Earlier this year, the National Basketball Association fined Cuban $500,000 because he just wouldn't shut up about the league's officiating. But if the league thought the penalty would convince Cuban to pipe down, they misjudged the intensity of this feisty dot-com billionaire-cum-basketball mogul.
Cuban, who sold Broadcast.com to Yahoo for $5.7 billion in 1999, has been variously tagged as outrageous, egotistical, brilliant and relentless--sometimes all at the same time.
By any measure, however, he rates as one of the most successful entrepreneurs in the history of the computer industry. Cuban's roots in the computer industry stretch back to 1983, when he started MicroSolutions, a computer retail store. At the time, the computer reselling universe was dominated by the likes of giants such as IBM Product Centers, Businessland, NYNEX, Entre and Computerland. Unlike many computer dealerships that went bankrupt, Cuban was quick to recognize the industry shift from home to business computing. MicroSolutions grew into a successful systems integrator, grossing $30 million a year before its sale to CompuServe in 1990.
After five years on the sidelines, Cuban founded Audionet, a company that figured out how to broadcast audio and video over the Internet. Since selling the business (which was renamed Broadcast.com) to Yahoo, Cuban has settled into his very public role as the Mavs' most outspoken--and most fined--fan.
But Cuban is again getting involved in the technology business, this time at HDNet, an all-HDTV network on DirecTV.
"It's a prime market, and if I can execute on our business plan, it could lead to great things," he says with nary a blush of understatement.
With his team trailing the Sacramento Kings 3 to 1 in a best of seven series, Cuban took time out to chat via e-mail with CNET News.com about management theory, the future of Internet technology, and the fate of his beloved Mavs.
Q: You've been a computer dealer, an Internet entrepreneur, and now a sports franchise owner. Which job was the hardest for you and why?
A: The hardest job was MicroSolutions. I started with nothing, and if it didn't work out, that is exactly what I would have...nothing. Then as we got bigger, it becomes obvious that lots of people's livelihoods depend on you. That's a difficult spot to be in during an industry downturn.
Second on the list was running Broadcast.com. The difficulty wasn't so much in running the company, because selling Webcasting services to businesses was not overly difficult. It was something that every company in the world could benefit from. It was just a matter of selling the service. The difficult part was in dealing with shareholders. We obviously were in the middle of a bubble that wouldn't end on anyone's schedule. While at the same time, the business press and CNBC and CNN/FN were--and continue to be--endless infomercials for people to buy stock on a whim. I was fine dealing with institutions, but when I would get e-mails from--literally--grandmas and single parents telling me they just bought our stock and it had dropped $20 in a day...it was incredibly difficult to deal with because there was no answer.
Compare those roles to your current role as an NBA owner.
In the NBA, the difference is that I can impact the business side, but I can't impact the game side. I can make the environment fun and rewarding for our customers, but can't go out there and hit a jump shot. The difficult part of the NBA is being held back by the corporate bureaucracy. There are so many rules that are designed to maintain control for the league at the expense of the product, it's crazy. Some of the most dumb-ass things that I have ever experienced, like being fined $100,000 for sitting on the floor next to our trainers because it's "decorum unbecoming an owner," to lack of communications among the franchisees--I have yet to be part of an open discussion where all these brilliant people who own franchises sit down and have in-depth discussions about the issues we face.
"The difficult part of the NBA is being held back by the corporate bureaucracy."
Which one turned out to be most enjoyable?
Broadcast.com, no doubt about it. Winning games are fun, and watching 20,000 people stand up and cheer for your team is a thrill. They don't hold a candle to taking a company public and having the stock close with the highest opening day jump in stock market history like we did on July 18, 1998, or selling your company for $5.7 billion and realizing that more than 300 of your employees are now worth more than $1 million each, or of course, when that day came, that not only did I have four commas in my net worth, but was liquid as well. That blows a basketball game away. (Editor's note: Forbes magazine ranked Cuban as the 158th richest American in 2001, with a net worth of $1.4 billion, which would be three commas.)
You're probably the most visible owner in the NBA--and you've not been shy about speaking your mind about policies and refereeing. Is that just you, expressing yourself as a fan-owner, or is that part of the management style you developed in your earlier careers?
It's no different than I have always been. What is different is the media. I ranted and raved about the Digital Millennium Copyright Act being the death of Webcasting and music on the Net and, most likely, broadband. I gave speech after speech and was quoted in the business press. Today, I have been telling everyone who listens that the Hollings bill on digital media is hard-core technological McCarthyism. Have you ever, or do you know anyone who has ever, made an extra copy of a music or video file?
I have also been very vocal about how wrong the influence Hollywood has over DC and digital copyright protections in the high-definition TV space. As a copyright owner, creator and broadcaster, I am completely against getting the government involved in trying to police copy protection. The whole battle that Jack Valenti and the MPAA is waging is about slowing down the adoption of HDTV to protect the significant percentages of their libraries that can't be converted to HD and would become worthless in an HD world. The same media companies that are active in pursuing copy protection with Chicken Little proclamations of their businesses coming to an end if these measures aren't imposed are out of the other side of their mouths telling Wall Street that business is great and getting better; please buy their stocks. That's as bad as Enron.
Of course, I get trade press coverage. But that's nothing compared to if I get fined 50 bucks for condemning how the officiating program is run in the NBA. If that happens, I'm on the evening news, every sports network, and in every newspaper in the country. That's just the way it works.
Are there any common managerial themes between your current and former professions?
They are all the same. You work your ass off to create the best possible product. You do everything possible to make sure your customers get the best possible experience and are as happy as they possibly can be. You work hard to build your sales force as big as you can get it so that everyone who might be a customer does become a happy customer. You approach every minute of every day like there are 20 Microsofts trying to kill you and put you out of business. That forces you to continuously re-evaluate your business and make changes in real time and be opportunistic. It forces you to always ask what differentiates your product and makes it compelling to buy, and it makes you always anticipate what your competition might do and keeps you working to pre-empt them before they get the chance to do it. Business is the ultimate competition. It's nonstop, work all day, and dream about it at night because you love it.
When you were working in the computer industry, you could take direct action to effect a change if things began moving the wrong way. But as a team owner, aren't you dependent upon the decisions of a coach who effectively becomes the day-to-day boss? Has it been hard for a serial entrepreneur to step back and let somebody else take the reins?
Sure, but the difference is there is always another game to regroup, another season to start over, and my customers are buying fun, not wins or losses. The coach is a manager of one part of the product, not the business.
Looks as if you're having a ball being an NBA owner. But you've been pretty vocal, and at times, the league has come down hard. Do you think your owners around the league are having difficulty accepting an outsider--and a former dot-com outsider--into their ranks?
Not quite sure. I only have talked to a few of them. Many don't come to our meetings, or if they are there, I have never had the occasion to sit and talk to them about our business. I would say I would have a hard time recognizing one-third of them if they walked by me. That's how little contact we all have, and that's part of the problem.
Speaking of dot-coms, where do you think the next big burst of Internet innovation will come from?
I don't think it's here or on the horizon, and that's a big problem. The growth of technology over the last 20-plus years has been based on a technology creating a competitive advantage for businesses of all sizes. PCs, software, LANs, WANs, e-mail, collaboration, Web sites, Web-based transactions, wireless LANs--those were all things every business could benefit from and quickly and easily identify productivity or competitive advantages from their investments. Unfortunately for many companies and the stock market, we have reached points of diminishing returns. Going from 1GHz to 2GHz PCs doesn't mean anything to 98 percent of corporate users. Going from 100MB per second Ethernet to 1 gigabyte per second or 10 gigabytes per second Ethernet doesn't mean anything to 98 percent of applications.
I had hoped it would be ultra-broadband to the home. But I don't see that happening now. When we get 100MB per second or more to our homes, then bandwidth-hogging applications that leverage video and data can start to come to fruition. Medical applications, watching and monitoring patients from home, with the inherent insurance cost reductions could lead the way if it happens. Unfortunately, it's a huge if because of the politics of today. The home-based bandwidth-consumption applications--in particular music--that could have driven consumers to buy broadband, which would drive the profits that will lead to investment that will lead to the innovations that will drive price points to make ultra-broadband to the home viable, will never happen. Our government will screw it up by taxing all technologies to protect the entertainment industries.
How about your former digs? Do you think Terry Semel will need to acquire a content company for Yahoo to thrive, or is his current strategy the right one?
They don't need to acquire a content company, but they probably do need to go on an acquisition spree. They are way overvalued: 8x sales for a company that lives off of advertising is tough.
"(Yahoo) doesn't need to acquire a content company, but they probably do need to go on an acquisition spree."
Why are you so upbeat about HDTV?
The fun thing is that the HDTV market is identical to the PC market. TVs are no longer analog; they are digital and benefit from Moore's law and the digital price performance curve. As a result, for HDTVs, price points are coming down and performance is going up, just like we saw for PCs. Even the media coverage is the same.
In addition to Dallas, a few other teams--your opponent in this round, the Sacramento Kings being the best example--have incorporated foreign-born players. But it's been a slow process. Is the problem a dearth of good talent, or is the NBA still not taking non-U.S. born players seriously?
Neither. It's just a numbers game. There are more people playing basketball outside the U.S. than citizens of our country, so you realistically are going to find great talent out there.
Any interest in buying franchises in other sports?
None. My interests are in making HDNet a huge success and getting the Mavs a championship. That's enough.
What's it going to take for Dallas to beat the Kings in this series?
Scoring more points in at least four games.
If your guys win the title, how do you plan to celebrate?
Let's just say I will enjoy whatever it is I do, but we have a long way to go before I even think about it.