Any successful financier will tell you that the investment business is basically educated gambling, and the average high-profile investor has plenty of failures and missed opportunities to go along with their successes. One of the most famous investors/entrepreneurs in the world, billionaire Mark Cuban, gave testament to that notion during a recent chat with Kevin Hart. During their conversation, Mark admitted to passing on the chance to invest early in a company that went on to become one of the biggest start-ups in recent memory: rideshare app Uber.
The subject came up after Hart said he missed out on the same opportunity. The comedian revealed he was once asked to invest somewhere between $50,000 and $75,000 in the fledgling rideshare platform by his talent manager Troy Carter. Believing the then-new idea “sounded like murder-ville,” Hart passed, and lived to regret it when Uber skyrocketed to ubiquitous usage among the general public. Hart said that had he gone along with the pitch, his stake in Uber would be worth some $100 million today.
As it turns out, Mark revealed his own tale of letting an uber fortune slip through his fingers by ALSO rejecting Uber very early on.
Mark Cuban recalled how Uber co-founder Travis Kalanick approached him in 2009 to come onboard Uber as an investor, but Cuban had reservations about the business and believed its valuation of $10 million at the time was too high:
“Whoops… Just think, if I would have given him $250,000 on a $5 million or $10 million valuation, it’d be billions.”
More specifically, Mark claims his $250,000 investment in 2009 would have given him a 2.5% stake in Uber. Uber’s market cap today is right around $100 billion. Therefore, had Mark made AND HELD that stake, today his shares would be worth…
Cuban admits he had enthusiasm for the idea behind ridesharing, but that he overestimated the obstacles faced by the company. As he remembered telling Kalanick at the time:
“You’re going to have to spend a lot more on marketing and dealing with all the taxicab commissions that are going to try and put you out of business…So that’s the challenge that I see for you guys.”
On the plus side for Mark, he is still a multi-billionaire. By our count his net worth today is $5 billion.
Mark earned the majority of his fortune as the co-founder of a company called Broadcast.com. In the mid 1990s, Broadcast built what was likely the first internet video streaming company, primarily with the goal of broadcasting sports on the nascent World Wide Web.
In 1999, Mark and his partners sold Broadcast.com to Yahoo for $5.7 billion in Yahoo stock. On the day the Broadcast deal officially closed, Yahoo’s stock was trading at $163 per share. Mark was locked up from selling any shares for six months. Luckily for him, six months later Yahoo’s stock price was roughly the same.
Sensing the internet was in an unsustainable bubble, the moment his lockup expired Mark dumped all of his Yahoo shares. All of them. He netted $2.5 billion in cash from the sales which all occurred before the end of 1999.
Over the next year and a half as the bubble eventually burst, Yahoo’s stock price slid from $100 to $70 to $50 to $30.
By October of 2001, Yahoo hit an all-time low of $8.11 per share. Had he not sold, his $2.5 billion stake would have been worth $125 million. Still a nice fortune, but obviously not enough wealth to allow Mark to buy the Dallas Mavericks and be the majority owner/investor in movie studio Magnolia Pictures, movie theater chain Landmark Theaters and HDNet.
So maybe he biffed the Uber investment, but he’s still on the Mount Rushmore of smart financial decisions!