They exited for $2.2 billion by focusing on lifetime value, not just acquisition cost.

[05:20]

"and that's how they were able to exit that company for $2.2 billion because they not only focused on the acquisition cost but the lifetime value"

[00:04]

"Today, it I joined their board 12 years ago, and it had a 22 cent stock. Uh it was under a $10 million valuation. Today, it's a $12 billion company."

[19:38]

"I went to Discovery and I gave him $350,000 uh for that six hours for an annual contract multi-year. So I technically owned a quarter of the network for $350,000 a year."

Full transcript

Celsius today. It I joined their board 12 years ago and it had a 22 cent stock. Uh it was under a $10 million valuation. Today it's a $12 billion company. I'll put it in three steps. T's, please, and C's.

Branding is the secret sauce. I turned it from selling and closing the deal to I was here to qualify the relationship to see if he was the right partner. We're going to be inviting uh up in a couple of minutes our fireside chat interview next uh Kevin Harrington who's an original shark from Shark Tank. He's on the first two seasons of Shark Tank.

One notable thing is he's had over 20 companies. Have done 100 million in revenue, invented the infomercial, and created the as seen on TV brand. So, we're going to set up the stage while we play a 90-cond video that can do a better job than I can introducing him. So, let's uh play that video, and we'll get started on this interview in just a minute.

Meet Kevin Harrington. With over 500 products launched and generating over $5 billion in product sales in over a 100 countries, Kevin Harrington is the inventor of the infomercial, as seen on TV pioneer, and original shark on the TV show Shark Tank. Kevin creates massive brands by combining great products with superstar talent like Kim Kardashian, 50 Cent, Kathy and Paris Hilton, CEO Green, George Foreman, Montel Williams, Jack Lane, Flo Raida, Hulk Hogan, Billy Mays, and Tony Little. My brand now is worth over $3 billion.

If you even have an idea, you'd want to go to Kevin Har. Kevin has been featured on 2020. CNN, Fox Business, Bloomberg, Jim Kramer's The Street, MTV, Good Morning America, the CBS Morning News, The Today Show, The View, and The Daily Double on Jeopardy. Now, the last clue. Back to the Shark Tank. I'm Kevin Harrington, an entrepreneur for over 40 years.

Kevin has built 20 businesses to over $100 million each. That's why he's the original shark from Shark Tank. Kevin Harrington. Let's give Kevin a warm welcome. All right. Awesome.

Thank you, Kevin. Appreciate you being here. Um, so the video, you know, did a great job introducing you. Was there anything else that's uh super recent about you or something you want to add even more context to before I get started? Well, you know, I I love, first of all, I want to thank you for having me today.

It feels like Shark Tank here. You know, I've I've taken about 15 pitches. And when I first met Mark Bernett and he was telling me what Shark Tank was, he said, "People with an idea, a product or a business, they get three minutes to pitch to you and a and a panel of sharks and you have three minutes to make up your mind." And I said that that feels like what I just went through today.

I took about 15 pitches and uh there's some cool stuff here. So, thanks for having me and um great to be here. Awesome. Yeah, appreciate it. And you've gotten a couple of uh transactions done through the club over the years um as you formalized like your own family office and investments. We appreciate you being part of the community and coming back.

It's awesome. Thank you. Thank you. So, you invest in a lot of early stage companies. What are some of the the most common mistakes they make? Well, [clears throat] early stage companies a lot of times, you know, it it's funny on Shark Tank, someone would come out and they're I need a half a million dollars for 20% of my company and then I say, "Okay, what's the use of proceeds?"

And they would, oh, we're going to spend 100 grand for this and 100 grand for that and a hundred for that and another hundred and then another hundred. So, oh, so you spent all 500 now then you're going to launch the business. Correct. What about marketing? Right. So, too often there's not a total game plan to launch the business.

Meaning, well, you know, I want to know are you do you have a customer acquisition strategy? Right. That's one of the most important things. How are you going to scale the business? Because yeah, I said I give you the half a million, you spend it all, but you haven't launched the company. How are you going to get customers in the door?

Oh, I thought you were going to do that as the shark. Well, no, that's not how it works. I'm funding you for you to build the business. So, so I focus on customer acquisition and that I mean I owned as seen on TV.com, as seen on TV, Inc. We had 2,000 products in a 100 countries, 25 languages and currencies.

And you know, we we had to know about customer acquisition on a country bycountry basis. So, and it's not just getting the customer, but what is the lifetime value of that customer because many times I mean to to give you an example, Guthy Ranker did the proactive show which was skincare was acne and they had a a continuity where when you signed up you were going to get auto ship of that product. Well, they turned a $39 sale into an average of eight turns. So it was not a $39 sale.

It was a $300 sale. So they now could spend they were spending a hundred$150 maybe who knows how much to get a customer and that's how they were able to exit that company for $2.2 billion because they not only focused on the acquisition cost but the lifetime value of that customer also. Seems like lots of centmillionaires and billionaires I interview have mastered controlling, acquiring, and being very good at navigating distribution channels. So, if you think about being on Shark Tank, inventing the infomercial, even being on stage here today, etc., a lot of it comes down to distribution.

And when people like Peter Teal say they uh they like to have a monopoly, but they'll settle for an oligopy. I mean, a lot of that comes down to like controlling distribution, right? Flow rider, 50 Cent. Can you talk about that for a minute? Cuz like when did the light bulb go on for you on that? So, um, about 12 years ago, I I got a phone call and and you know, one of the amazing things being an original Shark, um, 200,000 people every year apply to get on Shark Tank.

They only take 200. So, where do the other 199,800 people go? Well, they come on the internet. I get thousands of these people a month coming to me. So 10 years ago, 12 years ago, I get a phone call from a company in this neck of the woods, Florida, and they're an energy drink company, and they said, "Hey, we're a startup, but we have a clinical study on our product, and when you drink one can of this product, it'll burn 140 calories in your body."

And I said, "That's pretty amazing." And what's happening with your distribution? Back to your question. Oh, well, we're we're crushing it in Gold's Gym because people that work out, they get to burn calories before they get to the gym. And so, I'm like, I like that, but they're in a couple thousand gyms. And I said, well, okay, there's there's a company called Europa that distributes to 10,000 gyms, so let's get more distribution.

And so, with that, the the distribution came, but this is the amazing thing that happened. And I I say that the they they actually ended up this company with exponential sales as opposed to geometric because the the customers were now taking selfies, sending it to their friends and say, "You got to check this new product out and they were celebrities were were were putting the word out. It's called influencer marketing." And and I say what they were very good at is branding.

And I I call that the secret sauce. And this company, by the way, if you haven't heard, Celsius. How many have heard of Celsius before? All right, there you go. Celsius. Today, it I joined their board 12 years ago, and it had a 22 cent stock.

Uh it was under a $10 million valuation. Today, it's a $12 billion company. And they did this with with using the the influencers that I say that was ultimate branding because the the definition of exponential is it's expanding on a minute-by-minute basis as opposed to a geometric kind of normal uh growth in the business. And it just took off.

How do you go from from 22 cents a share to over $300 a share? So it was it I say the secret sauce was branding and distribution. Got it. Branding, distribution like the influencer marketing. Um is there anything else that you learned taking a helping take a company from millions to billions in revenue that you wanted to share related to Celsius?

Well, I'll say this. It you know first of all I I was one member of the team there. We had an awesome CEO. We had great, you know, the CFO for many of the years I was there is now actually the CEO and he was a very skilled guy, John Fieldley. And so, but when when when they went down the path of influencer marketing, which was, you know, was a direct result of all of us saying this product is so good, people love it.

Uh that really was a gamecher for the company and um and and now today many companies talk about using influencers but you know we had some celebrities involved and celebrities like to work with each other and we ended up and we had a relationship with the Kardashian family and all of a sudden we got Khloe Kardashian was putting out tweets about Celsius and then other celebrities wanted to and then of course the the the um influence inuencers, they wanted to be associated with a winner. So, so people working just part-time out of their house being a Celsius influencer, they were able to say to other companies, hey, look, look at the look at what I'm doing with Celsius and that's what I can do for your company. So, they use Celsius as a way to get new business for themselves. Got it.

Okay. So, what about with other consumer product oriented companies? Is there anything else related to scaling that you want to mention that might help people here in the room? Well, um I I would say Tony Little, the fitness guy. How many remember Tony Little, the ponytail? He was on the video here.

Um Tony, when I first met him, he was showing me products and I'm thinking, you know, Tony, they they look interesting and you're excited about them, but do you have any testimonials? Right. And so he's like, testimonials? He grabs his drawer, opens it up, and he's showing me before and after. Before and after. This one lost 80 pounds.

This one lost 60 lbs. What was he talking about? Magical transformation. And in my world of video, that is something that sells. And and it's funny. Tomorrow morning I'm shooting an infomercial with Tony Little back in Tampa, Florida because he is I've done a dozen plus projects over a billion dollars in sales with one guy and he is awesome because he knows how to get that magical transformation from the customer.

Somebody that couldn't even get on a bicycle and ride it that now is out jogging around the block, you know, and and really in good shape and lost a lot of weight. So um yes that is um it's a in in the world of as seen on TV and now even the digital landscape Tik Tok shop and Amazon etc. You're still magical transformation is always a good winner at selling products. So, were you born high energy for infomercials or is it Celsius or I haven't had a Celsius yet today, but um I will say um I I get excited about the the business that I'm in.

And just walking the floor, I I love meeting entrepreneurs. Uh I was one of the original uh co-founders of the entrepreneurs organization in 1987. Uh we were young entrepreneurs, Michael Dell, myself, Ted Leonsis, um who owns the Capitals and Wizards and very successful billionaire. Uh so um I just, you know, when I get around entrepreneurs, I feed off of it and and just love being around.

Awesome. You have my morning talk tomorrow and they give six things everyone in the room should be doing if they want to work with investors. One of them is to create a one-minute pitch video. You're the master of creating pitch videos. Any quick tips for people in the room that need to make one? Yes.

So, I have a 10-step formula. We don't have time for that. I'll put it in three steps. Tease, please, and seize. You tease. You You got to solve a problem.

So, solve a problem, but tease tease it up front with something attention getting. So, because you got to get in the world of TV or and now talk about the internet, you've got seconds before people are switching off to another site or something else. So, you got to get my attention and you got to show me a problem. Now, that's the tease.

Now, I'm I'm within 3 to 5 seconds. You've got me watching, paying attention, and now you're going to please by giving me what do we talk about? Magical transformations, testimonials, demonstrations, before and after. So, now sell me the benefits and the solutions to the problem that was just presented. And then if you don't have the C's, which is create an irresistible offer, you're not going to make the sale.

Because when we did the Ginsu knife, for example, one knife 1995, well, people were, you know, we did a lot of demos, but wait, that's a lot of money for one knife. But in the for the first 10 people, and this was live when I first saw the pitch, for the first 10 people, you're going to get a second one absolutely free. Now it's starting to get better. But wait, there's more.

Six free steak knives, a pairing knife, a bread knife, 10 knives for $20. Okay, now it's becoming irresistible. So that that and we just translated that pitch to television and we did hundreds of millions of dollars. Wow. Okay. So what about if someone meets you, wants to get your attention either via email, a cold reach out here in the room?

What what gets your attention and gets you to lean forward? Well, I I'll say this. You mentioned the one minute video. I mean, that is far and away the best thing that I mean, I can Yeah, you can send me a deck that's 37 pages and I'm going to look at it and think I'll get to it later.

Um, but if I see a hard-hitting one minute video that is powerful, tells the story, um, that's something that that I can watch in one minute and understand whether or not, like I said, what did Mark Bernett say? You get three minutes to pitch and and three minutes to make up your mind. If I can do it in one minute, it's even better. Got it.

So, you've closed probably a thousand joint ventures and licensing deals, etc. Um, any big tips on negotiating royalties or closing deals that you want to share with people here in the room? Yes. Um, what you know, I mentioned Ginsu Knives. We did that with a guy Arnold Morris. And I said to Arnold, "Look, we're going to pay you 50 cents for every knife set sold."

And Arnold's like, "Look, that sounds low. 50 cents. I mean, you're you're going to get, you know, 1995 and I'm only getting 50 cents, but let you know, I said, Arnold, if this works, it's going to sell millions. And so, I'll never forget, we were sending Arnold a check for hundreds of thousands of dollars a month. And my CFO would come in and say, Kevin, why are you sending this guy Arnold hundreds of thousands of dollars?

I said, why? Because we agreed to it. We're using his IP, his his likeness, his image, his pitch, and that's what the deal is. But guess what? It's an investment for him to bring the next deal. And Arnold, he brought us 15 deals over his lifetime.

And um and he brought us Billy Mays and and Billy did OxyClean, right? He brought us another lady, Sandy Mason. We had a blender chopper mixer and John Parkin who did the car wax where we lit the Rolls-Royce on fire and the car wax protected from fire and acid and you know all the demos that you know are created. So the bottom line is is I strike a fair deal and and to do a thousand deals if I I want to do a deal with somebody that if I'm on their if I'm in their shoes, I would look at that deal and say I would take that deal.

And 50 cents an order turned out to be a good deal for both of us. And and it also ensured that we were going to get all of Arnold's next deals and and that was really where billions of dollars were done. That's awesome. Yeah. Samz Zel had a book called Am I being too subtle and he talks about that in the book.

He doesn't want to leave the deal like messing over the other party. He wants to do a deal so they want to come back to the table obviously and I' I've been on phone calls and in meetings negotiating deals with Kevin and he's this high energy on phone calls too. It's not just a stage thing he does. So I appreciate that about you.

Um what are you doing in this stage of your life? What are you focused on? Well um lots of good things. You know as I get to be an older entrepreneur I I'm I'm working a little less. I I turned the business over. I have a I have a a son who's here in the room somewhere.

Uh Brian Harrington. Um maybe you show your hand somewhere, Brian. Um he's 38 years old. Three kids. I've got three grandkids. But my I've got a younger brother.

He's 60. He's been with me on and off for about 40 years. So I have it's myself, my son, my brother, my brother's daughter, and and another partner, Brandon Adams. We are still in the business of launching some products, but one of the cool things that we're involved with right now is there there's a social media app um network called Parlor that was very prevalent back in the day uh before Trump had Truth Social.

He was doing a lot of stuff on Parlor. Parlor ended up getting shut down by Amazon just overnight, but they had 30 million unique visitors a month. So, I'm part of a team that has bought the assets. We've raised over $und00 million. We're relaunching Parlor. We've made a filing, a regggd, and um raising um more capital, and that is going to be relaunching.

We we've got about 20 million unique visitors a month coming now. But my role inside that umbrella will be not only to be an adviser to the company and help raise capital, invest some capital, but also we're going to be focused on all the products that are coming to Parlor, Parlor Shop, etc. Much like Tik Tok Shop is crushing it, Parlor Shop and the associated brands that we use to launch products on Parlor, myself and my team will be the exclusive agents. Um working with all of those products.

So, we're really excited about that as a next phase project. Yeah, congrats. So, with that deal and other deals you've done, what do you think is really core to your success that other people just uh undervalue or write off, but you know, inside that's super core to your success, even if they don't always listen to you. So I I think I would say that you know in the old days um we've been cutting deals you know the the the the way we did it is we found downtime on the TV stations right Discovery Channel when it launched was an 18-hour a day channel.

It's 6 hours of downtime. I went to Discovery and I gave him $350,000 uh for that six hours for an annual contract multi-year. So I technically owned a quarter of the network for $350,000 a year. But then I went to Nashville. Then I went to Lifetime. Then I found out, wait a minute, if these infomercials work in the US, they also are going to work outside the US just like movies do, right?

So we launched in England on Sky channel with Rupert Murdoch. Then we launched in the Middle East with Shake Solid Camel. He had five channels that went dark at midnight, came on at 6:00 a.m. So we were filling the airwaves. And I think what was happening we our company and we were just a startup, but we went from 0 to 500 million.

I I call it kind of exponential because it we were we had so many new slots of airtime coming on. All we had to do was take the library that we had and dub it into the local language and we were instantly in business in in Saudi Arabia and all the Arabic countries in Germany and Holland and France in the local languages. So we really I think the focus is I like exponential and I said it with Celsius branding is the secret sauce and in in the old days it was airtime that was available in many many markets all around the world that was our secret sauce to build our business. Got it.

Makes sense. What if you're in a tough negotiation? Um how do you close the sale? Are you all about meeting in person? And do you use like a certain go-to line or relationship development process? How do you close big sales?

Well, you know, that that's a that's a great question. Um, so I I remember I was I was going to meet Shake Sol who controlled five channels. And I was a this is back in the early 90s, so um let's go back 30ome years or whatever. I was a kid and I'm going to go up against the shake that owns all the television networks and I'm thinking, how do I close this guy?

Right? This is going to be a tough negotiation, but I thought, wait a minute, there's there was another channel that had just recently launched in Italy and and so I figured, let me take this approach. I said and I walked into his office and I flown all the way from from Tampa, Florida to Jedha, Saudi Arabia and he welcomes me to his office and I went he said, "Please sit down in the chair." I said, "Mr.

Campbell, I said, "Before I sit down, I just want to say I full disclosure, I am in discussions with one of your competitors, uh, the Orbit Channel that just launched in Italy." And the shake said, "Wait a minute. Get my son in here. Get this. You don't want to do business with them. Let me tell you why you need to pick us to do the deal."

And all of a sudden, it wasn't me selling. It was him selling me to pick him because I had a library of shows to put in his 30 hours of downtime every day. So I turned it from selling and closing the deal to I was here to qualify the relationship to see if he was the right partner and it worked. We closed that deal.

Yeah. Awesome. Congrats. That's great. Um so one question I had just uh one of the last two questions here is just related to energy levels and health. Uh Sam Alman recently said, "I've never met a successful slowmoving person."

Um so can you comment on health routine and energy levels and how you manage your own energy? Anything related to that? Well, thank you for that. I appreciate it. Um I'll say this. Um I'm I'm born one of six kids, Irish Catholic family, Cincinnati, Ohio.

My dad was in the bar business and I started 13 years old working in bars u with with my father. And of course, I started drinking beer when I was probably 14 or 15. And so I'm like, you know, when I got to 50 and uh you know, I've got my 70th birthday will be my next birthday. So this is almost 20 years ago.

I said, I want to live a long time and I want to wait. I'm not going to wait till I'm 70 to start taking care of myself. I stopped drinking. And so 50 years old, that's 19 years ago, I stopped drinking. Then I was smoking three, four cigars a day. Guess what I said?

Forget the cigars. And by the way, my energy levels increased just just the drinking alone. I I lost 18 pounds. I got more energy. I started working out. And I I'll say this, your mind gets clearer.

And it was it was an awesome change for me. And I know some people maybe don't need to go cold turkey like I did, but um it worked for me. And um you know, no drinking, no cigars, and um I still I like a little some of the sweets every now and then. So, a little ice cream and dessert, but uh you got to take care of yourself a little bit.

But no, I I think being in good health, like you said, you know, it you you you know, I want to be able to move at at lightning speeds because, like I said, 200,000 people a year going to Shark Tank. We're getting thousands of them coming to us. And this is one of the reasons why I think we have we have a a great opportunity with our business because we're not in the old days I would maybe look at eight or 10 deals and have to make a decision which one of these do I want to invest in and we would launch five or eight or 10 projects a year. Well, go on Shark Tank.

Now I'm getting thousands of deals. The more you have to pick from, the higher the quality is going to be. So, how can you position yourself to get more deal flow and higher quality deal flow? Of course, it didn't hurt being a shark on Shark Tank, but it's something you can do by writing books, branding yourself, going on, you know, speaking and and events, being on stage with Richard Wilson, etc.

Um, you know, you have to put a plan together. And that ultimately is what I did. After having some meetings with some adviserss, I said, "Hey, I want to take myself to the next level." And they said, "Kevin, you got to start doing things like writing books and and getting on stage." And and after doing that, that's when I got the phone call from Mark Bernett.

So, um and and it happened after I also kind of energized myself from the personal changes that I just made. Wow. Awesome. Yeah. In 18 years running this investor club, one of the most powerful things I could ever tell an investor is to figure out how to see deals first exclusively and at better valuations. And you do that by looking strategic.

And you're obviously super strategic for consumer brands, any company that needs branding and influencer marketing, etc. Is there any last comment you wanted to make? We're we're probably like five or seven minutes over. I just kind of ignored the time clock cuz I liked what you were saying, but is there anything else you want to add? Oh, well, let's see.

I think we've kind of talked about it. Um you know I I get down to a a situation and a deal where you know if I I want to make sure that I would take the other side and I think that's that ultimately is what's driven me to be successful is I I want to create fair deals for both sides and and by the way many times deals need to get restructured because just because you sign something one day doesn't mean a year later you know honest guys can sit down and say, "You know what? We didn't really think about this or that." And if you're dealing with good people, you can restructure the deal.

But if you took advantage of them on the front end, beat them over the head to take the deal, they may not be as receptive to wanting to renegotiate. So, um I I say that deals change often. They there's fluidity in deal flow and um and if you start with a fair approach, um you I think you end up with with a good partner across the board. Awesome.

Great. Nice job. Give him a big round of applause. Thank you. Thank you. All right.

Thank you.