Mark Cuban relied on unconventional college hustles just to stay enrolled. Long before rising to fame as a celebrity investor on Shark Tank, owning the NBA’s Dallas Mavericks and joining the ranks of the world’s wealthiest individuals, Cuban ran a ‘Ponzi’ scheme. Speaking on the San Francisco Standard podcast recently, the 68-year-old billionaire entrepreneur opened up about how he financed his junior year of college at Indiana University in the early 1980s: by launching a dorm room "chain letter" that he now candidly admits operated as a ‘scam’.
“It was basically a scam. I made sure my friends all got their money back. And so I got up to the top of the list. And it was amazing, because I’d go to [my mailbox] and there’d be envelopes with 50 bucks from here, 50 bucks from there, and that’s how I paid for my junior year of college,” Cuban admitted with a chuckle during the podcast appearance.
How the dorm room ‘Chain Letter’ worked
Faced with mounting educational costs, Cuban kicked off the network by approaching an initial participant and asking for $100 upfront, structuring an informal financial pyramid:
- Cuban collected $100, pocketed $50 immediately and directed the remaining $50 to the dorm resident whose name sat at the top of a 10-person list.
- The top name was removed, and the new payer’s name was added at the bottom, creating a $50 circulating chain letter.
- As successive students paid in and recruited others, names moved higher on the list until participants reached the top slot, theoretically collecting cash from incoming buyers.
Cuban pitched the scheme as a way for participants to walk away with more cash than they put in. As the chain expanded through the dorms, envelopes stuffed with $50 contributions began arriving steadily at his mailbox, covering his college tuition and living expenses for the year.
Mark Cuban: From trash bags to tech
Finding resourceful ways to earn cash was nothing new for Cuban, who was raised in a working-class household in suburban Pittsburgh. His father, who worked in automotive upholstery, occasionally handed him a $20 bill, but taught him early on to fund his own desires. When a young Cuban asked his father for a new pair of basketball shoes, his father replied that once he had a job, he could purchase whatever he wanted.
That conversation launched Cuban’s sales career at an early age. Taking advantage of an opportunity through a family friend who had surplus boxes of trash bags, Cuban began knocking on doors throughout his neighborhood to sell household supplies.
“I would go door-to-door to be like, ‘Hi, my name is Mark. Do you use trash bags?’ I killed it.” Cuban recalled.
After graduating from college, Cuban relocated to Dallas, where he shared a cramped apartment, which he and his roommates dubbed a “hell hotel”, with five other young men.
Cuban slept on the floor, took a bed only when a roommate went out of town, and owned neither a closet nor a dresser. To make ends meet, he worked as a software salesman while spending his spare time reading tech manuals to master computer programming and operating systems.