Oct 28, 2024
When it comes to employees embezzling funds from their companies, billionaire Mark Cuban is surprisingly nonchalant about it.
“People steal, what am I going to do?” the entrepreneur, who has experienced embezzlement in his companies over the years, told Shannon Sharpe on an episode of the Club Shay Shay podcast. “You know what? It’s a good problem to have, right? I can afford it.”
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That being said, Cuban admits he is resentful of one particular employee who nearly drove his first company, MicroSolutions, out of business. “She took $82,000 of the $84,000 we had,” he told Sharpe. “We were flat broke.”
Here’s how Cuban rescued the firm from near bankruptcy after this ordeal and what it can teach us about recovering from financial failure.
Rescuing MicroSolutions
Cuban says the money that was stolen was earmarked for his vendors, which put the company in a challenging position. With only $2,000 left in the bank, the company faced an existential cash issue.
Cash flow problems like this are common killers for small and mid-sized businesses. According to a Quickbooks State of Small Business Cash Flow survey, 61% of small business owners say they frequently struggle with cash flow, with 32% saying a lack of cash flow makes them unable to pay employees, suppliers, loans or themselves.
And, according to U.S. Bank, 82% of businesses that fail attribute the failure to cash flow issues.
To avoid the same fate, Cuban says he reached out to his network of vendors to explain the situation and ask for flexibility.
“We had to call the vendors to say, ‘Please work with us, we'll bust our a–, we'll make sure you get paid,’ and they did. They worked with us, right, and the rest is history,” he said.
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Eventually, the company got back on its feet, and Cuban sold it to internet services company CompuServe for $6 million.
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Dealing with setbacks
Cuban isn’t the only famous billionaire who’s faced such setbacks. Steve Jobs once claimed Apple was 90 days away from bankruptcy in 1997 and was rescued by an investment from Microsoft.
Warren Buffett also once told CNBC that Berkshire Hathaway was "the dumbest stock [he] ever bought" because the underlying textile business was destined for failure. Buffett eventually went on to pivot the company to insurance and other investments to salvage it.
Such a move highlights the importance of keeping a solution-oriented mindset and being open to alternative investments that may work more in your favor.
Psychologist Angela Duckworth has studied successful people and found that beyond their talent, a key indicator of their success was their ability to persevere despite failure and to use setbacks as opportunities to learn, rather than give up.
“Everyone gets discouraged,” she said in a post on TED. “Everyone cries, sometimes. But some of us cross the Rubicon. When we do, we can say without reservation: Setbacks don’t discourage me for long.”
Everyday investors and savers can use this mindset to deal with unexpected losses, stock market crashes or any other roadblock on their way to financial freedom.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
