Supported by Greenhaven Road Capital, finding value off the beaten path.
Haralabos Voulgaris (‘Haralabob’) joined Bill Simmons for a Round 1 Playoffs basketball podcast. What stood out was Haralabob’s detachment. I recently finished a re-read of Charlie Munger; The Complete Investor and one big takeaway from that book was how rational Munger is. Good decision makers are rational decision makers and it’s a trait Haralabob has in spades. Without further gambling cliches, let’s get into the notes.
1/ Availability heuristic. Heuristics have long been awesome parts of being homo sapiens but they sometimes misfire.
Heuristics can be positive (I’ve heard that book mentioned a lot, I’ll check it out), neutral, (I didn’t realize that many people had this kind of car), or negative ( I think XYC is a good investment because I’ve heard a lot about them). Good decision making means figuring out how ‘true’ information that easily comes to mind is.
In their podcast, Haralabob tells Simmons that he voted for Kawhi Lenord for MVP in part, “I think people discount his defense. I think people discount how efficient he is on offense. He’s the only player that has to defend the other team’s best option.”
He’s saying that Leonard does things that are important but are hard to see. That is, these things aren’t available.
2/ Situations matter. “I think Paul George has a lot more upside (over Jimmy Butler) if he’s in the right situation.” Haralabob and Simmons compare these players because they were both playing and potentially traded. Haralabob points out something that Simmons has mentioned many times over that situations matter. For example, how would Tom Brady have turned out without Bill Belichick?
We saw in the AirbnUber Strategy post the importance of a situation. Neither company was first to market but both ended up winning (for the moment) because of a number of factors.
Another example is the Marshmallow Test Context. Self-control and delayed gratification wrote Walter Mischel is domain dependent. The rewards and temptations of one situation can cause an otherwise restrained person to be anything but.
3/ “Don’t be a model whore.” This is an idea I’ve seen more lately and Haralabob explains it nicely.
“In our model one of the things we had was that if a rookie projected above Lebron (James) the model was messed up. Tyreke Evans’s rookie year was quite good and compared favorably to Lebron and I remember looking at that and thinking ‘there’s something wrong with that.’”
Models are crucial first steps of an evaluation. We see this with people who buy businesses like Trish and James Higgins, Brent Beshore, or Royce Yudkoff. All of them use models to filter but then they also roll their sleeves up. Haralabob said, “You can’t just be a model whore, you have to watch the games.”
Good decision makers use models as first filters but then don their deerstalker.
4/ Basement bloggers. One great thing about the internet are the ‘basement bloggers.’ Whatever niche you want to dive into, it’s probably out there. For Haralabob there’s “the super quiet part of the internet, the people who go to Sloan every year and write a blog who are doing stuff that is super advanced,” who are really interesting.
The opportunity to learn has never been greater.
5/ Corner threes? That’s interesting.
“I remember reading Phil Jackson saying something like, ‘we don’t take those corner threes because they lead to fast breaks,’ and I was like – oh, that might make sense. So I watched every corner three that was taken in the NBA and charted whether it led to a fast break or didn’t it. Actually, it was the case that corner threes led to less fast breaks than other shots from the three point line.”
Danny Moses told Patrick O’Shaughnessy that a “healthy skepticism” is helpful. That’s what Haralabob had. When something doesn’t jive with our view of the world it’s a good opportunity to go digging. Patrick Collison said that this is how Stripe started. He saw that app store payments were easy but internet payments were not.
Thanks for reading,