What They Dont Teach You At Business School

I met-up with Mark in early September at Mike Arrington's TechCrunch50 and in October for a Cubs playoff game. Lecturing me over nearly eight hours as we shuttled from one after-party to another (and another), the founder of MircoSolutions, Broadcast.com, and 2929 Entertainment, explained how he used two primary disciplines-embrace failure & identify pain- to guide his companies through some really tough times, and even to help turn around an ailing basketball franchise -- the Dallas Mavericks.

Based on our nights of banter, my guess is that Mark would say these skills apply to founders during this havoc-ridden market. Mark is no college FICO credit specialist, but I'm inclined to give his method [the 'Cuban Two Step'] a try: employing it has also helped Mark catapult himself past fellow-Texan business mogul Ross Perot on Forbes's list of wealthiest Americans. (Ross was the previous Dallas Mavericks owner.)

So here is the Cuban 'Two-Step' to a Street Smart MBA. Like I said, it took me eighteen hours to extract, two months to digest and ten hours to write. You get in under eight minutes. 

Mark Cuban's Two-Step to the Street Smart MBA

(1) Embrace failure (It's temporary!)
(2) Identify pain. Then solve it.

(1) Embrace failure (It's temporary!)

Silicon Valley loves a founder who can wrestle success from failure. Fortunes always ebb and flow. Mark has shown he can consistently make money from bad fortune.

A lighthearted example of this was when Mark was fined by the NBA after his comment that some NBA referees are not even qualified to manage a 'Dairy Queen' ice cream store.  After paying the fine, Cuban served soft-serve cones and got major ESPN coverage.

A heavy example Cuban cited was at MicroSolutions. "Renee Hardy stealing $80K of accounts payable [account]," Mark recollected.  He later found out she was whiting out checks and adding her name to siphon off money.  Mark dug his heels and committed himself to making payroll. "I worked my [tail] off to close sales and begged vendors to let me be late in payments." Mark says that when failure stares you in the face and puts you in a hole, "Dig in, and dig yourself out."

(2) Identify a Market Pain

Then alleviate it. Mark only founds or invests in companies that resolve "a market pain."

Billionaire's club. I so wanna join

Before the Internet was our standard operating platform, businesses had a hard time integrating their departmental information systems with one another. MicroSolutions was an early enterprise "hack" for intra-department communication. It used CompuServe as the backbone and LotusNotes as a platform to enable managing tasks like word processing, spreadsheets and database management between offices of a single company.

Mark's current startup, 2929 Entertainment, solves a big Hollywood studio pain: declining revenues due to a costly distribution channel choked by theater owners. Most independent films can't afford distribution at all anymore.

"The independent film industry has been dying an ever slow death, I'm solving it," Mark said.  Cuban recognized the ever shortening cycle between film relaase and DVD release.  He innovated by having same day theatrical and DVD release, and in Cuban's words, "focused us on how to blow DVDs out the door".

I'll be in my Palo Alto cubicle embracing failure and identifying market pain so text me 650-283-8008

 during my office hours: 11:11am OR pm give or take 15 minutes. This article is at http://tinyurl.com/jan-07-09 so tweet it @larrychiang! I am also on Facebook in the Austin TX network... why Texas?! It is because I started 'Austin Secret Society of Entrepreneurs' (#asse9). If you see a typo or grammatical error, email me! larry@larrychiang.com :-)

Larry Chiang is the founder of Duck9, which educates college students on how to establish and maintain a FICO score over 750. He has testified before Congress and World Bank on credit.

He is a frequent contributor to Business Week's blog on "What They Don't Teach You at Business School". For fun, he studies massage therapy, does Yoga and plays basketball on college campuses.