Among the sessions at the GROWCO conference in May 2014 was a conversation between Eric Schurenberg, editor-in-chief of Inc. Magazine, and billionaire serial entrepreneur and investor Mark Cuban, owner of the NBA’s Dallas Mavericks and star of ABC’s “Shark Tank.” The two discussed his approach to competition, whether in his own enterprises or those of entrepreneurs whose ideas are just entering the market.
To compete, first know your true business
The Dallas Mavericks provided one example of Cuban’s approach to a business challenge. Schurenberg asked what he had to do to turn the organization around. “The first thing I had to do was change the culture,” he said. “The first rule I established was, ‘If you’re focused on wins and losses; you’re fired.’”
He also changed the team’s mindset about the business itself. “Everybody thought we were in a basketball business, but we’re really in the business of creating experiences and memories. When you go to a great sporting event, you feel it; everyone is involved. You’re hugging people you don’t know, and people are running in the streets and jumping up and down.”
When asked what it’s like to work with him, Cuban owned up to being a difficult boss and noted that he’s cautious about gaining confidence in new employees. “When you first start working for me, I micromanage until I trust you. I’ll have 30 emails going back and forth where I expect quick, direct and precise answers,” he said. “But once we get going, then you give me weekly reports, unless it’s a startup.”
He added that when his employees write their weekly reports, they’re expected to deliver the bad news first: “‘We lost this sale, and here’s why.’ I expect you to do well. Every company has setbacks, and I want to know what they are so I can address them. If things are going well, it’s just a weekly report; I say, ‘Thank you,’ and that’s it.”
“Business is the ultimate sport”
The conversation turned to “Shark Tank,” and Schurenberg asked Cuban to name his favorite. “They’re all my babies,” he said — but then he zeroed in on Simple Sugars, a skin-care product line that Lani Lazzari founded for people with sensitive skin as an outgrowth of her own experience with eczema.
She launched the products in a local grocery store and had $40,000 in sales when she landed a spot on “Shark Tank.” “Now she’s killing it,” Cuban said. He confessed that the young entrepreneur’s attitude caught him off-guard: “I expected her to be very needy. She’s the opposite: Here’s what I’m doing, Mark. Leave me alone.”
And her attitude continues to impress him. When she reached the $1 million mark, Lazzari asked Cuban for his advice on her next step. “Lani, you might be able to sell for $3 million or so. She said, “Hell no.” She wants to take it to $30 million in sales. She just turned 20. I love being part of it. Most of my businesses, like Lani’s, are ready to skyrocket.”
That said, he noted that not all the Shark Tank deals close. Some fall apart during due diligence. “About 30 percent of the time, people fudge the numbers, or they don’t even have books,” Cuban said. “They’ll say on air, ‘It cost me $1 a unit.’ Yeah, if you sold a billion; you sold 13.” One entrepreneur “thought it was unconstitutional to pay taxes,” he recalled, and another has $60,000 in credit card debt but “thought that wasn’t debt.”
Schurenberg asked, “Why do you do what you do?” What keeps him motivated after having earned so much money already?
“I love to compete,” Cuban replied. “Business is the ultimate sport. I just love to compete. It drives me all the time.”
“How do you know when you’ve won?” Schurenberg said.
“If you can wake up knowing you’re happy and you’re going to get it done, then you’ve won,” Cuban said. “I knew if I failed I was going to keep trying. So even when I had nothing I had everything. I wouldn’t have been satisfied, but I wouldn’t have thought I had failed.”
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