Mark Cuban's 6 Rules of Money

this video was sponsored by blinkist click on the link below to get free access to thousands of non-fiction book summaries money feels a little different to billionaires imagine spending 40 million dollars online for a private jet or buying a 13 million dollar mansion without even looking at it well this is a reality for mark cuban who became a billionaire after he sold his company broadcast.com to yahoo in 1999. after the sell he bought his favorite basketball team the dallas mavericks for 285 million dollars and but the players their own private jet for 36 million he later became an investor in the television show with shark tank and has invested in over 80 companies since the beginning of the show so let's take a look at mark cuban's six rules of money rule number one work on your mission even if no one believes in it cuban says that if you're innovating and bringing new ideas to the market you will always find those who don't believe in what you're doing he says to state the course and work on your mission even if others don't believe in it okay i'm investing a lot of my saved money into this whole idea of net casting right or internet broadcasting in early 1995 when people didn't even know what the internet was that was all risk because i literally was putting everything that i had on the line for something people just laughed at me and said wait audio over the internet you know you can turn on the radio you know you know you can turn on the tv yeah but you don't get it no that's just dumb all right you know and and so being able to overcome all that resistance because remember back then a you had to have a pc b you had to know what a modem was and install it c you had to know what the internet was and then you had to download a tcp ip client that worked over a modem and then connected to a browser that you probably didn't even know what it was or how to download it and we had to take it on faith that all this was going to grow a few months after the ipo yahoo bought out broadcast.com for six billion dollars you remember the date um i remember the date april first yeah it was april fool's day april fool's day yeah 1999. yeah um closing in july yeah it's been said that that was one of the worst acquisitions the question i wanted to ask you was well not not not from mark's standpoint the question is did they overpay in the top.com bubble or did they not execute on the plan they didn't execute first of all they paid in stock it wasn't cash so their their stock was as inflated if not more and so they paid in stock and think about it if you could go back to 1999 and have the company that dominated streaming right so we had hundreds of internet radio stations so we were pandora and spotify right we had really started video we dominated all video streaming on the internet it wasn't even close right there there was no youtube there was no anything else six seven years before youtube youtube right so you know radio stations online um music um customized radio stations um customized video we were you know integrating advertising doing indexing of um the spoken word and all this kind of stuff or index.broadcast and if you can go back and say you get to own that entire industry for 5.7 billion dollars in stock right that would have been a hell of a buy rule number two work as if someone is trying to take everything from you because they are we live in a hyper competitive world in the midst of the internet age this means that at all times there is always someone trying to get better as cuban says you got to know your business better than anyone in the world and act as if someone is trying to take it all away from you because they are when you walk in the room when you start a business and you start to talk about somebody you're never in a vacuum with no competition you know unless you're just extremely lucky and if there's going to be competition that means somebody else knows your business as well as you do when you get started and if you walk into a competitive environment and they still know more about the business than you do and more about your customers you're going to lose and but most people don't consider that they don't do the work they don't learn more about their industry they don't know even about their business i mean and so you've got to put in the effort to know more about your industry than anybody else um and that's that's the brains part and that's the effort part as well because look if you're competing with me you you better know what you're doing otherwise i'm gonna kick your ass but whatever industry you pick if you outwork everybody if you try to be a little smarter than everybody if you try to be a better sales person than everybody if you try to be better prepared than everybody you've got your best chance because if you don't do it and somebody else does you know i have the same work like someone's trying to take it all away from you you know work actually work like someone's spending 24 hours working 24 hours to take it all away from you and that's kind of the way i look at it rule number three learn the skills of the future the world is changing and is changing fast if we don't adapt we will be left behind but you've got to take that step this is the price of poker there's no future that doesn't have ambient computing or voice activation none that's super cool i just can't imagine what the future is going to be like it's great five years from now it's crazy but you know what like my dad used to say you know we don't live in the world we were born into if you just think about the year you were born and the stuff that was around yeah you know it's crazy you know a 90 year old that was born in 1928 yeah i mean it's just unbelievable i mean people weren't you know flying commercially then you know there no radio no yeah i mean there was radio but 1920 was when they really started broadcasting radio right no tv just things that are archaic already now that weren't around for people who are alive today and it's not going to change it's not going to slow down i think if anything it'll accelerate and you could hypothesize about our future and there's a lot of different directions it can go rule number four try different things most of us have little to no idea exactly what it is that we want to do or what will be the winning idea that will make us successful and the truth is that we won't know unless we try different things as cuban says we only have to be right once particularly if you're young today curiosity is great always learning and trying to find new things and being curious about new things because that's what leads you to that path trying to figure out in advance yeah that's hard because you don't know what you don't know i always say hugh experiment here she who experiments the most wins yeah i agree with thomas edison had almost 950 experiments before i came up with the yeah you know it's okay to get it wrong yeah it's okay to fail particularly when you're young yeah what the hell you know go back to your room and make your bed because you didn't get that business right yeah why not rule number five it pays to be nice there's a common saying that says people don't quit jobs they quit bosses cuban says that something that he learned as he built and invested in companies is that being nice is actually very beneficial not just to be a better person but also when building great companies it became apparent to me that the nicer i got the more effective people around me got the more productive they got the more sales we had i was undervaluing nice you know i i started my my first company after i got fired from a job and i was 24 just turned 24. um my first real company if you will and i was always go go go go all consumed right live it eat it sleep it breathe it and i knew people couldn't keep up or work as hard as many hours as me but i wanted them to and we were successful and we didn't have much turnover but i could have done a better job if i were nicer and broadcast.com i got a little bit nicer right as things but then once i got to the mavs and and some of these other companies and todd reminded me you know and really told me you know just nice nice works and so when you find yourself going to work when you're finding yourself dealing with customers when you're finding yourself making decisions we all get that object right that feeling in our stomach that tenseness that stress at various points and times that we all have to go through but sometimes you just need to calm the down right take a deep breath and be nice because you'll find out that people will do much more if you reduce the stress of people and you're nice you're gonna have such a huge advantage no matter what your technology is no matter how it compares even if it's a download for an app people will still have to deal with you your culture will come through being nice being being supportive reducing stress that all comes through even in an app rule number six know the rules of the game and use them to your advantage something that most people don't know is that mark cuban almost lost over 95 percent of his money after he sold his company to yahoo he would have lost over a billion dollars if he didn't know the rules of the game see mark and his partners sold broadcast.com to yahoo for 5.7 billion dollars but they did not receive cash yahoo bought the company with their shares so mark cuban received 14.6 million shares of yahoo for his share of the company at 95 dollars per share this means that the sell of his company gave him around 1.4 billion dollars worth of yahoo shares this was in 1999 but he began noticing that many internet companies were crashing in value he thought that it was only a matter of time before yahoo where he had over a billion dollars worth of shares crashed but there was a problem he could not sell his shares right away after the sale as part of his agreement so cuban created what is known as one of the best trades in history when he used what is called options to protect his wealth if you're not sure what options are here's a quick 30 second crash course on stock options an option is a contract that gives the buyer the right to buy or sell stocks at a specific price on or before the contract expires there are two main contracts when using options a put or a call and each contract represents 100 stocks of the chosen company a put option is a contract that gives you the right to sell shares at a specific price put options are known as insurance for your money because if the stock goes down you have the right to sell the stock at the higher price of your option for example if you own a stock at ten dollars a share and you buy a put option for eight dollars a share which is called the strike price and the price of the stock drops to two dollars a share you are able to sell the stock for eight dollars a share protecting eighty percent of your money mine is the cost of the contract but if the price goes up to fourteen dollars a share you can choose not to exercise your option of eight dollars per share since the value of the stock is higher than the option and only lose the cost of the contract when someone buys a call option the buyer of the call option can force the seller to sell this stock at the predetermined amount when someone buys a call option the buyer of the call option can force the seller to sell the stock at the predetermined amount so for example if someone sold a call option for his stock at 15 per share and the stock goes up to thirty dollars per share the buyer of the contract can purchase the seller's stock at fifteen dollars per share even though the stock is worth thirty dollars making this a bargain for the contract buyer okay now that we understand options here's what cuban did to protect his money since mark cuban had 14.6 million shares of yahoo he bought 146 000 put contracts to protect all of his shares in case the yahoo shares crashed this meant that he would have to pay millions of dollars in contracts to ensure his money to avoid paying this he sold another 146 000 call contracts to cover the cost of the put contracts making his trade virtually free he bought his put options at a strike price of eighty dollars per share remember his stock was worth ninety five dollars per share so he had a small loss margin he was protected if the stock dropped below eighty dollars per share but he also sold call options with a 205 dollar strike price so if the price of the stock dropped below eighty dollars per share he was insured with his put option but if the price went over 205 dollars he would not be able to profit from anything over that price yet if he was wrong and the stock didn't crash and instead grew in value he would still have a margin of profit up to 205 dollars per share interestingly by january of 2000 the price of yahoo stocks skyrocketed to 237 dollars per share making his trade looked like a very expensive mistake but in late 2002 when the dot-com bubble burst yahoo stock was trading at an all-time low of 13 per share making this trade a stroke of genius that allowed him to protect around 1 billion dollars so educating ourselves to know the rules of the game can be really profitable which is why i am very excited for this week's sponsor blinkist blinkist allows you to consume a book in less than 20 minutes blinkist is for anyone who cares about learning but doesn't have a lot of time to do so they take the key insights from over 3000 non-fiction bestsellers in over 27 categories and gathered them together in 15 minute reads now the best part is that you can read it if you're more of a reader but they also have audio explainers to help you understand more about the core ideas and since it's in your phone you can take it anywhere you can consume a book on your way to work or while working out at the gym and even if you're flying because you can download and listen offline 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Channel: The Better Men Project

Views: 84,060

Keywords: Mark cuban interview, mark cuban advice, mark cuban motivation, mark cuban sharktank, mark cuban networth, how did mark cuban get rich, how rich is mark cuban, mark cubam investments, mark cuban how to get rich, mark cuban on managing money, mark cuban success, entrepreneur motivation, success motivation, 6 rules of Money, the better men project

Id: rHqGN4Jm2AM

Length: 14min 48sec (888 seconds)

Published: Wed Dec 16 2020