Advice From a Shark Tank Shark

We’ve all been there. It’s late at night, you’re flipping through the channels and you stop on CNBC. Chances are there is an old episode of Shark Tank playing, and sitting in one of those leather chairs you might have seen Kevin Harrington, one of the original sharks.

Now think back many years ago, you’re still flipping through the channels, but this time you stop on an infomercial for a George Foreman Grill or a Tony Little Gazelle. Did you know you were actually seeing Kevin there, too? Maybe not physically, but Kevin’s fingerprints and dollars were very much present in those “as-seen-on-TV” specials. 

Kevin was the pioneer of the television infomercial, and, therefore, the direct-to-consumer industry. And when the internet emerged, Kevin was one of the first to move his sales online. On this episode of Up Next in Commerce, we grabbed Kevin for a quick interview to discuss his latest book, Mentor To Millions, and asked him to take us through his transition from TV powerhouse to digital investor. Kevin explains some of the key areas he looks at when determining if a company is worth investing in, and he details some of the ways that eCommerce companies should be thinking about marketing and product strategy.   

3 Takeaways:

 

• If You Don’t Have Marketing Money, Get Marketing Money: It is impossible to have a successful business if no one knows you exist. No matter how small a company might be, marketing has to be a top priority and, when spent wisely, whatever you invest in marketing has the potential to lead to huge ROI.

• Follow the Customers: The move toward eCommerce began in the mid-1990s when TV infomercials started putting website addresses at the bottom of the screen. Suddenly, companies saw that customers were opting to bypass telephone operators and place the orders themselves, and from there, ecommerce as we know it emerged. By always testing new ways to capture customers, you create opportunities to discover and encourage new types of buying behavior.

• Exit This Way: What’s more valuable than a product? A brand. And with the marketing tools available today, the ability to create a brand that customers love and trust is easier than ever before. Big buyers everywhere are eager to tap into these niche, high-conversion networks, which in turn, creates exit opportunities for smaller companies that never would have existed in the past. 

 

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce

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Transcript:

Stephaine:

Welcome back to Up Next in Commerce. This is your host, Stephanie Postles, and today I'm really excited. We have Kevin Harrington on the show, the OG original shark from Shark Tank and the CEO of Harrington Enterprises. Kevin, welcome.

Kevin:

Stephanie, thanks for having me. Looking forward to having some fun today.

Stephaine:

Oh, me too. Your background is so interesting. I feel like I can't even do it justice, going through how you started out in the world of e-commerce. So, I was hoping you could actually touch on that, of where did you start in Ecommerce? Because I see you listed as the original everything. The infomercial guy, the guy who created this stuff. So, I want you to put it in your words how you started out in this industry.

Kevin:

Okay. Yeah. So, I started... I was a young entrepreneur back in Cincinnati, Ohio, one of six kids, and I had started a... Getting, ordered cable television. And so, I remember I got a 30 channel package. This was, now, early eighties. And so, I'm going through my 30 channels, 24 hours of sports on ESPN and 24 hours of movies on HBO. I get to Channel 30 and there's nothing there. So, I call the cable company and I said, "Hey, look. I love this cable, all these channels, 29 of them. But I'm paying for 30. Nothing on channel, Discovery Channel."

Kevin:

And so, they said, "Oh, Discovery is our latest channel. It's brand new. They don't have a budget for 24 hours a day. They do an 18 hour a day schedule. Six hours is nothing." And so, that's when the light bulb went off. I'm thinking, "Wait." I said... I literally said to the person, "If I have something to put on that six hours, would you be interested?" "Hey, yeah. Come on down. Talk to us. We're definitely... Whatever you're thinking."

Kevin:

So, anyway, make a long story short, I started putting products on Discovery Channel back in the early eighties. I then tied up that six-hour block on the nationwide level at the parent, Discovery, which was in now tens of millions of homes. And so... And again, this is back in the early eighties and we were doing the Food Saver, the Jack LaLanne Juicer, the Tony Little Fitness, George Foreman, Billy Mays. We even started getting into mainstream celebrities like Paris Hilton and her lip plumpers and the Kardashians and their skin care and things like this. So, we got involved, and this was early on, the early eighties. Nobody else was doing this, so people call me the inventor of the modern day infomercial.

Kevin:

So, that's when it all started and we've, over the years, gone public with a few companies. Build them, sell them, build them, sell them. I like entrepreneurship and bringing in the right kind of team of people to help, but... So, as we were then selling products on TV, that was the beginning of my entry into the marketplace and I think as we started getting more sophisticated, things started happening down the road, where we started putting websites. Of course, in the early eighties, websites didn't exist, right? It wasn't until, I believe, around '94 that things started. I mean, Amazon started in '94. I was in business for a dozen years before Amazon ever started. So, selling products direct to the consumer.

Kevin:

And in the nineties, we started putting websites into our infomercials and wow. All of a sudden, we found a certain percentage of the people, they didn't want to call the operator. They wanted to go straight to that website, get all of the details, and now we found a whole new area business between websites and Amazon and digital and now when you look at Facebook, etc. etc., it's a whole new world.

Stephaine:

That's awesome. So, what does your role look like today? I read that you have launched more than 20 businesses that have grown to over 100 million in sales each, so I wanted to hear kind of what are you doing today and what kind of principles are you using that you've learned from the many years that you've been doing this?

Kevin:

So, that first company that I mentioned, we ended up being a public company in a little bit of a complicated transaction. But here we were, public on the New York Stock Exchange. The stock was sitting at a dollar a share and I started bringing the right kind of people on board and you give options and things to people. But make a long story short, a few years later, that stock went to $20, and so I was one of the co-founders and had millions of shares, so this was my first chance to be like... And take some chips off the table, as they say, right? So... Because I was building my business all those years, putting all my own personal cash back into building the business until we had a public company, then I could use other people's money. We had lines of credit and all kinds of amazing things. So, that was the first public company that I got involved with and we had great success with it. So, I thought to myself, look, yes. I can make money selling products, but I can also make money driving share prices in public companies.

Kevin:

So, since then, fast forward, I like to participate in public companies. I like to be on the board if that's important for me from their standpoint. Also, there's hardcore board of directors of public companies. There's also advisory boards. So, as I invest in companies and take board seats and things, I'm involved now in about north of 10 public companies in some significant fashion, meaning I own equity, shares, board position, advisory seats, whatever. I mean, for example, one of my companies I got involved with five years ago was a little company called CELSIUS and it's an energy drink that... I don't know. Have you ever heard of CELSIUS [crosstalk 00:06:14]?

Stephaine:

Yes, I've... Yes, I have.

Kevin:

Okay. So, I got involved at a start-up, CELSIUS. The stock was 22 cents a share and again, I got a nice package when I got involved with these guys. But the stock yesterday hit $19, okay? So, I mean, it's... So, when you think about... When you get in in the beginning and get a big block and that block goes to a big number, that is wealth creation. So, I can talk about national media. I can talk about another one As Seen On TV, another one [inaudible] Travel Biz. I'm involved in various of these pub-cos. Some of them have product, some of them... Most of them have some kind of relation to what I can bring to the table. But I will say this. Almost every single one of them needs the expertise of Ecom and selling and doing digital marketing to create, whether it's customer acquisition or investor acquisition or friendly participant in whatever it might be, the acquisition of names and value to the company.

Kevin:

So, generally, when I join the board of a public company or the advisory board of a public company, I'll be helping bring some of the things that I've been dealing with and learning about over the last 30-some years in the world of Ecom and internet and digital. So, it... I think my focus now, since I've had great success with helping small pub-cos grow and create value for their shareholders, that's something that's near and dear to me and I love participating in those kind of opportunities.

Stephaine:

That's awesome. So, how are you able to build buzz or advise your companies to build buzz in the way that you were when you were using traditional media streams like TV? How can you have that same experience online or through word of mouth and conversions online? How are you advising your companies to get that same kind of buzz that you had generated in your past life?

Kevin:

[inaudible] If we went through... If we take a look at CELSIUS, for example. Let's look at that industry. CELSIUS was a start-up five years ago going against Red Bull and Monster, two of the biggest companies out there that had tremendous shelf space already. So, they started down the path of getting shelf space and they were successful at getting some space here and there, but what we also created was a direct to the consumer side of the business where we started bringing on influencers, big ones like Flo Rida, Khloe Kardashian, etc. And then micro-influencers, fitness influencers. We have hundreds and hundreds and hundreds of fitness influencers, micro-influencers, out there on some arrangement that we've made with them to blast all of the information out about CELSIUS, why they love it, why they use it. And these are people... Many of them that approached us because they were users of our product.

Kevin:

So, now what's happened... So, for example, Flo Rida. He had 26 million followers. He created an amazing buzz to the point where one of his followers and friends was Khloe Kardashian. Well, she said, "Hey, Flo. I love this CELSIUS. Can you get me some cases of it?" So, we're shipping her cases, Flo cases, hundreds of fitness influencers, and now our Amazon business is just crushing it. So, I mean, this is... You can't just sit and wait for it to happen. You got to build the buzz.

Kevin:

And by the way, there's one thing that I did not say we did. The old days of as seen on TV... I used to spend, some years, as much as $100 million on television. ABC, CBS, NBC, FOX, Discovery, Lifetime, all the cable networks, hundreds and hundreds of broadcast stations around the country. But it's very, very expensive and the brand, a product like CELSIUS, in the world of as seen on TV would cost millions, if not tens of millions. So, we chose to go in the newer and much more direct way by utilizing micro-influencers and we've had a great run. The product is now in 165,000 stores, but it's also being supported by the social media influence marketplace.

Stephaine:

Yeah. I love that. Yeah, really great story. So, someone does not have connections or even maybe a budget big enough to give them even a micro-influencer. What would you suggest to a new DTC startup who's trying to get in front of people? What kind of digital channel are you advising your companies to try out or marketing methods or anything? How would you tell a new person starting out, this is the things that you should look into that are working right now?

Kevin:

Well, if they don't have the budget, I'd recommend that they go raise some money and get a budget, okay? So... Because if you are in business and you say, "Well, I don't have a budget for the Facebook or Instagram." I mean, this is where you have to test, these outlets, because... I mean, I had a product that somebody brought me two years ago. They had attempted to sell it in stores and on QVC and different places and they got shut down because nobody had ever heard about it. There was no branding. And so, we started running some very inexpensive $5 ads on Facebook and then Instagram and for $5,000 in ads, we brought in $25,000 in credit card orders. Amazing, right?

Stephaine:

Yeah. That's great.

Kevin:

Now, these folks that owned the company, we had a partnership now where we're starting to run this and so we were spending 100,000 a week, bringing in 400,000 a week in sales. Making money, paying for itself, unbelievable. So, don't tell me as an entrepreneur, "I don't have the budget." Because for five grand, you can test and you're going to find out. You may be... That... What happens... If you bring in 25,000 in sales off a $5,000 spend, that's self-liquidates, makes money and you're in a big profit position. So, you have to figure out a way to test the digital forces out there.

Kevin:

The other thing you can do... I know some groups that represent a lot of influencers and there are some people taking aggressive positions, where maybe you could talk them into taking a little equity position in your company in exchange for exposure from groups of influencers, so... Because these big master influencing organizations that have... I know companies, they have 800 influencers that they work with. Well, they pay them, but there's nothing that says they couldn't dribble down some stock or some equity to some of them also, and I think... I'm aware of some companies that are now starting to do equity-based influence marketing and so, I think you're going to see something like that taking storm in the near future.

Stephaine:

That's really interesting. So, when you're picking companies to either go on their board or help them, what kind of metrics are you looking at for these Ecommerce companies that lets you know whether they're going to be a winner or not? What kind of things are you looking for to pick who you're going to support?

Kevin:

Well, I like to see that they're spending money on media or influencers or some form of getting distribution. And so, if a company is... They say, "Okay. We've got $100,000 a month budget and $25,000 a week, and we're going to go spend it in an area." I like to see returns on that investment. I like to see at least a one-to-one back, meaning you spend 100,000, you're bringing back 100-plus, at least 100 in sales. But I really prefer to see more like 200 minimum, because now that is now where you're getting to a self-liquidating situation.

Kevin:

So, the most ideal client or investment for me is when I come into a company that is spending money and actually making money on the spend, but they don't have the money for the media, they don't have the money for the inventory, so they need capital. That is a perfect thing for me because once we plug the capital in, the sales are going to start blossoming and there actually will be self-liquidation so the media, it won't be expensed. It's sort of like an investment to the future profit. So, I think that's... In an ideal scenario, somebody that has a business that has a media spend that's paying for itself. That is, first and foremost, the number one thing that I look for.

Stephaine:

Well, makes sense. So, for more start-up companies and public companies, do you see them struggling with a lot of the same problems or is it just completely different? And if so, what do you see them hung up on right now, in this environment?

Kevin:

So, I mean, I think start-ups are different, generally, than public companies. Usually, a public company is working off... The reason they've gone public is because they've figured out a model that generally works and so they want to tell the public, "Hey, look. We've figured this out. We've got the customer acquisition cost figured out and we've got long-term lifetime value of our customers figured out and we just need money to go... And when we go public, we sell stock, we raise money to build the business." Right? Now, that's generally the kind of pub-cos that I like to get involved with. They're kind of over that start-up phase.

Kevin:

The challenge with start-ups is getting to that point of proof of concept, knowing that you've got something and/or having... And I... Being an old DR guy, back to the old days of selling Ginsu knives and Food Savers and Tony Little Gazelles and Jack LaLanne juicers, I'm an old school guy that likes to see customer acquisition models that work. So, I highly recommend... If a start-up is trying to raise capital, if they can show me an economic model for customer acquisition, I'm in. I mean, it's then a much easier deal because I can see the money is going in and it's going to build the business. I don't like to sink money in that's going to be used for salaries and start-up costs and software and all these things. I like to see money that gets invested into marketing programs that focus on increasing sales and getting new customers.

Kevin:

So, if a start-up... I mean, if you look at a lot of these modern day start-ups, the Caspers, the Romans, the... I mean, even... There's one. What's the one called? Oh. I'll think of it in just a second, but it's BarkBox, okay? Where people get a box for their dog every month, right?

Stephaine:

Yep.

Kevin:

Well, what they were doing was using customer videos. People would open the box every month with their dog and show all the excitement and the fun they were having, and these customer videos were being sent out to millions of people, acquiring new customers. So, they've built a $250 million business with their customers sending out things on Instagram because they were excited about the product. So, they had... They had proof of concept, they had a business model that worked and a customer acquisition model that worked.

Stephaine:

Very cool. So, what are some... I mean, I'm sure you've seen a lot of different models of customer acquisition. What are some of the most creative ones or timeless ones that continue to work?

Kevin:

Well, I mean, I think... Let's start with the one I just mentioned because when... This is... BarkBox is a company that, they didn't start on TV like the "as seen on TV." No. That would have cost them millions. They went... They reached out to their customers and so... There's another girl that started a beauty company and she was an intern at Vogue and she went out and started blogging and getting all kinds of information out. She wanted to start her own brand, direct to the consumer, and this is now a billion dollar brand and for some reason, the name of it is escaping me.

Kevin:

The bottom line is, how did she build a billion dollar company from zero, right? I mean, it was... It's literally amazing. But how she did it was micro-influencers. She recruited 1.7 million micro-influencers and this just took off and built her company into a billion dollar brand.

Stephaine:

Yep.

Kevin:

But the bottom line is I had nothing to do with this company. I just watched her and followed her from intern to billion dollar business, and that's exciting for me as an entrepreneur, to see young entrepreneurs doing this. I think the folks that started the businesses Rent The Runway and the clothing companies that, you would get a box every month, those are companies that focused on really tight acquisition costs for their clientele, etc., etc. But I just... I love hearing about these stories, when somebody starts from zero, is an intern at a magazine and a couple years later, running a billion dollar brand.

Stephaine:

Yep. Yeah. I love that. That's awesome. We will look her up and put it in the show notes.

Kevin:

Okay.

Stephaine:

So, one last question before we dive also into your book. What big trend or patterns do you see coming to Ecommerce right now? Any disruptions or things that you see impacting Ecommerce in the next year?

Kevin:

Well, the big old Amazon is up there, kind of waving its big wand over the whole industry in the product side of the business, okay? And so, I will tell you, what's happening is I'm seeing entrepreneurs start a single product business, get it on Amazon and then somebody comes along, wants to buy them. This is pretty cool because you don't have to have a $100 million business, a $50 million business or even 10 million. You could be doing two, three million dollars a year and someone might be willing to pay you eight or 10 million for that. So, I mean, there is an amazing trend right now. I know people, they're doing roll-ups, as they call them.

Stephaine:

Yep.

Kevin:

They're buying companies that... They'll buy them on a multiple of sales or earnings and then, as a big company, they've got an attractive blended situation that allows for their multiples to work for them and then packaging these companies and selling them off. So, I think the difference today versus, let's say, me when I was starting close to 40 years ago, back in the early eighties and I'm running Tony Little and Jack LaLanne. We only thought about just selling a lot of product, building these sales and maybe go public. But we weren't selling these brands. We never thought about, "Oh, let me go sell Tony Little's Gazelle product. Let me go sell the Jack LaLanne Juicer as a company." Right? But it's...

Kevin:

Now, this is what's happening. People that start a product business realize it is a business and it might be worth... If you got a business that's doing 30 million in sales, it could be worth two or three times sales. It might be worth $60 or $90 million. I mean, these are things that people that are entrepreneurs need to explore because the key thing is there are exit strategies for entrepreneurs today, unlike the old days where it was a lot tougher to find somebody to buy an old asset that you had.

Stephaine:

Yep. I love that. Very inspiring. All right, so you have a new book out, Mentor to Millions. I want to hear a little bit about that. What is the book about? Tell us all the details.

Kevin:

[crosstalk] Mentor to Millions, it's myself and my co-author, Mark Timm. Now... And actually, it's very interesting. The foreword is buy Tom Ziglar, Zig Ziglar's son, so...

Stephaine:

Oh, I love Zig Ziglar.

Kevin:

Oh, yeah. Me too. And Zig was a mentor to me and he was also a mentor to Mark Timm, and the family, after Zig passed away, introduced Mark and I and said, "You guys should be doing business because you're two good guys that my father mentored." And so, make a long story short, this is a book about mentoring. It's a book... I mean, we turned this manuscript in in January, long before there was any real buzz about COVID crisis and the pandemic. But once the pandemic hit, March, April, and our book... It's just coming out now. It actually launches in September, so right now it's only pre-order and I'll tell folks about that. But the bottom line is it's about how to get a mentor, how to find a mentor, how to utilize the mentor in your world, because I have used many mentors in many ways, and what they did for me is they helped me take my business growth exponential. And not just added on business, but geometrically exponential is what happened for me when I got mentored by the right folks.

Kevin:

So, Mark and I... It's... I'm the mentor in the book and he's the mentee and it's a story of our relationship and the magical transformation that occurs in the process. So, it's a powerful book about mentoring and how and why and where and all of that. But we're pretty excited because Hay House is the publisher, launches next month. We've got a lot of effort going into it and if anybody would be interested in hearing more about it, they can go to kevinmentor.com and there's an explanation of the book and all about the chapters and the follow-through from me mentoring Mark along the way of building his business. So, thanks for asking. I appreciate that, Stephanie.

Stephaine:

Yep. That's awesome. We will definitely be checking that out. We will link it up and Kevin, thanks so much for joining the show.

Kevin:

Hey, it was great to be here. Stay safe and healthy. Take care.

Stephaine:

Thanks, Kevin.