Blog from Bob Crimmins
Moneyball is a must-see movie for founders.
It might be the most important startup movie ever made. (-:
Briefly…. In 2002, Oakland A’s general manager, Billy Beane, was faced with one of the smallest player salary budgets in the league — $40M vs the Yankees’ $126M. Beane bucked convention and turned baseball upside down by building a team based on a probabilistic data model that analyzed player performance on the basis cost-per-win.
The resulting team looked nothing like a conventional winning team; but the result was historic. The team made the playoffs in 2002 and 2003 and, along the way, broke the American League record for most consecutive winning games — 20 games! The previous records were 17 wins (set in 1931) and 14 wins (set in 1913.)
Beane’s approach was not an experiment, it was not a theory fueled by passion, and it was not luck. It was based on a rational thesis about how to leverage a set of quantified data (assumptions) about player performance (e.g., on-base percentage) to overcome his incomplete knowledge (i.e., how players and the team would actually perform) to create a successful outcome (a winning team) with minimal resources (1/3 the budget of his biggest competitor.) In parlance of the Startup Haven Accelerator, he built a cogent story of how he could succeed. And he did.
For 23 years I’ve had the privilege of a front-row seat to the startup experience of many hundreds of founders and have closely observed the circumstances of their success and their failures — as a founder myself but more so as a mentor, as an advisor and, now, as an investor.
While it was not obvious to me in my early years as a founder, it has become unmistakably obvious to me now — the most pervasive and onerous feature of venture-scale startups is uncertainty. Uncertainty is everywhere. Literally, everywhere. In case you’re curious about where all that uncertainty is, just spend a minute trying to list all of the meaningful things in the startup world that are certain — or even highly probable. I bet you don’t come up with much.
All that uncertainty is the primary reason that startups are so hard and why they fail so often. And uncertainty is why startups are, fundamentally, probabilistic.
Like Beane, a startup founder’s job is to wake up every day and make probabilistic decisions, with limited knowledge, limited information and minimal resources (especially time). Improving the quality of those probabilistic decisions is, by my reckoning, the very best (if not the only) way to materially improve the probability of a founder’s success.
But mostly we don’t think of startups this way. Too often we think of the founder’s job as a mash up of hustle, experimentation, moving fast, acting boldly, smashing through, and ignoring naysayers. But none of this is materially relevant to improving the probability of success for a startup.
I’ll have more to share with you soon about just how founders (and investors) can improve their decision quality. Spoiler alert: it’s called GroundWork and it’s what we teach in the Startup Haven Accelerator.
But for now, I hope you won’t take my word for it and, instead, challenge me on my essential assumption that startups are fundamentally probabilistic.
In the meantime, here are two clips from Moneyball that capture the difference between the prevailing wisdom of what makes a good baseball player and the kind of players Beane believes the A’s need to recruit to be successful.
