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Ben Reiter

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73

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2018-08-13

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2018-08-13

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1. “So, there's this question, there's always this question of luck versus skill and process versus outcome. And you've talked a lot about process versus outcome the same way people do in investing, and yet part of the reason you dove into writing the book was because it was process and outcome.”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

2. “Enough of these very well measured decisions based on all sorts of data that they could turn things around in a very serious way, and you know that's more or less what happened”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

3. “They were, but that's hard to kind of wrap your mind around in the moment, especially when there's no promises that it's going to work, right? I mean, so there was that. Then there was also this general feeling that they were inept, you know, like they're making all these promises. There's no promise here. This could be this way for 10 years. So people were very upset about this prediction given that situation on the ground. But look, I wrote a 5,000 word cover story based on my time with them. And, you know, obviously stepping back from it as well and taking stock of what they were trying to do to support that prediction. It wasn't something that we threw out there just to be controversial, you know, just to get some headlines or something. There was real reasoning behind it. We felt as if three years down the line, which is actually a long time in baseball terms. It doesn't sound like a long time. But often if you look at the standing from like three years ago, they're almost upside down from where they are today. We thought that the astros would have had time to accumulate.”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

4. “Particularly in Houston, I think the idea of tanking people hated it, especially in Houston, people who love the Astros since they were founded in the early sixties, they can't even go to the games. You can't even watch the games. They're just so bad. 106 losses, 107 losses, 111 losses. Alex Trebek is making fun of the team on Jeopardy. It's a laughing stock, right?”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

5. “At first it was very negative. I think I underestimated how much anger there was out there about what the Astros were doing, right?”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

6. “Is he able to take advantage of the data? It's going beyond that. Like, where's the next source of predictive information coming from? Oh, look, we have these scouts who are longtime baseball men. They probably know a thing or two the computers can't analyze.”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

7. “One team is the computer team, one team's the human team. Which one's going to win? And the advantage is to the computers, right? When that's the question you're asking, if you have a systematic way of analyzing data, you can have an advantage certainly over humans. And the Astros guys now say that back when they're in St. Louis, they view it as kind of these days when they were alone at the buffet, right? Just getting huge advantages in all sorts of ways on the data alone. Well, eventually everybody caught up. And it wasn't actually that long ago. It was about two years ago that the Detroit Tigers, for example, had like one part-time analyst on their whole staff. Two years ago, it was like maybe 2015 or going into 2016. They've since caught up. They hired somebody from Apple. They're up to speed. They have their own database now. But that's a long time after Moneyball. But look, now the landscape has flattened. So the Asters innovation is where was the next advantage? And it was not just turning to computers when everybody now”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

8. “It was very personal, actually. I mean, yes, it was don't listen to this guy. He doesn't know what he's talking about, but it was also, you know, freeze him out when he walked into a room, calling him Harry Potter behind his back. At one point it got to the point where DeWitt was going to fire somebody in the front office who just wouldn't get on board with this whatsoever, somebody pretty high up. And that day he asked Luno to go work off site in case after he fired this guy the guy went after him and tried to fight him. Like things were pretty, pretty tense there for Jeff and for the guy he brought on as his stats man Sigma Dell who had an interesting background of his own I get into in the book as a former blackjack dealer and a NASA rocket scientist. But look Bill DeWitt kind of forced the issue in St. Louis. There were other organizations that had success and didn't have this happen, right? They kind of continued doing things their way for a long time. It was tradition versus”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

9. “To run the scouting department, that was right away, essentially. Even within the Cardinals, you got a lot of pushback. Baseball's a very traditional environment. It's very difficult to change cultures, especially a culture that worked, which is what everybody with the Cardinals believe theirs did because they were the Cardinals. So, yeah, I mean, a lot of the traditionalists hated it.”

   2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

10. “Right, well, I mean, certainly it wasn't just the Ace who had made this realization by the time Money Ball came out, right? There were other teams at the Red Sox under Theo Epstein, certainly the Cleveland Indians were always very far ahead of this. Other teams as well. But, and it probably took longer than you would think it did. Eventually everybody got on board, right? But it wasn't right away. It was right away for a team like the Cardinals, where Bill DeWitt, who's the owner of the team, very successful investor himself, Red Moneyball or was made aware of moneyball, and very quickly said, you know what, I know that we're the second most successful baseball team there is behind the Yankees, but this is going to provide us an edge going forward. This is how we're going to innovate even on top of our success. So he brought in Jeff Luno from McKinsey and from the tech world, which is where Jeff worked, although he was always a big baseball fan. He was connected with him by his son-in-law, someone that Jeff knew from McKinsey.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

11. “It's really hard for me to listen to this and not draw these parallels of investing. So Moneyball comes out in 2003. And that really was the trigger of releasing this concept of using data, what the A's word and Billy Bean was doing. Dave Swenson, in our business, wrote his seminal work in 2000. And all of a sudden, people in the investment world started investing in alternatives because that's what Yale was doing and it was working. What happened from, say, 2003 when Money Ball comes out and the A's maybe are one of the few games in town or Paul Di Podesta, the people who'd worked for Billy Bean were trying to do it. Over that next decade or decade and a half until what happened with the Astros played out.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

12. “That's something that scouts haven't gotten to know these players as people themselves and dug into their past met their coaches, met their families, have gotten a sense of, right? So you have all these numbers, but then you can see the track record. Say this scout has given a 60 makeup to 99 pass players, right? How have those players turned out, really? And then, so if he gives another 60 to another player, how would that a hundredth player turn out? You can kind of run regression analyses on these things and backtest them. Of course, there's only one piece of the puzzle, right? The idea is to combine things like makeup with OBP and FASB and all that to end up with one number essentially to help you make one decision on a player like yes or no. It's just expanding the data set and the universe of inputs that you have to hopefully make a better decision. And then as those decisions accumulate along the way to help you make marginally more”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

13. “For example, scouts, scouts have long graded players on a twenty to eighty scale, eighty being super Hall of Famer, twenty being probably me, right? No skills whatsoever. But they've assigned these grades to all sorts of characteristics of players for a long time, and there's records of these grades, right? He's got a 50 arm, he's got a 60 for contact. They also assign them for things like makeup in particular. Makeup is what baseball people call what you and I would probably call character, right? It's adaptability, grit, drive, ability to work as a team, ability to improve. That's one that is very hard to describe with other numbers. I mean, it's hard to see that in OBP or OPS or things like that.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

14. “After Money, while we were taught to think that numbers are far superior to describe almost any situation than human intuition, because humans are biased, humans are flawed, can't be trusted. The Astros recognize that humans can detect things, especially in players that numbers can't describe, that there aren't numbers for, and the trick is to properly process those observations and incorporate them with the performance data to kind of get the best out of both man and machine.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

15. “That had been kind of overlooked recently, especially in sports, which was information that comes from humans, human observation, human gut, human instinct.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

16. “Plan is strangely almost exactly, at least from a larger scale, what they ended up doing. Yes, they had the most advanced analytics department I had certainly ever been around. I'm sure it remains up there with any in baseball, probably any in many industries, right? They have a team of PhDs and people from all sorts of disciplines who operate in the nerd cave is what they've called it, right? This dark room, I actually didn't go in the nerd cave. I stood outside the nerdcave. It's very dark. A lot of blinking lights in there. But that's their analytics department, right? So they can parse every number that you have. And they were ahead of the game for a long time. The part that was really intriguing to me, though, was that they weren't just parsing performance data. This is beyond money ball stuff. Everybody knew by now that OBP is better than batting average, things like that. But there's a lot more data to handle, and they were doing it. But they were bringing in source of information.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

17. “Ryan and Craig Bizio and guys like that, and I came away thinking this is not a team that's run cynically or ineptly or an organization that has no idea what it's doing. It's an organization that has a very strong idea of just what it's doing and its plan was one that was new to me and I thought it was pretty intriguing.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

18. “The seven years he was there of any scouting director as far as pixie made that turned into big leagues. There's a count of that. So I wanted to see how it added up. How does a guy who seems to know what he's doing oversee such a terrible team? And what is the big idea here? Is there even a big idea here? Well, I didn't think I would write any sort of story about such a team unless we got some sort of unusual access to it, you know, unless they kind of let us in to what they were doing, let us into their front office to a degree the most wouldn't. So it took about a year of negotiations. The only thing I promised them was I'm going to come in. I'm going to be open-minded. I don't have an agenda. I'm not one of these people who's been killing you from afar. I just want to see what you're up to. And that was attractive to them at that point because they weren't getting killed everywhere just to maybe show a little bit of what they were doing. So I went in there for a few days. I sat in there draft room. I sat in their draft meeting right next to Nolan.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

19. “Not nearly as lovable as the lovable you lose. It just seemed like a total disaster dumpster fire almost down in Houston. But I knew something else. I didn't know them well, but I knew that the guys who were running the front office, particularly Jeff Luno, had had a lot of success in St. Louis in overhauling that scouting department. Some say”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

20. “the Asher Story by the same thing that everybody else was drawn by, which is that they were just so unbelievably historically ludicrously bad. Total train wreck, worst team over a three-year stretch since the expansion mets.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

21. “People from all over the country would flock to Wayne's house in Brooklyn because he knew everything about this guy. He knew everything. Wayne got very ill and actually died the day before Donald Trump was inaugurated, so he didn't leave to see that. But that was incredible training as far as any type of journalism, as far as digging and digging and being relentless about who you call and never stopping trying to get the story. Still, you know, it's hard to get a job. I kind of sent resumes around met everybody I could. Finally, I got an offer from Sports Illustrator to come in as a fact checker entry level researcher on a temporary basis. So yeah, man, I jumped at it. It's Sports Illustrated. I like sports. I want to write made sense. And, you know, that was two thousand four, and now it's 2018. So it seems like it's been a good place for me. How did you come about writing this book? It really started in 2014. I was drawn to the story.”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

22. “Well, I went to Yale for college. I did a lot of writing there. I took a class as a senior kind of advanced nonfiction writing class with this guy named Fred Streeby. Knows what he's doing and can get kids inspired about this sort of pursuit. After that, I really thought, hey, I want to write somewhere something. I liked sports. I didn't necessarily know it would be sports, went to graduate school over in Cambridge, England in international relations, so came back here to the States, got an internship at the Village Voice working for this guy named Wayne Barrett, who's this classic, crusty old New York investigative journalist. Wayne believed that the Axis of New York evil was Al Sharpton, Rudy Giuliani, and Donald Trump. And in fact, wrote books about the latter two. I mean, really, when Trump was running for president,”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source

23. “My guest on today's show is Ben Ryder, a senior writer for Sports Illustrated and the author of Astroball, The New Way to Win It All. He joined SI in two thousand four a few years out of college and has written for them ever since. In twenty fourteen, Ben wrote a cover story for SI entitled Your 2017 World Series Champs featuring the then Sorry Astros who were the laughing stock of baseball at the time. Three years later, his prediction came true. His book chronicling the journey has been dubbed Money Ball two point zero. Our conversation blew me away in how closely the parallels have been between baseball management and fundamental investing over the last fifteen years from the incorporation of data to the challenges in managing people, I suspect if you just changed the names of the players and the”

    2018-08-13 · Capital Allocators · Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64) · IDENTIFIED FROM THE TRANSCRIPT · source