Mr. Wonderful: The New GDP
October 9, 2020
Entrepreneur Kevin O’Leary is best known as one of the investors featured on the TV series “Shark Tank.” Mr. Wonderful brought his investment prowess to the virtual ALTA ONE and shared with attendees how the new GDP—the great digital pivot—will transform the United States.
Before COVID, according to O’Leary, his typical businesses made 50 percent of sales from retail, 40 percent on Amazon and 10 percent direct-to-consumer. Then the pandemic hit and that forced an economic shift.
“There’s a new America 2.0 emerging and it’s digital,” said O’Leary, who added that direct-to-consumer sales bring nearly 100 percent gross margins. “It requires you to understand you’ve got to communicate directly to your customer.”
As an example of the great digital pivot, O’Leary shared how Love Pop Cards, a company in his portfolio that specializes in greeting cards, responded after losing half of its retail sales just days after the country shut down.
Shortly before Mother’s Day, a designer for the company attempted to purchased flowers for her mother. However, all distribution of flowers had shut down due to the pandemic. While at her CAD station, the employee created a three-dimensional bouquet of flowers. The company then put it on their website. Everyone across the country was having the same problem ordering flowers. As a result, Love Pop Cards sold millions of dollars in the cards direct to customers.
“The digital pivot changed the way businesses communicate with customers,” O’Leary said. “It doesn’t matter what sector of market you in. Change requires supporting customers digitally and being transparent and honest with them.”
Due to the digital pivot, O’Leary said his portfolio of investments are already in the process of negotiating new leases with landlords. He expects to reduce square footage by 12 percent, which will result in 3 percent more cash flow. He said the reduction in the retail space will be significant.
“This is happening all over the country,” he said. “Investors are starting to sniff out the new America—the digital America. A more efficient America. Sales direct to customers.”
When thinking about direct relationships with customers, O’Leary said it’s important to think about what a company is doing for their community. He acknowledged the creation of the ALTA Good Deeds Foundation as “the right thing to do.”
“It’s a wonderful idea,” O’Leary said. “People must have empathy for the challenges that others are going through.”
Businesses can grow their brand by being involved in their community by showing they care, providing service and giving back.
Concluding his remarks, O’Leary reminded attendees that no technology can replace the direct connection to customers. It’s what powers business.
“It’s people dealing with people. Never forget to stay connected with your customer,” he said. “As industries digitize, customer service remains everything.”
Contact ALTA at 202-296-3671 or communications@alta.org.