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💡 "What Investors Really Look For”

Masters of Scale with Reid Hoffman

Photo by Jon Tyson / Unsplash

Table of Contents

Host: Reid Hoffman
Guest: Mark Cuban, Entrepreneur & Investor
Category: Biz & Tech | 💡 Business Lessons

Podcast’s Essential Bites:

[13:54] “When you're broke and you have to come up with something, you've got nothing to lose […]. You've got to solve a financial problem. You recognize that if you don't solve the problem, you're stuck. And so if you try and you fail you're back where you started, you haven't lost anything so why not try it, right? […] And I don't think people realize that sometimes the best time to start a business is when you're broke. […] You got nothing to lose. And if you're looking to be an entrepreneur, you don't want to take on a lot of debt and you know, the car, and the house, or the expense of this or that, that living like a student puts you in the best position to be an entrepreneur.

[31:06] “By that third year [of Shark Tank], we were one or two all the time for shows watched by families together, it was incredible. And so once I understood that, then doing the show became a no brainer and that's why I continue to do it to this day. It's not because I get access to these great deals, even though some are good, some are bad, but just the idea that kids are watching, or parents are telling me, you know, “now my kids understand what I do when I explain that I'm in this industry or that industry.” And so that's really rewarding and that's exciting for me.”

[32:24] “[P]articularly the Silicon Valley ethos is come up with that idea, get an investor. That's not how the real world works. […] You know, it's: have an idea, do some of your homework on it, come up with a prototype or an MVP and see if you can find a customer. Because for 99% of companies that start up, you're not going to get an investor, and you live close to the people who are going to be your customers to help your business get started, particularly if it's a service-oriented business. And so Shark Tank really conveys that message, and we try to reiterate it over and over and over again.”

[38:06] “Raising money is not an accomplishment, it's an obligation. It's more about getting someplace where you can solve a problem and do something unique and special, and once you get to that point, yeah, a little bit of investment because the less you take the more you own.”

[39:49] “Each person comes to investing with their own set of why they're investing and what this investment means to them. This could be something purely emotional, a lifestyle that they want to live. Truly understanding the person that you're sitting across from asking for money and being able to articulate how this investment will help them achieve their goals is just as important as asking for it. I think learning that and learning what is important for the person you are asking to invest is very important.”

[40:30] “I always tell people you got to be brutally honest, you've got to kick your own ass. You've got to know how a competitor can destroy you because once you understand what can destroy your business, you know what you need. And once you know what you need, then you can start evaluating potential investors. And part two to that is you have to do your homework, […]. I'm not going to be the same type of investor as Kevin O'Leary, or Reid Hoffman, or anybody for that matter […]. We're all different and have different areas of skill and where we're good and where we're bad.”

[42:08] “People always ask: How can I start a business? Should I start a business? And my first response is if you have to ask, you're not ready. Because entrepreneurship builds from a sense of confidence not a sense of uncertainty, […]. That you can solve a problem, that you have something unique, whether it's the technology or whatever. […] And if you have that commitment to do at night, on weekends, to give something up […] that's how you start building that base to know that you can be an entrepreneur. If you're not willing to do even that, you're not an entrepreneur. Because there's always a measure of sacrifice involved no matter where you are, I don't care if it's you or I starting a business, there's something we were doing that we gotta stop doing in order to be able to do this.”

[43:32] “No business has ever succeeded without sales. And some of the biggest mistakes in investments I've made is the kids were smart, the people were smart, but they had no sense of customers, and accomplishment, and selling, and achieving customer goals, and putting yourself in the customer's shoes. […] There's no business in the history of businesses that there hasn't been blood, sweat, and tears, and you've had to earn what you've accomplished, […]”

[45:03] “What I tell people is it doesn't matter how many times you fail, you only have to be right one time. Just one time, then you're going to be called an overnight success, be called lucky, but you're going to be laughing all the way to the bank […].  [Y]ou recognize that failure is just an issue of time more than an anvil that's holding you down.”

[45:04] “[O]ne of the things, I try to spend more time reading about failed companies than successful companies. […] [H]aving an understanding of not just what successful companies have done, but those companies within your industry, within your purview, whatever it is you're looking at, you've got to make an effort to find out those companies as well.”

Rating: 🍎🍎🍎🍎

🎙️ Full Episode: Apple | Spotify
🕰️ 50 min | 🗓️ 03/30/2021
✅ Time saved: 48 min