Mark Cuban doesn’t believe in following your passions (Transcript)

Listen along

Re:Thinking with Adam Grant
Mark Cuban doesn’t believe in following your passions
Sept 13, 2022

[00:00:00] Adam Grant:
Hey everyone. It's Adam Grant. Welcome back to Re:Thinking, 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 discuss some basketball rules that I think are long overdue for change. And why it's terrible advice to follow your passion.

[00:00:53] Adam Grant:
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. Tell me why, why did you do it?

[00:01:16] Mark Cuban:
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 time shocked me. I was really surprised. So that's what made it stand out.

[00:01:35] Adam Grant:
So interesting. Well, our students were blown away that you were willing to take the time to, you know, not just meet with them, but just hang out with them.

[00:01:43] Mark Cuban:
What else was I was I gonna do in Philadelphia?

[00:01:45] Adam Grant:
You know, well, we, we clearly need to show you some other parts of the city if that's, if that's your view, but I, I thought it was, it was just amazing and--

[00:01:54] Mark Cuban:
--I appreciate that--

[00:01:54] Adam Grant:
--It left it left quite an impression and, 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 rethinking the way things have always been done. And you have done that in a major way with Cost Plus. What's the origin story here.

[00:02:12] Mark Cuban:
So is the company. And the origin story is very simple. I got a cold email from a Dr. Alex Oshmyansky, 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 a more reasonable price. And I was like, that's great.

You know, I've been working on healthcare issues and, and doing a lot of research on healthcare, 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 explained 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 pharma bro Martin Skreli with the idea that you can raise a drug price by 5000%. And I told him, if you can raise it by 5000%, there's a really good chance. You can reduce it by 5000%. And so let's dig in and we started to, and, and I told him, look, here's the best way for us to do it. We're gonna just price everything at cost plus, and we're gonna show everybody exactly what our cost is.

We're gonna market it up 15% and why 15 like anything in, in a lot of business plans, you just pull it out of thin air and, and see if the numbers work. And then we started going from there, you know, our costs, plus 15% plus shipping and handing fee through our partner, Truebill who fulfills the script and then a shipping fee. The next issue was, how can we get manufacturers and, or distributors or wholesalers to sell to us? Actually, that was the hard part because you there's so many regulations and so many things that you have to get all your Is dotted and Ts 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 albendazole.

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 gonna put my name on it and it was just gonna be Cost Plus Drugs, but I put my name. 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 albendazole. That was our first drug. And we were able to work with Truebill to create the website and get it integrated and all that stuff. So we could fulfill. And on January 19th, 2022, we launched.

[00:04:45] Adam Grant:
It's amazing. Congratulations.

[00:04:47] Mark Cuban:
Thank you.

[00:04:47] Adam Grant:
I've just been stunned, even watching on Twitter, right? 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.

[00:04:58] Mark Cuban:
Yeah, it's stunning. Isn't it? It's just insane that, you know, well, 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.

[00:05:15] Adam Grant:
No, 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.

[00:05:24] Mark Cuban:
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 wanna create charities and, and not as many people want to be charitable and, and two, you know, you want it to be self-sustaining because the only constant in any business industry, vertical, whatever is change. There's gonna be new medications, things become generic. There's aren't gonna become generic. There's evergreen you know patents, and you've gotta be able to adapt and be agile. And so we didn't think that could work as a charity and we certainly did not wanna be dependent on contributions.

[00:06:00] Adam Grant:
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 healthcare industry.

[00:06:07] Mark Cuban:
No, just supplements. I'm very very cynical and skeptical of healthcare claims by supplements that have no researchers or science behind them.

[00:06:16] Adam Grant:
So here, here are the data we're already there. So that's, that's easy, but also this is just it's pretty far or outside your, your normal expertise. How did you decide that this was an idea worth pursuing? Cuz I think you get as many pitches as anyone on earth.

[00:06:29] Mark Cuban:
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 had talked to somebody that worked in and around The White House. And I said, well, what are they gonna 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 healthcare. 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 healthcare industry. You know, I, I funded a study on I'll give you one example. I asked a simple question. I said in Toronto, in, in Manhattan, the price, the annual wages of a doctor and hourly wages of nurses are about the same between Toronto and Manhattan.

The cost of a bandaid is about the same. Why is there such a discrepancy in the cost of healthcare in 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 there are 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 U.S. There's quest for profitability by adding new specialties that there isn't it 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. Oshmyansky came along, it was the perfect timing for it.

[00:08:07] Adam Grant:
Wow. Well, the model, when I first heard about it, I thought, oh, this is what the construction industry does.

[00:08:14] Mark Cuban:

[00:08:14] Adam Grant:
This is how I've, 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 though 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?

[00:08:29] Mark Cuban:
I still haven't. You know, we're trying to make it up with volume and, and that's the thing, right? I knew I was gonna have to eat a lot of capital right to, 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 gonna 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 rein.

[00:09:08] Adam Grant:
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 mote, right. You're not in a situation where you're gonna get network effects necessarily. And so it seems like it's pretty easy for anybody who's interested in this problem to say, wait a minute, why don't I go to 10% or 9%? Yeah. What. What happens then?

[00:09:27] Mark Cuban:
So there's a couple 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 dollars to $10, which is not outta the ordinary for us. You know, people who have a specific disease tend to go on group forums. 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 supplier. So while we can't build a technological mote, if you will, or even a scale boat and it's quite possible that someone can come in and, and copy us and cut their costs and undercut. Still there's that trust factor. That's very important because the, you know, if someone comes in and saves you money on something dramatic money that really changed your life, you're probably gonna go back to them first, even if a competitor emerges.

[00:10:39] Adam Grant:
So in that sense, it sounds like your competitive advantage is actually your brand loyalty.

[00:10:44] Mark Cuban:
Yeah. Trust is critical in this. People are betting their lives.

[00:10:48] Adam Grant:
When I think about that, I, 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.

[00:10:56] Mark Cuban:
Yeah. Right?

[00:10:57] Adam Grant:
Like you, you wave a flag saying, Hey, we're here to care and everybody holds you to a higher standard. How are you thinking about that problem?

[00:11:05] Mark Cuban:
We're not gonna advertise seriously. I mean, that network effect is considerable. I can't understate it. You know, I'll use this as an example, and we're not there yet. We're working on it, but we're not there yet. Let's say we added insulin. The one thing, if you go through our mentions on Twitter or, or any social media, insulin, insulin, insulin, and we're working on it, I can't make any promises, but the minute we do that, we 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.

[00:11:41] Adam Grant:
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 and A it came out that they had been an early mover in mail order or pharma. 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. It seems like you should be able to share information that helps people make decisions.

[00:12:20] Mark Cuban:
Yes and 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 them. 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 gonna be expensive. Most likely it's not even available through mail order, but if it happens to be right, they're gonna be able to tell who you 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 trade off 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.

[00:13:20] Adam Grant:
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 gonna look to the people in my community who are also taking this and asking, okay, what are you doing? Well, this cost 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.

[00:13:44] Mark Cuban:
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.

[00:14:10] Adam Grant:
I remember as a kid watching the old hair club for men ads.

[00:14:14] Mark Cuban:

[00:14:14] Adam Grant:
Which I never realized was gonna apply to me.

[00:14:17] Mark Cuban:
Yeah. I know I'm getting there fast.

[00:14:19] Adam Grant:
You're still way ahead of me. Uh, I remember the, the, the commercial that always said I'm not only the president, I'm also a client. Are you a client, Mark?

[00:14:29] Mark Cuban:
Yeah, for sure. For sure. I take the generic for Synthroid. So I have hypothyroidism and my price went from a couple hundred dollars down to $9 and 90 cents.

[00:14:40] Adam Grant:

[00:14:40] Adam Grant:
Do you give, do you give feedback to the team based on your user experience or do you try to stay outta that?

[00:14:45] Mark Cuban:
Yeah, 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. End of 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 okay, 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, okay, we can't stay within that 15% threshold.

And so you're not gonna see telehealth adage. You're not gonna see a blog from this leading doctor talking about X, Y, or Z, that. 11 minutes to get your call picked up instead of two minutes, or we might push you to email rather than saying, okay, just hold on. We'll have a customer service rep. Cause 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 trade offs that we have to make. So when you ask about, okay, getting feedback from our employees and friends, whoever. Yes, absolutely. And we're trying to use technology and chat bots 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 wanna save, you know, $9 on your 30 pills every month, or if you order 90 days worth, you can save, you know, $40 instead of 20. 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 gonna get those bells and whistles. You're gonna get the lowest price.

[00:17:12] Adam Grant:
And now I understand why you said you're eating your own dog food instead of drinking your own champagne.

[00:17:16] Mark Cuban:
Yes, exactly. Low cost dog food.

[00:17:19] Adam Grant:
Yeah. It almost sounds like you're the, the Southwest airlines of, of pharmacy.

[00:17:24] Mark Cuban:
Great analogy. Great analogy. Yep.

[00:17:26] Adam Grant:
I'm not gonna get to choose my seat. There's no first class, it's the best deal.

[00:17:29] Mark Cuban:
We might not even give you peanuts.

[00:17:33] Adam Grant:
That's okay. I was, I wasn't coming for, for the food for the peanuts.

[00:17:36] Mark Cuban:

[00:17:36] Adam Grant:
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, okay, here's the margin we're gonna make. And we're gonna manage to that margin as opposed to managing to the market.

[00:17:53] Mark Cuban:
Yeah. Particularly as trust becomes a greater issue within an industry. Having that radical transparency and healthcare is the obvious example. Cause nobody understands how prices are set for anything, whether it's the government or patients for that matter. But wherever pricing is off, a you have an opportunity to pick up customers and start a business around transparency.

[00:18:12] Adam Grant:
I, 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? Yeah. Um, how are budgets determined? Whereas you have a target. Everybody can understand. And it seems like it actually takes a lot of work off the C-suite hands to say, we don't have to explain every decision we're making. You actually already know the logic behind it.

[00:18:36] Mark Cuban:
Right. 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 the underpinning of the need for transparency is trust. And as organizations recognize, they have to create trust from their employees. Cause you know, and I had this discussion with a group. I was talking recent college graduates. I'm like, look, when I graduated from college, people talked about careers. Now nobody talks about careers. Now you are 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 gonna be a free agent. And with employees today, particularly gen Z employees, they come in knowing they're a 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.

[00:19:35] Adam Grant:
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 gonna, I'm gonna butcher your words, but you can give 'em 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.

[00:19:53] Mark Cuban:
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're telling 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.

[00:20:22] Adam Grant:
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, you know, different kinds of restructurings, but really take care of their people. And it turns out the researchers even call downsizings dumb and dumber, uh, 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 and left. And the rest of the employees basically said, I'm gonna do whatever I have to, to protect my job. I'm not gonna innovate and try to get us outta crisis.

[00:20:58] Mark Cuban:
When your entire focus is only your earnings per share or the cash in the, and you're that short term focus you 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 is 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, and I think one of the beautiful things, I, 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 place 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 gonna 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. Gen Z in particular, less-so so millennials, but gen Z in particular, I think is gonna 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 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 for your employees and your customers where they'll find somebody who does.

[00:22:47] Adam Grant:
That is such a refreshing dose of generational optimism. I, I think you can mark that up 30% on Cost Plus.

[00:22:54] Mark Cuban:
I'll only take fifteen.

[00:22:54] Adam Grant:
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?

[00:23:06] Mark Cuban:
I mean, you know, I'm not gonna 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.

[00:23:16] Adam Grant:
You're failing big time on that one.

[00:23:18] Mark Cuban:
I'm honest about it and that drives decisions. It's like, why is 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 gonna lie either. If I'm 25 and I'm doing this again, I'm probably going for, okay, what can I do to get acquired? But now the next dollar in my life, the marginal value of my next dollar is the minimus. It's not gonna change my life a lot. So my decision making process is completely different. And so if you look at hospitals to go back to. Know that CEO gets paid and those stock options improve and 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 Keating generation, the yuppy generation, right. And the 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 gonna be harder to retain your customers.

[00:24:44] Adam Grant:
Mark. I'm curious if your goal is still to retire, you are definitely failing on that one.

[00:24:49] Mark Cuban:
Retire in the sense that I get to make my own decisions. Now I get to make my own decisions. People kiss my ass and work to my schedule. I'm not at retired cause 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.

[00:25:06] Adam Grant:
That's that's exactly what I was wondering about is, is what motivates you, cuz you've you have total control over how you spend your time. When you look at an idea like Cost Plus it comes with huge opportunity cost. And so how do you decide, okay, it's one thing to invest in it. It's another thing to say. I wanna put my time and energy behind it.

[00:25:24] Mark Cuban:
Yeah. I get to fuck things up, you know, that's the upside, at least every entrepreneur, the back of their mind says I want to be that entrepreneur that disrupts an industry and changes. 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.

[00:25:42] Adam Grant:
I think of you as the capitalist with a heart, is that a fair description?

[00:25:46] Mark Cuban:
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. 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 you know, like we discussed earlier, sometimes people get caught up on the money and I understand why.

[00:26:20] Adam Grant:
So I wanna get your take on, 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, like, what are you doing? Are you gonna compete? Or what? And one of the most common responses was listen. Like we get it. But we're in a different business, which is we're trying to have bigger margins because R and D is super expensive and we need to be able to reinvest that, to develop life saving in medications. We were 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?

[00:26:54] Mark Cuban:
So we're their best front. Because the, 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 payers and the PBMs can maximize their margins, that the manufacturers are sometimes just paw in that game. So now we're starting to, you know, negotiate our deals with brand name manufacturers, not just generics, and as we add them, their patients are gonna be able to see that. They weren't the bad guy. There's the insulin manufacturers that publish all the data that said their pricing has actually gone down, even though the price to patient 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 supplied, then. If we're paying even marginally higher than what the manufacturers charge the PBMs, right? It's still gonna be cheaper for patients, which means there's gonna be more volume for the manufacturers. And because we're paying a tiny bit more because we don't have that scale, the insurance PBM verticals, we're making the manufacturers more, more money.

[00:28:25] Adam Grant:
I guess the other side of that, the socialist pushback. I hear a lot of people saying, yeah, but shouldn't medicine be free.

[00:28:31] Mark Cuban:
Look. Nothing is. It just depends on what the product is or are you selling ads around it? Who's paying for it, or 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 cheap. More power to 'em and to distribute for free because it saves the money on the Medicare formula is 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.

[00:29:21] Adam Grant:
I wanna come back to the free agency point you made earlier. Um, I've started to wonder if we're gonna 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, 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 bid, the highest mission?

[00:29:44] Mark Cuban:
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 arbitrize 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 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 at some, some level. It's an arbitrage on your earnings versus your time. Maybe part of it is okay. So I want some consistency. I wanna 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, to value their time more. That's the arbitrage.

[00:30:36] Adam Grant:
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, right, is having a super team around me. Last year, I invested in a startup A-team that said, we're gonna do this for the builder economy. We're gonna take engineers and designers, we're gonna 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 that's. Yeah. Can, can you see that scaling to other kinds of jobs and work?

[00:31:04] Mark Cuban:
Yes, I can. The hard part is selling it because getting somebody who has control of, of a checkbook, getting them to admit that, 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, is 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 who you cast down 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.

[00:31:52] Adam Grant:
To that point. One of my favorite studies of the last few years scored NBA players on how narcissistic they were from their tweets.

[00:31:59] Mark Cuban:
That's a great one, I haven't seen that one.

[00:32:01] Adam Grant:
Yeah. Oh, it's, it's amazing.

[00:32:02] Mark Cuban:
You'll have to send it to me.

[00:32:03] Adam Grant:
I'll send it over. I'll send it to you offline. The finding was okay so we get the narcissism scores by the, the tweet patterns.

[00:32:08] Mark Cuban:
That's literally amazing.

[00:32:11] Adam Grant:
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.

[00:32:24] Mark Cuban:
Yup. On the Mavs, too, over 22 years. Certainly on the Mavs.

[00:32:28] Adam Grant:
Interestingly, it's worse if your point guard is the narcissist, I guess being the focal point of the action. Yeah. Or at 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?

[00:32:41] Mark Cuban:
Oh yeah. That's-- not necessarily narcissism. I will now though. Cause I just learned something great that will really help me. Not necessarily narcissism, but culture and chemistry. So like I have 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. Right. I have no problem with someone smoking some weed. Right. But you know, when, 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, a better communicator. Not that Rick Carlisle 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 and knew how they fit together. And that allowed us to go much further than people expected us to.

[00:33:55] Adam Grant:
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?

[00:34:14] Mark Cuban:
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've gone for, but had the most amazing experience I've ever seen on the culture and employee support and employee training and enhancement if she was the best at putting them in a position to succeed of anybody I've 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, it raises head and tells you, you can see it in multiple places where people are leaving or people go to the next door and people are leaving comments and this and that.

Sometimes you just gotta 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, uh, you know, we also like for the Mavs, Dallas is one of the largest Indian communities in the country and we wanna 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. So 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 gotta rebuild and to avoid it. You've gotta recognize that kids coming into your organization today are completely different than they were five or 10 years.

[00:35:41] Adam Grant:
On 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 if they're getting hate their game suffers in the second half, because they end up kind of pissed off and they lose focus or they end up hugging the ball.

[00:35:57] Mark Cuban:
Yeah. They respond to the, that hate. Yeah.

[00:36:00] Adam Grant:
And I, I could not believe one that that was happening and two, that it was affecting their game. Are you seeing that too?

[00:36:05] Mark Cuban:
Oh yeah. Yeah. The buzzer blows it's half time you walk into the locker room, what happens is the players go to their lockers and while they're doing that, the coaches are huddling 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 da da. 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 gotta do. And if you don't do that, according to what we're trying to accomplish, we're sitting your ass down.

[00:36:54] Adam Grant:
I had some questions. I thought it would be fun to get your reaction to.

[00:36:56] Mark Cuban:

[00:36:56] Adam Grant:
Since you're, uh, 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 Luka as well as Jordan and LeBron.

[00:37:09] Mark Cuban:
A hundred percent. A hundred percent. Yeah. If he--

[00:37:12] Adam Grant:
I thought you were gonna say 95.

[00:37:14] Mark Cuban:
Yeah. If he stays healthy a hundred percent.

[00:37:16] Adam Grant:
Wow. Um, he's that talented?

[00:37:20] Mark Cuban:
Yeah. And then some.

[00:37:21] Adam Grant:
That's amazing. I can't wait. A lot of people are, are getting frustrated that threes are too easy to make. Where do you stand on the four point line?

[00:37:28] Mark Cuban:
No, because that'll distort the game. Just defenses are, will evolve. Teams are smart. If you look where Golden State beat us, it wasn't on a three point line. We made more threes than them. It's what they did coming off. The three point line when we closed out. And so being able to adapt to that is something we'll have to do. Uh, the reason the Warriors won 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 was 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 of beating in the playoffs and going far into the playoffs.

So I thought we were bit better able to adapt and execute than the Jazz and the Suns and the Warriors were be better able to adapt and execute than we were. And so for us to get that next level, we gotta have the corporate knowledge where we know how to execute every adaptation that we make during the game.

[00:38:25] Adam Grant:
Wow. All right. I'll hold off on the four point line then. As a kid, as a Pistons fan, I hated how often fouls were called, cuz it always hurt us with the bad boys.

[00:38:33] Mark Cuban:

[00:38:34] Adam Grant:
Then Hack-a-Shaq came in and I feel like now the end of every game is just a bunch of fouls and free throws and it, it ruined 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 play her down. What do you think of that idea?

[00:38:50] Mark Cuban:
It would be awful because it's a guaranteed score, you know.

[00:38:53] Adam Grant:
Okay. So what's your alternative? How do we stop the game from slowing down?

[00:38:56] Mark Cuban:
I don't think it, you really have to, right. We got rid of the 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 the free throw because I think that's drama when that falls in the air and the score is tied and there's less than a minute to go or less than two minutes to go.

[00:39:15] Mark Cuban:
Right. Everybody's holding. That's drama that I, that as a basketball purest and junkie, I love. You know, better, more efficiency in how we program. I think that is more of a cure for that problem than trying to change the rules.

[00:39:28] Adam Grant:
Shifting around a little bit to startups. What's the startup you most regret not investing in?

[00:39:33] Mark Cuban:
Probably Uber. Just because I had first crack at that and I wanted them to work with the taxi cab commissions and let them know so that it wouldn't be so expensive and they wouldn't be under it onslaught all the time. Um, 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. We're investing hundreds of millions of dollars to do tens of millions of dollars in business. And that's what I told them.

[00:40:08] Adam Grant:
Makes sense. Who's your favorite shark to partner with?

[00:40:11] Mark Cuban:
Probably Barbara Corcoran, our skill sets, 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.

[00:40:27] Adam Grant:
Yeah, that, that definitely I can see it. Is there a worst piece of career advice you've gotten?

[00:40:32] Mark Cuban:
Follow your passions.

[00:40:34] Adam Grant:
You don't agree with it?

[00:40:35] Mark Cuban:
No, not at all. Follow your efforts. No one quits anything they're good at. If I followed my passions, I'd be still trying to play professional basketball.

[00:40:44] Adam Grant:
What is the biggest mistake that you see startup founders making their pitches?

[00:40:48] Mark Cuban:
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 cause I'm not investing in them. You only survive with cashflow. I don't want to hear about your revenues, right? Cause revenues don't matter. I wanna hear about your gross margin dollars, your available gross margin dollars to pay your bills and your cash. Everything else--

[00:41:16] Adam Grant:
--Makes so much sense.--

[00:41:16] Mark Cuban:
--is nonsense. Just nonsense.

[00:41:18] Adam Grant:
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--

[00:41:30] Mark Cuban:
--24 second clock?

[00:41:31] Adam Grant:
Yeah. Like what is that? Just for drama?

[00:41:33] Mark Cuban:

[00:41:34] Adam Grant:
Because I, I know how much you care about entrepreneurs and how much you wanna invest in good ideas and, and give them a chance. I'm like this just, is it doesn't compute?

[00:41:43] Mark Cuban:
No, because one it's still competitive with the other sharks minimally, right? Not very much, but minimally and two it's telling me. It is telling me the other sharks and they always cut this out. You know, they're string yelling at me. Stop trying to change mother fucking business plan. Right. Or stop trying to tell him what to do. We gotta go home. So that's my shtick like Laurie is, oh, I love you so much. Or duh. Robert is if you had a pet, I would invest in it. Damon's the people shark. Kevin is I'm gonna take it out behind the bar and shoot it, no ripping over some reason or way Barbara is.

It's just not for me. So we all have our shtick and I always try to give some words of wisdom that, that help the entrepreneur. I'll give you some secrets here. One, the time of day matters. So if you pitch us right after. That is the worst slot ever, cuz we're comatose. Or if you get the last pitch of a day, sometimes there's little known secret that the water that we have in front of us, isn't water and so that, that impacts it sometimes.

[00:42:47] Adam Grant:
Well, I love that we started with you drinking with our students. Yep. And we're ending with you drinking with a bunch of founders.

[00:42:53] Mark Cuban:
Why not? Right? That's when everybody is telling the truth.

[00:42:57] Adam Grant:
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 WorkLife 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.

Adam Grant: Rethinking is hosted by me, Adam Grant, and produced by TED with Cosmic Standard. Our team includes Colin Helms, Eliza Smith, Jacob Winick, Michelle Quinn, Sammy Case and Anna Phelan. This episode was produced in mixed by Cosmic Standard. Our fact checker is Paul Durbin, original music by Dale Sue and Allison Layton Brown.

[00:44:23] Mark Cuban:
So if you're a startup entrepreneur out there, how are you going to make me money?

[00:44:29] Adam Grant:
What? You sound like Kevin there.

[00:44:30] Mark Cuban:
Yeah, I know. I think and I regretted it instantly. .