America is facing a generational crisis where younger people have no wealth built up and lack the financial literacy to do so, said Kevin O’Leary, star of Shark Tank and chairman of O'Shares ETFs. “In America today, there’s 100 million people that have nothing set aside for retirement,” O’Leary said. “That is a failure of financial literacy that started as far back as the 1970s.”
In the second segment of our interview. When we talk about alternative investments that you're involved in, starting with psychedelics, this is not a headline I would have expected from Kevin O'Leary. Like I said, I followed you for 10 years. You know, you're a pretty conservative guy when it comes to picking your investments and your ventures now.
Uh, one of your investments and I've had, uh, I've had the CEO on several times and our show is mine med, uh, producer of psychedelics for biomedical purposes. Yeah, stock's done extraordinarily well since inception you're involved in, but at first you turned them down. Can you tell us a story here? How did he approach you?
Whether you tell them and, you know, eventually you changed your mind. Why. The, the story of mine. Med is interesting because you have to remember when this sector emerged. Uh, and mine when mine med was one of the first to bring it forward. I actually met Jr. Rand at a lunch in Miami beach amongst the crypto community.
He at the time was looking at, uh, cryptocurrencies and, and it's a very vibrant community there. It meets usually on Saturday at a particular place called the Soho house. And at that time, uh, I was looking at an investment, uh, to, to build facilities in Iceland, uh, where the cost of energy for mining was significantly cheaper.
I was extremely interested in the deal. I, um, made a decision to put a large allocation to it called up my compliance department. And I can't even repeat on television, what my compliance, uh, Um, officer said to me, and that was the end of that, um, investment idea, uh, as you know, Bitcoin is not approved by, uh, by regulators and that because we're highly regulated in OSHA shares and some of my other financial companies, she told me, um, I, the, exactly towards where are you out of your beeping mind?
And I said, okay, just that I just was asking. But at that lunch was Jr Rand and. After everybody had dispersed, it was about four in the afternoon. I recall he said to me, look, I have another idea. Um, I would like to pursue, uh, clinical trials, FDA approved clinical trials for psychedelics as medicine for mental illness.
And I said, tell me more. Um, that was the beginning of a journey, uh, into a due diligence of his idea. And, uh, because I had dyslexia when I was a young child and I remember all the horrible medicines that, that, that they give kids like that haven't changed in 37 years, horrible side effects, terrible medicines.
And here was this young guy talking about a new direction. And I went back to my compliance department, said, look, and they said, if this is going to be cannabis all over again, the answer is no. But if this is only going to be from a disloyal purposes, we don't have a problem with it. And that was the beginning of my entry into a very early stage investment, um, in my med.
And you are right. That, that is now a very significant investment in our portfolio. And indeed the highest performing. Uh, sector and particular stock we have in our portfolios. It, I think I'm up 2000% or something this year. I don't know. It's just, it's an absolutely huge, uh, uh, sector now. And I think as a result of what occurred on November 3rd, the legalization of psilocybin in Washington, DC and Oregon state.
For research this further catapulted, the whole sector. My mate is now the leader in my mind because it has more molecules and more trials than any other company in the space, over a billion dollar valuation. Now by most definitions, that would be considered a unicorn. I started swell over a billion. Yeah, well over well over, it was at 2 billion last week.
Now you mentioned you didn't want it to be like cannabis. What was your issue with cannabis sectors? I, I really want it to be involved in cannabis, particularly from the growing facility point of view, where I would fund, uh, reach to grow, um, uh, cannabis. But, uh, the trouble was my, my Washington attorneys to represent me.
Uh, in compliance, uh, you know, with regulators on all the other financial services that I'm involved in a chairman of old shares, chairman of bean stocks, other FinTech investments, et cetera. Uh, I consulted with them and I sent them all the deals I got and they said you have one huge problem. It is still a schedule, one narcotic on the recreational side.
And so Rico statute supplied between States where it's legal and where it's not. So if you're, if you aid and ABET the transfer of a schedule, one narcotic. For recreational purpose across state lines, that outcome is really, really bad for you. Um, and as a result, I never participated in it and everybody kept saying, don't worry, it's going to be legalized.
Well, that's never happened. And the other problem with that section and the reason it never, you know, people are yeah, 80% of whatever they are in it. And they asked me why, and I tell them it never got allocated or indexed. By institutions because the industry never proved the medicinal efficiency. In other words, not enough trials of what CBD and THC actually do.
There's a lot of folklore and stuff, but it's really hard to prove it as a medicine. And yet you have also, you know, groups like mothers against drunk driving saying we can't test for it. And saliva who wants to get it. If you're an institutional, uh, you know, financial fiduciary, or you service the institutional space.
I, I want nothing to do with that. And I'm so glad I didn't get involved. I consider a cannabis to be just an agricultural commodity. I think it had a wonderful run, but the worst place you could ever grow marijuana would be in an Arctic climate. Like a country like Canada. You would want to grow that in the equator where you'd get five crops at a very low cost.
It's a total commodity that whole thing's over and still isn't legal federally. I have to ask you this because I'm a millennial for the millennial audience. A lot of my friends are younger people. They're starting businesses, especially this year because of COVID. And I just want to know what it takes to get funding, because that's the most difficult part for them that they could have a concept.
They, they, they didn't get it in the works, be an app or whatever the case may be. And they can't get funding now. Jr told me. He initially approached you, you initially had said no, a few days later you changed your mind. What does it take to convince Kevin O'Leary to get from a no to a yes. You know, the, um, I have, uh, a guy named Alex Kenji who runs O'Leary ventures, who does a lot of the due diligence for me.
Um, he's a very eclectic guy. Uh, IP lawyer, uh, MBA graduate combined degree speaks five languages of Russian descent, a Russian poet, very, very eclectic individual. Very brilliant. Um, and I, I said, Alex, the way we run our shop is I want Alex to, to have, uh, to be investor beside me in deals. He diligences. She doesn't have to, but I want to lend him the money.
To, to invest beside me, um, so that he has skin in the game and that he sweats bullets about his due diligence to get it right. Because if it loses, he still owes me the money. I mean, it's just, it's a classic private equity model. And so, um, he started diligence on, uh, Jr Jr called me one day and said, this guy is tearing my flesh, like a weasel.
He's driving me crazy. I said, well, that's what he does so well. And if you're unable to answer his questions, you certainly won't get me as an investor. And when Alex came back, he said, I like this. I like the sector. I like the business I like Jr. And, uh, I am going to, uh, take my full allocation and then some of my own money and invest in it, which is the first time I've ever heard that, uh, ever, ever.
And so I really got interested in learning more. And the one question I had for their board to get me over the hurdle, cause it was a fair size investment. I asked them all. Are you ever going to pursue recreational drugs? I don't want, I don't want you to sign a contract. I want you to look me in the eye and shake my hand that you're not going to do that because I believe in trust at the board level.
And they assured me, they were only pursuing medicine that afternoon. I wrote the check. You weren't concerned about the stigma associated with LSD and psychedelics that are still prevalent, especially amongst the investment community. People who don't know about the space. Those same investors who I called because when I get behind a sector and an investment, I let everybody know that I'm going to be a spokesperson for it.
Uh, cause I'm a believer. And as a, as an early diagnosed dyslexic, I was incredibly interested in the outcomes because anecdotally you keep hearing about very positive outcomes in microdosing, particularly around LSD that we haven't proven any of that yet. And the thing you have to realize about an investment, like.
Mine med, these are binary outcomes. You either get a zero or an extraordinary outcome because the issues you're addressing opioid addiction, depression, anxiety, and other afflictions of mental health are huge markets for drugs. If they end up working as or therapies. And so. You, you really want to diversify your risk.
And so what I really wanted out of, if I was going to deploy a significant portion of capital to know that I had multiple molecules and multiple trials. And so before doing my med, I kind of did some diligence on the other investment opportunities because they weren't the only people calling me. And I found that Jr's portfolio is very diversified and I consider him now, To be the leader of the space.
I mean, he really has charted the course. He is a, a primary participant. And now those same institutional investors who said, Elyria you out of your mind are calling me up saying, why didn't you tell me? And of course I have the email that said, Hey, Hi, I did tell you and you still thought I was crazy, but I think you, you need to be prepared to get some arrows in your back.
If you're going to charge into a brand new sector, particularly in, in, in, in something like this, which is highly risky, and I'm telling people right now, do not invest in this. If you think that it's not highly volatile, it is. But if you're making big bets for big solutions, then you need a portfolio of molecules and a portfolio of trials.
And therefore for me, that led me to mind then the, uh, millennials really like the mind match story. I have a friend of mine personally, who's invested in, he's done great with the stock millennial, every I'm 30 years old. So everybody, my age is around 30. Plus, or minus two, three, everybody. I know who's involved in the markets is day trading.
Everybody is going all in on either Bitcoin, some sort of crypto penny stocks, as risky as investments. They could find options on penny. You can just, whatever you can think of. That's risky. They're all in that's. That's what my generation is doing right now. Can you comment on this? Yeah, I don't consider that investing.
I mean, I investing to me is taking longterm , uh, the core bedrock for me is very conservative. I talked about, Oh, USA, that's really boring, but that's majority of what I invest in. And then on the fringe, I'll do things like my mad or the shark tank deals, et cetera. But every once in a while you get the extraordinary outcomes, like the mine meds and many of my private companies as well, plated sold to Albertson.
For over $300 million, et cetera. So, but, but the way I look at it is if you are, you know, I, I understand the appeal of day trading and I understand that the, but it's not investing. So you should look at it as, um, You're willing to take some portion of your net worth and risk it because it could go to zero.
You just don't know because it's, I've never found it. It's impossible to time. The market and day trading is market timing. But what I've encouraged day traders to do is to take 10% of every time they get a winning position and invest it. In, in, in core holdings, like pick some exchange, traded funds that represent more concerned investments and just leave it there.
And then every time you get another win, take 10%. And then what you find is over time, you start to grow a core base, which is. That's investing. So, but I like the idea that people are learning about the market. I think that's great. I think, you know, I don't day trade. I don't have time to do it. I don't, I don't understand why you'd sit there like a rabbit pushing buttons.
I mean, you know, if you, if you, if you have a good time, everyone needs a hobby. It's not well, okay. So a 30 year old wants to build his wealth. What, what should he be doing? How should he be investing? I know that's a very broad question. I mean, well, I, I, I, I think you've, you've hit on a huge issue in America today.
There's a hundred million people. Uh, that have nothing set aside for retirement that's they have no investment account. That is a failure of financial literacy. Uh, that started as far back as the seventies, we never taught kids in high school. We teach them reading math, jog, free sex education, nothing about investing, nothing about debt, nothing about credit cards, huge mistake.
I, one of my initiatives to 2021, and I'm glad you brought it up is financial literacy. You know, one of the things I do as a shark as is tour high schools, we used to do it physically. Now we do it virtually. And I talk about the long-term nature of investing and taking care of yourself. And I've gone one step further.
I'm an investor in a, in a, in an application, a platform called beanstalks, which encourages people to download it from a phone and set aside a hundred dollars a week, if you can. And it, it uses exchange, traded funds, not mine. I've, I've gone into the market and found all kinds of different ones in each of the categories, growth, dividend technology, whatever.
And, and just built a long-term platform. That's a robo advisor because the majority of people, as I found out, do not know how to buy and sell a stock. And so I'm encouraging everybody to download that app, B E a N S T O X. Try it, and then use it as your core strategy for building a nest egg, regardless what you do.
I mean, the average salary in America, depending on region is 52,000 to 56,000. Everybody can afford to put a hundred dollars a week aside for themselves. And that's really what beanstalks is all about what, but, okay. Um, I mean, you've already been involved in so many sectors. You've seen success in your life.
Why is it so important to be helping younger people gain financial literacy? You know, my mother had this concept of cars that she said, you know, if you're successful at some point, you have to give back. And I agree with that. And, and for me, that, that means teaching. Um, and so today I'm a guest lecture at Harvard MIT, Notre Dame, temple, uh, generally graduating cohorts of engineers.
These are sometimes up to three hour classes engineer about third of the class will go and start companies. So I love to. To be with entrepreneurs, but also we always end up talking about, uh, financial literacy. I would be amazed even, you know, you've got you go to MIT, you need, you need near a perfect math score to get into the engineering class.
And yet, so many of those graduates have no idea how to personally invest or take care of themselves in the future. And so we have those discussions. That's where the whole thing beanstalks idea originated years ago when I started doing this. And so for me, you know, something I'm passionate about, I'd have to be an investor.
I love watch collecting. I love music, all of these things, which are alternatives to the binary daytime work of being an investor, which is so binary. You make money, you lose money, but teaching is very rewarding. And, and having that debate with young entrepreneurs and talking about financial literacy, I just enjoy it.
It's a great use of my time. Um, and I'm really loving the feedback I'm getting from these classes were very challenging. These are really smart people and, um, I love to hear their ideas. No, the lack of financial literacy in our, in our society. How much is that is, is, is our fault as citizens, you know, let's say the public education system, we're a corporation.
Would you invest in it? Well, you know, it's a bit of a, I spent my early career. Almost 14 years in the educational space in the learning company. And we were the largest provider in many States of educational software, um, or up there in the top, um, you know, 110,000 schools in America, the Rita rabbits, the Carmen San Diego's, the where, where all of these Oregon trail, those are titles that I published at the learning company.
And I learned a lot about the educational system. Um, Having serviced every single one of those schools, practically a hundred percent of them. And, you know, in 26 countries, um, We really need to change the curriculum, um, in high school at the ages at 13 and 14, uh, and to start to explain how a credit card works, how an investment works, how the market works, that has to be a mandatory, not a supplemental.
And that's, that's another, uh, one of the things I'm doing next year, but for the state of Florida, for example, has brought it into the curriculum. It's mandatory. We need to see that in New York, Texas, and California, they're the majority of them of where the schools are. Uh, and then the rest of the States will follow us.
So we're starting to fix this problem. We're starting, it's on politicians. Uh, agenda. But, you know, there's nothing wrong with, with using my notoriety as a shark to get into high school and teach people about the merits of understanding what financial literacy, um, I'm sure they'll appreciate it as well.
Final question for you. What's on your Christmas wishlist in terms of alternative investments. You, I know you like watches, you have, you're an avid watch collector. What else, what else are, what else is peaking your interest right now that you could possibly invest in? Well, you know, people keep trying to get me into Bitcoin and I keep telling her about the regulatory environment.
Um, and I've been having great debates with some very smart people in that space, but it will never be an institutional product until it's regulated, even though there's a lot of hype about how institutions are looking at the truth is they're not, it's, it's such a tiny fraction of the multi-trillion dollar institutional space.
The way I, for me, this, this holiday, um, You know, every time I do a deal that's successful. And in this year, my most successful I mentioned earlier was mine med. I buy a new watch and I associate that watch. With, um, that deal for the rest of my life. And so I have ordered the watches I buy today. I'm more interested in one of a kind unique pieces.
I have so many watches now that I'm buying another watch makes no sense whatsoever. If I wore. Three a day. I couldn't get through my collection, um, four or five a day. I couldn't do it. So what I, what I'm working with now are, for example, right now, which fascinates me in many collectors will understand this.
There is a watchmaker who is alive today named FPG Jorn. He is the Picasso of watch, dial and watch a mechanical design. His pieces are probably the most coveted pieces in the world. They only make. 700 a year of them. Um, and, and those that are into the watch space, or you can just Google it later and look at it.
FP has designed a new vertical, uh, uh, watch, um, a Turbio where the, where the trivial movement is standing vertically in the watch, which is incredibly rare. And, um, that is a very expensive piece. Maybe there'll be two of them per boutique in the world. Maybe you don't know. I have ordered that watch for June delivery.
Now, I'm not saying I'm going to get it then, but I'm planning on wearing that in season 13 of shark tank, and I've told FP chop, chop, get that watch finished. Now, not that he's going to listen to me or give a damn, but he knows I'm a major collector of his pieces, but, but those pieces, my watch collection, which I use an app called Kronos 24.
Which marks to market all my pieces every night on the last trade globally, Asia United Arab Emirates, Saudi Arabia, whatever it is or the United States, my watch collection is up 113% year to date. So I consider that because I've got a significant amount of money tied up in this. Um, this is an asset class for me and it's done very well in 20.
Yeah, that was actually my, my, my, my next and final question is which watches are there are, they're considered an investment for you or sort of a passion. I know people, investors have bought art as alternative investments in stores. Wealth. Is that, do you approach it and the same with the same mentality?
Well, at the level I'm buying now, I do. I mean, I am buying watches. Uh, that costs more than, much more than a lot of modern art, but I consider them, um, one of a kind pieces or one of 10 pieces maybe, uh, severity. Um, you know, I'm, I'm, I'm part of that watch collecting community, which is a global community.
We communicate 24 seven. Uh, the, some of the largest watch collectors in the world are members of the Royal families of various, uh, middle East countries. And I know them all well. It's a very interesting community. And we talk about a lot of things outside of watches, which is why I want to be part of it.
But, um, you know, I w I will say I do view it that way. As an alternative asset class, I have a very complex security and inventory management system, just like I would store gold. I store watches. And I have various insurers that I work with you, it would be, would be impossible to steal my collection today.
I've had two collections stolen because there is so many different cities around the world in various bank faults. Uh, no one's going to get at them. So, you know, . It is like, it is like gold for me. Although my wife goes out of her mind when I come home with another watch, she just says, what are you doing?
Why would you need another watch? And I say, they're all coming. And they're going to be buried with me because I'm going to need them in the neck, in the afterlife, because it will be a long time I'm going to need a good one. Absolutely only, you know, plenty of time in the afterlife to tell the time.
Exactly. Mr. Wonderful. It's been wonderful speaking with you today. I'm very honored to have had this conversation. Thank you for coming on kickoff. Take care, take care and have a great new year. Have a great new year to you. Happy holidays and all the best in the new year. Merry Christmas and happy holidays through Christmas.
And thanks. Thank you for watching Kichler news. I'm David Lynn. .