How I Helped Mark Cuban Make a Billion Dollars and 5 Things I Learned from Him

mark-cuban-is-fun

Mark Cuban’s company, AudioNet (later named Broadcast.com), called me up in 1997 because they desperately needed my help in order for Cuban to become the billionaire he rightfully became.  They wined me, dined me, called me up every day, until finally I granted them their wish.

I don’t follow every aspect of Mark Cuban’s career. So I’m only going to discuss my own brief interactions with the periphery of his business life to explain what I’ve learned from him. Suffice to say, he’s enormously successful. He had a company Broadcast.com which he sold to Yahoo. And then Mark Cuban sold all his shares at the very top, walking away with billions, which he’s probably turned into a billion or so more. He then bought the Dallas Mavericks, started HDNet, made a ton of investments, had a very public battle with Donald Trump, had a very public battle with the SEC, etc.

(Mark Cuban on Dancing with the Stars. I like the way she is looking at him)

I called a friend of mine the other day, “Are you jealous of Cuban?” I asked him. And he said, “of course I am.”

Which is good because if he said, “no”, he would’ve been a liar. And if he said, “no, that guy just got lucky,” he would be the worst personality cocktail out there: stupid and mean.

Read More: The 100 Rules for Being an Entrepreneur 

What I learned from Cuban:

1) Create your luck. Most people I speak to about Cuban say he was lucky. He created a company with minimal revenues in the internet video/audio space, had the biggest IPO in history at the time (1998), immediately put the company up for sale, sold to the biggest Internet company (Yahoo), and then sold all his shares at the very top. How did he know to sell at the top? Is that the “luck” part everyone refers to? Or the fact that he started a company with no revs and was just “lucky” it was at the right time (the Internet bubble?)

It wasn’t luck at all. In chess there’s a saying, “only the good players are lucky”. Whenever a good player wins a game, the angry opponent often says, “ahh, you were just lucky”. But it always seems the good player gets lucky more than the bad player.

People are starved for love and affection. They thrash out everywhere to find it (business, games, relationships, etc) because they didn’t find it as children. And when they see someone else get love (money), they can’t understand it. Love doesn’t exist so how did X, Y, or Z get it? It must be luck.

In 1997, I had never heard of Cuban when AudioNet contacted me. AudioNet was the name of Cuban’s company before it changed its name to Broadcast.com.

At the time, my company, Reset, was putting together the first regular live online production of a TV show. The People’s Court with Ed Koch (a very prestigious TV show if you never watched it) wanted to stream live while it was being filmed. So people online could view it before it went on the air. I was very excited for several reasons.

The People’s Court with Judge Wappner was one of my favorites growing up. So now I was seeing from the ground floor how it was being made. A roomful of production assistants was going through every small claims court case on file. Hundreds or thousands of them. The most interesting ones were being pulled out for airing. We had our own office right next to this production room, where we would relax between airings. Then, we had a guy on site every day managing the streaming on the Internet. How many people watched every day back in 1997 online? Maybe 20? Maybe zero? But it was interesting. And they paid us well. I also loved being in the Hotel Pennsylvania, where it was being aired. Right across the street from Penn Station it was the site of many New York Open chess tournaments when I had been growing up. So I had fond memories. And also some bad ones.

AudioNet contacted us because they were dying for us to use their technology to do the live streaming. I forget the name of their local New York sales person. Very nice guy, persistent. “Listen,” he said, “Mark Cuban wants to go public and we NEED press releases. Press releases drive IPOs. This would be a great press release.”  We all laughed about that. We ended up using them.

Mark Cuban understood the game right from the beginning. Create a brand, be at the forefront of technology (but not too far ahead (no electric cars for him) ) get as many press releases going as possible, sell as fast as you can. He knew, probably five years in advance, that a bubble was occurring and this was the exact plan to maximize value from it. He probably extracted more from the initial Internet bubble than anyone else. It doesn’t happen by luck that you sell at the top. You have to know five years in advance when that top wil occur. And then have to have a very precise plan for being at the right spot at the right time at the very top.

I didn’t understand the game. For instance, in my company, I was a service business. Even though I was developing my own software to build websites. We were streaming many live events. We were doing many things that we could’ve called “products” and we could’ve headed down the IPO route by branding our products, speaking at events, etc. I probably had more revenues than half the companies that went pubic at that time. But I branded myself a service business, not a products business.

I had no business sophistication at all. All I wanted to do was make payroll, have a little extra (profit) and then sell my business as a function of my profits. This is fine in most business cycles (it worked) but I didn’t maximize the way Cuban did. I don’t want to chastize myself but I was right there, right at the same time, and with just as many good products that I had made as anyone else, but I didn’t properly plan for the events that were occurring (in retrospect) in plain daylight around me. In other words, I just simply wasn’t as smart as Cuban.

Everything is a game. Understanding the rules allows you to succeed.

2) Dont invest in ugly. A few years later, in 2004, I was starting a fund of hedge funds. I wrote Cuban to see if he wanted to invest. To his credit, he responded and said he didn’t like the specific strategy I was using. I was starting a fund of PIPE funds. PIPE funds invest directly into public companies by doing private deals with them so they could get stock at a discount or under other favorable terms. Companies do this because they need to raise the money. So, in other words, the worst companies around because they are incapable of raising money through other means. Mark felt the area was ugly and didn’t want to be involved.

We wrote back two or three times and each time he responded. I tried to argue with him but he knew where he stood and he remained there. No.

When companies he invested in did PIPEs, he would get out (notoriously, his back and forth with the SEC over his investment in MAMA and his selling when they did a PIPE)

So what happened? He was right. I smelled the writing on the wall in 2006 and began unwinding my fund before any implosion occurred. The implosion did occur in 2008, two years later, when funds couldn’t get out of illiquid positions in microcap companies and they all crashed in the financial crisis. Mark probably didn’t see the exact writing on the wall but once again he predicted an event that was yet to occur for another four years. What I learned: PIPEs had a bad reputation even in 2004, but I thought that created opportunity. Mark correctly realized that its ok to be an optimist in bad situations, but don’t be stupid. If you do too many crazy things then you become crazy. My investors came out ok but it could’ve been a lot worse and I should’ve just listened to Cuban from the beginning.

 

3) Get comfortable, then get rich. Most people think Cuban just stumbled into the dot-com boom, made his billions, and then that was that. This next thing I learned from Cuban is critical for any entrepreneur. He had already sold his first software company in the early 90s (I might be getting the dates wrong. I make a rule not to look anything up while I’m writing). I don’t know how much he made, but it was enough (10 milion?) for him to be comfortable for the rest of his life. So that allowed him the confidendence to stretch out his muscles and really go for the billion. So the rule is, get comfortable, and only then get mega-rich. If you try to go for the big number too early, you can end up miserable.

4) Bleed. Cuban’s been blogging at blogmaverick.com just about before anyone was blogging. All over that site you can see stories of his first company, of his thoughts on the Dallas Mavericks, about broadcast.com, etc. A great resource. He then used this excitement about blogging to invest all over the space (icerocket, weblogs, etc) and although those were successes I think he was doing it more out of fun than anything. And he used his blog to keep his name out there in the community. To keep building his personal brand. Thats very valuable.

 

5) Cuban’s Rules for Investing: Cuban made his billions and now he does what ever he wants. And pretty publicly. He buys movie chains. He produces movies (because he knows he has distribution for them). He loves basketball (the initial impetus for AudioNet was that he wanted to watch basketball games from his college over the Internet.) so he bought the Dallas Mavericks and has probably increased their value by several hundred million. It seems like there’s a few rules to Cuban’s investing techniques since the 90s:

1) Find something you are super excited about and know that at least another 100 million people can be super excited about it

2) Either start a company in that space or invest as much as possible in it. Also, strongly participate in it. Make sure you are the most excited user of your own product.

3) No matter what you are doing, get as much press as possible. Don’t use PR firms (maybe he does use PR firms but he certainly doesn’t need to. He creates his own PR). Be OUT there creating your own buzz with your own energy. PR firms can never do that for you. Too many companies rely on PR firms to create buzz. But it will never work. You have to create your own buzz and that adds many multiples of value to what otherwise would be your value.

4) Have a good bullshit detector. If things smell, get rid of them. If things are frothy, sell. Don’t break this rule.

5) Engage the customer. Cuban is probably the most accessible owner in the NBA. He talks to the fans. he blogs to entrepreneurs. In 2004 or 2005 I ran into Jason Calacanis who started weblogs, inc. He told me he cold-called Mark Cuban about his weblogs, inc blogging platform and Cuban immediately invested. Cuban responded to my emails about PIPEs even though he didn’t know me and wasn’t even interested in PIPES. Its hard work. For me I respond to up to 100 emails, comments, etc a day and still can’t keep up. Somehow Cuban has the energy to keep on doing what he’s doing even though he could’ve long disappeared by now (when’s the last time you hear from Todd Wagner, his old partner at broadcast.com. I’m sure he’s doing fine but he’s not as public as Cuban).

And yes, I’m jealous. The guy has the dream life. Not everyone can make a billion, though. So the challenge then is to make the dream life (or go far beyond what you thought the dream life would’ve been) by re-calibrating whats really important to you. In my mind, right now, I’m a trillionaire. And getting richer every day.

 

Read More: The 100 Rules for Being an Entrepreneur 

Follow me on Twitter, for more fun facts about Cuban

10 Unusual Things About Steve Jobs

10 Things I Learned From Jim Cramer

Why Larry Page and I are Different

(although it could even get better if I could go on Dancing with the Stars)

 

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  • Anonymous

    Cuban was not lucky in the ability to capitalize on a good opportunity but he was certainly lucky in being able to sell to people a company for billions of dollars that was not profitable and whose technology people later found to be worth near nothing.

    That is luck. Being able to bamboozle Yahoo and the gullible public may be a skill but real skill is in creating a tangible product that is worth something and that has lasting value.

    Cuban did no such thing. His product – Broadcast.com was worthless and provably so.

    He was a speculator who got out just in time. Not unlike many real-estate guys who made money when the bubble was growing. Many of those guys lost money when the bubble popped.

    Cuban was lucky that he found a company in Yahoo that was dumb. You can argue that was skill but I prefer to admire those that build things with real value and make money from that.

    • rmoney

      arackal, You should go out and read MC’s blog, it would probably give you better insight into your jealous comments. Also if MC would have stayed at Broadcast I am sure he would have made something of it (entrepreneurs are woven that way).

      • http://www.dividend.com Paul Rubillo

        I actually meant to hit reply to rmoney. The reality is the purchase for Yahoo will go down as one of the worst ever acquisitions for the company. Also, Mark never did stick around. I do admire Mark for being able to get what he got for his company and I am also a fan of how he’s straight-forward. His legacy is still likely far from being written in the corporate world.

    • http://jamesaltucher.com James Altucher

      In a frothy environment it doesnt matter whether it was Yahoo or Time Warner or whatever. There’s always going to be “a Yahoo”. Thats why I firmly believe it was not luck. Cuban knew in 1995 that there was going to be “a Yahoo” by 2000. And he planned for it, built for it, and worked 24 hours a day for it. At least according to his employees who I knew at the time who worked for him.

      • Anonymous

        James, what you are saying is that Cuban knew that there would be a sucker and that he executed in landing that sucker. Ok fine, that is not luck.

        I’m not saying that he didn’t work hard – by all accounts he is an extremely hard working person and that quality is to be admired and a prerequisite for any success and something to emulate.

        But the fact of the matter is that he sold a worthless product for a lot of money. Kudos to him for doing it but it was essentially and inarguably worthless with little revenue before he sold it and none after.

        But what is to me most admirable and truly not lucky are those that build products of value that last.

        The issue that I have in truly admiring the man is that he didn’t build anything with lasting value. I like to admire those that do.

        Yes he got rich – good for him.

        • http://jamesaltucher.com James Altucher

          No, I’m not saying that at all.

          • Anonymous

            Take a look at the 1000 richest people in the US and around the world. Cuban is likely on that list.

            Take away the people who inherited their money.

            Cuban is likely singular in that he is worth a vast amount of money that was essentially created without any product that had any lasting value and/or tangible revenues.

            How he got that money wasn’t that he worked hard or was smart or “didn’t invest in ugly”. Plenty of people are as smart and work as hard and certainly hard work and smarts are a pre-requisite to making money. He got that money because Yahoo was foolish.

            You say that isn’t luck but there are plenty of people like Mark Cuban – many/most successful any measure – who aren’t anywhere near Mark Cuban in terms of wealth.

            All the people who are near Cuban in wealth, built businesses that have had tangible and lasting value. Cuban is almost singularly a person who made vast money from something that was inconsequential.

            He was able to sell something worthless for a lot of money. So he was smart enough to get away with it but he is nearly unique in making billions that way so I think that some “luck” was involved.

            He is a smart man, but he certainly is no Jobs, Gates, Buffet etc… or any one else on the list of billionaires who made money from building/making products or services that made money.

            Kudos to him for not investing in bad investments (like broadcast.com) and managing to keep his money now that he has it.

          • tw

            While some of your points have merit, it is difficult to see what the world looked like back at the time of the transaction. We remember it as a product of our own experience. That is to say that in “retrospect” the company he sold turned out to be “worthless”.

            In all business ventures there is a risk that a company or product will suffer the same fate. I have many gadgets that were developed with serious amounts of r and d money only to be obliterated by something newer and better. I think Andy Kessler talks about this in at least one of his books….speaking of another lucky, and talented guy.

          • Chris

            James alluded to it in his post, but looking back at the time of the transaction the market for Broadcast.com was very limited; I know for a fact that dial-up was still the norm and the tech needed to power such a venture was 4-5 years in the distance.

            So.. did Mark sell Yahoo a “worthless” product or did Yahoo fail to develop it properly? I’d argue the latter. Had Cuban stayed on through ’03-’04 we’d probably be talking about how ‘lucky’ he was to sell BC.com for 20B+.

          • Anonymous

            Except that Broadcast.com never made money, was always losing money and that what they were selling was a commodity technology and commodity service.

            Expecting them to last for 4-5 years and then make money wouldn’t have worked and is counter to the strategy that James is suggesting Cuban followed – namely aim to sell out in a bubble. Cuban never was aiming to run a real business, at least as how I read James’ description and from what actually happened.

            He was smart and capable enough to build a “pump and dump” stock and Yahoo was dumb enough to buy them.

          • http://twitter.com/J_Biddy_Trader Jay Biddy Trader

            I can remember when AMZN never made money year in and year out.  They were in the red quarter after quarter.  YHOO has been terrible at developing their business model in the last 10 yrs and their stock is still down 90% from the 2000 highs.  Cuban cannot be blamed for selling a company with potential and subsequently the potential was never developed.  They weren’t making money at the time, but there are a few companies still around in the exact same position today.

          • Tgoc9

            and salesforce.com still loses money – doesnt mean that its a good comparison.  By ANY metric – even the ridiculous ones of the dotcom bubble – broadcast.com was among the most absurd 
            $1bn+ acquisitions of all time.  The company did not have enough “potential” to justify that valuation and it silly to suggest that Yahoo paid a fair price but simply botched up management of the company after purchase.

          • TheGardenMaster

            Tell us, what have you done with your life? What has been your contribution to society?

        • http://www.dividend.com Paul Rubillo

          The argument many founders will make is that the acquiring companies ruined the “vision” over time and thus it became worthless. Combine that with founders flying the coop as soon as they could and presto – worthless transaction. Acquiring companies need to be smarter when it comes to chasing the flavor of the day, especially when it comes to companies that essentially have no proven business model.

  • https://jarvisapp.com/ Jay Shirley

    I really enjoyed the article, very good piece… but I have to ask a question.

    What can you do with $1 billion that you can’t do with $10 million? Already with my income I can’t really find anything I *can’t* do, I just may not be doing it first class. Maybe I’m just missing that, but I’ve found my motivation for riches has diminished significantly as I’ve climbed the ladder.

    Now I just want to run the show and make payroll.

    • http://economicdisconnect.blogspot.com/ GYSC

      Great question, I guess us lower ladder rung types will never know. Sometimes enough is plenty, but more is even better? I have no idea.

    • Guest

      hmmm…. you can’t do thousands things.
      you have not power. this is first thing.
      but if you wanna talk about “first class”: you can’t own luxury house, little yacht (ferretti start from 5-8 millions), luxury cars, etc. First class toys have very big price.

      • Spencer

        You missed the point. He can have a car that runs perfectly, a house that his family fits in, rent a boat for a family vacation. I think Jay is right, there is sooo much wastefulness in the super rich. There is no need for the extravagances that some of them extend to. Sad when people have a 500million dollar yacht and there are still people dying of hunger.

  • http://www.dividend.com Paul Rubillo

    Mark Cuban has a lot of Wayne Gretzky’s skill in skating to where the puck was going to be. One big idea and you can write your own ticket forever!

  • David Gillie

    Damned right it’s luck. I know all about luck. I’ve been lucky as hell.

    Usually, I’m struck with luck while I’m breaking my ass putting 12 hours + a day hoping for a stroke of luck. It’s almost predictable — it’ll come after about three failures and re-starts.

    I hope PETA doesn’t see that 3-legged rabbit stumbling around in my back yard.

  • UraniumC

    yeah, but can he put his leg behind his head?

  • http://www.parmcharm.com karen parmelee

    Passion + Integrity = Success. Timing is a factor, but apparently not the most important. All your posts, James, are so very uplifting and intoxicating! Makes it seem that anything is possible. ; )
    I predict that once you can complete a yoga class without total humiliation, you will be on Dancing with the Stars!

  • Anonymous

    Great post as always. I was part of the ‘what a lucky guy’ crowd, mostly because a lot of what is written about him has “hater” undertones. People sleep better when they think other people are just luckier than them. I think you are absolutely right though – his foresight and timing have been incredible. He is also very public, yet accessible. I doubt you would have received a response from Donald Trump when fundraising for your fund. I think another takeaway is ego, or balls, or confidence – whatever you want to call it. When you combine that with rule #1 (find something you’re excited about) it makes for an explosive combo. Most entrepreneurs probably don’t have enough of one or the other. Do you think Zuckerberg meets these same criteria?

  • mike

    I find that people use the word “luck” and “talent” in the same way. “He is just lucky” “She just has more talent than me”. It is a total disregard for the hard work put in by the individual to accomplish something.

  • http://www.736hundred.tumblr.com 736hundred

    What is it about men and money? Average men appear to adore, even swoon over other men that have made it big. As if that achievement alone is the crowning glory, the ultimate pinnacle any man could ever possibly reach.

    I don’t get it.

    • http://jamesaltucher.com James Altucher

      Hmm, do I detect something here, 736? I actually happen to swoon over Oprah as well. And its not “money” so much as the various roller coasters one goes through on the path towards it (see almost every post on this blog). My question is: do you have an issue with men and money?

      • http://www.736hundred.tumblr.com 736hundred

        Not all men with money and not all women with money. Nothing is absolute. I hesitated in posting my comment. But in reality I have seen normal people alter their reactions once they find out someone is loaded.

        Maybe it just a societal issue and not a male issue.

        I prefer not knowing a persons balance sheet. I guess when talking about news makers there is no way around it

        Excuse typo don’t have glasses with me. :)

        • http://jamesaltucher.com James Altucher

          Well, in general I think you can see throughout this blog I’m an equal opportunity swooner regardless of sex or net worth.

          • http://www.736hundred.tumblr.com 736hundred

            absolutely….and somehow the way you do it, it’s endearing. :)

    • http://danmar.posterous.com/ jmdanmar

      Maybe they just wish they could have the freedom that money buys. Maybe they’re tired of going out for lunch and seeing all the luxury vehicles everywhere they look and then going home in their Camrys. Maybe they see all the beautiful women driving many of those expensive cars and thinking: “Man, if I had that kind of money maybe I could score that hot blonde in Legal.” Possibly forgetting why the hot blonde would be interested in them in the first place. :-)  Or maybe they beat themselves up because deep down they resent not having worked as hard or as smart as they could have at building the kind of success they want now now and not surrounding themselves with successful people. Or maybe they just think they’re unlucky! We simply can’t discount out of hand the fact we live in a material world where you are defined by what you have – whether we like it or not. And to claim that it’s only a matter of changing your thinking around is oversimplifying a complex social issue.

      • On iPhone

        Without calling your reasoning total bs. I would say that some people have learned what makes them happy and what makes them feel good and it’s not material crap or the objectification of a beautiful woman. To think that if x then y with the “x” being extreme wealth is a miserable way to live and think.

        • http://danmar.posterous.com/ jmdanmar

          Clearly I didn’t make it clear that this was “somewhat” tongue-in-cheek. However, the seriousness of your response gives me the impression you may have misread them. Of course some people have managed to do what you mention – most of us not only know that but know people who have (my sister the artist for example, who is a genuine inspiration). However, “some” is not “all” and there certainly are some people who are the opposite of what you describe. I see them every day.

          • http://736hundred.tumblr.com/ 736hundred

            I guess I missed your sarcasm -oopsy. In all honesty, I have grown tired of even dealing with people who place $$$$ as their top and seemingly only priority. If I want to I can see them everyday, but I choose not to, just because I don’t share their values and my time is precious.

            Nothing personal – just my choice after years of daily exposure.

            My initial question was; why do men (should have been gender neutral and it should have been “some” people) swoon over wealthy individuals? I really don’t even desire an answer….this post was ages ago….but thanks for your comments they made me think

            Cheers!

  • winning

    Mark is very savvy and smart and hard-working. But it is ridiculous to say he didn’t get very ‘lucky’ by starting an interent company at the time people were willing to throw $tens of millions+ at them, and to say he didn’t get lucky by IPOing near the absolute top of the Nasdaq, ever, and lucky/smart enough to cash out via Yahoo! which required Yahoo being stupid enough to wildly overpay.

    I’m not jealous, I admire him and the work he’s done with Dallas. But he got very, very lucky, and didn’t have to see the bubble ‘five years ahead’ of time, that’s ludicrous. It was obvious to anyone working in the markets who was over 25, and on the front page of Barron’s, the FT, the Economist, et al.

    Has he done anything the past decade remotely as successful as cashing out of AudioNet? Is one big score all it takes? I don’t know.

  • http://economicdisconnect.blogspot.com/ GYSC

    Thanks for this write up, I really did not know much about Cuban before this other than the Mavericks angle. In Chess the bad players get lucky every now and again, but the good ones have seem to have a never ending string of luck that defies statistics. Maybe it is something else (snark on).

  • Sooz

    “In my mind, right now, I’m a trillionaire. And getting richer every day.”(J.A.)

    Bottom line.. that’s all that really matters!!!
    I use to have this same conversation with my Grandfather who would pragmatically disagree with me all through my childhood and on..til his death.
    We use to play card games and board games and when I won I claimed victory by ‘Luck’!! I was playing against my Grandfather which required ‘Luck’ to beat him and he would always say,”There’s NO such thing as luck”.
    (mind you,..he also taught me how to read the journal that was delivered to his door step decades before on~line stuff..or ticker acrossed the T.V..)
    I have claimed many times in the past that I’m the ‘Luckiest’ person ever and I’ll continue to believe that forever..no matter what…just because of my Grandfather..:)
    There is a lot to be said for ‘Common Sense’ and ‘Timing in Life’..when applied!!

    p.s…chess non~applicable to my post above ..:)

    • Sooz

      Some things can not be learned or be taught.
      I’d consider these gifts as damned ‘Lucky’!

      • Sooz

        “Unlucky people miss chance opportunities because they are too focused on looking for something else.”.. “You have to trust in something—your gut, destiny, life, karma, whatever..” (Steve Jobs, Stanford graduation address )
        nice guest article by Erik Calonius:
        http://www.jonathanfields.com/blog/what-lucky-people-do-differently/

        note: should be tied to Jobs article but like the Luck/Unlucky tie here.

        • Sooz

          side note:
          Nine times out of ten I will hand calligraph a letter opposed to email..etc
          As a matter of fact, I just threw five notes/letter’s in the mail this past week..
          (In return I recieved five phone calls over the weekend in response to all notes/letter’s with thanks..:))

          *becoming a lost form of art/expression.

          • Sooz

            *hand written letter’s using any sort of medium besides a keyboard..
            edit: received

          • http://www.736hundred.tumblr.com 736hundred

            I like to cut individual letters out of magazine pages. Once cut I use them to form words.

            Works every time. :)

          • Sooz

            Well now shit, hundred!!
            You need to learn calligraphy..yes??
            (it might take a bit of that scissor cutting edge off)

          • Sooz

            Have fun on your near departure from the daily grind! You are much deserving.
            Don’t go ‘Jounsing’ without your shears..:))
            You’ll be back soon enough after soaking up ultra~gamma rays.

          • Sooz

            Edward(aka..hunred scissorhands),
            that should read jonessing…wth

  • http://twitter.com/stephenguise Stephen Guise

    It seems like everything in life is a game sometimes. The more I realize it and accept it, the more fun I have playing. In the beginning it was just annoying. Mark Cuban seems to have a an intuitive grasp on business in general. Everything he touched turned gold or was sold before it grew mold (sorry, went for the rhyme there).

  • http://twitter.com/bclund Brian Lund

    Cuban was smart to create a valuable company but SMARTER to know when to get out. Anyone remember Blue Martini or any number of internet companies whose CEO’s were worth 100’s of millions and got out with nothing? Not to mention his collar of his Yahoo stock is the thing of legends.

    • http://www.facebook.com/james.altucher James Altucher

      Great point. Whatever happened to Blue Martini? Remember Safeguard Scientific?

  • http://www.nicolesfarm.blogspot.com Nicole

    “I like the way she’s looking at him” – I’d say she’s thinking “Sh*t, I’m barely clothed [with a body like that who wouldn’t be] and this guy is more entertaining than I am.”

    Just a thought. Thanks for the article…it got my brain going this morning better than a triple shot mocha.

    • http://www.facebook.com/james.altucher James Altucher

      I need a triple shot mocha but without the mocha.

  • Tdyttdyt

    And every 5 seconds a child in Africa dies.

    Whoopee doo for Mark Cuban (never heard of him before now), tell me about his charitable efforts, then maybe I’ll be impressed.

    This blog seems very money-focussed, a sign of the times that its readers hold it in such high regard.

    • http://jamesaltucher.com James Altucher

      Maybe read some of the posts that do not mention the word money

    • pjc

      Certainly the average person walking down the street isn’t doing much for African children.

      Bill Gates and Warren Buffet are doing quite a bit to help African children. It wasn’t too long ago that these two gentlemen were routinely criticized for not doing enough in the way of charitable activities. Now that they have become perhaps the greatest philanthropists of all time, their former critics don’t seem very interested in giving them credit.

      Does that help explain to you where there isn’t as much philanthropy among the hyper-successful as you might otherwise expect?

      • http://www.rainmakervt.com Mike O’Horo

        If some of the average persons virtually walking down the street via this Disqus thread would like to do something for African children, you could do worse than help Charity:Water.  One billion people don’t have clean drinking water.  

        I heard about C:W via Seth Godin’s blog.  On the occasion of his 50th birthday, Seth asked friends to donate $50 to C:W.  Each $2500 raised drills a well in an East African village, where people otherwise have to walk 10 miles with gallon jugs.  (No, not the “10 miles each way” our parents claimed to have walked to school, but a real 10 miles.)  

        On my 60th, I asked friends and those in my network to donate $60.  The response was beyond gratifying.  People actually thanked me for asking them to help.  I think many of us, perhaps jaded by United Way-type scandals, are looking for something tangible to do, and this is definitely tangible.  They limit your appeal campaign to 90 days so they can get the money doing what it’s supposed to do.  

        I came up short on my goal of drilling two wells, but we got 80% of the way there before the clock expired.  All donations apply to well-drilling; sponsors pay all operating costs of the organization.  Check it out at http://www.charitywater.com.

    • MikeB

      Here we go again!  A comment from someone who knows better than Mark Cuban how to spend his money.

      By the way, Cuban sent a friend of mine $75K to help pay for her son’s liver transplant.  It took maybe 2 weeks from the day she asked him to donate to the day she received the check.

      So, you have no clue what you’re talking about, except you are right about this blog being very money-focused. I suspect that’s why many of us read it.

  • Aprilnaction

    Wow! This is a really cool story. Thanks for sharing and shedding light on the power of blogging and good business timing.

  • Thetruth

    James, let’s get a few things straight here. First, you are a bozo. You front yourself for the financial media as some investment authority when the fact is that you are a clown. The media airs clowns, not real experts. You are a marketer. You spend most of your time whoring yourself in the media to market yourself. Marketers are salesment, NOT experts, NOT analysts, NOT great investors.

    Second, Cuban is a clown and a loser. The guy is actually jealous of Trump the cheeseball. Why? Because Cuban suffers from some obvious issues based on his childhood so he is trying to compensate by getting as much attention as possible.

    Virtually any jerkoff with a dotcom was able to strike it rich in the late 90s. This a fact. Moreover, you act as if Cuban sold at the top as if he had a clue. You fail to mention that his sahes of Yahoo! were collared so they were triggered to sell automatically. You fail to mention the fact that Broadcast.com was heavily in debt and did not have anywhere near the revebues that would justify even a $100 million price tag. We see what has happened to Yahoo! due to its hairbrained mistakes, the acquisition of Broadcast of which was one.

    But you James, like Cuban have one advantage that has enabled you to gain media exposure despite your inability to predict the global collapse or establish any type of credible track record as far as I have seen. You are Jewish, so you are in the media club. Cuban is also Jewish, so he received adquate financing and massive pimping out of his useless broadcast.com by Jewish Wall Street and venture capitalists.

    You don’t even mention Cuban’s SEC case, which was a complete joke. Cuban should have been found guilty of insider trading. But when you have money, you are never found guilty, especially when you are Jewish and the head of the SEC is Jewish.

    Successful men are not measured by the amount of money they have. It does not matter how much money one has. What matters most if how you got that money and what kind of person you are. Are you honest? Do you have integrity? Do you put the people in front of yourself? Both you and Cuban should take a stab at these questions. I’d like to see how you respond. I know what my answers are.

    Finally, I don’t suppose any of the sheep who bother to waste their time reading your drivel are even aware that you have kissed Cuba’s ass and positioned yourself behind his “success” as a manner by which to prop up your own ego.

    Occassionally, real experts run across this trash when doing research on clowns, so you might wantto make your motives less obvious and report more of the full story next time.

  • http://www.GenuineThriving.com/ Jeremiah Stanghini

    I’d never really check into how Cuban made his millions. I had read here and there how some people weren’t very fond of how/what he did, but I’d never actually taken the time to research how he got big. It’s rewarding to know that he didn’t just “get lucky” as many people seem to label it. As you say and has been said, “winners create their own luck.”

    With Love and Gratitude,

    Jeremiah

    • http://www.facebook.com/james.altucher James Altucher

      Jeremiah, thanks for the comment. Its really true about creating luck.

  • Sooz

    If I had Mr. Cubans’ cash this a.m.(4/18/2011) I’d be hightailing it out of dodge. Summoning up a private jet and flying to Rio or anywhere but here.!?!
    We woke up to an inch of snow and continues to to fall..Worst non~Spring that I can ever remember!
    I’m over it already!!!

    • http://www.facebook.com/james.altucher James Altucher

      Sooz, go anyway. Even without the cash.

      • Sooz

        Daffoils, hyacinths and tulips covered in snow. Forget about the crocus..they were buried alive!! Geesh..
        Magnolias are patiently waiting to burst with color..
        In all truthfulness I’d much rather be working in my yard(wearing shorts..:).
        Maybe next week?!?
        I look forward to flipping off(figuratively)my furnace which been running since last Sept.. look very much forward to open windows/fresh air.

        • Sooz

          this very moment..32 degrees w/windchill at 20..(8:34pm est 4/19)
          J.A., don’t stow away your winter gear because it’s headed your way..bumber!

          • Sooz

            *edit bummer

  • Jjrdman

    I like the “get comfortable” part. Maybe do a right up on that for us dummies….you know, how to make $10 Million to get comfortable before we get really rich. I would find that lesson quite useful.

    • http://www.facebook.com/james.altucher James Altucher

      Mark’s blog, blogmaverick.com , has some excellent stories on how he did it.

  • http://JasonA.net jasona

    I actually worked at AudioNet back in the day, and I can say, without a doubt, that Cuban was super smart. Mark knew the space we were in, knew the direction we needed to go and executed like a mad man. I agree with you on all points: Mark is: 1.) Super smart and talented 2.) Fearless (because of his previous money) and 3.) Relentless with his execution. Great article, James!

    • http://www.facebook.com/james.altucher James Altucher

      Wow, Jason. What a coincidence. I had no idea you worked for Audionet back then.

    • http://www.facebook.com/james.altucher James Altucher

      Wow, what a coincidence, Jason. I had no idea you worked there.

      • http://JasonA.net jasona

        Yep, it was my first real job – I took a break from college one summer to work there (my roommate worked there), and I never looked back (nor finished my degree). Later, Cuban was a business reference for me when I closed our Series A with Intel Capital. Small world! :)

  • Thetruth

    James, let’s get a few things straight here. First, you are a bozo. You front yourself for the financial media as some investment authority when the fact is that you are a clown. The media airs clowns, not real experts. You are a marketer. You spend most of your time whoring yourself in the media to market yourself. Marketers are salesmen, NOT experts, NOT analysts, NOT great investors.

    Second, Cuban is a clown and a loser. The guy is actually jealous of Trump the cheese ball. Why? Because Cuban suffers from some obvious issues based on his childhood so he is trying to compensate by getting as much attention as possible.

    Virtually any jerkoff with a dotcom was able to strike it rich in the late 90s. This a fact. Moreover, you act as if Cuban sold at the top as if he had a clue. You fail to mention that his sell of Yahoo! stock were collared so they were triggered to sell automatically. You fail to mention the fact that Broadcast.com was heavily in debt and did not have anywhere near the revenue’s that would justify even a $100 million price tag. We see what has happened to Yahoo! due to its hair brained mistakes, the acquisition of Broadcast of which was one.

    But you James, like Cuban have one advantage that has enabled you to gain media exposure despite your inability to predict the global collapse or establish any type of credible track record as far as I have seen. You are Jewish, so you are in the media club. Cuban is also Jewish, so he received adequate financing and massive pimping out of his useless broadcast.com by Jewish Wall Street and venture capitalists.

    You don’t even mention Cuban’s SEC case, which was a complete joke. Cuban should have been found guilty of insider trading. But when you have money, you are never found guilty, especially when you are Jewish and the head of the SEC is Jewish.

    Successful men are not measured by the amount of money they have. It does not matter how much money one has. What matters most if how you got that money and what kind of person you are. Are you honest? Do you have integrity? Do you put the people in front of yourself? Both you and Cuban should take a stab at these questions. I’d like to see how you respond. I know what my answers are.

    Finally, I don’t suppose any of the sheep who bother to waste their time reading your drivel are even aware that you have kissed Cuba’s ass and positioned yourself behind his “success” as a manner by which to prop up your own ego.

    Occasionally, real experts run across this trash when doing research on clowns, so you might want to make your motives less obvious and report more of the full story next time.

  • http://www.techinsidr.com Techinsidr

    Love Cuban, but there is no denying that he was in the right place at the right time.  His company was worth billions on paper, but the true worth was a tiny, miniscule fraction of what Yahoo! paid for it. Did his technology change the world? No. Is it still being used today by most people? Definitely not. He just got out at the right time when valuations were at their peak.

    I don’t think he belongs in the same category as a Marc Andreessen who has changed the world.  Cuban did nothing besides cashing out during the height of the .COM boom when the market dictated that his lackluster tech company was worth billions.

    • http://twitter.com/J_Biddy_Trader Jay Biddy Trader

      In the “right place at the right time” means already having made himself into a self-made millionaire by his 20’s.

      “As fired up as I was about the job, I was scared. Why? Because I have
      never worked with an IBM PC in my life. Not a single time, and I’m going
      to be selling software for it. So what do I do? I do what everyone
      does: I rationalize. I tell myself that the people walking in the door
      know as little as I do, so if I just started doing what I told my boss I
      would do, read the manuals, I would be ahead of the curve. That’s what I
      did. Every night I would take home a different software manual, and I
      would read them. Of course the reading was captivating. Peachtree, PFS,
      DBase, Lotus, Accpac… I couldn’t put them down. Every night I would read
      some after getting home, no matter how late.”

      Mark Cuban

      People make their own luck through intelligent, hard work. Cuban already had millions when he sold Broadcast.com. I don’t know anyone that is lucky with three straight multi-million dollar endeavors: computer consulting, Broadcast.com, Dallas Mavericks. Every time he touches something, it turns to gold. Labeling it “lucky” is how we rationalize our own inability to succeed. Myself included.

    • http://www.rainmakervt.com Mike O’Horo

      There is no such think as “true worth,” i.e., some ethereal (and subjective) alternative value vs. that arrived at by a willing buyer and a willing seller.  The only measure of something’s value is what someone actually pays for it.  “It’s worth $100, but I got it for $60″ is silly.  Even if it previously attracted buyers @ $100, today it’s getting $60, so that’s its value.

  • da bear

    James, I’m sure if you ask Cuban he will freely admit his fortune is more due to luck than anything else.  I love your writing, but your analysis here is off base.  For every Cuban outcome there are 100,000 plus others under similar circumstances, characteristics who envisioned the same future, whose outcome did not work out nearly as well.  It’s just how things play out statistically in life.

    • http://twitter.com/J_Biddy_Trader Jay Biddy Trader

      That’s hilarious!  Have you read his story about how he developed his consulting company and sold it for ~$10 million in his 20s?  He had no computer experience, yet read the manuals on the software to become the local expert.  His degree is in business administration.  How about how the Mavericks were in the gutter and have won over 50 games a year for the last 10 yrs?  He completely turned them around.  By the way, he describes himself as “lucky” to show humility but he doesn’t believe it for a second.  His blog describes in detail how he made his own luck.

  • notMYrealNAME

    I worked with Mark’s brother Jeff in Dallas around the time he did the deal with Yahoo.  Now, of course, Jeff works for Mark.  I also know one of the Cuban brother’s very good friends.  They are a good family, smart and work very hard.  Kudos to Mark, he earned it….he’s one of the few “billionaires” I respect and admire. 

  • notMYrealNAME

    I worked with Mark’s brother Jeff in Dallas around the time he did the deal with Yahoo.  Now, of course, Jeff works for Mark.  I also know one of the Cuban brother’s very good friends.  They are a good family, smart and work very hard.  Kudos to Mark, he earned it….he’s one of the few “billionaires” I respect and admire. 

  • Anonymous

    See, here’s the deal….the internet is always changing and growing and no one knows exactly how it will go.  If you can be the first big player in something that turns out to be huge you’ve got it made.  But remember, in Internet Land everything can change at the blink of an eye.  This is why Ebay’s long term strategy is 7 days out.  So Cuban was building on a projected technology that might have been huge.  He’s doing the same thing with HDNET right now (and should probably sell it pretty quickly).  Yahoo saw the potential of that space and became the leader in it with a single purchase.  Things didn’t go as Yahoo hoped. And Cuban got out before the internet proved him wrong.

    There are two plays you can make in internet businesses:

    1.) create, promote, and sell before the Internet changes, or

    2.) Create and hold like Google did (although, as @facebook-584260635:disqus points out this wasn’t their initial strategy)

    Mark Cuban did create a product of value. The market valued it at Billions of dollars and Cuban got his share.

  • Steven L Goff

    I cant stand that cocksucker!….Cuban

  • Maxjohan

    Yeah, it wasn’t luck. It took me about 2-3 years or more, of long research, analysis and self critic. Before I realized that there’s no such thing as “luck” in business. Bill Gates for example, he worked for a goal, to make Microsoft a leading software company. Then there was this guy I read about that had started 80 companies in the tech field.

    Sir Terry Matthews was his name. Most people like vikram333, seems to dislike Cuban and how he sold “hot air” to “stupid” Yahoo. It doesn’t matter, he still had the foresight, as you said in greater detail, to predict the market, and become a billionaire. When you work both hard and smart towards your goals, you get lucky. Simple as that.

  • Adrian

    James, I’m 23 and up to my neck from college loans. I got a respectable degree from a mediocre institution. I use to have dreams of making my first million before the age of 30 by starting my own business, etc. Ignored working marginally higher in high school to get into a better institution, ignored working marginally better to get a better GPA in college, all because I thought I could “make it” without playing into the system.

    Now I am working at a doomed software start-up in a very entry level position. (Your FoF firm was on my cold call list one day which is how I came across your blog) Was really thinking I messed up my life by not following “the path” to wealth. Your posts have given me a lot of hope, solidified my view that we create our own luck and emphasized to me that no matter where I am at, hard work will elevate my standing. Just wanted to pass on my thanks to you, James, for keeping me going when I sometimes get down.

  • Anonymous

    Fed regulates the reserve ratio of all banks.
    SEC should also regulate the market capitalization of listed companies to twice their quarterly income.

  • http://jayliew.com Jay Liew

    James, can you elaborate more in more details, the pitfalls / downside of #3? It’s not uncommon for investors to push entrepreneurs they fund to take big risks. Likewise, most investors don’t like funding things that don’t have a remote chance of exiting huge. Would love to hear your perspective on this.

  • Guest

    I don’t believe you’re jealous of anyone’s appearance on Dancing with the fucking Stars.

  • JB

    “Everything is a game. Understanding the rules allows you to succeed.” – Just wanted to let you know that I will be ‘borrowing’ that quote and making it my background.

  • Stephen

    “He knew, probably five years in advance, that a bubble was occurring and
    this was the exact plan to maximize value from it. He probably
    extracted more from the initial Internet bubble than anyone else. You have to know five
    years in advance when that top wil occur. And then have to have a very
    precise plan for being at the right spot at the right time at the very
    top.””

    I think you might be giving Mark Cuban a little too much credit, here. No one knows anything “five years in advance” in this business.

    “It
    doesn’t happen by luck that you sell at the top.” Having seen this happen in my own family, I can assure it does happen.

  • TOC

    the problem is not that he got lucky… maybe he got rich because he was smarter than everyone else… I think its hard to tell how much luck played into it.  The real problem as I see it, is that he made a billion dollar but created NO long-term value.  He took advantage of a situation.  Is what he did better than scamming people out of money? I think so, but it is somewhere between that and getting rich by actually creating long-term value

  • Burritolover

    Broadcast.com had potential before they were bought out by Yahoo, then Yahoo (thinking Yahoo was a blessing to the internet), did nothing with Broadcast.com… What was Audionet/Broadcast.com? A company that streamed live video on the internet at the time… Did anyone else do it? No… There is your answer… Then out came Youtube… Put together a timeline of every event and thing happened, you will see what decisions have been made…

  • MustBeSaid

    Mark Cuban wasn’t lucky. He worked really hard to sell a worthless company to a bunch of idiots flush with investor cash. A company that’s nothing more than a redirect to the Yahoo homepage. He was smart and successful but in the way a sleazy car salesman is smart and successful for selling a junker to an ignorant buyer. He hasn’t done anything worth admiring aside from adding 9 zeros to his net worth. And if he died tomorrow, that would be his legacy…. “Got rich selling a worthless company to Yahoo. Then he owned the Mavericks for a while. HDNet something, something. The end”

    The Yahoo board were idiots to buy Brodcast.com but that’s not Marks fault. He set out to make money and he did. But he needs to stop being so arrogant about it. Convincing people who were clearly fools to part with money that wasn’t theirs for something that was worth almost nothing isn’t something you should be so proud of.

    But don’t be too hard on Marc. Had Yahoo not pissed away that money by giving it to him, they certainly would have wasted it on other bad deals. There’s a graveyard behind Yahoo HQ littered with the corpses of their acquisitions I hear the Broadcast.com mausoleum is quite nice.

  • tommydman

    He still got lucky.

  • Vi

    Meh, the guy didn’t create any value. Just pushed money around. The real entrepreneurs; people that deserved to be studied are people that created actual value, your Larry Page, Mark Zuckerberg, Jerry Yang, Larry Ellison, Bill Gates, Jeff Bezos etc. But to people outside the bay area or software look up to lucky idiots like Mark Cuban for patterns to success.

  • Peter Halim

    He is lucky….His net worth when he sold audionet to Yahoo is about $ 2.5 billion …that is 1999…currently his networth is at $ 2.7billion …..15 years and you only make 9% …that is only about 0.5% a year.– you will make more if you just put it in a saving bond. Even the current estimate of $ 2.7 b is not accurate. His Magnolia Pictures and Landmark Theatre are not making that much money and Forbes just value them based on the price Mark want to sell, which really no rational businessman will buy it.

    To be fair with Mark…..most billionaire are lucky on one climatix event in his/her live,;
    George Soros Sept 16, 1992 Black Wednesday
    Roman Abramovic 1995 purchase of Sibfnet for 1/70 of company value
    ……and so much more …you get the point

    But Mark is really not a savvy businessman, watch the Shark Tank and you will understand what I meant.