Mark Cuban Still Stepping Up

Imagine a crusty sports team owner in the bleachers asking fans how to improve his product.

Never happens, one might say.

But it's par for Mark Cuban. He's often in the stands rooting as hard as the fans for his Dallas Mavericks. That's where he gets a lot of his ideas for attracting yet more fans to American Airlines Center.

His discourse with crowds has paid off. When Cuban landed, the Mavericks were a struggling franchise in the National Basketball Association. They went 40-42 in the 1999-2000 season and averaged 16,000 fans per game.

That season, Cuban, a newly minted Internet billionaire, bought a 50% interest in the team for $285 million. Four years later the Mavs were selling out at 20,000 a game, with fans watching a contender.

Cuban didn't just throw money at expensive players. He decided to approach the team as he would any product, thinking about marketing as well as on-court results.

The Mavericks were among the first teams to put bar codes on tickets, allowing the team to track attendance. Fans told Cuban they wanted to see the shot clock; he installed a three-sided clock that is now standard in almost every basketball arena. He tripled the sales staff. He called corporate box holders who didn't show up and asked if they were satisfied.

"He took all of these disparate pieces," said Terdema Ussery, president and CEO of the Dallas Mavericks, "and he saw the big picture."

That meant looking at the team as more than shooting and defense. "He told us, 'Don't talk about basketball,' at meetings," Ussery said. "He saw that we're really in the entertainment business."

That combination of big-picture focus and small-detail attention is simply how Cuban does business.

Try, Try Again

Cuban, 49, has said that an entrepreneur needs to be right only once. In his case it took a few tries.

Born in suburban Pittsburgh, Cuban entered business as a young teen selling garbage bags door-to-door.

He started college at the University of Pittsburgh, then transferred to Indiana University. He paid his way by doing a variety of jobs, including disco instructor.

After graduating from IU in 1977, he continued traipsing through different jobs, including selling software and tending bar.

His first big break came in software sales. Working for Your Business Software, a small Dallas company, he convinced customers to give him computers so he could set them up with the software he planned to sell them. He became an expert while teaching himself the applications.

But he got the ax. As he writes in Blog Maverick:

"No one really asks me about my adventures working for Mellon Bank or Tronics 2000 or trying to start a business selling powdered milk ... (or) about working as a bartender at night at Elan's when I first got to Dallas, or getting fired from my job at Your Business Software for wanting to close a sale rather than sweeping the floor and opening up the store."

He was hardly finished. He used his contacts to build MicroSolutions in 1982. The firm was a system integrator and software reseller -- just like Your Business Software.

Cuban did things differently from other technology outfits at the time. Rather than hire techies who could sell, he hired salespeople.

He also made use of partnerships with other businesses to help cover costs -- now a common practice.

In 1990, Cuban and his partner, Martin Woodall, sold MicroSolutions for $6 million to CompuServe. Cuban was a millionaire at 35.

After that, he traveled and invested in stocks. With the economy sputtering, he told his broker to put him in safe investments.

"I was a widows and orphans investor," he said in a 2004 blog post.

He didn't stay that way. When the stock market turned up in the early '90s he started talking about technology with his broker, Rawleigh Ralls. Cuban knew a lot about companies such as Novell NOVL, mostly because of his experience at MicroSolutions.

Cuban wasn't just trading stocks. In 1995 he and a fellow Indiana University graduate, Todd Wagner, founded Broadcast.com. They were Hoosier basketball fans and wanted to hear games on the radio.

Using money Cuban made in stocks, he and Wagner bought computers, networking equipment and a high-speed Internet connection. The company started by recording radio broadcasts, digitizing them and putting them on a Web site.

Unlike many Internet companies, Broadcast.com focused on profit. Cuban went to firms with the over-the-air broadcast rights and had them pay to be on the site. He also sold advertising and business services such as conference calls.

With Broadcast.com, he used his previous strategy of forming partnerships with other companies to help defray costs. He signed exclusive content agreements with sports teams and even heavyweights such as General Electric GE and AT&T.

In July 1998 Broadcast.com went public and set a record at the time for a first-day price run, leaping from 18 to 62.75.

A year later Cuban and Wagner sold the company to Yahoo for $5.04 billion, or $130 a share. That was a 53% premium on the 84 at which the company was trading when the deal was first reported.

Cuban could have retired. Instead, he was at the tipoff of his career. He entered the national consciousness by buying the Mavericks in January 2000 from Ross Perot Jr.

Perot said he hadn't wanted to sell the team. But he changed his mind, saying Cuban was a "very good salesman" and that "Mark would not give up and I think I told him 'no' for about six months," according to a team press release.

In 2001, Cuban dribbled beyond the NBA. He partnered with Philip Garvin to found HDNet, the first high-definition cable and satellite network.

Wagner, who still works with Cuban in business ventures, says Cuban thought about high-definition TV during their Broadcast.com days and grasped the implications.

"He has a gift for understanding technology," Wagner said. "He saw something that no one else was ready to see."

That was a big reason for starting HDNet -- to create content that would drive adoption of high-definition TV sets, Wagner says.

Cuban sees downloadable content as a big part of the future of entertainment. Recently he started a chain of theaters that shows digital movies rather than film prints.

Team Approach

Cuban also continues to invest in small companies, where his industry knowledge and focus on profit serves him well. Aaron Levie, CEO and founder of Box.net, says Cuban asked him to do more than many other angel investors might.

"He set us up with two of his companies: HDNet and Redswoosh, to work on a project before we started solidifying investment terms," Levie said. That collaboration gave Cuban enough confidence to invest -- and be sure of making his money back in a certain time frame.

Ussery says it's all part of Cuban's desire to do things differently. Even dramatically; on Monday he steps into ABC's "Dancing With the Stars" competition.

"The worst thing you can say to him," Ussery said, "the thing that really sets him off, is 'This is the way we've always done business.'"