What Kevin O’Leary Tells Every CEO To Start Investing In

Any aspiring entrepreneur hoping to grab “Shark” Kevin O’Leary’s attention with a business pitch will be better able to answer this question: What’s the next big thing for small businesses?

Although O’Leary recently invested in the crypto space and said he thought it was “important,” if you think it’s bitcoin or blockchain, guess again. The co-host of “Shark Tank” and host of CNBC’s “Money Court” said the Covid boom in direct-to-consumer sales is the key business change, and just as important for small businesses and retailers. business giants.

Speaking at CNBC’s Small Business Playbook event on Wednesday, O’Leary said a rapid acceleration in direct-to-consumer sales (DTC) has manifested itself in “giant companies” like Nike. He said DTC sales jumped from 10% to 50% to 60% for businesses during Covid, but it’s not sales success alone that is the key to the future – it’s the data that make it possible to reach the customer directly online.

Companies are starting to collect data on customer preferences that go beyond the basics such as physical location at certain times of the day and shopping preferences, and this will matter as a technology that big business. companies will use to extract data for information research – cloud-based AI – becomes economical for all businesses.

One of the companies in its portfolio, Wicked Good Cupcakes, which was recently acquired by Hickory Farms, has become the No. 1 for “cupcakes on offer” in the United States through FedEx, and O’Leary said the company had been made aware of consumer buying behavior, even things like flavor preferences and when parents buy cupcakes for college-aged children during holiday periods. “The data was pouring in and they could then make offers,” he said, based on what they had learned about each individual.

O’Leary says the model’s success goes beyond this example. “Some of my small businesses are doing better than ever with much higher margins thanks to DTC.”

Cloud-based AI will drive increased sales, along with other business benefits. It will lead to improved margins and better forecasting of demand. Adopting the DTC and AI approach will allow managers to deploy capital much more efficiently and not end up with “a bunch of inventory sitting in big box retailers not making you money,” said O’Leary.

“I am now telling all CEOs to start investing in what you can do with AI and data management,” he said. “I’m really excited about this for small business.”

O’Leary said what we’ve learned from this pandemic is that businesses large and small have gone through an incredible digital pivot, and the Delta variant will only make that shift worse.

“I don’t care if you’re Nike or a company with a turnover of $ 5 million,” he said. “This is what happened during the pandemic. Nike hit 50% DTC in five months.”

Building a direct-to-consumer business and using cloud-based technology to run AI on customers is a “even a small business can afford” strategy, he added.

O’Leary has linked the boom in DTC, which removes multiple levels of distribution that squeeze trade margins, to the booming stock market during Covid and “a much more efficient and profitable industry across industries.”

“We’ve moved to a much more efficient place and in the future you want to have a direct relationship with the customer,” he said.