Mark Cuban’s next target: Insurance companies

Mark Cuban:
I’ll give you the exact answer.

Rohan Goswami:
Yeah, tell me.

Mark Cuban:
The exact logic. I’m rich as (beep). I don’t need the money.

Liz Hoffman:
Welcome back to Compound Interest from Semafor Business. I’m Semafor’s business and finance editor, Liz Hoffman, and joined by my colleague, Rohan Goswami. There are four big stories in the world right now.

Rohan Goswami:
Only four? You sure about that?

Liz Hoffman:
We got AI.

Rohan Goswami:
Okay.

Liz Hoffman:
We got the war in Iran.

Rohan Goswami:
Yes.

Liz Hoffman:
We have GLP-1s and we have the NBA playoffs, obviously.

Rohan Goswami:
Okay. Now today’s booking makes more sense to me.

Liz Hoffman:
Our guest today could speak very authoritatively to three of those. I’m sure not for lack of trying. We’re not going to ask Mark Cuban about the war in Iran. He’s one of those really ubiquitous people in business and finance who loves being ubiquitous, but he’s everywhere because he’s really thoughtful on big problems, big questions.

Rohan Goswami:
I’m very excited about this one, for all the obvious reasons. What are you going to want to put to him today?

Liz Hoffman:
Basically, Mark has exited from Shark Tank. He has largely exited his ownership of the Dallas Mavs, though we have some questions for him on that.

Rohan Goswami:
We do.

Liz Hoffman:
But basically, he does a lot of press. And in fact, he was on Semafor’s media podcast a year and a half ago talking about media, but in the course of that, managed to say the name of his healthcare company, Cost Plus Drugs, 17 times. And so he’s very good at understanding the power that he has to get in front of the camera, but also using it to push what is a pretty interesting and frankly, pretty public-spirited for-profit pharmacy that he runs.
So we thought we would dispense a little bit with the pretext or flip that narrative a bit and actually just talk to him about prescription drugs, what is happening there, what he’s trying to do. And then use that as a Trojan horse to talk about whatever else he’s thinking about in the moment.

Rohan Goswami:
Let’s see if he falls for our debate. I know he’s waiting for us, but one thing that is interesting to me about this is this is maybe the only area where him and the president actually agree, where the government is also trying to reinvent, has reinvented, I should say, the way that a lot of Americans already get their drugs.
This is TrumpRx. And they’ve announced a bevy of drug partners and manufacturing partnerships that cover everything from GLP-1s to everyday targeted treatments that become more affordable for everyday Americans. Which is exactly, it’s worth noting, what Mark has been trying to do with Cost Plus.

Liz Hoffman:
People have complained for decades about the cost of prescription drugs and it seemed unfixable. And Cost Plus was chugging along, making a little traction. And then now we’re in this moment where what seems to have totally shaken all the economics loose are shots that make you skinny.

Rohan Goswami:
Everyone wants to be sexy.

Liz Hoffman:
GLP-1s are rewiring the way we pay for drugs, where we get them through TrumpRx, these direct to consumer programs that Eli Lilly and others have. And so I think it’s a bit of an opening to get him to really explain what he’s trying to do. And then I suspect he has bigger ambitions. If he can knock loose the middle men of healthcare, I suspect he has some other targets in his site. I think he’s waiting for us. Let’s take a quick break and then we’ll be right back with Mark Cuban.
Mark Cuban, welcome to the show.

Mark Cuban:
Thanks for having me. I’m excited to be here.

Liz Hoffman:
So we want to talk to you squarely about your prescription drug business. You launched Cost Plus Drugs a couple years ago with a pretty simple idea of radical price transparency. This is what it costs us. We’re going to do a fixed mark-up on top. And that seemed like a crazy idea then. Fast-forward, we’ve got TrumpRx, we’ve got Lilly and Novo Nordisk selling their weight loss drugs for cash. What is happening in the way we pay for prescription drugs?

Mark Cuban:
Well, everybody’s realizing that if you go through a PBM, you lose. And when you look at direct to patient, whether it’s through us, whether it’s TrumpRX, whether it’s Lilly, whether it’s Novo Nordisk, whether it’s BMS with Eliquis, whatever it may be, they’re doing this so that they don’t have to deal with the PBMs.
That allows them to have direct relationships. It allows them to have lower prices. It allows them to actually make a little bit more money in some cases and allows the patients to always save money in all cases. And so that’s the key. How do you work around the middlemen that have just made things more expensive and less effective?

Liz Hoffman:
Can you actually just define PBMs for our listeners?

Mark Cuban:
Yeah. So what a PBM, it stands for pharmacy benefit manager. They’re responsible for creating the list of drugs that your insurance company will pay for and managing the claims that when you go to the pharmacy, what happens once you hand the pharmacist the prescription.

Liz Hoffman:
These companies have been bought up in the last couple years by insurers. What did that do to the economics of all of this?

Mark Cuban:
Destroyed them. CVS bought Aetna and you’ve got United, you’ve got the others. I don’t even like to mention them by name, but what’s happened now is you’ve got these companies that have 2,000, 3,000 subsidiaries. In the case of the biggest, they do $160 billion in intercompany transfers, which means they can just move money around to just create the pricing that they want to achieve throughout the entire healthcare system. That is not to the benefit of patients. It just makes things worse and it gives them effectively complete control of pricing throughout the healthcare system.

Liz Hoffman:
It feels like the game changer here was the weight loss drugs, though I don’t totally know why. Was that just such catnip for people who can frankly pay out of pocket that it sort of knocked loose some economics?

Mark Cuban:
Well, it’s a catch-22 for employers. So people went to their employer and said, “Look, this is better for me. I can lose weight. I can be healthier. There’s all these other associated benefits.” The employer said, “Well, how much is it going to cost me?”
And the way it was set up before the direct pricing is that for a typical GLP-1 injectable, it was going to be $1,300 cost to the employer. And the employer said, “No, that’s crazy. I’m not going to be able to pay all that much.” The other healthcare plans did the same thing.
And in recognizing the disconnect, patients wanted it, employers wouldn’t pay for it. The PBMs were the ones that were creating the $1,300 price. Those middlemen, the manufacturers, Novo and Lilly basically said, “Okay, we’re going to work with TrumpRx,” who helped push down prices, so I give them credit for that. “And we’re going to have a direct to patient program ourselves so that we can sell for less and work around the middlemen.” But to your point, it all started, Liz, when the employer said, “We can’t afford to do this.”

Rohan Goswami:
Cost Plus is really generics, not necessarily name brands. And that is where a lot of the spending is. Do you have plans to broach into that part of the space? How do you handle that?

Mark Cuban:
Yeah. The reason we’re primarily generics is not because that’s all what we want. We would carry every brand name, every specialty drug, every drug we’re legally allowed to sell, we want to sell. We want to show our cost and our 15% markup.
But when we go to the brand and specialty manufacturers and say, “Would you sell through us?” They say, “No.” And we say, “Why?” Those pharmacy benefit managers have told the biggest companies, BMS, Pfizer, Lilly, Noble, “If you work with Cost Plus drugs and sell at a net price, we will diminish your positioning on our formularies.” So you know on your insurance plan for your drugs, it’ll be like tier one, tier two-

Rohan Goswami:
Yeah.

Mark Cuban:
... tier three, and tier one’s the cheapest? Well, they might move them from tier one to tier two, three, four, or five, costing them who knows how much money.

Liz Hoffman:
But Lilly is now selling, I think, the injectables for 350 a month. What is that Cost Plus a margin? What would that be if you were selling it?

Mark Cuban:
So if it were actually a net price, which is the price after the rebates, it’d be lower. But I don’t know what it is because they won’t sell it to us, but I can give you an example. Eliquis, they just lowered their price for direct to patient, but let’s just pretend it’s December of 2025. The list price was $600. Our price would’ve been about $350.
They didn’t want us to get access to a net price because if they’re able to sell it for $600 and here we are selling it for 345 or 350 and every employer gets to see our actual cost and our 15% markup, that completely disrupts the relationship that they have with all these big employers. All of our prices are public and we publish our price list and we’re still the only pharmacy that does it. We charge the exact same price to everybody, no matter who you are, where you live, what the time of day.
Well, if our prices were made public, employers will do the same as what they did with our specialty generics and biosimilars and go to those PBMs and ask for lower prices, which would cost them money, which is why they don’t want the big brands to deal with us. And so we’re fighting that. And yes, we tell the FTC and yes, we tell the Department of Justice.

Rohan Goswami:
This sounds like a silly question maybe, but why charge people the same price? And I ask this because obviously the FTC is focused on algorithmic pricing for Ubers or Lyfts or even the grocery stores.

Mark Cuban:
Sure.

Rohan Goswami:
But it seems like here, if I’m making 400K a year and I have the same plan as someone making 150K a year, I have a greater capacity if I’m making 400.

Liz Hoffman:
Those are not our salaries. [inaudible 00:08:48] I would like that to be on record.

Mark Cuban:
No, you’re making a lot more. You wouldn’t accept a job for that little.

Rohan Goswami:
No, of course not, Mark. But seriously.

Mark Cuban:
I’ll give you the exact answer.

Rohan Goswami:
Yeah, tell me.

Mark Cuban:
The exact logic. I’m rich as (beep). I don’t need the money. I’d rather disrupt healthcare and save lives because when you have to pay that $600, that full retail price, when 40% of America can’t afford a $400 bill, by doing what we do, I can’t even begin to tell you the number of emails or letters that I’ve gotten saying, “Look, I was told by my employer that my insurance plan didn’t cover the drug my doctor prescribed. They said it was going to be literally $20,000. I found out you have it for 150. You saved my life.”
What’s more important? What’s going to change my life more? Feeling good about all those emails or being able to afford, I don’t even know. I-

Rohan Goswami:
I don’t mean the economics for you. What I mean is if a drug costs $100 base case, charge someone who’s making 400K, 150 and charge the guy making 100K, 50 bucks. And so you’re readjusting the price depending on the income or the earning power.

Mark Cuban:
But who’s making that determination, right? Now all of a sudden the pharma companies are making the determination of how the means test all that. On one hand, you can make the argument that charge richer people more to make it cheaper for poorer people, but that’s just really hard to manage. We just rather charge as little as possible for everybody.

Liz Hoffman:
As you said, Americans hate this.

Mark Cuban:
Yep.

Liz Hoffman:
The president is facing some very ugly polling numbers heading into the midterms. You do some work with TrumpRx. What is happening there?

Mark Cuban:
I think they’re doing a good job. I mean, is it perfect? No. But literally, if you save one patient money, that’s a win for TrumpRx. They’ve literally negotiated great pricing and pushed down the price of GLP-1s, the drug that’s changing people’s lives as much as anything. So that’s part one.
And part two is IVF, right? If you’re trying to grow your family and they’ve been able to cut the price of IVF drugs by thousands of dollars a month or more, that’s a huge win. We just had our first drug that was placed on there. A flu medication called XOFLUZA through Genentech. That just went up and hopefully we’ll have thousands more because we have an API that they have available to them and the minute they want to turn it on, they’ll go from having 53 drugs to having thousands.

Rohan Goswami:
You’re saying your drugs would instantly be available once the spigot is turned on-

Mark Cuban:
Correct.

Rohan Goswami:
... on TrumpRX? Okay.

Mark Cuban:
Correct. Yeah. And we have an API. All they have to do is pull the pricing and everything because they don’t actually do the selling. They link to other sites. They’ll link to the GLP-1 company. They’ll link to the IVF company or they’ll link to Cost Plus Drugs.

Rohan Goswami:
Is there a sense of when that API is going to go live? Do you know yet?

Mark Cuban:
If I knew, I would tell you. I’m ready yesterday. If I had some news to break, I would break it.

Liz Hoffman:
Oh, bless your heart, Mark.

Mark Cuban:
Yeah. You guys, I got to help. But yeah, hopefully soon. I know we’ve had a ton of conversations. They’ve looked at all the technology. It all works.

Liz Hoffman:
You’ve famously, I think, a love-hate relationship with Donald Trump. How do you think it’s going? They’re looking at some pretty rough numbers. People do not feel great about the economy. You’ve talked a lot about the gap between how people feel and what’s going on.

Mark Cuban:
Look, it’s hard for me. I don’t want to be that person where people say, “Oh, look, the billionaire’s trying to speak for other people.” There’s plenty of people that’ll do that.
When people look at their bank accounts, when people look at their credit card statements, when people look at their budgets, it is what it is. They know what they’re feeling and it hasn’t been great for everybody. But look, I’m not going to throw Trump under the bus. I don’t agree with him on everything, but what he is doing in healthcare is great.
And it’s not just TrumpRx. Guys like Chris Klump, Tom Keen, Mark Atalla, people that we’re working very closely with, they literally are doing things that is changing the cost of healthcare and the quality of care and the ability of more people to receive it. They’re asking me the same types of questions and they’re listening. And I give them credit for doing that. I tried to do that the last administration and they won’t even see me. So I give them credit for that.

Liz Hoffman:
Like you were too rich to go to the White House.

Mark Cuban:
Pretty much.

Liz Hoffman:
Yeah.

Mark Cuban:
You’ve all heard those stories.

Rohan Goswami:
Yeah.

Liz Hoffman:
A couple months back, you’d given TrumpRx a B as a grade, only because the PBM stocks had not fallen out of bed. And I guess I wonder, what could Trump do that would really be a death blow to these middlemen that you hate so much?

Mark Cuban:
That’s a great question, Liz. Okay. So number one, if you look at how pricing happens, and I don’t want to get too far deep inside baseball, but when brand manufacturers like to have the GLP-1s as an example, when they sell to the big three distributors that control 90% of drug distribution, they don’t sell 50% off like every other industry. They sell at the full list price. And then those wholesalers get a 5% discount effectively for paying on time and providing some information. But in doing that, that distorts the economics for all patients everywhere.
If you took the PBMs out of the middle of this so that they could sell at a net price, and I’ve talked to those same manufacturers and asked them, “Why did they sell at the list price instead of net price?” And they tell me, just like the same reasons they’re afraid to work with Cost Plus drugs, the formulary replacement, they’re afraid the PBMs will alter the formulary placement there too.
And I’ll tell you a story. I was talking to a bunch of consultants and I was telling them about the problem that people can’t afford their medications during their deductible phase. And they said, “Well, let me give you a horrific example, Mark.” They were working with a transportation company and there was a truck driver who couldn’t afford their anticoagulants. Passed out, killed four people.

Liz Hoffman:
Oh.

Rohan Goswami:
Jesus.

Liz Hoffman:
All because they couldn’t afford their medication during their deductible phase. That’s horrific. And I just said this to somebody in the state of Tennessee, and I’ve said it to other states, and I’ve said it to people in HHS. I would sue the shit out of the PBMs to make them either disconnect from the formularies and say, “You can’t control the formularies any longer because you just use those to auction off for rebates. Or we’re going to sue you for the harm that’s been caused by all these people who have gotten sicker or died because they can’t afford their medications so that you can get your rebates.”
Now, the PBMs would say, “We pass through those rebates to whoever, the employer or whoever it may be, and they do pass a chunk of them.” But if the prices were at net, you wouldn’t need to deal with the rebates at all. You wouldn’t have to pass through anything. And all these patients would save billions every single year and lives would be saved.
If HHS and the Trump administration did that, I would be their best friend. But what they missed in all this, and we brought it up earlier, is that the PBMs are owned or owned the biggest insurance companies. And when you pull revenue away from the PBMs, they just find new ways to charge you revenue because they’re so vertically integrated and so big.
And I’ll give you an example. Now for employers, they’re saying, “We’re going to charge you $2 per month per member to manage people who get statins,” which is a lot of people. “In the state of Florida, we’re going to charge you $4 a month, I think it is, because Florida changed their regulations, and so we have to do more paperwork, so we’re going to charge you per member per month. If somebody has kidney disease, we’re going to charge you $170 per member per month.”
And the worst part, the worst part is you’ve got these CEOs that have no clue that this is happening with their benefits. And I can’t tell you how many times in this past two months I’ve had people reach out to me and say, “I got my care denied by the insurance company.” We’ve all heard that story. But then I just ask the next question, who do you work for and do they self-insure? And when that happens, I then reach out to the CEO of the company and I tell them point-blank.

Rohan Goswami:
That must be a crazy call for them to get.

Mark Cuban:
Yeah. I email them or I put it on LinkedIn. You can go to LinkedIn and see where I posted it where I call out the CEO. And I’m like, “Look, this person could die because you won’t pay $75,000.” That’s insane. And what’s even worse, look, I don’t expect every CEO to be an expert in their healthcare benefits, but it is their second-largest line item expense after payroll. And every penny you save in your healthcare benefits goes right to the bottom line.
You could add 25 cents per share to your bottom line and you’re going to get paid a multiple of that, whatever your multiple is for your market cap. Here’s the hack for CEOs, anybody, any size company. Take your insurance contract, take your PBM contract, put it in Claude and just put in there, “Summarize this and tell me where they are ripping me off.” You will be shocked.
And then if you really want to save a lot of money, take the bills that they send you every week or every two weeks, because that’s when they expect to get paid, and run those through and just say, “What fees are they charging that they didn’t disclose?” You would be shocked.

Liz Hoffman:
I actually wonder if AI isn’t an equalizer here, which is that if you want to spend a lot of time on the phone arguing with your insurance company, you can sometimes get them to cover something. Is there some world where my AI agent is just out doing battle with Cigna’s AI agent about some bill?

Mark Cuban:
It’s already happening. It’s already happening. I’m working with companies that do just that. And then the insurance companies use AI to try to up-code so they can get more money from the employer or the taxpayer. So you’ve got all these battling agents trying to figure out who can take money from who. And you know who loses? The patient every single time.

Liz Hoffman:
Are there other middlemen out there you’d like to disrupt? I don’t know, perhaps a concert ticket platform or a housing brokerage. I’m thinking about business models that are in trouble-

Rohan Goswami:
We’ve been covering anti-trust a lot over the last six months.

Liz Hoffman:
... that everybody hates.

Mark Cuban:
I’d like to kick out the insurance companies because effectively they’re banks. 70% of the revenue they get, give or take for some of the biggest ones is taxpayer revenue. And they don’t even do insurance for the big companies. They just act as the administrators and the insurance, the big companies are the insurers.
So what we’re working on right now, and it’s not right around the corner, is to say, “Look, stop paying your insurance premiums. We’re going to have you take that same amount of money and we’ll probably peg it to the ACA silver plans because that’s means tested and age tested.
And let’s just say you’re a family of five, $2,100, you’re going to deposit that $2,100 into a bank account that we create that can only be used for healthcare expenses. And if you’re lucky and you never have a healthcare expense till you hit 65 and go on Medicare, you keep all the money.
It’ll make a little bit of interest, but we’re also going to take a little bit of that money out for direct primary care so you always have a doctor available to you, a little bit of it out so that you have stop-loss insurance, whether it’s at 30 or $40,000 we haven’t decided. So if it’s a super huge bill, then you’re covered. And for anything that you can’t afford, we’ll loan you that money. And now that money you’re depositing in the bank on a monthly basis, rather than accruing it in your account, it goes to pay off that loan.”
That makes it so you’re not paying any money to the insurance companies. If you’re a family of five, your employer’s probably spending $30,000 a year on your insurance. And so you can ask them for that raise. That’s what we’re in the process of putting together.

Liz Hoffman:
But isn’t the point of insurance is that healthy people subsidize sick ones? What happens when it becomes pay-as-you-go?

Mark Cuban:
Originally, that was the plan. But now by using stop loss insurance, it actually just changes how that works because the insurance companies use stop loss insurance too. They’re not looking to pay a million-dollar bill. They’re saying, “Look, we’ll cover it up to a certain amount. And then we’re paying for stop loss insurance.”
We’re just taking the same things that they do and we’re saying, “This is not insurance. This is a bank account so that you control it and you own it.” But instead of the health insurance company taking control of what’s paid, who you use, et cetera, you get all that completely in your control. It’s only yours and we’ll cover you in the case of something catastrophic above 30 or $40,000. So it’s not insurance at all.

Liz Hoffman:
All right. Does this business have a name?

Mark Cuban:
Not yet. Not yet. We were calling it the 10 Plan because we limit how much the percentage of your income that you contribute to no more than 10%.

Rohan Goswami:
Do we want to shift tracks a little bit? You obviously own the Mavs, you’ve talked about maybe buying a hometown team. Is the future of sports folks like you just paying more and more and more for these teams, or do you think-

Mark Cuban:
No.

Rohan Goswami:
... it’s going to skew institutional and it’s going to go and become like a real asset class of its own?

Mark Cuban:
It already is.

Rohan Goswami:
Yeah.

Mark Cuban:
That’s one of the reasons I sold because it went from conversations in our board of governors meetings being about, “How can we make things better for fans?” To, “How can we increase valuations?” And there’s nothing wrong with that, right? Valuations going up is great. I certainly benefited from it, but it’s harder to find individual owners like I was paying $285 million when franchises are going for four, six, eight, $10 billion or more. And so you’re seeing it become much more institutional. I’m working with a group called Harbinger Partners where that’s exactly-

Rohan Goswami:
Sure.

Mark Cuban:
... what we’re doing. We’re helping people invest in sports as an asset class.

Rohan Goswami:
You, for the first time, expressed what a lot of fans and watchers have long suspected, that you do have some regrets about the sale process. And that was pretty recent. Can you expand on that a little bit more? Was it just the trade?

Mark Cuban:
Yeah, it wasn’t just the trade. It was before the trade where I was working under some assumptions that I thought were part of the deal and they turned out not to be.

Rohan Goswami:
What were those?

Mark Cuban:
Just basically that I was going to run the basketball side. And that didn’t turn out to be the case, which turned into the trade. But that was the biggest part of it. But beyond that, I’d still would’ve sold them. I just would’ve done it differently. So those are mistakes that I made on my end.

Rohan Goswami:
Who else was in the process who you were marketing to and considering other than Miriam?

Mark Cuban:
Nobody. That was the whole mistake.

Rohan Goswami:
Oh, you didn’t run a process? I mean, you’ve made so much money through M&A.

Mark Cuban:
No, I didn’t.

Rohan Goswami:
You didn’t run a process?

Mark Cuban:
Right. No, it was more because I expected to run basketball and I had known Miriam before Sheldon Adelson, and I’ve done business with them and known them forever. And it just didn’t turn out the way I expected. My expectation was that I would run basketball, and that’s just not the way it turned out.

Liz Hoffman:
You think Miriam moves the team to Vegas?

Mark Cuban:
No, no, no. There’ll be an expansion team and they’ll stay in Dallas. It’s a great market. I mean, it’s literally the fastest growing market in the country.

Liz Hoffman:
As an investor in sports franchises, do you think sports betting and the prediction markets piece of that is good for A, the business of owning sports and B, society in general?

Mark Cuban:
So if you’re betting on winning and losing, great. If you’re betting on how many rebounds some guy might have or is part of a parley, you can make big bucks if this guy gets one more rep. No, it’s awful. The times I’ve heard fans scream at players for messing up their parlay or messing up their bet or on a prediction market the same thing, it’s horrific. When you allow the level of the discreteness of the bets. Will he scratch his nose during a free throw?

Rohan Goswami:
Right.

Mark Cuban:
I mean, it’s gambling-

Rohan Goswami:
Is that a real market? You’re joking, I think.

Mark Cuban:
I have no idea, but if you want to go out and put the bet on Kalshi or Polymarket, I’m sure somebody will take the other side.

Rohan Goswami:
Yeah.

Mark Cuban:
So that’s a little bit much. And I think that distorts it.

Liz Hoffman:
Have you ever watched one of your teams play, seen something and wondered if a player was-

Rohan Goswami:
Throwing it?

Liz Hoffman:
... throwing it?

Mark Cuban:
No, no, have not. But I know these guys and I know what to expect, et cetera. Generally, betting on outcomes is great. It’s great for the league. It creates interest. But doing it to the detailed level, I think is a real problem that we have to deal with in terms of who manages it, whether it’s the CFTC or the states. I think the leagues will have to get together and try to deal with legislation on both sides to try to figure out what the best path is to try to fix it.

Liz Hoffman:
Do you think Shark Tank would have been more fun to watch if there was a ticker about will Mark hit the bid on this pitch?

Mark Cuban:
Yes. Of course. I wonder if people do it. It would be great, actually.

Rohan Goswami:
People definitely had parlor games around Shark Tank, that’s for sure.

Mark Cuban:
Oh, for sure. Right? Yeah. Where people are just sitting around who will and who won’t. And just confirming to everybody that I was their favorite shark.

Rohan Goswami:
Neither confirm nor deny on that one. Before we get to the what’s next of it all for you, there’s one thing that has intrigued me, which is the NFL, I’m sure you saw this, sent a letter to Kalshi and Polymarket, very politely asking them to restrict exactly what you’re talking about, certain kinds of easily throwable, for lack of a better word, markets. And I found that really weird because the NFL, the NBA, the MLB are very rarely in the supplicant position. Do you think it’s a little scary that Polymarket, Kalshi have somehow become so big and so untouchable that the classic monopolies of their time are unable to stop them?

Mark Cuban:
Yes. And I say that and knowing that I invested in two funds that ended up investing in Polymarket and one who also invested in Kalshi. I don’t know how much it’s benefited me yet. I’m sure it’s real money, but at the same time, it’s still bad. As an indirect investor, I’d still want to see it to stop.

Liz Hoffman:
So you are literally talking against your own book here. I love it.

Mark Cuban:
Yeah.

Rohan Goswami:
Man of principle.

Mark Cuban:
Absolutely.

Rohan Goswami:
Consistent. We like this. Look, obviously, you’ve wound down your time on Shark Tank. You still own, my understanding is a little bit of the Mavs, but not the whole team. What is next for you? Is it just this crusade against the insurance companies? What is the next Mark Cuban?

Mark Cuban:
Yes.

Rohan Goswami:
That’s what it is.

Mark Cuban:
That’s what it is right now. I mean, think about it. It impacts everybody. And if I can improve it and make people’s lives better, put $500,000 into their pockets, what’s better than that? I’m so competitive and it’s punching up, taking on big companies that everybody says, “You can’t disrupt.”

Rohan Goswami:
You’ve always liked being a [inaudible 00:26:22].

Mark Cuban:
I mean, yes, I love it. Bring it on. And we’ve had a huge impact already. All those big companies from all elements of healthcare have reached out wanting to work with us. And in some cases, we’ve said, “No because you don’t match our principles.”

Liz Hoffman:
Has anyone tried to buy you?

Mark Cuban:
Yeah, but early on they did and we just said, “No,” and now they know better. And plus, we’re growing so fast. Almost every day we’re setting records. We’ve talked about the costplusdrugs.com. And by the way, we didn’t tell everybody, go to costplusdrugs.com and look for the lowest prices, but we’ve got Cost Plus Wellness where we’re open sourcing direct contracts with providers and that’s saving companies money and allowing them to route around the insurance companies.
We’ve got Cost Plus Marketplace. We haven’t talked about how bad hospitals are and other providers are at buying devices and medications and that’s why so many of them go out of business. And then we have a manufacturing group that manufactures drugs that are in short supply. And we’ve been able to take AI and robotics and shrink the size of a manufacturing plant by 70% so that we literally can put it in a tractor trailer and be able to manufacture drugs, biosimilars.
But the more important part is we’re really close to being able to do N-of-1 medication, cell and gene therapy. So when you hear about these people who, their kid heartbreakingly is one of 12 people in the world that have this particular drug and they’re trying to raise money. And they’re going to a research hospital who’s working on it to make that drug so that the patient can take it, costs at least a half a million dollars and takes at least six months. We’ve been able to shrink that to $50,000 is what we charge and at worst six months, but at best, just a few months.

Liz Hoffman:
Wait, before we moved on, who tried to buy you?

Mark Cuban:
Can’t tell you that.

Rohan Goswami:
Oh, come on. You’re not going to sell to them.

Mark Cuban:
No, I’m not going to sell. Yeah. Well, I said I’ll never sell about the Mavs, so I’m never saying, “I’m never going to sell,” again.

Liz Hoffman:
Is Cost Plus Drugs profitable?

Mark Cuban:
We’re about break even right now.

Liz Hoffman:
How much have you put into the business all told over the last couple years?

Mark Cuban:
Nine figures and growing, multiple nine figures and up. I don’t even know the exact number, but it’s okay.

Rohan Goswami:
That feels like a great place to pause. We’re going to take a quick break and we’ll come back with more from Mark.

Liz Hoffman:
As you said earlier, you’re really rich. You don’t need to be doing this. How do you think your fellow billionaires are doing in this particular moment?

Mark Cuban:
I don’t care. They’re billionaires. Yeah. Who cares?

Liz Hoffman:
But I guess we’re in the middle of a very weird PR cycle for OpenAI and there’s just-

Mark Cuban:
Oh, no. That’s different. Talking to AI is a different beast, right? [inaudible 00:29:10]

Rohan Goswami:
But the fortunes being made here are not being put to some sort of Carnegie-esque societal good, which arguably you’re doing.

Liz Hoffman:
I think that’s a better version of the question I was trying to get at. Yeah.

Mark Cuban:
Okay. So there’s a couple things here. One is we don’t know if AI large language models are going to be a zero sum game like search or a multi-winner game like streaming, right? Where you can have a dominant player like Netflix, but other people can participate and be profitable. So all those large language models, the Geminis, the ChatGPTs, the Groks, Claude, et cetera-

Rohan Goswami:
What do you use?

Mark Cuban:
I use them all, but primarily Claude, but they don’t know who’s going to win, so they have to go all in. And they have to raise so much money that if you’re just saying, “We’re going to make companies more productive,” you’re not going to do $120 billion raise as ChatGPT.

Rohan Goswami:
True.

Mark Cuban:
If you’re saying Arnold is walking through those doors and he’s going to terminate whatever it is that they’re going to be able to dominate and replace everything. Then you have a chance of raising $120 billion. I’m not a doomer the way some of them are.

Rohan Goswami:
Sure.

Mark Cuban:
I think it is incredibly impactful. I think there’ll be two types of companies, those who are great at AI and those who went out of business. But I think it’s not going to displace the number of workers that people suggest. We hear a lot of conversations that AI is not having the financial or productivity impact that some people expect.
And the reason for that is most of the AI implementations in bigger companies is agentic. You’re taking processes and you’re automating them using agents. And that’s fine, but it’s not going to revolutionize your business. It’ll make it more cost-effective, save you some money, maybe replace a couple people. But as a CEO of a company, any type of company, you have to anticipate that there’s some kid in a basement somewhere and she’s trying to figure out how to use AI to replace this 50 billion, $100 billion market cap company-

Rohan Goswami:
This is the vibe coding phenomenon.

Mark Cuban:
Not even vibe coding. It could be something whole lot more. We’ve taken robotics and AI and shrunk manufacturing down to nothing so you could put it in a tractor trailer. Somebody can do the equivalent for any industry. It doesn’t matter what it is.
But the point of all of this is that as a CEO of a company, you have a really hard decision to make. You are facing the ultimate innovator’s AI dilemma because somebody’s going to pop up looking to disintermediate you or disrupt your business or replace you being AI native with fewer people, fewer everything. And you have to make the determination and get the approval of your board and get the approval of your shareholders knowing that it could crush the price of your stock to basically tear down your company and reinvent it as an AI native company.
It is the ultimate innovator’s AI dilemma. You can’t be in between because somebody who’s smart out there... All these security companies, all these software companies, their valuations are declining not because they can’t survive, but because in order to survive, they have to reinvent their companies to be able to compete with companies who want to, whether it’s vibe coding or just reinventing product program or software development internally. And so most CEOs aren’t going to have the guts to do that.
Most CEOs aren’t going to get the approval of the board because it wipes out their shareholder value. And so my guess is you’re going to see shareholder lawsuits for two types. One, for those companies who did reinvent themselves to be native AI and their stock prices dropped. And two, for those companies who didn’t do it and they got disintermediated or replaced and their stock prices dropped. That’s a real catch-22.

Rohan Goswami:
The sound you hear in the background is every CEO listening to this and calling Thoma Bravo and begging to be taken private so they have runway to reinvent themselves outside the public markets. I want to reframe the question that Liz just asked because it’s slightly different than one you answered. But before we do that, I’m curious, have you invested in any of the leading AI companies either directly or through any of your VC funds?

Mark Cuban:
I invested in Groq, G-R-O-Q, that got bought by NVIDIA. So that was great.

Rohan Goswami:
It was a big deal. That was a great exit for you.

Mark Cuban:
Yeah, it was awesome. And I’ve invested in OpenEvidence. And there’s a couple of them that they don’t want anybody knowing who their investors are.

Rohan Goswami:
Got it.

Mark Cuban:
So I can’t say anything.

Rohan Goswami:
But the question I think is regardless of who wins the race, massive fortunes are being minted right now.

Mark Cuban:
Right. No, I didn’t get to that part of your question. You’re right. There is going to be a lot of capital focused on just a few people in the way the system is set up right now. And that’s a problem, right? Where you will see trillionaires beyond just Elon Musk. You’re going to see a lot of concentration of wealth from for AI investors like me and the people who created the company that own large amounts of those stocks. We have to start addressing those things now.
Wealth tax, that doesn’t fix shit, right? Because not only do people move, but even if it was federal, people are just going to have to retain cash and not be able to invest in things that lift people up because the reason you get the wealth disparity is because people don’t have appreciable assets. If you don’t have any assets that appreciates stocks, homes, whatever it may be, by definition, you’re going to fall behind if you’re just getting a salary or paid by the hour.
And so we have to do things that force, if necessary, employers to provide shares of stock pari-passu to what the CEO is making. So if the CEO gets 2% of their cash salary in shares or warrants or restricted stock or whatever, somebody making $40,000 as a janitor gets 2% and stock warrants the same thing because then everybody’s aligned.

Liz Hoffman:
And it’s a little bit of what’s going on with the Trump accounts. We’ve talked about TrumpRx, but it sounds like-

Mark Cuban:
To a certain extent. Yeah.

Liz Hoffman:
... that’s a pretty good idea.

Mark Cuban:
Yeah, but you got to hold it to your 18 and that’s all well and good. You can argue the good or bad of that-

Rohan Goswami:
Are you going to get behind it like Michael Dell has? Are you going to throw some money behind that or no?

Mark Cuban:
No, no, no. I’ll stick to healthcare. Then we have to start looking at not necessarily taxing large language models because I think the winners of today won’t necessarily be the winners 10 years from now, but I think there’s an argument to be made for our robots. They don’t really replace people, but we wouldn’t be mad if we were getting charged a nickel an hour per robot, right? Like just a tax that just says, “You have robots that work in any environment. It’s a de minimis amount, but it adds up and we’ll use it for whatever we need it to for people who need help.”

Liz Hoffman:
But it seems like, and I realize to your point about it’s paper wealth now, so maybe they can be forgiven for not plowing it into either for profit problem solving like you have or philanthropic. But it seems like, and I’m painting them with a broad brush, but that they don’t seem that interested in solving big social problems here. They’d rather go to Mars and then-

Mark Cuban:
Actually, they would tell you they are. They would tell you they are.

Liz Hoffman:
Have you seen much evidence of it?

Mark Cuban:
No, but... Well, yes, I take that back. When you talk to them and look to see what they’re doing, they think they’re saving the world. And-

Rohan Goswami:
By running their businesses.

Mark Cuban:
Yeah. It’s their own laissez-faire approach. They all think they’re John Galt and that’s the problem. I’d rather be Howard Roark. They think they’re John Galt.

Liz Hoffman:
I forgot what an Ayn Rand fan you are.

Mark Cuban:
Yeah, it’s been a while, but still Howard Roark’s my guy.

Liz Hoffman:
You told our colleagues, Ben and Max, last year that the only way you’d run for president is if Donald Trump tried to run for a third term. Anything you’ve seen in the last nine months since you said that that makes you change your mind?

Mark Cuban:
No. I’m focused on healthcare. I still got work to do. I like what I do. I like the challenge. I’m very competitive. I like going up against the big guys. And when everybody says, “You can’t do it, they’re too big,” if I can kick their and make people’s lives better, why wouldn’t I? Running for office and asking people for money, I’m like, I don’t give money to politicians at all. To me, either the value of my ideas stand on their own and they’re worth using and discussing. I don’t want to pay you to do that.

Liz Hoffman:
When is the last time you asked someone for money? Broadcast.com?

Mark Cuban:
No, it’s been since then. Probably in the ’90s. No, probably the early 2000s.

Liz Hoffman:
Okay.

Rohan Goswami:
It’s been a minute.

Mark Cuban:
Yeah. I always look at it like, why would I ask you for money if I have the money? Because that means one of two things. Either I’m giving up a great deal or I’m putting you into a worst deal.

Liz Hoffman:
Is that why you haven’t taken outside money for Cost Plus? You-

Mark Cuban:
No, just because I don’t want to have to think about profits. I want to think about impact. And everybody that works for us is mission driven and really understands that. And I think we’ll be profitable. I think the manufacturing pods we have, the tractor trailer thing that I told you about will be insanely profitable because they’re unique and nobody else can touch that. And we’ll make decent money on those. And so we’ll reward our employees. And hopefully be able to take that and have even greater impact.

Rohan Goswami:
Is the end game an IPO or a sale?

Mark Cuban:
No.

Rohan Goswami:
I mean, how do you think about monetizing this business?

Mark Cuban:
The end game is to be so profitable, we can push down drug prices to almost give them away.

Liz Hoffman:
All right.

Rohan Goswami:
Capitalism for a cause.

Mark Cuban:
Yeah. I mean, look-

Liz Hoffman:
We will have you back when you’ve done it.

Mark Cuban:
It’s going to take a few years.

Rohan Goswami:
We’ll have you back before then then.

Mark Cuban:
Hopefully.

Liz Hoffman:
Listen, Mark, is there anything we haven’t covered that’s just been top of mind for you?

Mark Cuban:
Yeah. The only thing I would bring up, if you were going to talk about sports was to talk about the valuations and the underpinning of the valuations.

Liz Hoffman:
Yeah, let’s do it.

Mark Cuban:
The KPI, if you will, for sports valuations is media rights fees. And media rights fees used to be built on ratings. Media rights fees are no longer built on ratings. They’re built on subscriptions and subscriptions are based off of churn retention and new subscriptions.
And a lot of the pricing was built when Peacock gave $100 million to the NFL and got three million subs, I think it was, and they retained them. So over the next 10 years as NBA, NFL, Major League Baseball, all of these contracts come up. The valuation parameter is going to be subscriptions and retention. And those are KPIs that I don’t see people talking about at all.

Liz Hoffman:
It’s funny, you got to listen to the show more. I’ve been obsessed with subscription fatigue and-

Rohan Goswami:
Liz is, yeah.

Liz Hoffman:
... particularly the whole Wall Street.

Mark Cuban:
My mistake then.

Liz Hoffman:
Just obsessed. No, but huge parts of the economy are subscriptionized and have these cash flows that end up underwriting some totally other business model that then becomes vulnerable to just me not wanting to pay every month.

Mark Cuban:
100%. I went to Claude and I said, “What percentage of revenues is the NFL rights fees for each of the rights holders?” For a couple Netflix and ESPN, it was de minimis. For Fox, it was a huge number.

Rohan Goswami:
It’s massive.

Mark Cuban:
Yeah. And for Warner Brothers, it was certainly a material number and who knows what comes with the renegotiation. And so that’s only one sport too.

Rohan Goswami:
Do you think it’s a good thing that these games are moving more to streamers, to the Netflixes? Do you think that’s a good thing for the consumer?

Mark Cuban:
No. And I think we blew an opportunity. When the last big TV deal came along, it was very obvious that between our local TV rights deal, and that was an RSN, so that’s gone now, but this is when the RSNs were still solid.

Rohan Goswami:
And when was this, 2016?

Mark Cuban:
Yeah, we had a solid RSN deal that was paying us well. We had ton more money from the national TV deal. And between that, that was, I forget the exact number, 60, 70% of our revenue. It was a big number. And so my idea was I’m less reliant on ticket revenue, so cut the price of tickets for people who can’t afford otherwise.
So I created $2 seats. And up until the time we sold or I sold, I had at least 4,000 seats that were $23 or less. And I think the lost opportunity is to recognize they went from $12 to $2, and it was 2,000 seats. It’s 20,000 a game times 41 games, so that’s $820,000. Okay. I left $820,000 on the table, but my marketing costs went down a lot more than that because every family found it affordable to come do a game. The problem was everybody scalped them because-

Liz Hoffman:
That’s capitalism the hard way, Mark.

Mark Cuban:
Right?

Liz Hoffman:
Yeah.

Rohan Goswami:
If you look at the Google Playbook, historically, it’s been to disrupt a business. Go from being the middleman to the actual sole sort of point of sale. Do you think that the leagues are making a mistake by giving these sports games to Google, to Netflix? If 10 years from now, once NBC and CBS and ABC don’t exist anymore, Google will turn around and say, “We’re not paying you $10 billion anymore. We’ll pay you five and we’re not going to distribute anymore.”

Mark Cuban:
That’s a risk, but they don’t have a choice because they’ve got to maximize those revenues now because that’s what drives valuations.

Liz Hoffman:
It’s really hard as a consumer to know who to root for here. They all sort of feel slightly like villains when you cast them in the right lights.

Mark Cuban:
Yeah. Always root for the fan, always root for the players. But you’re right. I mean, like I said, when we were in board of governors meetings, the conversation moved from being entrepreneurial to increasing the valuations of teams. And that’s a completely different approach when it comes to marketing and pricing everything that you do. And that was one of the reasons I sold.

Liz Hoffman:
You’re going to take another run at the Pirates?

Mark Cuban:
You never know, but most likely not. I get asked that growing up in Pittsburgh.

Rohan Goswami:
Of course.

Mark Cuban:
Going to Bucco’s game-

Liz Hoffman:
You’re talking to a Phillies fan, so hello from across the state.

Mark Cuban:
Yeah. You guys know how to win. We haven’t quite accomplished that yet. I was going to say, I don’t see buying the Pirates. Maybe if there was a change of ownership, I would contribute and help them where I could. And then let me just add one more thing. I think baseball is the best position from a valuation perspective of any sport.

Rohan Goswami:
Why?

Mark Cuban:
And that’s because they have been the most innovative of every sport.

Rohan Goswami:
Do you mean actual, the pace of play changes they’ve made or-

Mark Cuban:
Yes. All those changes now, the ABP, all that stuff has been amazing.

Liz Hoffman:
Wait, I have to ask, are you pro ABP or anti ABP?

Rohan Goswami:
Yes.

Mark Cuban:
Did you not see me get fined for yelling at the refs all the time?

Rohan Goswami:
No, we don’t

Mark Cuban:
Yeah.

Liz Hoffman:
I bet there’s an amount of money that you could pay the league where you are the AVP for one game.

Mark Cuban:
Right? That would be fun.

Liz Hoffman:
And they just let you sit there and watch and challenge the calls.

Mark Cuban:
Yeah, against ABP, that would be amazing. That would be-

Rohan Goswami:
But then you have to list the cap on the number of calls. You just have to unleash you fully and let you just go to town.

Mark Cuban:
Right. I’ll donate to charity to increase, give me one more challenge. So I think baseball has been the most innovative, which means I think their franchises are the most undervalue right now because there is a rule, I’ll call it Cuban’s role of ratings`. I just invented that term. The longer the actual playing time, the lower the ratings.
And so if you look at the NFL, in between plays, you can play fantasy football, you can bet on whatever now, which is ... And you can go to the bathroom, you can cook a five course meal and come back and never miss another play. So I think that is a big deal.
But the fact that for those of us who watch baseball, I don’t watch it near as much as I used to when I was a kid, but the fact that it’s faster makes it a ton better. And on basketball, I’m an advocate for cutting from 48 minutes to 40 minutes.

Liz Hoffman:
You know what? They don’t play until the last quarter anyway, so I feel strongly about this.

Mark Cuban:
But it hasn’t hurt. Look at March Madness. March Madness numbers are better than finals numbers, and that’s a 40-minute game.

Liz Hoffman:
Mark, we really appreciate it. This is a lot of fun. Thanks for coming.

Mark Cuban:
Thanks for having me on. This was fun.

Liz Hoffman:
All right. So we covered a lot of ground. What’d you think, Rohan?

Rohan Goswami:
You know what my favorite part was. It was anything to do with sports rights and media rights, but I was most tickled that he’s not content with being a PBM killer. He wants to go for the big guys. What do you make of his plan of his efforts there? How do you think that’s going to shake out?

Liz Hoffman:
The insurers.

Rohan Goswami:
Yes, the insurers.

Liz Hoffman:
Yeah. I won’t say that I totally followed the money of it, the insurers or banks and a lot of companies self-insure. I do like that he’s calling CEOs and telling them exactly what they’re doing wrong.

Rohan Goswami:
That’s great. Yeah.

Liz Hoffman:
And that he’s got some per share math by covering these drugs if they self-insure. But I mean, look, insurance is the white whale of disruption and plenty of people have tried. The problem, it’s a distribution problem, which is that most people get their insurance through their jobs, and so they don’t do a lot of shopping.
There was a moment where that looked like it might change 15 years ago with the Affordable Care Act. It didn’t really. And in fact, the pandemic really tethered people more to their employer-sponsored healthcare programs. So we’ll see, but boy, does he not like these guys.

Rohan Goswami:
No, he doesn’t.

Liz Hoffman:
And I would not want to be an enemy of Mark Cuban.

Rohan Goswami:
Insurance is your bugbear. You do love the insurers. You think you have a lot of thoughts on them, you read about them a lot.

Liz Hoffman:
To be clear, I don’t love the insurers.

Rohan Goswami:
No, no.

Liz Hoffman:
I think it is a-

Rohan Goswami:
A fascinating industry.

Liz Hoffman:
And my obsession is with life insurance, not health insurance, and that is a totally different podcast. So we could get into how those are different.

Rohan Goswami:
This is why I leave the vagaries of the insurance industry to you, but I am curious what you think of this model. If you think that’s a scalable model, since your point, the risk isn’t shared in the conventional sense.

Liz Hoffman:
Yeah. Honestly, I’d have to do a little faking and reporting on it because the whole point of insurance is that the healthy or the lucky subsidize the unlucky and that it’s a mutual. And that’s you mutualize the risk across a big enough pool of people and it kind of works. That’s what health savings accounts and FSAs, and this was a big priority for President Bush in the 2000s. And it kind of works, but it’s a pretty clunky system. I think the big companies really do self-insure and there’s some options there. His ambition to kill them is more interesting to me right now than the mechanism by which he would do it.

Rohan Goswami:
The other thing that really stood out to me, and of course I know stood out to you, is the fact that he didn’t run a sales process for the Mavs. This guy is a business legend. How do you not run a process? I mean, come on.

Liz Hoffman:
Sports M&A is just now becoming a thing. For a while, it was something that rich people sort of traded amongst themselves. And obviously to some degree, that’s still true. He sold it to Miriam Adelson, Sheldon Adelson’s widow. But I think you’re going to start to see a lot more sophistication around those products and how they’re financed and how they’re marketed. So maybe his experience will be the abject lesson now.

Rohan Goswami:
The cautionary tale.

Liz Hoffman:
But also just a reminder that every M&A deal, there is someone who thought they were getting some right that was in fact not written down.

Rohan Goswami:
Yes.

Liz Hoffman:
That one, you know what? He was a good sport about it and seems to have learned from his mistakes. But I think the thing that he said about part of the reason that he sold is that he wouldn’t say that it became less about creating experiences for fans and more about increasing valuations. He just didn’t want to go along for that ride.

Rohan Goswami:
Yeah. He’s probably one of the few owners in any league that genuinely cared as much, I won’t say more, but as much about the fan experience as the economics, which is why actually I wasn’t that surprised that he agreed with Brendan Carr that it’s a bad idea for all these rights to start getting hoovered up by big tech and going behind paywalls. I mean, $2 seats is obviously iconic, but there are any number of things that he did and would do owning a team that really spoke to a disdain for the ever upward evaluations that we see with sports teams across any league.

Liz Hoffman:
Yeah. But what he’s saying is the $2 tickets, it’s not that he does it out of the goodness of his own heart, though he did say a couple times that he’s, did he say, “Rich as (beep)“?

Rohan Goswami:
Yes, I believe that was his language.

Liz Hoffman:
Yeah. But actually it’s good business because you don’t spend on marketing. He actually makes these pretty simple, compelling business cases for doing the right thing. Which is why-

Rohan Goswami:
Wow. Which is the case where the economics and fan benefit actually work out very evenly. That’s not always the case.

Liz Hoffman:
Which is why even in a world where billionaires are so unpopular, people kind of like that guy. Well, that’s it for us this week. Thank you for listening to Compound Interest from Semafor Business. Our show is produced by Josh Billinson.

Rohan Goswami:
With special thanks to Anna Pizzino, Katherine Bilgore, Claire Einstein, Rachel Oppenheim, Tori Kuhr, Valana Wang, Garrett Wiley, Stephanie Chang, Luka Dončić, and Daniel Hoeft. Our engineer is Bob Mallory. Our theme music is by Steve Bone.

Liz Hoffman:
And if you like Compound Interest, please follow us wherever you get your podcast, leave a review. And if you want more from Semafor Business, you can sign up to get our email newsletters in your inbox.