Presentation by Billy Beane, General Manager, Oakland A’s
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Billy Beane joins the conference to talk about his experience changing the status quo. He relays his experience changing the game of baseball as the A’s general manager, and talks about some of the points of pain and commitments they had to make to have success.
Billy takes the stage and announces, “You can go ahead and give your collective groan…Brad Pitt played that guy?”
He goes on to talk about the making of the movie and how yes, he did get to hang out with Brad Pitt and how it was a surreal experience. He tells how Brad and Angelina came to a BBQ in his backyard in Danville, CA. But he’s glad it’s over. Almost a year ago tonight they premiered the movie in Oakland.
Billy starts by talking about his experience playing baseball, how if you look at his career statistics, he was basically “in chapter 11.” And yet he was the second highest amateur baseball player in the draft. He says he was overvalued based on things that had nothing to do with success on a baseball field and that had a real impact on his thinking as an executive. He also talks about how early on, his friend and roommate, Lenny Dykstra, was extremely talented but undervalued and that stuck with him, too. “My experience with Lenny shaped how I was going to run a business,” he says.
As the new GM of the A’s, Billy realized that he could somehow use the 150+ years of baseball data to change the game and looked for someone who could take the data and turn it into something useful. He hired Paul DePodesta, who was a 24-year-old Harvard Graduate, to help him figure it out.
Billy then addresses how the book, Moneyball, came to be. They were approached by Michael Lewis who wanted to write a newspaper article on how they were running their business. Billy says they were hesitant at first, but that there were two reasons why they let Michael hang around after meeting him initially: “He’s a sneaky SOB and 2) He’s married to Tabitha Soren (former MTV veejay) and we think she’s really hot, so we hoped she would show up, too.”
But really, they were also impressed with how much he knew when he came in. He told them they were arbitraging and it was the first time they had considered that term. “We realized we were mimicking Wall Street.” And they liked hanging out with him. He was there every day. After a few months, Michael told them that article was now going to be turned into a New York Times Magazine piece. Time went by and Billy and Paul kept asking, “Michael, when are you going to write this piece?” And he responded, “I’m sorry, guys, didn’t I tell you? I’m going to write a book.” And Billy said his “stomach went through my throat. Paul and I were both a little worried.”
The season finished and Michael wrote the book in the off season. Almost a year after the initial meeting, he finished the book. He offered to let Paul and Billy read it before it came out, with the caveat that they weren’t going to be able to change a single word of it. After reading it (“I read it in like four hours, Paul read it in two”) Billy walked into Paul’s office and asked, “Am I that much of a maniac?” And Paul responded, “Am I that much of a geek?” They both assumed nobody would read the book, but Michael assured them that people who run businesses were going to understand the book and understand the challenges that they have. It has sold close to two million copies.
Billy and Paul both understood there was going to be some backlash after the book and their approach was published. As Billy says, “you’re taking a romantic business and turning it into statistics. We were doing things differently. And people were upset.”
“The road to truth is long, and lined the entire way with annoying bastards.” Alexander Jablokov
That quote was their form of inspiration, says Billy.
They recognized that they had to commit to their approach and go all-in in terms of making decisions based on data. Billy tells a story about how, while they were still considering the approach, Paul came to him and said he was using progression analysis to determine how many wins the A’s would need to win the division. Billy completely disregarded what he said. Paul came in again and told Billy that they needed to win between 90 and 92 games to win the division. Billy ignored him again. While celebrating their division win, Billy said it dawned on him that that was their 91st victory and asked Paul, “Are you a Warlock?” And Paul responded that the mathematics will always work and that they had to trust the numbers. “That was an all-in moment for us,” says Billy. “Every business decision we made was going to be based on information.” They were going to eliminate the emotion and intuition and make sure they were disciplined in their decisions. “The collective result was we would have a chance to compete.”
Part of what they realized by looking at the data was they were valuing the wrong skills. They looked at the numbers and learned that the most important skill and statistic in baseball was getting on base. Getting on base had the highest correlation in winning. And the skill of on base was undervalued. They decided to “put all our chips on one skill. As Billy says, “collectively we had a bunch of guys that didn’t look particularly good in uniforms. But they had the one skill we were looking for.” When other teams caught on, within two years, on base was the highest paid skill set in the game.
Billy details how since 1965 the way teams made selections had never changed, how it’s a very subjective process. “It’s a very difficult thing to have someone scouting for you to go watch a kid in Iowa and have that person come back and tell you if he’s any good. This didn’t make sense to us.” They saw that any kid in the top of the draft had only a 3 percent chance of going to the major leagues. He said the industry was making subjective gut-feel decisions and paying a ton of money and that was the wrong approach.
Billy decided they had a blank canvas to say something completely different. They were going to make decisions on something different so they could look back and hopefully have something to improve upon. He said that the challenge of doing something so radically different was convincing their own employees that it was a good idea. “Convincing our own staff was our biggest challenge.” He talks about how noise affects decision making at every level. “If you’re going to make a tough decision, you have to understand that there’s going to be noise and you’re going to have to ignore it.”