Daryl Morey

Supported by Greenhaven Road Capital, finding value off the beaten path.

In honor of the Houston Rockets ascent, here are my twelve favorite Daryl Morey quotes. As Morey noted at the 2017 Sloan Conference, we need to continue our education, because, “We’re here because human beings are really really bad at making decisions.”

1/ “The problem, if you’re a journalist, is that you have to take an angle that’s interesting to your audience.”

News as noise is true when two groups have different metrics. Analytics are a difficult story whereas tropes are not.

2/ “I was really into baseball because I was a math nerd and you couldn’t get football stats, baseball was the only game in town.” Interests are your competitive advantage. As Buffett says, he and Munger aren’t going to try to out Bezos Bezos.

3/ “One of the tough meetings early on was meeting with coach O’Brien and saying, ‘Yes, you are number one in field goal percentage but you also are giving up the most open threes in the league.'”

Ease of measurement does not convey importance. “Someone created the box score, Morey says, and he should be shot.”

4/ “I was having this conversation with Frank Vogel. If you knew threes were good on offense you had to know they were bad on defense but that whole marriage hadn’t happened yet.” Invert, always invert.

5/ “Our poor CEO, all the press hits of negativity for our owner Leslie Alexander hiring me. He’s just dealing with the radio guys calling me deep blue, calling the owner crazy.”

Credit to Alexander for choosing to try something unconventional rather than conventional.

6/ “Yeah, teams have caught up (with Houston’s draft model). We feel like we’re farther ahead but the edge is much smaller. The difference between better model and slightly better model is way different than better model and no model. That edge has really eroded and we’ve adapted.”

Alpha erodes.

7/ “The baseball analytics guys were coming in and telling everyone they’re wrong and everything is wrong, so that was a tough sell. By the time basketball started looking at analytics a lot of our analysis was making coaches feel better. Guys like Shane Battier averaged eight points and five rebounds but coaches loved them. A lot of the advanced analytics stuff said that guys like Shane were worth a lot more than you think. When you have a message that’s like hey you’re right, here are a few areas you could improve versus, hey, you’ve been wrong your whole life you idiot the integration was a little easier.”

8/ “I want more bad owners… you’ve seen the poker analogy. If you’re the one shark among minnows you clean up but if you add just one more shark all the profits are divided by two.” It’s the parodox of skill.

9/ “I don’t think it’s really a factor (Morey’s lack of basketball experience). I mean, you don’t have to be a farmer to run Hormel.” Hardwood version of Green lumber.

10/ “Mike (D’Antoni) is a very good communicator and I’m reacting to him. He just says, ‘Hey, this is what I’m planning to do,’ and the answer, almost universally, is ‘sounds great.'”

As Morey’s contemporary Kirk Lacob said, “I always thought our secret sauce was that we have great people and turn them loose and let them do what they’re best at.”

11/ “A good strong locker room creates option value for certain guys you can add.”

Culture, said Ben Horowitz, is what people do when they aren’t told what to do. Peter Theil wrote, “No company has a culture, every company is a culture.”

12/ “When there’s a deal that’s fair for everyone, just do it.” Chris Douvos was encouraged to be a Partner, to be fair, and never have to go into the bottom drawer to pull out the documents that said who got what.


Thanks for reading.

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