According to billionaire entrepreneur Mark Cuban, taking a different approach when launching a business can lead to more success than relying on raising capital. During a recent Southby Southwest (SXSW) panel discussion, Cuban emphasized the value of starting a business “with as little money as possible” and bootstrapping it as much as you can.
In the session titled Unleashing the Entrepreneur In Everybody, Cuban provided some insight on raising capital.
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“The best way to start a business is with as little money as possible,” he said. “Preferably money that you saved up or with no money. You’re selling a skill you have and you start slowly. That’s what I’ve always done. Starting with nothing is where the big bucks are made for real.”
Cuban said that America is based on entrepreneurship, a quality that sets the United States apart from the rest of the world. While intelligence exists globally, the culture of entrepreneurship isn’t as prevalent in many other countries.
Cuban notes that, in times of adversity, innovation thrives. When people face challenges and their backs are against the wall, they tend to become more innovative, finding creative solutions to overcome obstacles. This resilient spirit is a key driver of entrepreneurship, further contributing to America’s position as a hub for innovation and business development.
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Cuban’s perspective comes from his extensive experience in investing in startups, including those featured on ABC’s “Shark Tank.” He pointed out that while external funding may be essential for certain companies with established momentum, many entrepreneurs adopt the mindset that they must immediately seek investment when starting a business.
Airbnb Inc., Uber Technologies Inc. and Facebook, now Meta Platforms Inc., are just a few examples of bootstrapped companies. They were all started with very little money, and they grew into multibillion-dollar businesses.
Cuban’s advice goes against this conventional wisdom. He suggests using personal savings to kickstart your business, allowing you to have greater control over your destiny. Retaining equity and control is key, as it leads to a more significant potential upside where substantial profits are made.
The self-made billionaire’s success story highlights this approach. He founded his first company, MicroSolutions, using his own funds, later selling it for $6 million. He and his friend Todd Wagner also invested $10,000 in a small startup, Cameron Audio Networks, and later took over a majority of its equity, transforming it into Broadcast.com, which was eventually sold to Yahoo! for $5.7 billion.
Examining the world’s richest people further supports this strategy. For example, Elon Musk, with a net worth of $225.3 billion, owns about 23% of Tesla Inc. and 74% of Twitter Inc.. Jeff Bezos, with an estimated net worth of $161 billion, holds “a bit less than 10%” of Amazon.com Inc.
Cuban advises entrepreneurs to hold onto their company’s equity as long as possible, waiting to sell only when there are no other viable options. He’s observed instances where people sold their companies for substantial sums but ended up owning a mere 2% of the company after all was said and done.
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This article ‘Starting With Nothing Is Where The Big Bucks Are Made’ – Mark Cuban Says The Best Way To Start A Business Is With As Little Money As Possible originally appeared on Benzinga.com
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Source: https://finance.yahoo.com/news/starting-nothing-where-big-bucks-220843720.html