
Lessons from Moneyball - themcgruff
http://37signals.com/svn/posts/3098-lessons-from-moneyball
======
startupfounder
The lesson of Moneyball is to 1) do what you love/what you are good at and 2)
purchase undervalued assets.

This is the same strategy that Warren Buffet has been using for decades.

The perception is high risk because you are going against the status quo, but
in reality you are in a low risk senario because you are doing what you love
and you see an undervalued asset.

In the startup world it is the same thing. If you are doing what you truly
love/what you are good at and you can identify undervalued assets then you
will win in the long term.

For employees this is finding a company that you can calculate that it will
succeed, then getting stock in that company by "taking the risk" and it all
works because it is something you deeply care about.

For founders this is finding an area that is ripe for disruption with a
problem that you face in your life. Starting a company is a way to realize
that value that other's are not capturing.

Really successful companies, founders, employees and investors do what they
love, love the ones around them, pay respect to everyone and can brutally
identify undervalued assets.

~~~
akkartik
_"The perception is high risk because you are going against the status quo,
but in reality you are in a low risk senario because you are doing what you
love and you see an undervalued asset."_

No, it _is_ high-risk. The risk is that the undervalued asset you see may not
really be one.

But staying with the status quo is high-risk as well.

Risk is a red herring; people optimize for regret-minimization. There's less
regret if you go with the crowd because there's other people to blame -- and
regrets are less apparent because everyone suffers together. But if you go
against the status quo and your life sucks, you have nobody else to blame, no
fellow sufferers.

This isn't a rational thought process. But you have to see the enemy clearly
before it can be defeated.

------
ojbyrne
For me, the lessons would be:

1\. Always question the conventional wisdom. That's what needs to be
disrupted.

2\. Every great innovation that makes someone famous or rich always involves
some guy who's been plugging away for years on his own without any notoriety
or wealth (In this case it was Bill James, who invented "sabermetrics" while
working as a night watchman).

------
brudgers
The problem with Moneyball as an analogy for web software development is that
software development is not a game with a finite pie outcome model, i.e. there
isn't a winner for every loser or vice versa.

For web software development there isn't even a clear way to determine winners
- e.g. market share or brand awareness may trump revenue as a measure of
success depending on the purpose for which web development is undertaken.

If Bean's goal had been to put butts in seats, it is unlikely that his methods
would have worked.

~~~
InclinedPlane
The way to get butts in seats is to have compelling games. The way to get
compelling games is to have a competitive team. The way to get a competitive
team is to find high quality players. I doubt any of this was not in the minds
of the team's owners and management.

~~~
brudgers
Winning often correlates with butts in seats.

However, it is unlikely that a strategy optimizing dollars/win is the same as
dollars/season. Merchandising and TV contracts play too big a role (not to
mention ticket prices). Stars sell merchandise and seats even for losing
teams.

------
mbyrne
Even Better: Dharmesh Shah's Startup Lessons From 17 Hard-Hitting Quotes In
"Moneyball"

[http://onstartups.com/tabid/3339/bid/76799/Startup-
Lessons-F...](http://onstartups.com/tabid/3339/bid/76799/Startup-Lessons-
From-17-Hard-Hitting-Quotes-In-Moneyball.aspx)

~~~
dshah
Thanks for linking to my article. Glad to see my friends at 37signals are fans
of Moneyball too.

------
gerggerg
The only real lesson in Moneyball is do what you love and don't let others
tell you not to.

What I find most interesting about the story is the different effect it has on
people. Business types see it as "Take a great risk and it'll pay off
(literally)." Science types see it as "Math works".

The reality is, you just have to do what you want to do and not care if other
people tell you you're crazy. Was a situation like Moneyball an exception to
the rule? Hell yes. But with out those 1 in 1000 exceptions to the rule we'd
have very little to show for 50 thousand years on the planet.

~~~
its_so_on
(below may include spoiler)

I thought the real lesson was "massively outperform the limits of your shitty
resources beyond anyone's expectations, by thinking outside the box and
concentrating on algorithms and data modeling; and still not succeed. Then if
someone is impressed and offers you more personal compensation than you can
imagine, to do the same thing but for them, while actually being given enough
resources to actually have a chance with it, then you go and fucking do it."

The startup analogy is easy: if you are solely responsible for running a free
service with a million users on $300/month hosting budget, and you almost do
it by inventing amazing algorithms, but the service still lags and sucks, but
is almost there, then when Amazon makes you an offer to come and do the same
thing for them you fucking take it.

~~~
brandnewlow
That whole scene there at the end really killed me. It was not made clear to
me why the protagonist made the choice he made. I wonder how he feels watching
that scene in the film every time he attends a screening.

~~~
its_so_on
doesn't matter. should have jumped ship. (whatever his motivations for not
doing so, the movie makes the lesson clear: it says in the final frames, that
he's still trying to win the last game of the season with the A's... Why would
they say that? What response would that possible elicit other than "should
have gone over to Boston"?) I think the lesson of the movie is clear enough
for me :)

~~~
jacques_chester
Real life has a filthy habit of failing to produce neat, satisfying dramatic
arcs.

~~~
its_so_on
real life also has a habit of letting people in similar choices make the right
one after seeing someone make the wrong one. The lesson of the film is pretty
clear, sorry. Not it's dramatic arc, just its lesson. At least to me. But hey,
if you want to keep chasing that last season game on an impossible budget, go
ahead bro.

------
tristan_juricek
If you haven't read "Thinking, Fast and Slow" it really summarizes the
problems in a lot of decision making in a very clear way.

I'm still reading through, but, you have two major actors in your brain. A
"fast" side, and a "slow" side. The fast side makes gut decisions, and the
slow side, well, applies more complex judgements and can include a more
unbiased view of the world. There's a ton to this process, but importantly,
the fast side is very happy to jump to conclusions when presented with missing
information.

The lesson of Moneyball, then, was that the "fast side" thinking clouded
judgements of baseball prospects by filling out ridiculous statements like
"he's got a hot girlfriend, must be able to have the confidence we need on the
field".

I'm not sure how you can use the baseball metaphor in terms of software
design, though.

But, you could easily say that we're presented with an incomplete amount of
information when building software. (What's going to happen when it runs? Who
knows! Just build a nice API and continue.) So we definitely all probably have
a lot of "quick learning" techniques and processes we just adopt to. For
example, Googling before you just stop and think. Or using the UI techniques
of other applications, because "that's how the big profit-making companies do
it".

------
sambeau
Where I find Moneyball (and a lot of A/B testing) falls down is in the
complexity around the player (or mechanism).

Teams often contain players whose value is off-pitch or subtle: leaders,
morale-boosters, supporters.

The system that Moneyball demonstrates would struggle to find the a manager
that would uses a Moneyball-type system. Where are the stats for the team-
picker?

While I'm definitely _not_ saying that there is magic in sports (nor any
successful website that ignores A/B testing) I am saying that sometimes a
talented spotter (or a talented designer) can produce a fit that a spreadsheet
cannot.

(yet.)

------
pron
I realize this comment may not be popular, but I gotta ask this. How come
every burp that comes out of 37signals lands on the front page of HN?

(Conformist... Yeah... <http://www.youtube.com/watch?v=V4CggHUypjY>)

EDIT: I guess I'm just allergic to cults.

~~~
noahnoahnoah
(I'm the author of the original post, and obviously I work at 37signals, so
feel free to take what I say with a grain of salt.)

Why do posts make it to the front page? Because enough people upvote them, so
there must be something that appeals to at least some people. If you have
comments on how I could have made this post more interesting or relevant to
you, or improvements in my writing style, I'd certainly appreciate hearing
them. You can reach me at noah@37signals.com.

~~~
pron
I'm sorry if I have offended you, that was not my intention. There is nothing
terribly wrong with the post. It's fine. That is not the point. My point is
that there seems to be a certain cult following to several persons/companies
in the industry among HN readers, which doesn't entirely surprise me, but does
disappoint me. I think this community should be more free-thinking and not
drink anyone's KoolAid. In fact, I'd like to see posts coming from from
certain figures given a much more critical treatment than a reverent one. HN
is full of useful, insightful critique, but there could be more of it, and we
can do away with the unnecessary reverence.

~~~
noahnoahnoah
Absolutely no offense taken, and I actually share your desire to avoid KoolAid
drinking. Every post should be evaluated on it's merits, and while I can only
speak for myself, I hope that things that I write only end up on the front
page when they have sufficient merit.

~~~
pron
Also, there is a problem with the voting process here (and on other sites,
obviously) in general. If everyone upvote what they like, this is almost
certain to ensure that the most interesting stuff never makes it to the front
page, because I may like something that is truly original and thought-
provoking, and also something nice about, say, GitHub (I'm just focusing on
GitHub as an example. They're A-OK). The result is that the mainstream stuff
gets lots and lots of votes, but what really interests us doesn't. What you
don't upvote is just as important as what you do. I've just posted
(<http://news.ycombinator.com/item?id=3559105>) an interesting lecture by Noga
Alon about voting paradoxes.

In addition, I think (though I may be wrong) the HN algorithm makes second
chances nearly impossible. If something doesn't make it to the front page
within a couple of hours since its posting (or even 30 minutes), it never
will.

------
sachinag
Billy Beane's shit doesn't work in the playoffs, the book/movie ignored the
Big Three, and information advantages go away.

The startup corollaries: small-bore inefficiencies can't overcome luck and
strong competition, don't attribute success to A when it's really the obvious
B (i.e. what differentiates your product doesn't mean it's actually better -
Gowalla and foursquare is my favorite example here), and people will steal
your landing pages because they work better.

~~~
dionidium
_Billy Beane's shit doesn't work in the playoffs_

What is this supposed to mean? The season gives you a 162-game sample. The
playoffs are a coin-flip, by comparison. It's just too small of a sample to
draw any conclusions, which is why both old- and new-school baseball guys have
an endless array of cliches about how anybody who makes it in to the playoffs
has a chance to win.

~~~
sachinag
It's a reference to a famous essay by Nate Silver (you may know him from
FiveThirtyEight at the NYTimes) and Dayn Perry:
[http://sports.espn.go.com/espn/page2/story?page=betweenthenu...](http://sports.espn.go.com/espn/page2/story?page=betweenthenumbers/billybeane/060405)

In short, the A's roster was actually constructed to succeed over 162 games
but the compromises he had to make on defense and power pitching to get extra
value are particularly fraught in the playoffs, where you're battling the
better offensive teams in the league. Of course, the playoffs are a crapshoot
(the Cardinals had no business being in, let alone winning in 2011), but the
compromises Beane had a direct effect on their heartbreaking playoff losses in
the early 2000s.

~~~
prophetjohn
These are not inherently better offensive teams. That's the whole point. The
2002 A's were a good offensive team because they were better at evaluating
offense than the rest of the league.

The reason the A's didn't win the World Series is the same reason the
Cardinals won the World Series in 2011 and 2006, but not 2004. It's the reason
the Giants won it in 2010. The playoffs are a crapshoot. It has nothing to do
with whether or not sabermetric analysis is valid for regular season games,
but not for playoff games.

------
kaonashi
This reads disturbingly like a Thomas Friedman editorial.

------
funkah
A/B testing and the like will only guide you to local maxima. Human thought
and intuition, ie design, will retain its importance as the impetus for
original ideas which can then be optimized through testing. And users will
continue to evaluate software as they do today, "with their own eyes and
emotions." Sorry, nerds.

~~~
asianmack
Why test when you can wait for 37signals to publish their successful results?
Then just copy that.

~~~
rmc
Because your audience might not be the same as 37signal's audience, and hence
might react differently to different things

