Mark Cuban on the company that made him a billionaire: Why I knew it would succeed despite many naysayers
In the mid-1990s, just before the dot-com bubble, Mark Cuban was approached by a friend about a business idea.
As a fellow sports fan, his friend, Todd Wagner, pitched Cuban that it would be lucrative to start an internet audio company where users could listen to sports games online. Sold on the possibilities, Cuban agreed, and in 1995, the duo created AudioNet, which later became Broadcast.com.
At the time, the internet was a very new concept to most people, so Cuban and Wagner faced many critics who didn't believe the company would succeed.
"When I'd tell people the vision, they'd say, 'You're crazy. I'll just turn on my TV. I'll just turn on the radio,'" Cuban said on a recent episode of the "Starting Greatness" podcast.
"People would laugh at me."
But that didn't matter to Cuban.
"I knew this was a winner," Cuban said of Broadcast.com. "I had no doubt in my mind."
For one thing, Cuban saw a market for streaming, "which we called network broadcasting or internet broadcasting back then," he told "Starting Greatness."
Cuban said he "firmly believed that streaming would take over all of television," because he "believed in the price-performance curve for PCs [personal computers] and broadband, and that as PCs would continue to get more powerful, the price of disc drives and of bandwidth would continue to fall."
That, Cuban said, "was a fundamental underpinning for streaming."
"I had that vision that we would follow this path."
Once the co-founders started to market the company, Cuban said he noticed a growing demand from those who wanted to listen to sports games or music during their workday, but couldn't keep a radio on their desk.
"I saw very quickly that user adoption was enormous," Cuban said. "No one used it and said they don't need it."
Then, as Broadcast.com added the ability to watch video with audio, "most of our revenue came from corporate events streaming and all-hands meetings," he said. That was "the real money-maker for us."
Broadcast.com also had a growing consumer base, because it was simple to us.
"I knew that in order for you to listen to OU [University of Oklahoma] sports, I was the path of least resistance," Cuban said. "I knew that anyone who wanted to watch or listen to a Mavericks game, I was the path of least resistance."
"There may have been some competing to try and do the same thing and copy us, but we were the only path of least resistance."
In 1999, Broadcast.com was acquired by Yahoo for $5.7 billion in stock.
That's why, Cuban said, "if you have the technology working in your favor, if you're the path of least resistance and if you have consumption, then you just got to go for it. Those are the pieces that create a moat that are really hard to replicate."
The experience led Cuban to be more open-minded and trust his gut to invest in companies or ideas that others may find "crazy," he said. Today, that includes his investments in companies centered around cryptocurrency and blockchain.
Investing in those companies today has "the same feel of the early days of the internet," Cuban told "Starting Greatness."
"You've got to really believe in your product" to succeed.
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."
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