Mark Cuban says he ran a “Ponzi scheme” to pay for college in the 1980s. “This is basically a scam”
Before he became a billionaire, NBA team owner and television personality, Mark Cuban Just another college student trying to figure out how to pay for school. He opened up about a controversial money-making scheme he implemented while at Indiana University on last year’s “Life in Seven Songs” podcast.
“It was basically a scam,” Cuban said, describing the chain letter setup he used to fund his junior year. “You can give me $100 and I want $50 of it,” he said. The idea is that as more people join, each participant will eventually gain more than they contribute.
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He acknowledged there were doubts about the plan. “This is a Ponzi scheme,” Cuban said. But for him, it works. He came from a working-class family and did not have much financial support except the 20 dollars his father occasionally gave him. “That’s what my junior year of college cost,” he said on the podcast.
Cuban said he made sure his friend didn’t lose money. “I made sure my friends got their money back,” he added. The remaining money was used to pay for his tuition.
He recalled the surreal experience of opening his dormitory mailbox and finding it filled with cash. “There’s going to be a $50 envelope here, a $50 envelope there,” Cuban said. “marvelous.”
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After college, Cuban moved to Dallas nearly penniless. He fell to the floor on a friend’s floor in what he called his “asshole” apartment. “If someone goes out of town, I get a bed,” he said on the podcast. He worked at a computer software store and was fired for closing sales instead of opening the store.
That firing spurred him to start his own company, MicroSolutions, which he later sold for millions of dollars. Years later, he co-founded AudioNet, which became Broadcast.com and was sold to Yahoo in 1999 for $5.7 billion.
“It gave me confidence,” Cuban said of his early years. Once he realized he could sell and make money, he “got excited about the business.”
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Today, Cuban is focused on disrupting the health care industry through his company, cost-plus drugs. The startup aims to lower prescription drug prices by selling medicines in a transparent, low markup manner.
