In the mid-1990s, just before the Internet bubble, Mark Cuban was approached by a friend about a business idea.
As a fellow sports fan, his friend, Todd Wagner, pitched Cuban that it would be lucrative to start an internet audio company where users could listen to sports games online. Sold over the possibilities, Cuban agreed, and in 1995 the duo created AudioNet, which later became Broadcast.com.
At the time, the Internet was a whole new concept for most people, so Cubans and Wagner faced a lot of critics who didn’t believe the company would succeed.
“When I told people the vision, they said, ‘You’re crazy. I’ll just turn on my TV. I’ll just turn on the radio,’” Cuban said in a recent episode of the “Starting the Greatness Podcast.
“People would laugh at me.”
But that didn’t matter Cuban.
“I knew this was a winner,” Cuban said of Broadcast.com. “I had no doubts.”
First, Cuban saw a market for streaming, “what we then called network broadcast or Internet broadcast,” he told “Starting Greatness.”
Cuban said he was “firmly convinced that streaming would take over television as a whole,” because he “believed in the price-performance curve for PCs. [personal computers] and broadband, and that as PCs became more powerful, the price of disk drives and bandwidth would continue to fall. “
That, Cuban said, “was a fundamental foundation for streaming.”
“I had the vision that we would follow this path.”
When the co-founders started to market the company, Cuban said he noticed a growing demand from those who wanted to listen to sports games or music during their workday but couldn’t keep a radio on their desk.
“I quickly saw that user adoption was huge,” said Cuban. “Nobody used it and said they didn’t need it.”
When Broadcast.com added the ability to watch video with audio, “most of our revenue came from streaming corporate events and meetings with all hands,” he said. That was “the real money maker for us.”
Broadcast.com also had a growing consumer base because it was simple for us.
‘I knew that so you could listen to OU [University of Oklahoma] sports, I was the way of least resistance, “said Cuban.” I knew anyone who wanted to watch or listen to a Mavericks game I was the way of least resistance. “
“Maybe there was a struggle to try to do the same and copy ourselves, but we were the only avenue of least resistance.”
In 1999, Broadcast.com was acquired by Yahoo for $ 5.7 billion in inventory.
That’s why, Cuban said, “if you have the technology in your favor, if you are the way of least resistance and if you have consumption, then you just have to go for it. Those are the pieces that create a moat that are really hard to replicate. “
The experience led to Cuban being more open-minded and relying on his gut to invest in companies or ideas that others might find “crazy,” he said. Today, that includes his investments in cryptocurrency and blockchain companies.
Investing in those companies has “the same feel of the early days of the Internet,” Cuban told “Starting Greatness.”
“You really have to believe in your product” to succeed.
Disclosure: CNBC owns the exclusive non-network cable rights to “Shark Tank.”
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