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Invest Like the Best with Patrick O'Shaughnessy
Sam Hinkie – Data, Decisions, and Basketball - [Invest Like the Best, EP.88]
May 22, 2018
01:07:35
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Quick takeaways
- Having a long-term view in decision-making is crucial for success and harnessing opportunities.
- Innovation can be fostered by using technology and drawing lessons from history for strategic adaptation.
- Recruiting exceptional individuals is vital for competitive advantage and successful partnerships in business.
- Machine learning enhances prediction accuracy and data analysis, offering insights traditional methods may overlook.
- Choosing a life partner is a significant decision impacting long-term fulfillment and value.
- Building deep relationships through due diligence and collaboration is essential for successful partnerships and investments.
Deep dives
Sam Hinkie's Basketball Analytics Impact
Sam Hinkie's unconventional decisions at the Houston Rockets and Philadelphia 76ers, focusing on acquiring undervalued players, led to a significant rise in the 76ers' franchise value from $418 million to $1.2 billion. His unique approach revolutionized the team, positioning them as one of the most valuable franchises in the market.
The Long-Term View in Decision-Making
Hinkie's emphasis on long-term success parallels an investing approach, focusing on future financial outcomes. He stresses the importance of looking beyond short-term gains and making decisions that will compound over time, similar to his strategic perspective in building basketball teams.
Innovation in Decision-Making
Hinkie's approach to innovation involves leveraging lessons from history, as seen in the book 'Empire of the Summer Moon,' to adapt strategies for success. He encourages learning from other domains and applying successful practices to drive decision-making, echoing the importance of adaptation and innovation in different contexts.
Importance of Hiring Exceptional Talent
Hinkie emphasizes hiring exceptional individuals as a key source of competitive advantage, guiding his angel investment decisions based on the quality of the team. He believes in investing in people first, seeking stunning colleagues who challenge and inspire growth, drawing parallels between successful partnerships and investment opportunities.
Predicting Future Outcomes Through Machine Learning
Machine learning plays a crucial role in enhanced prediction accuracy and decision-making processes. Hinkie's excitement for machine learning stems from its ability to analyze vast amounts of data, facilitating better forecasts and insights that traditional analytics methods may overlook. The evolving capabilities of machine learning enable more robust predictive models and deeper data analysis for informed decision-making.
Value of Marriage and Long-Term Decision-Making
Hinkie underscores the significance of choosing a life partner as one of the most impactful decisions in life. He advocates for prioritizing a strong partnership over short-term gains, emphasizing that the choice in a spouse influences various aspects of life, including children's traits and long-term personal fulfillment. Viewing marriage as a pivotal decision aligns with his approach of focusing on long-term value and meaningful relationships.
Strategies for Successful Recruiting and Angel Investing
In recruiting and angel investing, Hinkie emphasizes building deep relationships with potential partners over time to assess compatibility and value alignment. His approach involves extensive due diligence and project collaborations to gauge mutual fit and contributions, ensuring that partnerships are based on shared values and expectations for long-term success.
Role of Data-Driven Decision-Making and Investing in Innovation
Hinkie's reliance on data-driven insights and investing in innovation reflects his commitment to making informed decisions with lasting impact. Utilizing machine learning to process extensive information and drive predictive analytics, he aims to uncover asymmetric opportunities that compound value over time, fostering continuous growth and success.
Balancing Data-Driven Techniques with Human Expertise
Hinkie's approach to leveraging data-driven techniques like machine learning involves balancing analytical models with human judgment. By incorporating advanced analytics alongside domain expertise and critical thinking, he aims to maximize decision-making capabilities and adapt to evolving trends in data analysis and prediction methods.
Benefits of Autonomous Driving Technology
The podcast discusses the benefits of autonomous driving technology, highlighting the advantages of having machines singularly focused on driving tasks. By comparing human drivers who can be distracted, tired, or less attentive, the podcast emphasizes the precision and safety that autonomous cars offer. Specific examples include the ability of autonomous cars to detect potential hazards like a dog crossing the street or a car approaching, showcasing the advanced predictive capabilities of this technology.
Importance of Preparation in Negotiations
The importance of preparation in negotiations is emphasized, portraying it as a critical factor for success. The podcast suggests deeply understanding the other party's perspective and motivations to facilitate empathetic communication and problem-solving. By highlighting the significance of thorough preparation, the podcast underscores the value of anticipating the other party's needs and defining one's walk-away points in advance to achieve favorable negotiation outcomes.
I came across this week’s guest thanks to the overlap of three passions of mine: data informed investing, value creation, and basketball. Sam Hinkie worked for more than a decade in the NBA with the Houston Rockets, and then most recently as the President and GM of the Philadelphia 76ers. He helped launch basketball's analytics movement when he joined the Houston Rockets in 2005, and is known for unique trade structuring and a keen focus on acquiring undervalued players. Today, he is also an investor and advisor to a limited number of young companies in which he feels his experience can improve outcomes.
Please enjoy this unique episode with Sam Hinkie.
Show Notes
3:24 – (First Question) Advantages of having a long view and how to structurally harness one
6:08 – Using technology to foster an innovative culture
10:16 – Favorite example of applied innovation from Sam’s career
11:34 - Most fun aspect of doing data analytics early on the Houston Rockets
13:38 - Is there anything more important than courage in asymmetric outcomes
14:29 – How does Sam know when to let the art of decision making finish where the data started
16:29 - Pros and cons of a contrarian mindset
17:26 – Where he wanted to apply his knowledge in sports when first getting out of school and how his thinking is best applied in the current sports landscape
21:39 – How does he think about trying to find the equivalent of mispriced assets in the NBA
23:12 – Where tradition can be an impediment to innovation
25:07 – What did the team and workflow of the team look like in the front office
27:03 - The measure of truth in a sports complex
29:10 – What were the early factors coming out of the data that helped to shape NBA teams
30:42 – Best tactics for hiring
33:59 – Process of recruiting spectacular people
35:39 – Thoughts on fostering a good marriage
37:57 – Picking your kids traits in your spouse
38:02 – Selfish Reasons to Have More Kids: Why Being a Great Parent is Less Work and More Fun Than You Think
40:45 – What kind of markers does he look for when evaluating long term investment ideas
42:44 – His interest in machine learning
45:55 – What’s more exciting, the actual advances in machine learning or the applications that can be imagined as a result
47:15– International Justice Mission
48:11 – How he got started teaching negotiations and some of the points he makes in that class
49:16 – Effective techniques for negotiating
50:03 – Is negotiating contentious, do you need empathy
50:41 – A Rorschach test of Sam based on his reading of Lessons of History (book)
53:01 – Biggest risk Sam took in his career
54:37 – Biggest risks Sam took while with the 76ers
58:09 – Do people undervalue asymmetric outcomes in the NBA 1:00:11 – The players Sam has enjoyed watching over the years
1:02:45 – Why Robert Caro is a favorite author of his
1:04:30 – Kindest thing anyone has done for Sam
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