"I lost half a million dollars" Shark Tank's Kevin O'Leary recounts his worst investment ever

Kevin O'Leary, the sharp-tongued investor known as "Mr. Wonderful" on ABC's Shark Tank, has poured over $8.5 million into roughly 40 companies since the show's 2009 debut. While some bets paid off spectacularly - like his stake in Plated, which sold for $300 million - others crashed and burned.

One telecommunications startup became his biggest regret, prompting him to share a painful confession:

"He went to zero 60 days later. So I lost half a million dollars."

The chairman of O'Shares ETFs, who has spent more than three decades in the investment game, learned a costly lesson about trusting his instincts. Though he won't name the company due to ongoing litigation, Kevin O'Leary's candid account of this investment gone wrong offers a rare glimpse into how even the savviest sharks can sometimes get bitten.

Kevin O'Leary recounts the deal that went wrong

O'Leary's experience has taught him one fundamental truth about investing: success is never guaranteed.

"What I've learned after doing this a long time [is] no matter how you feel, and how optimistic you are, in the moment of making an investment, pulling the trigger, you have no idea of the outcome," he explains.

Declaring:

"You have zero probability."

He doesn't mince words about those who claim otherwise:

"Anybody that says they do is full of s---."

The ill-fated investment started with $250,000. Then came the dreaded phone call: "Look, I burned through all the cash. But, I know what I did wrong. I need another $250,000," O'Leary recalls the founder saying.

Despite his misgivings, personal ties clouded his judgment. "In my stomach, I didn't feel right about it," he admits. "My gut said 'No.' But because I knew the guy and I liked him, and he was a friend, and yada, yada, yada ... I gave him another $250,000."

The second investment disappeared even faster than the first. Within two months, the additional quarter-million was gone, with nothing to show for it. The experience left a lasting mark on Kevin O'Leary:

"I ignored it, and it cost me half a million bucks. That was really stupid. I'm pissed. And I don't forget that."

What, according to Kevin O'Leary is the key to success?

O'Leary identifies a common thread in his failed investments: founders who can't "pivot." He doesn't hold back in his assessment, calling such entrepreneurs "stupid" for their inability to adapt. "They can't get out of their own way," he observes. "They won't listen to anybody else."

The problem, he explains, is their resistance to change:

"They don't understand [that] the world moves and you have to move with it."

Despite such setbacks, O'Leary approaches investing with realistic expectations. His formula is straightforward:

"You make 10 investments, you get two to three huge hits. And it pays for the other seven [failed investments]."

This ratio helps explain why he's invested so heavily in Shark Tank, with some bets inevitably going south. The key is making sure the winners more than compensate for the losers.

Kevin O'Leary's most emphatic advice comes from his costly lesson: