The Mark Cuban Stimulus Plan - Open Source Funding

http://blogmaverick.com/2009/02/09/the-mark-cuban-stimulus-plan-open-source-funding/

by reitzensteinm • 17 years ago

108 91 17 years ago

Fuca• 17 years ago

I like this Guy good will to always come up with win-win situations all the time with sincerity and open mind.

Just wonder why would be the reason for rule #2: He will not put his money on any business getting revenue from ads; I do not see Google going bankrupt.

jraines• 17 years ago

Sure, this rule will filter some false positives -- but on the whole it will surely give him a more interesting (and easy to evaluate) set of ideas.

gcheong• 17 years ago

For one thing it will probably drastically reduce the number of applicants. More importantly perhaps, is it will force people to come up with viable ideas for products that get sold directly to the end-user rather than just expanding the number of advertising channels.

agotterer4• 17 years ago

Web 2.0 fails because there is no business model. Ad revenue works for some businesses, but for the majority it doesn't (they live of VC funding and hope for an acquisition). There is also little chance that you could attract enough sustainable traffic in 90 days to create a worthwhile revenue stream.

run4yourlives2• 17 years ago

An out-lier does not a trend make.

ojbyrne4• 17 years ago

3. It MUST BE CASH FLOW BREAK EVEN within 60 days

4. It must be profitable within 90 days.

5. Funding will be on a monthly basis. If you dont make your numbers, the funding stops

If these are true, unless you're completely poverty-stricken, why whould you need Mark Cuban? Perhaps we're talking large scale investments, but the whole emphasis on "sweat equity" suggests not.

jyothi• 17 years ago

To top it, if it is a type of business that can be built in 90 days, I bet before it even gets reviewed, someone else would get it live and for no equity shelled. So much for open source.

HeyLaughingBoy3• 17 years ago

The protection there is investment. If your 90 day to profit business needs a $30k investment and your competition can't raise the cash, then you effectively have no competition.

In any case, I think the reason for his posting is just to get people moving. It certainly made me feel pumped up about the idea I got this morning!

pg3• 17 years ago

Presumably the same reason many profitable businesses raise outside funding: to grow faster.

fauigerzigerk2• 17 years ago

That's true, but I wonder what I would buy for the money that helps me grow the business faster within 90 days. Employing people is excluded, renting office space is useless in that time frame, so the only things I can imagine are buying rights to something or buying actual physical merchandise.

Buying services, i.e outsourcing much of the work, is just a way around the no employees rule. Labour cost is probably the biggest chunk of most growing software startups' cost and that's excluded.

My conclusion is that it needs to a be rights based business. Buy rights to something, add value quickly, and resell the results.

webwright• 17 years ago

"why whould you need Mark Cuban?"

From the hip, I'd say it's a helluva PR opportunity, a chance to be in business with Mark Cuban (which some folks might really value), and would allow you to take a bit more of a risk than you otherwise might be able to.

Like YCombinator, I'd imagine selling him a bit of equity would increase your shot at success.

ojbyrne4• 17 years ago

I don't think Ycombinator is as restrictive. In this case the bit of equity seems to involve a lot of control, including monthly reports on financials, and control over hiring and day to day duties (that's what the bit about "no managers, everybody works" implies).

rms2• 17 years ago

Seriously, I'd give Mark Cuban equity for free just to be able to say I was funded by him. It gives you a lot of free credibility.

vaksel• 17 years ago

to go further, why would you need a stimulus, when you could have launched something like this in any type of economy

menloparkbum• 17 years ago

10. I will make no promises that I will be available to offer help. If I want to , I will. If not, I wont.

11. If you do get money, it goes into a bank that I specify, and I have the ability to watch the funds flow and the opportunity to require that I cosign any outflows.

I'm reading this article as "if you can build a successful business in 90 days, I'll give you some cash, and then it's mine....sucker."

te_platt• 17 years ago

That's not a bad way to read it. I read it as: Holy cow! An honest venture capitalist.

jacquesm2• 17 years ago

I've stopped taking Mark Cuban seriously long ago. The guy got lucky once, and mistakes it for business genius, it is that simple.

Sure, if you have a couple of billion lying around it is easy to tell other people how to solve their problems. But unlike say Warren Buffet I've yet to see him do something that commanded my respect.

I'd challenge Mark Cuban to follow his own plan, pretend he's broke for 60 days and then show that by his own measure he can make it work.

If he succeeds with that he'll definitely have me take him serious again, but I doubt he could and until that happens this is just another "I'm rich therefore I blog" addition to the S/N ratio.

fallentimes5• 17 years ago

That's not true.

Before Broadcast.com, he started a computer company (MicroSolutions) and ran a very successful hedge fund. After Broadcast.com, he bought the Mavs, started HD Net, formed a charity (Fallen Patriot Fund), actively invests as an angel and cofounded numerous movie production & distribution companies.

Broadcast.com was certainly lucky, but Cuban was already a millionaire long before becoming a billionaire.

rokhayakebe• 17 years ago

I rather be lucky once and make 2 billions, then being smart, execute against ideas and make 3 times 5M dollar exits.

agotterer4• 17 years ago

He founded: MicroSolutions, broadcast.com, 2929 Entertainment, HDNet.

He invested/owns/owned: IceRocket, RedSwoosh (which sold to Akami), Weblogs, Inc (sold to AOL) and the Dallas Mavericks.

I think he has proven himself.

pg3• 17 years ago

Who knows if this concept will work, but it's an intriguing idea. And I like it that in the middle of a supposed depression, the two top links on HN right now are offers of funding for new companies.

polvi• 17 years ago

Would you recommend this as a funding option for any of the YC funded companies?

pg3• 17 years ago

Sure, if the valuation was good enough and the growth targets were reasonable. There's no rule about how detailed the business plan has to be.

fallentimes5• 17 years ago

Cuban didn't return my emails when we launched :(.

JesseAldridge4• 17 years ago

Why do you say "supposed depression?" Do you doubt that the economy is in trouble?

arockwell• 17 years ago

The economy is in trouble, but depression still seems like quite a stretch to me.

steveplace• 17 years ago

The rhetoric he uses is related to how you react to the environment, not the environment itself.

TomOfTTB3• 17 years ago

Here’s the thing. If you’re a person with a "big idea" that idea means more to you than just something that popped into your head. It’s your hope. It’s what may be your big chance one day. So it's a big deal to you.

He’s asking people to basically give up on that dream. Since it would be easy for the idea to be stolen by someone with more resources you basically have to renounce the idea when you reveal it to the world. In return for that sacrifice you might create a company that would, at best, produce a minor positive impact on the economy as a whole.

Which is the kicker as far as I’m concerned. No company created like this is going to save the economy. At best you’ll generate around a hundred jobs in an environment that’s shedding hundreds of thousands a month. Meaning even the most altruistic person will have to get over the fact that they won’t be doing all that much good with this.

Seen like that I don’t see many people taking him up on this offer.

fallentimes5• 17 years ago

But the execution is almost always worth more than the idea. Ideas tend to change a lot once you get started.

And of course one thing won't change the economy, but helping to create new businesses is a great thing.

TomOfTTB3• 17 years ago

But that’s sort of my point. Mr Cuban’s rules limit the scope of what you can do. If you have to break even within 60 days than you can’t have that many resources (a 2 person operation at best I would assume). So say you come up with the idea, he funds it, and you get to work with one other person.

Now what’s to stop some company who sees your idea (which is probably worth stealing since Mr. Cuban liked it) and puts 6 people on it for the first 2 months. No matter how well you execute it’s hard to beat a team 3 times your size who are working on the same basic idea.

Because even if you execute better they can self correct fast enough to kill you off.

omnivore2• 17 years ago

It's tempting to a degree, but I think most folks are reluctant to themselves out there in such a public way, especially to be scrutinized by others, for no payoff. So as usual, it's a stunt of his. But when you're that rich, I guess you can do that.

HeyLaughingBoy3• 17 years ago

Meaning even the most altruistic person will have to get over the fact that they won’t be doing all that much good with this.

Perhaps not, but it will help THAT person. Meaning that now there's one more person (and his/her employees) who are not on the unemployment rolls. Just because an idea doesn't save the world doesn't mean it's not a good idea.

And for those of us who come up with multiple ideas each day, and are not particularly attached to any of them, it's a great way to possibly get funding if needed.

mjnaus• 17 years ago

I am having somewhat of a hard time figuring out how this "stimulus plan" helps the economy, as it appears it's intended.

If a startup is able to reach profitability within three months, this startup surely wouldn't need Mark Cuban's money to move forward and create jobs at some point in the future. They would have a rather big chance at succeeding even without this extra cash.

Mark presents this initiative as doing something for the greater good and the economy, however investing in companies that need to be profitable within three months (assuming funding will stop if they don't reach profitability within that time frame) is not exactly a risky investment and looks more like an easy way into something new for Mark.

agotterer4• 17 years ago

Really depends what the scope of your project is. I'm a developer, I could build a site for the cost of hosting (and time). If it can make a few bucks a month its "profitable". But you still have a ways until you are generating enough revenue to have a payroll, benefits, an office, etc.

No one really knows what the scope of his investment is. Mark is a smart guy, I'm sure this is a testing stage. So, he gives you a few thousand dollars (if that) to "test" for 90 days. If it has potential to make money, who knows where it could go.

whatusername2• 17 years ago

the "open source" nature of it perhaps? The fact that these business plans need to be posted in full - means that other places can duplicate them.

(also - that's probably the secret - this is probably not a tech play.... Think small local (but replicatable) businesses)

alain94040• 17 years ago

You nailed it. It's a great local stimulus and it could put a bunch of people back to work, locally. The condition to be sustainable means that he doesn't want to pay your salary for more than a few months, while you open your store.

The fact that it's open means every person in every town can open the same store and succeed as well, without directly competing.

micks56• 17 years ago

"I am having somewhat of a hard time figuring out how this "stimulus plan" helps the economy, as it appears it's intended.

If a startup is able to reach profitability within three months, this startup surely wouldn't need Mark Cuban's money to move forward and create jobs at some point in the future."

Not everyone has a bankroll sitting in a savings account ready to start a business. Mark's idea solves that.

And even if a person does have that bankroll, he may not want to invest it in the new business. Recessions don't end overnight because people hoard instead of spend money. The worse things get, the more people want to save for the long term, which prolongs the recession. Mark's idea solves that case, too.

Mark will fund promising ideas which need the cash now and can put it to good use. The cash he gives will be mostly gone by 90 days. That cash is a direct injection into the local and national economy.

So what gets accomplished is:

1. a possible wealth generating/job creating business is started

2. spending occurs when the natural inclination is to save

Both will have stimulative effects on the economy.

jmtame• 17 years ago

google, youtube, and facebook would never have made it past his litmus tests.

you've got 60 days to grow a tree. start watering.

agotterer4• 17 years ago

Yea, but besides Google, Facebook and YouTube havent been profitable in 5 years, let alone 90 days. I'm pretty sure that if youtube doesnt come up with a viable business plan in the next year it might not even be worth keeping. Facebook on the other hand has serious revenue potential.

david9273• 17 years ago

> Facebook on the other hand has serious revenue potential if it can survive the recoil from its sudden popularity, and if it can survive the onslaught of competitors. But those are both big if's.

adbachman• 17 years ago

Someone else in the comments (on Cuban's site) said something similar. His response was to the effect of, "I have no interest in investing in those types of businesses. They take time to build. This is about hitting the ground running" [link to comment](http://blogmaverick.com/2009/02/09/the-mark-cuban-stimulus-p...)

Sounds pretty straight forward. The three you mention are ad based, he wants no ad based businesses.

pj8• 17 years ago

The United States government should follow his lead. Giving more grants and low interest loans to startups.

The startups, the entrepreneurs, the risk takers, the pragmatists, the efficient and rational are what we need right now to pull us out of this mess. Instead the govt is giving all the money to the rich, inefficient, wealthy elite, who lied to get us into this mess in the first place.

Give some money to those with vision. How much could we here on this list do with $700 Billion? The banks aren't doing anything with it... We just wasted it...

xenophanes4• 17 years ago

The US Government isn't good at things like this. We don't need it expanding into new areas. Let the market handle it.

JesseAldridge4• 17 years ago

"The US Government isn't good at things like this."

Why not? Can we make it better?

reitzensteinm• 17 years ago

The thing is, even if you believed that the government would do a reasonable job of investing, the money is either going to come from issuing bonds (increasing the supply of attractive low risk investments and proportionally decreasing the attractiveness of high risk investments which cause growth), or they're going to already have it from taxation, much of which has come from money that would have been invested anyway.

While I'm certainly more in favour of the government giving e.g. entrepreneural low interest loans than bank bailouts, I can't help but think that the money would have been better spent had it never been removed from circulation in the first place.

How about getting entirely rid of tax on businesses until they issue dividends? So the money only gets taxed when it's withdrawn as profit (and this itself is only necessary to tax foreign investors). Businesses are on average quite profitable, so why take away money that they're planning to reinvest? It will almost certainly be reinvested wisely (because they were already profitable, they presumably know what they're doing).

pj8• 17 years ago

Taxing /only/ dividends is not a bad idea. It will prevent the kind of CEO salary run up we have seen in the past few decades as well.

known• 17 years ago

I agree. If $700 Billion tax exemptions are given to start-ups they will create millions of jobs.

VonGuard• 17 years ago

My favorite comment on that blog, by far, is the dude who wants Cuban to fly him out to texas so he can pitch him on his Star Wars Toy sales startup.

josefresco• 17 years ago

His name is Kevin Gawthrope and he's on Twitter http://twitter.com/gawthrok

mynameishere• 17 years ago

I have an idea.

Selling whiskey. Cheap.

To Mark Cuban. Profits in 4 minutes.

apstuff• 17 years ago

I'd rather be bankrupt of money and have the idea than be bankrupt of ideas and have the money.

Thank you Mark. But no.

david9273• 17 years ago

That's funny, because I submitted a business plan with the idea that 5% of anything is better than 100% of nothing.

patrickg-zill• 17 years ago

Send me all your business plans! I won't sign an NDA and neither will anyone else... but at least someone will profit from this (not necessarily you however)...

omnivore2• 17 years ago

I think it's just a post he's using to drive traffic and mock people for his own entertainment. I think any serious idea posted in the comments would probably get deleted.

callmeed• 17 years ago

I submitted one of my (many) ideas. If anyone's interested, here it is: http://blogmaverick.com/2009/02/09/the-mark-cuban-stimulus-p...

(feedback more than welcome)

run4yourlives2• 17 years ago

If you can get that launched and advertised, you'll win for sure... biggest issue I'd imagine is that the wedding industry is a local one, and you'd need lot's of vendors in the queue for the brides to find things worth their while.

fascinated• 17 years ago

This is the most arrogant thing I've recently read (though maybe, he is laughing really hard now as many people have bit the bait). Seriously, wow.

What is someone's incentive to publicly post a biz plan+idea in a blog comment over there? Apparently, a tiny amount of money and likely no other help from Mark, wow.

The Mark Cuban Stimulus Plan - Open Source Funding

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