SCOTT S. SMITH
Mark Cuban isn’t afraid to make waves on “Shark Tank,” ABC-TV’s hit reality series about investing in startups. It isn’t simply that he’s the big fish — with a net worth of $3.3 billion, according to Forbes — he also isn’t afraid to criticize what he regards as other Sharks’ foolish investments or the lack of preparation by many of the show’s contestants.
A study by Forbes of the Tank’s first seven seasons (its eighth just ended) showed that Cuban was the best at closing deals in three industries: entertainment, food/drink, and exercise equipment. His biggest single investment was $2 million in Ten Thirty-One Productions, which produces the Haunted Hayride and other live events. So what’s surprised him the most about the Shark experience?
“How many families watch the show together and how proud parents are when their kids are excited about business,” Cuban told IBD. “I never expected it to have the impact on them that it has.”
Cuban, 59, was born in Pittsburgh’s working class suburb of Mount Lebanon. At 12, he caught the entrepreneur bug, going door-to-door to sell plastic garbage bags in order to buy some expensive athletic shoes.
He sold stamps and coins in high school and during a strike by Pittsburgh Post-Gazette workers, brought newspapers from the printer in Cleveland to Pittsburgh. He took his high school GED a year early and became a full-time student at the University of Pittsburgh. While there, he worked as a bartender, taught disco dancing and promoted parties to pay his bills. After his first year of college, he transferred to Indiana University in Bloomington because it had the lowest costs of any business school in the top 10. There, he continued to make money as a dance instructor while also operating the most popular bar in town.
After graduating with a bachelor’s degree in business in 1981, he got a job at a Pittsburgh bank, helping it convert from a manual operation to an automated computer system. In the process, he says, he not only learned about systems, but how big companies operate and middle managers think.
His next gig involved trying to convince TV repair shops to join a franchise. And though he only sold one, he says there was a lot of value in learning about cold-calling and franchising.
He moved to Dallas in 1982 in search of more fun and sun. He had little money, so became the sixth roommate in an apartment where he had to sleep on the floor or a couch. He got a job as a salesman at the city’s first PC software retailer and learned the business by reading manuals every night. He went from living on bar food to making large commissions and doing consulting work outside regular hours, splitting his fees with the owners of the software business. But nine months into this, after asking another employee to open up for him so he could meet a potential client, he was fired for being absent from his job — even though he’d brought back a check from that meeting.
From MicroSolutions To Mavericks
In 1982, Cuban started MicroSolutions, a software reseller and system integrator — though he didn’t own a computer. One of his first clients was Martin Woodall, who sold multi-user systems, and he offered Cuban office space and to pay him for attracting clients. Two years later, MicroSolutions had $85,000 in the bank — or so Cuban thought: His secretary had cleaned out all but $2,000 before disappearing.
“What was done was done,” Cuban wrote in “How to Win at the Sport of Business,” figuring that “worrying about revenge” and venting his anger at the bank were just “a waste of energy.”
Instead, his effort went into getting smarter. “I would continually search for new ideas in books and magazines available to anyone,” he wrote, “but most people won’t put the time in to get a knowledge advantage.”
In 1990, he sold MicroSolutions for $6 million. His next venture, with partners Todd Wagner and Chris Jaeb, was AudioNet, which began with webcasting college basketball games. In 1998, they renamed it Broadcast.com, went public, and the next year sold it to Yahoo for $5.6 billion in stock.
Cuban purchased the Mavericks in 2000 from H. Ross Perot Jr. for $285 million. The Mavericks had been longtime losers, but after Cuban revamped its player roster and built the team a new stadium, its fortunes revived. The Mavs qualified for the playoffs in 2001, then made it to their first NBA Finals in 2006. And although they lost to the Miami Heat that year, the Mavs came back to beat the Heat in 2011’s finals to become NBA champs.
What has Cuban learned from this experience that might apply to other businesses (other than the publicity that comes from being fined $2 million for arguing with officials)?
“Good businesses are personal and the best are very personal,” he said. “Sports bring out emotions, as a great business should.”
In 2001, Cuban joined Philip Garvin to launch HDNet, a high-definition network that eventually became AXS TV. And Todd Wagner has been Cuban’s partner in other ventures, including 2929, which produces and distributes movies and TV content, owns Landmark Theatres, and has a stake in Lions Gate Entertainment.
“As an investor, he has an intricate portfolio of organizations across a wide range of industries,” said Michael Parrish DuDell, chief strategy officer of CouponFollow.com, who interviewed Cuban for his book “Shark Tank: Jump Start Your Business.” “He learned early on how critical it was to develop a keen eye for talent and empower that talent to share in the responsibility of leadership. It’s no surprise he’s helped so many people build extraordinary businesses.”
Into The ‘Shark Tank’
Cuban replaced an original member of the “Shark Tank” panel in 2011, joining Kevin O’Leary, Barbara Corcoran, Daymond John, Lori Greiner, and Robert Herjavec. Broadcast on Friday nights, the series has had an average audience ranging from 5 million to 9 million in its eight seasons, and it was renewed for a ninth, and moved to Sunday nights, starting Oct. 1. It won the Emmy Award for Outstanding Structured or Competition Reality Program in 2014, 2015, and 2016.
The power of “Shark Tank” to immediately impact tiny companies can be illustrated by the $100,000 that Cuban invested for 30% of Simple Sugars in season four. Owner Lani Lazzari had created a line of cosmetics as a teen to clear up her eczema and began selling it to others who had problems related to sensitive skin. She arranged to take off her senior year of high school for independent study so she could focus on growing her business. In the year leading up to her appearance on “Shark Tank,” she had 1,300 orders; within three days after the broadcast, she received 15,000.
Mark Cuban’s “Rules for Startups” from some of his most popular posts at http://www.markcuban.com and his real-time engagement platform, Cyber Dust, under +MCuban:
- Don’t start a company unless it’s an obsession.
- Hire people who you think will love working there.
- Know how your company will make money and actually make sales.
- Let people use the technology they know.
- Know your core competencies and focus on being great at them. Pay up for people in those competencies, but hire cheap for those who fit your culture and have other competencies.
- Keep the organization flat and have open offices to keep everyone in tune with what is going on and keep the energy up.
Cuban says he used to be preoccupied with work 24/7, but by managing his time smartly, he’s now able to put his family first. (He married Tiffany Stewart in 2002 and they have three children).
“Mark Cuban has mastered the very thing most entrepreneurs struggle with the most — delegation,” said DuDell.
“Time is the most valuable asset you own,” Cuban said. “How you use it is the best indication of where your future is going to take you. Sell in the morning, keep your customers happy the rest of the workday, and push the envelope at night.
“I used to be in the middle of everything, but I hire people I can build trust in, then let them take the ball and run with it.”
Owner of NBA Dallas Mavericks and one of the investors on the hit TV program “Shark Tank.”
Overcame: Boring, poor-paying jobs with no future; he decided to learn something from each one.
Lesson: Be brutally honest with yourself about the quality of your ideas, products, and services and why customers buy and at what price.
“Passion for a particular business is overrated. It’s really about where you put your effort. If you’re willing to work hard at something, a passion will naturally develop.”