Billionaire Mark Cuban announced his own stimulus plan earlier this week. It’s sheer genius.
Here’s how he describes it in his blog post, The Mark Cuban stimulus plan:
Rather than trying to be a Venture Capitalist, I was looking for an idea that hopefully could inspire people to create businesses that could quickly become self funding. Businesses that just needed a jump start to get the ball rolling and create jobs. I’m a big believer that entrepreneurs will lead us out of this mess. I just needed a way to help.
Then he lists the rules:
- It can be an existing business or a start up.
- It can not be a business that generates any revenue from advertising. Why ? Because I want this to be a business where you sell something and get paid for it. That’s the only way to get and stay profitable in such a short period of time.
So far, so good. But now pay attention to these next four rules, as a group:
- It MUST BE CASH FLOW BREAK EVEN within 60 days
- It must be profitable within 90 days.
- Funding will be on a monthly basis. If you don’t make your numbers, the funding stops.
- You must demonstrate as part of your plan that you sell your product or service for more than what it costs you to produce, fully encumbered.
Do you see it with those four rules? He’s promising to fund companies only if they don’t really need funding; only if they have real value; only if they’re perfectly set up for bootstrapping. It’s sheer genius. I don’t think he’s being cynical, or deceptive; I think he’s making a point. But we go on…
- Everyone must work. The organization is completely flat. There are no employees reporting to managers. There is the founder/owners and everyone else.
- You must post your business plan here, or you can post it on slideshare.com, scribd.com or Google docs, all completely public for anyone to see and/or download.
- I make no promises that if your business is profitable, that I will invest more money. Once you get the initial funding you are on your own.
- I will make no promises that I will be available to offer help. If I want to, I will. If not, I won’t.
- If you do get money, it goes into a bank that I specify, and I have the ability to watch the funds flow and the opportunity to require that I cosign any outflows.
- In your business plan, make sure to specify how much equity I will receive or how I will get a return on my money.
- No multi-level marketing programs (added 2/10/09 1pm).
So there you have it. This is somebody who’s made it, multi-billionaire, showing a whole lot of common sense. He calls it “open source funding,” which is apparently a reference to making the business plan transparent.
Not, by the way, that the country doesn’t need the full formal stimulus plan as well, for about 300-some million reasons … but let’s hear it for old fashioned ideas like making something people need, selling it for more than it costs to make, and minding the cash flow.