As a man Americans are used to seeing on their screens, Marc Cuban has a reputation as a formidable businessman. Currently worth an estimated $4.7 billion according to Forbes, Cuban started and sold two successful businesses before switching his attention to investing in start-ups. He’s invested in IceRocket, RedSwoosh (the first start-up by Uber CEO Travis Kalanick), and Weblogs Inc, all of which have been acquired by large technology companies. In 2000, he purchased a majority stake in the NBA Dallas Mavericks for $285 million, proving that his business skills go beyond making money. The Mavericks have seen continued success since the purchase. Let’s see what lessons Cuban has learned on his road to success.
Mark Cuban’s failures, what he learned from them, and how he overcame them
1) Failed milk powder business
Cuban’s first business venture out of college was selling milk powder. He graduated from Indiana University in 1981. After being fired from three jobs, he moved to Texas. An advert convinced him to purchase a powdered milk product, which was cheaper than regular milk, and in his opinion, tasted about the same. The venture “lasted minutes,” Cuban said, with his parents being one of his biggest customers. While the business was a flop, optimistic Cuban derived important lessons from the experience and shook off the failure. He learned not to predict customer behavior through his tastes. He also learned the importance of taking time to understand the market better.
While Cuban didn’t mind the milk powder taste, it took a lot more work than expected to convince other people of its superiority. In essence, the reality went against his original prediction of powdered milk being able to compete with regular milk in market share.
This early failure is a good demonstration of how he always goes above and beyond to calculate the potential consumer market in the most accurate way possible, a trait you can see in his Shark Tank appearances. Cuban now thinks about the industry more analytically, saying, “the more people try to sell you on the size of a [competitive] market, the more they are selling themselves, not the product. Going into a market with an already established competitor can be tricky; the product needs to have a niche selling point if it can hope to find market share in an already dominated space.”
Drinking regular milk was ingrained too deeply in the history of working-class American families to be uprooted by the cost savings powdered milk offered. At the same time, Cuban took some more time after this experience to find his technology niche; he credits his lessons from this failure as the springboard to his success.
2) Performance over optics
Cuban’s experience with the powdered milk business, paired with Motley’s, the bar he opened in his first year of college, taught him a lot about running a successful business. In fact, when he turned up at his job as a software salesman, $15,000 check in hand from closing a deal, and was fired because he didn’t open the store as asked, Cuban knew he was ready to step out on his own. Cuban turned around and founded MicroSolutions, an early adopter of upcoming technologies such as Carbon Copy, Lotus Notes, and CompuServe.
One of the largest customers MicroSolutions served was Perot Systems, which Dell acquired in 2016 for $3.9 billion. Cuban hailed the owner that fired him as his’ reverse mentor’ – in other words, he showed Cuban everything he shouldn’t do in business. “Even now, I look back at things he did, so I know to do the opposite,” Cuban says. This CEO was focused on Cuban looking the part, complaining about his ‘”two for $99 polyester suits” instead of concentrating on Cuban’s actual performance. This pushed Cuban to create the mantra “sales cures all”, which became a guiding principle throughout his entrepreneurial journey. Cuban realized his boss was focusing on the wrong things. You can look at the part and talk about the region, but if there are no sales, there is no business. The old boss may have played the role but never took the initiative to go out and sell, so neither did his employees. This led to the business failing a few years later.
Cuban gained a lot of knowledge gained from starting his student bar, falling at his business endeavor, to watching another business fail, which culminated in the $6 million sales of MicroSolutions by CompuServe. This knowledge has contributed to Cuban becoming the successful businessman and investor that he is today. Not only has he been able to gain significant revenue, but he has also developed a hunger for more lessons.
3) Invest in new technology
Just as the dot com bubble was taking off in the mid-nineties, Cuban was approached by a friend with a business idea: an internet company that allowed users to stream the audio from sports games over the internet called AudioNet, later becoming Broadcast.com. As the internet was a new phenomenon, Cuban faced lots of criticism, with many people laughing at the idea. However, with the price-performance curve of personal computers starting to take off, Cuban knew that the possibility of the internet overtaking television was on the table in a few years.
A few years later, workers were streaming podcasts and music while sitting at their desks. This is when it was time to market the company. Cuban took the learnings from his failed milk business and tapped into a non-competitive product market with an ever-growing customer base. After getting access to workspaces through employees, Broadcast.com added video and created what Cuban called ‘the real money-maker, which was the streaming of corporate events worldwide and all-hands business meetings. By providing the easiest way for consumers to listen to their sports audio through Broadcast.com, he made sure they would keep returning to the streaming service.
Cuban said, “if you have the technology working in your favor if you’re on the path of least resistance, and if you have consumption, then you go for it. Those pieces create a moat [of protection around your business] that is hard to replicate.” In 1999 Broadcast.com was acquired by Yahoo for $5.7 billion. This success ingrained in Cuban how he must be open-minded and trust his gut when looking to invest in new companies and technology. When you are the one investing, you must be satisfied with your strategy instead of being swayed by outside influences.
4) Define success for your employees
Cuban took the money he earned from the same Broadcast.com, bought Yahoo stock, and sold the stock later that same year. Upon selling this stock, he cashed in over $1 billion. They were making him a billionaire not just in assets but also in cash. In the 2000s, Cuban took a step back from starting companies and instead began investing in them. For example, the Dallas Mavericks increased in value from $285 million to $1.9 billion in 10 years due to Cuban’s investment.
He has also invested in many up-and-coming technology companies, including cryptocurrency, NFTs, and blockchain companies. He also branched out to launch his television career as a shark on Shark Tank. After working with companies following his “sales cures all” mantra, he found that many of his employees were bringing him excuses rather than results. After conversing with other effective business owners and coaches, he realized he was the problem. Following this realization, he implemented a three-pronged approach to communicate more effectively with his employees: sit down and define what everyone is responsible for, tell them what results were expected, and set clear deadlines.
Cuban also made sure every employee knew that his door was always open for feedback and questions. Implementing this new system, along with Cuban’s original market share calculations, allowed him to be a cautious but lucrative investor. While he turned down the opportunity to invest in the early stages of Uber, later claiming it was a mistake, he noted that he was worrying about regulatory issues. Nevertheless, he also remarked that sometimes you have to “be ready, fire, aim and just bust through doors and figure you will deal with the issues later.” He also observed that “where [Cuban] saw regulation, Travis Kalanick [Uber founder] ignored it.”
In the final growth stage of Cuban’s entrepreneurial journey, he was only investing in things he felt passionate about. He explained that his current company investments “feel the same as the early days of the internet, you’ve got to believe in your product” to succeed. Cuban’s passion allows him to enter more unstable markets, including the new ‘casino-like’ cryptocurrency.
5) Leading the Mavericks to success
Before Cuban’s purchase, the Mavericks won 40% of their games. With Cuban’s involvement over the next 10 years, they increased this to 69% reaching the playoffs in all but one of those seasons and made their first trip to the NBA finals, eventually losing to Miami Heat. The average NBA team owner is pretty hands-off, but Cuban bucks this trend by sitting with fans wearing the team’s jersey and traveling with the team to games. He believes this boosts morale and allows him to understand the players better, and learn their strengths. In this way, he can make more knowledgeable, strategic decisions regarding the team’s future. He does this with technology (fans can now purchase game tickets with bitcoin) and with the players themselves.
Cuban notes that for a while he was taking lousy advice, and not keeping Steve Nash with the Mavericks is one of his most significant failings. With this knowledge, we can see how Cuban has updated his managerial style to avoid future mistakes. Cuban learning from his failings is a big theme throughout his life, so much so that he credits his failings as his reasons for success. Cuban famously wrote in his book, “I’ve learned it doesn’t matter how many times you’ve failed, you only have to be right once.” Luckily for Cuban, he has been right on more than one occasion.
Conclusion
Many people have accused Cuban of being lucky, but his consistent work ethic and tenacity in overcoming setbacks silence this criticism more than any statement would. While Cuban has successfully navigated many company boardrooms and sits at an impressive 177 on the 2020 Forbes 400 list, he is very transparent about his many failures and setbacks.
Cuban’s belief that all of these setbacks increase the likelihood that you will find the one opportunity you need to create success ensures that he keeps a positive outlook throughout. A constant desire to learn and be proactive in solving problems sets Cuban above millionaire status as a fortified billionaire.
How Pressfarm can help you turn your venture into a success
Are you part of a startup that is launching a new product or service? Just imagine how amazing it would be to let someone else worry about generating publicity for your startup, while you focus on perfecting your product. With a team of professionals who have experience working with brands from different industries, Pressfarm can do that for you!
Pressfarm provides personalized public relations services that will help you tell a memorable brand story that will capture media attention and inspire your target audience. We have experience writing press releases that will win journalists over and feature articles that will excite your target audience. We’re also skilled at designing media kits that showcase the unique personality of each brand.
On top of taking care of your content creation, we’re committed to helping you find the perfect journalists to cover your story. For this reason, we give all our clients access to our media database of over 1 million journalists across different niches. With this database, you can forget about having to comb the Internet for journalists every time you have a story to pitch. Check out our packages and let us help you tell a brand story that moves your target audience and inspires action.