"You will fail" — When Shark Tank investor Kevin O'Leary admitted the reality of startup setbacks

On October, 2023, at Harvard Business School, entrepreneur and Shark Tank investor Kevin O’Leary addressed the difficulties of entrepreneurship and the inevitability of facing setbacks during an event co-hosted by Harvard Innovation Labs.

"The hardest thing [about entrepreneurship] is not the failing, because you will fail," he said.

He emphasized that most entrepreneurs experience multiple failures before achieving success. During the discussion, O’Leary explained that setbacks should not deter founders from taking the first step. He noted that launching a business requires making critical decisions daily, which helps entrepreneurs develop managerial and executional skills.

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Shark Tank star Kevin O’Leary on startup failures and the reality of entrepreneurship

The uncertainty of startup investments

Kevin O’Leary explained that in venture capital, not all investments result in financial gains. He referenced his involvement with FTX, a cryptocurrency exchange that collapsed in 2022, stating:

"He [Sam Bankman-Fried] paid me $16 million on the FTX exchange, and I was wiped out."

The Shark Tank investor further explained that startup investments often fail due to various factors, adding:

"Eight out of 10 deals I do go to zero for various reasons: market changes, execution excellence not there, sometimes fraud, which is being alleged here and … being tried this week as we sit here."

Despite these challenges, he clarified that failure in one venture did not deter him from investing in future opportunities.

O’Leary discussed how investors approach risk and evaluate businesses before making financial commitments. He underscored the importance of assessing leadership, market conditions, and execution strategies. He noted that while due diligence reduces risk, unforeseen factors can still lead to business failure.

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The role of market strategy in business success

At the event, O’Leary assessed business proposals presented by eight entrepreneurs from Harvard. He questioned one participant about how their business planned to establish a market presence, emphasizing the importance of visibility and customer outreach. He also questioned another entrepreneur’s approach to competing with well-established brands.

"How are you getting people to abandon giant brands like Nike and try something they’ve never heard of?" he asked.

The Shark Tank investor explained that gaining consumer trust is a significant challenge, and startups must differentiate themselves to attract customers.

O’Leary noted that many businesses fail because they do not have a clear strategy for reaching their target audience. He stated that even well-developed products or services will struggle without effective customer acquisition plans. He also emphasized the need for businesses to analyze competitors and understand industry trends.

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Decision-making and adaptability in business

O'Leary talked about how successful entrepreneurs turn with the market changes and operational challenges. He described that things outside, such as changing regulations, consumer trend, and competition, necessitate companies to change strategies. He mentioned that those who can pivot better have a better chance of maintaining growth.

At the event, Kevin presented the grand prize to Crop Diagnostix, an AI-based plant health analytics company. He inquired whether the entrepreneur was interested in moving to North Dakota, where the business was centered, to show utmost dedication to the enterprise. The entrepreneur responded:

"If you give me $100,000, I’ll be there tomorrow."

The Shark Tank investor highlighted that adaptability involves making strategic decisions that align with business objectives. He explained that founders who evaluate opportunities based on market needs and operational feasibility increase their chances of long-term stability.

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Watch Shark Tank on ABC every Friday at 8 pm ET, with streaming options available on Hulu.