“My gut said No”— When Shark Tank’s Kevin O’Leary lost “half a million dollars”

Shark Tank, the reality television show, has had its share of successful investments and some failures by its panel of investors. One of the most prominent investors on the show is Kevin O'Leary, who has invested millions of dollars in various companies.

Some of these ventures, such as his early investment in Plated, a meal kit service that later sold for $300 million, have brought significant returns. However, O’Leary has also experienced substantial losses.

In an August 2022 interview with CNBC Make It, O’Leary revealed details of his worst investment experience, which led to a $500,000 loss. The deal involved a telecommunications startup, and he said that while he "didn't feel right about it," he went ahead with the deal.

“In my stomach, I didn’t feel right about it. My gut said ‘No'," he explained.

However, his decision to ignore this instinct led to a significant financial loss, which the businessman later took as a life lesson.

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Shark Tank star Kevin O’Leary’s $500,000 loss: A lesson in trusting instincts

During the interview, O’Leary described how the investment unfolded. He initially committed $250,000 to the telecommunications startup. However, within four months, the founder informed him that the initial funds had been spent and requested another $250,000. The founder admitted to past mistakes and claimed to have a new plan to address the issues.

Despite his unease, the Shark Tank investor agreed to provide additional funds, explaining that his familiarity with the founder influenced his decision. O’Leary said that while he didn't get a good feeling about the deal, he admitted to knowing and liking the founder, which led to him giving him another $250,000.

O’Leary detailed that the second investment did not lead to any measurable improvements. He highlighted that the company exhausted the additional funds within two months, and noted that he lost "half a million dollars" over a few months.

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Lessons learned: Trusting instincts and recognizing founder issues

The Shark Tank investor emphasized that the experience reinforced the importance of trusting one’s instincts. He said that the lesson he took from the investment was to "listen to your gut" as it was "your experience talking," noting that it was something a person gained over time.

“You can’t forecast it. You have to learn it,” he explained.

He emphasized that these instincts are developed through years of experience in investing. The Shark also highlighted a recurring problem among failing startups, which was the inability of founders to adapt their approach. He said that the founders "can't get out of their own way" as they don't listen to anyone else.

He stated that stubbornness and a lack of flexibility can prevent businesses from overcoming challenges. O’Leary went on to emphasize that a founder’s inability to “pivot” can significantly impact a startup’s trajectory. The Shark Tank investor described these entrepreneurs as resistant to feedback, which limits their ability to respond to changing circumstances.

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Risk and return on investing

Kevin O’Leary explained that losses are an expected part of the investment process, particularly in startups. The businessman outlined his investment strategy, noting that successful investments often compensate for failed ones. The Shark noted that if a person made 10 investments, they would get "two or three huge hits," which pay for the other seven "failed investments."

The Shark Tank investor underscored that the telecommunications deal stands out because he chose not to act on his initial doubts. The Shark said that he didn't forget the lesson he learned from the bad investment as it cost him half a million dollars.

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New episodes of Shark Tank air every Friday at 8/7c on ABC and can be streamed on Hulu the day following their broadcast.