"Going to be exceptional" — Shark Tank's Kevin O'Leary on AI growth

Kevin O'Leary, entrepreneur and investor known from Shark Tank, recently shared his views on the growth of artificial intelligence (AI) and its impact on the economy. In an Instagram post on December 7, Kevin O'Leary, known as 'Mr. Wonderful' from Shark Tank, highlighted the growing recognition of AI's potential to drive innovation and reshape industries.

"I think everything is looking at AI now in a different way. I think AI growth is going to be exceptional," he stated.

He emphasized that businesses must understand the fundamentals of customer acquisition costs and manage risks effectively to succeed in the evolving AI landscape.

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Shark Tank's Kevin O'Leary discusses the future of AI and business challenges

The AI hype train: Acknowledging the potential

In a recent interview on the Morning Brew Daily show on November 29, Kevin O'Leary discussed AI's impact.

"So, I think AI is going to be huge. We use it in all of our businesses, particularly around translation," he said.

He explained that his investment strategy focuses on identifying trends and addressing problems across sectors. AI is already being utilized in O'Leary's businesses, particularly in translation services.

"When we, I do commercials now in Chinese and French and Arabic. We use AI," he noted.

However, O'Leary also spoke about the challenges around AI infrastructure, specifically, the demand for data centers. He said that seven hyperscale companies, including Tesla, Google, Microsoft, and Amazon, demand 30 gigawatts of data center capacities. Indicating the power supply issues, he said,

"There's only five under construction in North America right now,"

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The Power problem: A major roadblock

Kevin O'Leary visits "Outnumbered" (Image via Getty)

O'Leary elaborated on the power challenges facing data centers, revealing that constructing a one-gigawatt data center can cost around $4 billion.

"I built those. And we can't get the power," he explained.

Regulatory hurdles, such as Virginia's recent law which prohibits backup generators for data centers, make things even trickier. O'Leary stressed that data centers must maintain 99.999% uptime, which calculates to only 14 seconds of downtime per month.

To address this issue, O'Leary proposed using stranded gas in regions like West Virginia and Texas to generate clean energy for data centers.

"We're going to find stranded gas... and generate electricity from clean natural gas and build data centers," he said.

He explained that this would be a way to help alleviate the power shortage while also practicing sustainable energy.

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The importance of understanding business fundamentals

Kevin O'Leary speaks onstage during the Massachusetts Conference For Women (Image via Getty)

Besides AI and data centers, the Shark Tank investor pointed out that understanding customer acquisition costs is crucial for entrepreneurs.

"What I look for the most in almost all deals now is I say, do you know what it costs you to acquire a customer? Do you have any idea what that cost is? Most people don't... I never invest because you can't pour gasoline on the fire if you don't understand the business model," he said.

He noted that many startups fail because they don't grasp the relationship between customer acquisition costs and customer lifetime value.

"80 percent of companies... go bankrupt within 36 months because they're never able to get their customer acquisition costs below the lifetime value of the customer," he said.

O'Leary is driven by his experience, especially the success he had with female entrepreneurs. He says 70% of his successful investments are companies led by women— he believes they have managed risk well.

The Shark Tank investor cited an example of Anna Skaia, founder of Base Paws, who turned cat DNA testing into a business by understanding market needs.

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