Mark Cuban, one of the “shark” investors on TV’s “Shark Tank,” is a multi-industry entrepreneur and bestselling business author. He has appeared on “Good Morning America” for its “Swimming With the Sharks” segment, where a viewer asked him about his biggest business mistakes. Here’s a look at his mistakes and what you can learn from them.
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Mistake No. 1: Being Cutthroat
Believe it or not, this shark said that his biggest mistake as a young entrepreneur was thinking he “had to be mean.” At 25, when he started his first company, Cuban tried to make up for his young age with an antagonistic attitude.
Years later, Cuban learned that this was not the case.
“Nice sells,” he told viewers. “Nice makes you more money.”
The Rise of Kindness in Leadership
Cuban is one of many entrepreneurs who made this observation. In 2023, Martin Port, founder of BigChange, wrote about the emerging culture of kindness in entrepreneurship. He observed that decades ago, people saw business as a battlefield, and ruthlessness reigned.
Today, good leaders understand that negativity has a toxic effect on businesses and workplaces. Leading through fear is unsustainable, and people need positive feedback to thrive. That doesn’t mean avoiding criticism entirely, but it does mean approaching things more kindly.
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How Meanness Hurts Companies
Research backs up Cuban’s appreciation for kindness. Being kind is better for business, plain and simple.
Research indicates that when people in the workplace are critical and mean, the team feels more stress and fatigue. Being among nasty people is draining and makes productivity more difficult.
Meanness also limits innovation and collaboration, both essential to entrepreneurial success. No one wants to share ideas with a leader or coworker who’s likely to shut it down, especially if that shutdown comes with a mean comment.
If the company leader is hostile, that toxicity dribbles down to everyone. It damages morale, causes widespread stress and kills motivation. An unmotivated, stressed-out team can’t perform at its best.
Cultivating Gentleness as an Entrepreneur
Cuban was right — embracing kindness as a business leader is strategic. However, as the online business learning center INSEAD recently noted, the advice can be frustratingly vague.
INSEAD writer Nadav Klein dove into the research and found a simple but effective interpretation: Practice basic human decency. Show compassion and empathy to employees, colleagues and customers, and they will see you as a caring person.
James Rhee, chair and former CEO of Ashley Stewart, agrees. He sees kindness in business as demonstrating genuine concern for people around you. It’s about showing understanding, giving people grace and believing in good intentions. With that approach, it’s no wonder Cuban saw better results.
Mistake No. 2: Prioritizing Sales Over Profit
Besides being too mean, Cuban’s other big mistake was obsessing over revenue versus profit.
Revenue is the total amount a business brings in from customers. If you sell a $500 couch, you’ve earned $500 in revenue.
Profit is how much of that you keep after expenses. If you spend $450 to rent a showroom, buy the couch, ship it there and hire a salesperson, you’ve only made $50.
The Limits of Revenue
High sales numbers are encouraging for any business owner. It’s exciting to bring in $1,000 one month, $5,000 the next and $10,000 the month after that.
Revenue growth is important. You can only have a healthy business by bringing money in. But if that revenue doesn’t cover your costs, your business won’t be as successful as you think.
Why Profit Matters More
Imagine you own a startup with skyrocketing income. You’re making more every month, so you take that money and invest it back into the business. You hire dozens of employees and start developing more products. Those products earn you more revenue, so you repeat the cycle.
Your numbers look great on social media, but what does your balance sheet look like? Your business is shaky if you earn a high amount but can’t meet expenses. That’s a risky place to be, especially in an economy that most people view as unstable.
As Cuban learned and many other business experts argue, the way to achieve stability is to focus on profit.
Becoming Profit Minded
Revenue is an exciting vanity metric, but businesses must also know their profit numbers. There are three numbers to consider:
Gross profit: Total revenue minus cost of goods sold
Operating profit: Gross profit minus operating costs, such as employee salaries and marketing expenses
Net profit: Total revenue minus all expenses, including taxes
Tracking all three numbers gives you the most accurate picture of your business’s health. If one looks great but another doesn’t — for example, if your gross profit is high but your operating profit is low — it’s a sign that you need to cut back somewhere.
Start tracking profits as soon as possible, and your business knowledge will skyrocket. And, remember to be kind!
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