Businessman Mark Cuban transformed hundreds of ordinary employees into millionaires through a business practice that remains uncommon even among today’s most successful entrepreneurs. The billionaire investor and Shark Tank personality has consistently shared profits with employees when selling his companies.
All For One
In response to a question on X about what happens to employees when businesses are sold, Cuban tweeted on June 4, 2024, “In every business I’ve sold I’ve paid out bonuses to every employee that was there more than a year. http://Broadcast.com, 300 out of 330 employees became millionaires. Microsolutions, I paid out 20 pct to our 80 employees.”
He added, “HDNet wasn’t as big, but paid out about 20pct of what I got to employees, Mavs wasn’t a total exit but we paid out more than 35m dollars to employees. And only HDNet had any layoffs right after the sale.”
The tweet recently resurfaced on social media.
In every business I've sold I've paid out bonuses to every employee that was there more than a year. https://t.co/02NdL9a41q, 300 out of 330 employees became millionaires. Microsolutions, I paid out 20 pct to our 80 employees. HDNet wasn't as big , but paid out about 20pct… https://t.co/hTvCZnVvUF
— Mark Cuban (@mcuban) June 5, 2024
Cuban responded to another X user who had posted: “Selling underperforming businesses for $$. Capitalism at its best. I applaud it. Serious question: What do you do with the employees? Do you place the employees in jobs at other businesses you own, do they go with the sold business? Will that business pay a ‘living wage’?”
Cuban’s philosophy of profit-sharing dates back to 1990 when he sold his first company, MicroSolutions, which provided IT solutions and systems integration.
According to Business Insider, the software firm that had once faced dark times rebounded successfully, eventually selling itself to CompuServe for $6 million. Rather than keeping all proceeds for himself, Cuban distributed 20 percent of the profits among his 80 employees, reportedly resulting in approximately $15,000 per staff member if divided equally.
“You have to hustle the most when you think it’s the darkest,” Cuban has said on the “Pardon My Take” podcast in 2020, about navigating business challenges.
His most dramatic demonstration of employee profit-sharing came in 1999 with the sale of Broadcast.com, an early streaming platform previously known as AudioNet.
When Yahoo acquired the company for a staggering $5.7 billion in stock, Cuban’s profit distribution policy transformed 300 of the company’s 330 employees into millionaires overnight. This single transaction created more millionaires than many other tech acquisitions of the era.
The practice became a consistent element of Cuban’s business approach. When he sold his majority stake in HDNet (now known as AXS TV) in 2019, he maintained his commitment by sharing approximately 20% of his proceeds with employees. This sale stands as the only instance where layoffs followed a Cuban company acquisition.
Even when partially divesting from the Dallas Mavericks NBA team he purchased in 2000, Cuban continued his employee-focused approach. After selling his majority stake in the basketball franchise last year, he distributed more than $35 million to team employees, ensuring his exit benefited those who had contributed to the team’s operations.
When asked about his motivation for this unusual practice, Cuban expressed a straightforward philosophy: “I just believe it’s the right thing to do. Everyone that contributes should benefit as well.” This approach stands in stark contrast to many business sales where employees often face uncertainty or unemployment rather than windfalls.
Cuban’s loyalty bonus system applies specifically to employees who have invested at least one year with his companies, recognizing commitment and contribution over time. His practice demonstrates a rare perspective in American business culture, where exits often focus exclusively on founder and investor returns rather than broader wealth distribution.
Cuban, currently estimated to have a net worth of $5.4 billion by Forbes, continues to advocate for employee-friendly business practices.
thanks
Great read! I was wondering, do you know if other entrepreneurs are following this profit-sharing example? It seems like a powerful way to motivate employees but doesn’t happen often.