Mark Cuban's 12 Rules for Startups

thanks Mark. I found and read this because as a former long time Winning hockey coach, I always research winners and how they did it. BTW I love you on Shark Tank and your life story is awesome. You are a blessed man, brother!

Creativity doesnt follow the rules...Redbilly is the next "Get u'r done"

Hello Mark, I am a retired specialty food product developer. I currently live on the north shore of Lake superior. I spent the last 10 years of my career working with a privately owned company developing restaurants, bakeries, and a full line of very unique gourmet food products. I retained ownership of all of the products that we developed over this time and am interested in possibly selling these products to someone who might be able to market them. We sold these products for about seven years all over the US as all natural, organic, and salt free items. Mostly they were marketed through restaurant suppliers and up scale grocery stores. I asked him really do not have a need to go back to work trying to sell these products. Once you see the quality you will understand that they are far above most items that you see in this class. I am an entrepreneur by trade and simply like to see what the market is for this line at this time. Please respond. Thank you, Tracy

Mark makes alot of good points I would just add u gotta "Hustle" and don't try to for too much learn the one that u have the most passion about be aide that is one that will keep u motivated!

 Your key word there is "hire." Cuban's advice to hire people who will work 80-hours a week may be great for start up founders. It should also send a red flag to everyone who is not a "nerd, loser, obsessive, weirdo, asshole" to run in the other direction. Let's just see how well that works for start up founders to stop even pretending that working for them is a good idea. I'm guessing the "all-weirdo" environments may implode.

 Why are these things presented as mutually exclusive realities?

 I'm curious, though, as to whether a company necessarily does better when only such people work there. You need people who are hungry for success. You do not want an environment filled with hyped up people ready to eat one another alive or jump ship for the next New New thing. You have to be a megalomaniac to believe that other people should (or even can) be as passionate about your goals as they are about their own.

What of the mwc/cusa merger - television conract and how the affilitaion besides a merger can break the back of the bcs?  an affiliation which could end up with more than 50 teams and a national championship.???  where does this sit with mark cuban

ok, as you can see these tips are extremely helpful. but do you think your "investment" has to be a new invention or something along the lines to where its just a name brand:kids love it , adults can use it type thing?

This is the same advice I've heard from professors and swuccessful people in all areas of business. Take these rules if you want success

Very nice list.

His real bullets should be 1. Steal consumers from your employer and 2 get lucky then cash out in the bubble. 

All true of social mission start ups too, just add: 13. Mission is everything, don't let anyone in or near unless they "get it" like religion. 14. Don't take the wrong money, if you hockey stock growth and can change the world, pcik the right money ppl, own the termsheets. 15. Build design, benefit, share profit with the people you serve.  A smaller piece of something really hot, built by many matters.  Watch what happended with the founders of Paypal who went on to create 10+ other hot companies, because a bunch of people made money. Donna Morton CEO First Power B Corp, Unreasonable & Ashoka Fellow

Thanks for the thoughts. I didn't mean to allude that it's all luck or that people shouldn't be proud of their work; however, I have never met a successful person where luck/serendipity didn't play its hand at some key point(s) in the journey.

The ironic thing about guys like Mark Cuban is that they succeeded because they didn't listen too much to others. Now, why should a serious entrepreneur listen to his advise? Lmao...

This is an interesting article.  I'd also add to keep "culture" in mind as you're defining your team and establishing what is available to them from a company perspective.  For example, free snacks or free text books... which one attracts the right person to your team?   

Not sure I agree with 'no exit strategy'. It does not mean you are not totally attached to the idea if you have one...it's just a good idea to contemplate all possible outcomes for your business

People aren't understanding the purpose of his article -- startups. You have to have the no-life, no friends, no wife, 100% work, live at the office, low overhead etc., if you want to survive the start. After your company is awash in cash and has a steady revenue stream -- only then can you hire bimbo PR ladies and family and friends and whoever else is a dead weight to a pure startup. Don't want to make a sweatshop? No problem, it's called money. Money cures all, even 80 hour work weeks. That's the point he makes with hire the best -- better to hire one person who's the best than three people who have other things going on in their life and can't commit. This will anger the family values, "balance" in life crowd but the most technically competent people do not have balance in their lives. They dump their entire life into math, or science, or technology, or whatever else drives them. They didn't take liberal arts degrees with a little bit of this or a little bit of that nor did they spend time polishing the other parts of their life. You want these people to work for you. The crowning achievement of capitalism is division of labor and specialization -- human beings are no really more dumb or more intelligent than human beings anywhere else under any other system. As a startup you need every advantage you can get. Startups are about 80 hour work weeks and total commitment. By the way, Cuban's advice is not for creating sweatshops. Follow Cuban's advice and you could probably start a home business and transition to a small office. Cuban's advice is a proven blueprint for success. Meanwhile follow the advice of some in these comments and you would probably end up bankrupt in three to five years. Sure if you make it to be a medium or large business, you would need a PR firm. But how many companies have hired PR firms or more importantly wasted money on swag and gone bankrupt? Those people are not posting in these comments and that's what Cuban is warning about. Hire the nerds, hire the losers, hire the obsessive, hire the weirdos, hire the assholes, hire the people who you would never want to work with or be friends with. You don't have to be one of these (although it helps). Trust me, you are not taking advantage of them -- they want to work for you, they want to be hired, they want to dump 80 hours into your business. You just have to sift through the piles of resumes, hundreds of interviews and cut through the bull to find them. And when you do, they will form the core of your company.

try watching Glengarry Glen Ross...It is a line from the movie.

My husband is in management with UPS. We have never hired a PR firm.  We are one of the most recognizable companies in the world.  We are lucky. Many companies are not. All I do sometimes is say "brown" and people know. Advertising YES!!!! You have to have a good firm no matter what the size of the company to keep your company out in the public. Commercials, promotions, sponorship. KEEP YOUR NAME OUT THERE.

I took it to mean that you shouldn't try to be too fancy as a start-up.  You don't need to waste money on an espresso machine when you can make coffee or buy sodas for a fraction of the cost.  At least that was my take.

Startup rules or Sweatshop conditions?

Well said Tara! Best to hire a good PR writer, then submit your intro to PRnews.com and similiar pr sites. Then beat the streets for a beat reporter, tailor your message to their pain points. If your start up website saves you money at the pump, contact reporters who have just released a related article. Position your start up as the hero. Sandy Rowley Megastar Networks

He didn't say no one needed PR flacks, just that startups don't and can find better uses of their money.  I wholeheartedly agree.

Awesome post Nigel!

I disagree in part about open offices, at least for some employees. If you are a software startup, putting your engineers in open offices can decrease productivity. Informal interaction is great, but it can be impossible to concentrate on writing code when there are multiple conversations going on around you. When it comes time to crank on something that needs undivided attention, having a door is invaluable. Likewise, founders do need to have sensitive conversations away from employees and some employee / supervisor conversations need to be had in private. A badly executed open office environment with poor ettiquete can destroy morale and cause a startup to hemorrhage talent.

I'd love to get it too !

How do you feel about establishments selling cups of water to customers. i.e. Health Clubs. They have water fountains. Some people want a plain old cup of water. I know of a Chain that sells the cup of water for over a buck. Yes, people do but it, but the scoff at it. Capolisa@aol.com

How can I contact you to tell you my Idea for a start up business ???? Has to do with a little well know item that's in every home ( well people who read ) every week. Capolisa@aol.com

Rule # 13 Maintain Flexible Persistence- The goal is to have a vision and be persistent. However, you must be flexible and change to the desires of your customer. Reid Hoffman the founder of LinkedIn said it best- "The art is knowing when to be persistent and when to be flexible and how to blend them."

It's all about risk and cash flow ultimately. Debt represents a certain amount of risk and a reduction in cash flow. Plus there is no such thing as stock with a guaranteed high yield. Just not worth it. The most successful companies (and individuals for that matter), the ones that stay the course and have lasting success, on average, operate with *zero* debt. Good luck to you.

let me tell you I got 12 of 12.... never thought about I will ask myself those questions I'm on  the right way!

Thank you for very nice post and comments. But because of my poor English, I could not understand "An espresso machine? Are you kidding me? Coffee is for closers. Sodas are free. " What actually is it telling?

Mark was extremely lucky too. Right place. Right time to sell off his first company to people who needed something...and did nothing with it as I recall.

Wow, Mr. Cuban seems to advocate total immersion.  I think that knowing an exit and taking some hours out of every day to stay in touch with family and friends (oh, and sleeping) makes for more engaged and productive employees.  I'm all for being passionate about your work (I represent that every day), but limits are important to avoid large-scale burnout.  Burnout leads to flame-out.

I definitely agree with you on this. Every Business person knows connections is the key in this society unless you come up with a brilliant invention/ideas that no other has yet. Paying for a PR rep is like paying for a connection with your target and insurance that your effort stands out. 

You will certainly still work but you will enjoy doing so. It's ALWAYS hard work building a company.

LOL thanks for the laugh Tara! 

Being "some PR Flack" I obviously take exception to #11. First of all, a publisher of a magazine typically isn't involved in editorial content, so I'd suggest not wasting his/her time or your own by emailing them. Better off targeting a specific beat reporter, who has written about your competitors or on similar subject matter. Also, editors receive hundreds of emails each day, never mind another startup introducing themselves. That is when PR relationships can help companies rise above a crowded inbox. Plus, most biz folks, at least clients that I've had, while very passionate, find it hard to cut through the technical details and the BS to see what angles are really newsworthy. Thus, again how ‘PR flacks’ (grr to that term, thanks for insulting a whole profession) can help.

Making any attempt to get my business known is a #1 goal for me.  For me I find myself blogging while my bread is toasting before i have to rush out the door to my hourly job.  In the meantime I do find some time to at least try. Not paying thousands of dollars is a goal as well.  Word of mouth is very important to me.  After all I'm the CEO, secretary, salesman, PR guy, ad guy and copywriter (did I forget something?) So many hats to wear on top of the actual hat that pays the bills. 

Most small business people dont have the time or the experience to conduct effective media relations programs.  I say most, certainly some can do it. 

Well, I see a few mistakes I made!!!

Excellent advice! I really like #1. If you do what you love, you will never work a day in your life!

Nice read...Common sense makes a lot of sense..But can't see any "out of the box" rule here..maybe we don't need to emphasize too much on innovation on start up..Is it just about Passion and smooth execution?

Agree, I run start up for 4 years and most of the recommendation are true and not just for IT business.

I agree with the PR statement.  I would not pay anyone to do what I believe is a fundamental part of being a business owner, being able to communicate to the community around me.  I don't have a problem going out and selling "myself"  I actually like to see the face to face response when I mention my product.  After all they say about it nothing is free is it?  I know my product is unique and provides solutions for people, but I dare not mention my site here cause I don't like to be a spammer.  And If I find the correct communities and introduce my business however free it is, one day it will pay off.  So with that great Facebook advertising and all companies even News stations producing ads asking people to "Like Us on Facebook"  Lets see who follows the leader and who is the leader.  I'm going to bet the person talking to people face to face will be in the front.  And you can post that on your wall for everyone to read.  I prefer to hand someone a card for them to post on their real wall in their office or at home on the Frigidaire.

Tried to make a posting on #2 vewing absurd,; #6 being bad employee relations, and: #11 beign gjust plain wrong, unless you have internal PR staff to handle inquires and promote your company. Where did you find this guy? He is just wrong...

Entertaining read. Good work Mark!

I have been working in both very competitive start-up and big technology companies. I think everything he said is very true.

he's never worked for or with a software company...open office plan is just for saving money, has nothing to do with productivity

have to laugh at #10. What a total waste. Take that money and hire a PR firm to write those press releases, then YOU contact the media. ;)

Excellent article and absolutely accurate (having lived through several of these mistakes :))

Great list!  I love the emphasis on passion, openness and keeping it as simple as possible.

An extreme example of pre-planning an exit strategy is saying something like: "We are going to raise enough money for 1-2 years of dev, at which point we will sell to Google". Selling to a strategic acquirer is always an option, but you are at a huge disadvantage of it's your only option.  

Cory Janssen's comment made me rethink my position on #2. If what Mr. Cuban meant by "exit strategy" was not failure planning, but instead... If Mr. Cuban is trying to say that "one should be committed and not focused on the exit" then yes, I agree with that. I.e., You gotta be committed. It's gotta be your passion. You have to be thinking "I may be in this for the long haul.

Hmm... You are making me rethink my position on this. I read "exit strategy" as "planning for potential failure". I think what he is meaning is "strategy to leave, regardless of level of success", which wasn't clear. At least it wasn't for me. The former is planning 101. The latter is a lack of commitment. If so, I agree with your point.

I think Mark is completely correct about #2. For every story where somebody has planned to exit in a year or two, there are a dozen startups that fail because they don't build a real business that can survive on its own cashflow. 

Worth the read ...... Makes a good deal of sense ...

I have no idea what is going on in #6. So is it bad to get an espresso machine for the office? It's too much of a reward but soda isn't? Get out of the office for lunch but spend the other 23 in it? Help me out here.

Debt isn't inherently bad its just if you can get a return on it.  The world is awashed in cheap capital and you'd be foolish not to take advantage of it.  You can borrow now at zero percent for 2yrs with a transfer fee of 3% which if you invested in high-yielding stocks for EXAMPLE is a return on money that wasn't yours to begin with.  To add to Cubans list I would suggest a competant lawyer and certainly an accountant as part of any team going forward.

Yeah. I agree with the others. #2 is incorrect, naive and is disaster waiting to happen. #6 Makes Mark sound like an inexperienced leader. It doesn't belong here and suggests a poorly lead team. Maybe I am misunderstanding the point. #13: Do it without debt. This should be tattoo'ed on ever entrepreneur's forehead. The rest? Good advice.

My partner is a PR guy so I have that covered from the start. It is a big part of the  strategy depending on what your niche is. For instance, if you're selling clothes online, you better be doing some good PR since it is surrounded by "image".

Comeon moderator, you're not playing fair. We wrote a thoughtful article in reaction to this one here and you didn't post the comment! Anyone interested in reading it, check out BrokePreneur dot com

Insightful advice, but we respectfully disagree as well... http://brokepreneur.com/2012/01/brokepreneurs-rules-for-your-small-business-startup/

i love when people don't read...  "it's okay to buy for your own employees"

Re: #2 - respectfully disagree.  Many that go in it are inspired by great exits.  There is a reason it's called .COM, not .ORG, so you better know how it's going to end.

Yeah, because outsourcing has worked _so_ well in industry so far ....

If your startup involves programmers, and they don't have privacy and quiet, you won't keep them long.

10. Never buy swag. We bought one t-shirt which all of our team loves to wear. Total cost <$120. Good teams are dedicated and like repping their family.

Tip No.1 Have a load of cash to buy any service you want

Mark isn't suggesting not to do PR, just not hire a PR agency. Early in the startup phase, that money is better spent focusing on proof of concept and iteration development.

Categorically agree with what you are presenting Anthony. All of the most valued advisors I've had, including one Michael E. Gerber of the E-Myth, espouse "what does it look like when it's done". And I believe Michael's had a fair bit of experience here. I think I appreciate what Mark is actually saying though may be more in line with, don't have 'poor excuses' lined up as a reason for failing. Possibly more of a 'burn the boats' type of approach to push yourself beyond where you thought you might be able to go. It seems his article is somewhat polarising in terms of reaction. I feel there are good points and ones I don't go along with. I guess it's the way Mark chose to create strength in the type of companies he wanted to create. He seems to have been successful at doing that and of course we know, no two companies are alike - again referencing Gerber that our companies will simply be an expression of ourselves.

Great article.

Making a ton of sense @mcuban. The best advice: run away!   

He's talking about startups and the type of employees that are hungry for success.  During the startup phase, the employees must be dedicated to increasing the odds for sucessess so that the company survives makes the first five years since most companies fell within the first five years.

Umm...I thought he had exit strategies in place for broadcast.net from day 1?

Great article, but have to +1 the comments on #11 being off. Too bad Mark hasnt had the opportunity to work with a truly inspired PR team who works creatively. It can really work wonders. 

For Startups to be successful in this ultra competitive environment you must have all hands on deck 24/7.  That is exactly why juggernauts such as Google, Facebook & Apple build these all encompassing campuses, to maintain that startup mentality that put them in such enviable positions in the first place.   Once that startup transitions into a success then the employer should reward those employees with more than just their base salary (stock options, bonus, vacation time, perks, etc...).

Clearly Mark Cuban’s track record speaks volumes about his business acumen, and any entrepreneur would be wise to study his career and the decisions he’s made along the way. However, reading his “12 Rules,” I can’t buy #11: “Never Hire a PR Firm."  Never is a long time, Mark.   Should a start-up business always hire a PR firm? No. But there are certainly times when a new business owner would benefit greatly from outside counsel and having additional resources to deploy.   Cuban’s main point seems to be that public relations is all about pitching stories to reporters. That’s part of the job, but the public relations business has changed considerably since the days of Broadcast.com and its ilk. Today’s public relations firms offer counsel and execution to start up companies on a wide spectrum of strategies and activities. Firms help clients tell a story through various social media platforms; they identify and inform key stakeholders, build communities, and package and present salient business points. A good case study can be found in this blog we posted last year, written by a successful small restaurant owner in Chicago: bit.ly/hYBQXp. Entrepreneurs succeed in part because they subscribe to the art of the possible, not by indiscriminately rejecting possible solutions.

I like the entrepreneurial advice, but have to disagree with #11. Obviously you've never hired a great PR firm. Additionally, I've yet to meet a successful president or CEO who has time to research, pitch, schedule, prepare and coordinate interviews. If it's done right, it takes more than an introduction and a couple of emails.

My thought is Mark needs to go back to school into SMU. He is just one luchy man that will soon fall into the back ground.

absolutely agree. life and work should be kept apart

Mark, se supone que sos un hombre exitoso, entonces deberías saber que son las Relaciones Públicas. Te aclaro que las Relaciones Públicas son clave para el éxito de cualquier negocio. Te dejo un enlace para que te instruyas, y no hagas más el ridículo.http://www.rrpp.org.ar/index.php?page=Quienes.Alcances 

Bryan, I had the same exact thoughts.  Interestingly enough, I too am an IT professional.  I would also much rather get more time off or a raise than an occasional $100 bill thrown my way so my boss can create an exciting office environment.   He also calls for open offices, how about no offices at all and allow your employees to work from home as much as possible?  I don't have kids, but I know that I am much more productive when I spend the day at home with my dog than when I spend it in the office for non-productive meetings. I personally wouldn't want to invest over 50 hours plus commute time for somebody else's business, so I wouldn't expect my employees to do so either, regardless of how passionate they are for my business.  This is especially true if I know the time spent actually getting work accomplished is a fraction of those hours. My point is that not everyone is motivated by the same rewards in the workplace.  For some it is money, for others it is recognition, for some it is stability of having a job that pays the bills while their passions lie elsewhere with family, friends, or hobbies.  Perhaps Mark Cuban has gotten better results from employees who enjoy drinking the company shot, but I'd rather work with people who want to spend time with their families before they retire.

As a partner in a small NYC tech company, I can say that Lucy is 100% right.  A company can have the best product in their market, but if people don't know of it, or don't understand WHY it's better, then it's all for nothing.  We are still struggling with this.. 

Thinking that a great product spells business success is a mistake. "If I build it they will come" only happens in a field of dreams, or if you are lucky. The key to success is not just having a great product but knowing how to market it so others hear about its advantages. 

"Coffee is for closers... There are 24 hours in a day, and if people like their jobs, they will find ways to use as much of it as possible to do their jobs." I'm not a startup operator, I'm an IT professional... though at the moment I'm a full-time father staying at home with my kids - and loving it. I actually had to google 'Coffee is for closers' to find out where it originates from. So it comes from Glengarry Glen Ross. I've not seen the film but from the way it's described it seems to be about a morally and ethically bankrupt set of characters. The line is issued by a man who is informing the team that only two workers will keep their jobs, the rest will lose them. Is that the sort of motivation that's being talked about here? Is providing an espresso machine really the sign of a company that's about to fail? I'm a family man, and I've been very well paid for the work I've done in IT... but motivation for me doesn't consist of being offered nights out drinking Kamikaze shots - another night spent away from my family as well as the days spent away - but I guess that doesn't bother someone who's looking to get their employees to spend as much time as possible either working or thinking about it. If workers don't have lives outside of their jobs - family, sports, travel, music, whatever turns you on - then ultimately their work will reflect that. If a business expects its employees to be thinking about their work 24 hours a day, will the business be there for them when they lose their relationships and their families? Will it be there when its employees are telling their teenage children "I'm sorry I wasn't there for you when you were kids, but my job was more important than you"? Is it really so hard to run a company, and care about people a little... even enough to get them an espresso machine?

Good stuff. But. I don't believe for a second that Mark Cuban didn't have an exit plan for any business he started. Knowing how shrewd an operator Cuban actually is and based on his past deals, starting any business without an eye for an exit (whether that's to cash out or diversify) seems non-nonsensical to me. I get the notion of being so impassioned by your business that selling it at some point in the future is probably a negative thought you don't want in your head at the beginning, but I disagree that being mindful of it makes it less of an obsession.

If you have a vision for a great product, but can't connect with customers you will fail in business. There is nothing wrong with recognizing your weaknesses as an entrepeneur and hiring people who compensate for those weaknesses.

that is great information. Cheers Mark

Great read and need to knows!

Lucy, you are so right! I am both a PR professional by trade (nearly 30 years) and an entrepreneur of other ventures. I like Mark Cuban and admire him, but he's clearly  never had the experience of a reporter using him, taking information, mis-representing it and then dealing with the fallout.  It is a mistake to ever believe that a reporter is your friend when it comes to building a story.  PR and media relations is a delicate balance of science and art. Some entrepreneurs 'get' marketing and PR and others don't. I don't drill my own teeth -- and my dentist thanks me for my good sense. It's just more efficient and effective to hire an experienced media relations executive. 

I think PR is about finding the right person to work with. When I went through a tough time in our startup (like a particular tough time, not just standard startup challenges) my PR firm was amazing and were typically the first people we called. Find the right fit and these people can change the level your business operates at. I agree with your thoughts here Bill

Truth:  #8, sentence 3.

if you need a PR person you can't start a business when you start you need to think on every dollar when you start you come with a vision and your vision will bring you money not a PR person 

Mark's points are mostly right on target. I'm a two-time entrepreneur myself, and I especially feel strongly about having a flat organization and an open office.  But where I think Mark is 100% wrong is about public relations. Keith expressed very well most of the reasons. An entrepreneur recently wrote an article in Inc. entitled, "Marketing Plan: Why I'm Betting on PR."  (http://www.inc.com/caroline-limpert/public-relations-strategy-why-i-bet-on-pr.html)  I own a small NYC PR firm that specializes in working with start-ups. Start-up CEOs are generally not very savvy about PR and often don't have much experience with marketing. Most of them don't come from marketing backgrounds, they're technology geniuses, or have some great consumer product ideas, etc. They may know how to develop a great product, but have no idea how to develop a great brand. They look to us to help them do that because PR is a one-stop-shop for building credibility, visibility and brands.

The problem is that people can love their jobs but aren't able to work all day.

Passion and Obsession are important, but Talent, Vision and Perseverance are also needed. The hardest part of being an entrepreneur is realizing you can do it when it's already too late in your life. How do you do it when you have a family to feed and very little time for anything else? the answer is "Perseverance"; the secret sauce for all entrepreneurs. You can build an empire one brick at a time, one brick a day, little by little. However, you also need to have the Vision of something that would be a good business.

My Man.  Entrepreneurial DNA.  He cant help being smart, straight up and blunt. Hes talking about start-ups.  Not stage  2 or 3 companies that have customer lists and 3 year revenue projections. Like pilots, entrepreneurs are born that way, we cant help ourselves.  We like risk, creating, no rules and winning.  Been there, done that.  Hes right on.

PR professionals and marketing professionals know how to communicate with the media and can really help start ups and all businesses.   On this point Mr. Cuban is quite off the mark.  Most start ups don’t have the time to seek out much needed media coverage and unfortunately they, start up owners and entrepreneurs, are not marketing or media relations experts.  They need the help and advice.   Without help and advice from PR adn marketing pros a start up could make a communications or marketing blunder that could put them out of business.  Working with a PR pro or marketing expert is an insurance policy that startups should have.  Bill Corbett - Corbett Public Relations @wjcorbett:twitter wjcorbett@corbettpr.com