#119: Hard–Earned Lessons From A Maverick Who Made It – Mark Cuban

47 min read
#119: Hard–Earned Lessons From A Maverick Who Made It – Mark Cuban


JOE WALKER: Mark Cuban, welcome to The Jolly Swagman Podcast.

MARK CUBAN: Thanks for having me on The Jolly Swagman Podcast.

WALKER: Mark, I’m so excited to chat with you, it’s a real thrill. And most of my questions are going to be short, except for the first one. Because there are so many interviews of you out there and people know you so well now that I tried to ask myself, “Who is Mark Cuban?” And I tried to answer that question. And I’ll give you my answer, and then you can add or subtract from it. Does that sound okay?

CUBAN: Yeah, that sounds cool.

WALKER: Awesome. So I think of you as very much a product of the working class Jewish diaspora. Hard-working. Gritty. Aspirational. Optimistic. On your father’s side, the Chabeniskys emigrated from Russia through Ellis Island, where your grandfather Morris changed the family name to Cuban. Your maternal grandparent, the Feldmans, were also Jewish, emigrating from Novoselitsa in Romania.

As you were growing up in Pittsburgh, your mom worked a rotation of odd jobs. Your dad eventually worked in car upholstery for Regency Products. Your household was open-minded and aspirational, but not overly intellectual. There weren’t many leather-bound books lying around, but your parents did read the daily newspaper.

Your mom wanted you to have stability, but not necessarily fulfilment, and to get a job laying carpets because she feared that you mightn’t get enough money together to make it into college. But you did make it in, to Indiana University, and she supported your decision.

Your working class upbringing, your years grinding it out at college, in various jobs, and as you were building your first company MicroSolutions, combined with your Jewish ancestry, especially the knowledge that a quarter of your mom’s family lost their lives during the Holocaust, enables you to empathize with struggling and marginalized people. You’re not one of those guys who thought he hit a triple but was born on third base.

Despite — — or because of your own success, you never lost sight of the fact that luck plays an important role in people’s lives, a very rare trait in a successful businessman. I see certain other things running through your life and career. Optimism. Assertiveness. I spoke with someone who used to speak with you when they were researching Gandalf Technologies when you were a value added reseller, and this person said even then you were a straight shooter who didn’t suffer fools.

A focus on hard work and a keen understanding of the extra 2% and the power of searching for little edges to turn good businesses into very good businesses and very good businesses into great businesses. And the attribute of intellectual fearlessness. You back yourself to master any new field given enough work, from running Motley’s during college, helping a basketball team to an NBA championship and hopefully many more, and learning how a law firm operates, to teaching yourself to code, learning about Machine Learning, and getting an A in graduate level statistics in your first year at college. Through all of these experiences, you learned that you can take intellectual chances.

In a nutshell, you’re a figure who personifies what many people consider to be the American dream. So now you can tell me, how did I do? Who is Mark Cuban?

CUBAN: You did pretty well. I mean you probably could do a better job of describing it than I could. Yeah, I’m going with you. Now when everybody asks me, “Who’s Mark Cuban?”, I’m just going to play the podcast and just say, “I don’t need to say it, Joseph said it best.”

WALKER: Great. I’ll cut it up to you so you can send them that little clip. So Mark, in preparing for this conversation, I got in touch with Wayne Winston, your old statistics professor at IU…

CUBAN: That’s great.

WALKER: …who also did some work for you at the Mavs. And I asked Wayne, “What’s the most underrated thing about Mark as a businessman, the owner of a sports team, or as a person — something that he’s really good at, but almost nobody knows about?” And Wayne said, “He knows how to entertain customers. He learned that in college owning the best bar in town, Motley’s.” So what specifically did you learn about entertainment while you were running Motley’s?

CUBAN: I did not expect Wayne to say that, that’s crazy. You learn that people work hard for the money, and they want something that makes it worth their time. People take the path of least resistance. You’re either bored, you got something you got to do, or you don’t want to be bored and you want to end that boredom and you want to find something to do. And if you give people something that’s really special and memorable, even if you’re in college and it’s just about getting drunk for the cheapest price, then people are going to take that path of least resistance and try to have some fun.

And so he’s right in a big respect. I learned a lot back then that if you make it easy and cheap for people to have fun, they’ll knock down a path to your door.

WALKER: Why is Kamikaze a great shot?

CUBAN: Because why isn’t it? Of course it is. It’s cheap. You can buy rotgut vodka and you got lime juice or limes everywhere. Mix them together. Why wouldn’t you? I mean why wouldn’t you? Why wouldn’t anybody everyday?

WALKER: Do you know why that shot is called a Kamikaze?

CUBAN: No, tell me.

WALKER: So there’s a couple of stories. I worked in a bar at college as well, and we used to serve Kamikazes. But one story was that it was developed in Japan sometime after World War II on a U.S. Naval base. And another story is that it comes from the ingredients. So vodka, triple sec, and lime juice, or VTL: Very Tragic Landing.

CUBAN: First of all, only the high end bars put in triple sec. College bars don’t even have triple sec, so you guys are living the high life.

WALKER: Well if you ever make it down to Sydney again, we can have a Kamikaze together.

CUBAN: Definitely, or 10.

WALKER: So I want to talk a little bit more about entertainment, but moving into movies now. So the key challenge for Magnolia Pictures, the film distribution company you own, is how to bring in more at the box office than it spends getting people to theaters in the first place. So a question about movies if I can, but I want to start in a roundabout way.

So a funny thing about innovation is that it’s inherently unpredictable because if a new technology could be predicted, then it already would’ve been invented. And that’s why, as Alan Kaye says who you quote in your book How to Win at the Sport of Business, “The best way to predict the future is to invent it.” But extending that idea to Hollywood, every new movie, we can think of that as an innovation, and it’s never certain in advance which one’s going to be a hit with audiences.

And I want to read a quote from veteran Hollywood screenwriter William Goldman. He says that, “Raiders of the Lost Ark was offered to every single studio in town, and they all turned it down except Paramount. Why did Paramount say yes? Because nobody knows anything. And why did all the other studios say no? Because nobody knows anything. And why did Universal, the mightiest studio of all, pass on Star Wars? Because nobody, nobody — not now, not ever — knows the least goddamned thing about what is or isn’t going to work at the box office.” So can a movie company systematically produce hits?

CUBAN: Well it’s different now. What’s a hit today is different than it was back in the day because back in the day you wanted to go to a theater. Now, you’re probably not going to see it in a theater. You’re going to see it on Netflix or Amazon or whatever. But systematically, it’s hard. And it’s not even so much about picking a good script, it’s you just don’t know how all the pieces are going to work together.

If they would’ve picked anyone else to be the lead other than Harrison Ford, it might not have worked. If they would’ve picked anybody else to direct it other than Steven Spielberg, it might not have worked. So it’s not just about being able to say that’s the script, that’s the cast. You also need the producer, you also need the director. And then, you also need the right timing of it all, right? What else is coming out? What’s going on in the world at that point in time? Do people want to escape? Do they want serious?

It’s like anything else, luck is always more important because if you look … Okay, I’ll give you a quick story on picking movies. I got an email … So in 2003, we created HDNet Films and 2929 Pictures, and the idea was that we were going to produce movies because we owned Landmark Theaters, we owned HDNet, a high-def television network, the first high-definition television network, and we had Magnolia produce. That way we’re all vertically integrated.

So while we’re going through this whole process, I get an email from a guy named Alex Gibney. Alex Gibney, nobody really had heard of him, he goes, “I’ve got all this video on Enron.” Remember the company that blew up and it was a big scandal? And I email him back, “Is it exclusive, you guys own the rights?” He emails me back, “Yeah.” And I go, “So how much is it going to cost to produce this documentary?” He goes, “$770,000.” I said, “Let’s do it.” 12 minutes, it took 12 minutes to green light this documentary. It’s called Enron: The Smartest Guys in the Room. At the time, it was one of the top-grossing documentaries of all time, and it got nominated for an Academy Award for Best Documentary. Unfortunately we didn’t win.

Next movie comes along. My partner Todd Wagner gets this movie, and it’s in black and white, but it’s got George Clooney. And they wanted us to pay half of the production budget, and our half was going to be $4 million. Turns into a movie called Good Night and Good Luck with George Clooney, gets nominated for six Academy Awards. Doesn’t win any of them, but gets nominated.

So the first two movies Todd and I, and in the case of Enron just me, green-lit, got nominated for seven Academy Awards, and I’m thinking this shit is easy, right? I got a feel for this. You don’t know one more movie that we did that came after that. I mean literally I’m going to the Academy Awards, I’m walking like this, people are coming to me thinking, “You got the touch, you guys know what you’re doing, you and Todd. We want to work with you.” Went straight into the shitter right after that, that’s how hard movies are. They’re really hard to know and do.

WALKER: Yeah, it’s like with business, you can’t even ask your customers what they want. They know it when they see it. There’s a great quote by the economist Bill Easterly. He says, “We thought we wanted Halle Berry in Catwoman in 2004, which was later named The Worst Movie of the Year, but what we really wanted was Anne Hathaway playing Catwoman in The Dark Knight Rises in 2012, which was the box office champion of the year.”

CUBAN: Yeah, I mean, when people were using horses and carts and buggies, they weren’t asking for cars. When we started Audionet, and nobody knew what streaming was. It was even called internet broadcasting at the time. And I would tell people, “Look, you got a PC, you got a modem. You download these two pieces of software, and then you go to this website called audionet.com. And we’ll let you listen to all these radio stations and then all this music.” And they’re like, “Bro, I’ll just turn on the motherfucking radio. Why do I need to go through all that hassle?”

I’m like, “No, you don’t understand. This is what’s going to happen.” Like you said, if you just gave people what they want, we’d still be on horses and we’d still be listening to records.

WALKER: Bethany McLean is actually a former guest of the podcast and an acquaintance. I actually got in touch with her before this interview and asked her the same question I asked Wayne, and she said that, “Mark was an excellent executive producer for The Smartest Guys in the Room.”

CUBAN: Yeah, because I did nothing. I just said, “You guys know more than me about all this. I’ll write the checks. I’ll stay out of the way.”

WALKER: So when you were talking a little bit earlier about what makes a movie successful and how it can be unpredictable, one of the things in your answer indicated that it’s just the combination of so many elements that makes the success of a movie hard to predict. So just running with that theme for a moment, why is it harder to apply the Moneyball approach to basketball than it is to baseball?

CUBAN: Because you can develop baseball players. It’s hard to develop basketball players. So with baseball, if you look at the top draft picks, those aren’t necessarily the stars more often than not in baseball. I’m sure it’s the same in Australian Rules Football, right, because you can develop players. They’re bringing down six foot eight dudes from the United States to play Australian Rules Football because you can develop athletes.

In basketball, the number one pick in the draft, the top couple three picks in the draft, you typically know that those are going to be the best players and they’re going to be one of the best players in the league. And it’s really rare where somebody goes undrafted and then becomes a superstar, or even an all star. And so that’s the difference. In baseball, Australian Rules Football, you can teach them.

In rugby, I played rugby for a long time, you can take an American footballer and teach him how to play rugby. You may not turn him into a scrum half, but he’s going to be able to play 8 or wing forward and it’s not hard to teach him the rules. But you can turn him into a decent player because he’s got that athletic ability. In basketball, you need that athletic ability and skill, and it’s harder to develop.

WALKER: And then I guess there’s the combinations between players as well?

CUBAN: Yeah, that’s what it takes to win a championship. It’s one thing to have a great player, but you need a great team. And they all have to want to play together, you have to have the team chemistry. And that’s the same with all. Why are the All-Blacks so good? They had a little downturn for a while, and … Is that a bad subject?

WALKER: It’s a little bit sensitive, but you’re a guest, so you’re allowed to talk about it. So rugby’s one of my two favorite sports. What position did you play in rugby?

CUBAN: So I started off as second row, and then moved to wing forward, but I really liked to play 8 the best because I could pick up the ball more and run, and just wave off the scrum half and say I’m keeping this shit and going with it.

WALKER: That’s a very Mark Cuban move, I like it. So Mark, I did a bit of work trying to understand your views on Google and YouTube, and I went back through your old blog posts from 2006, ’07, ’08, and ’09 in particular. And around 2006, you thought that Google would be crazy to buy YouTube, and then when they did buy YouTube you thought that the YouTube guys should sell and run similar to what you did when Yahoo bought Broadcast.com because it was very different days back then. YouTube wasn’t monetized. It was bleeding huge bandwidth costs.

So a few questions around that if I may. First, why do you think it is that Broadcast.com became the dodo and YouTube is now an irrevocable part of our culture? It’s not because Broadcast.com had bad management and YouTube didn’t. Is it just timing?

CUBAN: No, no. No, it was bad management. When Yahoo took over, once the internet stock market popped, they basically closed it down. Because we were about break even. And like you probably read, we were Pandora, we were Spotify, we were YouTube. We were getting millions of visitors. And then in 2001 basically, Yahoo!’s board said, “Enough is enough. We’ve got to focus on being a search engine,” and that opened the door for YouTube.

And when I was ripping on YouTube, it was more about the legal side of it. One of the things that Broadcast.com always did was really respect copyright laws. And our attitude was if a user posted something, because we had user uploads, we had to make sure they owned the copyright to it. YouTube worked and said the exact opposite, “We don’t care,” and they knew they were violating copyright law, but when Google came in got involved they had better lawyers than Viacom and Paramount and those guys. And if Viacom would’ve had good lawyers, it might’ve been a completely different story.

But that was why I ripped on them because their whole business was built on the fact that the eff.org had told them that it’s okay to have user-generated content that you don’t have copyrights to, and all of our lawyers, our personal lawyers and Yahoo! as well but not just Yahoo!, told us the exact opposite. So I think that was the bigger disconnect.

WALKER: Gotcha, so it was bad management.

CUBAN: Yeah, pretty much.

WALKER: So back then, you thought Yahoo was overvalued, so this is back before the dot-com bust. You thought it was overvalued because you understood bubbles. But did you still think Yahoo would win the portal race?

CUBAN: Yeah, I did. I did, and they should’ve. And if they would’ve kept Jerry Yang as the CEO, they probably would’ve. And I’ll tell you another story behind that.

So there was … oh what the hell’s the name of the company? I forget the name of the company, but they own the patent to pay per click for advertising, which is the whole fundamental underpinning of advertising for Google and all search engines. And so they bought that company, so Yahoo owned that.

And when Google started to grow, they sued Google. Smart move. The dumb move was they settled with Google, and rather than just saying no, which was not the way Yahoo would do things back then, they’re not into conflict whatsoever, they allowed Google to pay them $1 billion in stock, which seemed like a great deal, right, but it also allowed Google to survive. And had they not been able to do it … I mean they’re super smart, maybe they’re able to find workarounds and it would’ve been a non-issue, but it would’ve been a whole lot harder and Yahoo would’ve been able to dominate.

But I remember going in there after they bought us and saying, “Look, if we do this, this, this, and this, we’ll be able to dominate. These guys won’t be able to compete with us. They’re going to have problems.” And they’re like, “Mark, that’s just not the way we do things.”

WALKER: So Yahoo bought Broadcast.com for $5.7 billion, and then you turned around and collared the stock. There are probably a few people in the world who timed the dot-com bubble better than Mark Cuban, and I’m curious is it possible to learn a sense of timing around technology and market bubbles more generally? Or is it just luck?

CUBAN: No, you learn very quickly not to time it. And number two, you learn not to be greedy. How much money did I need? That’s what it was all about. It wasn’t me trying to time it. It was like I owned a third of the company and we just sold it for $5.7 billion in stock. I was going to have to pay my taxes out of that, a shitload of taxes, so I was going to end up with more that $1 billion. And as it turns out … So I was like, “Okay, collar this.”

And not only did I collar it, before I was allowed to collar it because I had a six month holding period, I spent $20-some million, every penny that I had, to put on an index option on an internet index and buy puts on it so that in the event it cratered before I was able to put the collar on, then I would still make some money.

And I lost almost all my money on that put on the index, but it allowed me to do the collar, and it’s been called one of the top 10 trades of all time on Wall Street. So it wasn’t about timing it, it wasn’t about luck. The lucky part was that the way the market got so much more volatile, I actually made more money on the collar. It wasn’t just protecting it, I made more money, and that was the lucky part.

WALKER: Got it. What do you think, just looking at the current technology landscape, what do you think is the really important thing that we do now that’s going to sound absurd in a few years’ time?

CUBAN: Blockchain and NFTs. AI doesn’t sound absurd, it’s kind of par for the course now. Precision medicine and the way we built the vaccine, MRNA vaccines, and how AI applied to that, that won’t seem crazy. But the idea that we might not have pennies, nickels, and quarters, or I don’t know what the equivalent is in Australia. But the way we sell music and do podcasts like this. You’ll mint them and you’ll put them on the blockchain and you’ll make them available to anybody either for free or to buy them depending on how they want to use it, and people will use some sort of cryptocurrency isn’t the right word but token in order to buy that.

And so, all the things we’re talking about from the early days of the internet, I’m seeing the exact same things happening with blockchain and all the different applications built around blockchain. And the crazy part is we’ll look back and say, “All this happened because of the pandemic,” because so many people were able to stay home. A lot of people got stimulus checks there, here, and everywhere, and invested it in crypto and learned about decentralized finance and started making money that way.

And once they started making money that way, they started exploring all the different edges of the blockchain and application on top of it. And it’s just starting to blow up, and it makes perfect sense.

While I was getting ready to do this, I’ll give you an example of something I’m doing. So if you go to a site, rarible.com, R-A-R-I-B-L-E.com, I’ve put up some little artwork things because I just want to learn about it. And one of the things that was stunning when I did it, I put something up and I put it for 0.25 Ether, which was about $250 at the time and I put up 10 of them thinking, “Okay, who’s going to be crazy enough to buy this little artwork stuff?”

But that wasn’t the interesting part. As I was minting it going through the process of making it compatible to it, there were two check boxes. One was do you want to convey the copyright, I said no. The second one made me go, “Oh my God, this is going to be game-changing.” And what it was was what percentage of license would you like every time it’s sold? And I’m like, “Wait, what are you telling me? That if it sells for more or people keep on buying it and selling it, I get paid every time?” And that’s what it was.

And so I put 10% on the first one. And the next thing I know because it was my first thing that I put out there, there’s people buying it and selling it back and forth, back and forth, back and forth, multiple times, and I’m getting 10% of it every time and it was going up and up and up. One Ethereum, now it’s $1,500, $1,700. Then it was 10 Ethereum. I’m selling like $100,000 worth, and I’m getting 10% of that. Then I did another one, and it sold for even more, and I’m like, “Oh my God.”

And so it’s not so much that my artwork or my stuff is going to be incredible, but it’s the fact that for the first time ever something digital can be sold and resold and the original creator will keep on getting paid. So for your podcast, if you, rather than just putting it out there and hosting it and allowing people to download, if you went onto one of these sites and said, “Okay, it’s free or it’s 0.0001 Ethereum,” which is next to nothing, but allows you to track everybody that’s out there. And if you want them to, they can resell it. And if you want to get paid every time they resell it, you’re allowed to do it.

So if everybody says, “Oh my God, this podcast is just so fucking good. Here, I’m going to sell it to you or I’m going to give it to you,” you keep on getting paid. Now imagine that for a musician or a movie, right? There’s just so many applications. Or you’re a professional photographer, and rather than worrying about your artwork being stolen or your commercial photographs being stolen, you’re okay with it being out there.

And on top of that, with the blockchain, you get to track all of that and see who bought it, maybe not by name but their address, and it’s just incredible. And so when you talk about what’s the thing we’ll look back, all these people learned this shit because they were stuck at home. Not just me, but all these people involved, and it’s growing like this, I mean just exponentially just like the early days of the internet.

But the important part, like we’ve been talking about all these business inflection points, right? What was it when it come to movies that you try to see and how nobody knows anything? And then you asked me about selling and how to entertain and how to sell. When I saw that, it made me realize that anything that’s digital now, you’re going to be able to sell it forever and make money forever if it’s good content. And that’s just a game-changer for content producers, as you know, because as someone with a podcast, it’s hard to make money. You’ve got to get those sponsors. You try to do a great podcast, but you’re completely dependent on somebody bringing you advertising dollars or maybe some sponsorships or whatever.

Imagine if you’re able to take snippets or the whole thing or pictures or whatever and sell them just for pennies each time. And people are like, “Cool, I’ll give Joseph three cents just for listening to it,” as opposed to having to go through the whole tip thing and Patreon thing and all that. It just gets so simple and so different.

And then you add to that the fact that Gen Z in particular, I think you’re too old for it, right, but Gen Z in particular, their most valuable things that they’ve ever had growing up are digital. They don’t have houses. They’re just getting cars. Cars depreciate. But the best stuff you own are your pictures, your music, your videos. That’s you, right, and being able to buy and sell those things easily is natural.

And so when we look back, the stuff that’s crazy right now, we’re going to say, “This shit blew up and became enormous and important all because of the pandemic of 2020.” Sorry for the long answer, but you asked.

WALKER: That was incredible, thank you, and we’re going to be putting this podcast out on Monday for $10,000 per download [laughter].

CUBAN: Way back in the day when I had MicroSolutions, there was a commercial that used to run on the air. They used to have these things called dot matrix printers, right, and they used to print 80 characters per second. And then there was this IBM commercial that said, “Sir, why are you selling this dot matrix printer with 80 characters per second for $5 million when you can buy an IBM dot matrix printer for $99?” He goes, “Yes that’s true, and the IBM dot matrix printer is so much better, but all I got to do is sell one.” That is the same thing.

WALKER: Exactly. Mark, I want to ask you about a couple of books that have had an influence in your life and thinking. The first one is The Innovator’s Dilemma by Clayton Christensen, a classic business book. What did you take from that book?

CUBAN: You always got to check your hold card, right? You know when you’re playing cards, even though you know you got a seven underneath there, you always look 10 times to make sure it’s still a seven like you forgot? Well no matter what you think about your business, you always got to check again. You always got to check your hold card to make sure the premises that you’re running your businesses, the things you built your business on, are still applicable because there’s always somebody out there trying to kick your ass.

That’s why I named the book … God-damn …

WALKER: How to Win at the Sport of Business.

CUBAN: I know. I’m looking at this, my buddy’s book over here. How to Win at the Sport of Business. Boy, that’s an oldtimer’s moment. And so it was like business is the ultimate sport because you’re competing all the time and you don’t know who else is competing with you. And there’s always going to be somebody coming after you. You always got to compete. God, how did I forget that name?

WALKER: For the benefit of people who haven’t read the book, the dilemma that Christensen talks about is that all the things that make great businesses great — so great management, listening to your customers, continuing to develop your product lines — are the very same things that make great businesses fail, because there are disruptive technologies, which are cheap and simple so the margins aren’t great, and they only really please a very thin slice of the market…

CUBAN: It’s not even as much that as people get comfortable doing what works. If you’re making a lot of money doing something, that’s what you know and you want to keep on doing it. To your point, what he said was, “If you just keep on doing what you’ve always done, then people are going to be able to see what you’re doing and disrupt your business.”

And that’s the innovator’s dilemma, the dilemma of retaining your existing business versus innovating and moving forward knowing that you’re going to have to give up some of that existing business because if you don’t disrupt yourself, somebody else will do it for you, and you can see all that business disappear.

WALKER: You’ve also read, I believe, Michael Lewis’s book The Undoing Project?

CUBAN: Yeah, yeah.

WALKER: What did you like about that book?

CUBAN: I don’t remember. That was the book on the psychologists in Israel?

WALKER: Yeah, Daniel Kahneman and Amos Tversky.

CUBAN: Yeah, yeah. No, it was cool the way they approach solving problems and dealing with stress. But yeah, obviously I don’t remember all the details of it, but I think my takeaway was you always have to look for the intellectual solution. And sometimes what you think is the obvious answer is not. Sometimes when you look at something straight up and you think you understand what you need, you’re wrong.

And he gave the examples of picking the right infantrymen and understanding who’s going to be the best for certain types of positions, and how you find the best of people. And the way they had always done it, to The Innovator’s Dilemma thing, wasn’t working. It’s like one of the stories, I think it was from The Signal and the Noise, where they were trying to figure out the way to reduce the number of planes that were shot down during World War II. And when they were able to recover the wreckage, they always found that this part of the fuselage had the holes in it, and that must be why it’s being shot down.

But then this other guy comes in and says, “That’s not what we need to look at. We need to look at why are the planes that weren’t shot down still flying? What were they doing? And we need to do more of that.” So sometimes the solution is not what you think is the most obvious solution.

WALKER: Can I tell you what I took from The Undoing Project?

CUBAN: Sure, please do. You’ll help me remember things.

WALKER: So for me, it was about the importance of partnerships and how they succeed, and also how they fall apart. And one of the quotes in the book, I can’t remember which of the two says it but it’s that, “We’re both geniuses, but together we’re exceptional.”

CUBAN: The two doctors that work together, yeah, and their relationship?


CUBAN: Yeah, yeah.

WALKER: Exactly, so they were like the Lennon and McCartney of academic psychology, and then all their insights eventually became behavioral economics. But I would kill to have the sort of intellectual bromance with someone that Khaneman and Tversky had with each other.

CUBAN: It’s interesting because they had a falling out, became difficult, because sustaining those types of relationships are hard because everybody wants to take ownership, everybody’s got their own personal goals. People grow up differently, and so it’s hard to sustain those types of relationships.

WALKER: Exactly, and theirs fell apart for a couple of reasons, but one of them was … So I think there are two ways partnerships can fall apart. One is you both have equal input, but you get unequal credit. And the other way is you have unequal input, but you get equal credit. And that starts to cause tensions. And theirs fell apart because their input was equal, but Tversky was getting all the recognition and Khaneman wasn’t, so that started to grate.

CUBAN: Yeah but along those ways, because I’ve had partners in my business and we’re all different personalities, when you go in people have different goals. And you don’t really know what the end of the movie’s going to look like. And as you go through these things and what you expect to happen varies from what actually happens. So the one guy who wasn’t getting the credit wasn’t looking for credit until he saw how people were responding to what was going on. Then it became, “Well maybe I do want some of this credit, and maybe this is interesting to me.”

And so because you don’t know what Act Two and Act Three are going to be, and then what the end of the movie’s going to look like, when you get there sometimes you’re surprised and disappointed, or feel left out. And I think that happens a lot with partnerships because you see a lot of times when I start working with people, we see it on Shark Tank, where somebody thinks this is the way things are supposed to work. But as the business grows and you enter different parts of your life cycle for the business, what you expected is not what actually happened, and that’s where you get a lot of conflict.

WALKER: The two key business partners in your life have been Martin Woodall and Todd Wagner. What about those relationships made them so successful?

CUBAN: They were the exact opposite of me. Martin and Todd were both incredibly anal, incredibly detail-driven. I’m “ready fire aim,” and they are “no, ready, are we sure we’re ready, let’s check everything, let’s look at the details.” I talked about Broadcast.com, and this wasn’t Toddy specifically, but when it came to copyright laws I would’ve asked for forgiveness after the fact. And no, if we want to build this business and go public and really make a splash in the public markets, we don’t want this overhang, and that made perfect sense. Whereas YouTube took the exact opposite approach.

WALKER: By the way, The Undoing Project has the best ending of any nonfiction book I’ve read, so possibly something Magnolia Pictures could pick up and turn into a movie.

CUBAN: Well when somebody does, we’ll let somebody else turn it into the movie because you know how good we are at doing movies.

WALKER: So third and final book question, Mark. I understand you’ve been learning about Machine Learning and you’ve read The Master Algorithm by Pedro Domingos, which convinced you that it was prime time for AI. And you’ve also been reading this, Machine Learning for Dummies.

CUBAN: It’s in my bathroom, yeah.

WALKER: Best place for Machine Learning. Funnily enough, my last guest on the podcast was Frank Wilczek, and he’s also teaching himself Machine Learning. And his machine learning books were in the bathroom. He went and got them during the podcast. So Frank won the Nobel Prize in physics in 2004 for the discovery of asymptotic freedom and the strong interaction. And the three books he recommends are Reinforcement Learning: An Introduction, by Sutton and Bartow; Deep Learning by Goodfellow, Bengio, and Corville; and Information Theory: Inference and Learning Algorithms by David McKay.

CUBAN: There you go.

WALKER: I’ll email those to you if you’re interested.

CUBAN: No, it’s interesting now. It’s hard to read those books. It is hard to read those books. And videos are a lot better, so I’ve gotten into the habit of when it comes to AI-related things, whether it’s reinforcement learning and understanding how they’re teaching AI Go to beat the best Go players in the world, etcetera, I’m switching to videos and courses more because it’s brutal to try to read those books.

WALKER: It is. Can you use R or Python?

CUBAN: Yeah, I’ve used Python for sure. But I was never big on R because I didn’t have to do a lot of statistical stuff before I started doing machine learning, and then Python became the way.

WALKER: I’ve got two more business-related questions, and then I’d like to move to politics. The first business-related question is you are one of the best salesmen out there, what do people most commonly get wrong about sales?

CUBAN: They think that sales is about convincing. “I want to sell ice to Eskimos.” That’s not sales at all. Sales are about believing in your product and based off of what you know about your product helping people, or service for that matter, right? What does my prospect need and what can I provide to them to turn them into a customer? It’s that easy. And the more people you connect to, the more people you’re going to be able to help. And if you love your product, it’s easy, it’s easy to sell. And where you into problems is when people don’t believe enough in their product and they think they have to convince somebody.

WALKER: Do you have any tips for good cold pitches, especially by email which is one of the hardest ones?

CUBAN: Well you’ve got to do your preparation first. I can sell to almost any type of company because I understand the needs of most types of companies. And so I just ask myself if I’m the CEO or if I’m the person I’m trying to sell to, “What do I need? What makes my life easier? How can I reduce my stress?” And once I understand how I can make their life easier and reduce their stress, then I understand how to format an email. “I read this about your company and I recognize that you guys are running into some challenges with this. This has got to be driving you crazy. I don’t mean to intrude, but if you just want to take a look and read this, it’ll take you six minutes. And then if you don’t mind, I’ll follow up with another email and answer any questions you have.”

WALKER: The biggest thing in that example you just gave was empathy, in my opinion. A lot of people have no empathy when they … I start to get more and more inbound now about the podcast, and some of the asks I get from people are like I would not want to have a beer with this person at the pub. Like if you don’t pass that test…

CUBAN: No I agree, I agree.

WALKER: …Don’t come across as super needy, recognize that people are busy.

CUBAN: Yeah, just try to help. Like you said, empathy, helping, they’re the same thing. You’re not going to help somebody unless you feel empathy for them, right? And so find a way. But it also shows that you’re authentic when you do the work to understand what their needs are.

So if I’m just shooting you a blank email, “Hey we sell this. If you need this, reply.” Unless you just happen to get lucky and play the numbers game, “Oh by the way, we just fired our last vendor and your timing’s perfect,” that’s just not going to work. You’ve got to have a sense of, “I’m committed to finding out about what you need so I can help you.”

WALKER: My understanding is that you don’t believe the current stock market is in a bubble because interest rates are so low. Are we setting ourselves up for a bubble, and how will we know when the market does become a bubble?

CUBAN: So two things there. One, is it really a bubble when interest rates are about 1% and you’ve got so much cash going in? To me, that’s not really a bubble. We can argue if it’s overvalued or not. But the reality is that cash has got to go somewhere. And that’s why you see a lot of assets going up in price significantly because where else are you going to put it? Not under your mattress. So that’s part one.

To me what a bubble truly is is when people get excited and buy things and they don’t know why. They just buy things because everybody else is buying them. That’s a bubble. Early in the internet stock market frenzy, I would get in a taxicab and you’d hear somebody talking in a foreign language and you’d just hear the names in English of the internet stocks that they’re buying and selling. Or people would find out what I did and would just pepper me with questions should I buy and sell.

You saw some of that with all the craziness with GameStop and some others. There were people who bought and sold because they knew what they were doing. There were people who bought and sold because it was part of a collective and they wanted to do it because they believed in doing this together. And then there were people who had no idea that that other stuff was going on, they just bought and sold because their friends were buying and selling, and there was no connection to the Reddit stuff at all.

WALKER: Alright, three questions about politics, and I promise it’s not going to be the same question, “Are you running for president?”

CUBAN: Thank you.

WALKER: First question, what is your model of Donald Trump and how has it changed over the years?

CUBAN: Just not a lot of respect. Fun guy, interesting guy to talk to, and it hasn’t changed at all over the years.

WALKER: Really? Okay.

CUBAN: Yeah.

WALKER: Did you detect something a bit off the first few times you met him?

CUBAN: Yes. Yeah. Donald is just Donald, right? He’s hyperbole. He’s a salesman. It’s all about him. No self-awareness. It’s all about him. Always selling. It’s all about him.

I’ll tell you a quick story, and I’m sure you’ve read it since you’ve done so much homework. I was at a Superbowl party in 2001, right after we had sold to Yahoo, and it was at Mar-a-Lago. Beautiful place. And it was one of these deals where a friend of mine got invited and he invited me. And we’re standing at these tables right by his pool, and there’s a veranda in the club and there’s people sitting up there eating.

And he’s being the typical host, right? There’s the Hawaiian tropic girls all dressed the same walking around on one side of the pool, and then there’s Donald coming over and saying hi to everybody. And he gets introduced, no big deal, and he just randomly, I mean no prompting whatsoever because we’re just, “Hey, it’s Donald Trump, how cool is that?”, and he looks at me and he goes, “You know Mark, someday you’ll be able to sit up there with the rich people.” And I’m like, “Dude, you’re the one going broke.” I didn’t say this, but I’m thinking to myself, “You’re the one going broke.”

So part two. My friend then tells him the circumstances. So Donald gets a hold of me and I go to New York and I go to his office in Trump Tower. And I’m sitting there waiting and I’m looking around, and his office, every inch of every wall is covered with pictures of him, sometimes with other people, sometimes on covers of magazines, sometimes just pictures of him. And then he brings me in and we start talking about the internet and he wants to sell this, this, and this.

I’m like, “Don’t waste your time. Don’t waste your money,” and that was the end of it. But I got back on my laptop and I immediately sent an email that I still have to all my friends. And I said, “Look, if I’m ever famous and people know who I am, smack the shit out of me if you ever see me acting like this guy because he had pictures all over the place of himself.” But that’s who he was then and that’s who he is now. It hasn’t changed. It’s all about Me, everybody else be damned, and he’s just not very bright. That’s Donald Trump.

WALKER: What’s it like getting an email from Donald Trump?

CUBAN: Well he never sends an email because he never really uses the computer, so you get one from his assistant. And what they do is he’ll write something on a piece of paper, they’ll scan it, and then they’ll send it as an attachment. “Hey, the boss is sending you an email.” And I’m like oh cool, and then you look at the PDF.

WALKER: My mate actually got a cold pitch from someone recently and it was like that. It was a scanned, handwritten note. And he was like, “That’s actually not a bad tactic because it’s quite personalized.”

CUBAN: Yeah, I mean…

WALKER: It’s different.

CUBAN: In some respects yeah, but to me I’d be afraid that there’s a virus in it. Otherwise if it wasn’t from Trump, I’d be kind of concerned to open it. But yeah, I mean anything that makes you stand out is not a bad thing.

WALKER: So one of the themes I’ve been stressing on the podcast recently is the importance of taking seriously the concerns of the people who voted for Trump. When we have things like deaths of despair occurring at a tragic scale in America, when the white working class has just been gutted and hollowed out, we have to have empathy for these people. And a couple of people I’ve had on the podcast: Arlie Hochschild who wrote Strangers in Their Own Land, and Angus Deaton who co-wrote Deaths of Despair.

And at the same time acknowledging that Trump isn’t normal and that it’s possible to despise Trump but also to empathize with the movement that led to his election.


WALKER: But I noticed that you wrote a forward for a book, I think it was called White Working Class by an academic. And maybe you could just talk a little bit about how you understand the current predicament of the white working class in America and what you think the best thing for them would be?

CUBAN: So there was a book I read in high school, and it was called Why Men Rebel, and basically what it says is … And I found a copy and I got another copy actually. And what it says is when your expectations for your life are like this, like we talked about partnerships, this is how I see the arc of my life going and then this is reality, or maybe even there’s a downturn. That delta, when it gets wide enough, that’s why people rebel. Because what have you got to lose? The whole vision that I had for my life has just gone haywire and gone completely in a different direction.

And when somebody at least gives me some hope of that, that they understand, that they get it, that they’re one of us, then I don’t even care about anybody else. Now, I might drape myself in patriotism and say, “Well there’s so many people like me. We’re the majority, so it must be the patriotic thing to do since you’re doing it for the most number of my fellow citizens.” And you have to recognize that.

And the response is … Like, I’ll go on Fox News, Rupert Murdoch properties, and people are like, “Why are you going there?” I’m like, “Because I don’t need to talk to people who think like me or have the same perspectives as me. I need to learn from people who are different than me. I need to speak to people who are different to me.” “Why are you meeting with Trump? Why are you talking to this guy or that guy?” Because I want to hear from people who are different.

And to answer your question, that’s what’s needed. You need somebody who’s going to go sit down with the people that hate you, that disagree with you, that think you’re a communist, that think you’re a socialist, that think you’re whatever it is that they’ve been told is absolutely wrong with you and why you’re the worst thing in the world for the American people. And by doing that, to your point, that little bit of empathy, that little bit of connection, people don’t want to hate people. People don’t want to disagree with people. People want to have a commonality.

That’s why Trump got elected. It wasn’t like they believed in Donald Trump. It was he was the only one speaking to them. Donald Trump didn’t create a movement, he found a movement that was already there waiting to be picked up. And if you have empathy with those people, it’s not about programs. It’s not about the specialized thing. And it took me a while to figure this out that it’s not about, “This is what they need, let me tell you what they need,” and then help get that for them. That’s the intellectual approach.

It’s reality just listening more than anything else. And once you listen, then they trust. And once they trust, then maybe you can help them. Maybe they don’t need help. But they’ll decide and they’ll tell you. And I think that’s the missing component in all of politics, in your country as well as ours. I talked to Andrew Bogut, I don’t know if you know Bogie at all, but he’s all about conspiracy theories and right-wing politics in Australia, and so I get to follow his Twitter feed and see what’s going on there some.

But it’s the same thing, you’ve got to be able to communicate, show empathy. But the problem is right now the way our representative democracy is is that because we have primaries first, it’s the people who are the most extreme that vote in the primaries because we don’t get the turnouts that you do in the regular election. And so, you’ve got 10% of the turnout, you’ve got the people that provide money are the people that are the furthest to the extremes both on the right and left, and so our politicians have to pander to those most extreme people.

And that feeds off itself because it works for you in the primary, you’ve got to stay true a little bit at least even in the United States to who you were, and that just grows and creates its own continuing set of problems where we’re eating ourselves from the inside. And so that partisanship, the way we’re set up with the duopoly of republicans and democrats, it’s going to be a problem for a long time because until we have the ability to have independents represented in this country so that nobody can dominate, you don’t have two parties fighting for power in a duopoly, you have three or four, we’re going to have challenges.

But I think that person to come and show that empathy and sit down with the people that, not just Trump voters but it could be far left voters, very progressive, Bernie Sanders voters, because they’re not far from each other. You go full circle from the other side and they come really, really close. But you got to listen to them. You got to show the empathy. You’ve got to really recognize who they are and what they want, and it’s not all about stuff and programs.

WALKER: Amen. Is a third political party something that you might be interested in starting?

CUBAN: No, because again going back to what you said earlier about partnerships, expectations when you come in together are to beat the other guy. But then as you grow a third party or fourth party or fifth party, then internally all the power dynamics still take place. Just like the partnership in Michael’s book. Initially it was all great because they were on the same team trying to accomplish the same goals, but then they had their own interests that take place. The exact same thing is going to happen with the party, or two or three or four parties.

Now you’ll get a benefit from diluting the power from just the two, but you’re not going to solve the problem. To me, ranked choice voting, which allows you to have more candidates where you diminish the primary aspect that I just mentioned so that you can have more candidates. .. I support a group here in the United States called The Center for Competitive Democracy, and all we do is sue states and municipalities that try to keep independents off the ballot or small parties off the ballot. We just sue the shit out of them and get those people on the ballot so they have a chance to win.

And we’ll keep on doing more of that because that’s what we need. I think we need independent voices because then they can just represent the issues that are important to them and what they think are important to their constituents. And instead of being a Trump Republican or a traditional Republican or a progressive versus a liberal, it’s just here are people that represent these different interests, who you going to vote for? What do we need parties for at all?

If I was going to do one thing, I’d make parties illegal because all the things that they were good for — communications, creating commonality in terms of approach, having joint applications like ActBlue to raise money or whatever — we don’t need those things anymore. Those are things that are all available to us and available to everybody, and so all you do is get a false sense of homogenous or monolithic thought processes to try to say everybody’s on the same page when they’re not.

It’s crazy here when they say … Just the fact in the United States that we talk about the Democrats won the Senate and they already have the House. And the presumption is even though it’s 50/50 in our Senate, that all the Democrats and all the Republicans are going to vote unilaterally. They’re all going to vote the same way. Just think about what that means.

All the constituents of all those politicians don’t all have the same positions, yet they’re expected to vote the same way for party unity so we can get these things done. That’s wrong. That’s wrong in every way, shape, or form. And so I would get rid of all the parties, that’s not going to happen. So rather than trying to create a third party and just have it create more problems, I’d rather just support independent candidates. And there’s some projects out there for the equivalent of ActBlue to raise money and to get people on ballots and to support them that you can do now on the internet.

Look, if Wall Street Bets can get hundreds of thousands of people to buy and trade one stock independently, then you can probably independently rally support around a candidate that really stands up for the people.

WALKER: Wayne Winston mentioned that you were a fan of Australia’s ranked choice voting system. And for people who aren’t familiar, it allows voters to rank candidates by preference, meaning you can submit ballots that list not only your first choice candidate for a position but also your second, third choice, so on. What are the merits of that system in your opinion?

CUBAN: The merit is I don’t have to pander to a small group of people. Like I mentioned in the traditional primary system, it’s the most extreme people that vote in the primaries and the turnouts are so low that the majority of the voters in the primaries are extreme. And so that pushes people to the edges. And then on top of that, you hear the story a lot like when people talked about me running for president, “Well you’re going to pull votes away from so and so. You’re going to pull votes away from this candidate or that candidate, so don’t run.”

In ranked choice voting, that doesn’t happen. So if Joseph is your first choice and Mark Cuban is your second, and Donald Trump is your third, and Joe Bide is your fourth, you just order them in that order, and then they just knock off the lowest vote getter at the bottom and then push your choices up. So if Joe Biden gets knocked up, then his first choice gets the votes and then you move through until somebody gets more than 50%. That’s the way it should be. We’re starting to that in the mayoral race in New York. And people get a better feel for it. Do you like it, do you like the way it works down there?

WALKER: Yeah, I do. The other thing we have which is unique is compulsory voting.

CUBAN: That’s interesting.

WALKER: So if you don’t go up to vote and you’re registered, you’ll get a fine. But it’s only like 80 bucks or something, I can’t remember.

CUBAN: Still.

WALKER: But there’s huge turnout in our elections, like 90% plus.

CUBAN: See in the United States, people would revolt over that, revolt over that. I mean we tried to fine people for not signing up for insurance so that they would have healthcare protection, and it was just a revolt.

WALKER: Well the other thing about compulsory voting Mark is that political parties and political leaders can’t pander to the extremes. You have to win the center because everyone’s going out to vote. We find it works for us, but I don’t want to lecture anyone about their systems.

CUBAN: No, that’s okay. That’s the thing about democracy. Hopefully you learn and you evolve. That’s why our constitution has amendments.

WALKER: Yeah, exactly. So Mark in 2008 and 2009, you invested a lot of money into Australian bonds as a play on China.

CUBAN: Yeah.

WALKER: And the Australian economy is sometimes characterized as being based on houses and holes, that is mining and real estate. When you did your homework on the Australian economy, what did you learn about us? And can you elaborate a bit more on the thesis you held about Australia back then?

CUBAN: It was paying 12.5% for the bonds, and your business with China was booming, and we were in the Great Recession. And I figured that your proximity to China was going to sustain your economy, which it did, and that I was going to be able to either continue to earn my 12% or watch the bonds appreciate. And as it turns out, I just held them to maturity and just kept on earning my 12.5%.

Where I learned the most about Australia is, one, my partner on Dancing with the Stars, Kim Johnson, is Australian. And then, I had Andrew Bogut and now we have Ryan Broekfoff and Josh Green. Ryan and Josh just got named to the Australian Basketball Olympic team, so congrats, good on you guys. But that’s my understanding of Australia.


CUBAN: And I argue with people about Australian Rules Football versus Rugby Union, and so I mean it’s an easy argument to win. All this stuff versus real rugby? It’s no comparison.

WALKER: Exactly, exactly. I’m glad you’ve come down on the right side of the debate.

So, the two topics or themes that recur a lot on this podcast are number one, asset price bubbles, especially housing bubbles, and number two, innovation. And there are several ways those two topics are connected, but it was only recently while reading Friedrich Hayek that I struck on a deep link between bubbles and innovation. Because bubbles happen when people’s thinking becomes correlated, whereas technology thrives on uncorrelated thinking. And the way to think about that is that if innovation is the result of lots of different experiments by many individuals, and the odds of any one experiment finding a breakthrough technology are say one in 10,000. You can still beat those odds if you have 10,000 different individuals running different experiments, but the keyword is different experiments.

And the problem with the really conformist society, and this is true of countries around the world and also throughout history like if you look at how Ming China turned its back on the world, is that a conformist and authoritarian society doesn’t permit different experiments so the chances of finding that one in 10,000 breakthrough are like finding a needle in a haystack.

And so conformity is really overrated in my opinion, and we need more dissidents. And my final question Mark is, firstly, what should societies do at the policy level to be less conformist? And then, as a well-known maverick yourself, what should individuals do to be more maverick?

CUBAN: So first of all, government should have no place in trying to get people to conform other than basic human needs, what we believe as a society is best at a base level, education, safety, healthcare, food, shelter. And that’s just supplying basic needs. There’s nothing that a government should do to try to get people to conform in any way, shape, or form. It goes back to what you said about Trump voters. Let them be them and let them try to find their way. If you work with them and understand and listen more than anything else …

I guess a better way to put it, I’m a big believer now … Take a step back. Historically, the two parties are both top down. The Republican party here talks about trickle down economics, and the Democratic party is trickle down big government programs. Then you hope all of that trickles down to the people who need it. It rarely does because the money stays at the top on the Republican way, there’s some, but most of it stays at the top, and it’s hard via government to have money find its way to all the people that need it because they have to be applying and get approved for all this stuff and there’s a lot of inefficiency.

I’d rather see what we’re doing now happen, which is more Modern Monetary Theory where we need stimulus, can we get more than a 1% return from our citizens? Can they be more productive, to your point, letting an unlimited number of experiments happen even at the tiniest level because entrepreneurship and innovation doesn’t have to be on a big scale to start. Sometimes some of the littlest companies turn into the best ecosystems and communities. Sometimes some of the littlest things turn into the biggest things.

You just don’t know, particularly in a digital world, what’ll take off. And so, I really belief in a bottom-up approach where we try to remove as much friction as we can, including not trying to make people conform, and allow people to blossom and try things that they need to try.

And so I think that’s first and foremost, and in terms of individually trying, I tell people all the time the best time to go for it, no matter what it is, when you got nothing. When you’re dead-ass broke, what have you got to lose? That is the best time to start a business, and that’s why you see so many companies started by so many young people because they see things differently, they find a different perspective. And the best ideas don’t cost a lot of money to start. Few people are like Elon Musk trying to build spaceships and cars and flamethrowers. Most everybody else starts with an idea and a service or something they can make, and anybody can be an entrepreneur.

And so I think that’s where you get all these ideas blooming when you enable people to do things however they see or choose, and that’s what I’ve always done. It’s like if I keep on learning, then I can keep on coming up with ideas. If I keep on reading and paying attention or now watching more videos like my kids do to try to keep up with what they’re seeing, then I can come up with new ideas. And if we encourage people, again to your point, to be different but learn … because in my mind the more information you consume, the more excited you are about learning, the more different you’re going to be. You’ll have a completely different perspective on life, and that’s how you find things.

And Steve Jobs famously said, “Everything’s a remix.” And that’s the way I’ve always looked at things, and that’s what I’ve tried to teach my kids. You don’t have to have that one “oh my God this is unique, no one ever thought of it” idea. You just have to take something and make it better enough so that people want to consume it or use it or learn from it, and then anything is possible.

WALKER: Anything is possible. Mark Cuban, thank you so much for being so generous with your time and insights.

CUBAN: It was fun, yeah. It was crazy. Good questions, made me think. I can’t believe you’re the first person ever to question me on books I read, and so to me when I read books there’s things I take from them and I don’t really think about the whole book. I always look at it and say, “Okay, what is this thing that I’ve learned from this book and why am I reading it?” And then I might remember the concept and not the details. So you were testing me. When you started naming that book and I was like, “Oh shit,” so that’s a first, so I appreciate that.

WALKER: Awesome. Thank you so much Mark.

CUBAN: My pleasure.