Mark Cuban advises billionaires to avoid low-margin investments

Mark Cuban warned on Shannon Sharpe’s Club Shay Shay podcast that the most common ventures for new billionaires are “the death” of their wealth. He called out restaurants, clothing lines, liquor companies and even music labels, saying that these industries are “too easy to enter” and will drain profits. Cuban’s blunt advice is that the ultra‑rich should avoid low‑barrier businesses and instead hire a professional manager who has experience working with high‑net‑worth clients.

The warning comes at a time when more celebrities, athletes and tech stars are hitting billionaire status and face a new set of challenges: how to protect and grow the money they have earned. Cuban, a serial entrepreneur who built and sold companies for hundreds of millions, has seen many wealthy individuals lose money by jumping into sectors that look glamorous but are saturated. He explained that a business with low entry barriers—no licensing, minimal capital, or regulatory hurdles—creates fierce competition and squeezes margins. The concept of “barriers to entry” is key: regulations, patents, technology or other restrictions that keep competitors out and allow a few players to capture higher profits.

In the restaurant business, for example, the average profit margin for a full‑service establishment is only 3% to 5%. Similar thin margins apply to fast‑food chains, boutique clothing brands and craft breweries. Cuban argues that high‑barrier opportunities—such as tech platforms, pharmaceuticals, or regulated financial services—offer better long‑term returns because they limit competition and preserve pricing power. He also suggested that wealthy investors look at alternative assets like gold, which JPMorgan predicts could hit $5,000 an ounce by the end of the year, or fractional real‑estate platforms that let investors act like landlords without owning property.

To avoid the pitfalls Cuban describes, investors should build a “circle of competency” with trusted advisors who bring expertise in wealth preservation. Online platforms like Advisor.com can match individuals with vetted financial professionals for free, allowing them to review credentials and client feedback before committing. By focusing on high‑barrier sectors and professional management, ultra‑rich Americans can protect their wealth and avoid the quick‑sand of low‑margin businesses that Cuban calls “death.”