Invest like Mark Cuban — win like the Celtics
I’m a fan of Mark Cuban, from his early days of success at AudioNet (later Broadcast.com), his love and enthusiasm for his Dallas Mavericks and their loyal fans, to his business acumen. Mark has made himself and many others around him successful and wealthy — and while some of that success can be attributed to luck, the vast majority has been due to foresight and the ability to understand the markets in which he invests his money and time.
I was thrilled to see hedge fund manager James Altucher’s article in the Wall Street Journal this morning discussing how he helped Mark Cuban become a billionaire. It’s a great read that gives insightful tips to entrepreneurs, venture capital firms and individual investors alike. I wanted to touch upon Cuban’s 5 most important investing techniques — from a VC standpoint, OpenView Venture Partners shares a lot of these same techniques when we are evaluating expansion stage software companies to invest in.
1. Find something you are super excited about and know that at least another 100 million people can be super excited about it. In other words, what’s the market size, is it big enough, will we be able to see a return on that investment? This isn’t dissimilar to another extremely successful investor, Peter Lynch, who lives by the saying: “Invest in what you know.”
2. Strongly participate in the company. Make sure you are the most excited user of your own product. In this particular case, the “product” is the portfolio company. OpenView’s value add team, OpenView Labs, is all about working with our portfolio companies and their management teams on everything from sales methodology and market segmentation to agile development implementation. As investors, not only do we participate, but we also put our money where our mouth is and drink our own kool-aid. 3. No matter what you are doing or how busy you think you are, get as much press as possible. Companies need to create their own buzz. PR firms can help, but they will never have as much impact as the company or their employees themselves (there are so many examples of employees creating such good PR, it becomes a large percentage of their marketing: Zappos, Google, Starbucks, etc.). Creating buzz for your business should be fun and rewarding so why pay someone else to do that for you? OpenView helped portfolio company, Exinda, create significant brand awareness once they had built a great product offering…details can be found in our influence marketing case study. Cuban himself does an enviable job at this, with recent stints on Dancing with the Stars, ABC’s Shark Tank , and his constant court appearances at Mavs games.
4. Have a good BS detector. If things smell, get rid of them. If things are frothy, sell. Don’t break this rule. This is true in any size business or investment. On a daily basis things can get out of hand and personnel can hold you up and cause headaches. Do you have the ability to make changes on the fly? When OpenView pursues deals, not only do we require background checks on key executives, but we also make sure everything is squeaky clean – it’s one of our values — always have high ethical standards.
5. Engage the customer. Again, Cuban spends a lot of time in the blogosphere, on Twitter, engaging his supporters, fans, etc. Entrepreneurs need to do the same and thankfully there is infrastructure set to make this all possible…facebook, twitter, youtube, etc. These platforms provide an easy channel of communication to your customer, don’t waste the opportunity! Furthermore, the companies who get it are the ones that let their customers do the bulk of their marketing (yet another shout-out for Zappos.com). At OpenView we try and do the same. You’ll find a blog for each and every employee that has been featured as a top VC blog in the industry, a weekly newsletter and quarterly forums, not to mention we are always open to discussing opportunities with entrepreneurs.
It’s not easy replicating the success Cuban has had — but when you create your own luck and opportunities, the road to success becomes a lot more obvious. I wish I could say the same about those Mavericks of his.
Oh, and go Celtics!
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