HOW TECH USED VC KNOW-HOW TO CONQUER THE NBA And the human capital skills that made it happen How tech used VC know-how To conquer the NBA THE VALLEY INVADERS I was 10 years old when I fell in Our talent pool can be constricted, But then the disrupters came Alex Zaharia love with the game of basketball. with plenty of competition. along. In the last 15 years, almost Senior Associate, London We all have our heroes growing up half the NBA’s 30 teams have come and the NBA players were mine. We have to make decisions fast; to be owned by new billionaires Their incredible athletic skills and sometimes faster than the with Silicon Valley ties. For larger- than-life personas have business would ideally like. example, ownership of the Los always captured my imagination. Angeles Clippers has passed from Indeed, the intricate web of human And our environment is high the controversial real estate and business stories behind the profile: top performers change the tycoon, Donald Sterling, to scenes at the National Basketball game, the wrong hire can cost Microsoft’s Steve Ballmer. Association contributed to my dearly. choice of career in Executive Under Silicon Valley’s influence, Biography para 1 Search. But with tech rolling its tanks onto technology has permeated the the NBA’s lawn, sport is now NBA at all levels. Players are now An internationalist (and huge There’s a constant crossover exhibiting all the commercial nous accomplished VCs in their own basketball fan) Alex began his between sport and business; for of high-growth tech, too. right. The league is the first sports career in Human Rights Law example, plenty of coaches forge a adopter of Data Science and before moving into technology- focused executive search. lucrative sideline career in Sports ownership has always Analytics and its subsequent developing teams in business. signposted the industries which insights are leveraged by other His work at Renovata focuses on were dominating Western industries as well (particularly the intersection of Human Nowhere is the analogy more economies. Owning a sports gaming) – thus attracting private Capital, Business Strategy and relevant than in tech. Of course we franchise was traditionally a equity funds into the sector. The Technology; catering to the help to build high-performing statement, a public display of NBA is also a testing ground for needs of some of the world’s teams at Renovata, but the wealth rather than a business in the latest fan experience: it’s on most disruptive and cutting parallels with an NBA franchise run and of itself. Clubs and franchises track to be first to offer a full VR edge ventures. much deeper. were internationalist toys with experience thanks to a partnership [email protected] great hospitality and bragging with Magic Leap. rights. 2 How tech used VC know-how To conquer the NBA VC PLAYS IN BASKETBALL First column But most of all, for the deep- Although the Celts are the most pocketed techies, owning a team is successful franchise in league not just a statement of their arrival history by championship wins, on the billionaire scene, it’s a high Lacob felt like any entrepreneur in growth venture. It’s an opportunity a big corporate: the recipe was to apply VC logic for profit and proven but he was hungry for prestige in equal measure; in a more. business where there’s nowhere to hide. Because an NBA franchise’s So he took the hiring and success is valued very visibly and organizational culture principles publicly: do they have a winning from his successful career at team on the court? Kleiner Perkins and applied those VC fundamentals to the GS There’s a constant crossover Take Joe Lacob, and the Golden Warriors, acquiring the franchise in between sport and business; for State Warriors. Lacob, a partner at 2010 for c$400M and growing its example, plenty of coaches VC Kleiner Perkins Caufield & value to $2Bn by 2018. forge a lucrative sideline career Byers, was not completely alien to in getting the best out of basketball - before becoming The Warriors had won their last commercial teams. majority owner of the Warriors, he championship in 1975; they now had been part-owner of the have the 2015, 2017 and 2018 Sport is also exhibiting the Boston Celtics. titles in their record book. Here commercial nous of high- are the human capital decisions growth tech – because tech is that led to this success. rolling its tanks onto the NBA’s lawn. 3 How tech used VC know-how To conquer the NBA 01. Cultural Principles 02. The Executive Team 03. The Product Team • Nimble management Lacob’s openness to new ideas is now also enshrined When it came to the players, Lacob also took a VC’s Traditional NBA owners were hands-on, imperial in the team’s ownership strategy. Minority owners in long-game approach in recognizing the upside of his leaders when running their teams. Instead, Lacob teams traditionally get tickets and occasional rights to current superstar, Steph Curry. Curry had showed prioritized hiring the best people - like hall-of- courtesy events with other teams. Lacob realized that flashes of brilliance as a rookie but had suffered famer Jerry West, known not only for his the ownership community is a ready-made, highly ankle injuries that set him back a couple of seasons. dominance as a player in the 60s but also for motivated source of expertise. Today, minority owners Most other teams would have traded him or even helping put together some of the strongest teams all actively contribute to decision-making with voided his contract. in league history. And Lacob left his talent free to whichever personal edge they have to offer the make decisions: West had authority over who to franchise. Lacob deployed the latest innovations in medical draft, trade, and - especially - not to trade. and sports technology to help Curry recover. His leg With a supportive and broad-skilled leadership team, treatment and core training regime were state-of- • Open communication you can take greater risks on individuals. Bob Myers the-art at the time (Lacob being an investor in a few Lacob also dismantled the typical hierarchies of was an Assistant Manager with the team but Lacob medtech start-ups too) and the bet paid off: Curry management. For example, Peter Guber, a minority didn’t hesitate to take a calculated risk on the step-up outperformed the competition and repaid his team’s owner of the team, has the same say in key candidate with a high upside. investment many times over. decisions as Lacob. He sees value in different points of view, and also benefits from Guber’s rich After being promoted to General Manager, Myers With his coaches, Lacob recognized that growth network of contacts in the media. The same applies himself said to the NY Times: “The reason I’m sitting happens in stages. In the early years, he employed to coaches and managers: everybody is respected here now is because of that VC model. I had no track Mark Jackson, a coach with a great track record in for their skillsets and encouraged to come forward record. I had no past experience. If you only believed in developing young talent and establishing a when they believe they can improve the past performance, you’re talking to someone else. I collaborative culture in the team. Jackson was organization, even if that means contradicting mean, I wouldn’t have hired me”. perfectly suited to the scrappy, guerilla approach of Lacob himself. the ‘startup’. Myers ended up being one of the most successful • Leverage outside wisdom NBA GM’s of the decade. Once the machine was running smoothly, similar to One of the keys to innovation is in nurturing fresh replacing a successful Series A-to-C CEO with an perspectives. The Warriors’ open culture allows IPO-ready CEO, Lacob brought in Steve Kerr to them to attract, among many others, retired develop Jackson’s legacy further. superstars like Steve Nash – also an Angel investor in his own right - to advise the team. The team is thus exposed to outside opinions and invited to contribute their own. 4 How tech used VC know-how To conquer the NBA DISRUPT WITH DATA WHAT’S NEXT? Eduard Thorp (the ground Lacob’s recipe is now being copied Technology and innovation are breaking economist, statistician by other wealthy tech club owners. often cited as the main ingredients and author of “Beat the Dealer”) The aforementioned Jerry West of disruption. But the game of had been one of Lacob’s has even been hired by Steve business, like the game of professors at Irvine. It had instilled Ballmer to work his magic at the basketball, is still played by people. in Lacob a trust in the numbers formerly bottom-ranked Los which convinced him that Kerr’s Angeles Clippers (indeed you get Corporates will borrow more and data driven acumen would be right the feeling that Ballmer specifically more from the VC management for the next stage of the team’s wanted an under-performing team style, particularly providing a solid development. It was a novelty and to work on…). Silicon Valley culture framework where experts have widely criticized around the league is disrupting the NBA at all levels. freedom to operate, and deploying at the time. But (just as in baseball, technology – especially heavy where success led to celebration in The winner-takes-all visibility of analytics – for reliable decision- the book and film Moneyball) it sport, on local and world stages making and de-risked recruitment.