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Q&A Interview with Entrepreneur Mark Cuban of SHARK TANK

Maj Canton - May 6, 2011



TV Tango recently took part in a Q&A conference call with entrepreneur Mark Cuban, who is a guest shark investor on SHARK TANK this season. Mark took some time out of his busy schedule with HDNet and the Dallas Mavericks playoff run to dish about the fellow sharks, give advice to future SHARK TANK entrepreneurs, and talk about what traits he looks for when deciding whether to invest in a company.


Tonight, Friday, May 6, 2011 at 8pm ET/PT on ABC, you can watch Mark on SHARK TANK in his last appearance this season -- and it will be a good one since he makes a $1 million offer to an entrepreneur.




Question: Is Friday your last episode as a guest investor because of your schedule?

Mark Cuban: Actually, I was willing to do as many as they wanted me to. I think they just kind of scheduled out the season so they had it split between Kevin Harrington coming back, Jeff Foxworthy and me. While Friday's my final new show, I think they're going to repeat the original preview show that came out on that first Sunday [on March 20, 2011].


Question: How long does it take to actually do an episode?

Mark Cuban: I was in there I don't even know how many days, but it's a full ten-hour day where they just bring in pitch after pitch after pitch. And then the editors decide what goes on air.


You know, it's funny because I went in to get all setup and brought a couple of different suits, and they're like "No, you just wear one suit every day. That way we can cut the episodes in two."

So it's not like there's any chronological order to them. They bring in the deals, and it's fun because when those folks walk in the door on the show, you'll see all the sharks taking notes. It's because when the entrepreneurs walk in the door, it's the first time we've seen them.

It's almost like DANCING WITH THE STARS actually, where you see the little preview video when the dancers go out there. We don't even get to see the video that they show about the entrepreneurs and their businesses. We just get to hear whatever they pitch us.

Question: Did it surprise you that you were accused of being a bully in the first episode? Are you in an unusual situation where you can actually control a room when you want?

Mark Cuban: I was a bully; I am a bully in those particular cases. I'll take full credit. It's business.


What's interesting about SHARK TANK is the entrepreneurs that come on are smart. The producers do a pretty good job of picking out folks that really are intelligent people. And they recognize they pay a price arbitrage to get on the show. They actually reduce the valuations of their companies to make them more attractive to the producers which in turn make them more attractive to me as an investor.

There really is kind of a SHARK TANK, discount which is all the more reason for me to be even more aggressive when I'm on the show.

I think the fact that I do have a little bit more financial wherewithal has put me in a position to kind of be a bully. And I'm fully taking advantage of it.

Question: What entices you to invest in a product on the show?

Mark Cuban: There's a couple different elements. First, I look at the business, and it's got to be a business that I can see a future to that I think really has promise and potential. It's got to be a business that I understand. It's got to be a business that I add value to. And I think just as importantly, it's got to be a person that I believe in and I think has the commitment and passion for their company.

I get pitched everyday. I can't walk down the street without being pitched by somebody. And too often entrepreneurs make it all about the idea. I have this idea. I have this idea. And that's not enough. One of the great things about SHARK TANK, we get to see a lot of businesses that have been fleshed out where people have put in time and put in sweat equity. And so if I see a business that I think has potential where the entrepreneur has really put in the work to try to make it successful proving that they believe in it.


And then I can see elements in the entrepreneur that are attractive to me in terms of efforts and brains, and ability to sell. Expertise in their industry, those are all the things I look at. I look for all those types of elements.

Then I contrast that to the risk-reward of the business or of the investment. So in other words, if I'm investing $10,000, there's a different risk-reward profile than if I'm investing a million dollars.

When I make an offer for a million dollars like I do on the show Friday night, you better believe I believe in all of the elements as opposed to just a couple of them.


Question: How do you think you would have fared as a young entrepreneur on a show like SHARK TANK?

Mark Cuban: They probably would have eaten me alive. I would have gone in there prepared. I would have gone on there very knowledgeable about my business. I've been in similar situations. But what's really difficult for the entrepreneur is even though you may only see the segment in ten minutes, it could drag out for an hour or more with us just peppering them with questions. And the camera's rolling the whole time and you've got to stand still. And the whole standing still and just responding to questions, I don't know if that's my strength. So they probably would have crushed me. But that probably would have motivated me rather than crush my spirits.


Question: Does appearing on television help or hinder your business profile and investments?

Mark Cuban: That's a great question. It works both ways. It gives me access and opportunity because people know who I am and they kind of understand how I work. And that really shortens the cycle or the process to go from contact to conclusion.

But on the flip side, there's many a time where they'll raise the price because they think just because I have the money that I'm going to throw it away. And where that's particularly a problem isn't so much in investing in businesses, but it's when I go to try to buy something at a store or whatever.


Or if I'm looking to potentially buy a house, then the price goes up. So what I do is I have my wife go call under her maiden name. You'll never see me bid on something. Or you'll rarely see me bid on just something normal using my name. We'll typically use my wife's maiden name.


Question: Will you do your own TV show?

Mark Cuban: Hey, if it's fun. I'm the luckiest guy in the world, and I just try to create experiences for myself and have fun. And if it's the right opportunity, sure. I mean they're always fun to do. They're always a great challenge and it's always the competitive spirit in me that wants to try it and see how well I'll do. So I'll never close the door on it, but I'm not out there actively searching for anything.


Question: Have you personally learned lessons about business as a result of SHARK TANK?

Mark Cuban: It's interesting, I have learned quite a bit because each of the sharks has a different orientation towards business and we all kind of play to our own strengths. Robert has different strengths than Kevin. Well maybe Kevin doesn’t have any strengths but he likes to pretend he does. Daymond has certain strengths, Barbara has certain strengths. And so I've learned to really pay attention to them which I always try to do. But I really try to pay attention to their styles.

Barbara is very empathetic and that works very well for her. And you can see why people who work with her or companies she's invested in really want to do well for her.

What Daymond's got is interesting because in the retail and fashion area, Daymond's got a whole process already in place. He's like an assembly line of fashion. Where he's got the manufacturer, he's got the distribution. He's got the financing already in place. And so all he's got to do is find the right deal and put it right through his pipeline. And I didn't have one of those and I want one.


So I've learned from these guys really how to streamline all the elements in doing these types of deals. Whereas before because I dealt typically with tech almost exclusively with technology and entertainment, each deal kind of took on its own life form and so I think I've learned to kind of streamline things and run it through more of a specific process. Because I've seen it work so well for those guys.

Question: What advice do you have for people who enter the SHARK TANK?

Mark Cuban: Be prepared. And I say this not just for coming into SHARK TANK but anybody who's an entrepreneur. When you walk into the room, you have to know your business better than anybody in the world. Because there's somebody out there competing with you and wanting to kick your ass.

And those are the words I use literally. If you're not prepared and you're not ready for people to compete with you, then you're going to lose. I think that's a mistake that entrepreneurs make.


They think just the idea and just the effort, and whatever else is going to put them over the top. When in reality, anybody who shows any level of success, it's like a magnet to other people who want to try to take that business away. And for me that element of fear of knowing that I'm competing with huge companies always motivates me.


I think people coming into the SHARK TANK need to recognize that if it's a good idea and you can't do well, one of us may even compete with you. So you have to be prepared and you have to be ready to compete.

Question: What's the worst mistake people can make when they're pitching you?

Mark Cuban: It's funny you ask that because I was just looking at an email before I got on. And they just make the mistake when people start looking for sympathy. That's the first thing that turns me off. When people start off with "I was in the hospital." Now I'll give you one. It's been a rough road, my parents divorced when I was three, and they're 45 years old.

You just can't fit it into the excuse category. You've got to go right to business because that's why we're there. Everybody's got a story of what made life difficult for them, and you just cannot go there. That's one of the things that just makes me turn off immediately.

Question: What makes you pull the trigger and say I want to give you money?

Mark Cuban: Preparation, a great idea, people that have actually done... Let me take a step back. What really gets me going is when people have an operating business where they've already gone for it. And they've invested everything. They've put their heart, their soul, their time, everything that they have available to them into the business. And they've laid it on the line. And they just need a little bit of help.

I've been in situations where I have a business that turned out to be successful, but I just needed help in one area or another just to -- and normally it's not even money-- it's just a little bit of knowledge or a little bit of experience so that you don't repeat mistakes that someone else has already made. So if someone's gotten to the point where they've taken their business through sweat equity, and brain power, and effort and I can help them by just bringing my experience to the table, that's the best scenario.

And there's times when I've helped people not even asking for any equity in their company. It's just been, you know what? I really like what you've done and here's a couple of hints for you. And here's a person to call and go for it.


Question: In Friday's episode, what made you interested in the eco friendly portable speakers?

Mark Cuban: That's confidential.



Question: What kind of eco things do you like and use at home?

Mark Cuban: I mean I try to be smart. When in doubt, I always give the benefit of the doubt to an eco friendly product or green product. We do all the recycling things and we have classes with our kids where we teach our three kids about recycling. And we have points that we track on the wall literally from kids turning off the lights, not letting the water run, not leaving the TV on when you leave the room. Those types of things.

So I try to be smart. I'm believer that I want to leave the planet a little bit better for my kids, and their kids, and their kids. I can't say that I've been a big investor in green companies simply because from the technological side, I'm not as tuned into it as I probably should be. It's not really one of my strengths. But just from a personal perspective, I try to be as supportive as possible.


Question: Will you be on next season on SHARK TANK?

Mark Cuban: Well if there's a next season and they want me back, I'm there because I love doing the show. I love being part of it. And I love the intellectual and business challenge of it.


Question: Is it hard for you to delegate?

Mark Cuban: No, I delegate far more than people might think. I micromanage until I trust you. I either trust very quickly or I fire you.


And so I really don't have issues with being right behind people's back. If anything some of the people who work for me tell me that I'm too hands-off once I trust them. And they want more interaction..

As far as seeing me behind the Mavs bench, it's no different. There's certain businesses where culture is key to the success of the business. Any top data on the culture is critical; so that's why you see me by the bench.

Question: What other eco-businesses you have looked at?

Mark Cuban: I haven’t looked at a lot that are eco driven. And honestly I think it's become too much of a gold rush. There's too many businesses right now where people are trying to take advantage of the importance and people's recognition of the importance of supporting the environment and being cognizant of eco driven living of our lives.

Because I don't know that business intimately, I've been really hesitant to even consider getting in. It just happens. When something becomes too front of mind in any social environment, there's just a lot of people who try to create businesses, and 99% of them just aren't well thought out. Because I don't have the experience, I've avoided it for just that reason. But that said, where the brain power is there, you're starting to see very, very high end software being created to drive things like nuclear power, plant generation and protection.

There's a lot of really cool and interesting things going on. But they're way out of my core area of expertise.


I'm starting to read more about it, but I'm so far behind. I have a hard enough time keeping up with the things I'm supposed to be good at. But that said, all of our companies -- in particular the Mavericks -- have got people that are very in tune with it, and so I try to hire people and keep them around me. It's not real hard for me to hire people who are smarter than me, and so I turn to them for advice and that's really worked out well for me.

Question: On SHARK TANK, can you get out of these deals after you do due diligence?

Mark Cuban: We can't get out just because we don't like them. But we can if we do a lot of detailed due diligence and they misrepresented something.


Like I had one deal that didn't make it on air with these animation folks, and their whole thing was our costs are so low. Then we got in and they just decided that anything they put on the charge card didn't count as a cost and didn't disclose those until we went in and really dug in.

So we've got situations like that where they just get so excited that they get caught up in the moment and kind of fudge things or amplify things. Or they just mislead you. Then we have every opportunity to get out.


Question: Are you super reluctant to invest in new things?

Mark Cuban: No. I tell people all the time if it's where you're looking, you're looking in the wrong place. That's not where the next big thing is going to come from.


For a long time it was the next big website. And then it was the next big social network. And now it's the next big Groupon competitor and all these people say, "Oh, I can do a better job than Groupon."

When you see multiple things coming in the same area that's always a red flag. And I typically tend to avoid it. What I really like are things that come out of left field. I'm like "Wow, I never thought about that." I mean those are the cool things.


On Friday night there's one that... I'll let you just watch to see that it just makes such total perfect sense that I went hard after it. Because it was low tech but it was really important. And it just came out of left field


And those are the best types of opportunities.

Question: When you were starting your first businesses, did you run into a lot of people who turned down investing in it?

Mark Cuban: No, actually. All of the businesses --every single one of them -- have all been sweat equity. My first real company was a company called Micro Solutions, and I started it because I got fired from a job selling software. I wanted to go out and close the deal. It was a retail store and my boss said no, I had to be in there to sweep the floor and open up the store. I made the executive decision to go out there and pick up a $15,000 check thinking that my boss would love it and forgive me and he fired me.

Then, I obviously needed a job, but rather than going out and getting a job -- at the time I was living with six guys in a three bedroom apartment, sleeping on the floor and had really no expenses -- I just started my company just out of that apartment.


Even Audio Net which turned into, the big company we sold to Yahoo, cost me $3500 to start. And so I've never gone out and raised money prior to starting a company ever.


That's what I really look for in entrepreneurs where they don't think they have to raise money. They’ve already started their company. They've got it going. And they come to somebody as an investor or they come to the SHARK TANK really looking not just for money but for expertise.