Re:Thinking with Adam GrantMark Cuban doesn’t believe in following your passions | Re:Thinking with Adam Grant
EVERY SPOKEN WORD
45 min read · 9,054 words- 0:00 – 0:02
Intro
- AGAdam Grant
[upbeat music]
- 0:02 – 2:12
Mark Cuban’s unexpected Wharton hangout (and why he did it)
- AGAdam 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. [upbeat music] 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 [laughs] is you went to the campus bar and you hung out with students f- I think it was past midnight. I thought that was an incredible mark of character. Uh-
- MCMark Cuban
[laughs]
- AGAdam Grant
... but tell me, why, why did you do it?
- MCMark Cuban
I wanted a beer [laughs]
- AGAdam Grant
[laughs]
- MCMark Cuban
And why not hang out, right? Um, 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 n- used it for groups, which at the time shocked me. I was really surprised. So that, that's what made it stand out.
- AGAdam 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.
- MCMark Cuban
What else would I, was I going to do in Philadelphia, you know? [laughs]
- AGAdam Grant
Well, we, we clearly need to show you some other parts of the city-
- MCMark Cuban
[laughs]
- AGAdam Grant
... if that's, if that's your view. But I, I thought it was, it was just amazing and, uh-
- MCMark Cuban
Appreciate that
- AGAdam Grant
... it left, it left quite an impression and, and also made some other speakers look bad, so bravo.
- MCMark Cuban
[laughs]
- AGAdam Grant
[laughs] Let's talk about what you're up to these days. I'm a big fan of, of rethinking the way things have always been done-
- MCMark Cuban
Oh, yeah
- AGAdam Grant
... and you've done that in a major way with Cost Plus.
- MCMark Cuban
Yep.
- AGAdam Grant
What's the origin story here?
- 2:12 – 3:44
The origin of Cost Plus Drugs: a cold email and “radical transparency”
- MCMark Cuban
So costplusdrugs.com 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'd 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 explain 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 Shkreli 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 mark 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 cost plus 15%,
- 3:44 – 4:47
Launching in a regulated market: why it took three years (and why Mark put his name on it)
- MCMark Cuban
plus shipping and handling fee through our partner, Truepill, 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 are so many regulations and so many things that you have to get all your I's dotted and T's 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 on it 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 Truepill to create the website and get it integrated and all that stuff so we could fulfill. And on January 19th of 2022, we launched.
- AGAdam Grant
It's amazing. Congratulations.
- MCMark Cuban
Thank you.
- 4:47 – 6:29
Why this isn’t a charity: building a self-sustaining disruptor
- AGAdam Grant
I've just been stunned, even watching on Twitter, [laughs] 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."
- MCMark 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.
- AGAdam Grant
No, fundamentally wrong. And I, I also love that you turned it into a, an opportunity to build a business, which is obviously a part of what you do. [laughs]
- MCMark Cuban
Yeah, but you know what? Uh, 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 want to 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. You know, there's gonna be new medications, things become generic, things aren't gonna become generic, there's evergreen, you know, patents, and you've got to be able to adapt and be agile. And so we didn't think that could work w- as a charity, and we certainly did not want to be dependent on contributions
- AGAdam 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 [laughs] .
- MCMark Cuban
No, just supplements. Um, very, very cynical and sep- skeptical of healthcare claims by supplements that have no research or, or science behind them.
- AGAdam Grant
So here, here the data were already there.
- MCMark Cuban
Yeah.
- AGAdam Grant
So that's, that's easy. But also, this is just... it's pretty far outside your, your normal expertise. How did you decide that this was an idea worth pursuing? 'Cause I think you get as many pitches as anyone on Earth.
- 6:29 – 8:30
Learning healthcare from first principles: cost drivers, incentives, and system design
- MCMark 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, 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'm, 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 spent a fair amount of money just learning the, the healthcare industry. You know, I, I funded a study... I'll, I'll give you one example. I asked a simple question. I said, "In Toronto and in Manhattan, the price, the, the annual wages of a doctor and hourly wages of nurses are about the same between Toronto and Manhattan. The cost of a Band-Aid 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 they're 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 US, there's a, a quest for profitability by adding new specialties that there isn't in, 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.
- AGAdam Grant
Wow. Well, the model, when I first heard about it, I thought, "Oh, this is what the construction industry does."
- MCMark Cuban
Yeah.
- AGAdam 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, [laughs] however, 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?
- 8:30 – 11:05
The business model reality check: volume, thin margins, and the ‘moat’ question
- MCMark Cuban
I still haven't. [laughs]
- AGAdam Grant
[laughs]
- MCMark Cuban
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 reinvest them.
- AGAdam 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 moat.
- MCMark Cuban
Right.
- AGAdam Grant
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%?"
- MCMark Cuban
Yeah.
- AGAdam Grant
What, what happens then?
- MCMark 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 to $10, which is not out of the ordinary for us. You know, people who have a specific disease tend to go on group forums and 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's 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 moat, if you will, or even a scale moat, and it's quite possible that someone can come in and, and copy us and cut their costs and undercut us, it's 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.
- AGAdam Grant
So in that sense, it, it sounds like your competitive advantage is actually your brand loyalty.
- MCMark Cuban
Yeah. Trust is critical in this. People are betting their lives on us.
- AGAdam 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.
- MCMark Cuban
Yeah, right [laughs] .
- AGAdam Grant
Like you, you wave a flag saying, "Hey, we're here to care"-
- MCMark Cuban
Look at me. Yeah
- AGAdam Grant
... and everybody holds you to a higher standard. How are you thinking about that problem?
- 11:05 – 14:29
Why Cost Plus avoids marketing: trust, privacy trade-offs, and social proof
- MCMark Cuban
We're not gonna advertise [laughs] .
- AGAdam Grant
[laughs]
- MCMark Cuban
Seriously, I mean, that network effect is considerable. I can't understate it enough. 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've 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.
- AGAdam 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&A, it came out that they had been an early mover in mail order pharmacy.
- MCMark Cuban
Uh-huh.
- AGAdam Grant
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. [laughs] It seems like you should be able to share information that helps people make decisions.
- MCMark 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. And that's the risk. So if you happen to be, you know, someone who has a disease that there are only 100 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, if it happens to be, right, they're gonna be able to tell who you are. 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 the law.
- AGAdam 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.
- MCMark Cuban
Of course.
- AGAdam Grant
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 costs 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.
- MCMark 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, y- 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.
- AGAdam Grant
I remember as a kid watching the old Hair Club for Men ads-
- MCMark Cuban
Yeah
- AGAdam Grant
... which I never realized was gonna apply to me, but- [laughs]
- MCMark Cuban
[laughs] I know. I'm getting there fast.
- AGAdam Grant
[laughs] You're still way ahead of me. Uh, I remember the, the, the commercial that always said, "I'm not only the president-"
- MCMark Cuban
Um-
- AGAdam Grant
"... I'm also a client."
- MCMark Cuban
[laughs]
- AGAdam Grant
Are you a client, Mark?
- 14:29 – 17:37
Building a ‘Southwest Airlines’ pharmacy: mission clarity vs. bells and whistles
- MCMark Cuban
Yeah, for sure. For sure. I take the generic for Synthroid, so I have hypoi- hypothyroidism, and my price went from a couple hundred dollars down to $9.90.
- AGAdam Grant
Wow.
- MCMark Cuban
Yeah.
- AGAdam Grant
Do you give, do you give feedback to the team based on your user experience?
- MCMark Cuban
Yeah, of course. Yeah.
- AGAdam Grant
Or do you try to stay out of that?
- MCMark Cuban
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 the 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, um, fulfill that mission is hard because it's really difficult to stay focused on not adding bells and whistles because natural in- 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 added. You're not gonna see a blog from this leading doctor talking about X, Y, or Z. It may take 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 them 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 and whoever, yes, absolutely, and we're trying to use technology and chatbots 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 want to 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 $27, 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 pri- price possible."
- AGAdam Grant
And now I understand why you said you're eating your own dog food instead of drinking your own champagne.
- MCMark Cuban
[laughs] Yes, exactly.
- AGAdam Grant
[laughs]
- MCMark Cuban
Low-cost dog food.
- AGAdam Grant
Yeah. It almost sounds like you're the, the Southwest Airlines of, of pharmacy.
- MCMark Cuban
Great analogy. Great analogy. Yep.
- AGAdam Grant
I'm not gonna get to choose my seat. There's no first class. It's the best deal.
- MCMark Cuban
And we might not even give you peanuts. [laughs]
- AGAdam Grant
[laughs] That's okay. I was... I wasn't coming for, for the food.
- MCMark Cuban
For the peanuts, exactly.
- 17:37 – 23:08
Transparency as a broader strategy: internal trust, Gen Z ‘free agency,’ and crisis reputations
- AGAdam Grant
You know, 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?
- MCMark Cuban
Yeah, particularly as trust becomes a greater issue within an industry, having that radical transparency, and healthcare is the obvious example because nobody understands how prices are set for anything, whether it's the government or patients, for that matter. But wherever pricing is opaque, you have an opportunity to pick up customers and start a business around transparency.
- AGAdam 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 our salary is set at a particular level.
- MCMark Cuban
Yeah.
- AGAdam Grant
Um, how are budgets determined, whereas you have a target that everybody can understand, and it seems like it actually takes a lot of work off the C-suite's hands to say, [laughs] "We don't have to explain every decision we're making. You actually already know the logic behind it."
- MCMark Cuban
You see right through it, 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 again, 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 of recent college graduates. I'm like, "Look, when I graduated from college, people talked about careers. Now nobody talks about careers. Now you're 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 it. 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, w- 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.
- AGAdam 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 them 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."
- MCMark 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'll tell 20 people. Well, now that 20 people is now 2,000, 20,000... You know, it could be 1,000 hardcore followers, or it could be two million people, depending on how viral it becomes.
- AGAdam 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, [laughs] the researchers even call downsizings dumb and dumber-
- MCMark Cuban
Yeah
- AGAdam Grant
... 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 out of crisis."
- MCMark Cuban
When your entire focus is only your earnings per share or the cash in the bank, and you're that short-term focused, you will fail. 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 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 and 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? [laughs] 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-
- AGAdam Grant
[laughs]
- MCMark Cuban
... upside down and unfortunate. W- Gen Z in particular, less 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, 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 physical, financial, and personal health balance, right? Because either you accommodate it for your employees and your customers, or they'll find somebody who does.
- AGAdam Grant
That is such a refreshing dose of generational optimism. I, I think-
- MCMark Cuban
[laughs]
- AGAdam Grant
... you can mark that up 30% on Cost Plus. [laughs]
- MCMark Cuban
[laughs] I'll only take 15.
- AGAdam Grant
It's obvious to you in your experience, it's clear to me in the evidence, right, that, like, how we treat people in the short run has massive long-term implications. Why have so many leaders been slow to recognize it?
- 23:08 – 26:26
Incentives, capitalism, and why leaders fixate on short-term money
- MCMark 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.
- AGAdam Grant
You're failing big time on that one.
- MCMark Cuban
I'm honest about it. [laughs]
- AGAdam Grant
[laughs]
- MCMark Cuban
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 de minimis. 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 that, you know, that CEO gets paid, and those stock options improve in 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 yuppie 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.
- AGAdam Grant
Mark, I'm curious if your goal is still to retire, you're definitely failing on that one.
- MCMark 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 a to- retired 'cause I'm too competitive. I like this 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 shots.
- AGAdam Grant
That's, that's exactly what I was wondering about is, is what motivates you? 'Cause you, you have total control over how you spend your time. When you look at an idea like Cost Plus, it comes with huge opportunity costs. 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.
- MCMark Cuban
Yeah, I get to fuck things up. [laughs] You know? That's the upside. At least every entrepreneur, in the back of their mind says, "I wanna be that entrepreneur that disrupts an industry and changes the game." 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.
- AGAdam Grant
I think of you as a capitalist with a heart. Is that a fair description?
- MCMark 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. And 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.
- AGAdam Grant
So I wanna get your take on, on the more extreme reactions to that on both sides.
- MCMark Cuban
Sure.
- 26:26 – 28:27
Who’s really driving drug price pain: PBMs, payers, and the next move into brand-name drugs
- AGAdam Grant
So one is as soon as Cost Plus came out, I found myself with some pharma CEOs, and I said [laughs] "Hey, like, what are you doing? Are you gonna compete or what?" And one of the most common responses was, "Listen, we get it, but we're in a different business, which is we're trying to have bigger margins because R&D is super expensive, and we need to be able to reinvest that to develop life-saving 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?
- MCMark Cuban
So we're their best friend 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 the payers and the PBMs can maximize their margins, that the manufacturers are sometimes just a pawn 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 patients 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 supply, 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 of the insurance PBM verticals, th- we're making the manufacturers more money.
- 28:27 – 29:24
‘Should medicine be free?’ Efficiency, government roles, and political constraints
- AGAdam Grant
I guess the other side of that, the socialists push back.
- MCMark Cuban
Mm-hmm.
- AGAdam Grant
I hear a lot of people saying, "Yeah, but shouldn't medicine be free?"
- MCMark Cuban
Look, nothing is free, right? It just depends on what the product is. Are you selling ads around it? Who's paying for it? 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, uh, generics, let's say, cheaper, more power to them, and to distribute for free because it saves them money on the Medicare formularies, 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.
- 29:24 – 36:58
The future of work and super teams—plus NBA culture, chemistry, and attention traps
- AGAdam 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-
- MCMark Cuban
You're preaching to the choir
- AGAdam Grant
... to the highest bidder or the highest mission?"
- MCMark Cuban
You know, the future of work is in 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 arbitrage 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 to be the sweet spot for my earnings that I need in order to be able to free myself up to do the things I love to do so that I get fulfillment in my life? It's an equation at some, some level, right? It, 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.
- AGAdam 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-
- MCMark Cuban
Yeah, that's cool
- AGAdam Grant
... or two years."
- MCMark Cuban
Yeah.
- AGAdam Grant
Can, can you see that scaling to other kinds of jobs and work?
- MCMark 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 ha- 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 doubt on the outcomes that they promised, 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.
- AGAdam 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. [laughs] So you get like a tweet that says-
- MCMark Cuban
That's amazing. I haven't seen that one, no.
- AGAdam Grant
Oh, it's, it's amazing. Uh, I think the-
- MCMark Cuban
You have to send that to me.
- AGAdam Grant
I'll, I'll send it over. I'll send it to you offline.
- MCMark Cuban
Just send it to me. Yeah.
- AGAdam Grant
The finding was, okay, so we get the narcissism scores by the, the tweet patterns.
- MCMark Cuban
That's great. That is literally amazing.
- AGAdam Grant
[laughs] 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.
- MCMark Cuban
No, on the Mavs too. Over 22 years, certainly on the Mavs.
- AGAdam Grant
[laughs] Interestingly, it's worse if your point guard is a narcissist, I guess being the focal point of the action.
- MCMark Cuban
Yep.
- AGAdam Grant
Or a ball hog. And so it seems like that raises big questions about talent versus character and, like, do you find yourself screening for narcissism in players?
- MCMark Cuban
Oh, yeah. Not, not necessarily narcissism. I will now, though, 'cause-
- AGAdam Grant
[laughs]
- MCMark Cuban
... I just learned something great that'll 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 b- a better communicator. Not that 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, they knew how they fit together, and that allowed us to go much further than people expected us to go.
- AGAdam 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, [laughs] by taking one problematic player f- 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?
- MCMark 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 have gone for, but had the most amazing experience I've ever seen on the culture and employee support and employee training and enhancement, and 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 its head and tells you. You can see it in multiple places where people are leaving or people go to 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 be- 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 ago.
- AGAdam 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 hogging the ball."
- MCMark Cuban
Or they, they respond to that. Yeah, they respond to the-
- 36:58 – 44:40
Rapid-fire: Luka GOAT odds, rule changes, startup regrets, Shark Tank tactics, and ‘follow your effort’
- AGAdam Grant
I had some questions I thought it would be fun to get your reaction to-
- MCMark Cuban
Sure
- AGAdam Grant
... since you're, uh, you're always full of sound bites.
- MCMark Cuban
[laughs]
- AGAdam Grant
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?
- MCMark Cuban
100%.
- AGAdam Grant
100%?
- MCMark Cuban
Yeah. If he stays healthy.
- AGAdam Grant
I thought you were gonna say 95.
- MCMark Cuban
Yeah, if he stays healthy, 100%.
- AGAdam Grant
Wow. Um, he's that talented.
- MCMark Cuban
Yeah. And then some.
- AGAdam 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?
- MCMark Cuban
No, because that'll distort the game. Just, defenses are ev- will evolve. Teams are smart. If you look where Golden State beat us, it wasn't on the 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 it, 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's its own series because you make adjustments throughout the game, and the team who's best able to execute on those adjustments is the team that wins because you're already by definition talented, talented as a team based off of being in the playoffs and going far into the playoffs. So I thought we were bet- better able to adapt and execute than the Jazz and the Suns, and the Warriors would be able, 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 ad- adaptation that we make during a game.
- AGAdam 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 'cause it always hurt us with the bad boys.
- MCMark Cuban
Right.
- AGAdam 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 ruins the energy of the game. As a fan, I've always wanted to experiment with, with a penalty box like hockey-
- MCMark Cuban
[laughs]
- AGAdam Grant
... where you just have to go a player down. What do you think of that idea?
- MCMark Cuban
It would be awful because it's a guaranteed score, you know?
- AGAdam Grant
Okay, so what's your alternative? How do we stop the game from slowing down?
- MCMark Cuban
I don't think it r- 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 ball's in the air and the score is tied and there's less than a minute to go or less than two minutes to go, right, everybody's holding their breath. That's drama that I, that as a basketball purist 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.
- AGAdam Grant
Shifting around a little bit to startups, what's the startup you most regret not investing in?
- MCMark 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 an onslaught all the time. Um-
- AGAdam Grant
Which was right in retrospect.
- MCMark Cuban
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 or investing hundreds of millions of dollars to do tens of millions of dollars in business, and that's what I told them.
- AGAdam Grant
Makes sense. Who's your favorite Shark to partner with?
- MCMark Cuban
Probably Barbara Corcoran. Our skill sets complement each other. Very pragmatic, entrepreneurial. I don't really spend a lot of time with the person to u- make that part of my equation, if you will. Barbara's all about the person. She is so good at that. It's incredible.
- AGAdam Grant
Yeah. That, that definitely... I can see it. Is there a worst piece of career advice you've gotten?
- MCMark Cuban
Follow your passions.
Episode duration: 44:42
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Transcript of episode YOYWKN9sxaI
