Two Dallas guys strike it rich with the Internet

As he took his seat for the flight back to A Dallas, Mark Cuban felt the pain of a more boisterous night at one of New York City's toniest restaurants, where champagne flowed and waiters served up more shrimp cocktails than any man could ever eat. Beyond that, he couldn't remember much.

One thing he did know was that his three-year-old company's initial public offering had the record for the largest first-day gain--an astounding 249 percent increase over its $18 offer. The small group that gathered the night before were early investors in Broadcast.com, each having bought from 30,000 to 160,000 shares at 50 cents a share. When the bell sounded at the end of the trading day, each of those shares was worth $62.75, making them all millionaires. Even in New York, that counts for something.

As Cuban sat on the plane with that day's New York Times business section, the development began to sink in as he gazed at a picture of himself and co-founder Todd Wagner. The Times article told all the world that the company's record IPO had made them fabulously rich, too. It was like seeing his picture at the office and wondering anyone would connect the mug on the wall with the man in line. Cuban wasn't making it difficult for potential witnesses on that crowded flight back; his T-shirt was emblazoned with the Broadcast.com logo. As he sat there clearing the cob webs, he started wondering if things would change. That's when reality struck.

"I'm looking around, and no one's paying any attention; no one cared who we were," he laughs. That IPO of 2.5 million of the company's 16.88 million shares raised $41.95 million for Broadcast.com and gave it a market value of $1.06 billion. To put that into perspective, Netscape shares rose 108 percent the first day its stock traded in 1995, ending with a market valuation of $2.2 billion. America Online recently acquired it for $4.2 billion.

For Cuban and Wagner, the IPO was just an event, a way to keep score, not a defining moment. Cuban likens it to being the NFL's No. 1 draft choice after having won the Heisman Trophy as college's top player. The world is watching with high expectations, but in the end, he knows Broadcast.com has to produce.

The company's beginning was humble enough. Two entrepreneurs whose work had brought them to Dallas years earlier still pined for Indiana University basketball. That led to an idea to use the Internet to capture and retransmit home-team broadcasts. Their idea is changing the way people communicate, and it has made the two exHoosiers fabulously wealthy. Cuban's 28 percent stake in the company was worth over $330 million in late November: Wagner's 16 percent was worth nearly $190 million.

So, why Dallas? Cuban, a native of Pittsburgh, has a simple explanation: "Dallas is a great place for this. It's young, it's fun. You can work hard, you can play hard. The people are just awesome, and they don't have the Silicon Valley attitude. Silicon Valley has its legacy because they've been doing it for so long, and they have their pecking order. Here, it's 'Let's go make some money, let's go execute on our business plan. Are you on or are you not?'"

Cuban, who founded systems integrator MicroSolutions here in 1983 and sold it to CompuServe seven years later, was president a high-tech venture capital firm when he set up a computer in his spare bedroom. He's an intense man whose words spill rapidly from a mouth anchored by a modified Jay Leno jaw. He punctuates his sentences with "right" and laughs easily. He still tries to work out regularly, but there are subtle signs his travel schedule is starting to take its toll on efforts to keep his 6-foot-plus, 40-year-old frame in shape.

He spends most of his time selling the company and its image in both the financial and corporate communities. And as someone who once built a high-tech company from scratch before becoming a venture capitalist, he brings operational expertise to Broadcast.com.

Todd Wagner, 38, is the dealmaker. Before joining Cuban, he was a corporate lawyer specializing in securities law, and he brings a lawyer's intensity and precision to conversations. He talks as rapidly as his partner, but unlike Cuban, his laughter comes in short bursts, then quickly stops as he returns to the business at hand. Even though his attire these days leans more to khakis and denim shirts embroidered with the Broadcast.com logo, it's clear he is just as comfortable in a charcoal three-piece suit sitting across a corporate conference table in tough negotiations.

He's passionate about his work, and few operational details escape his attention, even though it leaves him little time for anything else. "We love what we're doing," he says. "Love it, love it, love it. This is creating a new industry that didn't exist four years ago."

They started with the Dallas sports talk radio station KLIF (570-AM) in September 1995. They now rebroadcast nearly 380 radio stations and networks, and 40 TV stations and cable networks, from a 30,000-square-foot converted warehouse at Taylor Street and Malcolm X Boulevard in Deep Ellum. Through Broadcast.com's web site, sports fans can listen to live broadcasts of 420 college and pro teams. Their online library contains 2,200 full-length CD music titles and 500 audiobooks. Since being founded, the company has broadcast 16,000 live events, including the past three Super Bowls and NCAA basketball tournaments, the Stanley Cup Playoffs, interviews from last year's Academy Awards, and the premiere of Titanic.