Mark Cuban

A Whale in a Shark Tank

In the real world, a Shark is no match to a Killer Whale. According to ichthyologists — A killer whale can kill the great white in less than five seconds. What gives the whale an edge over the oldest and deadliest predator?

A Killer whale (which is a mammal) has a brain three times bigger than the brain of a human being (also a mammal) and several times bigger than a Shark’s brain (which is not a mammal). A whale’s ability to learn and socialize (essential tool in hunting) matches that of human beings.

But then why bother about whales and sharks? Hang on for a minute more.

Today, I watched the tenth season of Shark Tank. This American TV series is essentially a platform for aspiring entrepreneurs, who can pitch their ideas to investors, also referred to as ‘Sharks’.

While Sharks they are (especially Kevin O’Leary, when it comes to valuations); however one person, who is way beyond this ‘Sharky’ definition, is Mark Cuban. We can rather call him ‘a Whale in the Shark Tank’.

Valuation is the last of Mark’s concerns (I would agree). Mark’s judgement about people, businesses, trends speaks volumes about his experience in the world of business and investment. He is is forthright and free from any pretense.

There is always something to learn from Mark’s comments and investment decisions. Having watched the latest season of Shark Tank, I am making a simple attempt towards summarizing his investment philosophy:

(1) Great minds, Invest alike: As with many Investment Geniuses, and notably Warren Buffett, Mark has time and again emphasized on the importance of higher gross margin and wider moat. Such a firm, according to Mark, is not reliant on higher volumes to recover the costs.

(2) An eye on the future: Mark is always two steps ahead in seeing opportunities, where others don’t: Biotech, Motion Sensors, Health foods, Alcohol (world surely needs escape from heat and freaks).
He is so futuristic, that he acknowledges the overwhelming presence of tech, in turn helping him to go retro and investing in companies based on real life experiences (horror production, click albums).

(3) All or none: Mark assigns utmost importance to an Entrepreneur’s skin in the game. What does not work for Mark? Businesses which require owner’s presence on the floor, in turn inhibiting scalability (he prefers grab-n-go outlets over large fine dine restaurants). Also a big no to moonlighting executives, unless you can prove your commitment (Sanaia apple sauce).

(4) Risk and Return: According to Mark — The best route to market is direct online. We have seen him highly recommend SEO (search engine optimization), particularly targeted towards Amazon. At the same time, he seems averse to retail based expansion, citing inventory management risks.

(5) Risk and Return… Talking of risks, he tries to stay away from infant products. He is also not so much of a fan, when it comes to products which require detailed demonstration OR heavy marketing investments.

(6) More bang for the buck: All the above points boil down to 2 key parameters:
(a) Achieving scale without guzzling cash (High Return on Investment),
(b) Understanding of what works in the world and what doesn’t.
Leveraging on the above two, Mark often finds new applications for the existing product, bringing a completely new dimension to the pitch and a new revenue stream to the business, without incurring additional R&D costs. Few instances are: Cycloramic (link), Vade Nutrition and many more.

(7) Not just a predator, but a sensible hunter: Mark comes out in full support for entrepreneurs who:
(a) Have given services to the nation at large (Link to R Riveter handbags),
(b) Work for a noble cause (Link to anti-bullying app by Trisha Prabhu),
(c) Come from lesser means yet have robust ideas.
(d) Budding young entrepreneurs, often as bold as Mark (Link to DIY Cold Brew Coffee).

Kudos to Mark; it is truly an Ocean of opportunities to grow his billions and help others in the journey.