Ted Audio Collective.
Hello, everyone. We hope you're enjoying this new season of After Hours so far.
We're taking a short break this week because we want to play you an episode of another show in the Ted Audio Collective, rethinking with Adam Grant.
You might already know Adam from his TED Talks, books and TED Podcasts work life.
But this is a new podcast where he sits down every week with all kinds of different people to figure out what makes them tick and what we can learn from them about creativity, leadership and the way our minds work.
We thought you would particularly enjoy this episode with Mark Cuban.
Other guests of Adam this season include author Celeste Ng, actor and producer Rhys Witherspoon, neuroscientist Chantal Pratt and Nobel laureate Saul Perlmutter.
You can find the show by searching Rethinking with Adam Grant wherever you're listening to this.
Hey, everyone, it's Adam Grant.
Welcome back to Rethinking, my podcast on the science of what makes us tick.
I'm an organizational psychologist and I'm taking you inside the minds of fascinating people to explore how they think and what we should all rethink.
My guest today is Mark Cuban, the outspoken serial entrepreneur, shark tank investor and owner of the NBA's Dallas Mavericks.
Mark's latest venture, Cost Plus Drugs, has made hundreds of prescriptions more affordable.
We have a rollicking conversation about what it takes to disrupt an industry and when to bet on a person and an idea.
We also discussed some basketball rules that I think are long overdue for change and why it's terrible advice to follow your passion.
So Mark Cuban, I think it was six years ago that you came to visit us at Wharton.
And I don't know if you remember this, but you did something I have never seen a speaker do before or since, which is you went to the campus bar and you hung out with students.
I think it was past midnight.
I thought that was an incredible mark of character.
But tell me, what why did you do it?
I wanted a beer. And why not hang out, right?
One of the things I remember asking them was whether or not they were on Facebook.
And I expected them to say no.
And they all said yes, because they used it for groups, which at the times shocked me.
I was really surprised.
So that's what made it stand out.
So interesting. Our students were blown away that you were willing to take the time to not just meet with them, but just hang out with them.
What else was I going to do in Philadelphia?
You know, well, we clearly need to show you some other parts of the city.
If that's if that's your view.
But I thought it was it was just amazing.
And I appreciate that.
It left quite an impression and also made some other speakers look bad.
So bravo. Let's talk about what you're up to these days.
I'm a big fan of of rethinking the way things have always been done.
And you've done that in a major way with Cost Plus.
What's the origin story here?
So Cost Plus Drugs Dotcom is the company and the origin story is very simple.
I got a cold email from a doctor, Alex Ashmoyanski, who was looking at doing a compounding pharmacy as a nonprofit in Colorado with the idea that you make scarce drugs that are overpriced because they're scarce and make them more available at more reasonable price.
And I was like, that's great.
You know, I've been working on health care issues and doing a lot of research on health care, paying for studies.
I'm like really good idea, but too limited in how you're thinking about it.
Let's expand it to all drugs.
You know this industry, you know it well.
How would we do that as he'd explain different things to me?
I'm like, the only way this is going to work is, one, if there's radical transparency, because there's no way to explain to anybody simply why a drug costs what it does.
And the really the only true understanding of drug pricing that consumers or patients have is via the farmer grow Martin Shkreli with the idea that you can raise a drug price by 5 ,000%.
And I told him if you can raise it by 5 ,000%, there's a really good chance you can reduce it by 5 ,000%.
And so let's dig in.
And we started to and I told him, look, here's the best way for us to do it.
We're going to just price everything in cost plus.
And we're going to show everybody exactly what our cost is.
We're going to market up 15 % and why 15 % like anything in a lot of business plans, you just pull it out of thin air and see if the numbers work.
And then we started going from there.
You know, our costs plus 15 % plus shipping and handling fee through our partner TruePill who fulfills the script and then the shipping fee.
The next issue was how can we get manufacturers and or distributors or wholesalers to sell choice?
Actually, that was the hard part because there was so many regulations and so many things that you have to get all your I's dotted and T's crossed and rightfully so that it took us more than three years to get through that process to be able to get through selling our first drug Albenzol and look, I'm
not mad at it, right?
Because there are a lot of protections there that are important.
And initially I was not going to put my name on it.
It was just going to be cost plus drugs, but I put my name on it because it showed those manufacturers and distributors that I was committed financially and that there was a level of trust that because I was putting my name on it, it's the only business I've ever put my name on.
And so over those three years, we managed to get a drug, Albenzol, that was our first drug.
And we were able to work with TruePill to create the website and get it integrated and all that stuff so we could fulfill.
And on January 19th of 2022, we launched.
It's amazing. Congratulations.
Thank you. I've just been stunned even watching on Twitter.
All the people saying you just made it possible for me to afford this medication that I'm dependent on.
And I just couldn't get until cost plus came around.
Yeah, it's stunning, isn't it?
It's just insane that, you know, a lot of things are insane today right now in this country.
But, you know, at the same time, the idea that people have to make choices between housing and food and medication.
That's just not right.
Now, fundamentally wrong.
And I also love that you turned it into an opportunity to build a business, which is obviously a part of what you do.
Yeah, but you know what?
You know, we looked at it as a charity, but there's there's an ongoing problem with charities.
One, there's too many of them.
A lot of people want to create charities and not as many people want to be charitable and in two, you know, you want it to be self -sustaining because the only constant in any business industry, vertical, whatever is change.
You know, there's going to be new medications.
Things become generic.
There's aren't going to become generic.
There's evergreen enough patents and you've got to be able to adapt to be agile.
And so we didn't think that could work as a charity.
And we certainly did not want to be dependent on contributions.
Well, I have to say I was a little surprised to see you taking this on one because watching Shark Tank, you're always a little skeptical of anything in the health care industry.
No, just supplements.
Very, very cynical and skeptical of health care claims by supplements that have no research or science behind them.
So here are the data.
We're already there.
So that's that's easy.
But also, this is just it's pretty far outside your normal expertise.
How did you decide that this was an idea worth pursuing?
Because I think you get as many pitches as anyone on Earth.
Yeah, no kidding. All day, every day.
Probably around 2017 when there was a lot of discussion by the administration then about getting rid of the Affordable Care Act.
I talked to somebody that worked in and around the White House and I said, well, what are they going to replace it with?
And they said they had no idea.
And so I was like, well, that's not good.
And so I think, you know what, you know, I was always curious about health care.
Let's start digging in.
And so I started funding multiple studies and looking to create alternatives to the Affordable Care Act and really spend a fair amount of money just learning that the health care industry, you know, I funded a study.
I'll give you one example.
I asked a simple question.
I said, in Toronto and in Manhattan, the price, the annual wages of a doctor, an hourly wages of nurses are about the same between Toronto and Manhattan.
The cost of a banding is about the same.
Why is there such a discrepancy in the cost of health care and those two cities?
And if you look at the procedures from a hospital in Toronto, many of them are less than Medicare prices in New York.
How is that possible?
And so you start getting into things about malpractice insurance.
The fact that more rooms have more than one bed in Canada and they're mostly private rooms in the United States.
The fact that there's more buildings in a hospital complex and there always are buildings being added in a hospital complex in the US.
There's a quest for profitability by adding new specialties that there is in Canada.
So you start understanding what the motivations are for a lot of these things.
And that really got me in tune to it.
And then when Dr. Ashmayansi came along, it was a perfect timing for it.
Wow. Well, the model when I first heard about it, I thought, oh, this is what the construction industry does.
This is how I've watched builders work over the years.
And it makes so much sense, both in terms of cutting out the middleman and also introducing transparency.
There's a part of me that wonders, well, how do I know the builder isn't getting screwed and that their costs aren't too high?
How did you navigate that?
I still have. You know, we're trying to make it up with volume.
And that's the thing, right?
I knew I was going to have to eat a lot of capital to make this work.
And I was willing to do that because of the goal we have.
But at the same time, you know, as much as I hate projections and know they're always going to be wrong, we did our projections and we knew that we had to hit certain thresholds in order to overcome our costs.
And that's what we've been able to do.
Where we're at now is where we expected to be two years in.
And we continue to accelerate in terms of volume and gross margin dollars.
And hopefully, we'll get to the point, not just where we're profitable, but we can take those profit dollars and reinvest them.
So right now, it seems like you have something of a first mover advantage.
You're not in a world, though, where it's easy to build a moat, right?
You're not in a situation where you're going to get network effects necessarily.
And so it seems like it's pretty easy for anybody who is interested in this problem to say, wait a minute, why don't I go to 10 percent or 9 percent?
Yeah. What happens then?
So there's a couple of things.
One, there are network effects, right?
And that's one of the beautiful things about this in terms of the cost and what the network effects are.
Let's just say you have a particular disease and one of your medications is on our formulary and we reduce the cost from $100 to $10, which is not out of the ordinary for us.
You know, people who have a specific disease tend to go on group forums and chat rooms and Facebook groups and support groups and talk to each other.
And so what ends up happening, we can see it in our data because you see the orders start to accelerate.
So there is very much a network effect that leads to trust and trust is a very important component for patients, right?
Because you don't know what you're getting and you really very much have to trust your supply.
So while we can't build a technological mode, if you will, or even a scale mode, and it's quite possible that someone can come in and copy us and cut their costs and undercut us, it's still there's that trust factor that's very important because that, you know, if someone comes in and saves you money
on something, dramatic money that really changed your life, you're probably going to go back to them first, even if a competitor emerges.
So in that sense, it sounds like your competitive advantage is actually your brand loyalty.
Yeah, trust is critical in this.
People are betting their lives on it.
When I think about that, I think about some research showing that sometimes the very organizations that advertise integrity are the ones that then are most likely to be accused of hypocrisy.
Yeah. Right. You wave a flag saying, hey, we're here to look at everybody holds you to a higher standard.
How are you thinking about that problem?
We're not going to advertise.
Seriously, I mean, that network effect is considerable.
I can't understate it enough.
You know, I'll use this as an example.
We're not there yet.
We're working on it, but we're not there yet.
Let's say we had an insulin.
The one thing, if you go through our mentions on Twitter or any social media, insulin, insulin, and we're working on it, I can't make any promises.
But the minute we do that, we've solved a significant problem.
Now, and think about what happens.
That whole community now wants to work with us.
And so that's that's the trust factor.
That's the ongoing connectivity that we have.
Yeah, that makes sense.
This not spending a dime on marketing.
I love it. I have a fundamental allergic reaction to the idea that a pharma company should be pushing drugs on people.
That being said, there is a little wrinkle here that I discovered a few years ago.
I was giving a keynote to a pharma company.
And in the Q &A, it came out that they had been an early mover in mail order pharmacy.
And they said, look, we have this big challenge, which is our internal data suggests that in mail order, because we're able to truly specialize, our error rate is about 20 times lower than traditional pharma.
And we're not allowed to advertise that because of regulations.
And that seems wrong.
Seems like you should be able to share information that helps people make decisions.
Yes or no. Right. Because you can reverse engineer drugs that or information that is small scale and be able to determine an individual or get it down to a group of individuals that may help you personally identify and that's the risk.
So if you happen to be, you know, someone who has a disease that there are only a hundred people in the country and there's a special drug for it.
And yes, it's going to be expensive.
Most likely it's not even available through mail order, but if it happens to be, right, they're going to be able to tell who you are, you know, here's our deliveries by zip code.
And here there's so many ways to work backwards to that.
That's where the risk factor is.
Now, there's always that tradeoff between accomplishment and being able to get the word out so that more people benefit versus protecting privacy.
And I'm a Scott McNealy advocate where he says, don't worry about your privacy.
You have none. But, you know, at the same time, it is important to a lot of people.
So I understand the law.
This also speaks to the psychology of social proof a little bit that very few of us are experts on even the medication we take.
And so there's a lot of uncertainty and we know under uncertainty, people follow the lead of similar others.
So I'm going to look to the people in my community who are also taking this and asking, OK, what are you doing?
Well, this costs less.
It's the exact same drug.
It goes by a different name because it's the generic.
But why would you not do that?
It seems like a no brainer.
Yeah, without question.
And look, you know, you also have the doctor in the mix and that doctor also has that type of social proof, too, because, you know, medicine is only as accurate as your luck prevails.
There's this always uncertainty with medicine.
And so we trust. We trust the people in similar circumstances.
We trust our doctors.
We trust sometimes what we read.
And so when you aggregate all that together, that social proof, to your point, is critically important.
I remember as a kid watching the old hair club for Men ads, which I never realized was going to apply to me.
I know I'm getting there fast.
You're still way ahead of me.
I remember the commercial that always said, I'm not only the president, I'm also a client.
Are you a client, Mark?
Yeah, for sure. For sure.
I take the generic for Centroid.
So I play hypothyroidism and my price went from a couple hundred dollars down to nine dollars and 90 cents.
Wow. Do you give to give feedback to the team based on your user experience or do you try to stay out of that?
I mean, you get to a certain age and everybody, you know, has medications.
And so we give feedback from my friends, family, you name it.
People in the company obviously use it as well.
And so we try to eat our own dog food.
And yeah, we try to improve that experience.
But the other thing I will say is if our mission is to be the low cost provider of every single medication we're legally able to sell, period of the story.
It's a very, very simple mission.
But to fulfill that mission is hard because it's really difficult to stay focused on not adding bells and whistles.
Because national inclination as an entrepreneur is, OK, well, we had this experience and if only we did this, it would make the experience a tiny bit better.
But then we have to do that cost benefit analysis.
Right. Because doing that across tens of millions, potentially, of customers might mean, OK, we can't stay within that 15 percent threshold.
And so you're not going to see telehealth added.
You're not going to see a blog from this leading doctor talking about X, Y, or Z.
It may take 11 minutes to get your call picked up instead of two minutes.
Or we might push you to email rather than saying, OK, just hold on.
We'll have a customer service rep because customer service reps are incredibly expensive.
And when you're doing it across millions of customers, it adds up very quickly.
And so there are these tradeoffs that we have to make.
So when you asked about, OK, getting feedback from our employees and friends, yes, absolutely.
And we're trying to use technology and chatbots and trying to understand what works.
But, you know, it's like when you go to the dollar store, you know, you're going to the dollar store and you're not expecting to be handed a glass of wine and we're not handing anybody a glass of wine.
We're effectively the well -run dollar store for medications.
And that's that's who we are.
If you need to pick something up tomorrow or you have a concierge doctor and you're expecting them to deliver it tomorrow or the same day, that's not us.
If you are concerned about, you know, choosing between food or you just want to say, you know, nine dollars on your 30 pills every month or if you order 90 days worth, you can save, you know, $40 instead of 27.
We're here for you.
That's the problem we solve.
And it's a valid problem that needs solving.
And that's why we're willing to say you're not going to get those bells and whistles.
You're going to get the lowest price price possible.
And now I understand why you said you're eating your own dog food instead of drinking your own champagne.
Exactly. Low cost dog food.
Yeah, it almost sounds like you're the the Southwest Airlines of pharmacy.
Great analogy. Great analogy.
I'm not going to get to choose my seat.
There's no first class.
We might not even give you peanuts.
That's OK. I wasn't coming for the food.
The peanuts. Exactly.
No, it's interesting to me.
Obviously, this is majorly disruptive to pharma, but it also seems like a model that could disrupt a lot of other industries.
To say what if Wall Street expected companies to indicate exactly what their costs were, say, OK, here's the margin we're going to make and we're going to manage that margin as opposed to managing to the market?
Yeah, particularly as trust becomes a greater issue within an industry, having that radical transparency in health care is the obvious example because nobody understands how prices are set for anything, whether it's the government or patients for that matter.
But wherever pricing is off paid, you have an opportunity to pick up customers and start a business around transparency.
I imagine that transparency is also useful internally, because I know as an employee there's a tremendous amount of ambiguity about why are salaries set at a particular level, how are budgets determined, whereas you have a target that everybody can understand, and it seems like it actually takes a lot
of work off the C -suites hands to say we don't have to explain every decision we're making.
You actually already know the logic behind it.
But the reality is, yeah, their transparency is a competitive advantage in the right industry and it is a way to improve productivity when people fully understand.
And again, the underpinning of the need for transparency is trust.
And as organizations recognize, they have to create trust from their employees because you know, and I had this discussion with a group of recent college graduates.
I'm like, look, when I graduated from college, people talked about careers.
Now nobody talks about careers.
Now you're a free agent.
It's like in the NBA, you have a one year deal.
All right, you're immediately a free agent.
You know, two year deal, whatever you know when you're going to be a free agent.
And with employees today, particularly Gen Z employees, they come in knowing their free agent.
And just like my attitude has always been for all of my companies, we have to re -earn our customers business every single day.
Well, the same applies to employees.
You have to re -earn your employees commitment every single day as well.
And that transparency certainly is a tool to engender trust.
Just to double click on this free agency point for a second, you made what I thought was one of the most profound statements of COVID and I'm going to I'm going to butcher your words, but you can give them back to me correct.
You said something to the effect of the way you treat people now during crisis is going to have implications for recruiting and retention five, 10 years down the road.
Yep. Yeah, no question.
What I said effectively was the way you treat your employees during a crisis will define your brand to your customers and future employees forevermore.
And that is the absolute truth, right?
There used to be a saying if you do something well for a customer, they'll tell one person if you screw something up, they'll tell 20 people.
Well, now that 20 people is now 2020, you know, it could be a thousand hardcore followers or it could be 2 million people, depending on how viral it becomes.
It reminds me of what I think is the most rigorous study of its kind of companies that were facing financial pressures.
Some of them downsize.
Others choose pay cuts or different kinds of restructurings, but really take care of their people.
And it turns out the researchers even called downsizing dumb and dumber because the companies that chose to downsize, they let go of people they didn't realize were indispensable.
They also ended up just creating a ton of survivor guilt and anxiety.
And then the superstars saw the writing on the wall on left and the rest of the employees basically said, I'm going to do whatever I have to to protect my job.
I'm not going to innovate and try to get us out of crisis.
When your entire focus is only your earnings per share or the cash in the bank and you're that short term focus, you will fail.
At some point, it will backfire on you.
Now you still may make money, but your stress levels as the CEO or entrepreneur or C -suite are going to skyrocket so high that that equation or that equilibrium you're trying to find between mental, physical and financial health will fail miserably and you see it all day, every day.
And I think one of the beautiful things, I have three kids, 12, 15 and 18.
And I can see it in them a little bit in their friends, emotional health, mental health, equilibrium is something that they placed a premium on.
And I think organizations will have to understand that more and more and more as we go forward, not only for how you treat your employees, but what your customers expect as well.
Boomers aren't your customers anymore.
You know, the boomers are going to go down in history as the most disappointing generation ever from sex, drugs and rock and roll to what we have today.
It's insanely upside down and unfortunate.
What Gen Z in particular, less millennials, but Gen Z in particular, I think is going to go down as the greatest generation because they take all the ingredients into account when they're making decisions.
And I think that's beautiful.
And it's very analogous to when I was getting started and technology was just happening or, or the internet was just happening.
You had to accommodate the expectations of digital generations, even if, you know, their parents were technological dinosaurs, you just knew where things were going.
And it's the same now with that fiscal, financial and personal health balance, right?
Because either you accommodate it for your employees and your customers or they'll find somebody who does.
That is such a refreshing dose of generational optimism.
I think you can mark that up 30 percent on cost plus.
It's obvious to you and your experience.
It's clear to me in the evidence, right.
That how we treat people in the short run has massive long -term implications.
Why have so many leaders been slow to recognize it?
I mean, you know, I'm not going to lie.
When I was 25 and had my first company, I wanted to get rich.
I wanted to retire by the time I was 35.
And so that drove the decisions that I made.
You're failing big time on that one.
I'm honest about it.
And that drives decisions.
It's like, why hasn't there been somebody to compete with cost plus drugs doing the same thing, because it's easier to build a company that builds personal wealth by working within the system.
And if you're able to reach any levels of success, you've amplified your ability to get acquired by one of the legacy companies.
And I'm not going to lie either.
If I'm 25 and I'm doing this again, I'm probably going for what can I do to get acquired?
But now the next dollar in my life, the marginal value of my next dollar is de minimis.
It's not going to change my life a lot.
So my decision making process is completely different.
And so if you look at hospitals to go back to that, you know, that CEO gets paid and those stock options improve in value by the more revenue you create and while you have an interest in having great outcomes for your patients, that outcome versus cost decision may be completely different because there's
this non -virtuous circle of insurers and providers or payers and providers that benefit from higher revenues.
Right. I understand why it happens and everybody will make their own decision.
But I think versus the Alex heating generation, the yuppie generation, right.
And to go to Wall Street generation versus today's generation where people are more cognizant and if a company doesn't have a social mission, it's going to be harder to retain your customers.
Mark, I'm curious if your goal is still to retire, you're definitely failing on that one.
Retire in the sense that I get to make my own decision.
Now I get to make my own decision.
People kiss my ass and work to my schedule.
I'm not retired because I'm too competitive.
I like the stuff. It's my sport, if you will.
But I get to call the shots in terms of my calendar and that's what's important.
Or my kids get to call those shots.
That's exactly what I was wondering about is what motivates you because you have total control over how you spend your time.
When you look at an idea like Cost Plus, it comes with huge opportunity costs.
And so how do you decide, okay, it's one thing to invest in it.
It's another thing to say, I want to put my time and energy behind it.
Yeah, I get to fuck things up.
That's the upside. At least every entrepreneur in the back of their mind says, I want to be that entrepreneur that disrupts an industry and changes the game.
What's better than that?
And can you make money at it?
Now in my case, I'll just reinvest it.
I don't need to put it in my pocket.
I think of you as the capitalist with a heart.
Is that a fair description?
People don't fully understand the definition.
I don't think they do of capitalism.
Capitalism isn't just about trying to make as much money as you can.
Capitalism is the opportunity to get the outcomes that you want that give you personal reward.
And it could be making as much money as possible, having the greatest amount of impact in one way or another and losing as much money as possible.
You have that opportunity.
It's just you get to make that choice.
And to me, that's what makes capitalism the best system.
But like we discussed earlier, sometimes people get caught up on the money and I understand why.
So I want to get your take on the more extreme reactions to that on both sides.
So one is as soon as cost plus came out, I found myself with some pharma CEOs and I said, hey, what are you doing?
Are you going to compete or what?
And one of the most common responses was, listen, we get it, but we're in a different business, which is we're trying to have bigger margins because R &D is super expensive and we need to be able to reinvest that to develop life -saving medications.
We're able to come up with COVID vaccines.
Then we could give them away for free or at cost to the developing world.
And so why are we getting demonized when we're actually reinvesting that too?
What would you say to those CEOs?
So we're their best friend because the obfuscation comes not from the manufacturers of the drugs.
For the most part, it comes from pharmacy benefit managers and the payers that own those pharmacy benefit managers.
And when I say payers, it typically refers to insurance companies, right?
And then they own pharmacy benefit managers.
They own retail pharmacies, but we're the manufacturer's best friend because what happens is there are so many games played with pricing so that the payers and the PBMs can maximize their margins that the manufacturers are sometimes just a pawn in that game.
So now we're starting to negotiate our deals with brand name manufacturers, not just generics.
And as we add them, their patients are going to be able to see that they weren't the bad guys.
There's the insulin manufacturers that publish all the data and said their pricing has actually gone down even though the price of patients has gone up.
That's part of the problem that we solve because of that transparency that will shed light on the distortions and who the people are that create those distortions.
And part two to that is if we're able to scale to enough patients that we supply, then if we're paying even marginally higher than what the manufacturers charge the PBMs, right, it's still going to be cheaper for patients, which means it's going to be more volume for the manufacturers.
And because we're paying a tiny bit more because we don't have that scale, the insurance, the PBM verticals, we're making the manufacturers more money.
I guess the other side of that, the socialist pushback.
I hear a lot of people saying, yeah, but shouldn't medicine be free?
Look, nothing is free, right?
It just depends on what the product is.
Or are you selling ads around it?
Who's paying for it?
What are the taxes?
Where's the efficiency to make it better?
I'm not anti -government getting involved in the programs.
I'm anti -lack of efficiency.
Whoever's able to do the job best is going to give the best results for patients.
There's certainly an argument to be made that if the government can manufacture certain drugs, generics, let's say, cheaper, more power to them and to distribute for free because it saves them money on the Medicare formulas, great.
That's a smart business move by the government.
Now, the problem is, we have this duopoly that runs our government that's more interested in retaining power than choosing the right people to run an organization like that.
I want to come back to the free agency point you made earlier.
I've started to wonder if we're going to see in the next decade or two, at some level, the whole concept of a job blown up and people say, no, you know what?
I'd actually rather just organize my life as a series of projects.
Why am I selling my soul to one company when I could rent my skills to the highest bidder or the highest mission?
You know, the future of work is an arbitrage in your time.
I've been saying that for years, you know, where it's effectively, how much can I get paid per hour, per job, whatever it may be?
And then how can I effectively use that money to and arbitrage that money to get people to do things for me that cost less?
So I have the most time, fungible time available to myself.
That's effectively what we try to do in our lives.
Anyways, you know, how, what's going to be the sweet spot for my earnings that I need in order to be able to free myself off to do the things I love to do so that I get fulfillment in my life.
It's an equation. It's some, some level, right?
It's an arbitrage on your earnings versus your time.
Maybe part of it is, okay.
So I want some consistency.
I want to reduce my risk.
So I don't have uncertainty in my earnings.
Some people want annuity in their earnings.
Some people are willing to take the risk to value their time more.
That's the arbitrage.
If that's the model, should it be limited to individuals or should it be done at the group level?
So I think about NBA super teams.
My favorite thing in my career is having a super team around me.
Last year, I invested in a startup A team that said, we're going to do this for the builder economy.
We're going to take engineers and designers.
We're going to let them team up with the people they've always wanted to work with.
And then companies can hire them as a group for a mission that might be two months or two years.
Yeah. Can you see that scaling to other kinds of jobs?
Yes, I can. The hard part is selling it.
Because getting somebody who has control of a checkbook, getting them to admit that they need this help is a challenge.
The challenge of super teams is the culture.
Success has a million parents and failure at, you know, as an orphan.
And it's the same with groups, right?
Because when things are working really, really, really well, then, okay, everybody's in that group and it works.
But the minute that there's somebody you cast doubt on the outcomes that they promise, all of a sudden that group starts to disintegrate at some level.
Because there's no one person in charge, it's hard to manage all the dynamics, right?
That's been the crusher of super teams.
That's why it's been rare for super teams to really work well, unless the dynamics of the super players are already established.
To that point, one of my favorite studies of the last few years scored NBA players on how narcissistic they were from their tweets.
So you get like a tweet that says, Oh, it's amazing.
I'll send it over. I'll send it to you.
The finding was, okay, so we get the narcissism scores by the tweet patterns.
Then it's a little bit amazing.
I love that in and of itself.
And then the next phase of it is, it turns out that the more narcissistic players you have on your team, the worse your team performs and the less likely they are to improve over the course of the season.
And I'm sure you've seen that dynamic, maybe not on the Mavs, but on other teams.
On the Mavs too, over 22 years, certainly on the Mavs.
Interestingly, it's worse if your point guard is the narcissist, I guess being the focal point of the action or a ball hog.
And so it seems like that raises big questions about talent versus character.
And like, do you find yourself screening for narcissism and players?
Yeah, not necessarily narcissism.
I will now though, because I just learned something great that are really healthy.
Not necessarily narcissism, but culture and chemistry.
So like I had this rule, a team can have one knucklehead, you can't have two.
One knucklehead adapts, two hang out together.
You can have one guy that's a heavy weed smoker.
You can't have two or certainly not three.
I've literally made trades in the past because I had to get rid of one weed smoker.
I have no problem with someone smoking some weed, right?
But you know, when you get into the habit of just hanging out and playing video games and smoking for six hours, that's a problem.
So culture and chemistry are critical to success.
Like this year with the Mavs.
You know, we had pretty much the same team as we had the year before, but Jason Kidd came in and set certain expectations and was a better communicator.
Not that Ricarlo is a Hall of Fame coach, right?
But with the players we have at the age level, they are, you know, Jason Kidd was able to communicate roles better than we were in the past.
And so that helped develop our chemistry because all the guys knew what was expected of them.
They knew their roles.
They knew how they fit together.
And that allowed us to go much further than people expected us to go.
There's always the selection versus socialization question, right?
So do I screen on this stuff or do I try to shape the culture?
And it sounds like you're doing a mix of the two by by taking one problematic player or employee, but not two, because then it might infect the culture.
What do you do once it's too late and you discover that you have a couple of those people in a company or on a team?
I mean, I've had that in a company, right, where it was just horrific and we had real problems and we had to turn it upside down.
You know, we had to bring in a new CEO who may not have had the experience on the business side that we otherwise would have gone for, but had the most amazing experience I've ever seen on the culture and employee support and employee training and enhancement.
And she was the best at putting them in a position to succeed if anybody has seen, right.
And we had to make that change and it was just painful and horrific, but it had to be done more often than not.
It raises his head and tells you, you can see it in multiple places where people are leaving or people go to next door and people are leaving comments and this and that.
Sometimes you just got to turn it all upside down and get rid of the people that are part of the toxic side of it.
And that also extends into diversity and inclusion because it starts to become good business because, you know, we also like for the Mavs, Dallas is one of the largest Indian communities in the country and we want to sell tickets to that community.
And we had nobody from that community, you know, selling tickets.
You've got to always be able to reestablish yourself when things go wrong.
And before things go wrong, hopefully you don't reach the crisis point that the Mavs did and you don't have to go through what we did, but if you do, you've just got to rebuild and to avoid it, you've got to recognize that kids coming into your organization today are completely different than they were five
or 10 years ago. I'm that, I got a call from an NBA coach saying I'm running into this issue where my players check social media at halftime and they're getting hate their game suffers in the second half because they ended up kind of pissed off and they lose focus or they end up hugging the ball.
They respond to the hate.
And I, I could not believe one that that was happening and two that it was affecting their game.
Are you seeing that too?
Oh yeah. Yeah. The buzzer blows.
It's halftime. You walk into the locker room.
What happens is the players go to their lockers and while they're doing that, the coaches are hotly to try to figure out what adjustments are made because you only have 15 minutes and so the coaches have to decide what's going to change and so the players change and they grab their phone and they immediately
start looking. Now, most will look for texts from their friends because that's where we get honest feedback and that's good sometimes.
And that's really, really bad sometimes, particularly with family, you know, shoot more than enough and so, and then others will look at social.
And so it's, it's certainly an impact, but what we've tried to do is say, here's your role, right?
Here's what you've got to do.
And if you don't do that, according to what we're trying to accomplish, we're sitting your ass down.
I had some questions I thought it would be fun to get your reaction to since you're, you're always full of sound bites.
So let's fast forward the clock.
I don't know. 30 years, it's 2052.
What is the probability that when we're talking about the goat, we're talking Luca as well as Jordan and LeBron.
A hundred percent. A hundred percent.
If you say 95, yeah, if he stays healthy, 100%.
Wow. Um, he's that talented.
Yeah. And then some, that's amazing.
I can't wait. A lot of people are getting frustrated that threes are too easy to make.
Where do you stand on the four point line?
No, because that'll distort the game.
Just defenses are, will evolve, teams are smart.
If you look, we're Golden state beat us.
So what was it on the three point line?
We made more threes than them.
It's what they did coming off three point line when we closed out.
And so being able to adapt to that is something we'll have to do.
The reason the warriors one wasn't because they necessarily were the most talented team, but they were the best at executing their game plan.
That's how they beat us in the playoffs.
Every game is its own series because you make adjustments throughout the game.
And the team who's best able to execute on those adjustments is a team that wins because you're already by definition, talented, talented as a team based off beat in the playoffs and going far into the playoffs.
So I thought we were better able to adapt and execute than the jazz and the sons and the warriors were better able to adapt and execute than we were.
And so for us to get that next level, we got to have the corporate knowledge where we know how to execute every adaptation that we make during the game.
Wow. All right. I'll hold off on the four point line, then as a kid, as a Pistons fan, I hated how often follows were called because it always hurt us with the bad boys.
Right. Then Hackishack came in and I feel like now the end of every game is just a bunch of follows and free throws and it ruins the energy of the game.
As a fan, I've always wanted to experiment with, with a penalty box like hockey, where you just have to go player down.
What do you think of that idea?
It would be awful because it's a guaranteed score.
You know, okay. So what's your alternative?
How do we stop the game from slowing down?
I don't think you really have to.
Right. We got rid of their automatic reviews pretty much in the last two minutes.
And there's only the one challenge and fewer things that get reviewed.
And I'm not necessarily opposed to their free throw because I think that's drama.
When that ball is in the air and the score is tied and there's less than a minute to go or less than two minutes to go, right, everybody's holding their breath.
That's drama that that as a basketball purists and junky, I love, you know, better, more efficiency and how we program.
I think that is more of a cure for that problem than trying to change the rules.
Shifting around a little bit to startups, what's the startup you most regret not investing in?
Probably Uber. Just because I had first crack at that and I wanted them to work with the tax decaf commissions and let them know so that it wouldn't be so expensive and they wouldn't be under it onslaught all the time.
Which was right in retrospect.
Yeah. And I wanted them to spend more money on marketing, but more diligently.
And then Silicon Valley came in and as it was back then, they wanted to subsidize everything and Uber still needs to be subsidized in a lot of respects.
I'm never a fan of spending or investing hundreds of millions of dollars to do tens of millions of dollars in business.
And that's what I told them.
Makes sense. Who's your favorite shark to partner with?
Probably Barbara Corcoran.
Our skillsets compliment each other.
Very pragmatic, entrepreneurial.
I don't really spend a lot of time with the person to make that part of my equation, if you will, Barbara's all about the person.
She is so good at that.
It's incredible. Yeah, that, that definitely, I can see it.
Is there a worst piece of career advice you've gotten?
Follow your passions.
You don't agree with it?
No, not at all. Follow your effort.
No one puts anything they're good at.
If I followed my passions, I'd be still trying to play professional basketball.
What is the biggest mistake that you see startup founders making their pitches?
They think about what everybody else is doing and they try to connect to what's happening in the market.
If someone's pitching to me, I don't care what so -and -so is investing somewhere else.
I don't care on the valuation of some other company that you think is a comp, because I'm not investing in them.
You only survive with cash flow.
I don't want to hear about your revenues, right?
Because revenues don't matter.
I want to hear about your gross margin dollars, your valuable gross margin dollars to pay your bills, and your cash flow.
Everything else is nonsense.
Just nonsense. I watch Shark Tank pretty religiously.
One, because it's an amazing show.
And two, I find clips to show in class, which are always fun.
And there's something you do that I've never been able to make sense of, which is your exploding offer.
I know... The 24 -second clock?
Yeah. Like, is that just for drama?
Yes. Because I know how much you care about entrepreneurs and how much you want to invest in good ideas and give them a chance.
Like, this just doesn't compute...
Yeah, because one, it's still competitive with the other sharks, minimally, right?
Not very much, but minimally.
And two, it's telling you.
It is telling you. The other sharks, and they always cut this out.
You know, they're starting yelling at me.
Stop trying to change your motherfucking business plan, right?
Or stop trying to tell them what to do.
We got to go home. So, that's my schtick, like, Lori is, oh, I love you so much.
Robert is, if you had a pet, I would invest in it.
Damon's the people's shark.
Kevin is, I'm going to take it out behind the bar and shoot it.
They're ripping over some reason or way.
Barbara is, it's just not for me.
So we all have our schtick and I always try to give some words of wisdom that help the entrepreneur.
I'll give you some secrets here.
One, the time of day matters.
So if you pitch us right after lunch, that is the worst slot ever because we're comatose.
Or if you get the last pitch of the day, sometimes there's a little known secret that the water that we have in front of us isn't water.
So that, that affects it sometimes.
Well, I love that we started with you drinking with our students.
And we're ending with you drinking with a bunch of founders.
Why not, right? That's what everybody tells the truth.
Mark, thank you. This is, this has been incredibly fascinating and also unusually fun.
My favorite insight from this conversation is follow your effort, not your passion.
A few years ago, we did a work life episode on the perils of following your career passion, and Mark just added a new twist to it.
I've seen so many students follow their passion for a field, only to discover later that they love the outcome, but not the process.
If you're thinking of becoming a writer or a musician, the question isn't whether you love reading books or listening to music, it's whether you enjoy writing and composing.
The easiest way to figure that out is to pay attention to how you spend your time.
There's another benefit of following your effort.
It gives you a window into your values, not just your passions.
Psychologists find that interests can wax and wane, but meaning tends to last.
Noticing where you invest your effort doesn't just illuminate what you enjoy.
It reveals what matters to you.
Rethinking is hosted by me, Adam Grant, and produced by Ted with Cosmic Standard.
Our team includes Colin Helms, Eliza Smith, Jacob Winnick, Michelle Quint, Sammy Case, and Anna Phelan.
This episode was produced and mixed by Cosmic Standard.
Our fact checker is Paul Durbin, original music by Hans Dale Su and Alison Leighton Brown.
So if you're a startup entrepreneur out there, how are you going to make me money?
You sound like Kevin.
