So, Cuban is saying Silicon Valley's advantage is the ability to create exits. What's the most common exit path? If you've got the right investor pedigree, it's to flip your company to Google, Facebook, Yahoo or another Sequoia/Accel/Kleiner/Andreessen company. I think that's one of the biggest reasons its difficult to recreate a Silicon Valley elsewhere. SV is a much more incestuous process than the meritocratic one its often portrayed as in the media. Most Sequoia companies don't really "fail" -- they get acqui-hired as a favor/kickback because its better for Sequoia's portfolio and doesn't really impact the acquiring company. In other parts of the country/world where that's not possible, there is a much greater risk for entrepreneurs to start companies around things like social networking apps. Also, kind of ironic to note that Cuban made most of his money by selling his company to Yahoo at the peak of the first internet bubble. A few years later, his company effectively ceased to exist -- not exactly what I'd call creating long-term value.
I'm amused by it. It's a transfer of wealth from shareholders of those companies to founders and VCs. These are also the companies with dual class shares designed to keep control in the founders' hands. They all say it's to be able to focus on the long-term, but really it has bred empire building and poor stewardship of the shareholder's capital. As a result, their interests are less aligned with shareholders' compared to if all shares had the same voting rights.
An exception to this is Apple. They have one class of shares and management have been conservative stewards for the life of the company. They never make large acquisitions, which limits the opportunity for destruction of shareholder value, and all acquisitions are made with the purpose of enhancing a product or some other core of the business. It's in the company's culture to have organic growth. They either have it or they flounder.
