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How Mark Cuban Hangs Onto His Money
By PAUL SULLIVANFEB. 19, 2017

If there is a wild, out-there script to becoming a billionaire, Mark Cuban could lay claim to following it.

Mr. Cuban, worth $3.4 billion, now owns the Dallas Mavericks, which won the N.B.A. championship in 2011, and is a star of “Shark Tank,” a reality television show where successful entrepreneurs vote to support or reject a new entrepreneur’s business.

His path to success demonstrates the kind of risk-taking, almost inadvertently savvy behavior that has become almost commonplace among entrepreneurs who make staggering fortunes.

And like many of them, his early years provided no hints about his ultimate success.

In 1982, Mr. Cuban had just graduated from Indiana University and moved to Texas, where he started out more as an aspiring actor than as a technology entrepreneur.

“I got a bartending job at night,” he said in a series of email interviews. “I wanted a job in technology, so I sought out tech sales jobs. I interviewed and ended up getting a software sales job.”

When he lost that job, about a year later, he started his first company, MicroSolutions, which sold and installed software. He bootstrapped the company before that word became shrouded in the mythic haze it has today. “I didn’t have any backing,” he said. So he asked a customer to advance him $500.

A mere seven years later, he sold the company for a reported $6 million. “I bought a lifetime pass on American Airlines and retired,” he said. “I had a house in Dallas and rented a place in Manhattan Beach in Los Angeles. My goal was to have as much fun as I possibly could.”


In short, he did what many 32-year-olds would dream of doing, particularly in the period before technology was an escalator to immense wealth.

During the five years after he sold MicroSolutions, he traded stocks on his own and learned a lesson about prudence that might seem inconsistent with his public persona.

“I probably made another $15 million trading stocks,” he said. “I saw public companies in the PC, software and networking industries all blow up and then crash and burn. I had no doubt it would happen again. And I felt like I didn’t need to make more money. I needed to protect what I had.”

By the late 1990s he was working with a friend on a company called Broadcast.com, which was one of the first companies to get into the streaming business. Within a few years, he had turned an idea into a business with revenues in the tens of millions of dollars. It was a success by any measure. And then Yahoo came calling.

A high-flying technology company, Yahoo bought Broadcast.com for an eye-popping $5.7 billion at the peak of the dot-com bubble in 1999. Years later, Fortune magazine included the deal among the five worst internet acquisitions of all time.

“Yahoo executives got way ahead of themselves in acquiring Broadcast.com,” the magazine wrote. “Slow dial-up connections made watching video a test of patience as did the laughably meager library of shows (think 1960s-era monster movies and Victoria’s Secret fashion shows). The service soon disappeared, as did the executives who engineered the deal.”

As he did with the money from the sale of his first company, Mr. Cuban managed the Broadcast.com windfall with an eye toward protecting the downside. Until he could diversify out of the Yahoo stock he received in the sale, he used financial tools like collars to ensure the value of his holdings did not plummet because of something Yahoo did.

“I wasn’t greedy,” Mr. Cuban said. “I don’t need more money. I need to be able to enjoy my money.”


Mr. Cuban stands out as a first generation dot-com entrepreneur who did the right things to hang on to his wealth.

“When I look back on the 1990s in Silicon Valley, the thing that really stands out to me about those times was the sense that enough was not enough,” said Mark T. Curtis, a managing director at Morgan Stanley Wealth Management and a financial adviser in Palo Alto, Calif., since 1982. “There was almost a feeding frenzy around everything that was dot-com new.”

And in this, people like Mr. Cuban, who diversified their holdings to reduce their risk, were an anomaly.

Mr. Cuban said even though his wealth is now in the billions, he has continued to use financial instruments to protect it. “I have hedged against unexpected situations, which protected me nicely in 2009,” he said. “But beyond that, I keep a hedge on my assets so I can sleep at night.”

According to Wealth-X, he has nearly 50 percent of his net worth in cash and other liquid securities; an additional 30 percent is the value of the Dallas Mavericks. Investments in private companies he owns total just over 10 percent of his money. Eight properties, two private jets and a yacht reportedly make up the rest.

In addition, Mr. Cuban has the financial freedom to say what he wants. In his ownership of the Mavericks, he has often been openly critical of officials, much to the chagrin of the N.B.A., which has fined him several times for comments. During the presidential election, he was outspoken in his support of Hillary Clinton, a decision he sees no downside for now.

But he said he was hopeful that the billionaire-laden administration of President Trump would do well.

“For those that are truly self-made billionaires, unless they are incredibly greedy individuals, there is less of a risk that they try to use their positions to enrich themselves,” Mr. Cuban said.

“In my experiences with obscenely wealthy people who have made rather than inherited their wealth, like myself, many if not most tend to reach a point where it’s not about moving up the Forbes list,” he said. “They tend to create other goals, and public service is one place to focus their efforts.”

https://www.nytimes.com/2017/02/19/your-money/how-mark-cuban-hangs-onto-his-money.html?ref=dealbook