Friday, March 22, 2013

19 Brilliant Business Lessons From "Moneyball"

IF you haven't seen the movie, go rent it. You'll learn alot in the time you watch it. I am serious, even if you aren't a baseball person.

This is a great article for anyone who needs to succeed in business......really.

My favorite line from the movie's central character, Billy Beane:
Billy Beane "The problem we're trying to solve is that there are rich teams and there are poor teams. Then there's fifty feet of crap, and then there's us. It's an unfair game..."

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19 Brilliant Business Lessons From Moneyball

by Dharmesh Shah

Founder and CTO at HubSpot and Blogger at OnStartups.com

January 15, 2013
I'm an idiot. Not all of the time, mind you, but every now and then, I'm an idiot. Like the time my friend and co-founder Brian Halligan asked me to read the book “Moneyball” . This was back when we had first launched our startup, HubSpot. “But, I'm not a baseball guy,” I said. “It's not about baseball. It's about data,” he replied. So, I put it on my reading list, bought the book, but still failed to read it. That was a mistake.

Years later, I watched the movie when it came out. Twice. In one weekend. The first time I felt like I missed so much that I had to watch it again. If you haven't seen the movie yet, you should stop reading this article and go watch it. If you get distracted and never make it back to this article, don't worry, you made the right call.
 

So, without further ado, here are some great quotes and lessons on business and entrepreneurship from Moneyball:

1. He passes the eye candy test. He's got the looks, he's great at playing the part.
Spectacular startup success often becomes a game about scouting and recruiting. A common mistake entrepreneurs make is recruiting team members early on simply because they look the part. In the long run, it doesn't matter if on paper, someone's perfect. You want people that can actually do the job. That VP of Sales candidate that has 15 years of experience at Oracle? Likely not worth it for you. They'll look the part, but they may not be able to deliver the goods. And, like Johnny Damon, she's going to be expensive. Get good at seeing talent where others don't.

2. You're not solving the problem. You're not even looking at the problem.
Identify a fundamental problem in your industry and then focus, focus, focus on solving that problem. Don't get distracted by all the the things that are swirling around the actual problem. Don't listen too closely to those that have deep industry expertise and are emotionally attached to the status quo — it's possible that they're part of the problem. Figure out what the actual issue is, and solve it.

For example, look at Dropbox. My friend Drew Houston (CEO) set out to solve a really hard problem -- getting data to synch across different devices. He had many people (including me) that were telling him that this particular idea had been pursued so many times before. He didn't get distracted by all that noise. He dug in, focused and fixed the problem. Today, Dropbox is valued at billions of dollars and has tens of millions of happy users.

3. We've got to think differently.
This quote reminds me of Apple. Only, Steve Jobs wrote it as ”think different” (intentionally going with the grammatically incorrect version because it “sounded better”). Like the Oakland As, your business is also working under constraints. Often, big constraints. Often, unfair constraints. If you're trying to disrupt the status quo and beat competitors that are much bigger and better funded, you're not going to do it by playing their game. You'll need to think differently. Playing the old way when you're at a disadvantage is a sure-fire way to lose.

This is one that I'm personally very passionate about. When we started HubSpot, everything we had learned about startups -- and the conventional wisdom was "do one thing, and do it very, very well." Generally, that's amazingly good advice. Except when it's not. Like in our case. The problem we saw was not that there weren't great marketing apps out there -- the problem was that none of them were integrated or worked well together. So, we thought different. We decided to do the crazy, crazy thing of doing it all. Why? Because that's what we believed the problem was.

4. First job in baseball? It's my first job anywhere.
Experience is often over-rated. Some of the most successful startup teams consisted of people that lacked relevant experience at the time they joined. But, what they lacked in experience, they more than made up for in sheer talent and hunger. In the early days, hire athletes. People with raw talent and a propensity to get things done. Don't be resistent to recruiting people that are early in their careers. You're looking for arbitrage opportunities. You're looking for the future stars -- because you likely can't afford or convince the current stars.

5. Your goal shouldn't be to buy players, your goal should be to buy wins.
I'm going to illustrate this point with a quick paraphrasing of a conversation I had with an entrepreneur last year. It went roughly like this:
Me: What do you need?
Them: We need to build a management team.
Me: No, what do you actually need right now?
Them: Well, right now we need a VP of Engineering.
Me. What for?
Them: Well, we need someone to head up our product development effort.

Me. No, you actually need to write code and release a product. You need to respond to customer issues. You need to iterate quickly so you can learn quickly. You don't need a VP of anything, you need a doer of stuff that needs to get done. Don't think about buying titles — think about buying outcomes. Think about plugging gaping holes in the company. Are you signing up customers so fast that you can't respond to all the support emails? Don't hire a head of support, hire someone that helps you tackle the support issue. Someone that's maniacally committed to customer happiness. They can become your head of support some day.

6. He really needs to accept this as life's first occupation, a first career.
This statement was made to the young Billy Beane when he was trying to decide between the full scholarship to Stanford and a career in Major League Baseball. Billy's mom asked if he could do both. The answer was, he couldn't. And, that's true in baseball, in startups and just about any hyper-competitive activity. You can't straddle the fence, because you will get your ass kicked by someone who's almost as good as you, but much more committed. You can't take that investment banking job and do a startup. You can't maintain two feet firmly planted on the ground and take the leap of faith. You have to pick. It's not an easy choice, but you have to pick. And, if you're in school, my personal (and unpopular in some startup circles) advice is stay in school . Make learning and building connections your “first occupation”.

But whatever you do, don't sit on the fence. Commit to something. Don't hedge. Give it all you have. Make it your life's first occupation. If you can't get excited about it -- find something else. I've made lots of stupid mistakes in my professional career -- the stupidest was trying to run two startups at the same time. That's a story for another day.


7. Why do you like him? Because he gets on base.
The startup world is filled with superstars that get overlooked or don't quite make it because they're "quirky" or otherwise don't fit preconceived patterns of people think a person in a given role should look and feel like. None of that matters. When recruiting engineers, find brilliant people that write code that solves the problem simply, effectively and can be maintained without brain damage. When hiring sales people find those that have high emotional IQ and care about truly understanding customer problems -- and selling them a solution. Figure out what success looks like for a given role, and ignore the irrelevant details. (Note: Culture fit is not an irrelevant detail. Things that are irrelevant are age, nationality, gender, etc. -- things that have no bearing on the outcome).

10. Hey, anything worth doing is hard. And we're gonna teach you.
Your ability to teach is one of the single biggest levers you have in a startup. Why? First, because it's one of the biggest benefits you can deliver to your team members. They can get a higher salary somewhere else. They can get better perks somewhere else. But, at your startup, they can learn things. Second, it's unlikely you're going to find the "perfect" 5-tool player. Even if you found them, you likely couldn't afford them. If you're willing to help people with a specific super-power fill in gaps in their knowledge/experience, you create lots of value -- for them, and for you.

12. It's day one of the first week. You can't judge just yet.
Be a little bit patient. Often, your best people will take a little time to really shine. Don't judge too early. Determine the context. If someone's not cranking yet, is it because getting up to speed at your company is hard? Everyone's too busy to show them the ropes? Their lack of early performance could be the context, so be patient
But, don't be too patient. If someone isn't at least moderately productive in the first month or two, it's unlikely they're going to be super-productive in the following year. The really great people tend to deliver some value almost immediately.

14. Where on the field is the dollar I'm paying for soda?
It is good to be budget-conscious in an early-stage company. It instills the right kind of discipline that will help long-term. But, don't be penny-wise and a pound foolish. There are little things that don't cost that much, that makes people happier. It's not about the money (they can all afford the soda), it's about the inconvenience and the principle. Remember, deep down inside, people are human. [smile]

One quick example from HubSpot: We launched a book program whereby any employee can request any book they think makes them a better HubSpotter. I personally handle all requests and send out a Kindle version of the book immediately. It magically appears in their account, and they don't have to fill out an expense form or do anything. It's not that expensive, but it's been super-well received.

15. These are hard rules to explain to people. Why is that a problem, Pete?
One of the best segments in the movie. Pete is troubled at how different what they're doing is, and why it's hard to get others to understand and accept it. But, the point was, when you'retransforming something and making massive change, not everyone is going to understand. The important thing is to be right -- and then make the change happen. The best way to convince people that your theory was right is to be right and show them (not tell them) you're right. Most people will never be convinced otherwise.

16. I'm not paying you for the player you used to be, I'm paying you for the player you are right now.
Hard-hitting advice. I'd extend this to say: Recruit on potential but reward on performance. Customers are not going to be delighted by the code a brilliant engineer could have written. On a related note is the quote "If he's a good hitter, why doesn't he hit good?" Or, "If she's such a good sales person, why can't she sell?"

17. That's my bar. My bar is here. My bar is to take this team to the championship.
Although it's often OK to end up being in second place -- that's not what you aim for. You and your team should be in it to win it. If you decide too early that winning is impossible or too hard, you set a ceiling on your success.

18. If we try to play like the Yankees in here, we will lose to the Yankees out there.
Don't play the game using your competitor's rule book -- despite how successful they may or may not be. That's a losing strategy. If they wrote the rules, chances are, they were written to favor them not you.

19. We're going to change the game.
And really, that's what it's all about. It's not about exiting for millions of dollars or going public. It's about changing the game. It's about seeing something that's not quite right in the world, and deciding you want to fix it. For me, personally, it was observing that marketing is broken. Most people hate marketing. we wanted to transform marketing into something people love. It's hugely ambitious, but I have this feeling, deep-down inside, that we're right.

How about you? What is the flaw (big or small) that you're seeing in the universe that you're trying to fix? 

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