Last updated on May 6, 2022 - My Free Marketing newsletter 👀
Mark Cuban is one of the wealthiest people in America with an estimated net worth of 4.3 billion dollars (!!) but getting there wasn't easy. He spent his early twenties sharing a 3-bedroom apartment with 5 other guys. In this post, I’m going to break down how Mark went from broke to billionaire by the age of 41.
Let’s dive in.
Mark Cuban was born on July 31st, 1958 in Pittsburgh, Pennsylvania, and grew up in a working-class family just like a lot of us. While his father spent nearly half a decade working as an automobile upholsterer, some say the roots of his entrepreneurial genes came from his grandfather who immigrated from Russia and fed his family by selling merchandise out of his truck.
Mark Cuban actually started hustling at a very young age. At 9 years old, he was buying baseball cards, bundling the Pittsburgh Pirates players together, and reselling them on the playground at a premium. At age 12 he sold garbage bags door to door and by the age of 15, he was peddling stamps.
Cuban says that selling the stamps taught him more about business than any class he’d ever taken. Through collecting stamps, he was able to learn about the laws of supply, demand, pricing, and when to buy/sell/hold an asset. That stamp money he made eventually helped pay for his college at the University of Indiana where his side hustles really started taking off.
At college, Mark would teach sorority girls how to disco for $25 dollars per hour. His next big step was opening a bar called Motley. This bar became the go-to spot in Bloomington but was ultimately shut down after word got out that an underage girl had won a wet t-shirt contest.
Unfazed by the shutdown, Cuban took these business lessons from Motley into his next venture. He always had 51% ownership even though he never put his own money upfront — but no one minded because he always built up the business.
The major takeaways from Mark Cuban’s early life?
He spent a decade building up experience as an operator, salesman, and marketer before he even started his first real business. And because of that, he was able to negotiate majority ownership in ventures like Motley without having to put up any of his own money.
So something to think about for yourself especially if you’re young (and even if you’re really old) is take action NOW.
Yeah, you can watch a lot of videos, buy a lot of books and courses, look for other software tools, but what Mark did is he put in the time to try a lot of businesses out, and eventually that built up skills for him to be successful at larger companies.
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After college, Mark drove his beat-up Fiat to Dallas with $60 in his pocket and moved into a 3 bedroom apartment with 5 other guys. He eventually got a job at a PC software company, Your Business Software. His role was to open the store, sweep the floors, and sell software.
So what was the problem?
Mark didn’t know anything about software!
Every night, he brought home a different software manual and read it — no matter how late at night it was.
Very quickly I learned that by putting in that extra time, I knew stuff that people who went to college for this stuff and had advanced degrees in it, didn’t know. Because they only knew what they were taught in school. And they weren’t doing the work to keep up. —Mark Cuban
9 months into that job, Mark became the top salesman.
But then he was FIRED for disobeying his boss. (Don’t worry Mark, I got fired too)
And that was actually the 3rd time he had been fired. So Mark thought… Maybe I shouldn’t work for other people.
So with the support from several customers, he actually started his own business — MicroSolutions — which was a computer consulting service. He grew the company to $30 million in revenue and in 1990 at the age of 32, he sold the company to Compuserve and got $2 million dollars from the deal.
Mark attributes a lot of his early successes to the power of being broke. He lived with 5 guys in a 3 bedroom apartment, slept on couches, and didn’t take a vacation for 7 years. Because he was already living a low-cost lifestyle — he didn’t have anything to lose!
For me — I was fired at Facebook, I was fired/quit Mint, my next company was also banned by Facebook — so yeah, I had a chip on my shoulder. I think the same thing was happening with Mark. He had nothing to lose, and he wanted to prove himself.
So think about how you can put yourself in that position — or if you’re in that position, how can you grow from it like Mark did?
Oh and also… read the frickin manual.
Just because he put in the time, he was able to compete against people with much more knowledge and experience than him in a market he started off knowing nothing about.
Most people won’t put in the time to get a knowledge advantage… will you?
After Mark sold MicroSolutions, he started trading tech stocks and did so well that he turned it into a hedge fund and almost sold that too. And in 1995, Mark and his co-founder Bill Wagner, launched AudioNet — one of the first online streaming services — which they later renamed Broadcast.com.
In 1998, at the peak of the internet boom, Mark took Broadcast.com public and the stock price soared 250% on the first trading day, setting a new record for the highest runup of a newly issued IPO.
Less than 9 months after the IPO, Yahoo bought the company for 5.7 billion dollars.
Mark also sold most of his Yahoo stock that same year, netting over $1 billion dollars as well.
The key here is that Mark went to his broker and issued a “collar”
Some people thought the stock market was going to go up forever. I had more than a billion dollars to my name. They said, “Oh you should just keep your stock and don’t do anything with it, because it’s going to keep on going up forever.” I was worth more than a billion dollars. How much fucking money do you need?
I went to my broker and I did something called a collar. I had to wait six months, and that was a nerve-wracking six months, but I sold what’s called calls on Yahoo, which gave somebody else the right to buy it at a higher price, and I used that money to buy something called puts, which meant if the stock dropped below a certain point, I was able to sell that stock at the value of the put. When the internet stock market bubble burst, that saved me. —Mark Cuban
Puts and calls limit your gains, so Mark didn’t make as much money, but he also protected himself and that ended up working out for him so he didn’t lose as much as everyone else did.
In 2002, just 3 years later, Yahoo shut down most of its broadcast services and this has since been called one of the worst internet acquisitions of all time.
The key takeaways here?
But now let’s look into the numbers behind Mark Cuban’s net worth.`
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On January 4, 2000, Mark Cuban purchased the majority stake of the NBA Dallas Mavericks for $285 million dollars. The Mavericks only won 40% of their games and had a horrible playoff record of 21 wins/32 losses.
And in the 10 years from when he bought the team, the team won over 69% of their regular season games, and reached the playoffs in 9 of those 10 years.
According to Forbes — and this is wild — the annual estimated revenue of the Dallas Mavs is over $307 million dollars a year. But the operating income (this is the profit that they're taking after wages of the players, costs of goods like popcorn or whatever) is $105 million dollars.
But the real money in the NBA and a lot of pro sports teams is not actually the cash flow — it’s the appreciation.
Cuban paid $280 million dollars for the team in 2000, and today based on Forbes estimates alone, it is at $2.4 billion dollars
So let's do some math to actually see how much he's making from owning a basketball team…
($2.4 billion - $280 million) / 20 years = $106 million/year just from the appreciation of owning the team.
So let's do a total from the capital appreciation…
$106 million in appreciation + $105 million of operating income = $211 million a year owning the Mavericks.
Businesses like this are really fascinating — just like real estate — where you can get cash flow but there is an appreciation of your assets over time.
So think about that for yourself — is what you are working on something that's growing over time? Is the asset getting more valuable, staying the same, or depreciating?
So he's been a Shark since 2011, and he's invested in over 85 deals for a total of almost $20 million dollars.
The top 3 deals that he invested at least $1 million in are TenThirtyOne Productions, Rugged Maniac Obstacle Course, and Beatbox Beverages.
I actually have heard of those guys
Each season there's around 22 episodes and the beauty of this is he's getting paid to go check out companies. We estimate that he makes around $50,000 an episode, so 22 episodes x the $50,000 bucks = $1 million dollars a year just from getting free promotion on Shark Tank and investing in potentially really cool companies.
So how much is he actually making from all the investments on top of getting paid to be on the show?
We're estimating around a 15% return on his initial investments.
So if you take the $19 million that he's put into all these different companies and multiply it by the 1.15 we're estimating is his return — it looks like the total return from all these investments will be around $69 million dollars.
If you take out his original $19 million dollar investment, it means he's made almost $50 million dollars in the past 10 years for an average yearly return of $5 million dollars from his Shark Tank investments.
And being on the show is also amazing publicity for him as a public figure! How did you hear about Mark Cuban?
Yeah, probably from Shark Tank.
So if you take the math from his salary plus the return on his investments, it's over $6 million dollars a year! And it's amazing how Mark has gone from his first business selling computers then he got into Broadcast and sold it into Yahoo and now he’s working with such an amazing array of companies…
I want to be like Mark.
This is nuts!!
So Mark Cuban does not play with the stock market much anymore, but he's actually massively invested in two companies that have blown up since his initial investments.
So what is his actual investment strategy?
This is beautiful and something that I think we can all learn from — he sticks with companies he believes in.
So he's owned 2 companies:
Let's do some math just to see how much he made in 2020 from Amazon stocks…
At the beginning of 2020 it was $1800 dollars a share, at the end of 2020 it was $3200 dollars so about $1400 dollars increase or 177%.
600,000 shares x $1400 increase = $840 million
I think I made like $40 dollars.
I suck at investing, this is not financial advice — I'm likely the only guy who bought Blockbuster shares (yeah, go figure) so I've started only investing in companies I personally use and can see being around for at least 10 years.
But for me I think the beauty of what Mark is doing is he’s making a lot of really wild investments with angel investing — because those are either going to be home runs or they're going to be total flops — and with the stock market he's doing consolidation. He's picking two companies and really focusing on them.
I think there's a lot to learn from that.
This is co-founded by him and Todd Wagner who he started Broadcast.com with before they sold it to Yahoo.
This company is a vertically integrated film production and distribution company. So, what does that even mean?
It simply means they buy companies at every step of the movie business — from the production, to the theaters, to the actual streaming platforms.
The annual revenue (not the profit) of all these different properties is around $16 million dollars.
That number might actually seem low to you — only $16 million! — but the media business is a hit or miss business just like the YouTube world! Not every one of our videos blasts off into infinity.
My guess is the same for their business — it doesn't always work out.
One thing to keep in mind about these industries is that sometimes the sexiest industries make a lot less money than you think. So think more boring!!
More boring = more money.
And again, I always remind you guys — be careful about your profit vs. your revenue.
Mark Cuban also does angel investing on top of his Shark Tank investments. He invests aggressively in tech startups.
He’s done over 343 investments over the years and he's had over 77 exits — that's a really impressive track record. Most investors and venture capitalists get a power law return where basically 1 out of 100 do really well, so it's like nothing… nothing… nothing… SOMETHING!
I've invested in maybe 5 companies, and the reality is that only one has ever exited, and that took around 6 years. That's just part of the experience of angel investing.
One really interesting thing Mark’s done that I think you can learn from is if you want to get more deals, if you want to meet more people, a great thing to do is blog or YouTube and just put yourself out there.
It gets you way more interesting opportunities than you could get cold soliciting people that you don't know.
So let's take a look at all of the revenue streams making up Mark Cuban’s net worth.
= $1,275,1000 billion per year
But remember — this is revenue, not profit! And things like his Mavericks ownership and his Amazon stock are asset gains so he hasn't actually collected those monies yet — he hasn't sold them.
So what’s the giant-ass lesson from Mark?
Don’t try to make a quick buck.
I know maybe you saw a Youtube ad that showed up selling you a course, or some guy that says you can get rich overnight — but really, go for the long-term billions.
And remember that Mark started his first business after getting fired from his computer salesman job — so one setback definitely doesn’t define your life.
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