Supported by Greenhaven Road Capital, finding value off the beaten path.
Michael Fishman is the Assistant GM of the New York Yankees. Fishman majored in Math at Yale, computed insurance risks as an actuary, and won a surfing fantasy sports competition. On the Wharton Moneyball podcast, Fishman said that he wanted to bring an actuary mindset to a basebal field.
“The change I wanted to make was taking the subject matter from insurance to baseball. How could I take what I was good at, math, and combine it with my passion, baseball.”
Like Ted Sarandos, who saw Marvel’s big screen success and tried it at Netflix or Sam Walton who saw what the retailer across the street did, Fishman took something that worked over there and tried it over here. Even David Letterman’s Top Ten list bit came from someplace else.
But new ideas expire and innovation becomes commonplace. Edges erode, and that’s happened quickly in baseball.
“Moneyball, which came out in 2003 was a big factor. Teams started realizing other teams were doing things they weren’t doing and there was a need to incorporate statistical analysis within teams.”
The problem is one that Rishi Ganti talked about with Patrick O’Shaughnessy. Once there is a market – more than one buyer – there are market prices. Billie Beane’s Oakland teams purchased value because they were the only buyer.
David Heinemeier Hansson said that he looks for companies that, “rarely get any PR at all. Most companies that run like us are smart, they duck, they don’t talk about how much money they make. They don’t want to attract any attention.”
The Yankees get a lot of attention, and it’s not as odd as it sounds that they should adopt a Moneyball mindset.
“There are inefficiencies at all levels to take advantage. In a smaller market it’s trying to find cheaper players who are under valued. But those same things still apply to a bigger market club as well. More cheap talent you can get into your system allows you more payroll flexibility.”
In Astroball that payroll flexibility was in the draft. Edges change but the availability of them does not. Baseball players may be on the warning track in front of Gould’s Right Wall. Maybe the next edge isn’t on the field, it’s off. “People off the field can have a legitimate impact on the field,” said former Yankees third baseman Chase Headley said.
If that is the next edge, all the stakeholders have to buy-in. Fishman said, “I’m fortunate to be in a situation where analytics is a big part of what we do, and with the belief of all the key people in the organization.” Top-down support and a decentralized command helps. For Brian Koppelman it’s writing the words but letting the actors “make it additive.” Warriors GM 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.”
These kind of environments are built on good communication. Headley said, “It’s a different dynamic being told by somebody who hadn’t played the game before where you need to stand.” Convincing players is a challenge the Astros, Pirates, Athletics, and Yankees have all dealt with.
There’s a salience to the vivid. Fishman said, “You take an example from defensive shifts where some teams started experimenting with it and there was some pushback every time you see a ball get through where a fielder would have been in a normal defense.” Each of the books; Moneyball, Astroball, Big Data Baseball, chronicles the conversations. Often there’s one player whose career gets a boost from the new approach and the other players are slowly convinced.
Fishman and his fellow GMs realize that analytics isn’t a silver bullet.
“Looking through the two lenses (scouting and stats) you want to have many different opinions about a player and try to see if something is being missed.”
They know to be suspicious of simple stories. Dan Carlin said, “Any time I hear an argument that’s black and white I can almost automatically assume that it’s wrong. Sometimes reality is black and white but that happens so rarely. The majority of the time it’s complex.”
Thanks for reading.