You Don’t Understand The Mechanisms of Trump’s Economic Policy: Kevin O’Leary (Transcript)

You take a country like Vietnam, they don’t have enough people to ever have trade balance with the United States. They simply can’t buy enough stuff to offset how much stuff we buy from them because many companies, including mine, have moved out of China to Vietnam or Cambodia or India.

So these countries have massive trade deficits in the United States because we manufacture stuff there. Now, can Trump get all that stuff repatriated? Not during his mandate. You can’t do that in 34 months. You can’t move all the factories back to us. But the policy itself will slowly self correct.

I don’t think we need to make plush toys in America. There’s no value added in making a Barbie doll in the United States. That job is not a high value job. I think it makes sense to make chips here, but semiconductor chips, that makes sense to me. High value add, that makes sense to me.

So Trump is trying to balance all that, but you can’t listen to all the noise. I mean, he’s a walking press conference. He just says whatever he wants to say when he says it. I’m so used to it now, it doesn’t faze me whatsoever. I just focus on the signal.

Evaluating Trump’s Negotiating Effectiveness

TOM BILYEU: But is it moving us forward in international negotiations? I will talk very specifically about China in a minute, but right now I just, if you were going to rate his negotiating skills, is he actually moving us forward? Because now that the whole idea of 90 deals, 90 days, it’s just sort of dragging on. We’re not seeing enough wins that really make a press conference worthy. Is anything actually happening?

KEVIN O’LEARY: Yeah, yeah. I mean, we’re never going to get 90 deals in 90 days. It’s never going to happen. I mean, it takes, it used to take two years to get a deal done with one country. He’s just accelerating it very quickly and he’s getting sort of letters of intent.

What the market really wants to hear is they don’t care about the granular deal itself. They just want to know what the tariff itself is going to be. So if you’re an investor in a country in a jurisdiction like Switzerland for me, or Canada for me, and there’s other places I invest, I just simply want to know what’s the deal? Is it going to be 10, 12, 15, 14, 13, 7? What is the actual reciprocal tariff going to be so I can adjust my capex accordingly? And the rest of it I don’t care about. I don’t care about the detail. I need to know what the reciprocal tax is.

And in the case of Canada, because it’s the largest trading partner of 28 states, they’re going to have to resolve that one pretty soon because both countries need each other on that. And the Canadians are going to have to give up their supply chain tariffs, like on butter and eggs and milk against Vermont. They have 200% tariff. That’s just not sustainable.

Warning Signs and Success Indicators

TOM BILYEU: So you seem pretty sanguine about the sort of what many people will point to as the chaos of Trump. But there are things that ring your danger bell. So from an outcome perspective, what would make you worried that this is putting us in a bad place, either specifically from an American standpoint or just from a global investor standpoint? And what would put us in a good place?

KEVIN O’LEARY: Yeah, I mean, the red bells would be ringing and I would be very concerned about unsustainable tariffs for a long period of time, like 35%. That wouldn’t work. That would never work with anybody. And it would cause major chaos in financial markets. I think Trump knows that.

I don’t get caught up in politics per se or show for politicians, even Trump. I show for policy. So I wait until I see the actual policy. And lately, because I’m involved in certain sectors like stablecoins or data center development, I have to get my hands dirty in Washington. And I go there to meet with senators and governors and representatives in the administration to understand where they’re taking their policy. And so because I have to know what that is or I can’t be successful as an investor.

My point is I don’t have Trump derangement syndrome. I don’t care. I only care about policy. And so if I believe that Trump was going to do 35% tariffs on major economies that I’m an investor in, that would be a big problem. And you would see the markets correct pretty quickly around that.

But the market doesn’t believe that anymore. You’ve had this volatility in Trump’s now it’s 35%, now it’s 10%. Whatever it is, the only thing that matters is what is the end game, what does it end up at? And if you told me, it’s 10% reciprocal worldwide. Yeah, I think the market’s betting on that right now. And I think we’re going to get there.

And then at the end of the day, all this stuff was just a bunch of noise and volatility based on gnashing of teeth. And look, there’s a lot of people don’t like this guy. I mean, they just don’t. And they’re never going to get over it. And they can’t believe he’s President. I say deal with President for the rest of this term. Get over it. Now, if you want to do business, focus on that and just focus on policy.

The China Challenge

TOM BILYEU: All right, so China, I think is the game. I’ve heard you say similar things. I’m routinely trying to refocus my audience on. Listen, China matters a lot. Everything else for the most part is a distraction. Do you think that we can apply enough pressure to China that they’re going to be forced to come to the table? Because obviously Xi would have us believe. “Nah, whatever. I don’t care. I’ve minimized my exposure to the US more than you guys think I can outweigh you. You guys are going to come on our terms.”

The China Challenge: Economic War and Stolen IP

KEVIN O’LEARY: No, he can’t do that. It’s not going to happen. And we need to work a deal out with China. You’re right though. Everything else is a distraction compared to China because these two economies are entering an economic war against each other. Hopefully it’s not a military war ever, but an economic war and an AI war because the country with the best AI is going to win all the wars in the future.

You got some essence of that in the Iran situation where very few American boots on the ground there. The entire operation was done using technology, some of it very advanced and robotics and everything else. And very, very precise missile led by GPS technology that also uses predictive AI. And so all of this stuff, that’s the first time we’ve seen a 48 hour war that way. China was watching, the Russians were watching, everybody was watching. And it gives you an idea that this race of technology and AI and the economy are all kind of fit together.

So here’s the way to view the Chinese situation from 30,000 feet in my view is my personal opinion. And I’ve been dealing there for over 22 years now. Remember they came into the WTO back in 2000 and there was a lot of assumptions about compliance back then. That was during the Clinton period. They never complied. They cheated. They stole IP. They built many of their sectors around American stolen IP, German stolen IP, and nobody made them pay any consequences for that.

They just kept saying, “Well, as they get bigger, they’ll understand the value of democracy. This will be better for us.” That never happened. They basically stole it all and then became very proficient at advancing it. So particularly their tech, their automotive, and all kinds of different sectors are built off someone else’s tech. Now, you can find the DNA of any of this stuff just by reverse engineering anything they build over there. So we don’t have to argue fact. I believe it’s a fact.

What matters is what happens now. Are we going to continue to let them steal American IP or are we going to somehow hold them accountable? And I think we’re in it for decades now, various administrations. Nobody has taken them to task on this issue until now.

The TikTok Decision and Market Access

And so you’ve got a whole bunch of issues wrapped up in this narrative going on the next few weeks, including the September 19 decision on TikTok, which is blatant spyware in the U.S. There’s no question about that. And the law has been already passed. It’s either going to go dark or somebody’s going to buy it and rewrite it under American laws. So who knows how that’s going to shake out? And we haven’t decided or know what she wants to do. Only he and Trump can decide.

But I’d argue that by the time this narrative is over with China, they will comply. Because if they lost access to the largest consumer market on earth through massive tariffs, there’d be a lot of unemployed Chinese rioting in the streets. And if you’re the Supreme Leader, you cannot afford that. You can’t afford that. And so Xi is not an idiot. He knows that. He doesn’t want to back down. Either does Trump. They’re going to have to find that accommodation.

But it’s not just about tariffs. It’s about IP access to their courts to resolve trade disputes, access to their financial markets. They get access to the New York Stock Exchange, and the NYSE’s rules are not even abided by.

TOM BILYEU: Have you heard Trump making noises about that, or is he just focused on the trade aspect?

KEVIN O’LEARY: No, no, Trump has already talked about this. It started in Geneva three months ago, whenever that was. But everybody knows that within the administrative narrative with China right now, at the level of discussion, they’re trying to resolve these issues. Each of these is a separate issue. TikTok’s a separate issue. Chip sales from Nvidia, separate issue. You know, all of these things are separate multibillion dollar issues that are unique to the China negotiation.

We’re not having that narrative up in Canada or in Mexico or in the EU. They’re having that narrative with China, because if China wants to play with the big boys and have equal access to the American market, they have to play by the rules. Now, the legal systems, the IP laws, access the financial markets under the rules and regulations of the SEC. And all of these are sub issues. But the old way of doing it is over.

I mean, if China wants to keep stealing IP, it’ll end badly for them because the US is still the largest consumer market. That’s the stick, that’s the hammer. Trump has that leverage now. He may not have it forever. Congress understands that. And we obviously, I would like to do business in China. That’s a huge consumer market. There’s many products and services I want to sell there, but I don’t want to get screwed doing it.

The Drain Wig Example: How IP Theft Destroys Innovation

And so, you know, I got to be honest with you that what’s happened over the last 20 years, no one ever looked at the granularity of this. And I see it through a lot of the small startups I fund. Let’s say you come up. Let me give you an example. Let me give you a very simple example that I think your viewers would appreciate.

Let’s say I come up with an innovation and I patent it called Drain Wig. It’s a real product. It’s so simple. You put it down your drain in your own home or in a motel or commercial, you know, resort or whatever, and it collects all the hair and it does it in a unique way that actually works. Many designs have been tried to do this. They failed. Drain Wig figured it out and they patented it and they sold it for $29.95. And it really worked. And so commercial institutions said, “Well, I can cut my plumbing costs by 60% by just stopping right there.” Huge.

The minute it got to $5 million in sales, 40 knockoffs. 40 knockoffs on the market at $8.99.

TOM BILYEU: Wow.

KEVIN O’LEARY: They didn’t have to pay back the R and D the company had spent or all the money they spent creating the product in the past and creating distribution, it already had been done by them. And then they got knocked off. Company went out of business or changed hands as a result. That happens millions of times. Nobody made. You didn’t hear that tree fall in the forest. It was a tiny little company of $5 million. Could have been $100 million plumbing supply company one day. But that didn’t happen because it got knocked off by China.

That’s what I testified about in Washington. I gave them examples of that that they’d never heard of. They did their diligence and they realized that’s how we’re getting screwed. One innovation at a time. Screwed over and over again because nobody brought them to task. Well, I think there’s a new sheriff in town. Maybe you like him, maybe you don’t. But basically Congress has had enough and they’re pissed.

Two Egos, High Stakes: Will This Get Disastrous?

TOM BILYEU: Do you think that we’re going to see two egos that have no incentive to back down? Trump can be very pragmatic at times, but he’s very bombastic in a way that I think Xi responds allergically to. I think Xi has proven with the zero COVID policy that he’ll go hard in the paint and is perfectly willing to see his people suffer to get what he thinks is the right outcome. Does this get disastrous before we find resolution?

KEVIN O’LEARY: I think it’s a good debate for you and I to have because I think this will be the toughest negotiation. I think you’re right about that. I don’t think Xi wants. You know, when you’re the supreme leader for life, you can’t make many mistakes because you got to keep everybody happy. You’re only the supreme leader while the people that support your supremacy back you up. If they see weakness and you’ve seen this happen in China before, you’re gone pretty fast.

And so he’s got a pretty big pressure cooker there. A real balance. He cannot have mass unemployment. That would be mass inflation because he would have to print money people to buy bread and the price of that bread would go through the roof. And so it’s. And he knows that. He’s not stupid. This is a smart leader. And I think that’s the pressure cooker. So my guess is there’s going to be a deal.

And it doesn’t cost a lot for Xi at this point to give up on IP theft. He’s already stolen all he needs. And it’s sort of at this point he can compete. And I think he is. I think he’s competing in aeronautics, he’s competing in biotechnology, he’s competing in AI. And he did it all on the backs of other people. He stole it all. And so now you can’t take back what he’s stolen. But he is advancing his own versions of all these things.

And I think it’s an easy gift for him to actually comply with the World Trade Organization, to have disputes. He’s got, I don’t know how many thousand disputes are unresolved at WTO. So maybe he should get kicked out of that or at least fix that, which I think the WTO could pressure him and might do so. But they’re going to need the lead of the US to start that.

And I think China wants to be playing with the big boys, the G8, so to speak. I think they want to get there and I think they’re going to be vicious competitors. But I think it’s good and healthy to have a competitor like China. And I’d like just for them to play by the rules. And I think that messaging is the one that the market is anticipating. If we really thought it was going to be disastrous outcome. If you and I believe that, and the majority of investors believe that this market would correct 40% right now. And I don’t. I don’t see that happening, man.

The Thucydides Trap: Rising vs. Declining Superpowers

TOM BILYEU: Fingers crossed. I certainly hope you’re right. The image that plays in my mind that I’m always looking for somebody to talk me off the ledge is that we have the perfect setup for Thucydides Trap. China has a long history of being the big dog in the world. They have the identity of we are the biggest and the best, that we’re this temporarily embarrassed nation. We are finally clawing our way back to the top.

Every time you have a rising superpower and a declining superpower, they end up colliding and they find themselves inextricably, typically pulled towards a kinetic war. I think we’re already in the middle of a cold war with China. And so I look at, if I’m in Xi’s mind, and I don’t think like an American inside of a Chinese body, that I think of the way that a collectivist person would think that has, you know, come up through all of the horrors of Mao that personally affected his life.

He sees what I call red light, green light capitalism of, “Hey, we understand capitalism is how you move forward, but we also know that if you kidnap enough of the top people and re-educate them, that you can keep a level of control on this thing.”

So, to me, this is all going to boil down to. Because I think he is going to flex as hard as he believes he can possibly do before there’s a coup that he can’t squash with violence. If I’m really honest, and it all comes down to how real is the housing crisis. If the real estate crisis over there is real and they’re like, in 2008 levels of fragility, then I think he’s going to realize, “Okay, I’m not going to be able to push this as far as I want.” He’ll go, you know, he’ll push, but, like, ultimately, Trump and he are going to come to the table and both realize, “All right, we’re not on strong enough footing, so we’re going to have to come to an agreement.”

But if the housing crisis isn’t real enough, I think Xi will be able to out. He’ll be able to get Trump past the midterm elections, and then it’s over.

The Pursuit of Freedom vs. Authoritarian Control

KEVIN O’LEARY: So let’s just break down what you just said there, because I think you’re on to a very good point here, and I think we should look at it. You just described a scenario where if I were a young, bright individual in any country, anywhere, and I had the opportunity because I was an entrepreneur and I wanted to exploit my ideas and I wanted to build a business and I wanted to be an innovator, would I want to go to a geography that you just described, or would I like to immigrate to America, where for over 250 years it’s proven that if I’m good enough and my ideas are validated and they do solve a problem, I can build a business and create freedom for my family.

So I started that basis as being what makes any country competitive. Can you create an environment even with all the faults that anyone has. Like, there is not a chance in hell I would want to go live my life in China. Not when I could starve or Supreme Leader could re-educate me. I love that word you brought up. I don’t want any of that. Why would I want that?

And so in the pursuit of intellectual capital, that creates all the innovation globally, who’s going to win on this one? And I think the constant signal between these two economies is just that the human being who wants to live in freedom, who would rather go to a place with all of its faults. I mean, there’s a reason that people risk their lives to cross rivers under barbed wire to get into America. You don’t see that happening in China. I don’t see anybody trying to get into China. And that’s why.

And so I’m going to bet my capital on that. And I think the rest of the world is betting their capital on that. And it’s sort of then you can get into the mishmash of who’s the president, and all the rest of that stuff. But I’m confident that my assumption is correct about the pursuit of freedom being the reason that economies are successful.

And I think you can steal all the stuff you want, but if people don’t want to move there, you have to rely on your own internal policy, which can be brutal. And ultimately, you’ll never be the winner. You’ll always be number two. And maybe that’s okay for Xi. Maybe he can live as number two in perpetuity, because I’m pretty sure he’ll die one day. I mean, I don’t think he’s a vampire.

And so if they really want to compete and they want to win long term, the only successful philosophy, period, is democracy, period, period. That’s it. Or a form of democracy that is so trusted, such as trusted leadership, like the UAE, which is not a democracy, but has proven for at least this last 50 years that they understand what democracy is and they rule that way. That’s the only way it’s going to work.

You see a lot of people trying to get into the UAE and getting a passport there. They want that. They like the system, the policy there, but that’s a very democratic in a foreign country. And I’d argue that they are the petri dish. They could have that country is only 52, 53 years old. They could have chosen the Chinese way, they could have chosen the Russian way, they could have chosen Venezuela or Cuba or North Korea in a way they didn’t. They took the best of culture around the world, the best of policy. And they created a behemoth economy that’s competing now.

And the metric I use is China is number two in AI spending, the US is number one. Who’s number three? UAE. How’d they do that? And so it’s sort of I teach this stuff. I’m an executive fellow at Harvard. So I have classes with people and explaining to them what I believe works, trying to convince them to think that through and trying to convince at least a third of the class not to become consultants because that’s what they, they just make consultants at these business schools. Then those people live a life of mediocrity. It’s a shame to see it happen.

But that’s a long answer. So I’m not as worried as you are because I think long term you can’t beat what America has proven works.

The Challenge of Socialist Sentiment Among American Youth

TOM BILYEU: I agree with you on that. However, where is your confidence level that America, the voting public is going to maintain their belief in that freedom? When I look at a Mamdani or I look at just the look at Minnesota and the types of candidates that are running for governor, running for mayors of local cities, there is a real populist push to the left for policies, whether you call them blatantly socialist policies or you call them social democracy.

For reasons that I can outline in detail, I believe that American youth is losing their enthusiasm for capitalism, full stop.

KEVIN O’LEARY: Yes, I’ve heard that. And I think it’s a valid concern and it’s a fair point to bring up. And you definitely have evidence in New York City and other states, as you’ve detailed, 100%. But I’ve also heard that same claim back in the 50s. I go back and I look at history. There was a time when communism was rising up and it was occurring in places like New York City. There was a very bohemian vibe to it and people claimed that it was a better way of life. And young people swarmed to some of them are called beatniks. That far back. I’ve seen this movie before.

TOM BILYEU: And so what knocks it back though?

The Reality Check of Economic Cycles

KEVIN O’LEARY: Well, I’ll tell you what happens. Reality strikes. It’s sort of what you hear happening right now in New York because that’s a good case study. This Mondavi thing that’s going on, if you listen to his rhetoric, it’s basically “money for nothing and chicks for free.” I mean, and I totally get it. I totally get it. And it’s very, it’s a great message if you want to be elected as mayor. His problem is going to be delivering on that.

New York is already the highest tax jurisdiction in America and it’s obviously not that well run already. And so what happens for these kinds of cycles? And my argument to you is going to be very simple. The American democracy, the way it was built, it has the ability to self correct and does it self corrects in four to eight year cycles. And it has since it was formed.

You just saw it happen in the general election. The country was moving too far to policies that didn’t make sense to the kitchen table in Champagne or Urbana, Illinois. And so boom, it’s self corrected and it self corrects at the municipal level, at the mayor level, at the state level, and it’ll do it again.

Because when you offer “money for nothing and chicks for free,” you can’t deliver. The system doesn’t provide for that. And so it’s a classic case of “you won’t get fooled again.” Because these young people that are voting for him are going to want the free food, the free grocery stores, the free subways, the free and there’s not a chance in hell he can deliver that. And so they will be pretty unhappy with him in the next cycle.

Now, I’m not sure he’s going to win. There’s a fair amount of people willing to start to examine his policies. But my whole point, and I don’t want to get too far, is that yes, people have gone into this. Young people today want communism, Young people today want socialism. Not actually the majority of them want a job. They want to raise a family, they want to be able to support it.

And about a third of them have that burning desire of the American entrepreneur that wants to create something magical for themselves. Not the greed of money, the pursuit of freedom which has driven this economy. And I live that every day and I can guarantee you every year, and I’m the investor in them, I see a new crop of them. We’re very healthy there, we’re in great shape.

So within my own family we have these debates. I’ve got young kids too, and believe me, Thanksgiving dinner is full of this rhetoric. But I look every year at how they too have advanced. The minute they got a paycheck and saw tax, they went from being screaming liberals to raging conservatives. And that’s kind of what happens. I watched it happen in my own family. It just happens.

People want to know, “Where did half my paycheck go? Who did I just give that to?” As soon as you get a job, you move from being that socialist to that conservative, that’s how America works.

The Debt Cycle and Inequality Crisis

TOM BILYEU: All right, I’m going to give you my best black pill pitch and then I hope that you can dismantle this argument. So I’m a big Ray Dalio person. I believe that Ray has gotten to the physics of how money works effectively by looking at debt. And we’re nested inside of a big debt cycle.

And the problem is in the 50s we had not reached phase five and a half, which is effectively where we are now. Phase six being total collapse. Just the debt becomes such a burden. There you, there’s nothing to do. You have to default. It seems to me that we’re on that path, especially given the big beautiful bill. But I don’t want to get distracted by the whys right now.

Just the structure of the debt goes like this in a fiat money system where the only way out of the kind of interest payments that we have to make now to keep giving everybody the “money for nothing and chicks for free” is that you print money. Printing money makes assets go up. Houses are the only asset that people understand intuitively.

So suddenly that housing becomes unavailable to the whatever, 40ish percent of people that otherwise just aren’t going to own assets because they don’t understand financial markets. And so now you get this hollowing out of the middle class by pushing the people that otherwise would have been in the middle class up to the upper class because they do understand assets. And then you push the 40ish percent of people in the middle class and low class down even farther because they don’t understand assets.

And that hollowing out creates this massive inequality which triggers something that is so embedded in our DNA which if you’ve ever seen a monkey do a task next to another monkey doing the same task, you pay them both cucumbers, everybody’s fine. You pay one monkey a cucumber and the other one a grape and the one getting the cucumber freaks out. And that’s what we have now.

And so it, the Gini coefficient which is the basically it doesn’t matter if everybody’s poor, everybody’s rich. What matters is are there poor people who can look to their neighbor and see them being rich. That’s when people go ballistic. That’s the setup that we have. The middle class essentially doesn’t exist anymore. Housing is completely out of reach. Somewhat of an illusion because it’s really just money printing. But anyway you create that setup.

So now even these kids that would they want to be raging conservatives, they still don’t see how they’re ever going to get on the property ladder. And so that resentment just builds and builds and builds.

The Debt Market Perspective

KEVIN O’LEARY: Well that’s a very eloquent job you just did there. I read Ray as well. I’m an advocate of understanding his point of view. It’s an important one for me. I’m basically a debt guy and always have been, and I came up in the fixed income market. So 100% he’s a very valid thinker in strategizing that scenario, and the question is why wouldn’t that happen?

Let’s examine because one of the things you have to risk when you’re an investor like me is if I really believed that that scenario is going to roll out, my portfolio mix would be completely different than it is right now. But I’m basically believing that the debt markets, which they call them, the bond vigilantes are asleep right now.

The smartest investors are not the equity guys. The smartest investors are the debt guys, and the reason is they take duration risk. So they have to be historians in the sense they look back to try and forecast the future.

The Big Beautiful Bill and Economic Strategy

Now here’s some things you got to think about. The big beautiful bill which caused chaos in the relationship with Elon Musk and Trump that’s still playing out was Elon had the understanding in his mandate, his 120 day mandate that he would try and create a balanced budget. Instead we took on another 3 trillion of debt if we just score this budget the way it is.

What Elon didn’t understand, and I think he understands now is to get stuff done in Washington. And the primary mandate of getting that bill through was to anchor the tax rate because the reason the American economy is, and we just got new consumer numbers today, economy’s on fire. It’s doing so well right now. And that’s because this tax rate is competitive against the G20.

We don’t want to change that. We can’t have our tax rates go up into the top quartile of tax the G20, because it’ll slow down GDP growth. That was Trump’s goal. He achieved it with a big, beautiful bill.

Finding 3 Trillion in Savings

Now, how do you deal with balancing the budget? You got to find a way to save 3 trillion. Well, that’s where his new task is. And he can’t do reconciliation except every 12 months. But you may not, or you may know this. The government timetable starts in September in the new year.

So as soon as you get past September, and this is what I don’t think Ray is giving much consideration to. If the economy continues to grow, the amount of tax income that comes in just on a normal day basis goes up. In addition, if the tariffs are successful at a 10 to 12% rate, that in itself has not been scored yet, that brings in trillions of dollars against this deficit.

The third aspect, and I give you on this one, is does Washington have the stomach to actually take these new revenue streams and deploy them into debt reduction as opposed to pissing them away with stupid programs? And that is the challenge that I think is next.

Because it wasn’t long ago that we had a balanced budget in America. It doesn’t have to be this way. There may be, for example, just doing a means test on Social Security. Maybe not everybody should get that check. Maybe it’s a different form of tax. Maybe if you’re making over a million dollars a year, you don’t need a whole 4,000 dollar a month check. And so that’s one aspect. Health care could be better. That’s another aspect.

Optimism vs. Global Perspective

I’m an optimist in the sense that Ray hasn’t given any credit to these other sources of income. He has taken the baseline assumed. It doesn’t change. I’m not there yet. And apparently the market isn’t there yet, either on either bond vigilantes or on the equity side where we continue to see new highs. I’m more in the bullish on America camp.

And Ray, as you know, spends a lot of time where I do in Abu Dhabi. He’s a global thinker and I like that. But even he knows where half of his dollars go. More than half as the rest of the world’s sovereign wealth goes. Where do you find it here in America? Because there’s no other market like that.

And if the rest of the world believed that collapse was imminent, they’d be sitting with all that cash under the streets of Zurich. So I don’t, you know, I’m not agreeing is what I’m saying. I’m the other side of that argument and I’m going to stay with it and I’m going to watch it and I’m going to be part of it.

Advocating for Small Business

You know, I work very hard in Washington on behalf of. And my last point on the Ray thing is 70% of jobs in America, 70%. 70% are created by companies between 5 and 500 employees. Those are my people. Those are the companies I invest in. I am their advocate in Washington. I actually read the Tax Act. You didn’t read it? I read it.

TOM BILYEU: It’s just you, I think, at this point, which thank God you did, by the way. So the more info you can give people to look out for, the better.

KEVIN O’LEARY: And I saw stuff in there I didn’t like and I worked with Senators Hagerty, Rick Scott in Florida and Ron Johnson with their staffers. And I said, “Guys, this is bad for small business in America. This line, this line, this line, this line, this paragraph. Help me ward off this catastrophe, because I can’t do it. I can only be the advocate for these businesses.”

And if you don’t believe me, why don’t we talk to some of these businesses and thank goodness these great senators had the guts to get in there and fight for these changes. And I’m extremely proud to have been involved in that. That took out some extremely bad policy, but that’s the way America works.

If you really believe that it’s going to hurt 70% of job creation, you have to stand up and go to Washington and sit down and meet these people. They’re not stupid, they’re pretty smart. And if they’re influential enough, and those three senators, they are the pillar of small business in America. And I’m so proud to know them. I mean, it worked is my whole point.

And so if you’re a small business in America and you are first or second generation, my message to you is I have your back. I have your back as I do for all the companies I’ve invested in. And I now work policy also. You know, I’m just a guy that says, “Look, here are the facts. Let’s fix this mistake before it becomes law.” And thank goodness we did. And now I’m a believer in this bill. Now are we going to solve the 3 trillion? Yes, in the ways I spoke of previously.

The Growth Challenge

TOM BILYEU: Well, talk to me about how we unlock growth because as I look at it, as of right now, my bet is, and I’m literally moving my money in accordance with this bet that America, the bond market cracks within the next 10 years barring a radical change in policy or the unlocking of growth. That’s just math.

KEVIN O’LEARY: So. Well, you’re talking mass inflation there, correct?

TOM BILYEU: So yeah, they’re going to either have to print money or openly default. They’re both defaults in my opinion. But how do we open that growth? Because there is that, that’s a real thing. If we can unlock enough growth, we can really do it. But what would that take?

The Stablecoin Solution

KEVIN O’LEARY: Okay, so let’s examine that with granularity because it’s important what you’re raising there. In order for that scenario to play out, you’d have to have a lack of confidence in the U.S. treasury bill, period. You would have to find another place that people are comfortable putting their liquidity in every country on earth outside of the US treasury bill, which is considered the risk free asset.

And so right now it is. And under your scenario in the next decade that is no longer the case. It would be more like a Venezuelan telco bond. And so, you know, it’s. Is that going to happen now? Why would that happen or why would it not happen?

I want to point you to some policy that is going to become law hopefully on Friday, the stablecoin Act. So let’s talk about the stablecoin act. And talk about the treasury bill and talk about inflation, all in the context of what you’re bringing up here, a lack of confidence in the U.S. treasury bill. Let’s just stay focused on that.

So when this law passes and you’re a the US So just to describe this, the Genius Act Hagerty bill, Senator Hagerty, we’re going to create a product in America that is now legal that allows you to create a digital dollar. So a product that you buy USDC is the one I’m using out of a company called Circle.

And the full disclosure, I was an early shareholder in Circle. I believe in what Jeremy Allaird was proposing, although nobody believed him seven years ago, nobody. And today he is the CEO of a very successful public company that trades today that generates and creates these stablecoins.

Digital Dollar Innovation

Why is this important? So if I can buy a stablecoin as I do right now and he is forced by law or this pending law to be audited. For every stablecoin he has, it’s backed by a US dollar. He has to prove it to be totally transparent. So instead of holding paper dollars I could just own USDC on my phone which I do. Right here on this phone I have a whole bunch of USDC. I can send it to anybody in the world I want if they have a corresponding account and you just transfer it, which I do.

But think of it this way. Let’s go back to your point about the T bill. Under your scenario the T bill has to collapse as a secure form of risk free investing. If I live in Turkey, you and I talked about Turkey just a little while ago or I live in Venezuela or I live in any unstable regime, I can take my local currency and I can buy a stablecoin backed by the US dollar.

The law says this, it must be backed up by the dollar or an equivalent including the t bill under 92 day duration. So complete liquidity. Can you imagine if I had that option in Turkey and I’m just working there as a plumber and I’m watching my currency have 12% variations in volatility year to year or I can take half of it or maybe 2/3 of it or all of it and put it in USDC on my phone?

I’ll buy that USDC even though it pays me no interest whatsoever just to have the stability of my trust of the T bill. So all of a sudden what you didn’t take into account and Ray didn’t take into account is every country on earth I believe over the next three to five years is going to take advantage of an ability to digitally own something. They have faith in the American economy and the American T bill.

Global Trust in America

Now under your scenario, and it’s fair to be a critic, you’re arguing that the country will continue to mismanage itself with deficits that at some point this faith cracks. I’m not there. I think what’s happened with this legislation is we have found a way to let every human being on earth buy into the trust of the 2 year or 90 day, I should say T bill.

And if there’s a better place to put their money, they’ll put it there. But there isn’t because they’re not going to put it in China ever, ever. They don’t trust Xi at all. And I’m talking about people that don’t have to live in China like the rest of the world, who do they trust? Not the President of the United States, the American economy.

They know the president’s going to change every four or eight years, but they trust the way the country operates and how it’s delivered value for 250 years. That’s my argument and so far it’s worked.

So I don’t think in your scenario you’ve taken into account the innovation America brings forward, not the regulation, the innovation that’s going to solve for demand of the most trusted piece of paper on earth, the American T bill. That’s my case. It’s a great debate I’m having with you and I think the listeners should think about it and I think I just won that argument.

TOM BILYEU: All right, it is a great argument and I’m very glad that you’re making it. There are a couple caveats that will determine whether you win in reality, which is are they going to make that inflationary or is it going to be you can only buy the debt backing it on the open market? That would be question number one.

KEVIN O’LEARY: Yeah, well, in the context of, you know, the liquidity of the T bill, the more liquid it gets, the more the market determines its value. You would agree with that, right?

TOM BILYEU: Sure.

The Global Stablecoin Revolution

KEVIN O’LEARY: Okay. So between Circle and Tether, the two different stablecoins that until the law was passed, you could call them rogue if you wished, they’re now bigger than most countries in terms of owning T-bills. Bigger than most countries, the sixth largest.

And I think probably by 24 months from now they’ll be the third largest, bigger than any country, or bigger than 90% of countries ownership. And that diversity is global. I’d argue the people that can own these things are going to be the billions of people around the world.

And so that’s pure open market price discovery. Your scenario is going to be very difficult if it’s not liquid. But I’m arguing it gets more liquid by the second and the demand for T-bills, the more the world’s volatile, the more there are rogue nations, the more people that live in these rogue nations don’t trust their governments, the more liquid stablecoins will become.

So I think there’s always going to be rogue nations. There’s always an Iran, there’s always a North Korea, there’s always a Russia. All of those people are not stupid people in the UST bill they will trust. And I rest my case on that.

And so in my scenario, the probability of what you’re worried about never happens, which is a lack of liquidity, the inability to get out of a bill to buy a T-bill and not be able to sell it for what you paid, plus interest. Very difficult for that scenario to happen in the way I’m seeing the world coming together.

The Inflation Question

TOM BILYEU: Well, so the question that remains unanswered though is are these going to be inflationary? Because the thing that’s going to break people’s confidence in the bond market is very simple, that the US continues to deficit spend. More money is coming into the world. As more money comes into the world, prices are going to go up.

You’re going to further exacerbate that dynamic that I was talking about earlier. You’ve got all the resentment because what ends up happening to nations for people keeping score is they tear themselves apart from the inside. So the economy doesn’t necessarily collapse because there’s some external pressure. It collapses because people start killing each other inside the country.

And so what I would need to understand to know, because I agree with you, I think that the genius act is phenomenal. I couldn’t be more excited about it. I think that it really is going to make what I’m talking about less likely. However, if it becomes an inflationary thing where we just… anybody that wants it will make more, make more, make more, make more then you are going to run into the same thing that we see in Houston.

So Houston has solved the housing crisis by saying “we’re just going to make as many houses as we want.” Now that’s great, but people don’t exactly rush into that market. And so you end up getting weakness in that market because people go, “it’s not a good investment. It’s great if I want to live in it, it’s not a good investment.”

So if you run into that same thing where it’s like, okay, the US Debt is a great place to put money if I’m living in a rogue nation or whatever, but I’m not going to be using it as the risk free rate of return. It was just getting bigger and bigger and bigger by the day. So I presume that they’ll have to cap that at some point. So it’s not just like anybody that wants to buy, we’re going to sell.

The Balanced Budget Debate

KEVIN O’LEARY: I think what you’re saying and I think we should make it very simple. Do you believe we’ll never have another balanced budget again? That’s what you’re telling me? If I believe that is what I’m telling you, yes. And so if I believe that, I would agree. You’re right. I don’t believe that.

I do not believe that every administration going forward will never attempt to balance the budget. There is a growing concern on a bipartisan basis of exactly what you’re talking about. And so I have, you know, I understand when people think of politicians, they’re below single cell amoeba. I get it, I get it.

But if you actually start to talk to various members, both the Senate and whether they’re governors or whatever, I would argue now that about 25% of them on its way to probably 33% of them going to be tested in the midterms, are starting to become the kind of Eli Crane kind of guy. A guy I know who’s just made it his mission to keep calling this topic up when he’s in Washington. Exactly what you’re talking about.

So I think there is a way to balance the budget. Ron Johnson has pointed this out with some very simple charts. Of late he’s found a way to find that 2.3 trillion which would get you there and then even more. Elon has pointed some ways out. Very difficult to stomach. But there’s a path there. Then you have growth on your side, then you have other forms of income, like tariffs.

I’m kind of in the camp that doesn’t see the world you do. And that is fair for you to take that position, because if you really were going to be right, I would be increasing my holdings in hard assets. I would buy more bitcoin, more gold bullion, probably collectibles have proven, even watches. I mean, you think about hard assets that have appreciated better than the S&P. Part of it’s because of the concern of where can I put my money where it’s protected against that inflated scenario.

And you’re right. People are taking bets like that. Certainly bitcoin’s been an extraordinary asset, and it’s not yet even determined whether it’s a commodity or a security. We’ll get that in the Infrastructure Act.

But I think the answer to your question is you may be right. If I thought you were 30% right or 20% right, why wouldn’t I just hold those assets at a 20% allocation? And I do. So, in a way, I’m hedging my bets. I’m not as pessimistic as you, but I have over 20% in hard assets. They’re not liquid, but it’s gold. It’s bitcoin, it’s collectibles, it’s watches, it’s certain types of real estate, oceanfront. It’s data centers that I invest in, which are an energy play. These are hard assets.

And otherwise, I put it all into 4.2% T-bills, which I don’t. So it’s, in a way, I’m admitting there is a possibility for your scenario, but it’s, to me, no more than 20%.

TOM BILYEU: Yeah, no, I think that’s smart. And like you, I see paths out of it. I just don’t think it’s going to happen by accident. So in the same way that you are, and thank you, by the way, going to Washington, D.C. and fighting for small and medium companies, which I think is huge, huge, huge. And I cannot celebrate you enough for that. I’m doing my part as a media economic commentator to just try to get people focused on how money actually works so that they can start understanding how to move if we start going down that path.

KEVIN O’LEARY: Path.

Abu Dhabi: The Capital of Capital

TOM BILYEU: Speaking of how to move, I was in Dubai, and lo and behold, I bump into Ray Dalio. And I was like, “Ray, what are you doing here?” And his whole pitch was, “oh, Tom, I come here in Abu Dhabi a lot.” And he was like, “what matters is how people are with each other.” And you have talked about Abu Dhabi being the capital of capital. What’s going on? What are they getting right? How are they hoovering up so much capital?

KEVIN O’LEARY: It’s the leadership. It’s the confidence that you get. Understanding their policy, they figured out within three generations, policy is the only thing that matters. Why is Abu Dhabi the safest city on earth? Policy. Why can a woman walk around there two in the morning? Why can I leave a Rolex on a bench and have it returned to me, to my hotel? Or a purse?

TOM BILYEU: Did that actually happen?

KEVIN O’LEARY: It happens all the time. I mean, it’s an incredible… Not to me. I don’t leave my watches on, but…

TOM BILYEU: I was going to say people have told…

KEVIN O’LEARY: But I actually wear incredibly rare pieces when I go out for dinner in Abu Dhabi. I don’t have, I have no concern of being robbed there and other people feel the same way. I don’t do that in New York. I can’t do that in San Francisco or Los Angeles. You know, I have mock copies of my rare ones. You know, I have unique pieces, like one of a kind piece, uniques that are priceless. I wear them in Abu Dhabi. I don’t wear them anywhere else.

But so the point is that confidence, as Ray was saying, is understood by people. And they have the most advanced medicine in the world there. When I go to, I go to a clinic in Dubai called Longevity, where I get an EBOO treatment that I can’t get in the United States, although all the doctors are American and Swiss and French and German with the most advanced American equipment on Earth.

And, you know, I’m a big believer in EBOO, which is a form of dialysis, but also injects in 50 billion exosomes, which reduces inflammation.

TOM BILYEU: I wish it could do inflation as well.

The UAE’s Economic Model and Global Competition

KEVIN O’LEARY: Inflammation. So much inflammation. And so 14 days later you feel like you’re 20 years old again. So it’s really quite something. And all the advancements they have, but they’ve also invested wisely. Companies like IHC and One Development.

You know, I’m involved in real estate there in a company called One Development. They have the most advanced technology going into their developments. Digital walls that we don’t even have here yet. And complete AI technology that’s integrated into the building. So it’s not like 15 different apps. One for your music, one for your temperature, one for your security cameras. It’s completely ubiquitous.

You say to your phone, “Oh, I’m going to be home. Please open the garage door and set the temperature at 69 degrees.” Boom. I mean, that kind of stuff we’re years away from, they’ve got it because they’re building it. I can’t say enough good stuff about that place. It’s just the only way you’re going to find that out is you have to figure it out. I’m on the same boat. I went there, I’ve been going there for years. I realized there’s no place like it on Earth. They are becoming the capital of capital.

And so if you want to build a data center here in North America, you need turbines to convert natural gas into electricity. That’s the path of least resistance right now. Well, you got to go there because they were smart enough to invest in a lot of the turbine manufacturing capacity on Earth. So you make them your partner and you build out a facility somewhere in West Virginia or in Alberta, wherever you’re going for your natural gas.

I really would tell people to study the policy of that country because what they basically done is they were students of every other policy on Earth and chose wisely from each economy and each geography. What are the Canadians to write in their parliamentary system or the British or the Australian. What do the French do in developing the arts, what do the Germans do in engineering and all of that. They took that policy and moved it to Abu Dhabi. And that’s what you get. You get the world’s most successful economy in 50 years like that. I mean, everybody should be studying what they’re doing. It’s just unbelievable. And the beneficiaries are the people of that country.

But you know, you and I could go on about this for a very long time. I recommend it for everybody. The resorts are spectacular. It’s a beautiful place. The food is off the charts. Every restaurant brand you know is there. So it’s just every luxury designer is there. The malls are unbelievable, the museums are incredible. I mean, it’s just the whole thing. They’re building a sphere there like Las Vegas has, except bigger and better. So the acts are going to go there to perform. The whole thing is incredible.

And what they’ve done on corporate taxes, they’ve made it so attractive that guys like Ray and I go there and set up our companies and we invest out of there. Of course we do because it’s the path of least resistance. Money has no nationality. Now with the USDC thing, you know, Stablecoin act, this makes it even better because the ADGM, the regulator there, is endorsing the SEC policy and works in sync with the SEC.

So now I don’t have to worry about being rogue when I’m doing business over there because I’m regulated with a compliant regulator that understands they’re in sync with the SEC. The Canadians are doing the same thing with the OSC. So these countries are all syncing up with the policy in the United States. Policy, right. Not politics, policy. So if we pass policy in the US and the ADGM in Abu Dhabi agrees, and the OSC in Ontario, Canada agrees, those are two geographies I can do business in and stay compliant. Bingo. Policy.

Understanding Tax Policy and Global Competition

TOM BILYEU: All right, talk to me about tax policy. So right now there’s this just burning desire in young people to tax the rich, make billionaires pay their fair share. Yet when as a business owner I think about taxes, I’m like, hey, this makes growing harder. This makes things more difficult. So you’re talking about it there in the UAE. What do you wish people understood about tax policy in terms of how it will make their lives better?

KEVIN O’LEARY: The best way to look at tax policy is consider you’re in a competition globally because money has no nationality. As I just said, it flows to the path of least resistance. You do not need to have the lowest tax rates to win. You simply need to be competitive.

So if I’m going to spend, and as I am, $5 billion building a data center, I need to know the place I put it in and the state I put it in or the province I put it in or wherever it’s going has competitive tax rates. So I can raise the debt and the equity that I have to raise to build the facility. And so if there’s a competition, what the great thing about North America at least is for hundreds of years we’ve understood the competition of both states, countries and policy.

So if you have competitive taxes, you’re no different than the Netherlands or Finland or Canada, and you’re North Dakota or you’re West Virginia. Check the box on that. I don’t have to worry about the taxes. I’m good there. There’s no crazy tax policy. Then do I have a stable policy around providing building permits and access to power and employment regulation and fiber to get access to the Internet and water policy because I need water if I’m going to cool my compute. And so it’s all a competition.

And so the reason Trump fought so hard to get this bill through is it kept him competitive against Ireland. For example, do you remember the period when all the pharmaceutical companies reset up their headquarters in Ireland? That’s when the tax policy was out of balance. And there’s a good example of what happens. Everybody just moves their headquarters. You don’t have to do that anymore. You can be concerned about what you’ve been discussing on spending, I get that. But not on tax policy anymore. We’re in a good place now.

And then you have the competition of states. I don’t live in New York because I think it’s a poorly managed, over taxed city with a 5 to 10% risk of having a very unusual person who wants to do money for nothing. I don’t want anything to do with that. And so I quietly, like everybody else, moved to Miami. All of my neighbors are from New York and Boston and my whole building is New Jersey, Boston, New York City. And they go back home for six months less a day. That’s the competition of states.

So if you want to have stupid tax policy, you simply lose the money. People don’t have to talk about it, they just do it. And 12,000, whatever it is, license cards a week being transferred to Florida. I’m telling everybody, stop coming to Collins Avenue. We can’t handle the traffic. Please go somewhere else. We’re tapped out. No more license plates from New Jersey. We just don’t have room for you. You got to go to Texas. Go somewhere else.

TOM BILYEU: That’s hilarious. Now what is it that people are misunderstanding? If we could capital control and stop people from leaving, would we be able to tax our way to prosperity?

The American Dream and Capital Flow

KEVIN O’LEARY: Never. That’s not the American dream. The number one export of America is not technology and it’s not energy. It’s the American dream. The job. The only job, the most important mandate the President has is to maintain the American dream so that every 60 cents of every dollar worldwide comes to pursue the American dream. The minute you…

TOM BILYEU: How do you define it?

KEVIN O’LEARY: Well, the American dream is very simple. It’s I have nothing but an idea and I need to go to a place that respects my idea, lets me maybe own my idea through IP law, and then lets me work like a dog to make it come to a reality as many millions of people have done and continue to do.

Through all of this rhetoric, we’re still generating more millionaires per year than any other jurisdiction on Earth and continue to. There are more and more and more and more millionaires in America than anywhere else on earth. Through all of the bad stuff and all the rhetoric and all the unfairness, you can still do exactly what I said, have a great idea, move from an oppressed nation, move to America, take your abilities to turn this idea into a business and bloom. Everybody still believes that. The minute they don’t believe that is the end of America. And that’s not going to happen anytime soon because it’s still a reality.

So when people start to tell me, “Oh, the next generation doesn’t care about the American dream,” I call bullshit. That’s simply not true. Because the rest of the world all wants to move here still. And so I’m sorry, when I hear that, that really gets my ire up. It’s not true.

Now if you want to compete, you have to set up in any country an environment that draws in capital and a good example. And I think it’s a fair example. And it’s very current, as they like to say, au courant. Look at the last 10 years up in Canada where I invest. And I have lots to say about the Canadian policy under Trudeau.

Canada’s Economic Decline and Recovery

The Idiot King Capital left Canada over a 10 year period. The GDP dropped every year until it stopped growing completely. Even the Canadian pension plans couldn’t invest in Canada anymore and started investing in jurisdictions, primarily the United States, but others as well, where the policy attracted capital.

So the Idiot King put in place a bill called C69, which was called the Pipeline bill, which basically stopped all development of everything. Mines, natural resources, natural gas, oil, everything shut down. And the Idiot King took his people from a 10% at the poverty line to 25%. He impoverished his people because he was the Idiot King. And at the end of the day, his people threw the Idiot King out and replaced him with a guy named Mark Carney.

Now Carney owns the Idiot King. He’s got to fix the Idiot King’s policy. How fast can he do it? And what he’s doing right now is running around the world and it’s probably the right thing to do, saying, “I’m opening up Canada for business. I’m going to compete with the US and other countries by getting the right tax rate, getting the right policy, getting the right ability to bring in permits so quickly that you can actually not be a risk at a sovereign wealth level.”

Because the sovereign wealth left Canada during the Idiot King reign because they were promised policies they never got, so they couldn’t do any development. So they spent all the soft money on engineering designs and everything else. And the Idiot King screwed them. And so Carney has to reverse all that. But that goes to show you this is the competition of nations.

And I think Carney will be successful, which is why I am saying, wait a second, the idiot king is gone. Why don’t we allocate what we used to allocate, 2.53% of a fund which is the GDP that Canada used to have of the world GDP and put it up there. We’re getting in at all time lows. The Canadian dollar has been trashed by the king. And so I really think that these go in cycles and I like to see competition.

And I’ve been, when I was over in Abu Dhabi, I was pointing that out too. I brought some of the leadership from Canada quietly over to the palace and introduced them to the leadership, saying, “Listen, I think we can get back into Canada. I think we can do some things there, particularly in Alberta, where they’ve got unlimited power at the lowest cost in North America. Why don’t we put a data center in there? Why not?”

And that’s what we’re doing. We’re saying, okay, they’re competitive. Let’s go put a data center there. And there’s only, you know, the tenants for data centers are Microsoft, Xai, Tesla, you know, there’s 15 to 18, 10 tenants. They go to where the power is the lowest cost. And right now that’s under Daniel Smith’s leadership in Alberta, Canada, and she’s open for business. So, okay, I guess Canada’s waking up from an economic coma that was put in place by the idiot king.

TOM BILYEU: All right, I’ve heard you talk about a flat tax. Why would we want to do that?

Simplifying Tax Policy and Economic Growth

KEVIN O’LEARY: Well, I believe in making policy simple to understand. What I’ve said about this, the tax policy is incredibly complicated and it’s not right that I can afford to hire. I bet you I spend millions every year just preparing for my global taxes with professionals. Jesus. Accounting firms and lawyers. Millions and millions of dollars.

And it used to frustrate the hell out of me. And I’m saying, “Why is there so much friction in the system?” It’s because the tax codes are too complicated. If we just said, “Look, you know that your tax rate’s going to be whatever it has to be, I don’t know, 20%. And everybody has to pay 20%. No ifs, ands or buts, no deductions, no BS, nothing.” I think the world would work a lot easier. And I just write my check or make it 15 or whatever you have to do. Whatever you tell me, it’s going to be great.

Instead I got to go through all this crap of trying to figure out this deduction versus this, amortization schedule versus this, versus that, versus this. I don’t know. I mean, I’m just a pragmatic guy saying to myself, “Look, I can’t boil the ocean, but I can point it out.”

And I think your platform and platforms like this, and certainly it’s important that you present both sides of every argument because that’s why you have value. And I think you do a good job doing that.

And so I look at the tariff wars right now between countries, and I think if you told me today that let’s take the Canada US one because it’s so current. We mentioned it earlier. If they just said, “Okay, it’s going to be 10% both directions, boom, everything else gone, including the interprovincial supports or interstate, whatever the crap it is, no tariffs except 10% equal.” Boy, with the market like that, I would understand it. I could deal with it. I adjust my investment accordingly and move on. It’s the instability and the complexity of all of this crap that hurts growth. And that’s what we have to figure out.

TOM BILYEU: Is that going to disadvantage people that are stuck in a loop of poverty even more?

Breaking the Cycle of Poverty Through Stable Policy

KEVIN O’LEARY: No, I think it creates a more stable economy, that there’s two ways to get out of the loop of poverty, education and stable policy that gets economic growth. We want jobs for everybody. Everybody. And the way to create jobs is not government jobs. It’s 70% of jobs are created by companies with 5 to 500 people. They are the ones we need to get out of the cycle of poverty.

In every community, wherever you are, some entrepreneur is starting some business that’s going to hire five people. I don’t care whether it’s a hardware store or a car dealership or whatever it is, a consulting firm that helps you get AI into your small business. Whatever it is, that’s how you get out of the site. So you need policy, stable policy, you need competitive tax rates and you need education. And so we need to do all three of those, right?

And I think there’s, we could. I came up in education. I was, my first company, the Learning Company. Advanced reading and math scores. That’s all we did. And I always said, “Why aren’t we advancing super financial literacy?” And thank goodness in some states like Florida today they are.

But everybody, even when people say, “Oh, you have dyslexia,” I have dyslexia too. There’s always an opportunity if you can find the magic of somehow getting educated, even with hard streets like go work as an apprentice somewhere. Even if you don’t graduate college, who cares if you learn in an industry you’re passionate about and then you have a great idea. And this is for a third of America. It’s a lot of people.

I look at a cohort of maybe 900 students that I teach at Harvard as an executive fellow. I just teach entrepreneurship. And my job, when I open these classes up, I look up at all them. I say, “I only have one job here, to convince one third of you not to become a consultant and strike out on your own and form a business and create jobs. Your job is to create jobs. That’s why you’re here, not to become a consultant where you never make a decision of consequence and you float of a sea of mediocrity for the rest of your life.”

And so even Harvard’s figured that out. They don’t want to be just a machine that grinds out consultants. What value to the economy is that? None.

TOM BILYEU: I was just going to ask you. So what is it about the consultancy angle on life that traps them in mediocrity?

The Problem with Consultancy Culture

KEVIN O’LEARY: Because after two years of being a consultant and I’m just, I look at that resume and I put it in the garbage because they’re, they now are infected. They’ve never learned what it’s like to make an incorrect decision or a decision of consequence. They’ve never felt the panic and what it takes to make decisions of consequence where it’s a live or die, where your business is going to live or die, or people that work for you expect you to lead them out of the mess that you’re in.

That’s a certain talent that you have to learn how to do. You need to be able to learn how to distinguish the signal from the noise in everyday advancement of a business. A consultant doesn’t do that. They just make recommendations and there’s no consequence to bad recommendations. They just get farmed out to the next job they bill. That’s all they do.

So I think, listen, I have nothing against. If you make that horrible decision in your life, it’s on you. You did that. You just become a single cell amoeba in the ocean of mediocrity. And I’m never going to hire you. And many other people agree. They just. Consultants make really shitty CEOs because they’ve never done it. And so why curse yourself that way now? Look, this is not popular with the big consulting firms. They’re not loving me.

TOM BILYEU: Shock, Kevin, how could that be?

KEVIN O’LEARY: Yeah, but I’m pointing out reality to these people. And I’m very successful, I think, and luckily because of the new leadership at Harvard, which is dealing with a lot of issues, obviously, but they understand, and I’m just one voice in this, how important it is to breed this economic entrepreneurship into these young people, the smartest people in the world, to understand the difference between the signal and the noise and to go create jobs, not create consultants.

The Three-to-Five Rule: Parsing Signal from Noise

TOM BILYEU: All right, let’s assume that somebody just heard your pitch. They’re now not going to be a consultant. They’re in the real world. They’re making consequential decisions. They’re making mistakes, fine, they’re early. But they need you to help them understand how to begin to parse signal from noise. I get it, they need to fail. They need those consequential decisions. But I’ve seen people do the thing, but they just take the wrong lesson. Do you have methodologies? I’m not sure what the word would be for them to parse out. Okay, this is what you need to learn from that mistake.

KEVIN O’LEARY: I do, actually. It’s very simple. In every day of your decision making, there are three to five tasks you have to get done. And your job is to define what they are the day before to advance your business mandate. Whatever it is, I don’t care what the business is. There’s three to five things not in the next month, the next 18 hours after you sleep.

And let’s say you’re going to work. Most people work 18 hours, believe it or not. It’s insane, but that’s what entrepreneurs do. You need to get these three to five things done. Everything else that stops you. So those three to five things are the signal and everything else is the noise.

And your job is very simple. In the 18 hours of this day, that for me starts at 5:45 in the morning. Let’s go. Can I get my three things done? And I’ve learned this years ago. I always make sure I get my three things done before anything else happens. And I’m very, very, very productive.

Lessons from Steve Jobs and Elon Musk

And so I learned this from Steve Jobs, by the way. I work for him. He was an absolute nasty guy. A very unpleasant, but he definitely was. 80, 20 ratio, 80% signal, 20% noise. I believe I’ve achieved that. I think there’s only one other guy on earth that passed Steve Jobs, and that was Elon Musk. He’s 100% signal. It’s very awkward for him. He doesn’t waste any time.

But Jobs’ point was because I made all his educational software on the OS for him in schools, all 110,000 school buildings. And he would. He and Woz had a pretty interesting relationship. He understood that he needed to get programmers, companies like mine, to buy into their chip, their version of the hardware, which we did, but he used. There was no text back then. It was in the early 90s.

And he taught me, “Get your three things done.” And damn, was he right. I mean, that guy, look at what he achieved. Until Nvidia, he was the most valuable company on earth, and most of that legacy was on him. He just focused on things that had to happen, and he would not let anybody get in the way. And his style of doing that was very, very, very difficult. I mean, the guy was just a brute, but I respect him. Because he didn’t want you to like him. He wanted you respect him. And I do. And he was very successful.

So that’s my message to entrepreneurs. Understand that your job is to parse. And you have to understand what is it that I have to get done? Just today. Just today. Just today. Because you will find many, many things that will take you away from getting it done. You’ll push it till tomorrow, then you’re losing, then you’re going to fail. And you may. Your first venture may not make it, but that doesn’t matter. Entrepreneurs fail multiple times before I had my first liquidity event.

Today, I am laser focused on the three things I’m getting done today. And to be fair to you, Nancy, who books my 30 minutes every day, she has to parse. She knows what my three things are. And for me to go and spend an hour with you or whatever we’re spending together. And this is a credit to you, she has done her diligence on you, and you’re worth my time. I know that sounds arrogant as hell, but it’s very important that I wanted to do this because I respect what you’re doing and I want to be part of your narrative. But you have been vetted by one of the toughest women on earth, I can tell you that. And she would not waste my time, and so I’m not. I consider it an honor to work with you now.

TOM BILYEU: Appreciate that. How do you figure out what the three things you should be focused on are?

Investment Philosophy and Daily Priorities

KEVIN O’LEARY: I have many investment opportunities in front of me every day. Some of them are very, very big, and some of them are important to me as a person.

I’ll give you an example. I mean this may sound crazy, but we made – I talked about the data center with you that I have many data center projects, but I have a great team. Some of them are in Dubai, Abu Dhabi, some of the engineering firms and a huge team of guys and women been working on this and governments. It’s such a big project, it’s multi-billions that’s always on the top of my list every day because I’ve been working on it now for three years and every day there’s something I have to work on with somebody somewhere in the world. So that’s number one.

But number two today was I’m working with Sudiki, which is one of the world’s largest watch dealers on earth, to build a piece unique watch out of Tantalo to celebrate watch week in November. Watches for me are very important. It’s just part of who I am and it’s marked time. I’m a world known collector and I’m a member of the Horological Society of New York and I work with all the brands.

Someone gives up their life at 14 years old to become a watchmaker. I have a lot of respect for that. They’re an artist, so I support that kind of thing. We want to make the watch have a red stone face. FP Journey years ago created such a watch out of a stone, a ruby, basically a rough ruby.

The Art of Rare Stone Acquisition

I’ve started to work with some of the world’s top stone dealers to find such a stone that we can cut the dial from. I mean this is crazy stuff. The community that deals in these certain ruby stones is so small. It’s just a few people on earth.

I’m very, very fortunate and I guess I should thank Shark Tank for it. I’m known all around the world as “the mean shark” and all that stuff. But I get all my calls returned from everybody as the Shark Tank guy. So I started making calls and now I’m negotiating to get that stone so that we can continue our mission to make this watch, this piece unique that I’m going to own.

It’s going to come into my collection and I’m honored that a watchmaker would even consider doing that for an individual. But I’m very fortunate now because many brands do that for me. We make piece uniques. But my whole shtick is red. It’s got to work with red.

This is a Moser watch that is very, very rare. The only one in the world with a red band on it made by Moser for me. I’m proud because I love this piece. The watch that I’m designing with Sadiki is very much like this, except the dial is going to be instead of being an onyx, it’s going to be a red ruby.

That may sound nuts to people, but that keeps me balanced because I’m pursuing the chaos of art with business. And then lastly, I’m considering a new business I’m very intrigued in. I’ve been looking at asset classes moving in the markets and I think many of your viewers are watching this too. One of the most successful assets over the last 36 months have been collectibles and they’re liquid sports watches.

TOM BILYEU: Yeah, I was going to say, what are you looking at besides watches, sports cards?

Indexing Collectibles Strategy

KEVIN O’LEARY: I don’t want to own one sports card. I want to own an index. So I’m talking to some of the largest collectors, again, very fortunate be able to get my call returned from all these people saying, “Look, how can I index if I want to put a million bucks into an index of cards, let’s say 50, 60, 70, 80 cards?” I use ETFs. That’s how I invest. So my mindset is diversification.

I’m discussing this with some of the world’s largest collectors. I’m not that interested in bidding on one card and having the volatility of one card. What I’m interested in is where can I put my money into 50 cards. That’s how I’m going to solve for it.

I think in the new digitized tokenized world, I can find a way to do that because I would like to allocate – you were talking earlier about, I was thinking I’d put a 5% weighting into collectibles like I have right now in other hard assets. 5% feels good to me and I’m sitting on a lot of cash and T bills. We talked about that.

I wouldn’t mind taking some of it out of there into an index that’s an alternative asset class. Yes, there’ll be volatility, but generally speaking, if you have an ETF kind of structure, you don’t go to zero. And I don’t like leverage. So it’s sort of do it unlevered, that kind of thing.

TOM BILYEU: So one last question for you. Looking at somebody like Michael Saylor who does lever himself to the hilt, how do you think about that? You’ve got bitcoin as this insane asset class that has just returned, returned, returned. How do you keep yourself sober? Do you make exceptions or do you just say, “This is how I invest and I’m going to stick to it?”

Bitcoin Investment Philosophy

KEVIN O’LEARY: No, I know Michael. I respect him a lot. And he has created something of a unique situation. Not every investor agrees on my take on bitcoin, including in the ETF market. I don’t use ETFs to own Bitcoin. I don’t understand why I pay the fees to anybody to own Bitcoin. And that’s part of the challenge I have with Michael’s structure. I don’t need that. I don’t need leverage. I just own bitcoin, period. And so that’s worked. I bought it back at $16,000 or whatever it is.

TOM BILYEU: Congratulations, my friend.

KEVIN O’LEARY: Yeah, and the only challenge I have is to keep it at a 5% weighting. When it dips, I buy. When it goes up, I sell down to the 5%. I just have that discipline. But I don’t use leverage. Listen, what he’s done is fantastic. It’s worked for his investors. I don’t invest that way.

The Picks and Shovels Strategy

My philosophy is simply, “What’s the allocation?” Used to be 3%, now it’s 5%. Part of that’s through capital appreciation. But the other aspect of bitcoin that is my philosophy is if you’re going to own the asset, also own the infrastructure that supports the asset.

Because if you think about the philosophy of this, go back hundreds of years, would you have rather been the gold miner who hit gold one in 10,000 times or sold the picks and shovels to everybody that was trying to find the gold? Turns out on a risk adjusted basis, you did better off selling picks and shovels.

So on a risk adjusted basis, why don’t I own a bitcoin miner, which I do in Norway and Finland? It’s a private company now. It’s again a power play. It’s called Bid Zero. I got involved in that years ago. We were going to put it up in upstate New York behind Niagara Falls, which had very attractive power. But you can’t really do business in New York. You can’t get permits. The policy is unstable.

So we moved that asset to Norway where we got a similarly attractive power deal off hydropower, and then we’re building now in Finland with nuclear power. So we mine Bitcoin. I now own the infrastructure. And I feel that between the two of them, that’s the right way to own that asset class.

The other thing is I own the exchanges. I owned up in Canada, an exchange called WonderFi just got acquired by Vlad at Robinhood. So now I own some Robinhood. But the point is, he’s the infrastructure that I can hold my bitcoin on. And I own Coinbase as well.

That, to me, is how you own bitcoin. And then we wait and see what happens with the policy. That’s going to come right after they sign, hopefully they sign the Genius Act, then we do the Market Infrastructure Act, and then we keep moving down the policy platform.

TOM BILYEU: Fingers crossed. Kevin, this has been extraordinary. I can’t thank you enough for the time. How should people engage with you if they want to follow along?

Connecting and Engaging

KEVIN O’LEARY: Well, KevinOLeary.com or they can follow me at Kevin O’Leary TV, which is my name on most of the platforms. I love the narrative. I have a great social media team. I love to be part of the narrative on policy. You don’t see me shilling for any politicians because I don’t do that. But when there’s a policy issue and I’m enjoying the narrative we’re having on New York City, Merrill Race right now, you can see me posting all day long on that.

It’s been an extraordinary interaction. And I love my followers. They’re fantastic. And they really let me have it. I think what’s occurring in the world, this ability to have this narrative with millions of people is extraordinary. And it’s very, very healthy for democracy.

TOM BILYEU: Agreed, man. Again, thank you so much for taking the time. Really appreciate it. I will certainly be one of the people engaging with you. Everybody at home, if you have not already subscribed, be sure to do so. And until next time, my friends, be legendary. Take care.

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