Kevin O’Leary on fintech, customer acquisition, and cryptocurrency

A financial technology entrepreneur — or anyone pitching a startup — with a concise pitch and a unique skill set won’t get funding without mastery of the company’s financials, according to Kevin O’Leary, the celebrity investor from ABC’s long-running TV show “Shark Tank.”

“If you don’t know your numbers,” O’Leary said, “you deserve to burn in a Hell, and I’ll put you there myself.”

Known to “Shark Tank” viewers as “Mr. Wonderful,” O’Leary offered blunt advice during a keynote address, “Entrepreneurship in Fintech: a VC Perspective,” at the fourth-annual MIT FinTech Conference March 10 in Cambridge, Mass. During his nearly hour-long presentation, O’Leary revealed some of the lessons for entrepreneurs he’s learned from a decade on Shark Tank and reviewed the challenges and opportunities in financial technology and cryptocurrencies.

Know your numbers. 
The inability to talk coherently about a company’s financials has come back to bite Shark Tank contestants and damages financial technology company entrepreneurs as well. Indeed, financial technology and traditional businesses face common problems.

“Customer acquisition cost is the number one issue,” O’Leary said. “Fintech is ubiquitous because there’s no barrier to entry. But the big barrier is … how to get the cost of acquiring a customer to be worth less than their lifetime value.”

“Shark Tank’s” millions of viewers each Friday night solve the acquisition cost for entrepreneurs that appear on the show, O’Leary said, if they know how to take advantage. One of his most celebrated investments, Wicked Good Cupcakes, did. O’Leary said many businesses that got deals with “sharks” that season failed to acquire customers after appearing on the show because they were not prepared for the surge of orders. Wicked Good Cupcakes not only anticipated this — upgrading its internet capacity ahead of time — but proved masterful over the years using free media to obtain new customers, O’Leary said.

Fintech opportunity and taking cryptocurrency mainstream. 
O’Leary, whose financial technology offerings include a small-dollar investment product called Beanstox that allows people to learn to invest without making big bets. The multi-millionaire entrepreneur routinely jets with his extended family between countries and finds the promise of cryptocurrency exciting.

“I should be able to land in Geneva and pay with any coin,” O’Leary said. “I want to have the government accept it and be able to pay taxes with it. That’s the dream.”

Real estate also is ripe for investment opportunity, he said. Asset-based coins with a smart contract will allow for fractional ownership, where an investor can put down 50 cents or $1 million, and provide a less expensive way to raise capital than a real estate investment trust.

But the dream isn’t a reality yet, as cryptocurrencies remain a constant source of regulatory scrutiny. There are those who view cryptocurrency as a tool for breaking down governments and others who embrace it within a vision of future commerce, according to O’Leary. Not an anarchist, O’Leary said financial technology players such as himself have to be willing to work with regulators to make cryptocurrency mainstream.

“I want to find a way to use this technology to be ubiquitous, as everybody else does,” O’Leary said. “The fringe movement will slowly erode away as those of us going in through the regulated portal do this. This is the most exciting technology in the friggin’ world, but we’ve got to get the regulators off of everybody’s back by complying with them.”