Mark Cuban is an American entrepreneur, television personality, media proprietor, and investor. He is a named inventor of 11 patent families and 23 distinct patent publications for his inventions. He also owns the Dallas Mavericks, co-owns 2929 Entertainment, and is the chairman of AXS TV. He is also one of the main “Shark” investors on the ABC reality television series, Shark Tank. In 2011, Cuban wrote an ebook, How to Win at the Sport of Business, in which he chronicles his experiences in business and sports.
On October 14th, 2020, Eileen Ye, the Founder and President of the JEC NYC, and Mahmoud Abdellatif, the Vice President of the JEC NYC, interviewed Mark Cuban and asked for his advice on teen financial literacy.
1. What personal finance skills do you recommend we should have before becoming adults and going to college?
“Well, you’ve got to have the basics. You need to open up a checking account. I would do both a physical and a digital from two different sources, because, when you do the physical, it just makes you go through the process of going to a bank and understanding how a bank operates, and that’s always insightful. And then having a digital account simply because you want to understand the implications of having it. And, you know, since most kids have Venmo and Cash App et cetera, you probably are already there. But for those who aren’t, it’s just important to have. And then beyond that, really, there’s a language to business that you want to at some point really take the steps towards learning, you know, whether it’s online, whether it’s self-taught, whether it’s through Coursera. I would at least take an introduction to accounting class and I would do the same thing with finance. And the reason is, as you go forward with your life, particularly if you have any interest in being an entrepreneur, you’re always going to be at an advantage when you understand the language of business, when you can look at a balance sheet or an income statement or a cash flow statement and understand what it truly means, that’s going to give you a huge edge in everything you do. And the same applies with finance. If you’re ever looking to buy a home, if you’re ever looking to make an investment, knowing what an internal rate of return is, a cash on cash return is, et cetera. Those are things that if you understand them, you’ll be in a position to really handle your personal economics and finance as well, but also deal with your career and investment finances as well.”
2. What do you teach your daughter about financial responsibility and being independent?
“She’s got a budget and she’s got to stick to our budget and she’s got to make her own money. She has an allowance, but for any of the extraneous things, she knows that she’s responsible for earning that income herself. And so she’s gotten internships and jobs over the summer. And obviously she has an advantage, just people I know and I can make introductions. And that’s how she got her last internship. But still having her go through the process, collecting the check, those are all things that we really try to instill in her and my middle daughter and my youngest son as well. I want them all to be responsible for their own finances, not dependent on dad and mom.”
3. Do you think the experience of working at a young age has helped to get you where you are?
“Yeah, definitely has, I mean, because it gave me confidence in understanding the basics of business, even when I was nine, ten years old, buying and selling trading cards like kids do today, right. Or shoes like kids do today, I had to understand my cost and what a profit was and how to make gross margin dollars, the sales process and understanding what customers want, understanding how marketplaces work, whether it was a trading card. You know, my Luca Doncic rookie card, to use an example, what does somebody think is worth and how do I find out where and how people value that card and who would be a potential customer? And by recognizing that I have to buy it for less and sell for more, those are all things I learned at a young age that really gave me confidence that I could buy and sell things. And once you can, you know, how many kids that you know that make money buying and selling shoes. Right. Everybody has those friends. Or buying and selling clothes, wherever it may be. That’s a skill set that any kid fourteen to whatever can learn today and benefit from.”
4. Many of our members are interested in learning how to invest money. How should they start?
“Ok, so investing money can mean a lot of different things. We’re just talking about trading cards as an example. The trading card industry, the valuations are going straight up right now, almost in tandem with the stock market. You know, if investing could be investing in trading cards, but recognizing that could be a very volatile market. It could be investing in stocks, but also recognizing that stocks can be a very volatile market. But what I always try to tell people is make sure that you understand what you’re doing, make sure you understand and you have an investment thesis of why you happen to be buying something because nobody sells something to you thinking the price is going to go down. So if you look to buy a share of stock in Google, somebody is selling that share of stock to you, and they’re not selling it because they think Google, the price of the Google share stock is going to go straight up, otherwise they would just keep it. And so you have to understand as much as you can about whatever it is you’re buying and have a concept of what that market is like. And again, your expertise could be in shoes. You know, shoes have been a great investment for people who truly understand the supply and demand. So it doesn’t have to be the stock market. It doesn’t have to be real estate. It could be anything. But the key is doing your homework and being prepared.”
5. Are there any podcasts or news sources you would recommend to high school students who are interested in business?
“Well, if you want to learn more about business, Jason Calacanis has got a startup podcast where he talks to entrepreneurs and investors and why they invest and why they started the companies they did. And so that’s probably one of the best. Honestly, I don’t listen to a lot of business podcasts. I listen to a lot of technology podcasts. I always listen to This Week In Machine Learning. But you guys don’t want to geek out, you want to stay out in business. And so, yeah, generally anything, whether it’s a podcast, whether it’s a YouTube channel, anything that’s of interest to you, because you can never learn enough. You know, the more you learn, the greater advantage you will have because most people don’t put in the time to learn, just like you’re taking the time to do this. I’m sure you’ve had a lot of friends say, oh, what a great idea, the Junior Economic Club. Right. You know, I really want to do something and then they do nothing. And the difference is you guys are entrepreneurs. You’ve actually created your branch of this club. You follow through. You’re doing things, and that’s a credit to you. When I was in school, I had junior achievement and that’s what I got involved with. And we learned how to start a company and learned how to do these things. And so, you know, whether it’s your club or others, podcasts related to investing, podcasts related to startups, anything that looks interesting to you, do it because that’s how things get better and that’s how you learn.”
6. Could you share with us a major risk you took in your career and your view on risk-taking at a young age?
“Yeah, you know, when I first started companies right out of school, I had gotten a job and got fired. And, you know, at that point, I had five roommates. I was broke as a joke. And so I had nothing to lose. And often my motivation was, I mean, how bad could it be? Right. I could get a job, but I wanted to start a company. And if I failed, well, then I’ll get a job again. But I mean, really, I just wanted to be an entrepreneur and I wanted to start a company. And I just knew that as long as I did the work, did the preparation, like we talked about before, then I could pull it off. But look, risk is all relative. If you got nothing to lose, there’s only upside. If you’re young, you know, you’ve got time. Time is very available to young kids. And so why wouldn’t you start a business? I mean, some of the greatest companies ever have been started by high school kids. I remember there’s a company, Dell Computer. And when I was just out of college, Michael Dell was still in college and he started it. And now it’s tens of billions of dollars. And he was a student. And there’s no reason why you can’t create a world class company while you’re in college. Bill Gates with Microsoft, they were all in high school when they started. Why can’t you start something great? Why can’t anybody watching this start something great? But the key, the one thing you have to do, you have to start. You have to take that first step. Otherwise it’s just a dream, and you can’t spend dreams. But if you take that first step and you put in the effort, anything is possible.”
7. How have innovations in technology changed the way that you invest?
“The world has changed dramatically. I mean, when I was a kid and first started trading, it was mostly manual. You know, there were people in pits in the New York Stock Exchange or in Chicago that would cry out, “I’ve got one hundred shares of this for sale,” and someone says, “I’ll take it.” And then there was a convergence, and in the 90s, it went somewhat digital during the early days of computers and the Internet. But it was still a hybrid. And then actually more in the late 2000s and early 2010s, that’s where we really started to see high speed trading and high frequency trading. And that really changed the game. And you start now to see things like Robin Hood. And so trading has become a completely different beast. You just have to recognize that how you trade is going to be a little bit different. And then on the other side, in terms of picking stocks and understanding. Recently, things have changed with SPAC, but up until recently, the number of publicly traded stocks has actually dropped. And so back in the 90s, there were eighty five hundred and now there’s closer to four thousand, give or take, and the amount of money invested in stocks has gone up considerably. So there’s a lot more money chasing a lot fewer stocks. And a lot of those companies have a lot of tools available to them. And so they may use AI to try to analyze all data coming from a company. They may use AI as input to models, or they may use output from their AI linguistics programs that’s looking at every piece of written text as input into their models to try to determine what trades are made. And all of that is automated. I mean, it’s not even touched by a human hand. And the bigger point there is there is going to be a lot of quantitative analytics in terms of buying and selling stocks, derivatives, whatever it may be. But I still believe now, particularly as the number of publicly traded stocks is expanding, if you do your homework and use the tools available to you online, you can get an edge if you truly understand a company because there aren’t enough people doing in-depth analysis of companies these days.”
8. What advice would you give to a young person interested in technology?
“Learn. Try. Do everything. My 11 year old son is a little geek like I am. And so I just got him a Raspberry Pi board and I’m trying to get him to sit through, putting it all together and understanding how it all works. You know, I’ve worked with my girls on Hopscotch and creating applications there, and Hopscotch actually is getting ready to create a marketplace where you’ll be able to create apps on Hopscotch and sell them. And so when it comes to learning technology as a kid, just find something that’s interesting to you. You may be really excited about tick tock. Well, what makes TikTok so compelling are their algorithms and their AI You know, traditionally in social media, Instagram and, you know, back in the day, Facebook more so than now, they would present you things based off of the people you follow or based on chronology, more like Twitter. Now with computer vision and computer recognition and AI, TikTok knows what you watch. And if you watch one video 20 times, it doesn’t matter who you follow or if you follow anybody, they’re going to give you more videos like the videos you watch a lot. And to me, if you find something that is interesting to you and try to understand the technology behind it, like how do the TikTok algorithms work? how does TikTok use AI to present new content? How does TikTok filter their content to keep it safe? Those are the types of things that I suggest to kids. Find something that’s close to you or personal to you and understand how that technology works. And that’s a great way to start getting excited about technology. And just take classes online. Take Coursera classes, take tutorials, try to create things that are interesting to you. It might be building a computer, it might be writing an app, it might be writing some software, it might be doing some basic AI modeling. Whatever it may be, find something that’s interesting to you and go for it.”
9. We’ve been living with COVID-19 for around 7 months. Can you share with us your outlook on its impact at this stage?
“I mean, it’s been brutal. I mean, you guys are in New York City. You know how tough it is. You know how tough it is to try to go to school wearing masks, social distancing. You know, your natural instincts are to be human, to hug and touch people and be close. And just trying to deal with that has been very, very difficult for everybody. You know, we all worry about our parents and our grandparents. And you worry about your friends and other people in your family. Will they catch it? And what happens? If you live in New York, you know somebody who’s caught it. If you live in any major city, you know somebody who’s had it and had good outcomes and bad outcomes. It’s frustrating. It’s confusing and it’s scary in a lot of respects. But that said, I happen to know people that are working on the vaccines, and I’m very hopeful that these vaccines are going to work and they’re going to work very well. And over the next four to six months, we’re going to see the vaccines really take hold and have an impact for the best. And then hopefully by next summer, you know, the pandemic of 2020 will be a bad memory. And I’ll give it some context. Imagine 1918. Right. One hundred and two years ago. Prior to 2020, we really didn’t think about pandemics at all, did we? And yea there were discussions and there biologists and virologists that talked about it and warned us of the risk. But in our day to day lives, you didn’t think about it. Your parents didn’t think about it, your grandparents didn’t think about it. Which means, even though they didn’t have a lot of technology or science back in 1918, they found a way to get to the other side. They found a way to get through it. And at some point it just became a distant memory and that the same thing will happen here. I’m very confident of that.”
10. What advice would you give to a current high school student worried about the pandemic and its impact on the economy and jobs?
“I wouldn’t worry about that at all. I would just focus on what you can control. What is it that you like? Because, you know, when you apply for jobs or you apply for college, one of the questions they’re going to ask if you sit for an interview is, What did you learn during the pandemic of 2020? What new skill sets did you pick up? This is a time when you can’t do as many things as you might have done in the past. So now’s a great time to use it to learn. You know, I do tutorials. I make sure I read. I’m trying to pick up new skill sets because it’s an opportunity, you know, where in the past I might have done A, B or C, now I’m gonna try to take that time to learn.”
11. Today, we live in a very different world from our parents’ generation. There was no internet or social media 50 years ago. You have been involved in technology and investments throughout this time. Knowing what you know now, what are the important things our generation should keep in mind for the future?
“Everything is going to change. You don’t live in the world you’re born into. You guys are, what, 17, 16? So you lived before iPhones, you lived before wireless Internet, you lived before people even begin talking about self-driving cars. You lived before 5G. You think it’s going to stay static? No, it’s just going to keep on changing, and the rate of change is only going to accelerate. The one thing I’ve learned over all those years is, what seemed fast early on looks really slow in hindsight. And what seems fast today is going to look really slow tomorrow. And so you have to be a lifelong learner. One of the things that’s made me successful is that I love to learn. I love it. Every single day I’m spending hours trying to learn something new or improve my skills at something technology or business related. And so by always being a learner, as things changed, that created opportunity for me because most people don’t like to put in the time. You see your friends, right, they’re playing Call of Duty or CSGO or Fortnite or whatever. And not that that’s bad, there’s a lot of good that can come out of it. But at the same time, that time also creates opportunity. And so the moral of the story is you don’t live in the world that you’re born into, and change is only going to accelerate. So you have to be a lifelong learner. So as things change, you’ll be prepared.”
