Work & Finance

Mark Cuban's Three Rules for Building a Company

The dot-com billionaire shares his strategies

What's the difference between a CEO and an entrepreneur? It's the difference between NBA team owners who sip champagne in the skybox and Mark Cuban, the dot-com billionaire who prefers to sit courtside with his Dallas Mavericks, yelling at coaches and eavesdropping on huddles. Obnoxious? Maybe. But it's hard to argue with a guy who sold his company to Yahoo! for $5.7 billion, and then used the proceeds to turn the Mavs from bottom-feeders into contenders. For more of Cuban's advice on business (and basketball), visit blogmaverick.com.

Rule 1
Sweat equity is the best equity. "Taking money from someone else kills more start-ups than anything else does. Do everything you can to avoid taking money. If you must, your best prospects are potential customers. You have something they want, so if they invest in you, it can be a win-win situation."

Rule 2
Don't lie to yourself. "If you find yourself describing your idea or business with words ending in - er—subjective words such as cheaper or faster—then chances are you don't have a business that is differentiated enough that one of your competitors couldn't do the same thing."

Rule 3
Don't drown in opportunity. "Once you have started your business, there will always be one more new thing to try, one more idea you just had. The problem is, new businesses don't have enough bandwidth to do them all well, and they can drown trying. Know what your core competencies are and be amazing at them."