When launching a product, a lot of times, entrepreneurs don’t know who to go to and end up hiring the wrong person or lining up with the wrong mentor. On today’s show, Michelle Seiler Tucker brings on American entrepreneur and business executive Kevin Harrington. An original “shark” on the hit TV show Shark Tank, Kevin’s legendary work behind the scenes of business ventures has produced well over $5 billion in global sales and the launch of more than 500 products. If you’ve been trying to market and sell your product to no success, you don’t want to miss today’s episode.
Listen to the podcast here:
Powered by Podetize
Watch the episode here:
Launching A Product The Right Way With Kevin Harrington
I’m happy to have my good friend, Kevin Harrington joining us. Welcome to the show, Kevin.
It’s great to be here, Michelle. Thank you.
We’re going to share your sizzle reel to tell our audience all about Kevin Harrington.
For over 100 companies, Kevin Harrington is the inventor of the infomercial, As Seen On TV pioneer, and Original Shark on the Emmy award-winning show Shark Tank. Kevin creates massive brands by combining products with superstar talent like Kim Kardashian, 50 Cent, Kathy and Paris Hilton, Kris Jenner, CeeLo Green, George Foreman, Montel Williams, Jack Lalanne, Flo Rida, Hulk Hogan, Billy Mays, Paula Abdul and Tony Little. Kevin has been featured on 20/20, CNN, Fox Business, Bloomberg, Jim Cramer’s The Street, MTV, Good Morning America, CBS Morning News, The Today Show, The View and The Daily Double on Jeopardy!. A renowned speaker, Kevin has appeared on stage for organizations like AT&T, Microsoft, United States Postal Service, Humana, 3M, FedEx, Albany University, Harvard, and MIT. Kevin has authored several books including Act Now!: How I Turn Ideas Into Million-Dollar Products and the bestseller, Key Person of Influence. An entrepreneur for over 40 years, Kevin has built twenty businesses to over $100 million each. That’s why he’s the Original Shark from Shark Tank.
Kevin, welcome to the show. It’s great to see you.
It’s good to be here.
I appreciate you spending time with us because I know you are a busy man. Kevin, you and I have lots of things in common. One of them is that you used to sell businesses as I do. I’m mergers and acquisitions and you used to sell companies.
I did small business deals way back in the ‘70s, ‘80s. I was selling pizza parlors, delicatessens, laundromats, flower shops, small manufacturing companies. It was $1 million and under the price point that they were selling it for, so small businesses. You’re doing bigger deals.
I’m doing $10 million and up.
That’s a whole different world. I love that world too. I’m in that world now but in the ‘70s and ’80s, a guy would come in, he’d have $20,000 and he’d say, “What can you put me in?” I say, “We’ve got this laundromat over here. They want $80,000 for it but they’ll take $20,000 down and finance the $60,000.”
I started out that way, Kevin.
I did thousands of those. What it did for me is it’s an education and business onto itself. You get to see their financial statements, their leases, their percentages, and the mistakes they’re making. It was an amazing business experience for me.
You’re quite the entrepreneur but how did you transition into selling companies to being an entrepreneur’s entrepreneur and marketing products like you have? You’re a $5 billion man.
I had a downtown office in Cincinnati, Ohio and we didn’t just sell the business, I leased space to an insurance agency, advertising group, small accounting firm. We had all these service providers all the way around. That way it was called the Small Business Center. We provided services and I started taking equity in their deals because people say, “Thanks for putting me in this business but I could use some help. I don’t have anybody for marketing.” I said, “We’ll do the marketing because we’ve got the marketing agency right here.” We’d get a 20% equity in the business. What happened was I was making money, I bought a house, I ordered cable TV. I’m watching my first 30 channels of cable. I’ll never forget this.
I’m going through all 30 channels. ESPN, 24 hours of sports, HBO, MTV, I got to the last channel which was channel 30 and it was the Discovery Channel and there was nothing on the channel. I called the cable company and I said, “I’m not getting Discovery. There’s nothing there.” They said, “It’s an eighteen-hour-a-day channel, six hours a day is nothing.” The light bulb went off. I said, “Let me come on down there and talk to you.” We started putting businesses for sale on the Discovery Channel. I hosted a show, Own Your Own Business Show.
We had dozens of businesses for sale. You sometimes see these real estate shows, Million Dollar Listing. They show you all these beautiful homes. Why was the Own Your Own Business guy showing laundromats, pizza parlors, franchises, this, that? Somebody then said, “I got this product that’s called a Ginsu Knife. It slices through Coca-Cola cans.” We started products then and this was 1980 to 1982 and then it took off. We were selling millions of these knives and Jack Lalanne Juicers, George Foreman, all these things. It transitioned from selling businesses to selling products.
You’ve got to get to the right people, the people that will take care of you and mentor you in the right fashion.
That’s interesting because I’ve heard you speak many times, you and I have shared the stage many times, and I’ve never heard you say that you used to put businesses on that infomercial. I knew that you put products but I never knew that you put businesses on that.
When I tell my story, it depends on the crowd on how I position it. Generally, people think you’re the product guy, the As Seen On TV guy so I talk about that. I hosted various shows. One was called the Franchise America Show and I had three franchises. These were 8 to 10-minute segments each that comprised the 30-minute show. The leads would come in, I’d sell the leads to the franchise company, and then I get a percentage of any franchises sold also.
You’re a true visionary. You see things that other people don’t see because other people will walk past a great opportunity, a great idea like you do but you take massive action.
I see the same things other people see, I take action. That’s one of the big differences. Many other people said, “I saw that six hours with nothing on it.” I thought something should go on there. I said, “Something should and I’m going to find it.” I went, found it, and put it on there. This is how innovation happens and I deal with many inventors now because I’m a product guy still. What does an inventor do? They see things around the house that are problems and they are problem-solvers. I see opportunities in the market for income and I’m an income generator.
I’ve always said that 98% of products or inventions never make it out of the incubator because of the key ingredient to getting your product, your invention out of that incubator, into the market, and being successful.
The vendor walks in my office, he’s got this prototype. He has no money typically. Seldom do inventors come in with piles of cash and an idea because if they had the cash, they would have already spent it in their product and blown it. Thank God they didn’t in many cases because I get them at an early stage but they need a dream team, they need a mentor. We’re going to be talking about my book, Mentor To Millions. Few people and you said 98%, it’s 99.5%, fail. It’s because they go to a lawyer who charges them tens of thousands in patent and legal fees.
They go to another place, all of a sudden their money is gone, they don’t know what to do. By the way, if you’re going to launch a product, you have to have marketing dollars because Walmart, CVS, Target, and Walgreens, they’re not going to take your product if you don’t have some way to move it off the shelf. That’s why As Seen On TV worked well because we put it up on TV, people would see it, and they’d want it in the store. It was a natural built-in program to drive the people that want to buy the product at the stores. You need to team up with the right people. There are many companies out there that rip off inventors that I say be careful with your money.
I ran into a nurse that didn’t make a lot of money but had saved up enough and invested in her house. She borrowed $150,000 against her home, took a lien out, and then put it into inventory for a product that she had come up with but the tooling was done the wrong way so the inventory she had couldn’t be sold because it was defective. She was trying to go after the Chinese manufacturer, they were long gone, she was out, and lost $150,000 down the tubes. I feel sorry for people like this because they’re making payments on that $150,000 for the rest of their life and they got nothing.
If you’ve got to get to the right people, the people that will take care of you and mentor you in the right fashion, and sometimes the mentors might even help you finance it or put some money up or whatever. I tell people to get other people to help you finance it because there’s plenty of money out there. Get somebody to come in with some money, some expertise and you can make a lot more money the first time owning half of something than owning all of it and having to put up all the money and take all the risk.
A lot of times people don’t know who to go to because you’ll hire the wrong person or you line up with the wrong mentor. What’s your list of people that they should go to first? Obviously, you. If they think they have something good, they should reach out to you, but who else would be in that category?
I appreciate that but I’m here to help people do their own thing. If they want to call me, fine. I’m busy but for the right deal, I’ll move. This is one thing I say everybody can do. If your product, let’s say is in housewares. There’s something called the IHA, International Housewares Association. They’ve got thousands of members and it’s a nonprofit. The head of it knows a lot of the right people. They can recommend different folks and whatever. I formed an organization that used to be called the ERA, the Electronic Retailers Association. You could call there, you could get lawyers, product developers, manufacturers, marketers like myself, the shopping channels.
You need to reach out, go to associations, lawyers, or accountants. I say how do you get the right mentor? You talk to those that are in your inner circle, even out of your inner circle like the people in these associations because they’re going to recommend the best people to you. There’s a liability if they’re recommending the wrong people. It’s important to get into the right associations. One other thing, I see you at Board of Advisors, War Room, Genius Network, and all these meetings and things. There’s a lot of good networking that goes on there but reach out and ask different folks for different connections.
The associations were a great idea because people don’t think about that. It was a social issue for everything.
I know the publisher of HomeWorld Magazine, Peter Giannetti, and he is connected. I’ve known him for years but if I can call him and say, “I need a good guy to be able to get me into Target in Minneapolis.” “There’s a guy that lives up there and used to work for Target. Here are his name and phone number.” You can always get the right people by connecting with the right people.
The key is to align yourself with those organizations like VA and the other ones you mentioned and then check the references. Make sure they’re the real deal. That was a good tip. Kevin, before they go to the market and spend a lot of money, should they test the market advertising first on Facebook? I’ve heard you talk about that before. Tell us a little bit about that.
Let me give you my analysis. In the old days, I’m talking years ago and then all the way back. We would put a lot of money into a project because we’re going to produce the infomercial, manufacture the product, we’d have hundreds of thousands up to $500,000 invested then we would test it and find out nobody wanted it. It’s like, “How do we do this testing first?” When the internet came along, Facebook and Instagram and all the target points, we now can do a nice task, we’ll shoot some video, not a 30-minute infomercial but 60-second videos. We’ll build a funnel, we’ll run some ads, all-in, we can do all that for $15,000, $20,000, no more.
We’ll know whether something is good. We say test before you invest. I like the fail fast, fail cheap, and test before I invest because I’m not going to spend $200,000 on something and find out nobody wanted it. I can find out nobody wanted it for $10,000 or I could find out that everybody wants it. I had a product that I didn’t think was going to be a home run and we tested it. We were doing a five-time multiple from media growth sales and we were blown away. This thing ended up being a $100 million product because we tested it. We never would have tested it if we didn’t have a cheap way to test. Facebook, Instagram, Pinterest, YouTube, etc.
What if you test it and your results were huge but you haven’t built it yet? You have to move fast, you better be prepared.
We test knowing we’ve got an eight-week window where we can get the goods. If it’s a year window, you’re wasting your time but if you’ve got a 2 to 3-month window where goods can be ready then a test is a good idea.
What products are you working on? Do you have any new products you’re working on?
We’ve got a lot of new stuff. The product that I was mentioning to you is a new product called SinoFresh. There are a lot of people with allergies. This is a homeopathic version. I’m not going to get into all the copy points here but the bottom line is if you buy Afrin and some of those products, they are bad. If you’re on Afrin and you’d take this, it will clear you up right away. We’ve got about 30 products that we’re in the middle of.
Are these your products or somebody else’s products that you’re a partner with?
Test before you invest.
I don’t invent anything. I partner on everything in the many years I’ve been doing this. I only invented one item. I got too close to it and kept putting money into it. It was terrible. I lost $500,000 on my own product. I want to be a partner. That way I’m not competing with inventors. Here’s an item. Did I ever show you this thing called Peeps? It’s an eyeglass cleaner. It cleans, gets the dust off first of your eyeglasses, then it closes, it opens up, and there. It cleans both sides of your glasses simultaneously. This is an amazing product. We’ve sold many of these. We’re in Walmart, Target, optical stores, Facebook, Instagram, all that stuff. This is a huge success. My partner is Daniel Patton. He’s the guy that invented it. He invented Crocs, sold off his interest then got into the eyeglass business, partnered with me, and now we’re taking this to the marketplace.
I met him at A4M Anti-Aging Show in Vegas.
He’s a good man and a good partner. I have hardware products, something called the Magic Saw. We’re on QVC with a bunch of stuff, we’re on HSN. This is one of my most exciting products I’ll tell you about. Have you ever heard of this company called Celsius?
I haven’t tried it but I’ve heard of it.
When I tell you the story on this one because you’re an exit rich person. I got involved with this company years ago when it was getting founded. I’m a founding board member so I got stock, a package, and all of this. When I first talked to them was $0.10 and it was a couple of million-dollar company. By the time I signed my deal, it had gone to $0.22. That’s where I got in. If you google it now, the stock for this company, we grew it from $2 million to $1.4 billion. Stock is $20 from $0.20. You know what it’s like to be on the ground floor with something like this. This is what I do. I get involved with companies at an early stage but I don’t just sit there, I help them. I help drive the business, get some good board members, bring directly to the consumer sales to the table. For Celsius, we brought on some celebrity influencers and fitness influencers. It’s been an amazing company and amazing growth. I love getting in on the ground floor and it’s the old no wind to hold them, no wind to fold them.
One of our audiences asked is TV dead.
It’s not dead, it’s changing. All of the channels that are out there are going to be an app. When you think of television, you look at your television and think of that as a TV. It’s going to be a big monitor with a bunch of apps on it. You’re going to get NBC on an app. Everything is going to be an app and you’re going to be able to pull it in. All the cable networks, there are big changes happening. Many of these cable networks are not going to exist in a few years. It’s all over, the press, what’s happening. I get a cable bill and it’s $300 a month.
I’ve got about 300 or 400 channels. I watch ten. I don’t watch the hundreds of extraneous channels. When they start deep bundling, who’s going to be paying for a lot of these? You’re not going to want to pay for it. If they’re not getting paid then how do they produce programming? There’s a big shift in the market. I will tell you, there’s been a 50% decline in television viewership. For sure, TV has changed and it’s going to be a different looking thing in a few years.
One more question then I want to get to your book and my book because you’re on a tight timetable. Where’s the best place to test a product? One of our audiences is posting that question.
We use Facebook and Instagram. It’s good because you can get targeted results. Facebook has 1,800 target points. We have a good history. We’ve been running product launches for years. We have hundreds of product tests that we can mirror this against so that we get a good read on it instantly.
You’re a genius, you’ve done a great job at marketing everybody else and branding everybody else but you haven’t branded yourself. You have this book coming out called Mentor To Millions. Tell us about that.
I’ll give them a site to go to where for $18 they get the book and 30 days of free mentoring. I’ll be doing daily mentoring sessions for 30 days for anyone that buys the book now. It’s called KevinMentor.com. For many years an entrepreneur, I’m going to teach people how to get a mentor, how to be a mentor, how to be the mentor’s best student. This is because I have had many mentors in my life, Michelle. I wouldn’t be here if it weren’t for many mentors. I had a finance mentor that raised me capital.
Zig Ziglar and Richard Branson were mentors to me but I had people that weren’t famous that were personal finance mentors. I’ve got a guy from my personal finances, UBS, Merrill Lynch, big-time Morgan Stanley, X guys that are now helping me invest in my deals. We’re looking at the electric car and electric battery business. It’s growing crazy. There are different trends and things that we look for in personal finance. I’m sure you’ve had some great mentors in your life too, Michelle. Anybody that hasn’t is missing out and they need to find out how to get mentors. Mentor To Millions is not a how-to book. It’s more of a journey. We go through this journey with one of my mentees and there’s a magical transformation. I hope it’s going to be well-received. We’re getting amazing reception so far. It’s selling crazy as far as we know. We hit number one on Amazon and we’re working on some other lists also.
I always tell people you don’t know what you don’t know and why not align yourself with the experts, hire a mentor who has been down that path to shorten your path.
They’ve been there, they’ve done it. I love your Exit Rich because that’s what I say. You need a mentor that’s had exit strategies before because it’s great to go build your business. If you want a big payday, take the chips off the table. I had businesses I built when I was younger and some I sold, some I didn’t but nowadays, people are building little businesses. They build an Amazon business and sell it.
Exit Rich, thank you for writing the foreword. I couldn’t think of a better entrepreneur to write our foreword especially because you’ve done it. You’ve sold businesses where we’re coming from. The timing is clear. I don’t know if you know this but it used to be 85% to 95% of the startups would fail in the first 1 to 5 years. When we wrote Exit Rich with Sharon Lechter, we did the research and you’re going to be shocked. Thirty percent of those startups will fail but out of 27.6 million businesses, over 70% of those who’ve been in business ten years will go out of business. Think about those numbers. That’s huge because there are only 32 million businesses employing over half the workforce. You hear about the big box stores all the time but you don’t hear about the small businesses.
It’s brutal for those guys now.
They’re going out of business because they stopped innovating, Kevin. You’ve got to innovate. Innovating is key.
Let’s say you’re a retail store. If you didn’t put together some direct to the consumer strategy outside of your store, you may not be in business now. Pier 1 Imports, they closed down. A friend of mine bought it for $31 million, the whole thing because no one wants the retail side. They were buying the assets of the website and the data of the customers, etc. They missed the boat on direct to the consumer.
Pier 1 is one of the lucky ones. They got bought out because they have the IP. Many of these businesses don’t always have the IP, they have the database. Facebook paid $19 billion for WhatsApp and they were hemorrhaging money but they had a billion users and that’s what Facebook was paying for. I’m sure you’ve seen many business owners make mistakes when they’re trying to exit their business.
We both sold businesses. Did you ever sell a business that was doing $2 million in business and then a year later it’s doing $1.5 million because the new owner took it down the tubes and then they come back? They’re like, “I’ve got to sell this. I’m not making any money.” I had that happen one time. I looked at the numbers before and then I looked at the numbers after. The advertising expense in the previous business had been about $80,000. Now, it was completely gone. The guy said, “I’m not going to advertise anymore.” It’s like, “You lost $500,000 in sales and all your profits.” “That’s an expense I don’t need.” “No, it’s an investment in getting people in the door.” Who’s going to survive without advertising?
The number one reason that businesses go out of business is that they stopped innovating and marketing. Those are the two key successes to stay in business and staying alive. They stop asking your clients, “What do you need now? What do you want? How can I make it easier for you to do business with us?” That’s what Amazon did and why Amazon is winning.
In the As Seen On TV business, we’d spend 50% of our money on advertising to get the customer. If we have a 20% product cost of 50% media costs, we have a 30% gross margin. We can make money on 30%. We had to spend 50% of it to get the customer. It’s because TV time was expensive.
You were successful before the internet. Now with the internet, you’re even more successful. The customer acquisition cost is much less than it used to be.
My first big exit was I had a public company on the New York Stock Exchange. We took the company from $1 a share to $20 a share and I had millions of shares. That was back in the early ‘90s. Years ago was when I was having a good time exiting rich.
Anybody that hasn’t gotten a mentor is missing out, and they need to find out how to get mentors.
Any last tips you have for entrepreneurs, people trying to get their idea out of the incubator or business owners trying to exit?
I’m running through an airport and someone stopped, “You’re that guy from Shark Tank. I’ve got something for you.” I’m like, “I’m racing to get to my plane.” “If you had one thing, what would it be for a young entrepreneur like me?” I’m like, “Okay.” We’ve talked about it here. It’s about mentoring. It’s about getting a dream team. I was a young entrepreneur and I was struggling. I wanted to do it all myself. I didn’t want to pay anybody else. I’m like, “I don’t need to pay finance people.” I realized as I’m building my business, I’m not a finance guy. I need smart people around me. By the way, some mentors, you don’t pay them.
I mentor people for free often. I know you do some of that too. We live in an entrepreneurial society, I give back to that community. The bottom line is surround yourself with a couple of experts whether they’re paid, unpaid, mentored, or whatever. That’s why I wrote the book, Mentor To Millions. With experts, at least the first time around you’re going to learn and not make the same mistakes that they made. It’s a shortened learning curve and piggybacks their success. At the end of the day, 50% of a huge pie is a lot better than 100% of a pie that never gets baked.
That’s what I always say, that’s why I partner with business owners to help them. I invest my own money, time, energy, effort, and resources to help them build their business so it’s sellable. As you said, I’d rather have a person who’s been huge than all of nothing. Kevin, you’re successful. What were you like as a little boy?
I’m 1 of 6 kids. I was an altar boy and all that good stuff. We had a close family. My brothers and sisters were all still close. Zig Ziglar had the greatest thing, you can get everything in life you want if you help enough other people get what they want. I give back, I help. In the last years of my life, I want to spend a lot of time mentoring and helping entrepreneurs become successful. Along the way, I’ll get involved in a few of your deals but it’s a good attitude to start out every morning. I know you work like that too.
I told you we have a lot in common.
Thank you, Michelle.
Thank you, Kevin. Thanks to all of our audience for another episode of Exit Rich.