5. Funding will be on a monthly basis. If you dont make your numbers, the funding stops
If these are true, unless you're completely poverty-stricken, why whould you need Mark Cuban? Perhaps we're talking large scale investments, but the whole emphasis on "sweat equity" suggests not.
10. I will make no promises that I will be available to offer help. If I want to , I will. If not, I wont.
11. If you do get money, it goes into a bank that I specify, and I have the ability to watch the funds flow and the opportunity to require that I cosign any outflows.
I'm reading this article as "if you can build a successful business in 90 days, I'll give you some cash, and then it's mine....sucker."
From the hip, I'd say it's a helluva PR opportunity, a chance to be in business with Mark Cuban (which some folks might really value), and would allow you to take a bit more of a risk than you otherwise might be able to.
Like YCombinator, I'd imagine selling him a bit of equity would increase your shot at success.
I don't think Ycombinator is as restrictive. In this case the bit of equity seems to involve a lot of control, including monthly reports on financials, and control over hiring and day to day duties (that's what the bit about "no managers, everybody works" implies).
Yes, but Mark Cuban has to offer better valuations, no one but the micro seed funds can reasonably invest 20k for 5%. And if Mark Cuban really wants to micromanage my company, I'd humor him.
Who says he has to offer better valuations? The last line seems pretty relevant - "Im sure I will come up with more rules as I see what comes along, if anything."
He'd have to nail down the rules at some point--you can't sign a contract that isn't written. So, you'd know what you're getting yourself into before getting into it.
I've stopped taking Mark Cuban seriously long ago. The guy got lucky once, and mistakes it for business genius, it is that simple.
Sure, if you have a couple of billion lying around it is easy to tell other people how to solve their problems. But unlike say Warren Buffet I've yet to see him do something that commanded my respect.
I'd challenge Mark Cuban to follow his own plan, pretend he's broke for 60 days and then show that by his own measure he can make it work.
If he succeeds with that he'll definitely have me take him serious again, but I doubt he could and until that happens this is just another "I'm rich therefore I blog" addition to the S/N ratio.
Before Broadcast.com, he started a computer company (MicroSolutions) and ran a very successful hedge fund. After Broadcast.com, he bought the Mavs, started HD Net, formed a charity (Fallen Patriot Fund), actively invests as an angel and cofounded numerous movie production & distribution companies.
Broadcast.com was certainly lucky, but Cuban was already a millionaire long before becoming a billionaire.
And on top of that, when he talks, it makes sense! I mean, it feels like what he is saying is true even though I don't personally have an evidence to support it. The numbers could be anecdotal, who knows. In 6 Billion people, there are probably going to be one or two or 10 people who make every "wrong" decision and still become billionaires.
It's just that Mark Cuban seems to attribute most of his wealth to Mark Cuban and a very small %age of it to luck whereas it most likely is the other way around.
That's true, but I wonder what I would buy for the money that helps me grow the business faster within 90 days. Employing people is excluded, renting office space is useless in that time frame, so the only things I can imagine are buying rights to something or buying actual physical merchandise.
Buying services, i.e outsourcing much of the work, is just a way around the no employees rule. Labour cost is probably the biggest chunk of most growing software startups' cost and that's excluded.
My conclusion is that it needs to a be rights based business. Buy rights to something, add value quickly, and resell the results.
Where did you get the "no employee" rule? If I understood correctly the whole point of this was to create jobs, but that everyone hired needs to work, not organized into layers of management.
To top it, if it is a type of business that can be built in 90 days, I bet before it even gets reviewed, someone else would get it live and for no equity shelled. So much for open source.
The protection there is investment. If your 90 day to profit business needs a $30k investment and your competition can't raise the cash, then you effectively have no competition.
In any case, I think the reason for his posting is just to get people moving. It certainly made me feel pumped up about the idea I got this morning!
Who knows if this concept will work, but it's an intriguing idea. And I like it that in the middle of a supposed depression, the two top links on HN right now are offers of funding for new companies.
When I was in college, he returned an email of mine. I asked him if he was any happier now that he could have anything in the world. He told me that he was just as happy when he lived off of happy hour food and lived in a dumpy apartment with his best buds.
The United States government should follow his lead. Giving more grants and low interest loans to startups.
The startups, the entrepreneurs, the risk takers, the pragmatists, the efficient and rational are what we need right now to pull us out of this mess. Instead the govt is giving all the money to the rich, inefficient, wealthy elite, who lied to get us into this mess in the first place.
Give some money to those with vision. How much could we here on this list do with $700 Billion? The banks aren't doing anything with it... We just wasted it...
The Government should do things when it's not going to happen otherwise. Like the military. Or arguably providing free health care to everyone.
But when the Government isn't needed, then it shouldn't be used. Think how inefficient Microsoft is. Then realize Microsoft isn't actually very bad as big companies go. Well, the Government is an order of magnitude worse than the most inefficient huge companies.
The Government is bigger, has more layers of management, rules, and paperwork, doesn't have to worry as much about making a profit, and there's less accountability and responsibility for decisions. If a normal company messes up, it pays for the mistake; if the Government messes up, the tax payer pays. Those are bad traits that should be avoided when we can.
Well, the Government is an order of magnitude worse than the most inefficient huge companies.
The Social Security System is one of the tightest ships in the world. You can't even get index funds with lower management fees in the private sector, because profit wants to be made and should be made.
The link says social security is short 7 trillion dollars of 2008 money to pay for its obligations over the next 75 years. 7 trillion dollars is a lot of money... Whatever the reason this happened, doesn't it indicate the less Government the better, to lower the risk of them losing trillions of dollars?
I'm sorry, it was a bad idea to bring up Social Security. My only point was that the management of the legal requirements for the organization are very very small relative to the amount of funds that are flowing in and out.
I do agree that there are fundamental flaws in the Social Security System and I have said many times, though not here, that I will gladly pay into social security and never receive any benefits. I don't see any other solution and I am volunteering to take the hardship.
If enough people join me, we can fix social security. Like a balloon that slowly deflates through controlled exhaustion...
No, social security was a good example and a good idea.
Does anyone remember the parody of Gore on SNL saying "Lockbox"? Does anyone remember why?
See, GM is in trouble (and claiming its workers cost $75/hr) because it had huge pension obligations, but instead of saving some of its revenue for when the chickens came home to roost, it'll will just bank on the company's revenue growing without bound (like homeowners banked on their property values).
The only problem is when this doesn't happen.
Now, the government, instead of spending its money wisely and saving it for the social security insolvency that hangs over our heads, decided (under Bush II) to issue one-time "tax rebates" to stimulate the economy.
Anytime we actually have money to pay into social security, we use it for some stopgap measure like paying down our trade deficit, tax rebates, etc. If we followed a rational funding policy for Social Security, both in good times and in bad (like when you make steady payments on a mortgage) then we wouldn't be worried about it.
7 trillion / 75 on the other hand is less than 100 billion a year. There are some other ongoing programs I could mention to put that number in perspective.
Also, while Social Security may be short now (or in the first break-even year, 2013 or so depending on who you ask, but even then the program won't be broke, it will just be spending more than it receives) for demographic reasons it will be long later for the same demographic reasons.
The larger problem of debt forecasting over an even shorter time horizon (remember when we had a ten-year surplus of trillions, at the end of Clinton's second term) makes me dubious that even your 7 trillion number will be accurate.
The first link seems to be an argument against planned economies. I think pj was suggesting something much more modest - something along the lines of a government run version of YCombinator. It seems to me that a group of experts giving many small grants or loans to a wide variety of startups would be a very good idea. (It seems to be working pretty well for pg et al.)
See, VCs, angels et al are investing their money or other people's money for the sole purpose of turning it into more money.
A government run investment firm can have a much broader view of success than simply 10x returns on capital investment.
Roads, bridges, and dams themselves for example are not profitable, but they enable a more productive society. The benefits of parks, museums, etc are largely unquantifiable, yet there is a perceived benefit.
A public wireless cloud infrastructure for example would enable synchronization of traffic along major corridors, reducing exhaust, fuel consumption, and time delays. It may not produce a profit, but it will improve our entire economy. We could automate 50,000 miles of rail roads, 20,000 miles of interstate. That would do a lot for our economy and our productivity.
A project like that though, is probably much bigger than any VC firm or group of angels. Also, we don't really /want/ competition to build something like that, we want collaboration. Private capital is competitive. How do we get everyone working together on benevolent projects that may not turn a big profit directly, but could enable social profit for the whole?
Another famous argument by Mises is that it is hard to figure out what is a socially profitable investment in absence of market prices. You pretty much just have to close your eyes and guess. The government currently doesn't justify each of the thousands of projects it has in such a manner.
I'm assuming we want the benefit of each project to be greater than the cost. The bigger the program, the more unlikely that is to be the case.
The critiques of the planned economy are applicable here.
The critiques of the planned economy, I'll have to look that up. Sounds interesting.
I see your point. I suggest we reduce risk by investing in many small projects run by small numbers of individuals, but very focused.
To the first paragraph, I have this sense, no numbers really, but a sense that collaboration is becoming more required over time. Look at nobel prize winners and how often prizes are shared over time. I don't know what that function is over the long term, but we appear to be in an upward trend over recent history.
Collaboration at this level is difficult on a global scale and across national and linguistic barriers.
Which ideas are worth rescuing from the global valley of death? Big ideas that will or will not affect billions of people for decades to come. Some who haven't even been born yet.
> A government run investment firm can have a much broader view of success than simply 10x returns on capital investment.
Yes, a govt run investment firm can look for opportunities to
(1) grease the right palms so that a specific congress critter is re-elected
(2) Make sure that a congress critter's friends make money.
(3) Employ said congress critter's idiot cousin.
....
And, the folks running said investment firm won't take a hit if none of their investments make sense.
And, the "investment" money is provided at the point of a gun so whether or not you think their plan makes any sense, you get to pay for it.
That's pretty different from what we're talking about, but still looks quite interesting. The legal issues seem like the big problem with something like that. If you could figure out how to make it work... well that could be pretty huge.
Governments aren't good at things like this, but I don't agree with the generally proposed reasons. I think governments simply can't operate with enough discretion, and when they do operate they are trying to achieve some political end, rather than a profit.
I think governments can be quite efficient at achieving their goals, its just that the goals of politicians and bureaucrats are not aligned with the market.
The thing is, even if you believed that the government would do a reasonable job of investing, the money is either going to come from issuing bonds (increasing the supply of attractive low risk investments and proportionally decreasing the attractiveness of high risk investments which cause growth), or they're going to already have it from taxation, much of which has come from money that would have been invested anyway.
While I'm certainly more in favour of the government giving e.g. entrepreneural low interest loans than bank bailouts, I can't help but think that the money would have been better spent had it never been removed from circulation in the first place.
How about getting entirely rid of tax on businesses until they issue dividends? So the money only gets taxed when it's withdrawn as profit (and this itself is only necessary to tax foreign investors). Businesses are on average quite profitable, so why take away money that they're planning to reinvest? It will almost certainly be reinvested wisely (because they were already profitable, they presumably know what they're doing).
I am having somewhat of a hard time figuring out how this "stimulus plan" helps the economy, as it appears it's intended.
If a startup is able to reach profitability within three months, this startup surely wouldn't need Mark Cuban's money to move forward and create jobs at some point in the future. They would have a rather big chance at succeeding even without this extra cash.
Mark presents this initiative as doing something for the greater good and the economy, however investing in companies that need to be profitable within three months (assuming funding will stop if they don't reach profitability within that time frame) is not exactly a risky investment and looks more like an easy way into something new for Mark.
"I am having somewhat of a hard time figuring out how this "stimulus plan" helps the economy, as it appears it's intended.
If a startup is able to reach profitability within three months, this startup surely wouldn't need Mark Cuban's money to move forward and create jobs at some point in the future."
Not everyone has a bankroll sitting in a savings account ready to start a business. Mark's idea solves that.
And even if a person does have that bankroll, he may not want to invest it in the new business. Recessions don't end overnight because people hoard instead of spend money. The worse things get, the more people want to save for the long term, which prolongs the recession. Mark's idea solves that case, too.
Mark will fund promising ideas which need the cash now and can put it to good use. The cash he gives will be mostly gone by 90 days. That cash is a direct injection into the local and national economy.
So what gets accomplished is:
1. a possible wealth generating/job creating business is started
2. spending occurs when the natural inclination is to save
Both will have stimulative effects on the economy.
Really depends what the scope of your project is. I'm a developer, I could build a site for the cost of hosting (and time). If it can make a few bucks a month its "profitable". But you still have a ways until you are generating enough revenue to have a payroll, benefits, an office, etc.
No one really knows what the scope of his investment is. Mark is a smart guy, I'm sure this is a testing stage. So, he gives you a few thousand dollars (if that) to "test" for 90 days. If it has potential to make money, who knows where it could go.
You nailed it. It's a great local stimulus and it could put a bunch of people back to work, locally. The condition to be sustainable means that he doesn't want to pay your salary for more than a few months, while you open your store.
The fact that it's open means every person in every town can open the same store and succeed as well, without directly competing.
Here’s the thing. If you’re a person with a "big idea" that idea means more to you than just something that popped into your head. It’s your hope. It’s what may be your big chance one day. So it's a big deal to you.
He’s asking people to basically give up on that dream. Since it would be easy for the idea to be stolen by someone with more resources you basically have to renounce the idea when you reveal it to the world. In return for that sacrifice you might create a company that would, at best, produce a minor positive impact on the economy as a whole.
Which is the kicker as far as I’m concerned. No company created like this is going to save the economy. At best you’ll generate around a hundred jobs in an environment that’s shedding hundreds of thousands a month. Meaning even the most altruistic person will have to get over the fact that they won’t be doing all that much good with this.
Seen like that I don’t see many people taking him up on this offer.
It's tempting to a degree, but I think most folks are reluctant to themselves out there in such a public way, especially to be scrutinized by others, for no payoff. So as usual, it's a stunt of his. But when you're that rich, I guess you can do that.
But that’s sort of my point. Mr Cuban’s rules limit the scope of what you can do. If you have to break even within 60 days than you can’t have that many resources (a 2 person operation at best I would assume). So say you come up with the idea, he funds it, and you get to work with one other person.
Now what’s to stop some company who sees your idea (which is probably worth stealing since Mr. Cuban liked it) and puts 6 people on it for the first 2 months. No matter how well you execute it’s hard to beat a team 3 times your size who are working on the same basic idea.
Because even if you execute better they can self correct fast enough to kill you off.
I think we're pretty much on the same page. The only distinction I would make is that I think more people + more money + a shameless willingness to copy your competitors good features might equal better execution.
You're making the classic techie mistake of assuming that any given niche can only support one business. Except for a vanishingly small number of historical anomalies,that's just not true!
Meaning even the most altruistic person will have to get over the fact that they won’t be doing all that much good with this.
Perhaps not, but it will help THAT person. Meaning that now there's one more person (and his/her employees) who are not on the unemployment rolls.
Just because an idea doesn't save the world doesn't mean it's not a good idea.
And for those of us who come up with multiple ideas each day, and are not particularly attached to any of them, it's a great way to possibly get funding if needed.
If you can get that launched and advertised, you'll win for sure... biggest issue I'd imagine is that the wedding industry is a local one, and you'd need lot's of vendors in the queue for the brides to find things worth their while.
This is the most arrogant thing I've recently read (though maybe, he is laughing really hard now as many people have bit the bait). Seriously, wow.
What is someone's incentive to publicly post a biz plan+idea in a blog comment over there? Apparently, a tiny amount of money and likely no other help from Mark, wow.
Yea, but besides Google, Facebook and YouTube havent been profitable in 5 years, let alone 90 days. I'm pretty sure that if youtube doesnt come up with a viable business plan in the next year it might not even be worth keeping. Facebook on the other hand has serious revenue potential.
> Facebook on the other hand has serious revenue potential
if it can survive the recoil from its sudden popularity,
and if it can survive the onslaught of competitors. But those are both big if's.
Someone else in the comments (on Cuban's site) said something similar. His response was to the effect of, "I have no interest in investing in those types of businesses. They take time to build. This is about hitting the ground running" [link to comment](http://blogmaverick.com/2009/02/09/the-mark-cuban-stimulus-p...)
Sounds pretty straight forward. The three you mention are ad based, he wants no ad based businesses.
I like this Guy good will to always come up with win-win situations all the time with sincerity and open mind.
Just wonder why would be the reason for rule #2: He will not put his money on any business getting revenue from ads; I do not see Google going bankrupt.
For one thing it will probably drastically reduce the number of applicants. More importantly perhaps, is it will force people to come up with viable ideas for products that get sold directly to the end-user rather than just expanding the number of advertising channels.
Web 2.0 fails because there is no business model. Ad revenue works for some businesses, but for the majority it doesn't (they live of VC funding and hope for an acquisition). There is also little chance that you could attract enough sustainable traffic in 90 days to create a worthwhile revenue stream.
I think it's just a post he's using to drive traffic and mock people for his own entertainment. I think any serious idea posted in the comments would probably get deleted.
Send me all your business plans! I won't sign an NDA and neither will anyone else... but at least someone will profit from this (not necessarily you however)...
4. It must be profitable within 90 days.
5. Funding will be on a monthly basis. If you dont make your numbers, the funding stops
If these are true, unless you're completely poverty-stricken, why whould you need Mark Cuban? Perhaps we're talking large scale investments, but the whole emphasis on "sweat equity" suggests not.