1. How Mark Cuban Saved $1.4 billion in the dot-com bubble
In 1994, Mark Cuban co-founded AudioNet.com, which later turned into Broadcast.com. The company broadcasted live events on the internet, which was revolutionary at the time.
In 1998, Broadcast.com IPOâd and brought Mark Cubans net worth to over $300 million. And then, 9 months later, Yahoo purchased the company for $5.7 billion in stock. This brought Mark Cubans net worth to over $1 billion, but it was all in Yahoo stock, and he wasnât able to sell within the first six months.
At the time, the dot-com bubble was taking place, and any company with a â.comâ in their name was skyrocketing in the stock market. Mark Cuban saw that this couldnât continue forever, and wanted to make sure he protected his shares incase they plummeted.
Hereâs what he did:
Yahoo was trading for $95 at the time.
Cuban took most of the cash he had, and bought puts + sold covered calls. The covered calls were bought at a strike price of $205, and the puts at $85.
So what does this mean?
If the shares (currently trading at $95) went over $205, Mark had to sell them at $205.
But if the shares went under $85, Mark would be able to sell his shares at $85.
So what happened?
The shares skyrocketed over $230, so Mark had to sell some of the shares at $205. The shares then plummeted under $85, allowing mark to sell the rest of his shares at $85.
What would have happened if he didnât buy the calls and puts? We may never know, but there is a good chance he wouldnât have come out with over $1 billion.
2. You probably already know the answerâŠ
In most cases, if you are seeking advice, you probably already know the answer. I know itâs not true in every situation, but think about itâŠ
When people seek advice on how to lose weight, they probably already know how⊠Go to the gym, get your heart-rate up, and eat less calories than you burn.
Want to make more money? Find a more lucrative job, or get better at your job.
This week I caught myself google-ing âhow to learn Spanish fastâ. But I already know what I need to do. I need to get started.
Some times the best thing to do is just get started. Do the basics.
And the advice youâre waiting for.. itâs probably just an excuse youâre using.
3. Business idea of the Week: Local Online Farmerâs Market
Think Instacart + Local Farmers.
Demand for local organic food has been a growing trend, and there doesnât seem to be any signs of this trend slowing down.
Right now, if you wanted fresh local produce or meat, where would you go? Most likely a farmers market, or local market.
But, how can we make this food more accessible for local consumers, and increase sales for local farmers?
Add technology of course.
The Idea: Create an online marketplace where local farmers can sell their goods to local consumers. This is a two-sided marketplace meaning you need both the supplier (farmers) and buyers (local shoppers) to use the site. Two-sided marketplaces can be very challenging to build, but can be an awesome business when executed correctly. The obvious exampleâŠ. Amazon.
How to get started:
First you can build a basic online marketplace using software such as Shopify or Bubble.io.
Once you have a basic marketplace built, you will need to find your suppliers (farmers). I would start by attending every local farmers market you can find, and pitch the suppliers on what you are building. This should provide them with more sales, with very little extra work.
Once you have a few suppliers on your marketplace, you will need to acquire customers. Since your customers will be local, you can target local facebook groups, reddit groups, and any local advertising you can find.
Delivery: The delivery of the produce will be up to you. As things get started, you can do the delivery yourself, and hire part time delivery drivers as things scale.
Monetizing: The most important part. How will you make money from this? This will be up to you, and will most likely take some experimenting. You can start off by taking a percentage of each sale, and/or charging a monthly membership to shoppers in order to access the site.