The Mark Cuban Stimulus Plan - Open Source Funding
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4. It must be profitable within 90 days.
5. Funding will be on a monthly basis. If you dont make your numbers, the funding stops
If these are true, unless you're completely poverty-stricken, why whould you need Mark Cuban? Perhaps we're talking large scale investments, but the whole emphasis on "sweat equity" suggests not.
11. If you do get money, it goes into a bank that I specify, and I have the ability to watch the funds flow and the opportunity to require that I cosign any outflows.
I'm reading this article as "if you can build a successful business in 90 days, I'll give you some cash, and then it's mine....sucker."
From the hip, I'd say it's a helluva PR opportunity, a chance to be in business with Mark Cuban (which some folks might really value), and would allow you to take a bit more of a risk than you otherwise might be able to.
Like YCombinator, I'd imagine selling him a bit of equity would increase your shot at success.
You can probably get a better deal from the SBA.
Sure, if you have a couple of billion lying around it is easy to tell other people how to solve their problems. But unlike say Warren Buffet I've yet to see him do something that commanded my respect.
I'd challenge Mark Cuban to follow his own plan, pretend he's broke for 60 days and then show that by his own measure he can make it work.
If he succeeds with that he'll definitely have me take him serious again, but I doubt he could and until that happens this is just another "I'm rich therefore I blog" addition to the S/N ratio.
Before Broadcast.com, he started a computer company (MicroSolutions) and ran a very successful hedge fund. After Broadcast.com, he bought the Mavs, started HD Net, formed a charity (Fallen Patriot Fund), actively invests as an angel and cofounded numerous movie production & distribution companies.
Broadcast.com was certainly lucky, but Cuban was already a millionaire long before becoming a billionaire.
He may be one of them.
He invested/owns/owned: IceRocket, RedSwoosh (which sold to Akami), Weblogs, Inc (sold to AOL) and the Dallas Mavericks.
I think he has proven himself.
It's just that Mark Cuban seems to attribute most of his wealth to Mark Cuban and a very small %age of it to luck whereas it most likely is the other way around.
Buying services, i.e outsourcing much of the work, is just a way around the no employees rule. Labour cost is probably the biggest chunk of most growing software startups' cost and that's excluded.
My conclusion is that it needs to a be rights based business. Buy rights to something, add value quickly, and resell the results.
In any case, I think the reason for his posting is just to get people moving. It certainly made me feel pumped up about the idea I got this morning!
When I was in college, he returned an email of mine. I asked him if he was any happier now that he could have anything in the world. He told me that he was just as happy when he lived off of happy hour food and lived in a dumpy apartment with his best buds.
The startups, the entrepreneurs, the risk takers, the pragmatists, the efficient and rational are what we need right now to pull us out of this mess. Instead the govt is giving all the money to the rich, inefficient, wealthy elite, who lied to get us into this mess in the first place.
Give some money to those with vision. How much could we here on this list do with $700 Billion? The banks aren't doing anything with it... We just wasted it...
Why not? Can we make it better?
But when the Government isn't needed, then it shouldn't be used. Think how inefficient Microsoft is. Then realize Microsoft isn't actually very bad as big companies go. Well, the Government is an order of magnitude worse than the most inefficient huge companies.
The Government is bigger, has more layers of management, rules, and paperwork, doesn't have to worry as much about making a profit, and there's less accountability and responsibility for decisions. If a normal company messes up, it pays for the mistake; if the Government messes up, the tax payer pays. Those are bad traits that should be avoided when we can.
The Social Security System is one of the tightest ships in the world. You can't even get index funds with lower management fees in the private sector, because profit wants to be made and should be made.
http://en.wikipedia.org/wiki/United_States_public_debt
The link says social security is short 7 trillion dollars of 2008 money to pay for its obligations over the next 75 years. 7 trillion dollars is a lot of money... Whatever the reason this happened, doesn't it indicate the less Government the better, to lower the risk of them losing trillions of dollars?
I do agree that there are fundamental flaws in the Social Security System and I have said many times, though not here, that I will gladly pay into social security and never receive any benefits. I don't see any other solution and I am volunteering to take the hardship.
If enough people join me, we can fix social security. Like a balloon that slowly deflates through controlled exhaustion...
Does anyone remember the parody of Gore on SNL saying "Lockbox"? Does anyone remember why?
See, GM is in trouble (and claiming its workers cost $75/hr) because it had huge pension obligations, but instead of saving some of its revenue for when the chickens came home to roost, it'll will just bank on the company's revenue growing without bound (like homeowners banked on their property values).
The only problem is when this doesn't happen.
Now, the government, instead of spending its money wisely and saving it for the social security insolvency that hangs over our heads, decided (under Bush II) to issue one-time "tax rebates" to stimulate the economy.
Anytime we actually have money to pay into social security, we use it for some stopgap measure like paying down our trade deficit, tax rebates, etc. If we followed a rational funding policy for Social Security, both in good times and in bad (like when you make steady payments on a mortgage) then we wouldn't be worried about it.
Also, while Social Security may be short now (or in the first break-even year, 2013 or so depending on who you ask, but even then the program won't be broke, it will just be spending more than it receives) for demographic reasons it will be long later for the same demographic reasons.
The larger problem of debt forecasting over an even shorter time horizon (remember when we had a ten-year surplus of trillions, at the end of Clinton's second term) makes me dubious that even your 7 trillion number will be accurate.
http://www.econlib.org/library/Essays/hykKnw1.html
This problem seems non-fixable. Also, in modern states power is separated from accountability, so rational decisions are not incentivized:
http://unqualified-reservations.blogspot.com/2007/07/why-whe...
This is hard to fix, but maybe slightly more possible.
In general, these are hard problems.
See, VCs, angels et al are investing their money or other people's money for the sole purpose of turning it into more money.
A government run investment firm can have a much broader view of success than simply 10x returns on capital investment.
Roads, bridges, and dams themselves for example are not profitable, but they enable a more productive society. The benefits of parks, museums, etc are largely unquantifiable, yet there is a perceived benefit.
A public wireless cloud infrastructure for example would enable synchronization of traffic along major corridors, reducing exhaust, fuel consumption, and time delays. It may not produce a profit, but it will improve our entire economy. We could automate 50,000 miles of rail roads, 20,000 miles of interstate. That would do a lot for our economy and our productivity.
A project like that though, is probably much bigger than any VC firm or group of angels. Also, we don't really /want/ competition to build something like that, we want collaboration. Private capital is competitive. How do we get everyone working together on benevolent projects that may not turn a big profit directly, but could enable social profit for the whole?
I'm assuming we want the benefit of each project to be greater than the cost. The bigger the program, the more unlikely that is to be the case.
The critiques of the planned economy are applicable here.
I see your point. I suggest we reduce risk by investing in many small projects run by small numbers of individuals, but very focused.
To the first paragraph, I have this sense, no numbers really, but a sense that collaboration is becoming more required over time. Look at nobel prize winners and how often prizes are shared over time. I don't know what that function is over the long term, but we appear to be in an upward trend over recent history.
Collaboration at this level is difficult on a global scale and across national and linguistic barriers.
Which ideas are worth rescuing from the global valley of death? Big ideas that will or will not affect billions of people for decades to come. Some who haven't even been born yet.
Yes, a govt run investment firm can look for opportunities to (1) grease the right palms so that a specific congress critter is re-elected (2) Make sure that a congress critter's friends make money. (3) Employ said congress critter's idiot cousin. ....
And, the folks running said investment firm won't take a hit if none of their investments make sense.
And, the "investment" money is provided at the point of a gun so whether or not you think their plan makes any sense, you get to pay for it.
Never confuse intent with effects.
I think governments can be quite efficient at achieving their goals, its just that the goals of politicians and bureaucrats are not aligned with the market.
While I'm certainly more in favour of the government giving e.g. entrepreneural low interest loans than bank bailouts, I can't help but think that the money would have been better spent had it never been removed from circulation in the first place.
How about getting entirely rid of tax on businesses until they issue dividends? So the money only gets taxed when it's withdrawn as profit (and this itself is only necessary to tax foreign investors). Businesses are on average quite profitable, so why take away money that they're planning to reinvest? It will almost certainly be reinvested wisely (because they were already profitable, they presumably know what they're doing).
FWIW, CEO earnings exploded because of a restriction on CEO salary. If that's a surprise....
If a startup is able to reach profitability within three months, this startup surely wouldn't need Mark Cuban's money to move forward and create jobs at some point in the future. They would have a rather big chance at succeeding even without this extra cash.
Mark presents this initiative as doing something for the greater good and the economy, however investing in companies that need to be profitable within three months (assuming funding will stop if they don't reach profitability within that time frame) is not exactly a risky investment and looks more like an easy way into something new for Mark.
If a startup is able to reach profitability within three months, this startup surely wouldn't need Mark Cuban's money to move forward and create jobs at some point in the future."
Not everyone has a bankroll sitting in a savings account ready to start a business. Mark's idea solves that.
And even if a person does have that bankroll, he may not want to invest it in the new business. Recessions don't end overnight because people hoard instead of spend money. The worse things get, the more people want to save for the long term, which prolongs the recession. Mark's idea solves that case, too.
Mark will fund promising ideas which need the cash now and can put it to good use. The cash he gives will be mostly gone by 90 days. That cash is a direct injection into the local and national economy.
So what gets accomplished is:
1. a possible wealth generating/job creating business is started
2. spending occurs when the natural inclination is to save
Both will have stimulative effects on the economy.
No one really knows what the scope of his investment is. Mark is a smart guy, I'm sure this is a testing stage. So, he gives you a few thousand dollars (if that) to "test" for 90 days. If it has potential to make money, who knows where it could go.
(also - that's probably the secret - this is probably not a tech play.... Think small local (but replicatable) businesses)
The fact that it's open means every person in every town can open the same store and succeed as well, without directly competing.
He’s asking people to basically give up on that dream. Since it would be easy for the idea to be stolen by someone with more resources you basically have to renounce the idea when you reveal it to the world. In return for that sacrifice you might create a company that would, at best, produce a minor positive impact on the economy as a whole.
Which is the kicker as far as I’m concerned. No company created like this is going to save the economy. At best you’ll generate around a hundred jobs in an environment that’s shedding hundreds of thousands a month. Meaning even the most altruistic person will have to get over the fact that they won’t be doing all that much good with this.
Seen like that I don’t see many people taking him up on this offer.
And of course one thing won't change the economy, but helping to create new businesses is a great thing.
Now what’s to stop some company who sees your idea (which is probably worth stealing since Mr. Cuban liked it) and puts 6 people on it for the first 2 months. No matter how well you execute it’s hard to beat a team 3 times your size who are working on the same basic idea.
Because even if you execute better they can self correct fast enough to kill you off.
Also, more people + more money != faster or better execution.
Perhaps not, but it will help THAT person. Meaning that now there's one more person (and his/her employees) who are not on the unemployment rolls. Just because an idea doesn't save the world doesn't mean it's not a good idea.
And for those of us who come up with multiple ideas each day, and are not particularly attached to any of them, it's a great way to possibly get funding if needed.
(feedback more than welcome)
What is someone's incentive to publicly post a biz plan+idea in a blog comment over there? Apparently, a tiny amount of money and likely no other help from Mark, wow.
you've got 60 days to grow a tree. start watering.
Sounds pretty straight forward. The three you mention are ad based, he wants no ad based businesses.
Just wonder why would be the reason for rule #2: He will not put his money on any business getting revenue from ads; I do not see Google going bankrupt.
Thank you Mark. But no.
Selling whiskey. Cheap.
To Mark Cuban. Profits in 4 minutes.