Want to Be a Self-Made Billionaire? Mark Cuban, and the IRS, Says This Is the Best Way to Build Generational Wealth

Mark Cuban.

If you want to build considerable wealth, there's really only one path--and one mistake to avoid.

John D. Rockefeller, America's first billionaire, once said, "If your only goal is to become rich, you'll never achieve it." To Rockefeller, wealth was a by-product, not a direct result.

Take Mark Cuban. In 1983 he launched MicroSolutions, a systems integration and software reseller; the idea was that plenty of companies wouldn't understand how to -- and would need help to -- cobble together their hardware and software platforms. Seven years later, he sold that company for $6 million.

In 1995, he and some friends decided people would love to listen to (and later see) their favorite teams play away games and launched Broadcast.com, an audio and video streaming service for live events. Four years later he sold that company for $5.9 billion.

The next year he bought a controlling interest in the Dallas Mavericks for $285 million under the premise that, well, he wanted to own a professional basketball team. Recently he sold the majority of his stake for approximately $3.5 billion, and recently he sold land directly across from the team's arena to the new owners for an estimated $40 million-plus.

Add it all up, and Cuban is worth somewhere around $5.4 billion.

His wealth is a by-product: of spotting opportunities, working hard, and providing value to customers. (And employees; after the sale, Cuban reportedly gave bonuses totaling $35 million to Mavericks employees.)

Sure, he's entrepreneurial to his core. He wants to make money. But his wealth is the result of building brands, not the goal.

His wealth results not from a laser-like focus on money, but from the relentless pursuit of excellence: building exceptional knowledge, exceptional skill, and exceptional talent. His wealth results from doing something incredibly well, and then doing it over and over and over again.

Cuban is just one example. Take the top 10 on the most recent Forbes billionaire's list. Each of them made their fortunes by building and acquiring businesses. Bernard Arnault, with his 75 different fashion and cosmetics brands. Musk, with cars and rockets. Bezos, with the everything store. Zuckerberg and Facebook.

The Forbes list dovetails nicely with data from an IRS report, "Top 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes."

Here's how the top 400 on that list made their money:

• Wages and salaries: 8.6%
• Interest: 6.6%
• Dividends: 13%
• Partnerships and corporations: 19.9%
• Capital gains: 45.8%

Paychecks, interest, dividends -- wealth-building opportunities available to employees -- are dwarfed by the wealth produced from owning a company, and taking capital gains.

That's where Cuban made the bulk of his money: building, buying, or investing in companies -- and eventually selling all or a portion of his ownership stake. (Unlike, say, Amazon, stock of which Bezos periodically sells, the Mavericks aren't a publicly traded company.)

All of which leads to two main takeaways. The first involves the one mistake he feels startup founders should never make.

As Cuban says in his class on MasterClass:

The biggest mistake entrepreneurs make is making how much money they think they need to raise part of the equation for starting a business. They come up with an idea and their next thought is, "How much money can I raise?"

When you incorporate a company ... you own 100 percent of the shares in that company. All the extra work you're doing because you didn't bring in money that allows you to hire someone, or whatever, that's called sweat equity: you're putting your sweat in to retain equity rather than sell it to someone else.

When you raise money, particularly as a young company, you have to give up more equity. You have to sell a bigger percentage of your company because you're young.

Raising money should be your last resort. When you raise money, that's not an accomplishment. That's an obligation.

The only reason I have billions of dollars is because I did not immediately go out and raise money.

Granted, not raising money makes the startup journey harder. As Cuban says, you won't be able to afford to hire employees who possess skills you don't have. Resources will be limited. Your runway will be shorter. Mistakes won't just be costly; they may put you out of business.

On the flip side, not raising money forces you to learn new skills.

As Cuban says:

One of the most important things that's allowed me to be successful is... I can read a balance or income sheet. I can look at a marketing plan, and put together a marketing plan. I can understand statistics, and the impact they have on decision-making. Those are all things I can do for myself. Could you hire people to do those things? Yes. But when you're starting a business, it's a whole lot more efficient and you can move a whole lot faster when you do it yourself.

I think that's where I'm different than a lot of entrepreneurs. I don't have the approach of, "Let's take the money, go hire a bunch of people, get an office, all that."

It's, "I'm going to figure it out."

Choose not to raise money, and you may not be able to hire salespeople, so you'll need to learn to sell. If you're selling products online, you may not be able to hire a marketing firm, so you'll need to learn digital marketing. You may not be able to hire an accountant, so you'll need to learn basic bookkeeping. You'll need to learn not just how to manage, but also to lead.

Putting in sweat to retain equity doesn't just help you retain ownership of your business as it grows; the process of building sweat equity ensures you will develop new skills.

Both of which are good things. The second takeaway? Working for a salary won't make you fabulously wealth, if fabulous wealth is your goal. Neither will investing in the markets.

Owning a business or business, on the other hand, could not only build a solid foundation of wealth -- and a lifestyle that allows you to largely control your success or failure -- but could someday also generate a financial windfall.

In short? If you want to amass considerable wealth -- and there's definitely nothing wrong with that -- you'll need to be an entrepreneur. But as HubSpot co-founder Dharmesh Shah says, your goal shouldn't be to make a million dollars, your goal should be to serve a million customers.

Serve your customers well -- serve your customers incredibly well -- and you'll earn the right to serve even more customers.

And then the money will follow.

This post originally appeared at inc.com.