Mark Cuban vs the SEC: Cuban Wins!

I've been very lightly following the SEC case against Mark Cuban. As a fellow Dallasite and Mark Cuban fan, I was excited to hear that he was cleared of all charges this week!

Apparently, back in 2004, Cuban sold 600,000 shares of Mamma.com stock before the company made a private maneuver that was seen as unfavorable to its current stock owners. He effectively sold off all of his shares in the company, amounting to nearly 8 million dollars, a few weeks before the company made the impending, unpleasant public announcement.

Among a number of other details Mark Cuban was made aware of this private equity offering when Mamma.com executives invited major investors to participate in the new placements. Cuban declined when he found out that the company had begun to associate itself with a known stock swindler, Irving Kott.

He also claims that he was never asked not to sell his existing shares nor was he bound to confidentiality. The jury agreed with his version of events considering there was no written confidentiality agreement to prove otherwise. Seems likely that one of the grittiest, shrewdest men in business today would want anything that he's agreed to in writing. Oral confidentiality agreements are worthless and I'm surprised that the SEC went to trial with nothing but a claim that, 'he promised!'

Cuban spent more than the potential punitive SEC fees and fines defending himself against these charges since the case was dropped and re-opened in 2009. He declined to settle with the US government based on principle, knowing he had not committed illegal trading activities. He's fortunate he had the funds to fight these charges.

All in all, I feel its foolish to forget that he foresaw the pop of the internet bubble so many years ago. He sold all of his Yahoo.com shares he earned in the sale of broadcast.com, just before the stock devalued shortly thereafter.

Mark Cuban is just a talented, opportunistic businessman who knows his way around the trading floor. That's why he's one of my grittiest entrepreneur idols!

"Only Morons Start a Business on a Loan" - Mark Cuban

The title of this Mark Cuban interview by Bloomberg sucked me right in, "Only morons start a business on a loan." Even though I bootstrapped my way through the first three years of my business and saw wonderful, surprising growth, I think this spoke to me because I recently took out a loan for my business. Earlier this year, feeling that I truly knew my market and seeing that the profits were rolling in at a steady pace, I took a small loan for $12,000 to boost my inventory. The catch on this particular loan was that it was all due back in a matter of 6 months. I saw the principle payments due back, the overall interest payments and thought it was a great deal. And it was, still is. The terms were very acceptable, I just didn't know how to be a borrower. I had always ponied up the capitol myself.

It was all working so very well, until the fifth month the loans were due back. I just was not making enough to pay back the loan AND continue to grow. I felt stifled by these payments and I definitely feel that the progress I'd made immediately prior to taking on the loan was eradicated. I felt that was essentially starting back over now that the last payment is scheduled for the end of this month. I didn't get nearly what I thought I would out of this sudden infusion of cash.

I'm excited to get back to my normal that I'm so very used to, especially during my business' peak seasonality. I'm not saying that I wouldn't take out a loan again, but I certainly would like to have more of my own cash on hand to combat the payment periods during the slow time of the year. How ironic - you have to have money to borrow money. Or I might take out the loan just before a natural boom in sales. I regret taking out this 6 month loan just before the slow time of year. That was definitely something I would not recommend or repeat.

At any rate, there were a few other awesome nuggets in this video. The grittiest of us will like what he has to say at 1:30 "Small business don't fail for lack of capitol, they fail for lack of brains, lack of effort." Love it!

Let's "grit" our heads down and work, entrepreneurs!