Kevin O'Leary | Why the Busiest Home Service Owners Get the Least Done

**Tommy Mello** (0:00)
You mentioned you worked for Steve Jobs and he was an asshole.

**Kevin O'Leary** (0:03)
100%.
He also taught me about the concept of signal-to-noise ratio, which I've really adopted. You need to get three things done every day, whatever they are, and that's the signal. You've got to block out 70% of the noise. Now, because you're blocking out noise, you're perceived as an asshole. We would have contentious meetings in the old headquarters. Brutal. Some of my staff would be crying when it was over. People don't have to like you, they have to respect you, because you can achieve things.
If you try and make everybody like you, you will fail.

**Tommy Mello** (0:32)
Today's a very special day. We got the Freedom event out there. Today's guest, Harley, he's an introduction. Known as Mr. Wonderful from Shark Tank, world-class investor, entrepreneur, business leader, who built and sold The Learning Company in one of the largest tech deals of all time. He went on to launch O'Leary Funds and O'Leary Ventures, and today manages a diverse portfolio that spans everything from FinTech to crypto to consumer brands. Best-selling author, global speaker, and a straight shooter on personal finance leadership and entrepreneurship. Kevin's not here just to talk about money, but also discipline, decision-making, and how to build wealth that lasts.
Kevin, I'm really excited that you're here, brother. Appreciate it.
Why did you decide to do this is my first question.

**Kevin O'Leary** (1:18)
I love working with entrepreneurs, and what that room was full of was entrepreneurs, people that really understand that entrepreneurship is not a destination, it's a journey, and we're all in it together, and we're sharing our thoughts together. I really enjoyed that session because there's a lot of energy in that room. But that's what it's about when you start a business in America, it's only a third of the population to pull it off. I mean, it's not for everybody, and I'm not telling people to do it, but if you are going to do it, you want to talk to other entrepreneurs, you want to share ideas, you want to help entrepreneurs not make the same mistakes that I made. So I go through that journey saying, here's what worked, here's what didn't, here's what I've learned recently, here's what I've applied, here's how it's worked.
I want to share, you want to give back. This is the way I look at it.

**Tommy Mello** (2:05)
What do you think about the home service industry?

**Kevin O'Leary** (2:08)
It's probably one of the best times ever to be in it.
Not only technology advancing it, it's never going away, it's never going to be replaced by AI or any of this disruption stuff. It's the core of most people's net worth is where they live and they care about it. It's a spectacular industry. I mean, it reminds me, there's two industries that I admire so much that it's going to be around forever. Climate control storage, which I came up in, it's directly linked to the stuff you buy for your home because after a while you store it. I mean, it's like everything that goes on in maintaining a home or a business is a perpetual business. Good times, bad times, recessions, whatever, it's always a required service.

**Tommy Mello** (2:57)
You know, we run, at my company, 25,000 jobs a month. And you know what's crazy, what happened through COVID, is we were deemed essential.
And I've been through 2008, as you know, and the multiples went from 10 to 12 to 14 to 18 to 20x.
Isn't that crazy? 20x. And it's hard to do the math, really, of 20x multiples on EBITDA. Then I learned about annual reoccurring revenue, and you can get a multiple of that. And it's fun stuff. What do you look for when you make an investment?

**Kevin O'Leary** (3:36)
I look exactly for that. How do I get my money back, first of all? Secondly, how stable is the reoccurring revenue?
How risky is that recurring revenue? Like, what would make it stop? I mean, I'll pay way more for a safe investment that has recurring subscription or whatever it is to keep continuing every month. That's what you're describing, and that's why it's valuable. And it turns out the whole market feels that way. So these multiples have increased for a reason. It's the safety of the investment. First to return the capital invested, and then to accrue the benefits of a renewed pace of free cash flow. That's very, very valuable. People covet those kinds of investments. And so it takes execution skills, too. You have to have someone that can execute, that can do it. But if you understand the model and how to acquire a customer and how to maintain it and it generates cash, that's pure gold. And that's what this business is. That's why it went from a 7 to a 20