"A pessoa que controla o algoritmo controla o mundo, certo?" Mark Cuban no Lex Fridman Pod

- The person who controls the algorithm

controls the world, right?

And if you are committedto one specific platform

as your singular source of information

or affiliated platforms,

then whoever controls thealgorithm or the programming there

controls you.

(air whooshes)

(logo sizzles)

- The following is aconversation with Mark Cuban,

a multi-billionaire businessman,

an investor and star ofthe series "Shark Tank,"

longtime principal ownerof the Dallas Mavericks,

and is someone who is unafraid

to get into frequent battles on X.

Most recently over topics of DEI, wokeism,

gender, and identity politics

with the likes of ElonMusk and Jordan Peterson.

This is the Lex Fridman podcast.

To support it, pleasecheck out our sponsors

in the description.

And now, dear friends, here's Mark Cuban.

You've started many businesses,invested in many businesses,

heard a lot of pitchesprivately and on "Shark Tank."

So you're the perfect person to ask,

what makes a great entrepreneur?

- Somebody who's curious,they wanna keep on learning,

'cause business isever-changing, it's never static.

Somebody who's agile.

Because as you learn new things

and the environment around you changes,

you have to be able toadapt and make the changes,

and somebody who can sell,

because no business hasever survived without sales.

And as an entrepreneurwho's creating a company,

whatever your product or service is,

if that's not the most important thing

and you're just dying andexcited to tell people about it,

then you're not gonna succeed.

- But it's also a skillthing. How do you sell?

What do you mean by selling?

- Selling is just helping.

I've always looked atit about putting myself

in the shoes of another person

and asking a simple question,can I help this person?

Can my product help them?

From the time I was 12 years old,

selling garbage bags door to door

and just asking a simple question,

"Do you use garbage bags?Do you need garbage bags?

Well, let me save you some time.

I'll bring them to yourhouse and drop them off."

To, you know, streaming.

Why do we need streamingwhen we have TV and radio?

Well, you can't get accessto your TV and radio

everywhere you go.

So we kind of break downgeographic and physical barriers.

And, you know, Cost Plus Drugs.

You know, what's the productthat we actually sell?

We sell trust.

In a simplistic approach,we buy drugs to sell drugs,

but we add transparency to it.

And bringing transparency to an industry

is a differentiation, and it helps people.

- Trust in an industry that'shighly lacking in trust.

- Exactly.

- Okay, so what's the trickto selling garbage bags?

Let's go back there.At 12 years old, what?

I mean, is it just your natural charisma?

I guess a good question to ask,

are you born with itor can you develop it?

- Oh, you can definitely develop it.

Yeah, I mean, because sellinggarbage bags door to door

was easy, right?

It was like (bangs knuckles)12-year-old Mark going,

"Hi, my name is Mark, doyou use garbage bags?"

You know what the answer'sgoing to be, right?

"Can I just drop them off for you?

You know, once a week,whenever you need them,

you just call, and I'll bring them down."

"Sure."

So that was easy.

- But I'm sure you've been rejected.

- Oh yeah, of course.Not everybody says yes.

- What was your percentage?

- I don't remember, butit's pretty close to 100%.

- Oh, okay, never mind. Sothat's why you don't remember.

- Yeah, right.

'Cause who's gonna sayno to a 12-year-old kid

who's gonna save him time and money?

But you know,

typically my career whereI've started companies,

it's to do something thatother people aren't doing.

Whether it was connecting PCsand to local area networks

and at MicroSolutions.

And you know, the salesmanshipwas walking into a company

and just saying, "Look, talk to me

and I can help youimprove your productivity

and your profitability,is that important to you?"

And the answer is obviously always yes.

And then the question is, can I do the job

and can I do it cost effectively?

And so you didn't haveto be a born salesperson

to be able to ask those questions,

but you have to be able tobe willing to put in the time

to learn that business.

And that's the hardest part.

- I'm sure there's askill thing to it too,

in like how you solve the puzzle

of communicating with aperson and convincing them.

- Yeah, I mean, there'sskill from the perspective

that I read like a maniac.

Then like now

you can give me an exampleof any type of business

and it'll take me twoseconds to figure out

how they make money and how Ican make them more productive.

And I think that'sprobably my biggest skill,

being able to just drill down

to what the actual need is, if any.

And then, you know, fromthere, being able to say,

well, if this is what this company does,

and this is what their goal is,

how can I introduce something new

that they haven't seen before?

And is that a business that I can create

and make money from?

- So figure out how this kind of business

makes money in the present.

And then figure out,

is there a way to makemore money in the future

by introducing a totallynew kind of thing.

- Correct.

- And you can just do that with anything.

- [Mark] Pretty much, yeah.

- And you think you're born with that?

- No, I worked at it because, you know,

going back to what I saidearlier about curiosity,

you have to be insanely curious

because the world is always changing.

My dad used to say,

we don't live in the worldwe were born into, you know?

Which is absolutely true.

If you're not a voraciousconsumer of information,

then you're not gonna be able to keep up.

And no matter what yoursales skills or ability are,

they're gonna be useless.

- What'd you learn aboutlife from your dad?

You mentioned your dad.

- My dad did upholsteryon cars, you know, got up,

went to work everymorning at seven o'clock,

came back five or six,seven o'clock, exhausted.

And I learned to be nice.

I learned to be caring, Ilearned to be accepting.

Just, you know, qualities

that I think he really tried to pass on

to myself and my two younger brothers

were just be a good human, you know?

And I think, you know, hedidn't have business experience.

So as I got into business,he would just, you know,

say, sorry, Mark, I can't help you.

You know, I don't understandwhat you're doing.

He never went,

neither one of my parentshad gone to college.

You've gotta figure it out for yourself.

But he was also veryinsistent that, you know,

he worked at a companycalled Regency Products

where they did upholstery on cars.

And he would bring methere to sweep the floors,

not because he wanted meto learn that business,

because he wanted me to learn

how backbreaking that work was.

I mean, he lost an eyein an accident at work,

a staple broke.

And the only thing hewanted for my brothers and I

was for us to neverhave to work like that,

to go to college, to figure it out.

- You said to be nice.

That said, you also said that you

when you were first starting a business,

you were a bit more of an asshole

than you wish you would've been.

- Absolutely, yeah, yeah,because I was more of a yeller.

I was, you know, I didn't have.

- No really, Mark Cuban?

- You know, what you seeon the sidelines, you know,

with me at a Mavs game,maybe a little bit.

But I also didn't haveany patience for somebody

I thought wasn't using mykind of common sense, right?

Because I was always onthe go, go, go, go, go.

Particularly when I was younger,

just trying to be successful,

trying to get to the pointwhere I had independence.

And I would tell this to people, you know,

either you're speeding upand getting on the train,

or you know, we'll stop

and drop you off at the next station,

but let's go where you go.

- Did you have trouble withthe hire fast fire fast

part of running a business?

- Yeah, always, 'causeI hated firing people.

'Cause it meant, one, it was an admission

of a mistake in the hiring.

And two, the salesperson in me

always wanted to come out ahead.

And I was always horrible at firing.

But I always partnered with people

who had no problem with it.

So I always delegated that.

- Well, that's the tricky thing

when you're working with somebody

and they're not quite there,and you have to decide,

are they going to step upand grow into the person

that's the right, or they're not.

And in that gray area isprobably where you have to fire.

- Well, it's hard. Yeah, for sure.

Because, you know,

there is obviously a failuresomewhere in the process,

you know, what did we do wrong?

And when I would interviewpeople for jobs, I mean,

99% of the people I've everinterviewed I've wanted to hire,

because in my mind, it was like,

okay, I can figure out howto make this person work.

Right, and then they wouldn't,

and then, you know, peopleat the company'd be like,

Mark, you suck at this.

You know? And so I alwaysdelegated the hiring.

- Yeah, I mean, I'm the same.I see the potential in people.

I see the beauty in people,

and which is a great way to live life.

But when you're running acompany, it's a different thing.

- It's different.

And you gotta know what you're good at

and what you're bad at, right?

I was good at, you know, Iwas a ready, fire, aim guy,

and I always partnered with people

who were very anal and perfectionist

because where I could justgo, go, go, go, go, go.

They would keep me inside the baselines.

- They would do the duediligence, I suppose.

- Yeah, or just, yeah, the detail work,

the dot the i's and the cross the t's.

- What does it take totake that first leap

into starting a business?

- That's the hardest part.

It really depends on yourpersonal circumstances.

Like, I got fired.

I mean, I was sleeping on the floor

with six guys in athree bedroom apartment,

so I couldn't go any lower.

So there was no downside.- That's the bottom.

- Yeah, there was no downsidefor me starting a business.

And it was just like, you know,

I was 25 when we started MicroSolutions,

and, you know, I'd just gotten fired

and it was like, look,I'm a lousy employee.

I'm gonna just start goingto some of my prospects

that I had at my job,

and asked them to frontthe money that I needed

to install some software,

and found this company,Architectural Lighting,

who put up $500 for me thatallowed me to buy software

and have 50% margins.

And, you know, that'show I started my company.

- But like, by way ofadvice, would you say?

I mean, it's a terrifying thing.

- Yeah, I mean, you'vegotta be in a position

where you're confident.

You know, I get emails

and approached by people all the time,

you know, what kind ofbusiness should I start?

That tells me you're not readyto start a business, right?

Either you're prepared andyou know it, or you don't.

You know, in the United States,with the American dream,

everybody kind of alwayslooks at themselves

and say, okay, you know,I have this idea, right?

And then you go throughthis process of saying,

okay, you know, you talkto your friends or family,

what do you think?

And they almost always, oh,it's a great idea, tight?

Then you go on Googleand you say, oh my God,

no one else is doing it,without thinking, you know,

10 companies had gone outtabusiness trying the same thing,

but okay, it's on Google,and then people stop, right?

Because that next step means,

okay, I have to changewhat I'm doing in my life.

And that's not easy for 99% of the people.

Some people look at that as an opportunity

and get excited about it.

Some people get terrified,

because it's okay, maybe I'm comfortable,

maybe I have responsibilities.

And so whatever your circumstances are,

if you want to take that next step,

you have to be able todeal with the consequences

of changing your circumstances.

And that's the first thing.

You know, do you save money?

So you know so you have,you know, if you have a job,

but you have a mortgage,do you have a family?

You've gotta save money. Youcan't just walk, you know?

I mean, they've gotta eat andthey've gotta have shelter.

But on the other side of thecoin, if you've got nothing,

it's the perfect time to start a business.

- Yeah, desperation is a good catalyst

for starting a business,but in many cases,

the decision as you're talking about,

you're gonna have tomake, is to leave a job

that's providing somedegree of comfort already.

So I suppose when you'resleeping on the floor

and there's six guys,it's a little bit easier.

- It's really easy, right?

Particularly when you get fired

and you don't have a job, you know,

and you're looking at bartending at night

to try to pay the bills.

And so it wasn't hard for me,

but to your point, it reallycomes down to preparation.

You know, if it's important enough to you,

you'll save the money,you'll give up, you know,

whatever it is you need togive up to put the money aside.

If you have obligations,you'll put in the work

to learn as much as youcan about that industry

so that when you start yourbusiness, you're prepared.

And you can always, youknow, at night, on weekends,

whenever you find time,lunch, start making the calls

to find out if people willwrite you a check, you know,

or transfer you the money to buy

whatever it is you're selling.

And by doing those things,

you can put yourself ina position to succeed.

It's where people just think,okay, you know, Geronimo,

I'm leaping off the edge of a cliff

and I'm starting a business, that's tough.

- But sometimes that's likethe way you do it, though.

- There's always examples ofany situation or scenario.

Right, but I mean.

- [Lex] Anecdotal evidence for everything.

- Yeah, but if you'regoing into a new business,

you're gonna have competition

unless you're really, really,really, really, really lucky.

And that competition isnot gonna just say, okay,

let Lex or Mark just kick our ass.

And so you've gotta be prepared

on how you're gonna dealwith that competition.

- What do you think that is about America

that has so many peoplewho have that dream

and act on that dreamof starting a business?

- You know, I thinkwe've just got a culture

of consumption and more, you know,

and to get more, you've got to, you know,

creating a business gives youthe greatest potential upside

and the greatest leverage on your time,

but it also creates the most risk.

- So that capitalist machine,there's a lot of elements,

by contrast, the respect for the law.

Like an entrepreneur can trustthat if they pull it off,

the law will protect them,there won't be a government.

- Hopefully that's still the case, yeah.

- [Lex] Well, yeah,there's always something.

- Yeah, us versus othercountries, you're right, right.

So us versus other countries,

like Joe Biden of all people said to me,

it was at an entrepreneurship conference

that when he was vicepresident, he had put together,

and we had gone up there, abunch of us from "Shark Tank"

to talk to young entrepreneursfrom around the world.

And he said to me, "Mark, you know,

the one thing that separate,

I've been to everycountry around the world,

and the one thing that separatesus is entrepreneurship.

We're the most entrepreneurialcountry in the world,

and there's no one else who's even close."

And when you look at theorigin of our big, you know,

the biggest companies in theworld, for the most part,

there's an American originstory somewhere behind there.

And I think, you know, thatjust gets perpetuated on itself.

We see those Horatio Alger stories,

we see examples of theJeff Bezos of the world,

the Steve Jobs in the world,

and those are the typesof people we want to copy.

- Yeah, we wanna be really careful

and try to really figure out what that is,

because we don't wanna lose that.

- [Mark] For sure.

- We wanna protect the whatever, you know,

and that's a lot of the discussions about

what's the right way to do government,

big government, small government,what's the right policies?

But also culture, like who we celebrate.

One of the things that troubles me

is that we don't enoughcelebrate the entrepreneurs

that take risks and theentrepreneurs that succeed.

It seems like success, especiallywhen it comes with wealth,

is immediately matched with distrust

and criticism and all that kind of stuff.

- Yeah, it's changing for sure,

because, you know, you cango back just 12 years, right?

Traditional media dominated,let's just say through 2012,

you know, that was thepeak of linear television.

You know, newspapers weren't as strong,

but they still had somebreadth and depth to them.

And then social media comes along,

and everybody gets toplay in their own sandbox

and share opinions with peoplewho think just like them.

And it also gives them the opportunity

to amplify those feelings.

And I think that's wherecelebrating entrepreneurs

really started to subside some.

There were always peoplewho were progressive

that were like, billionaires are bad,

or millionaires are bad,depending on the time period.

But you didn't really see iton an ongoing basis, right?

It wasn't gonna be on the evening news.

It wasn't going to be in thefront page of the newspaper.

It was going to be, if you read a book

and someone talked aboutit, or you read a magazine

and there was an articletalking about, you know,

this progressive movement orthat progressive movement,

whatever it may be, youknow, or political parties.

But now all of that is frontand center on social media.

- Yeah, we're trying tofigure it out how we deal

with the mobs of peopleand the virality of it all.

And I think we'll find our footing

and start celebrating greatness again.

- Well, I mean, that's thewhole reason I do "Shark Tank."

- That's true. That showcelebrates the entrepreneur.

That's true.

- It's the only placewhere every single minute

of every single episode, you know,

we celebrate the American dream.

And the reason I do it iswe tell the entire country,

and it's shown around the world even.

You know, we're amazingadvertising for the American dream

in I don't even know how many countries.

But every time somebodywalks onto that carpet

from Dubuque, Iowa orKetchum, Idaho, you know,

that sends a message toevery kid who's watching,

seven, eight, nine, 10, 12-year-old kid

that if they can do it fromKetchum, Idaho, you can do it.

If they can have this idea and get a deal,

or even present to the Sharks

and have all of Americasee it, you can do it.

And that, I mean, I'm proud of that.

The 15 years of that, isjust, it's just been insane.

You know, now kids walkup to me and go, yeah,

I started watching youwhen I was five or 10,

and I started a business

'cause I learned aboutit from "Shark Tank."

And so, you know, I think, you know,

it celebrates it and we convey it.

And I don't think it's going away,

but there are differentbattles we have to fight

to support it.

- Yeah, I love even when

the business idea's obviously horrible,

just the guts to step up.

- [Mark] To be there.

- And to believe inyourself, to really reach,

I mean, that's what matters.

I mean, 'cause like someof the best business ideas

are probably, maybe even youand "Shark Tank" will laugh at.

- Oh, for sure.

You know, without question, the good ones,

we're not gonna recognize every good one.

And then sometimes we'lljust motivate people

to work even harder to get it done

'cause of what we say tothem, and that's fine too.

You know, there's beengreat success stories

that we said no to.

- What stands out aslike a memorable business

you've been pitched on "Shark Tank"?

What's the best one thatstands out on in memory?

- There's no best one,right? They're all different.

They're all best intheir own way, I guess.

The stupid ones.

And you know, we haven'thad any, you know,

world changing earthshattering ones, right?

Because those aren't gonnaapply to "Shark Tank."

They don't need us, right.

You know, so we typically get businesses

that need some help atsome level or another.

But there's ones I've passedthat I wish, like Spikeball.

Do you know what Spikeball is?

So it's this rebounding netthat you can put on the beach

and you have these yellow balls

and you play a game of, you know,

it's just a competitivegame, but they're killing it.

So if you go to beaches in New York or LA,

you'll see kids playing it all the time.

And it was a fun game that Iwish I had done a deal with.

And there's been others.

- [Lex] And you passed.

- And I passed.

They were getting some traction,

and they wanted to createleagues, Spikeball leagues,

and they wanted me to be the commissioner.

And I didn't want to be a commissioner

of a new Spikeball league.

- So you have to kindahave this gut feeling

of will this scale, willthis click with people?

- Of course.

Yeah, can it be protected?Is it differentiated?

Is it something thatmakes me think, you know,

why didn't I think of that?

Or is it just a good solid business

that's gonna pay a return to the founder

and may not be enough of a business

to return to an investor?

- Yeah, I mean, and I guess

the question you're trying to see,

will this scale, there's promise,

will the promise materializeinto a big thing?

- Well, see, I don't even care

if it's gonna be a big thing, right?

'Cause it's all relativeto the entrepreneur.

We had a 19-year-oldfrom Pittsburgh, Laney,

who came on with a simple sugar scrub.

And there was nothingoutrageously special about it.

I didn't see it becoming ahundred million dollar business.

I thought it could become atwo, three, $5 million business

that paid the bills for her.

And that was good enough.

And, you know, six monthsafter the show aired,

she called me up, she goes, Mark,

I've got a million dollars in the bank.

What am I gonna do? I'm like, enjoy it.

Put aside money for yourtaxes, and go back to work.

You know, and so it doesn'thave to be a huge business.

It's just gotta be one thatmakes the entrepreneur happy.

- But then there's thevaluation piece, I mean.

Do a lot of the entrepreneurs overvalue?

- [Mark] Yeah, of course.

- The business?

- Yeah, I mean, that'sthe nature of it, right?

I mean, and that's really

where the biggest conflictsin "Shark Tank" happened.

That's in evaluation.

They, you know, they thinkthis is the best business ever.

You know, there we had onelady couple that came on

and they had this scraperfor cat's tongues, right.

- [Lex] Nice.

- It was bizarre. Themost bizarre pitch ever.

- [Lex] I love it.

- You know, and they hadthis insane valuation,

and it was on becauseit was corny and fun TV,

not because it was a good business.

- Oh really? Okay, yeah, youdidn't see the potential.

- [Mark] None. Yeah, none.

- There's a lot of cats inthe world, Mark, come on.

- Yes, there are. And they'llgo do very well without me.

- So how do you determinethe value of a business,

whether it's on "SharkTank" or just in general?

- It's actually really easy, right?

So if you take, just to use an example,

a business that's valued at $1 million,

and I want to buy 10% ofthat company for $100,000,

then in order for me to get my money back,

they've gotta be able to generate $100,000

in after tax cash flow thatthey're able to distribute.

Can they do it or can they not, right?

And if it's $2 million,whatever the valuation is,

that's how much cash, aftertax cash they have to generate

to return that money to investors.

Or the other option is, do they, you know,

do I see this as businesspotentially having an exit?

Right, do they have some unique technology

or do they have somethingspecific about them

that some other companywould want to acquire?

Then the cash flow isn't as,

I don't wanna say important,

but isn't going to guide the valuation.

- And how do you know if acompany's gonna be acquired?

So it's the technology, like the patents,

but also the team, is it?

- Yeah, it could be anyof the above, right?

It could be, it could bea super products company

that I think is gonna take off.

- And how do you know ifthey can generate the money?

What's the, you made itsound easy, you know?

- Yeah, I mean, can the person sell?

You know, and if not them, can I do it,

or someone on my team do it for them?

- So you're looking at the person.

- Yeah, for sure. Yeah.

Barbara Corcoran's the best.

She can look at a person andhear them talk for 20 minutes

and know can that persondo the job and do the work?

- Can you tell if they'refull of shit or not?

So one of the things with entrepreneurs,

they're kind of like we said overvaluing,

so they're maybe overselling themselves,

but also they might be full of shit

in terms of theirunderstanding of the market,

or also like, or exaggeratingwhat their thing can do,

all that kind of stuff,can you see through that?

- Yeah, for sure. Just byasking questions, you know.

So if they are delusional at some level

or misleading at another level,I'm gonna call them on it,

you know, so you get people

trying to sell supplementsthat come on there

and it's a cure for canceror whatever it may be.

Or there's this latest fad that, you know,

increases your core strengthwithout doing any exercises.

You know, shit like that,I'm just gonna bounce,

I'm gonna pound on them, right.

- See, I still love that.

I still love the trying, just trying.

- No, you know, give them credit, right?

Because they know all ofAmerica's gonna see it,

and they're deluded themselves to believe

this story so strongly.

- I mean, there's a delusional aspect

to entrepreneurship, right, like you just.

- See, that's a great question.

Do you have to beambitious, and, you know,

set aside reality at some level

to think that you can create a company

that could be worth 10, 100,a billion dollars, right?

Yeah, at some level.

'Cause you don't know,it's all uncertainty.

But I think if you're delusional,that works against you,

because everything's grounded in reality.

You've got to execute, you'vegot to produce, you know,

you can have a vision, right?

And you can say, this iswhere I want to get to,

and that's my mission, orthis is my driving principle,

but you still gotta executeon the business plan.

And that's where most people fail.

- Yeah, you have to be kindof two brained, I guess.

You have to be able to dip into reality

when you're thinking about like,

the specifics of the product,how to design things,

like the, you know, the first principles,

the basics of how to build the thing,

how much it's gonna cost, all of that.

- Yeah, I mean, 'cause ifyou can't do the basics,

you're not gonna be ableto do the bigger things.

And at the same time,you've gotta be able,

one of the things that entrepreneurs do

that I always try to remindany that I work with on,

is we all tend to lie to ourselves.

Our product is bigger,faster, cheaper, this or that.

As if that is a finite situation,

that's never going to change, right.

And there's always somebody,

I call them leapfrog businesses.

Whoever's competing against you, you know,

if you do A, B, or C, they'regonna try to do C, D, and E.

Right, and you better beprepared for that to come,

because otherwise they'reout of business too.

So you're never in a vacuum.

You're always competing against

sometimes an unlimitednumber of entrepreneurs

that you don't even know exist

who are trying to kick your ass.

- And the tricky part of all this too

is you might need to frequently pivot,

especially in the beginning.

- Hopefully not.

- So you think like in thebeginning, the product you have

should be the thing thatcarries you a long time.

- Yeah, because I mean

that's your riskiest point in time, right?

And so if you've done your homework,

which includes going out there

and testing product marketfit, you should have confidence

that you're gonna be able to sell it.

Now if you didn't do your homework

and you go out there andyou sell whatever it is,

and you've raised money orwhatever, just to pivot,

you've already shown

that you haven't beenable to read the market.

And so it's not that pivots can't work

and always don't work, they can,

but more often than not, they don't.

You pivot for a reason.

That's because you made a huge mistake.

- Well, I also mean like the micro pivots,

which is like iterativedevelopment of a thing.

- Oh yeah, oh, that's not,yeah, just iterations, yeah.

You know, entrepreneurshiphaving any business

is just continuous iteration, continuous,

your product, your salespitch, your advertising,

you know, introducing new technology.

How do you use AI or notuse AI, where do you use it?

What person's the right person?

There's just a milliontouch points, you know,

that you're alwaysreevaluating in real time

that you have to be agileand adapt and change.

- But especially in software,

it feels like business modelcan evolve really quickly too.

Like how are you gonna make money on this?

- Software for sure.

Because you know, anything digital,

because it can change in a millisecond.

- Speaking of which, how didyou make your first billion?

- So my partner Todd Wagner and I

would get together for lunches,

and we were at California Pizza Kitchen

in Preston Hollow in Dallas.

And he was talking about

how we could use this newthing called the internet.

This is late '94, early '95,

to be able to listen to IndianaUniversity basketball games.

'Cause that's where we went to school.

And he was like, look, whenwe would listen to games,

we would have somebodyin Bloomington, Indiana

have a speakerphone next to a radio.

And then we would have aspeakerphone in Dallas,

and you know, six pack or 12 pack of beer.

And we'd sit around listening to the game

because there was noother way to listen to it.

So I was like, okay, my firstcompany, MicroSolutions,

you know, I'd written software,done network integration.

And so I was comfortable digging into it.

And so I'm like, okay,let's give it a try.

So we started thiscompany called AudioNet,

and effectively became

the first streaming contentcompany on the internet.

And we're like, okay,

we're not sure how we'regonna make this work,

but we were able to make it work.

And we started going to radiostations and TV stations

and you know, music labels and everything.

And evolved audionet.com,

which was only audio at the beginning,

to broadcast.com in 1998,which was audio and video,

and became the largestmultimedia site on the internet.

Took it public in July of 1998.

It had the largest first day jump

in the history of thestock market at the time.

And then a year later we sold it to Yahoo

for $5.7 billion in Yahoo stock.

And I owned, you know, rightaround 30% of the company,

give or take.

And so after taxes,that's what got me there.

- Well, there's a lot of questions there.

So the technical challenge of that,

you're making it soundeasy, but you wrote code,

but still in the earlydays of the internet,

how do you figure out how tocreate this kind of product

of just audio at firstand then video at first?

- A lot of iterations,right? Like you talked about.

We started in the secondbedroom of my house,

set up a server.

I got an ISDN line, which was 128K line,

and set up, downloaded Netscape server,

and then started usingdifferent file formats

that were progressive loading

and allowing people toconnect to the server

and do a progressivedownload so that the audio,

you can listen to the audio

while it was downloading onto your PC.

- Yeah, and was it super choppy?

So you're trying tofigure out how to do it.

- Oh yeah, for sure, forsure. It would buffer.

It was, yeah, it wasn'tgood, but it was a start.

- But still was good enough,'cause it's the first, kind of.

- Yeah, because there wasno other competition, right?

There was nobody else doing it.

And so it was like, okay,

I can get access to this, this, or this.

And then there were some thirdparty software companies,

Zing and Progressive Networks

and others that took ita little bit further.

So we partnered with them,

and I started going tolocal radio stations

where literally we would setup a server right next to it.

I had a $49 radio, the highestFM radio that I could find.

And we'd take the output ofthe audio signal from the radio

with these two analog cables,plug it into the server,

encode it, and make itavailable from audionet.com.

Then I would go on UUNET bulletin boards.

I would go on CompuServe,I would go on Prodigy,

I would go on AOL, I'd gowherever I could find bodies.

And I'd say, okay, we'vegot this radio station,

KLIF in Dallas, it's got Dallas Sports

and Dallas news and politics.

And if you're in an officeor you're outside of Dallas,

connect to audionet.com,

and now you can listen tothese things on demand.

And that's how we started.

And it started with one radio station

and then it was five, then it was 10,

then it was video content,

then the laws were different then.

So we could literally go outand buy CDs and host them

and just let peoplelisten to whatever music.

And we went from, you know,10 users a day to 100 to 1,000

to hundreds of thousands to a million

over those next four years.

- How did you find theusers? Is it word of mouth?

- Word of mouth.

- [Lex] Just word of mouth.

- Didn't spend a penny on advertising.

- So the thing you were focusing on

is getting the radiostations and all that.

- Oh, radio and TV,anything, any content at all.

- Did you pick up the phone?What'd you, how'd you?

- Wherever I could, likeeverything that was public domain,

I'd go out and buy a video or a cassette,

whatever it was, you know.

And this was before the DMs,

the Digital MillenniumCopyright Act of '97,

whenever it kicked in.

So literally anything that was audio

we would put online sopeople could listen to it.

And if you think about somebody at work,

they didn't have a radio most likely.

And if you did, youcouldn't get reception.

Definitely didn't havea TV, but you had a PC,

and you had bandwidth available to you.

And the companies weren't up on firewalls

or anything at that point in time.

So our in-office listening,you know, during the day,

just exploded, becausewhoever's sitting next to you,

what are you listening to, right?

And that was the start of it.

And then, you know, in early'98 we started adding video

and just other things.

And we had ended up withthousands of servers.

You know, there was no cloud back then.

And just pulling together allthose pieces to make it work.

But where we really made our money

was by taking thatnetwork that we had built

and then going to corporations and saying,

look, you know, in it's 1996, '97, '98,

and to communicate withyour worldwide employees,

what they would do is theywould go to an auditorium

that had a satellite uplink,

and then they would havepeople go to like theaters

or ballrooms and hotels thathad satellite downlinks,

and they would broadcast, you know,

their product introductions, whatever.

And so we said to them, look,

you're paying millions of dollars

to reach all your employees,when you can do it.

Pay us a half a million dollars,

and we'll do it just on their PCs at work.

So we did, you know, whenIntel announced the P90 PC,

we, you know, charged them$2 million or whatever

to do that.

When Motorola announced anew phone or a new product,

we would charge them.

And so we used the consumer side

to do a proof of concept for the network.

And then we would take thatknowledge and go to corporations

and that's how we made our revenue.

- And there's some sellingthere with the corporations.

- Yeah, a lot of selling there.

But we were saving them so much money.

And they were technology companies

they wanted to be perceivedas being leading edge.

And so it was win-win.

- How much technical savvy was required?

You said a bunch of servers.

Like at which point doyou get more engineers?

How much did you understand,could do yourself?

And then also, once youcan't do it all yourself,

how much technical savvy is required

to understand enough tohire the right people

to keep building this and innovation?

- I did all the technology,

and then we hired engineerafter engineer after engineer

to implement it.

And so, yeah.

From putting together amulticast network, to software,

to just all these different things.

- Was this like a scary thing? Like is.

- It's terrifying, right.

Because as we were growing,trying to keep up with the scale

and literally we'rebuying off the shelf PCs,

and then, you know, server cardsas the technology advanced,

and hard drives, and things would fail.

And we would have to, you know,

we didn't have machine learning back then

to do an analysis of, you know,

how to distribute server,you know, resources.

So, you know, like there was a time when

Bill Clinton and all theMonica Lewinsky stuff happened.

They released the audioof their interviews of him

or something like that, right.

And we literally, I knewat that point in time

when that was released,

everybody at work was gonnawanna listen to it, right?

So we had to take down servers

that were doing ChicagoCubs baseball, right.

You know, and just make allthese on the fly decisions

because there was no, we didn'thave the tools to analyze

or be predictive.

But yeah, it was all technologydriven and marketing.

- The acquisition by Yahoo,can you tell the story of that?

But also in the broader contextof this internet bubble.

This is a fascinating part

of human history, yeah.- Sure, it was crazy.

So on the acquisition side,

we were the largest mediasite on the internet.

And it wasn't close.There was nobody close.

We were YouTube,

and relatively speaking,we would be 10X YouTube

relative to the competition'cause there was nobody there.

And so it became obviousto Yahoo, AOL, and others

that they needed a multimedia component.

And we had the infrastructure,the sales, all that stuff.

And so Yahoo, when we went public in '98,

or right before, I think it was,

they made an investmentof like $2 million,

which gave us a connection to them.

And then after we went public,

they decided they neededto have multimedia.

And so in April of '99, we made a deal.

And then July of 2000's when it closed.

- And can you explain to me

the trickiness of what you did after that?

Which is the?

- On the collar.

- [Lex] Yeah.

- Okay, so when we sold to Yahoo,

we sold it for $5.7billion in stock, not cash.

And so I looked at, you know,

after MicroSolutions, when Isold that, I took that money

and initially I told my broker

I wanted to invest like a 60-year-old man

'cause I wanted to protect it.

But then he started askingme all kinds of questions

about all these technologiesthat I understood.

Like networks I had installed.

We had become one ofthe top 20, let's say,

systems integrators in the country.

At one point in time

we're the largest IBM tokenring installer in the country.

It was crazy, right?

Banyan, that name, blast fromthe past, I mean, so anyway,

so these Wall Streetbankers, or analysts rather,

that were the big analystsof the time would call me up.

'Cause they would ask my broker,

what does he know aboutthis product, this product?

And I knew them all,

what was working and not working, right.

And so the ones that worked,you know, I say that's working.

And I'd see the stock, they say something,

the stock would go up 20 bucks, right.

So I'm like, well, and mybroker's like, you need to,

you know this better thanthey do, you need to invest.

So I started buying and selling stocks.

And this was in 1990,and was just killing it.

I was making 80, 90, 100% ayear over those next four years

to the point where guy came in

and asked to use my trading history

to start a hedge fund, which we did.

And I sold within ninemonths. It was great, right?

But the point being, as it goes forward,

so when we sold to Yahoo,

I already had a lot ofexperience trading stocks,

and I had seen differentbubbles come and go.

The bubble for PC manufacturers,

a bubble for networking manufacturers,

they went up, up, up, up, up.

And then they came straightdown after the hype,

or somebody just leapfrogged them.

And so when we sold to Yahoo, I was like,

I've gotta B next to my name.

That's all I need, or all Iwant. I don't want to be greedy.

And I'd seen this story before

where stocks get reallyfrothy and go straight down.

And I knew that because allof what I had was in stock.

I needed to find a way tocollar it and protect it.

So understanding stocks and trading

and options and all that.

My broker and I, we wentand shorted an index

that had Yahoo in it.

And so the law at the time was

you couldn't short any indexes

that had more than 5% ofthat stock in it, right.

Of any one of the Yahoo stock.

And so I took pretty much20 some million dollars,

everything I had at the time,and I shorted the index.

- This is fascinating by the way.

'Cause it's based on yourestimation that this is a bubble

- Or just my not wanting to be greedy.

- Sure, so the foundationof this kind of thing is

you don't wanna be greedy.

- Yeah, I mean, how muchmoney do I need, right?

You know, where other people were saying,

oh, I think it can go uphigher, higher, higher.

I was like, I went on CNBC,and I told them what I had done

and they were like,

and Yahoo Stock had gone up significantly

from the time I had collared.

And one of the guy, JoeKernen was on there.

"Don't you feel stupid nowthat Yahoo stock has gone up,

you know, X percent more?"

I'm like, "Yeah, I feel realstupid sitting on my jet."

- But I mean, there issome fundamental way

in which bubbles are based on this greed.

Just greed.- Oh, for sure, for sure.

Yeah. And I'd seen it before,right, like I just said.

And so what I did waswe put together a collar

where I sold calls and boughtputs, and as it turned out,

when the market justcratered, I was protected.

And, you know, over thenext two, three years,

whatever it was, it converted to cash,

paid my taxes, et cetera.

But it protected me.

And as it turns out,

it was called one of thetop 10 trades of all time.

And what was even moreinteresting out of that period,

my broker at that timewas at Goldman Sachs.

And I had asked him tosee if there was a way

to trade the VIX, right,the volatility index.

And there wasn't, right.

And so one of the people that Goldman

that we were working withto try to create this

actually left Goldman

and created indexes thatallowed you to trade the VIX.

- Well, it's not trivial tounderstand that it's a bubble.

I mean, you're kind of lesseningyour insight into all this

by saying you just didn't wanna be greedy.

But you still had tosee that it's a bubble.

- Yeah, I mean, yeah,

obviously if I thought itwas gonna keep on going up,

and there was intrinsic value there,

I would've stayed in it.

But it wasn't so much Yahoo,

it was just the entire industry.

Back then, you know, like we'relooking at the magic seven

or whatever it is stocks now.

And people were asking, is it in a bubble?

And when I would get into cabs

and people would just starttalking about internet stocks,

there were people creatingcompanies with just a website

and going public.

You know, that's a bubble, right?

Where there's no intrinsic value at all.

And people aren't even tryingto make operating cap profits.

They're just trying toleverage the frothiness

of the stock market.

That's a bubble. Youdon't see that right now.

There's not companies,you don't see hardly,

you don't see any IPOsright now for that matter.

So, you know, I don't thinkwe're in a bubble now,

but back then, yes, Ithought we were in a bubble,

but that wasn't reallythe motivating factor.

- Do you think it's possible

we're in a bit of an AI bubble right now?

- No, because we're not seeing

funky AI companies just go public.

If all of a sudden wesee a rush of companies

who are skins on other people's models,

or just creating models to create models

that are going public, then yeah,

that's probably the start of a bubble.

But that said, my 14-year-old

was bragging aboutbuying Nvidia, you know,

with me in his Robinhood account.

He tells me the order, I placed it,

and he was like, oh yeah,it's going up, up, up.

You know, and I'm like, yeah,we're not quite there yet.

But that's, you know, that'sone thing to pay attention to.

- Yeah, we're flirting with it.

You said that becoming abillionaire requires luck.

Can you explain?

- Yeah, I mean there's no business plan

where you can just start it and say, yeah,

I'm definitely gonna be a billionaire.

You know, if I had to start all over,

could I start a companythat made me a millionaire?

Yeah, 'cause I know how tosell and I know technology

and I've learned enoughover the years to do that.

Could I make 10 million? Probably.

100 million? I hope so.

But a billion, just somethinggood has got to happen.

You know.

- The timing.

- Timing, you know,

internet stock market was goingnuts right when we started,

you know, and that certainlyI couldn't predict or control,

you know, it's like AI right now,

AI's been around a long,long, long, long time.

And the Nvidia processors, or GPUs rather,

you couldn't predict that now's the time

that they were gonna getto that cost effectiveness

where, you know,

you could create models and train them

and although it's expensive,it's still doable.

You know, we didn't reallyeven, we had Asics, right,

for custom applications

and we had CPUs that were leading the way,

but GPUs were more forgaming and then cryptomining,

and then all of a sudden

they were the foundation for AI models.

- So I think luck being essentialto becoming a billionaire

is a beautiful way to see life in general.

First of all, I personally think that

everything good that's ever happened to me

is because of luck.

I think that's just a good way of being.

It's like you're grateful.

That said, there's some examplesof people that you're like,

they seem to have done a lot of,

they seem to have gotten lucky a lot.

You know, we mentioned Jeff Bezos.

It seems like he did alot of really interesting,

powerful decisions formany years with Amazon

to make it successful.

- But he was really ableto raise money, right?

A lot of money.

And people were really dismissive of him

because they weren't profitable.

And we were in an environment

where it was possible to raise that money.

- It was possible to raise that money.

I mean, what about somebody you get

sometimes feisty with on the internet?

Elon, who couldn't even look at Zuck

and Bill Gates and Warren Buffet.

- Sure, look, Zuck was justtrying to get laid, right.

And it took off, and hewrote some good stuff.

- Aren't we all?

Is that a foundationof human civilization.

- Right, at some level, right.

But yeah. So more power to him, right.

You can't take anything away from him.

But yeah, Snapchat, same thing, took off.

Apps didn't take off in 2007when the iPhone came out.

Apps took off in 2011, 2012.

And if you were there with theright app at the right time,

and even Facebook, you know,in 2004 the bubble had burst,

and you know, the price forcomputers had fallen enough

and kids in school allneeded computers or laptops.

If he had tried to dosomething like that, you know,

five years earlier, Imean, he was too young.

But, you know, five yearsearlier or five years later,

you know, or Friendstermight've been the ultimate,

or MySpace.

- Friendster, I remember Friendster.

- Or MySpace, I had a MySpace account,

and that was before Facebook.

- Yeah, the timing's important,

but there's like the detailsof how the product is built,

the fundamentals ofthe product, like what?

- Well, so, but that's what gets you,

when the opportunity is there, right?

That's what allows you to takeadvantage of that opportunity

and the kismet of it all, right?

You've gotta be,

'cause it wasn't like anyof the people I mentioned,

there weren't others tryingthe same thing, right.

You had to be able to see it,

you had to be able to visualize it

and put together a plan of some sort,

or at least have a path, andthen you had to execute on it.

And do all those things at the same time,

and have the money available to you.

Because it wasn't like, whetherit was Google or Facebook,

you know, they raised a shitload of money.

It wasn't bootstrappingit that got them there.

- And raising money isnot just about sales,

it's about the generalfeeling of the people

with money at that time.

- [Mark] And proximity.

- Oh yeah, sure.

- If Zuck wasn't at Harvard,

and he was at Miami of Ohio University,

or he was at RichlandCommunity College, same idea,

same person, same execution, and nothing.

- I believe in the power ofindividuals to find their,

to realize their potential nomatter where they come from.

- I agree, I agree 100% with that, right.

- [Lex] But luck is required.

- Yeah, I mean, scale is, theonly delta is scale, right.

You know, we're not all blessedwith the access to the tools

that you need to hit that grand slam.

- But then also,

billion is not the onlymeasure of success, right.

- Absolutely not, right.

Everybody defines theirsuccess in their own way.

- How do you define success, Mark Cuban?

- Waking up every day with asmile, excited about the day.

You know, I was, you know,people always say, well,

when you get that kind ofmoney, does it make you happy?

And my answer always is,

if you were happy when you were broke,

you're gonna be really,really, really happy

when you're rich.

- But you gotta work on beinghappy when you're broke,

I guess.

- Well, you're just being happy, right?

If you were miserable, youknow, in your job before,

there's a good chance you'restill gonna be miserable

if that's just who you are.

- That's a pretty good definitionof success, by the way.

- [Mark] Thank you.

- How do you reach that successby way of advice to people?

- You know, we talkedabout my dad, my parents.

I never looked at my dad

and said, okay, you're not successful.

He busted his ass.

And when he came home, you know,

we enjoyed our time together, right?

There was nothing at any point in time

where I felt like, oh, thisis miserable, we're awful.

You know, we don't havethis, we don't have that.

You know, we celebratedthe things we did have,

and never knew about the thingswe didn't have, you know?

And so I think, you know,

you have to be able to find your way to

whatever it is that puts asmile on your face every day.

And some people can doit and some people can't.

- It's not always about the smile

or the smile on the outside.

It could be a smile on the inside.

- Yeah. Whatever it is, right,whatever makes you feel good.

- Yeah, the struggle, even thestruggle, like with your dad,

the really, really hard workcan be a fulfilling experience

because the struggle

leading up to then seeing your kids and.

- Exactly right, right.

Because that was my dad's grand slam.

Right, seeing three kids goto college, be successful,

you know, be able to spend time with him.

And that was the other thing, you know,

he really made me realize

is the most valuable assetisn't the money, it's your time.

That's why, you know, from ayoung age, I wanted to retire

because I wanted to experience

everything that I possiblycould in this life.

And, you know, he got joy fromus. I get joy from my kids.

And that's the most specialthing you ever can have.

- Beautifully said.

You have made some mistakes in your life.

- [Mark] Yeah, a lot of them.

- One of the bigger oneson the financial side

we could say is Uber.

- Yeah, we call that notdoing something, yeah.

It wasn't a mistake, it wasjust, I mean, it was a mistake.

(both laughing)

- But I like how you tried to.

- Yeah, yeah, I alwaystry to look at mistakes

that things you did that didn't turn out

as opposed to things you diddo, you know, the negative but.

- What can you tell the story of that?

And maybe it's just interesting,'cause it is illustrative,

like how to know when a thingis going to be big and not,

and what are the fundamentals of it

and how to take the risk and not,

and all this kind of stuff.

- Right, so the backstory ofthat is Bill Gurley came to me

and said, Mark, there's this guy Travis

that has this company Red Swoosh,

which is a peer-to-peer networking company

that I think you can help.

And so I invested and wouldspend a lot of time with Travis

and it is funny 'cause backthen that was like 2006,

I was an investor atbox.net with Aaron Levy

and, oh, there was one other company,

but there were three of them

where there'd be emails between,

you know, where I'd introduce them,

and we'd all talk in these emails

and they'd all gone to haveastronomical success, right.

But so Red Swoosh had its issues.

You know, 'cause I alwayslook at peer-to-peer

as kind of stealing bandwidthfrom the internet providers

when bandwidth was a scarce commodity.

And so, you know,

what Travis did withthat though was great.

You know, he convinced gaming companies

who wanted to do downloads ofthe clients for those games

to use his peer-to-peer in Red Swoosh.

And you know, he busted his ass,

and I think he sold it for$18 million, so he did well.

And so it was naturalfor him to come to me.

And I still have the emails, you know,

and asked me about Uber Cab,

and I thought, okay, this is a great idea.

I really, really like it.

I said, you're gonna, andhe showed me his budgets,

and I think they were raising money

at 10 or $15 million or whatever.

And I'm like, your biggestchallenge is gonna be,

you're gonna have to fight

all the incumbent taxi commissions.

They're gonna want toput you outta business.

That's gonna be a challenge.

And I think you don't have enough money

designated for marketingto get all that done.

And I said I'd invest, butnot quite at that valuation.

Right, never came back to me.

- Yeah, I mean there's some lessons there

connected to what you're doingnow, we'll talk about it.

Cost Plus Drugs is likelooking at an industry

that seems like there's alot of complexity involved,

but it's like hungry for revolution.

And the cabs are that.

- Yeah, for sure, right.

They they were dominatedby an insulated few.

They were not very transparent.

You didn't know the intricacies.

They were very, very politically driven,

and old boy incestuous network.

And to Trav, you know, andlike I told him, Travis,

the best thing about you