Billionaire tech entrepreneur Mark Cuban has proposed a solution for income inequality that doesn’t involve dismantling capitalism: Business owners should give all their employees equity.
“The biggest issue for entrepreneurs, for capitalists, for those of us who are successful is, if someone is only going to be paid by the hour…they’re always going to fall behind,” Cuban told Recode Decode with Kara Swisher at the 2019 SALT Conference in Las Vegas. “And income distribution is … [the] disparity is going to get wider and wider.” So, said Cuban, “We as entrepreneurs have got to make a point to give stock to everybody that works for us. Period. End of story. No exceptions, because that’s the only way people are going to get any type of equity appreciation.”
If entrepreneurs give their employees an ownership stake in the company, then employees can reap the benefits of its success as the value of the stake grows, said Cuban, often substantially. Uber’s first employee, Ryan Graves, for example, is now worth more than a billion dollars thanks to the company stock he got as part of his employment. And many of Cuban’s former employees became millionaires, he tells CNBC Make It.
Cuban says that he gave all his employees stock at the two companies he founded — Microsolutions, a computer consulting service he sold to Compuserve in 1990, and Broadcast.com, an online streaming service he sold to Yahoo in 1999 for almost $6 billion in stock. “300 out of 330 [Broadcast.com] employees became millionaires” at the time of its sale, Cuban tells CNBC Make It. According to Cuban, “capitalism isn’t bad. It’s when capitalists don’t pay attention” that bad things can happen,” he told Swisher. “Our country is a lot like running a business…you can’t just look at the short term in the immediate aspect, you’ve got to look at the long term,” he said.