the owner of Arab Radio Television (ARB), which has distribution in 20 Arab countries. We successfully gained those, as well as TV in Tokyo.
We had close to one hundred infomercials produced, in addition to the licensing agreements with investors, which made the move into other languages easy. We simply dubbed them to the local language where it was being aired. Through scaling, we increased sales from $100M to $500M and our stock price rose due to the value we created.
Are you working on any exciting new projects now? How do you think that will help people?
I’m working on several projects at the moment. First, I’m working on building out a roofing company (Roof Maxx), which recently became the nation’s fastest growing roofing business by delaying costly replacements of asphalt roofs with an all-natural, soy-based shingle rejuvenator spray application. They are the first company to use an asphalt spray that prolongs the life of the roof, instead of replacing it. I invested in their parent company and own 20 territories. We are now working on scaling the company into new territories.
I also sit on the board of Celsius, a producer of healthy energy drinks. They approached me five years ago when they were very small and I decided to invest. Today, both the market cap and stock price of Celsius are almost 200% higher than when I joined. We’re now in 165,000 stores and public on the NASDAQ, and have surpassed Monster as the top energy drink on Amazon. To create that kind of market value is truly phenomenal. Celsius is beneficial to the public as an alternative to the unhealthy energy drink industry. A Monster actually made one of my children swear off energy drinks after getting sick. Celsius is different — it’s what people drink to workout in the morning, it boosts metabolism and it isn’t made with all of the artificial ingredients in other energy drinks. It’s extremely popular among fitness influencers.
Finally, I recently joined Cannapreneur Partners, a cannabis investment firm specializing in early-stage startups, where I serve as a strategic advisor and brand ambassador for the firm and its portfolio companies. I also made a personal investment in Cannapreneur, and we are planning a few Shark Tank-style webinars and live events focused on early-stage startups in the cannabis sector. I’m very excited about this, particularly since global cannabis sales are projected to be $75 billion annually by 2030 — a nearly six-fold increase over the numbers recorded for 2018.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
I have been fortunate to have several amazing mentors, like my father, who have made an important impact on my success. For example, I was invited to spend time with Richard Branson at Necker Island, and the advice he gave me completely changed my life and career trajectory. He had seen all of my TV products and told me, “I see Billy Mays, Jack LaLanne and George Foreman, but where are you? You’re nowhere. Nobody knows who you are.” He pointed out that I created all of these brands, but hadn’t yet done anything with my personal brand. He was right. Thanks to Richard Branson, I’ve since written eight books and built a name for myself. It’s actually because of my very first book that Mark Burnett invited me to be an investor on Shark Tank. It’s amazing how life plays itself out that way.
Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?
In times of crisis, the first thing people should do is talk to their mentors. I’ve received hundreds of calls and emails from those I’ve done business with; some who I hadn’t spoken with in years. If you don’t have a mentor, you should find one, and this might even be a good time to do it.
Second, run through your personal finances. My wife and I sat down together and went through our books, looking at it from a different angle, and ended up renegotiating our insurance and accounting fees, among other expenses. We found over a dozen monthly recurring charges for services we weren’t even using anymore.
Lastly, focus on your day-to-day and where you can best apply your skillset to find some part-time income.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long-term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?
I personally believe in investing in yourself and your future business, but for the vast majority of people, investing in an S&P index fund is the preferred route. Data shows that most people who attempt trading on their own eventually do quite poorly. Therefore, the lower cost index funds are ideal for those who aren’t very familiar with stocks and trading.
That being said, some portion of your portfolio should be in private placements or private investments that have the potential for outside returns. All asset allocators would recommend having some portion of investable assets in private placements or in stocks and to let the seasoned professionals do the trading.
Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?
I would suggest looking at Direct-to-Consumer brands and investing in the cannabis sector in particular. It’s a consumer-driven consumption business, which means consumers regularly return to replenish their supplies. Unlike kitchen appliances or cars, cannabis is a continuity industry.
Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?
Where there is risk, there is opportunity. At the end of the day, I like to get in on the ground floor and look at who is making cutting-edge deals. The cannabis industry is in its beginning stages and set to explode as laws change, so cannabis is an exciting and lucrative investment right now.
Are there alternative investments that you think more people should look more deeply at?
Global cannabis sales are projected to triple to $75 billion annually by 2030, so now is the right time to invest in this rapidly emerging market. That’s why I recently made a personal investment in Cannaprenuer Partners, because I believe the cannabis sector will be more profitable and lucrative than even the internet boom. The sheer velocity and momentum of this market is staggering, and it’s only in the early stages. Wall Street firms have been hesitant to invest in the space because cannabis is still federally restricted right now — but it won’t always be. Private investors like me are getting in on the ground floor while the perceived risk is high but the opportunity is great. Simply put, cannabis is one of the fastest growing sectors and one of the largest job-creators in the U.S.
If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long-term investment what would you advise them to do with it?
Cannabis is definitely a long-term investment and is one of the largest markets available to put money into. This market is a great long-term play. You want to let your investment sit there and accumulate value as the industry grows. Additionally, if someone is interested in the ability to quickly access their investment capital, I would recommend investing in a private placement. That, or put it into your own business.
Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?
When confronted with an opportunity, I look at five things. First is proof of concept. Ideas are brought to me constantly and many times it’s scribbled on a napkin because all of the capital is going to prototyping, engineering, molds and inventory. We’re talking hundreds of thousands of dollars, not to mention years of development. I’m looking for something that’s further along, where they have already gone through that development process and are actively selling their product. I seek out problem solvers and want something unique enough that solves a problem that no other product or service can do in a similar fashion. Roof Maxx is a star example of such a service.
Second, and most exciting, are the products that create magical transformations. Tony Little walked into my office one day and presented five pictures of overweight individuals. He explained that these individuals had approached him for help losing weight, and now they had all lost 50 to 100 pounds each. I was astonished. Lo and behold, Tony is the founder of the Gazelle Glider, which has done a billion dollars in sales. Magical transformation sells.
Another important factor is competitive analysis. People will be ecstatic about their product or service and claim that it’s unique, but then we jump on Google and immediately find others doing something similar. It happens all the time on Shark Tank. I like to see that they have done their background research and can illustrate how they’re faring in the market.
The fourth detail I look for is that they’ve done their cost analysis and pricing research. What is the customer acquisition cost? What is the lifetime value of the customer, or what is the average sale? Many people totally gloss over this part, but it’s crucial, especially when making a sales pitch to investors.
Finally, I sway toward products or services that provide lifetime value. Longevity is huge when acquiring and retaining customers. Will it provide value to society for years to come? If so, it might be worth it.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
I believe in the Law of Attraction, which is the belief that positive or negative thoughts bring positive or negative experiences into a person’s life. My favorite quote is by Paul J. Meyer, who said, “Whatever you vividly imagine, ardently desire, sincerely believe and enthusiastically act upon must inevitably come to pass.” In other words, whatever you conceive and believe, you can achieve.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)
Random people will stop me all the time and ask, “If you had one thing you could tell an entrepreneur, what would it be?” Generally, I focus on the concept of a dream team. I’m a part of Cannapreneur Partners because their CEO Michael Scott believes in this concept and he’s actively working on creating one.
The idea of a dream team comes from personal experience. In the early days when I was just building my business, our growth flatlined because we had no capital and ran out of profits. It got to the point where we needed lines of credit just to stock our inventory, but I was unable to raise any money as banks were turning me down left and right. At that point, I ran into a retired, former bank president and told him about my predicament. He said he would give me a line of credit from one of the banks that had turned me down just to prove that it was possible. Instead of asking for money in return, he wanted to join the company as an equity player and build a dream team. He helped hire an amazing group and secured a $3M line of credit, and I accordingly gave over equity, as well as named him COO. We built out the rest of our dream team and grew to $500M.
I was a young, egotistical entrepreneur and thought I could accomplish everything by myself. It wasn’t until I was consistently shut down by investors and banks that I realized entrepreneurs have to be able to keep the doors open. You have to allow other, more experienced professionals to come in and support you. It might mean giving away a small percent of your company, but your business will likely suffer if you keep them out.
One thing that is making a huge impact right now is the world’s transition — or partial transition — to virtual events, especially since the COVID-19 pandemic began. Last year, I was on the road for 200 days and speaking at 80 events to a crowd of 300 to 10,000 people. Now, I’m able to reach the masses virtually, as guests can easily log on to the event through their phone or computer from anywhere in the world. I’m doing late night events in Malaysia and Singapore right now with 12,000 people watching. We can all reach millions now just by jumping on my computer.
Thank you for the interview. We wish you only continued success!
