20VC Mark Cuban on His Relationship To Wealth and Risk, Why Coming Out of The Pandemic Will Be The Best Time In The History of Mankind To Start A Business & Why Silicon Valley Investors Are Like Old Hollywood

In a comprehensive conversation on "20 Minutes VC," host Harry Stebbings interviews serial entrepreneur and investor Mark Cuban, discussing Cuban's journey from a software salesman to a billionaire. Cuban shares insights on his early tech career, the founding and sale of MicroSolutions and Broadcast.com, and his subsequent purchase of the Dallas Mavericks. He emphasizes the importance of sales, the value of understanding risk, and the need to stay agile in business, particularly during the pandemic. Cuban also critiques the Silicon Valley investment scene, advocating for authenticity over "fake it till you make it" and highlighting the potential for post-pandemic entrepreneurship. Alongside his business acumen, Cuban reflects on the impact of fatherhood on his priorities and the necessity of aligning company vision with team goals.

• Harry Stebbings introduces the podcast episode and himself.
• Harry mentions his Instagram handle for behind-the-scenes content.
• He expresses excitement about having Mark Cuban on the show.
• Harry gives a brief overview of Mark Cuban's career achievements.
• Thanks are given to Kim at Cluster for providing question suggestions.
• Harry briefly mentions sponsors Hello Sign and Headspin, detailing their successes and services.

"Welcome back. You are listening to the 20 minutes vc with me, Harry Stebbings, and you can see all things behind the scenes on Instagram at H Stepbings 90 96 with two b's. But to the show today and this is one I've wanted to do since I started 20 vc but maybe wasn't."

The quote is Harry Stebbings introducing the podcast episode and highlighting his anticipation for the interview with Mark Cuban.

• Mark Cuban is a serial entrepreneur, investor, and owner of the Dallas Mavericks.
• He founded Microsolutions and sold it to CompUSA in 1990.
• Cuban co-founded Audionet, which later became Broadcast.com, and sold to Yahoo for $5.6 billion.
• Since acquiring the Dallas Mavericks, they achieved significant milestones, including winning the NBA championship in 2011.
• Cuban is also known for his role on ABC's Shark Tank.

"So I'm truly honored to be joined today by the incredible Mark Cuban. Mark is a serial entrepreneur, investor and owner of the Dallas Mavericks."

The quote is Harry Stebbings introducing Mark Cuban, summarizing his entrepreneurial journey and achievements.

• Mark Cuban's tech career started with a job selling PC software in Dallas.
• He learned various programming languages and network technologies.
• After being fired, he founded Microsolutions and later sold it to H&R Block.
• Cuban then contributed to the start of the streaming industry with Audionet, which evolved into Broadcast.com.

"My starting point in tech was I got a job working for a software company in Dallas selling pc software where I didn't really know anything about the software at all."

The quote explains how Mark Cuban began his career in technology with little knowledge but a willingness to learn and adapt.

• Cuban's relationship with money has changed significantly over time.
• He went from being broke and sharing an apartment with others to becoming wealthy after selling Broadcast.com.
• Cuban's focus shifted from earning money to what he could do with it to help his family and contribute to the world.
• He enjoyed life even when he was broke and always aimed for the freedom to control his time.

"I mean, I went from being broke, living six guys in a three bedroom apartment, literally, like I would go buy a beer somewhere and then eat like as many fried mushrooms or whatever bar food I was allowed to eat and gaining 30 pounds to after we soldbroadcast.com and were able to convert that to cash."

The quote reflects on Mark Cuban's humble beginnings and the significant change in his financial situation after selling Broadcast.com.

• Cuban never equated money with happiness, as he had fun even when broke.
• He has always tried to maintain a positive outlook and avoid stress.
• Cuban's goal was to have enough money to not worry about bills and to stop working if he chose to.
• He values time as the most important asset and aims for control over it.

"See, I never looked at it like I'd be happy because I was having fun when I was broke."

The quote indicates that for Mark Cuban, happiness was not directly tied to financial success but to enjoying life regardless of his financial status.

• Cuban admits to always being terrified of risk.
• He emphasizes the importance of preparation, citing a quote from basketball coach Bobby Knight.
• Cuban's approach to risk involved doing thorough homework to reduce fear and make informed decisions.

"I hate know I was always terrified of risk, but I always tried to be know."

The quote reveals Mark Cuban's cautious approach to risk, highlighting his fear but also his commitment to preparation and due diligence.

• Cuban and his team were pioneers in the streaming industry with Audionet.
• There was no existing streaming market when they started; they were the first to broadcast events over the internet.
• The excitement of doing something new and groundbreaking drove the company's innovation and progress.

"Literally, when we started audio net, it wasn't like there was a streaming market. There was nobody, not one single company doing what we were doing."

The quote highlights the innovative and groundbreaking nature of Audionet, marking the beginning of the streaming industry with no prior examples to follow.

• Harry Stebbings discussed the early days of streaming, emphasizing the unique opportunity presented.
• The vision was to create a $5 billion company.
• The approach was not competition-driven but opportunity-focused.
• Importance of executing correctly was highlighted as critical to success or risk being forgotten.

"This can change everything if we do this right, this is a $5 billion company. If we do it wrong, people won't remember us, and we'll still be friends. But this is the most unique opportunity we'll ever have."

The quote underscores the transformative potential of the streaming opportunity and the binary outcome of either significant success or being forgotten, emphasizing the high stakes and uniqueness of the moment.

• Mark Cuban discusses the importance of knowing when to quit versus when to pursue a vision.
• He suggests quitting when you run out of money or time, not just when facing criticism.
• Cuban emphasizes that more money is not always the solution; often, more innovation or differentiation is needed.
• The best products should be able to sell themselves without an over-reliance on funding.
• He encourages entrepreneurs to be brutally honest with themselves about the viability of their business.

"You quit when you run out of money or you run out of time... More often than not, if you had more brains or more of a differentiation to decide if it's that time, you just have to be brutally honest with yourself and ask yourself, what is it that's keeping this from happening?"

This quote highlights the practical considerations in entrepreneurship, such as financial and temporal constraints, and the need for self-honesty in assessing a business's potential and challenges.

• Cuban discusses the ideal time for starting a business, especially post-pandemic.
• He argues that great companies often didn't need to raise a lot of money.
• Cuban emphasizes sweat equity over financial capital and encourages entrepreneurs to take action on their ideas.
• He views the post-pandemic landscape as an unprecedented time for entrepreneurs due to the lack of established rules and the openness for negotiation and innovation.

"Now's the time to do it. Now's the time not to hesitate and go for it. Particularly if you lost your job or you find yourself being furloughed. What better time?"

The quote encourages taking entrepreneurial action during uncertain times, suggesting that disruptions can create unique opportunities for new businesses and ideas.

• Cuban differentiates between individual company success and macroeconomic trends.
• He predicts that the economic recovery will not be a quick return to normalcy.
• Cuban expects a prolonged period of struggle due to accelerated negative trends, such as the decline of retail and the rise of digital platforms.
• He discusses the impact of artificial intelligence and robotics on the economy and job displacement.
• Cuban calls for investment in AI and robotics to maintain national security and competitiveness.

"All these things are going to change in some manner or another, and that's going to lead to displacement and disruption, and that's going to lead to challenges and opportunities, but we're going to have to do things a little differently when we come out of this."

The quote reflects Cuban's perspective on the post-pandemic economy, acknowledging both the challenges and opportunities that will arise from significant disruptions and technological advancements.

• Cuban discusses his approach to investment and price sensitivity.
• He distinguishes between personal purchases, where he is less price-sensitive, and investments where he seeks leverage and upside.
• Cuban prefers investments that generate cash flow rather than relying solely on potential exits.
• He seeks material ownership in companies to ensure a significant return on investment.

"When I invest, I try to get at least a material amount of the company... because the company can't get big enough for me to get a material enough return to have it impact my net worth."

This quote reveals Cuban's investment philosophy, focusing on substantial ownership stakes and cash flow, rather than small investments with the hope of a large exit.

• Cuban addresses the potential limitation of focusing on cash flow-positive businesses.
• He acknowledges that while such a focus might seem limiting, he doesn't rule out investing in companies with significant growth potential.
• Cuban highlights the importance of having options to invest further or accept dilution as a company grows.

"So when you get a company that's just a huge grand slam like that, the option of continuing to invest and retain my ownership or being diluted for whatever reason."

The quote discusses the balance between seeking immediate cash flow and the potential for significant growth, suggesting that a flexible approach to investment can accommodate both strategies.

• Mark Cuban does not invest in companies that buy sales, especially those requiring massive funding to achieve market share with the expectation of an exit strategy.
• He emphasizes the importance of organic growth and is critical of companies that spend excessively on sales to dominate a market.

"The type of investments I won't do or don't do is ones where companies buy sales."

The quote explains Mark Cuban's aversion to investing in companies that spend large sums of money to artificially inflate their sales numbers to gain market share.

• Mark Cuban compares Silicon Valley to "old Hollywood," where everyone is looking for their big break, leading to a transient workforce.
• He prefers employees who are fully committed to the company's vision rather than those looking for the next opportunity.
• Cuban criticizes the venture capital model in Silicon Valley, which he believes promotes bad habits and a problematic company culture.
• He suggests that companies like Twitter, Uber, and Lyft would have been more successful if they had been founded outside of Silicon Valley.

"I think they're like old Hollywood."

This quote draws a parallel between the Silicon Valley culture and the old Hollywood system, where people are more focused on personal advancement than on contributing to the company's success.

• Mark Cuban strongly disagrees with the "fake it till you make it" approach, advocating for authenticity and self-awareness.
• He believes that pretending to have experience or knowledge that one lacks is not productive and often leads to failure.
• Cuban encourages entrepreneurs to take risks and commit to learning, but not at the expense of honesty about their capabilities.

"Hell no. You got to be authentic, especially not now."

This quote emphasizes the importance of authenticity in entrepreneurship, rejecting the notion of pretending to be more experienced or knowledgeable than one actually is.

• Cuban asserts that all successful companies require sales and that a good product does not guarantee sales success.
• He believes that CEOs must be willing to sell their product; otherwise, no one else will.
• Cuban emphasizes that continuous fundraising without focusing on generating sales is unsustainable.

"All sales cures all. There's never been a company in the history of companies that's ever succeeded without sales."

This quote underscores Cuban's belief that sales are the most crucial aspect of a business's success.

• Cuban advises pricing based on the customer's perceived value proposition.
• He encourages entrepreneurs to test higher pricing to understand the true value of their product or service.
• Cuban shares an anecdote from his first company, MicroSolutions, where he successfully doubled his initial price, leading to significant growth.

"You price from the perspective of your customer. What's the value proposition, period?"

This quote highlights the importance of understanding and pricing according to the value perceived by the customer.

• Cuban stresses the importance of aligning team members with the company's vision.
• He advocates for developing trustworthy managers to facilitate effective delegation.
• Cuban prefers to work with detail-oriented people to complement his own big-picture approach.
• He suggests hiring people who are different from oneself and being decisive about firing when necessary.

"You're never going to accelerate unless you delegate."

This quote encapsulates the idea that growth and progress in a company rely on the ability to delegate tasks effectively.

• Cuban believes the approach to strengths and weaknesses depends on the context, such as the type of company or one's role within it.
• He suggests that employees need to address their weaknesses, but the approach may differ for entrepreneurs or business leaders.

"Depends what you do, right? I mean, it depends the type of company you're in and what your job is or what your circumstances are."

This quote indicates that the strategy for dealing with strengths and weaknesses is situational and varies based on individual circumstances and the nature of the business.

• Strive to be great at what you do, not just good.
• Being great leads to differentiation and the creation of opportunities.
• Once you are paid for your greatness, fortunes can be made.
• Self-awareness is key; don't lie to yourself about your abilities.

"If you're an entrepreneur, whatever you're good at, then just work really, really hard to be great at it. A, no one quits anything they're great at. B, that's where you find your differentiation and create your opportunity to make a lot of money."

This quote emphasizes the importance of excelling in your field as a pathway to success and the creation of wealth. It also suggests that greatness in a skill or profession can lead to job satisfaction and career longevity.

• Reading "Rebooting AI" to reassess perspectives on AI.
• "Healthy Buildings" to understand the importance of air quality and health in buildings post-COVID.
• Reading helps to stay informed and prepare for the future.

"First, I'm reading two books, rebooting AI because everybody looks at AI as complete positive. Rebooting just made me recheck my whole card, right, and take a second look to make sure my premises on AI straight."

Mark Cuban shares his reading habits to highlight the importance of continuously learning and challenging one's own assumptions, particularly about AI.

• Personal competitiveness drives motivation.
• Desire to win and prove capabilities.
• Focus on changing the game, not on the competition.

"I'm competitive. I just love to win. I want to prove that I can still kick your ass."

This quote reflects Mark Cuban's personal drive and competitive nature as key factors motivating his actions and decisions in business and life.

• Initially, having children did not change much.
• As children grew, priorities and time management shifted significantly.
• Parenthood leads to a focus on spending quality time with family.

"But as they've gotten older and turned into real people, changed everything. Now I'm so fortunate I can spend as much time with them as they'll let me."

Mark Cuban discusses the profound impact that his children's growth has had on his life, altering his perspective and approach to time management and priorities.

• Advocates for a gradual reopening of society.
• Emphasizes the need for agility and learning in response to COVID-19.
• Rejects dogmatic solutions; calls for fresh, adaptable approaches.

"I think any dogmatic solutions? I'm a capitalist. I'm a libertarian, I'm a socialist. Those are all out the window, and we've just got to approach this with fresh eyes."

Mark Cuban stresses the importance of flexibility and open-mindedness when dealing with the unprecedented challenges posed by the COVID-19 pandemic.

• Ensuring family safety during the pandemic.
• Aiming to positively impact others, especially small to medium-sized businesses.
• Recognizing the limits of one's knowledge and seeking to assist where possible.

"Trying to figure out a way that I can help other people reclaim their lives or move forward and just try to have as much of a positive impact as I can without being arrogant about it."

Mark Cuban outlines his current focus on using his resources and knowledge to help others navigate the challenges brought on by the pandemic, while staying humble and aware of his limitations.

• Funded Travis Kalanick's previous company, Red Swoosh.
• Hesitated to invest in Uber due to concerns about regulatory challenges.
• Missed opportunity in Uber, but maintains a relationship with Travis for advice.

"I also knew that he was the type that if you put a wall in front of him, Travis would run through it, even if you wanted to keep that wall built."

This quote reveals Mark Cuban's perception of Travis Kalanick's tenacity and the reasoning behind his initial hesitation to invest in Uber, which was due to concerns about Travis' approach to obstacles.

• Invested in multiple robotics companies for various applications.
• Interested in analytics, food supply chain, and manufacturing efficiencies.
• Believes the food supply chain and manufacturing will face growing challenges.

"There's a couple in the robotics space. I've done, like, five of them."

Mark Cuban expresses his excitement for the robotics sector, highlighting his recent investments and the potential he sees in this area of technology.

• Expresses appreciation for the opportunity to be interviewed.
• Acknowledges the enjoyment and value of the conversation.

"That was a great interview. Thanks for having me. I really enjoyed it."

Mark Cuban concludes the interview by thanking the host for the engaging conversation and expressing his pleasure in participating.

• The host feels fortunate to conduct interviews and create the show.
• Expresses gratitude to Mark Cuban for participating.
• Invites listeners to engage on social media and highlights sponsorships.

"I have to say, it really is episodes like that which make me feel so lucky to be able to do the show."

The host reflects on the rewarding experience of hosting the podcast and the value of having guests like Mark Cuban share their insights.