Editor’s note: This article was first published in November 2015; the figure of Mark Cuban having been involved in more than 150 companies is from that year.
Mark Cuban’s greatest talent is making money, and he doesn’t need excellent products or big ideas to do it. As we’ve covered before, two of the ways he made money were selling shoelaces and programming people’s remote controls.
At 25 he was working as a bartender, and years later he was a billionaire thanks to that talent for building companies, and for investing in other entrepreneurs’ projects. That is why Cuban is a highly prized source of wisdom when it comes to advising new entrepreneurs.
Kevin Daum, a writer and contributor to the respected magazine Inc., spent an hour with Mark Cuban and wrote down some of his ideas as advice for new entrepreneurs. It is advice well worth reading, coming from someone who has been involved in more than 150 companies.
When Daum asked him what he considered his worst business mistake, Cuban’s only answer was: thinking you’re too smart.
These are his 12 tips:
See also: The fascinating life and career of Mark Cuban
1. Don’t follow your dreams. Follow your effort
Cuban explains that success comes from capitalizing on your strengths. Overcompensating for weaknesses takes up too much energy and effort. You’ll know you’ve found your passion when doing what you do doesn’t feel like an extra effort.
2. Raising money is not an achievement
When a company raises too much money from investors, Cuban said, it kills the company’s future. He believes a company should grow organically and steadily. Entrepreneurs often complain about a lack of funding for their projects, when the truth is that entrepreneurs who are never short of money tend to end up failing.
An entrepreneur’s most important asset isn’t money but creativity and ingenuity. Cuban also believes that once an entrepreneur takes money from investors, those investors can steer the company down the wrong path, because they’ll want quick results and a return on their money, and these days that mindset is at odds with success.
3. Entrepreneurs are really good at lying to themselves
Cuban thinks today’s entrepreneurs are too optimistic. He believes they should be pragmatic in the way they approach their businesses. Believing the business will work isn’t enough. You have to do things the right way.
4. You only have to be right once
In business there’s no scoreboard for mistakes, only one for wins. You can fail at 5 or 10 companies. It doesn’t matter. You only have to succeed with the next one and you’ve won at business.
Cuban knows that his success is the result of his effort and experience in seizing the business opportunities that come his way.
5. Selling isn’t convincing. It’s helping
Cuban knows that everyone has to sell to succeed. But he feels that selling often carries the connotation of getting people to buy things they don’t want.
Like so many other successful businesspeople, Cuban believes your business mindset should be about creating a product or service that helps others. The sales will follow.
6. Build great teams
For Cuban, the best way to prevent business failure in such fast-changing times is to have talented people in the company. Not people who come cheap, or who are under or over a certain age so the company can collect hiring subsidies, but the best in their field. That’s how you win in business.
See also: The obsession with hiring the best: Elon Musk poaches a worker from a yogurt shop
7. The best equity in the world is sweat equity
Cuban insists that an entrepreneur’s greatest pride comes from putting your best and biggest effort into a company.
8. Tell the bad news first
Cuban demands that both his partners and the managers of the companies he invests in always tell him the bad news first. If someone hides bad news that affects one of his businesses, that person stops being his partner in the company.
Hearing about problems quickly makes the solution faster and more efficient, and keeps a problem from turning into an emergency.
See also: 6 things you need to be great in business
9. The longer the backstory, the worse the investment tends to be
When an entrepreneur spends too much time trying to justify a failed business idea or business model, it’s usually a bad investment. If an idea isn’t compelling on its own merits, it’s probably not worth the effort.
As we’ve said on other occasions, if you have a business idea you can’t explain quickly in a way everyone understands, you probably don’t have a business, because if the idea is hard to explain, imagine trying to sell it.
10. Companies that grow too fast get crushed fast
There will always be exceptions, but Cuban’s philosophy is sustainability over making quick money.
Of course, the question is “what counts as too fast?”, and I suppose the answer is “when we see that our business model is sustainable and well rooted at its base”.
11. Be curious and excited about learning
Cuban says learning is essential to success. If you want to stay ahead of trends and competitors, you’ll need an insatiable hunger to learn.
In business you always have to be growing and, as an entrepreneur, you should always be learning.
12. Be nice
Cuban has a reputation for being an incredibly nice person. He’s very down-to-earth and very direct, and he doesn’t think there’s any need to be unpleasant or rude to people. You should also always be honest, whatever you do, because people always remember.
See also: 5 money tips from billionaire Mark Cuban that you can start copying today
Featured image: Marc Levin, CC BY 2.0, via Flickr.
