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Published:May 6th, 2011 08:50 EST
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Billionaire Mark Cuban's Advice from the Shark Tank

By Paulette Cohn

It is Mark Cuban`s last appearance of the season on ABC`s Shark Tank and he has the other sharks all riled up when he urges the entrepreneurs to stop negotiating with them if they even want a chance to make a business deal with him.

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Shark Tank gives budding entrepreneurs the chance to make their dreams come true and possibly make a deal that will make them millionaires. Cuban joined the series this past season and is wheeling and dealing along with fellow sharks, including real estate mogul Barbara Corcoran, infomercial industry pioneer Kevin Harrington, technology innovator Robert Herjavec, fashion icon Daymond John and financial expert Kevin O`Leary.

Now, Cuban talks about what he looks for to make a deal, what turns him off to one, and how his TV presence can actually work against him in real life.

In one of the first episodes you were called a bully. And tonight, you tell the entrepreneurs to only negotiate with you. Because of your money, are you in an unusual situation where you can actually control a room when you want to?

Mark Cuban: I was a bully; I am a bully in those particular cases. I`ll take full credit. It`s business. What`s interesting about Shark Tank is the entrepreneurs that come on are smart.

The producers do a pretty good job of picking out folks that really are intelligent people. And they recognize that " they play a price arbitrage to get on the show. They actually reduce the valuations of their companies to make them more attractive to the producers which in turn make them more attractive to me as an investor.

And so there really is kind of a Shark Tank discount, which is all the more reason for me to be even more aggressive when I`m on the show. And I think, the fact that I do have a little bit more financial wherewithal, you know, it has put me in a position to kind of be a bully. And I`m fully taking advantage of it.

What entices you to invest in a product on the show?

Mark Cuban: There`s a couple different elements. First I look at the business. It`s got to be a business that I can see a future to that I think really has promise and potential. It`s got to be a business that I understand. It`s got to be a business that I add value to. And, I think, just as importantly, it`s got to be a person that I believe in and I think has the commitment and passion for their company.

One of the great things about Shark Tank, we get to see a lot of businesses that have been fleshed out, where people have put in time and put in sweat equity. And so, if I see a business that I think has potential, where the entrepreneur has really put in the work to try to make it successful proving that they believe in it, then I can see elements in the entrepreneur that are attractive to me in terms of efforts, brains, edge to them, and the ability to sell.

And then I contrast that to the risk-reward of the business or of the investment. So in other words, if I`m investing $10,000, there`s a different risk-reward profile than if I`m investing a million dollars. When I make an offer for a million dollars like I do on the show Friday night, you better believe, I believe in all of the elements as opposed to just a couple of them.

Does appearing on television help your business profile? Does that help you with your investments? Or can that actually hinder you because people know who you are and they think you have more money so they want you to invest more?

Mark Cuban: You know, that`s a great question. It works both ways. It gives me access and opportunity because people know who I am and they kind of understand how I work. And that really shortens the cycle or the process to go from contact to conclusion.

But on the flip side, there`s many a time where they`ll raise the price because they think just because I have the money that I`m going to throw it away. And where that`s particularly a problem isn`t so much in investing in businesses, it`s when I go to try to buy something, just at a store or whatever.

Or if I`m looking to potentially buy a house, or you name it. Then the price goes up. So what I do is I have my wife go call under her maiden name. You`ll rarely see me bid on something normal using my name. We`ll typically use my wife`s maiden name.

What advice do you have for people who enter the Shark Tank?

Mark Cuban: Be prepared. I say this not just for coming into Shark Tank but anybody who`s an entrepreneur. When you walk into the room, you have to know your business better than anybody in the world. Because there`s somebody out there competing with you and wanting to kick your ass.

And those are the words I use literally. If you`re not prepared and you`re not ready for people to compete with you, then you`re going to lose. And I think that`s a mistake that entrepreneurs make. They think it`s just the idea and just the effort, and whatever else is going to put them over the top. When in reality, anybody who shows any level of success, it`s like a magnet to other people who want to try to take that business away. For me, that element of fear of knowing that I`m competing with, you know, huge companies always motivates me.

What`s the worst mistake people can make when they`re pitching you? Where your brain just shuts off and you`re really not listening anymore?

Mark Cuban: It`s funny you ask that because I was just looking at an email before I got on. The first thing that turns me off is when people start looking for sympathy. People start off, "Well, you know, I was in the hospital." Or, "It`s been a rough road. My parents divorced when I was three." And, they`re 45 years old.

You just can`t fit it into the excuse category. You`ve got to go right to business because that`s why we`re there. Everybody`s got a story of what made life difficult for them. And you just cannot go there. That`s one of the things that just makes me turn off immediately.

On Shark Tank, can you get out of these deals? Do you have to do due diligence? Or do the producers screen everything?

Mark Cuban: We can`t get out just because we don`t like them. But we can if in our detailed due diligence, they misrepresented something. I had one deal that didn`t make it on air with these animation folks and their whole thing was, "Our costs are so low." And then we got in and they just decided that anything they put on the charge card didn`t count as a cost and they didn`t disclose those until we went in and really dug.

So we`ve got situations like that where they just get so excited that they get caught up in the moment and kind of fudge things or amplify things. Or they just mislead you. Then we have every opportunity to get out.

Shark Tank airs Friday nights at 8 p.m. on ABC.