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Shark Tank’s Kevin O’Leary floats hotel ICO

Mr. Wonderful touts regulated blockchain investments as the future

Kevin O'Leary

Mr. Wonderful, Kevin O’Leary (via KevinOLeary.com)

Shark Tank‘s “Mr. Wonderful” Kevin O’Leary came on CNBC’s Sqawkbox Monday to discuss the idea that Twitter might ban ICO ads and instead turned his appearance into an ad for the most exciting new ICO of the week: a coin-backed hotel.

At a time when Facebook, Google, Twitter and other platforms are questioning the integrity of ICOs, the billionaire ended up giving a great two-minute speech about the future of blockchain business investing. “Instead of a stock, a share, it’s a coin. With a smart contract approved by the SEC,” said the Shark Tank investor and chairman of investing company O’Shares.

Compared to many Wall Street-financed construction projects, $400 million doesn’t stand out. O’Leary said that he cannot give away all of the details due to an NDA. However, O’Leary mentioned that the $400 million ICO would give coinholders a one-third stake in the hotel. That brings the total valuation up to $1.2 billion.

“The key is to go to the regulator and say, ‘I want to work with you. I don’t want to tear the world apart. I want to be regulated. I want to do this by the rules,’” said O’Leary, who last year toyed with the idea of running for prime minister of Canada. “I don’t want to destroy the government. I want to make money.”

With an ICO, the hotel operator won’t need to pay investment bankers a 5 to 7 percent commission—meaning the project would automatically start off being 5 to 7 percent more profitable. Instead, the hotel operator will likely attract thousands of people buying coins for $20 each. Potentially, investors could later trade in those coins for a night’s stay or sell them instantly and transparently on the blockchain.

This new ICO deal structure sounds exciting for investors, but it had greater implications as a way for small local businesses to raise their user base (a.k.a. “customers”) and capital.

Hotels and restaurants have famously thin margins. By a recent estimate in the Boston Globe, a restaurant with $1 million in sales would be lucky to clear $32,400 at the end of the year. That’s assuming they go the traditional route and borrow $250,000 for operating costs. The service and fees on that debt alone could run $40,000, meaning your average restaurant pays the bank more than it pays the owners.

“About those investors: Most put up the money for pure passion, not because they’re looking to get rich quick,” the Globe said at the time. “Anyway, chances are, they already are.”

The reality is: if you’re a serial investor of the Shark Tank variety and you spend money entertaining clients, wouldn’t you love to also namedrop the fact that you own the place?

The promise of the Hotel ICO (please give it that name) is that your average coin buyer can have this joy too. Even better: O’Leary said this will be the largest asset-backed ICO in the history of the blockchain and that it is SEC approved.

The deal, which took shape over the last two months according to O’Leary, is right in line with his new Robin-Hoodesque mission that he started to develop late last year. In December, O’Leary announced Beanstox, a new way for all investors to start small. “My goal by the end of Q1 [of 2018] is to have 100,000 people building their future [on the app],” O’Leary said. “We need to teach our young people how to invest.”

O’Leary is a natural showman and also spent time yesterday promoting his upcoming appearance on QVC via Twitter. On Wednesday, he will go on the shopping channel to sell his to sell his O’Leary Estates wine. He later tweeted cryptically while promoting another Shark Tank-backed venture, “I’m putting a case if [sic] my latest #OlearyFineWine aside for the next business milestone we celebrate!!”

If the piecemeal ownership of a hotel sounds silly, remember that QVC shoppers can get three bottles of O’Leary Estates wine for “4 easy payments of $11 (+S&H and tax).”

Brendan Sullivan is a writer, producer, and author of the memoir Rivington Was Ours: Lady Gaga, the Lower East Side, and the Prime of Our Lives. Disclosure: he owns cryptocurrencies. Follow him on Twitter.