Playing Moneyball With a Lean Startup Budget

Playing Moneyball With a Lean Startup Budget

I love sports of all kinds—team sports, individual sports, local and international events. In sports, an individual or a group of people set goals, acquire the knowledge and skills to accomplish their goals, and meet challenges along the way. Each game is a contest, yes, but it's also a problem to be solved. And if sports is viewed as a microcosm of life, basketball, it seems, is most like life. Here’s how I first discovered that.

Six years ago, I read a NY Times article on basketball player Shane Battier written by Michael Lewis, the author of Moneyball: The Art of Winning an Unfair Game. At the time, Shane Battier wasn't necessarily on my radar, and to be honest, I don’t even like Duke basketball. I’m a lifelong Californian, I went to UCLA, and as a Lakers fan, I can’t say much about the Houston Rockets. But I’m a huge Shane Battier fan now. I’ve probably read that article more than a dozen times since it was published, and it has nothing to do with my love for basketball. You see, Shane Battier was a rare breed in the NBA. He was not considered to be a great player by the common definition. He was, however, a player who made his team great.

Battier’s game is a weird combination of obvious weaknesses and nearly invisible strengths. When he is on the court, his teammates get better, often a lot better, and his opponents get worse—often a lot worse. He may not grab huge numbers of rebounds, but he has an uncanny ability to improve his teammates’ rebounding. He doesn’t shoot much, but when he does, he takes only the most efficient shots. He also has a knack for getting the ball to teammates who are in a position to do the same, and he commits few turnovers. On defense, although he routinely guards the N.B.A.’s most prolific scorers, he significantly ­reduces their shooting percentages. At the same time he somehow improves the defensive efficiency of his teammates—probably, [Rocket’s general manager Daryl] Morey surmises, by helping them out in all sorts of subtle ways. “I call him Lego,” Morey says. “When he’s on the court, all the pieces start to fit together. And everything that leads to winning that you can get to through intellect instead of innate ability, Shane excels in. I’ll bet he’s in the hundredth percentile of every category.”

Moneyball, the movie based on Lewis’s book, was the first time I understood the power of statistics to help build winning teams. Moneyball is the story of the general manager of the Oakland Athletics baseball team, Billy Beane, and his success at building a competitive team on a lean budget by looking at statistical data in ways never before done in baseball.

Athletic teams and tech startup teams are, of course, made up of individuals, each with their own backgrounds, experiences, and, well, statistics. We have a lean startup budget so we need all the help we can get with the precious few resources we can hire. We’re going up against companies with deeper pockets that already have hundreds of employees and have been around for much longer. At this point, in terms of money, we’re not even the equivalent of the Oakland As, while our main competitors are like the New York Yankees with the largest budgets in ecommerce. We can move faster than they can, but we want to go far and we have to be smart about how we spend our capital.

With that in mind, I sometimes wish there was a Sabermetrics-like database for individuals in tech like there is for baseball. If there was, I might be able to mathematically analyze the characteristics of people who will be most valuable to my startup team—what might make them better to hire than someone else. Imagine if LinkedIn could tell me who will be the next No-Stats All-Star! Instead, I can only rely on intuition and the lessons of Shane Battier, whom Morey said was “the most abnormally unselfish basketball player he has ever seen.”

There is a tension, peculiar to basketball, between the interests of the team and the interests of the individual. The game continually tempts the people who play it to do things that are not in the interest of the group… The player, in his play, faces choices between maximizing his own perceived self-interest and winning. The choices are sufficiently complex that there is a fair chance he doesn’t fully grasp that he is making them.

I love creating and building teams. I’m passionate about developing products that people enjoy using. And I get especially excited by coaching and mentoring individuals. It’s proven that a cognitively diverse team is able to solve harder problems. So, how can we apply the ideas of the No-Stats All Star and Moneyball to individuals within startups, and use that data to create winning teams and companies? When, and more importantly, how do we stop looking for superstars and instead find those people who are undervalued?

When you spend as much time interviewing and networking with people as I do, you start to get pretty good at reading and finding key indicators. In addition to previous work experience and former roles, I look at the companies where people have worked. Is the company still around? Is the product they worked on successful? What were the characteristics of the team they were on? I also try to identify the “X Factor” that sets someone apart, indicators that show a certain hustle, inquisitiveness, creativity, curiosity, drive, ambition, loyalty, and empathy. These are things you can’t see on a resume or social profile. I’m particularly interested in the people who have side projects or hobbies because it’s a window into their true passions. While I don’t want a bull in the china shop, I also don’t want a company of clones, and I don’t believe in hiring someone who is a good “culture fit.” I want a diverse, competitive, driven, smart, and creative team. I want each member to push boundaries and help us think outside of the box.

This is another reason why open source software like Reaction is so incredibly powerful. On any given day, we are interacting with diverse people, each with a variety of experiences and perspectives from all over the globe. They force us to think about different use cases and experiences that not only make Reaction better, but even more important, makes us have a better understanding of how commerce works in different cultures around the world. Very few of these people would be involved if it wasn’t an open source project. And because the very nature of open source is that its contributors are unselfish, they are, in essence, the Shane Battier’s of Reaction. They make our team better and stronger.