Mark Cuban's Brutally Honest Business Truths

In whatever industry you pick, you have your best chance if you outwork everybody, if you try to be a little smarter than everybody, if you try to be a better salesperson than everybody, and if you try to be better prepared than everybody. Because if you don’t do it and somebody else does, you know what will happen. I have this saying: work like someone is trying to take it all away from you. Work like someone is spending 24 hours a day to take it all away from you. That’s kind of the way I look at it.

What would you say is the number 1 reason why people fail?

Lack of brains, lack of effort - what do I mean by that? Well, some people just don’t do the work, they don’t learn. You know, when you start a business and you enter a market, you’re never in a vacuum with no competition. You know, unless you’re very lucky, there’s always someone else who knows your business as well as you do when you get started. And if you face a competitor who knows more about the business than you do, more about your customers than you do, then you’re going to lose. But most people don’t think about that. They don’t do the work to learn more about their industry. They don’t even know much about their own business. So you have to put in the effort to know more about your industry than anyone else. That’s the brains part and that’s the effort part too. Because look, if you’re competing with me, you better know what you’re doing. Otherwise I’m going to kick your butt. You know? And you’re not going to outwork me either. So that combination is usually what kills businesses early on more than anything else.

You could within a 5-10 minute interview say, this dude is not going to make it as an entrepreneur ?

I can usually tell. I can tell by their passion, their focus, their preparation. You know, there are many factors that influence whether a business will be successful or not. Here’s the business they’re in and here are a thousand things that matter for their success. Based on my experience in businesses, I can put myself in their position and say: okay, here are 900 of the 1000 things they have to be aware of. And then I can ask them how many of those issues they have addressed already. That gives me a sense of how hard they’re willing to work. I can also tell by the questions they ask me. So all I have to do is say: “Okay, what do you want to know?” And when they start saying: “What should I do?” That’s not a good sign.

Do They ask you?

Yeah, yeah, and that’s fine. I want them to ask questions, but… you know, people like to say: you know, the only stupid questions are the ones you don’t ask. And that’s not true. Because the questions you ask tell me more about you than anything else you do. They tell me about your preparation. If you ask me basic questions that you should have known and mastered already, that’s going to disqualify you more than anything else. If you’re not always learning, if I’m not always learning, if I’m not absorbing as much as I can absorb, someone else is going to kick my butt. Right? So you talked about paranoia. The greatest source of your paranoia should be knowledge. If someone else knows more than you do and if you’re not learning, if you don’t know how to learn, if you don’t have a thirst for learning and acquiring information, then you’re out of luck.

Do you think there needs to be a healthy level of paranoia?

Oh yes, I always say: for every one of my businesses, I ask myself: what would I do to kick my own butt? Right? So whatever business you have, there’s someone trying to put you out of business. There’s someone trying to take a bite out of your business. And it’s better for you to figure out how they’re going to do it before they do it. So yes, that’s being paranoid. And you have to be paranoid. You have to anticipate other people’s next moves. And you can’t ever downplay the competition. I was at a business plan competition this morning at a college and they were kind of being dismissive of the competition. And you can’t ever do that. You know, they’re out there trying to take you down and they’re not just going to sit still. And if you’re good, really good, you’re going to inspire them to work even harder, faster and better. So you have to be very self-aware of what you’re good at and what other people are good at. And a healthy dose of paranoia makes a big difference. It’s very helpful.

Let’s transition to a different subject: college. - You went to IU? - Yep. Right. Now you have a lot of people who say: forget about school, drop out of school.

They’re idiots.

So you think they’re idiots. Tell me why?

Well, if you’re going to have and run a business, and you don’t understand accounting, you’re already behind the 8-ball. Can’t you hire someone who knows how to run- but then they still have to communicate with you. Your accountant might tell you that you’re profitable but your cash is going down. You know, not understanding that breakdown and- and when you don’t… do you think you need college to learn that? I think you do. Right? Because it may not be for some people… look, if you’re so self-motivated that you can take an online course in accounting and teach yourself everything, then you’re way ahead of the game anyway. But most people aren’t. I don’t care if you go to a community college and take accounting and spend 99 bucks for the class. Just spending the money forces you to be more committed to do it. But accounting, finance, marketing to a lesser extent, sales if the school offers that… these are all… that’s the language of business. And so while it’s possible to teach yourself these things and while it’s possible to hire them when you’re starting your own company, you don’t want to have to spend money hiring an accountant or a lawyer to incorporate. Right? You can probably figure it out yourself if you’ve gone through all these classes. And so your cost of opening up a business drops but even more important than all that… that’s the blocking and tackling… that’s the language of business… The thing I learned at Indiana that was more important than anything else was how to learn. And learning became far more important. That’s the blocking and tackling. That’s the language of business. You know, the thing I learned at Indiana that was more important than anything else was how to learn. And learning became far more important to me because the one certainty in business is that it’s always going to change.

How does one entrepreneur increase the speed and areas of their business?

- Speed in what way? -

Speed of growing your business. - So how fast can I grow?

It depends. You have to know your own skill set and how it fits within your company’s life cycle. Some companies are a slow grind and you have to understand that and bide your time until it starts to click and then grow with it quickly. If you’re trying to release a product that needs to be ubiquitous, you have to go as fast as you can. And then, you know… - Release a product There are a lot of people who say: “perfection is the enemy of profitability”. And that doesn’t mean you have to wait until it’s a perfect product. It really depends on what the product is. Is it a barber shop? Is it an app? Is it a service? Is it a product? But the key is looking for the low-hanging fruit. What customers are willing to write you a check or commit to it? You know, so that they’re willing to integrate it into their daily lives or their daily business. And so getting a commitment either through time or revenue is typically what I look for. And if I can get a commitment, then I’m going to be able to learn. I’m going to see how they use it and if they sustain usage. And then once I get the next one, hopefully it came a little faster than the first one, then I can ask for referrals and then the next one and then the next one.And I just try to ramp it up.

You know when I bought the Mavs we had no season ticket holder base and so literally it was a matter of just putting a list of former season ticket holders in a white page back then you know, on my desk next to my phone and making phone calls -

You?

Yeah, me. because if I’m not going to do it, how can I expect someone else to do it right? So just get on the phone, "Hey this is Mark Cuban - I’m the new owner of the Dallas Mavericks." You know, "I’d like to invite you back for-"...

Unbelievable.

It’s not though. This is my business.

But can’t you get regular sales guys or something to make those calls once they get to a quarter? You’re a billionaire and you’re making those calls.

Well, but that’s fine and good. Right? Because everybody has their own goals. Right? But still I don’t want anybody at the Mavs to be able to say: well, he’s not willing to do the work. Right? There’s… you know, if I walk around and I see some papers on the floor, I’m not saying: go pick that up. I’m like: okay, that’s trash. I’m picking it up.

But in terms of speed of growth, You have to get that first customer first. And then when you get that first one, what did you learn? Reiterate and get that next customer. And then hopefully as you learn more and more through the process, then the next one and the next one and the next one come by even faster. I alluded to it earlier about entrepreneurs being born or built. I knew I was wired to be excited about business. How or why I don’t know.

Some guys, have the muscle memory and the discipline when they golf. Dirk Nowitzski may not be the most talented guy in the NBA but he has the discipline and the focus to do what’s necessary to be successful. He combines that with being 7 feet tall and being skilled. You know, that makes him an amazing basketball player. So it’s about understanding what your skill set is, finding the right place to use those skills and then going for it. Will that make you 250 grand? It depends on if you pick the right industry. I started my first business when I was 12. I was buying and selling baseball cards, buying and selling stamps anything I could do to make money. I was hustling and trying to do so I was in the business but all my friends were into it with me, so they wouldn't know. -

Baseball cards?

Yeah, baseball cards you name it, I mean I grew up in Pittsburgh and so I would, probably even less than 12 years old I would go up buy a bunch of baseball cards that I collected and I would package and I would say to the other kids okay, you're guaranteed to have a Pittsburgh Pirate in this package, and I would charge three times as much and I’d set up on this park bench down in the park down in Scott Township where I grew up and I’d have these little sales and it was great I made money and I mean it was…

You know, I learned as much about business when I was 9, 10 and 12 as I learned any other time.