Mark Cuban, one of the “shark” investors on the TV show “Shark Tank,” is a multi-industry entrepreneur and bestselling business author. He has appeared on “Good Morning America” on its “Swimming With the Sharks” segment, where a viewer asked him about his biggest business mistakes. Here are his mistakes and what you can learn from them.
Mistake #1: Being ruthless
Believe it or not, this shark said his biggest mistake as a young entrepreneur was thinking he “had to be bad.” At 25, when he started his first company, Cuban tried to compensate for his young age with an antagonistic attitude.
Years later, Cuban learned that this was not the case.
“Good things sell,” he told viewers. “Good things make 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 viewed business as a battlefield and cruelty 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 altogether, but it does mean approaching things with more kindness.
How pettiness hurts businesses
Research supports Cubans’ appreciation for kindness. Being kind is better for business, plain and simple.
Research shows that when people in the workplace are critical and mean-spirited, the team feels more stressed and tired. Being around unpleasant people is exhausting and hinders productivity.
Petty-mindedness also limits innovation and collaboration, two essential aspects of business success. No one wants to share ideas with a leader or coworker who is likely to dismiss them, especially if that dismissal is accompanied by a mean comment.
If the company leader is hostile, that toxicity spreads to everyone. It damages morale, causes general stress, and kills motivation. A demotivated and stressed team cannot perform at its best.
Cultivating Kindness as an Entrepreneur
Cuban was right: embracing kindness as a business leader is strategic. But as online business learning center INSEAD recently pointed out, the advice can be frustratingly vague.
INSEAD writer Nadav Klein dove into the research and came up with a simple but effective interpretation: practice basic human decency. Show compassion and empathy toward employees, colleagues, and customers, and they will see you as a caring person.
James Rhee, chairman and former CEO of Ashley Stewart, agrees. He believes that kindness in business is about showing genuine concern for the people around you. It’s about showing understanding, being empathetic to people, and believing in good intentions. With that approach, it’s no wonder Cuban has gotten better results.
Mistake #2: Prioritizing sales over profits
Besides being too petty, Cuban’s other big mistake was obsessing over revenue versus profit.
Revenue is the total amount a business earns from its customers. If you sell a $500 sofa, you will have earned $500 in revenue.
Profit is the amount you keep after expenses. If you spend $450 renting a showroom, buying the sofa, shipping it there, and hiring a salesperson, you’ll have only made $50.
Income limits
High sales figures are encouraging for any business owner. It’s exciting to make $1,000 one month, $5,000 the next month, and $10,000 the month after that.
Revenue growth is important. You can only have a healthy business if you generate revenue. But if that revenue doesn’t cover your costs, your business won’t be as successful as you think it will be.
Why profits are more important
Imagine you have a startup with skyrocketing revenue. You make more money each 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 bring you more revenue, so you repeat the cycle.
Your numbers look great on social media, but what does your bottom line look like? Your business is in trouble if you’re making a lot of money but can’t cover your expenses. It’s a risky situation, especially in an economy that most people consider unstable.
As Cuban learned and many other business experts argue, the way to achieve stability is to focus on profits.
Becoming a profit-minded person
Revenue is an exciting vanity metric, but businesses should also know their profit figures. There are three numbers to keep in mind:
- Gross profit: Total revenue less cost of goods sold
- Operating profit: Gross profit minus operating costs, such as employee salaries and marketing expenses
- Net profit: Total income less all expenses, including taxes
Tracking all three numbers will give you the most accurate picture of your business’s health. If one looks good 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 your earnings as soon as possible and your business knowledge will skyrocket. And remember to be nice!
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