46 min read

Mark Cuban: The Role of Business in a Crisis
Out of the Crisis Podcast Transcript

There are very few people who don’t know about Mark Cuban and all he has accomplished. What many people don’t know is how instrumental he is in relief efforts for the COVID-19 Crisis. Mark and I are working on a few different initiatives together so I asked him to take some time to discuss his view on where we are in the crisis, how we get out of the crisis, and what the world will look like when we do.

Show Notes

Panelists

Producer: Ben Ehrlich

Editor: Jacob Tender

Links

For those who want to get involved in the initiatives we discussed please visit:

The original audio can be found on Breaker, Apple Podcasts or wherever you listen.


Eric Ries

I’m Eric Ries, this is Out of the Crisis.

There’s nothing good about the situation. But I have been witness to extraordinary acts of generosity of courage of ordinary people stepping up and leading, even in situations in places where they couldn’t have possibly imagined them doing that even just a few weeks ago. And I’ve always heard stories about how people did that in past crises. My grandparents used to tell me stories about that. And I never really imagined it ever happening to me. And yet I’m witnessing it all around us. And I do think that is a path forward for us as a society for us to realize we have these inner strengths and capabilities to step up and lead. Mark Cuban is a legend, and you’ve probably seen him on TV or you know him as the owner of the Dallas Mavericks are just a larger than life personality in our society. Mark, and I have been On many related email threads in this COVID crisis, trying to work on relief efforts, and he called me the other day and just asked me for a comprehensive briefing on everything related to the procurement of personal protective equipment for our medical first responders. Mark has a unique ability to use his name and his platform to open doors. And he, of course, can do that for himself. But he’s been very generous in this crisis, doing it for others. Here’s my conversation with Mark Cuban.

I can’t imagine there’s anyone out there who doesn’t know you and the many things that you’re involved in, but just for those maybe who are new. You want to introduce yourself and tell us a little bit about many, many different business ventures you’re involved in?

Mark Cuban

Yeah, I guess. I’m Mark Cuban. I own the Dallas Mavericks. I’m on Shark Tank. I’ve invested in hundreds of companies. I made my money. Initially when I was in my 20s I got fired from a software sales job started on a systems engineer. later called micro solutions. We were one of the very first low local area network and wide area network integrators taught myself to code over seven years and wrote all kinds of applications. We wrote the very first automated purchase order interface for Walmart. For sales, we wrote one of the very first video interfaces so that Zales could take videos and pictures of their inventory instead of having to keep one in the safe and just all kinds of crazy applications and sold that company called compuserve. If you remember back then Oh, yeah. Oh, yeah. You know, and then took a couple years off. And then in the mid 90s, late 94, early 95, my buddy and I were trying to figure out the best way to listen to Indiana basketball and we had to have a speakerphone where we had one set up in Bloomington, Indiana, one in Dallas, Texas. And so when we put our radio next to it in Bloomington, and we’re like this internet thing has got to have Have a better way. And so we started what turned out to be one of the first if not the first audio streaming companies called audio net. And obviously we evolved to video as well, and took that public and then sold it to Yahoo almost 20 years ago today. And then after that bought the Mavs and just been having fun investing and starting running small companies ever since.

Eric

That’s awesome. Obviously not gonna have time for any basketball questions, but just how how is the whole organization I was just thinking about what it must be like to run an organization that is completely shuttered, that can’t do its business at all. It’s no fun, but like for everybody.

Mark

Yeah, it’s no fun, obviously. I mean, from from the man’s perspective, the players are going nuts and you try to keep in touch with them all the time. on, you know, particularly with young employees, you got to really be vigilant because their natural instinct is they think they’re invincible and outside and do anything and hang out and, you know, and and, you know, they’ve realized we’ve had some some young folks Guys in their 20s, um, in a woman in her 20s actually gets sick as well. And some advanced systems, they’ll be okay. But it wasn’t any fun and but that kind of, you know, sent the message back to them that, you know, they really have to take this seriously. So that that’s been the hardest part. Um, in terms of the mass, you know, and obviously, a lot of it’s out of our control, most of most small businesses, you know, you try it, you can try different things and take advantage of different opportunities you create for yourself, even weird times like this, but with the NBA teams, we’ve got to wait didn’t take direction from the NBA. So that’s a big difference.

Eric

Have you guys thought about how they can use their celebrity and kind of platforms to be advocates for social distancing or somebody that’s playing,

Mark

You know, they’re playing video games with kids, they’re, you know, they’re out there sending the message to stay at home, you know, giving you know examples of how you can stay active in your backyard or indoors and just trying to stay engaged. You know, we live in a social media universe now. And all of them have Particularly in the NBA have very large platforms, and they want to keep those active and they recognize that, you know, with kids not at school kids are more active on those platforms and, you know, their potential fans that turned into followers that, that turned into bigger fans and you know, that leads it to better business. So they recognize that this as bad as this is, it’s an opportunity to connect more with fans, and really, you know, advance that connection with them.

Eric

So great. And, you know, I just really appreciate taking time to talk about this with so much going on. You know, first of all, just on the pandemic, you know, it’s affecting all of us, we’re all dealing with it as best we can. How are you holding up what’s what’s your pandemic setup? I mean,

Mark

I work from home all the time anyway. So it’s not a big change. You know, I’ve, you know, you know, me from the past, I’m not a big email, I’m not a big meetings or phone call guys. I do 90% of my stuff via email. And so this is kind of par for the course for me and it’s more of an adjustment for others that I work with. work around who always wanted to do phone calls or meetings. But they were always used to working with me this way. So my life hasn’t changed all that much other than my kids being home, and a lot more forced family fun for the Cuban family.

Eric

How they how they hold up with school clothes and everything.

Mark

Yeah, I mean, the school is actually keeping them busy in the mornings. My 16 year old daughter still doesn’t talk to me. My 13 year old daughter talks to me sometimes. So it’s business as usual here.

Eric

Yeah, that’s, that’s really great. We We also were accustomed to working in schooling from home. And so it hasn’t been such a big disruption. But I know, you know, and we’ll put a link in the in the show description. But we’ve been working on this thing called school closures. org for families for whom this is much more of a crisis and trying to help them get the resources and I’m astonished how much people use schools for for school lunches and food security and so many surfaces. And so getting the word out to people who don’t have as much as you can do.

Mark

Yeah, we’re getting killed meals and just trying to Where we can?

Eric

Yeah, that’s, uh, that is really awesome. Have you had any conflict in the family about just like, what level of quarantine you got to do for like packages coming in? Or groceries or anything? Yeah,

Mark

I mean, at the beginning, particularly, you know, my friends are doing this, my friends are doing that. No, you’re not doing it? No, no, you know, in fighting that battle. No, you can’t even take your car. She just learned to drive. And, you know, it’s but she’s smart. I mean, she’s come around, and she recognizes the risks. And, you know, she understands what’s going on. So, yeah, it hasn’t been a problem the last 10 days or so. But early on, it was and, you know, I think they’re, they’re smart enough to recognize this is something that’s unique because they see the fair in their parents faces, they hear the fair, you know, in their, their friends, parents voices. And so, you know, it’s just, it just is what it is. And the good news is, you know, there’s social media babies, right. That’s how they grew up. And so whether it’s Snapchat, whether it’s instant, gram, whether now it’s Tick tock, um, they’ve got things to occupy them. I couldn’t even imagine, you know, when I was growing up if this would have happened, you know, no sports on TV. I don’t know what I do.

Eric

inconceivable, right? Yeah, it’s really, it’s such a huge difference, even, you know, people, obviously, compared to the 1918 pandemic a lot. And I think how much social activity but also how much business activity is able to keep going. Because we all can do so much from home and nobody’s discovering more they can do.

Mark

You know, we tried to explain to them that throughout history, that there’s always been circumstances where you wake up one morning and the world is different, you know, wars have been fought. My grandparents were forced from Russia, you know, it’s either leave or die. You know, my dad and my uncles fight in the world wars. And so it’s just, you know, there’s always circumstances in people’s lives. I mean, you hope you don’t have to deal with it. But, I mean, if you live in Syria, you know, there’s, there’s no I know, you know, and so While we have first world problems, and this is still, you know, difficult for us, but it’s still a first world problem compared to what people and undeveloped nations are facing.

Eric

Yeah, amen to that.

Mark

I remember every message we try to, you know, to ride home with them that and amplify as much as we can that as difficult as this is, you know, other countries people are resilient. And in other countries, they’ve gone through worse in this country, we’ve gone through worse.

Eric

I took a lot of comfort in that I remember as a kid, my parents were victims of the Holocaust and fought in the wars and they would tell us the craziest stories about what it was like. And you know, as a kid growing up in America, middle class family, you know, it just seems so remote like Oh, come on this soul fashion, that kind of stuff can never happen here. And now I am I wish I’d listened to a little better.

Mark

Yeah, we reviewed the story of The Diary of Anne Frank, you know, and in what she went through, um, obviously, it didn’t end well. But still, you know, it was a book they had read and it there resonated with them.

Eric

It has a whole different meaning now, when you’re actually living through this

Mark

Yep.

Eric

One of the themes that has really struck me the last couple weeks, you know, working with you and so many others is this unbelievable surge of business leaders, civic leaders of all stripes, kind of stepping up and trying to lead us out of this crisis. So talk a little bit about what you’ve seen, and kind of why you felt called to take on a leadership role.

Mark

I mean, we’re, I’m very fortunate, you know, I’m not facing the financial struggles that I once did. And so I’m in a position where I can try to help others and it didn’t start with this. But when this happened, you know, I have I have a platform, I have resources. I have people available to me to help me and it was just the right thing to do to try to help where I could. And that started with continuing to play pay employees in the companies I control because I understood that grief and the uncertainty and the fear that they would go through if they weren’t getting a paycheck, and encouraging others to do the same. Trying to use the Mavericks as a platform to, you know, reach out through our foundation and through the Mavs directly to get food or daycare to first responders. And you know, it’s just the type of things that make common sense if you have the resources to do them. And it’s not surprising to me at all that whether it’s yourself or others, Marc Benioff, so many other people have recognized that, okay, I’ve got the resources to help solve problems. And there are people out there that are putting they’re putting their lives on the line to save people. Why won’t I help them? You know,

Eric

they’re the real heroes here.

Mark

Yeah, they are the real heroes. And, you know, we’ve done it with the military. We’ll do it with first line responders and healthcare. And God forbid it happens again, but we’ll do it again. If we have to.

Eric

You know, I really remember right? The first day of the NBA decided to shut down your I think the first owner to call for providing funding, you know, not just to the direct employees, but to everyone in the network of vendors and people who are around the team who had had economic need. And it was really interesting. I one thing I’ve really believed is that a crisis kind of reveals your true colors. You’ve learned a lot about companies and organizations by how they respond in the moment. And look, I mean, I’m a warriors fan. And their first day reaction to that was not very strong. And it kind of after you said that, that was what you were going to do. Then other owners kind of stepped up and said, Yeah, we’re gonna do that, too. I just thought that was really interesting moment, and showing how an individual act of leadership could then you know, influence a whole industry.

Mark

Yeah, I mean, it just happened that it was a Mavs game when everything shut down. It was just happenstance. But it was something I thought about previously, you know, we’d had conversations, not knowing if that game was going to be played that night, not knowing what would happen With the rest of the season, and it was just something that that was a concern to me. And it just came to mind when I was doing the interview on ESPN. And unfortunately, you know, it did lead to others doing it. And again, I still think most would have done it anyways, if they could afford it. But it was just nice to see people, you know, recognize that there’s something they should consider.

Eric

One of the key values here is to put people first, and that, you know, businesses, organizations, We exist to serve human beings. And so when people are need that, that’s got to come first as a business priority. And that just seemed like a moment to kind of communicate that value through action rather than words. What else have you seen or done to try to help your organizations understand the need to put people first?

Mark

I mean, that’s just a driving principle of who we are. I mean, look, I’ve made lots of mistakes. And I’m not here to tell you that these all came organically to me. We’ve had problems at the Mavs that I had to respond to and I had to learn from it. When you when you have things that go really wrong, you have to learn a lot. And you have to recognize where things did go wrong. And, you know, I would just go, but I recognize that, you know, the leadership that reports to me is just as important as what I do. And I gave people a lot more autonomy, you know, authority with a responsibility without authority doesn’t get anybody very far. And I think one of the things that I’ve recognized is that I’ve got to pull back and let people have that authority, so they can make decisions and just be more available to them. And I think that’s really a big part of how my leadership has evolved. Because I was just having fun for a long time. And it kind of bent me because I trusted people without communicating with them. Now, I trust them, I give them authority, but I communicate a whole lot more actually. Let them communicate with me a whole lot more so that we’re all on the same page. And when you do that, that kind of sets an example and the people that report to me do the same thing. The people that report To them do the same thing, even though you know, we’re not a very hierarchical hierarchical organization, the levels that we do have, we really try to make it so that when you have responsibility, you have authority, and a big part of that is communicating with your people.

Eric

Yeah, one of my pet peeves is an org chart that puts the leader at the top of the chart. It’s like, no, it says completely backwards, like the leaders exist, supporting the people that do the actual work where they’re like, the roots and the end of the muck, you know?

Mark

Yeah, and every company has different parts as it as its own life cycle, right? And you have to recognize and be self aware of where you are in the lifecycle of the company. When you guys were starting out when I was starting up, it was, you know, go go, go, go go. And, you know, when am I going to get my next customer? How am I going to pay my bills will I be in business another month, and you deal with things a lot differently then, as you grow and become more established, you have to recognize that it the business kind of has, is an organism of its own and kind of takes a life and Culture of its own. And you have to work on getting that culture to the point where it really is bottom up, where the the people who are touching the customers the most are the ones that recognize that they have the most important job. Because if they don’t do their job, well, we’re not going to have customers and things aren’t going to work.

Eric

Totally. So beyond like basketball and your platform and kind of advocating for what is right, can you share some stories about people that you’ve seen step up that have impressed you?

Mark

You know, there’s I had another company go knock over monkey mat, that’s a shark tank company that made the decision to close down. And I thought that was tough, but it was also brilliant. Because they had money in the bank, they didn’t let it just go and, you know, get it, take it to the very end, and then hope they can make it work. They were like, We don’t see the light at the end of the tunnel. They had just been abused by the tariffs and that was an issue. their customer base, you know, wasn’t as direct as that. Was wasn’t, it was starting to not be as direct as it had been. And they recognized that, hey, this is a problem. And we’re gonna return money to our shareholders, but it also allowed them to put money in their pocket and their employees pocket. You know, rather than just writing it out to the end, I was impressed there. I see seen dude wipes, right is a company that really amped up, there are a few companies that are doing better because of what’s going on. And they recognize that there is an alternative to toilet paper that they’re sanitizing. I don’t even know what you call it. tising wipes, right. And so, um, you know, they whoops, I’m sorry, this this is booming. The business is crushing it. Yeah. I mean, and I’ve got a few Shark Tank companies that are crushing it and, you know, they have the moral dilemma of, Okay, I feel bad about this. And I don’t feel bad. I mean, this is people like your product. And they said, Well, what should we do? We amp up advertising and like, Yes, I mean, cost per clicks of people out there don’t realize the cost per click for advertising is going down, the customer acquisition costs are going down, you know, and if you play this right, and you connect more closely to your customers, the lifetime value may go up. And for dude wipes it was an opportunity to, to connect more and reach out and get more customers and they took advantage of it. And they asked me, Well, you know, what else can we do? And I said, hire people, you know, there’s going to be a lot of people who need jobs, pay him 15 bucks an hour, at least they got to be able to live off of it, and hire them to do whatever you can find them to do. And I think that’s just one of the things where every company when all of a sudden your business accelerates. There’s always something that you can find smart. There’s always something you need done, and now you can find a lot of smart people to do it, because so many people have lost their jobs. So those those are a few examples. But I think the one thing to really point out is whether you’re struggling or do Well, you have to be aware of what’s happening in the marketing of your products. Things are changing in digital marketing changing dramatically, the big advertisers are pulling way back. And if you can reduce your cost for customer acquisition, if you can connect in a way that, you know, expands your email database, adds more customers and allows you to connect in new ways. That’s, that’s setting a platform for the future for you. And so even in these dark days, you have to be opportunistic, and, and that also includes really learning everything you can about what’s going on in your industry, you can’t fall back, you really have to lean in and say, okay, are there opportunities right now for me to take advantage of, and what do I need to do to do so?

Eric

One of the things Sam Altman said that struck me was that during a boom, the only thing that gets cheaper is cost of capital. Everything else gets more expensive. And so firstly, crisis, the really key inputs that allow companies to Grow, get cheaper human talent, marketing, engineering, r&d, everything gets less expensive. So what have you been doing? encourage companies not to be afraid now to invest to put people to work to make sure that we’re all doing our part, you know that this doesn’t turn into an economic depression.

Mark

The first thing is to take advantage of the payroll Protection Program. Now, you can’t apply until Friday. And I’m kind of disappointed of that. But that’s neither here nor there. But you know, for those who aren’t aware, it’s a government stimulus program. That effectively says for your employees that make under $100,000 a year, the government will cover your payroll expenses and rent and utilities and some ancillary expenses for the next two and a half, three months, but, but there’s also a kick, if you retain all your employees, you don’t have to take you don’t have to pay it back. So I’ve been pushing all of my Shark Tank companies, all my smaller companies, you know, you have to have fewer than 500 employees. So already Companies that qualify to go out and apply for this, because it allows them to retain their employees, allows them to continue to push their business forward and stay in business and potentially grow. And that’s just something every small business with under 500 employees needs to take advantage of.

Eric

A lot of folks I’ve been talking to about this, they’re not accustomed to asking the government for help, and it feels a little weird. Startups don’t always interact with the government. Have you if you help people kind of understand why it’s important for them to do this?

Mark

Yeah. I mean, of course, I mean, my first inclination, I, you know, I run libertarian, just who I am. And my first inclination was, you know, I don’t I don’t think I want to do this. But this is not a standard operating procedure. This is not a typical environment. This is a black swan event, and you have to deal with what’s in front of you. And the government knows that stimulus is important for the economy, like you said, we don’t want to, you know, any more severe recession than we were already in and hopefully to avoid to depression. And so we really need to take the steps to keep our employees keep them employed, and keep them working. And if there’s a stimulus program that allows us to do this, you got to do it.

Eric

I won’t think I was really conscious of this pre crisis. But it really struck me in the early days, because I was so focused on taking care of obviously, our employees, our vendors, our contractors, our you know, our broader community, was that one of the ways you provide support to people is to offer them stable employment.

Mark

Yes. Oh, yeah. So yeah, like that’s actually like keeping the company in business, having it have a sustainable business model, having it pull in the funds that it needs to keep going. That’s actually not a greedy thing to do. It’s a way to be service be of service to the people that are in your ecosystem. Without question look, as someone who’s been fired and had their back against the wall and sleeping on the floor and not being sure where my next dollar was coming from to pay for food. You know, I can connect with people who are in that circumstance or would be necessary. circumstance if you had to lay people off, and so anything you can do to keep them hired you, you just improve their sanity, you improve their mental health, you improve the lives of their family. So you’re certainly not being selfish and it’s not look, I’m a capitalist, it’s never selfish to keep your company in business. It’s never selfish to hire. It’s never selfish to try to do the right thing for your employees, your customers and your stakeholders. You know, where it becomes selfish is when you just try to just squeeze out one extra dollar at the expense of an employee at the expense of a stakeholder to try to look good to shareholders because you don’t think they trust you or believe in you enough to increase your price earnings ratio if you’re a public shock, you know, yeah, that’s that’s where things go wrong.

Eric

You know, and and the way you treat people in a crisis when you could take advantage of them. People remember that

Mark

forever. Yep. Right now you know if the way you treat your employees today, while all this is going on, will define you as a brand for years, if not decades. We will be on Shark Tank. As an example, we’re seeing more and more companies over the last three years that have a social component to them, buy a pair of socks, we’ll give away a pair of socks, you know, by the sandals, and will contribute money to building schools in Afghanistan for girls who otherwise couldn’t go to school, you know, buy their son will provide blankets. So consumers, particularly Gen Z, and millennials, though they’re used are becoming more used to looking for a social component with the, from the companies that they do business with. If you don’t have it before this, you are at a disadvantage. Now going forward, those same people, they’re gonna look to see how you treated your employees, they’re gonna look to see how you treated your customers. They’re going to look to see what impact you had in your community, because when they go on Instagram, or on tik tok, or on Snapchat, or even Facebook, if they have it, and they’re they’re not going to wear your T shirt, they’re not going to be proud of showing your products online. They’re not going to be an influencer for you organically and authentically because they don’t want to be associated with your product. And they’re going to tell their friends the exact same thing. We’re already seeing posts that this company just sent an email to lay off their employees, I’m not doing business with them again, that company did a group voicemail to everybody in order to furlough employees. That’s gonna have ramifications for years. And so what you do today will help define your brand or hurt your brand for a long, long time.

Eric

One of the famous things that Toyota would do and you know, Toyota has been around since the Great Depression and before was that, you know, during economic downturns, they would keep people employed in the factory, even if they had no orders, and just come up with something else for them to do and make them make improvements in the factory improve capacity so that when the orders eventually they’re gonna resume, they’re poised to take advantage of the growth. So anyone in your portfolio or anyone that you’ve been talking to kind of have an example of something like that or impressed you with something.

Mark

Yeah, I mean, a lot of our companies, a lot of our company are keeping people employed? There’s no question but you know, in all small businesses you so Go, go, go, go go all the time, you always find yourself thinking, you know what if I only had a few minutes, if I only had a day or two, I really would love to do a BNC. You know, I like to redo my marketing materials. I like to rewrite this this manual, I like to read that evaluate this code and look for bugs and clean it up. I like to, you know, talk to this customer, I like to redo my my video content, or add or create new content or write scripts for this content, all these things that you always wanted to do if you only had time. Now you probably have the time. And now’s the time to do those things so that you come on the other side after the reset in America 2.0 and you’re stronger.

Eric

Let me ask you a little bit about the COVID relief efforts that you’ve been involved in.

Mark

Most of the philanthropic stuff has been geared towards trying to help first responders, getting them fed taking care of their daycare needs, getting kids getting food to kids At school getting money to food banks, I’m just trying to get where there’s immediate need as much as we possibly can. I haven’t been wanting to try to say, Okay, I’m donating X amount of dollars to trying to find a cure or vaccine for COVID-19. Because that’s just longer term, I’ve really tried to focus on ways that we can help people that are facing immediate needs, whether it’s feeding them, clothing them, sheltering them on providing daycare, whatever it may be. And then obviously, as a as a business person that just looked at what’s happening with PP and E, particularly the mass. Obviously, that was that went from an efficient market to an inefficient market overnight, and it upset me. I mean, I thought that there were companies out there that were manufacturers, particularly domestic manufacturers that were withholding data and keeping the market opaque, and that was contributing to it becoming a black market as opposed to even a remotely efficient market. If not, you know a truly efficient market. And so that’s where, you know, I got involved with you guys and Alex and a bunch of other folks for project in 95 calm, which effectively looks to connect buyers and sellers and make sure that products that was going from point A to point B was actually authentic and could do the job and you know, the information they’ve uncovered the the opportunities they’ve been able to, to find, but also the junk and the garbage and the scams they’ve been able to protect people is incredible.

Eric

It’s sickening, that’s awful. We’ll put a link in the description to pee pee Coalition for those that want to kind of get the latest information and want to get involved there. Why that issue in particular? I mean, for me, it makes my blood boil,

Mark

Because it’s something I shouldn’t have to have. It’s something that should have happened. Right? I’m sorry if I’m a step slow Robin step slept in like two days.

Eric

No, no, it’s I listened. This is one of the most outrageous things happening in the crisis right now. I think it’s…

Mark

Yeah it’s crazy. I mean, yeah. Whereas there’s a product out, I’ll use as an example. And I don’t think they’re doing anything illegal. But I do think that they don’t have a great corporate conscience. There’s a product manager at three that knows the 95 mask business inside and out, domestically and globally. They know who all the manufacturers are. They know who what their capacity is, even with all the additional capacity. They know, historically, who the buyers are, they know the trends. They’ve been in business and doing this long enough. They were there through SARS, they were there through other, you know, flu epidemics. Not as bad as this, but they saw trends, they had an understanding. They also had, you know, allocation programs that allowed them to deal with hotspots. Yep, having all that data, they shared none. And because they shared no information, that market went from inefficient to their distributors, telling people placing orders as of this morning when I talked to two Some order places some hospitals, that the hospital Yeah, they’re telling them you, you can place an order, you cannot cancel it. We don’t know when we’re have any Product to Ship you. And we’ll just ship it if and when we get it. And when you respond to your customers like that, it freaks them out. So as a result they’re going out there trying to buy, they assume that’s just the way the entire market is. And that’s what it’s become when the leader does that. So they’re out there buying whatever they can and mass from whoever they can at whatever price they can source it at. And not only are they doing that they’re hoarding it. Whenever they get extra, they’re sharing it, they’re keeping it to themselves, because of all the uncertainty we don’t they don’t know what their Apex is going to be. In some cases, they don’t know when it’s going to be. In some cases, they don’t know when it’s going to strike them because they’re in an area that hasn’t been hit hard yet. And when and because of that, the market turns those from an efficient market to a gray market to a black market and that may not have been able to be completely avoided. But it certainly could have been dealt with him in a way that made it a lot less traumatic and a lot less intense. And if three, and three, Tom could have done that, just by releasing information, that they would have just had their head of supply chain, their head, their product manager for the end, 95 just go out there and talk to everybody to share data with other manufacturers to talk to other manufacturers and say, why don’t we organize together and release information about what our daily production areas what our daily deliveries? deliveries are, what our order rates are, so we reflect demand, and work with the hospitals that our customers and ask them what their daily burn rate is. So, you know, other hospitals know how many are being used so they can learn from other, you know, hospitals who are being hit first. All these types of things that they had information that would be supportive and helpful, and they didn’t share any of it. And to me, that’s just the wrong way to approach things.

Eric

Yeah, I mean, I’ve been talking I’ve been on the phone non stop last 10 days. with people all over this ecosystem industry in all these grassroots groups, and one of the themes that has come up over and over again is lack of coordination, lack of cooperation, lack of data, we’re all bidding against each other on the same black market bidding up the price. And there needs to be a coordinated national response, we got to work together, we got to have open data. And this is a crisis that’s about to get much, much worse. I mean, all of us are getting these awful messages on social media by email, who doesn’t have a family member or friend who works at a hospital or in the healthcare system in some way? I mean, we’ve got everyone’s got these

Mark

messages. And that’s exactly right. In fairness, reflective of you know, if you’re not from our government, right, I’m not trying to pick on anybody but sets, it shows you that you can’t have everybody in charge. When you have everybody in charge of trying to solve a problem. Nobody’s in charge, and everybody steps on each other. And now he’s also seeing articles that USAID, you know, which had a stockpile actually shipped a lot of this PP overseas this week. Didn’t know. And if you had one person in charge, you could manage everybody that’s working with them, then you can start to take inventory of everything, as opposed to everybody just scrambling trying to solve the problem not talking to anybody else.

Eric

So one thing I want to get your perspective on is a number of the people I’ve been talking to who are working relief efforts, and some of these people have been working 24 hours a day, you know, for weeks now. Yeah, they have these moments where they’re like, Why me? Why am I in charge of this? This just doesn’t make sense. No, have you had that conversation? The days like, what what are you and I know about this? Why are we called

Mark

Yeah, why do we find ourselves adding value to this problem? When there’s no reason we should be adding value at all or even involved?

Eric

Yeah, and and if you go on social media, there’s people saying, you know, stay in your lane. What are you doing? Like why, you know, this is the this to the experts leave it to the government. And I and I know people like I was just counseling someone last night who wants to start one of these projects and they were Afraid, you know, wait a minute, they had it, they actually had it done and we’re not able to ship it, you know, they couldn’t bring themselves to publish it because they’re like, I’m gonna get crucified on social media people gonna yell at me I might make a mistake, and who am I? To say what needs to be done? And I, it was late at night I said, Listen, you gotta have a heart to heart right now. First of all, your product guy. So what am I going to tell you delay? No, of course not. But also like, you have to do this, your call to do it. You have no, the cavalry is not coming.

Mark

And the only caveat I will put there. And Eric, tell me what you think like a lot of times people have the best intentions. And they have an idea or they want to start a foundation or they want to do philanthropy. But what they don’t do is check to see who else is doing the exact same thing.

Eric

Exactly.

Mark

Right. And so I’m a big believer and this is generically not not specific to all this, but we have too many charities that there should be a great charity consolidation because there’s so much duplication of effort. So sophistication of fundraising. So much duplication of overhead That the effectiveness of all the above is diminished. Because these charities are competing with each other.

Eric

I’ve taught, I’ve talked to so many people last couple weeks who want to be in charge, you know, and that that ego is getting in the way of doing the work. So yeah, we have a lot of redundancy and lack of cooperation. So it’s how do you find that balance between you have your own unique, distinct perspective, but then the need for us to work together and and not make duplicative efforts?

Mark

It’s almost like starting a company or creating a product, right? I really have to do your homework to do it right. Now, you may have a vision that allows you to do it better. But you know, we talk all the time, is it a product or a feature? And you have to really know the difference because somebody else’s product, the Delta, the difference between your product and there’s maybe just a feature they can add in 10 minutes. So even if you have a unique element to your idea for solving the problem, you also have to ask yourself, can you take this to somebody already in the world already doing this and make their lives and make their product or make their service was better? And yeah, you know, we’re starting to see some of that now as people are realizing they’re duplicating efforts. But I think, you know, I think it’s incumbent upon anybody in any company you start, whether it’s a charity, nonprofit or for profit, um, you know, can you work with somebody already in place to get this done? Because duplication of efforts is counterproductive.

Eric

Please cooperate, please share data. I mean, yes, the days of delay that this kind of pissing contest of causes, and people are dying every day now. So there’s, there’s not really the time and energy for duplicative stuff that, you know, hey, maybe that should be true all the time. To your point, but especially in a crisis, right, especially now.

Mark

Yeah, especially now.

Eric

Can you talk a little bit about the kinds of questions you’re getting from your portfolio companies and from the companies and nonprofits that you’re affiliated with, like, what some of the questions you’re getting as they’re grappling with this crisis?

Mark

I mean, the first is have you seen this anything like this before? No. The second is What should I do about production? You know, like, there’s, I have one company rise nation, which is an exercise a boutique exercise company. And they’re, we’re in the middle of building another location. And on one hand, I want them to continue to build it. But I, because I want people to have jobs and continue working on us paying them. And on the other hand, if they’re going to finish it so quickly now, because those folks have nothing else to do, that it’s not going to open for months, because there’s not gonna be anybody who can go to it. And that creates its own set of challenges. And so trying to deal with what’s truly critical path and prioritizing, has in that particular case, and really across the board has probably been the biggest question, what do I prioritize and how, and that’s where I’ve had people put together critical paths of okay what you need to do, and who all was impacted along each step of the way. And then trying to maximize the impact that you can have for the long term. And then the second thing that I tried to convey is, don’t you know, it’s painful for today. But there’s going to be great companies that come out of this, you know, we’re gonna look back in 510 years, and there’ll be 510 2025, however many companies that we’re born in this mess that we consider to be great companies. So if you put your long term vision hat on, you know, where can you see yourself, and what’s your vision for the other side? You know, this isn’t business as usual. So do you have this conversation ahead yesterday? Do you have a vision for the other side, that maybe is different than what you’re doing today? But maybe it’s something that everybody can get behind? Because you knows where those visions are going to come from, right? Maybe it’s you, maybe it’s me, maybe it’s this entrepreneur, maybe it’s any of the hundred entrepreneurs I may work with, but it’s going to come from somebody. So you know, press yourself, you know, visualize what You think it’ll look like when we come out of this? And can you do something to change the game that will make it better?

Eric

So when people call you and ask about what you’ve seen before, I expect what they’re expecting to say as well. You’ve lived through them and you’ve been through some shit, man, forgive my language. You’ve been through the.com crash, and you’ve been through the Great Recession. Tell me probably some what what you think are lessons that you learn from those experiences that are relatively

Mark

I’ll tell you, not so much those experiences. But I’ll give you an example and the one that I’ve been using with everybody. So my first company micro solutions, the systems integrator, we were about two years old, we had three employees, and we were doing things we thought the exact right way. And we would have our accounts payable list, and I would review that and then somebody else would cut the checks, and then I would sign the checks. Then I would have somebody put the checks in the envelopes and mail them to our vendors. No big deal work for the first year, almost two years. One day, I get it. Call from the bank and a guy with a Texas draw son. You’ve had somebody come through the drive thru, and they whited out the pennies and wrote over there put their name when they wrote it over on my tell me you didn’t cash it. Well, of course I cashed it. Why would I? And so turns out of the $84,000 we had in the bank 82,000 was for payables to our vendors. She took it all gone. And so, my first response, obviously was worth the fuck, no, my second response was, Okay, I gotta get to work. And my partner Martin, and I did just that. We got on the phone with our vendors. We explained what was going on. They knew we were growing. I mean, we weren’t insanely profitable, but we were sustaining ourselves and growing some and, and we were decent customer for them. And they understood, but they listened and they talked and the message I gave to my companies were uses example, then and now is you’ve got to communicate with your vendors, exactly what’s going on, you have to be honest, you have to be transparent. And you have to be proactive. You can’t just put your head under the pillow, and hope they don’t call. And when I went through it, you know, and actually back then we’re going we’re in a recession. And things weren’t great for for most companies. And so they had heard it from others for but for different reasons, right companies were going out of business. This is right around the SNL crisis. And so but we we talked to them and founder were you through it, and they listened because they don’t want to see their customers going out of business. And today, your vendors are feeling the same fear that you’re feeling. They’re having the same problem with their manufacturers or vendors, or whatever the case may be. And they’ll talk to you and they’ll listen, and they recognize that these are unique circumstances and if you can convey to them, here’s how you’re going to get to the other side. Here’s how you’ll come out of this better if they work with you and give you a payment. And schedule, whatever it may be, most likely they’re going to listen. But as an entrepreneur, you have to do that. Now you can’t wait to it hits the fan, you have to be proactive, transparent, and honest.

Eric

One things I’ve been urging people to do is to send a letter to every one of their vendors and contractors, urging them to put their people first and making sure they understand Hey, we don’t want you to put your people at risk for our sake, we want you to obey social distancing to have you done something like that with with your network of suppliers.

Mark

I haven’t talked to them. I mean, we’ve called talk to them on the phone, haven’t sent letters or anything like that little fashion, I guess to center. That is real fashion for me, you know, um, but I have had the conversation with some creative folks where, look, you, you shouldn’t be spending this much time you need to spend less time working on this. You know, I know you’re stressed because you’re concerned about how much business you’re going to continue to get. And I know you’re trying to kiss my ass because, you know, I’ll keep on giving you business. But don’t worry, I’ll be here you go take care of your family first because cuz your kids are at home, you can’t be stressed you’re not going to do as good a job. And you’ll kiss my ass even better. I’ll get both cheeks when I when we get on the other side. If we do this right.

Eric

That’s… Yeah, I know you got you got me stumped there for a follow up. That’s exactly right. Well, I guess the point is that if you take care of your vendors as human beings first, then when it comes time to renegotiate, when it comes time to work out payment plans and figure out how to get through this together, they’re gonna be more willing to work with you.

Mark

Of course, when did you, you know, employees, employers are scared. I had a conversation with somebody I didn’t even know actually, and they emailed me. And they were like, Well, my employer didn’t tell me this, this and this and this, and I’m upset about it. And I’m like, you don’t think they’re upset? You don’t think they’re terrified? You don’t think they’re worried about whether or not their stay, they’ll stay in business. You need to talk either to your direct manager, if it’s smaller if it’s a small enough company, the owner the company and just tell them they You understand? You know, because it’s not just an entrepreneur or employer talking to employee. If you’re an employee, you should be just as motivated and proactive to say, you know, what, what can I do to help you stay in business? What, where can I help? So we get through this together, because that’s going to create a much stronger bond between you and your employer that’s going to pay off for a long, long time. You know, I’m one of the sayings I like to use, or the concepts I like to convey is that, you know, there’s there’s two types of employees, those who create stress, and those who eliminate stress, oh, you always are going to do a, you’re always going to be proactive to keep the people that eliminate your stress, or at least reduce it. And you’re going to just let the people that are the hurricanes. You know, it’s always the people who think they’re the most valuable, that always are the least valuable because they they create hurricanes of their own making. And then they say they’re, they’re the only ones that can solve them, you know, and the people that just go about their jobs, reducing our limit In your stress, the minute you hear they’re even looking for a job or considering leaving, you go nuts and proactively give them a raise. So in these types of circumstances, you want to be the employee that proactively goes to your boss or the owner, and says, How can I help? Here’s what I can do. You know, my, my partner, my spouse works, that’s not a stress for me, or neither my partner, my stuff, my spouse doesn’t work. And this is going to be a problem. But here’s how I can put myself in a position to help you succeed here, you know, let me do this, this, this, I’m really good at this, this and this, you tell me what works best for you. And when you have that level of communication, regardless of who starts it. That’s how you get to the other side and come out stronger.

Eric

And we’ll definitely put a link to the Dunning Kruger effect in the yes for the thing about people who think they’re the most valuable. So most importantly, Mark, where do you think we go from here? Like, how do we get out of the crisis? I don’t know.

Mark

I don’t I honestly don’t know. But I think what I do know is that there’s no other country in the world that’s as resilient. That’s as entrepreneurial, that’s as creative. And I have complete faith in American exceptionalism, if we want to call it that, that we’re going to come up with unique ideas and create unique opportunities that we’ll only see because we’ve gone through this, that whatever we get whatever’s on the other side, you know, after this reset, whatever occurs, that I have complete faith, we’ll figure it out. And we’ll come up with new businesses that propel us. I mean, when you go back over the last 50 years, and you look at the greatest technological achievements, most of them came from this country. Now a lot of them were immigrants who came here, but they came here because they recognize that we, we incubate businesses, right. This is a country that appreciates entrepreneurship, and I think that will continue. Um, maybe we won’t have as many immigrants but those who are here, I think we’re going to to contribute. And I think entrepreneurs are going to lead the way. And that’s how we come out of it. But the specifics, I don’t know.

Eric

So there must be people listening to us right now that are sitting on the sidelines. I mean, how many of us are kind of in existential dread despair on social media feeling like there’s nothing we can do? If someone’s on the sidelines right now can’t figure out how to help or what to do? How can they get in this fight?

Mark

Take care of your family, take care of your friends, take care of your community, you know, start there first, and call people on the phone, call your friends. You know, I had a hang out with my high school buddies, some of whom I hadn’t talked to in a couple years. And it was great and just ideas started flowing, right? Because you don’t have to go big. You just have to connect. And when you connect with people, you start getting that network effect. And I think that’s really what we need people to do. Start working locally in your community, create a local network effect, and then go from there and see where that takes you. Because everybody can Be a leader in their own community, everybody can be a leader in their household. Everybody can work with people they know, you just have to connect with them. You just can’t. You can’t hibernate and keep to yourself.

Eric

Give us one prediction for how the world, the business world, our society at large is going to change as a result of the crisis.

Mark

I think people are going to be a lot more cognizant of cleanliness. And, you know, we’ll see, we’ll see a lot more germaphobes and that’s a good thing. You know, people, you know, it’s not a macro thing. But it’s, it’s an important thing. Because we’re going to need to get past social distancing. We’re going to need to be able to go into communal environments. And, you know, good hygiene for products for services for ourselves is going to be critical. And it’s it seems so common sense and so basic, but it’s something that I’ve always taken for granted, haven’t you?

Eric

Oh, of course. Listen, epidemiologists have been warning us about this for years that we got to change our habits and changing and we hundred percent ignoring them because it’s such a downer message. I don’t think we’re going to be ignoring them to the same extent anymore, right?

Mark

That’s exactly right. And that’s going to create opportunities. You’re going to see one man sanitized or one woman sanitizer companies just, you know, spraying everything. You know, I’ve had conversations with people at our arena, about creating labeling systems. Because if you’re, you know, my mom wants to go to the local park, she’s going to want to know when the last time that park bench was sanitized. And how many people have been there since then? And no one Okay, here’s a little label or whatever it is saying, okay, it’s only been 30 minutes feel free. You’re safe or the count of people who have been here is x, you know, those are the types of things were giving people comfort that they can venture back out and have some some ability to return to normal. I think those those types of opportunities are going to be big, but it’s going to take some time.

Eric

This has been Out of the Crisis. Out of the Crisis is hosted by me Eric Ries, produced by LTSE’s Ben Ehrlich and edited by Breaker’s is Jacob Tender. Music composed and performed by Cody Martin. Out of the Crisis was created in partnership with Breaker the best platform to create and listen to podcasts. For more information on ways you can help, visit Helpwithcovid.com. I have several projects on there and feel free to message me that way. I’m also @ericries on Twitter and if anyone has ideas or is working on a project related to solutions, please do reach out to me. Thanks for listening.

I'm building products that build the next generation of companies at LTSE. This blog is where I share my personal thoughts.

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