Invest Like the Best with Patrick O'Shaughnessy - Shane Battier - The No-Stats All-Star - [Invest Like the Best, EP.304]

Episode Date: November 22, 2022

Today’s episode is a special one, in a format that may turn into a series. It is a conversation between Ravi Gupta and Shane Battier. Ravi is a partner at Sequoia, one of our most popular past guests, and a good friend. Shane is Ravi’s friend, and one of the most successful basketball players ever, having won championships and awards at the high school, college, and NBA levels.   I spent 10 years as a purely quantitative investor, so naturally I was obsessed with data in sports. When I was meeting with prospective investors, Michael Lewis’s book Moneyball—which chronicled the data analytics revolution in baseball—was my go-to analogy to explain what I did… “Moneyball, but for investing.” I used that line for years.   I’ve learned firsthand that it’s wise to follow your curiosity, no matter how strange or different it may be. The podcast is my curiosity tour, and years ago it led me to Sam Hinkie—who is himself on the Mt. Rushmore of analytics in sports. Sam introduced me to Ravi. Then Ravi sent me Michael Lewis’ article written about Shane called “The No Stats All-Star.” I highly recommend you read it.   All this serendipity around friends, data, investing, and sports gave me an idea: why not ask Ravi to interview Shane? Ravi likes the idea of playing for the front of the jersey, not the back. It is hard to imagine someone that lived that more than Shane. Shane shares his story, lessons learned from various coaches, and using data as an advantage. He also explains the four kinds of teams he’s encountered, which I found simple, and memorable.   For the full show notes, transcript, and links to mentioned content, check out the episode page here.   -----   This episode is brought to you by Canalyst. Canalyst is the leading destination for public company data and analysis. If you're a professional equity investor and haven't talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalyst.com.    -----   Today's episode is brought to you by Brex. Brex is the integrated financial platform trusted by the world's most innovative entrepreneurs and fastest-growing companies. With Brex, you can move money fast for instant impact with high-limit corporate cards, payments, venture debt, and spend management software all in one place. Ready to accelerate your business? Learn more at brex.com/best.   -----   Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.    Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @patrick_oshag | @JoinColossus   Show Notes [00:03:53] - [First question] - What people measure in basketball, what matters when it comes to winning, and why he was called a replaceable cog in the No-Stats All-Star [00:08:38] - Some of the plays that impact the overall points during a basketball game [00:14:33] - The power of curiosity and obsessing over details [00:16:16] - Embracing his role and how being a role player applies to life outside of the court [00:20:47] - Where his obsession for winning and being a good team mate comes from  [00:23:23] - Some of the things great leaders and coaches did to inspire him  [00:28:51] - An overview of the four types of teams and fundamental aspects of them [00:34:50] - What a person can do to elevate their team and make it a winning one  [00:37:43] - Antifragility and the letter Shane wrote for Ravi when Amazon bought Whole Foods [00:44:56] - How to get everyone rallied around a long-term shared mission effectively   [00:46:48] - Finding a No-Stats All-Star in a company and what to look for in one [00:52:34] - The kindest thing anyone has ever done for him

This episode of Invest Like the Best is sponsored by Canalyst. Canalyst is the leading destination for public company data and analysis. Founded by a former byside analyst who encountered friction sourcing, building, and updating models, Canalyst is now used by over 400 institutions, including the largest money managers globally and by a number of guests on the show. With detailed company-specific models and data on virtually every public company, panelists clients are able to ramp up faster, update models instantly, and incorporate the highest quality fundamental data into any workflow. If you're a professional equity investor and haven't talked

to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalist.com slash Patrick. That's C-A-N-A-L-Y-S-T-com slash Patrick. Today's episode is sponsored by Brex, the integrated financial platform trusted by the world's most innovative entrepreneurs and fastest growing companies. With Brex, you can move money fast for instant impact with high-limit corporate cards, payments, venture debt, and spend management software all in one place. Ready to accelerate your business, learn more at brex.com slash best. That's bR-e-X.com slash best. Hello and welcome, everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best.

This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at join colossus.com. Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaunacy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaunacy Asset Management. This podcast is for informational purposes only.

and should not be relied upon as a basis for investment decisions. Clients of positive sum or Oshonasi asset management may maintain positions in the securities discussed in this podcast. Today's episode is a special one in a format that may turn into a series. It is a conversation between Ravi Gupta and Shane Badiye. Ravi is a partner at Sequoia, one of our most popular past guests and a good friend. Shane is Rovey's friend and one of the most successful basketball players ever, having won championships and awards at the high school, college, and NBA levels. I spent 10 years as a purely quantitative investor, so naturally I was obsessed with data

in sports. When I was meeting with prospective investors, Michael Lewis's book Moneyball, which chronicled the data analytics revolution in baseball, was my go-to analogy to explain what I did, Moneyball, but for investing. I used that line for years. I've learned firsthand that it's wise to follow your curiosity, no matter how strange or different it may be. The podcast is just my curiosity tour, and years ago it led me to Sam Hinky, who has himself

on the Mount Rushmore of analytics in sports. Sam introduced me to Rovey. Then Rovey sent me Michael Lewis's article written about Shane called the No Stats All Star. I highly recommend you read it. All this serendipity around friends, data, investing, and sports gave me an idea. Why not ask Rovey to interview Shane? There were so many valuable ideas in the Michael Lewis article. I thought we'd get even more in a real taped interview with someone that knew Shane. well, and that's exactly what happened. Rovey likes the idea of playing for the front of the jersey, not the back. It's hard to imagine someone that's lived that more than Shane. Shane shares his story, lessons learned from various coaches, and using data as an advantage. He also explains the four

kinds of teams that he's encountered, which I found simple and memorable. I hope you enjoy this great conversation, and if you have ideas for other iconic duos we could bring on in a similar format, DM me on Twitter. Thank you so much to Rovey and Shane for kicking off Thanksgiving. week for us all. Shane, here we are. Podcast. Looking forward to it. I'm so excited. So excited. It's been a long time coming, baby. Let's do this. That's right. I can't wait. All right. We're at a bunch of topics today, but we got to start at No Stats All-Star. And for those of you that don't know, it's an article that the one and only Michael Lewis wrote about my good friend Shane. And the article's a gold mine. I would encourage everyone to

read it. But I'm going to pick a quote for us to get started. And here it is. It involves a little dis of you, Shane, but it ends up pretty strong. Here we have a basketball mystery, a player widely regarded inside the NBA, as at best a replaceable cog and a machine driven by superstars. And yet every team he has ever played on has acquired some magical ability to win. I mean, it's a pretty cool sentence. So tell us about the article. Tell us about what people typically measure in basketball and tell us what actually matters to winning. Well, it's freaking Michael Lewis. All right. So I'm not taking any grief, any crap from anybody, but since it's my I'll take that. Look, back in 2009, I got traded to the Houston Rockets, and the Rockets were

interesting because they were the first team in the mid-2000s that used analytics as an organizational philosophy and pejorative for basketball. Now, this had been happening in baseball for many, many years of Billy Bean and Theo Epstein, but no one had dared cross the analytic line in basketball until my good friends, Daryl Morey and Sam Hinky, now famed investor, Sam Hinky. That's right. Another invests like the best guest in the past. We just got to get Daryl on. He's got just so smart. They changed the way that I look at basketball. I had always been a player who made my living by doing the small things, very, very unsexy things, like running back on defense, diving for loose balls, taking charges, the plays that never ever sell any jerseys in the merch store,

but are essential for winning basketball games. And for the first time ever, using analytics, we actually were able to measure the value of all these innocuous plays that before were just deemed intangible. And wouldn't you know it that in Daryl and Sam's models and their algorithms, which was brand new to me, I popped as a tremendous player because I produced outsized value at a very reasonable cost.

All right. It was very cheap, cheap labor. And produced a lot. something we all aspire to find. We all aspire to be as high ROI as you were, Shane. Yeah, but not the person who actually is the high ROI player. Well, Michael Lewis found this very compelling. So he wanted to follow me around.

He followed me around for a year. And he sort of dove into the story of why I did what I did. And it was interesting because it's like basketball is different than baseball. In baseball, what's good for the goose is good for the gander. Okay. What I mean by that? If I wanted to maximize my incentives and my financial potential, I'm going to try to hit as many home runs as I can. I'm going to swing the fence every single time because there is a definite correlation between dollars earned and home runs. Every team's

trying to score runs. Every team's trying to put points on the board, do that but hitting home runs. In basketball, if I want to maximize my financial impact for my life, I'd shoot the ball every single time because there's a strong correlation between points per game and your paycheck every two weeks. But we all know that if I'm shooting the ball every single time in basketball, we're not winning any games, as good a shooter as I was. Michael Lewis, who I love, I love spending time with him because I love to hear how he thinks. He was trying to get me to explain why I valued all of the little plays at a level that really no one else was doing in basketball, much at the chagrin of my career.

People who did me do not think I was but an average NBA player. I wasn't very athletic. I was kind of slow. Really good looking, but most fans didn't appreciate that. And so Michael Lewis wrote this article called the Nostat All-Star, and it basically broke down the reason why every team I played on, when I was on the floor, the teams played at a championship level. And when I was off the floor, those same teams, they played at a 500 record level, barely a

playoff team. And what we found was through analytics, through the stats, there's tremendous, tremendous value in all of the little plays that with big data now, we're able to measure. And for whatever reason, I had this special skill when I was on the floor, my teammates rebounded better, even though my rebounding numbers were very, very modest, about four rebounds game when I was on the floor, my teammates shot better for some magical reason. One of the things I always found was they describe almost basketball as a math problem and the points per possession and what the difference is when you do the right thing

versus the wrong thing. Talk a little bit about some of those plays that you're mentioning and, you know, the impact on the points that ultimately matter in the game. Well, it's kind of funny. When I met Darrell and Sam in Houston, they explained analytics to me, and this is all brand new. And I was insanely curious. about their methods. I think it's the reason why I had so much success because I was so curious. They explained basketball math to me like I played blackjack in Vegas. They told me like, hey, Shane, when you go to the blackjack table in Vegas and you get dealt pocket aces, what do you do? Well, you always split them. Why? That's what the book says. Well, why does the book say that?

Well, that gives you the best chance, mathematically speaking, to have a positive, expected value on that single hand. Yep. Does that mean you're going to win that hand? No. But if you sit at that shoe, you sit at that table for hours on ends and always split aces, you're going to come out on top. Well, the same holds true for basketball.

There are certain plays in the game of basketball that if you do repeatedly what the mathematically pure decision is, over the long run, you will have success. you'll stack all these positive EV plays again and again and again. Well, what do I mean by that? I was a really good defender, and I knew that the toughest shot in the game was a two-point elbow jumper, which was 10 to 15 foot shot away from the rim. It was worth two points. On average, the average NBA player only made that shot about 42, 43 percent of the time.

In a vacuum, if I allowed a guy like Kobe Bryant to shoot that shot 100 times, all right, I expect him on average to make it about 42, 42, 42 percent. He's going to score about 80 to 85 points. Well, if I allow Kobe Bryant to get to the basket, which is the worst shot, I can allow Kobe Bryant. And what makes it great, it's like a 60 percent shot. Oh, wow. In a vacuum, if I allow Kobe Bryant to get to the basket, he's going to score 120 points.

Yeah. So the math is pretty simple. For me, I want Kobe Bryant to do the thing that will nut him 82 points and not 120 points. Yeah. So basketball for me became this one giant decision tree full of tradeoffs. And I was always trying to make the tradeoff that gave me the best chance of success and hurt my opponent to the fullest extent. And I knew over a large sample size, whether that's a game, whether that's a season series,

whether that's over a course of a career, those numbers will bear out. Yeah. And so I became so obsessed with process. I cared not about result. Kobe Bryant put big, big games on my head, and I left the game. I said, I did exactly what I wanted him to do. I just on the wrong side of variance. But over the course of my career, the number is always buried out.

And that's why a slow guy like me was able to have a 13-year championship winning career. It's awesome. I mean, the idea of in something that we watch so closely with so many people paying attention to it, that there's still places to find value. that's not obvious to everyone, and to put numbers against these plays that feel like you said, intangibles, and the fact is like, no, it's actually quite tangible.

One of my favorite examples you've given me is the fact that you didn't foul very much. The fact that the worst thing you can do is foul somebody, because even if they're a 70% free-throw shooter, that's 1.4 points on the possession, and you told me an average possession is one point. All right, so then you mentioned this obsession.

And the other thing that comes out in the article is preparation. they talk about the fact that Daryl and Sam would give you a 30-page binder of information, and you'd study it for hours before the game. And so it kind of bears the question of, do you think you prepared more than your great teammates, or do you think you prepared differently or both? Because there is this question of the role that preparation plays in doing something different than everybody else. I prepared smarter.

Look, it was a big learning curve to understand analytics, understand the tradeoffs between, okay, allowing a corner three-point shot was worth 1.2 points and allowing a three-pointer from the top of the wing, it's 1.1. So we're talking hundreds of points here, tens of points. Once I understood sort of the rubric of where all the tradeoffs were, I knew exactly where to look in a scouting report. So I can get 30 pages of scouting report. And in 10 to 15 minutes before a game, I had my routine, and I could distill all of that information and apply it. So I wasn't reinventing the wheel every single night. There were some certain no-nows that were stock.

Don't foul anybody. Don't give them a transition shot. Don't allow them an open three-point shot. Okay, across the board, any NBA player, that's where they really, really hurt you. Now you get into the nuance of, look, I knew when Kobe Bryant went to his left hand, it was a 42% shot. but when he went to his right hand, it was a 62% shot. So understanding to that granular level of advantage, it pays off. I knew that.

And so I was always voracious about left-right splits and jump shot splits. I wanted the fire hose. And I knew after much practice what was applicable and what wasn't. And I wasn't very fast, but my skill was I could think every single play. I can think every single second, and that sounds kind of stupid, but my awareness of where I was in the court, who I was guarding, what the game situation was something that came very, very natural to me. And I was able to leverage that to create huge, huge advantages when I was on the court. Nothing sounds stupid. You think about, you and I both play golf. I mean, think about when someone

tries to tell you to change something in your swing and then how hard it is to get out of your head when you're trying to change it. I think the skill of being able to put that stuff into practice right after reading it and then changing your behavior when you're in the midst of a game, that's pretty unique. You know, one thing that comes up, Shane, that, you know, I think about for investing or business or whatever, the curiosity point, that's a big deal. And then, you know, another thing that's like catnip for an investor is when you find somebody who is running a business or whatever, who's just obsessed with the details, who actually goes and spends all the time to make it second nature. So there are a lot of parallels, and it's interesting to hear it. Yeah, what don't I know?

That's terrifying to me. If I'm guarding LeBron James and Wayne Wade, the greatest players in the world, I want to know everything about them. I want to know what they had for breakfast. I never wanted to go on the floor because they're so good that I always felt if I didn't have every piece of information on them, I'm in trouble. It's not different than Sequoia. And so the Greats are voracious, voracious about information. Yeah. Vouracious about having an awareness of what do I lack in terms of knowledge and how can I correct that?

And look, I wasn't naturally talented enough to overcome that. My advantage was large amounts of data being able to process that. So give me the fire hose, baby. I love that. I think also to your point on like it being like investing or being like Sequoia, I do think there's a paranoia of, oh my gosh, if I haven't done everything that I can do, to get to the right answer or give myself the best chance of success. I mean, what am I doing?

This game is hard enough as it is. And I think that there's like a respect for it that's evidence that comes through that preparation. All right. So this is something else that's interesting. You talked a bunch, you were a role player, but you embraced that. And you embraced it because you believed it would help the team win and that was the best thing you could do.

You've also told me before that Coach K, of our shared alma mater, that you probably have a bit more of a distinct relationship with him than me as a fan. but you said that he talked about how everyone's a role player. I think that's a fascinating concept that applies outside of basketball. Talk about that. Talk about what he told you and talk about what it felt like to be a role player later given that kind of discussion from Coach K. Well, I joke that I was a modest player.

I averaged a very modest stats. But people forget, I was the national high school player of the year. Yeah. Yeah. I was the national defensive player three times, national player of the year 2001, as well as being like one of the best role players of all time. So I've seen every role.

Yeah. I've lived every role. I've weighed the towel. I've hit winning shots. I've done it all. The mentality never changes. It never changes. It's what can I do to help my team win?

And when I got to Duke in four years, our record was 131 and 15. We won a lot of games. When I retired, we were the winning this four-year period in college basketball history. We had a lot of talent. We had 10 to 13 McDonald's All-Americans, which is the highest level of high school player at any given year. And Coach Kay's message to us was, look, you guys were all great high school players. But when you come to Duke, you were all role players. Now, there's a difference.

Your role made me to go out and score 20 points and grab 10 boards. But that role is no more or no less important than being the sixth man, being called upon when we have an injury going and start. It's no more or less important than the walk-ons who have to practice and be in shape and know the scottery report better than I have to know it so that we're the most prepared team out. So if everyone plays their role, it's amazing what it's accomplished. We had a lot of star power, but there was never a star system at Duke. We all looked at each other as, look, we're Duke. And you wrote an amazing blog on your play for the – It's front of the jersey.

the front of the jersey and not the back. And I play for so many great coaches, the great Chuby Brown from the Memphis Grizzies, Hall of Famer, like a grandpa to me. He said, listen, Jack, when you win, you all ride the same train uptown. I love that. What he meant by that is like, look, when you win,

people just want what you have because you're part of a winning team. Yep. No one gives a crap about your stats or your titles. They just say, oh, man, you won? let me wear your ring. So I tell young people all the time, the way you create value for yourself is being part of winning teams, winning cultures.

And people will naturally want you on their team because they think you have some magical ability to make their teams better. It's not the other way around. It's not the Instagram world where it's me, me, me, me, me, and someone's going to recognize I'm so great and just pluck me away. No, be a part of a winning team because when you win, you take the same train. And Shane, the thing that's so interesting about that, and there's two big takeaways from me from there. One, I think the expression and the language of everyone's a role player, there's so much value in that as you think about companies, appreciating different people and getting everyone to get going and buy in.

You and I talk about buying it all the time, but that's such an important element. And this idea of everyone's a role player is just different roles that each person's playing. There's real value in that outside of basketball. And then the second thing on the winning team was you've got to sacrifice something and, you've got to sacrifice something. basketball or in sports sometimes to be on the winning team. You're going to play a different role. The crazy thing about business is if you're on a winning team, you actually make more money too. Think about it. The only way you get paid in the NBA is if you win a championship. That's how it is in my world. And so part of the thing to me when I try to get people to play for the winning team,

play for the front of the jersey, I'm like, that's the way to be selfish. And it also happens to be a hell of a lot more fun. Absolutely. You have to have a game. At some point, you have to have faith. And do I have the talent? Do I belong here? And look, for a long time, I thought I was an apostor and didn't belong until I sort of calm myself down. And wouldn't you just that point? You say, no, I belong in the game here. I can have value.

That's amazing what you can have let go of and really give yourself to the team and the journey for the championship calls. Well, this is a great segue to one of my favorite stories as well as my favorite things about you. You are obsessed with being a good teammate, obsessed with winning. I told people this before, but the first time that we had lunch together, I went to the bathroom as soon as we got sat down. And as I came back, you had picked up a napkin from the table and you were wiping my chair

because you noticed a little bit of moisture or something on the chair. And I remember thinking, I was like, that's like something my mom would do. It's just not like a behavior that happens all the time. It's not just on the basketball court. It's the most esteemed honor of being the commissioner of our fantasy football league. Shout out to the go bar and all the work you do for that. But like, where does that come from? Where does this obsession come from of being a good?

teammate of winning. Mike Moritz from Sequoia has this idea of everything that influences you and endures happens before you're 14 years old. Is that true for you? Absolutely. So blessed to have amazing parents who sacrificed everything, give me every opportunity. And so I was always super grateful for any opportunity. And not only opportunity for me, but opportunity for us. And look, Growing up in Detroit, I had a very unique childhood. My dad passed away a few years ago, Big Ed, big black guy, only black guy in town, been a white mom. So I had no role models.

There was no one like me who was mixed, no one I could talk to. My parents didn't understand. We didn't have much money. You know, I had iron on patches on my clothes and I couldn't buy Jerbo jeans. I love the shout out to Dubot. I couldn't buy Jerbo jeans either. And I remember being so envious. 1990, I mean, just not cool.

and I was like super tall. I didn't fit in with my friends because I looked like I was a foot taller than everybody else. So I was stuck out. I was poor. I looked funny in big ears. And I was mixed. And so I was an outcast. By fourth, fifth, sixth grade standards, I was an outcast.

But I realized that, look, when my teams won at recess on the basketball court on the sandlot, and I helped my friends win, they loved me and wanted me on their team. And so I became obsessed with, not what do I need to do to stick out, but what can I do to help my friends win? And it was really the seminal lesson that I carried throughout my career, that it's always, always been about the team. What are we doing? And I wouldn't have it any other way. That's so good. That insight from Moritz of the before 14 being the enduring motivation, it has never failed. And that was so cool to hear. Are you talked about Big Ed, obviously an amazing,

coach of yours. You've kind of alluded to Hughie, you've alluded to Coach K Spolstra. Most people on this podcast are never going to get to play for coaches like that. Hopefully we're fortunate enough to be around leaders who inspire us. What are some of the things that those folks did to inspire you

and to identify what mattered to you and whether that's specific to you or generalizable, what were some of the things that they did and be as specific as possible because none of us are ever going to get to play for those folks? Look, the Hall of Fame coaches I play for. Eric Spolstra, Rick Adelman, Hall of Fame, Mike Furtello, Brown, Coach Keener from Country Day,

Coach K, Big Ed. They were all amazing CEOs of their team. They all exhibited competency. I'll never forget, Mike Fertello, every time you walked into a game, there was, like, writing that was about a centimeter high on the board just filled with everything other team might do. There were no, like, if ands or butts. Like, there was no gray area on the scouting report. We knew exactly what our job was to do that night.

And we trusted him because we knew that he put the work in and it was competent. We talk about benevolence. Shuby Brown was an amazing, amazing coach. He was really hard to play for. There were days where he would swap, spit with every player and call him, you know, MF and all this stuff. But he had a rule. He said, no matter what happens today, we will always start new tomorrow, which is like a

tremendous, tremendous thing to do for a leader. Totally. He may cush you out and call your name of the book, but next morning you say, how are the dogs doing? How's your kid? He would live that. He would never carry over something the next day. And it's hard not to love a person that does what he says he's going to do. You know, all these coaches showed tremendous integrity. Coach Kay never showed up unprepared and he never showed up without enthusiasm. Sure, he had bad days, but he was always, hey, let's get better today. Let's be a team. Let's talk. Let's play to the standard of Duke basketball. And if we didn't

match his level, we heard about it. And so it was a habit that isn't granted us. We need to show up every single day. Look, when you play for great coaches like this, I was so blessed to play for hall of him coaches. And there's a belief that leaders can instill in a team. And sometimes it's like an irrational belief. But it's the difference. And it reminds me of, back in 2001. On my senior night, we were the number one team in the country, one of the favorites to win the national championship. And my senior night against University of Maryland, we lose the game.

Our starting center, Carlos Buzer, breaks his foot. And like, you would have thought that, like, we're done. And I threw a pity party that night. My teammates threw a pity party that, like, here we are national champion, favorites, and we may lose our next three games. We had to go to North Carolina for the season finale, go to Atlanta for the ACC tournament and then the NCAA tournament in a few weeks. And Coach Kay brought us to the gym.

He actually kicked us out the next morning because we're sulky. And he's like, you're not my team. This is not Duke basketball. So when you're ready to come practice, we can come back in the gym. We have the cliche team meeting. Like, I coach, we're ready to practice. We trudge out there. And everyone had written us off at this point.

No Carlos Boozer, no chance. And to a man, he goes down the line to each of us and says, Do you believe in me? And we all said yes. If you believe in me, we will win a national championship. We're all like, is he joking? But he was so convicted. He was so convicted.

It has so much confidence that at our lowest moment as a team, where we had the most self-doubt, he said, if you listen to me and execute my new plan, we will be national champions. So he had developed that trust and that integrity. So, all right, let's do it. And so great leaders were able to change more. So at that point, say, look, we're going to try to shoot 53-pointers for game. And this is kind of before the three-point revolution. This is 20 years ago, yeah, 20 years.

So he's way ahead of his time. We're going to overwhelm these teams with our speed and our three-point shooting. We're like, all right. And so we go to North Carolina. We're, I think, like, 10-point underdogs. We beat them by double digits. Go to Atlanta, win the ACC championship. Miraculously, Carlos Boozer gets healthy enough to play.

We go to Minneapolis. We actually win every game in the, NCAA tournament by 10 points, beat Arizona in the finals, and go down as one of the greatest teams of all time in college basketball. And three weeks prior to that, we had our lowest moment where we thought we may lose the next three games and just be a skid mark in the underwear of history. It's quite a visual shame. I lived it.

And the power of belief and the power of those bonds that are forged. And that's not something you wake up and say, okay, today we're going to be a team. No, those are all the habits you develop over the year, all the diversity, all the highs, the lows. When your team's in trouble, that's when you lean on it. Yeah. You don't just invent that that day. And so that's the power of coaching.

Power of coaching and the power of belief. Oh, that's so awesome. I think even the most fervent Duke hater can learn something from that. I think there's this concept of leadership of believing in the team more than they believe in themselves. And that's that. I mean, he was there. you talk about what leaders can do with a team.

One of my favorite things that I think you should be doing as a TED talk is the four types of team. You have this idea of there's trust and mission and the different quadrants. Talk about that and talk about those four different types of teams and what kinds of teams respond and what kind of teams don't. But I think describing that will be valuable for people. I've studied a lot about teams and championship dynamics. And in my opinion, the two most fundamental aspects of any team,

are trust in each other and mission focus. What's our goal? Why are we here? And every team that ever played, whether it's a corporation or organization, a board, a basketball team, this sort of phone, sort of four types of buckets. First team is characterized by low trust and low focus, low mission focus. We call that a disastrous team. That's just a bad team.

They don't trust each other. When times get tough, they give up. They say it's too hard. This is a non-starter. and if you were part of a disastrous team, you may need to find a new team. That's not true. I was part of a disastrous team when I was a rookie with the Memphis Grizzlies. I got drafted by the Memphis Grizzlies, sixth pick in the NBA draft 2001.

And I left Duke, which was the winningness program over a four-year period. And I got drafted by the Grizzlies, which had the lowest winning percentage of the four North American sports, baseball, basketball, football, hockey. Wow. Literally, I went from the penthouse to the outhouse. And I saw what a disastrous team was all about. First day of the mile run. One mile run, we had guys who couldn't even finish a mile run as preseason conditioning. In the NBA?

In the NBA. I'm in the NBA. I'm in the best shape of my life. I'm in the NBA. I got to be the best shape. And so I run like five minute a mile. I'm not very fast. That was fast.

And there were guys who could not run four laps around the track. And I said, whoa. Wow. And so I learned what a disastrous team was. was lack of trust, lack of communication, lack of focus. And we won 23 games that year, and it was a disaster. The next type of team is called a lagging team. And a lagging team is characterized by a team that actually has high trust and they like each other, but low mission focus. And on paper, this is great. There's no drama. There's no clicks. Like, everyone kind of gets along, but it's not really a drive.

And that was sort of the next chapter for my Memphis Grizzly team that we actually sort of got rid of the bad eggs. But we didn't have guys who understood how to win. So we liked each other. And an interesting phenomenon that happens in lagging teams is rate busting. But the negative connotation. So if Larry is on the assembly line, Larry's a very subpar riveter. But Larry, great softball player. We love his kids.

He's clean up on the softball team. He's a good time. but he is a inefficient worker. What actually happens is people who work on his line will slow their rate to protect Larry because they trust him and like him so much. As a manager, that's a losing team in the long time. Now, the opposite of that team is what's called the Brittle team,

like Peanut Bruttle. These teams are characterized by high mission focus but low trust. And on paper, again, this is awesome. I got a bunch of absolute killers who just want to create Ibada, and just lay waste in the competition, and I'm going to go get it. But the problem is, when stress is introduced to the system, you know, in the form of a recession or a competitor, teams that lack trust fall apart.

They're brittle because all of a sudden everyone will start trying to go Kobe and solve the problem themselves. And again, in any group, the strength of your team is always together, of the solo effort. Well, that leads us to what does a championship team look like? Before you get there, I think a lot of investment firms end up falling victim to either the lagging team or the brittle team. They all like each other, but they're not focused on performance or they're all focused on performance, but they hate each other when the times get tough. And I think that there's real failure modes in both those. And that's true for a ton of companies.

Yeah. So what does a championship team look like? I call them coherent teams or gel teams. How do you know you're part of a gel team? Jelled teams have a shared accountability. Whether the results are good, bad, and different, they know that this outcome was a result of process and protocols that we all contributed to. So we can accept the consequences, good, bad, and different.

There is a shared cognition. Jelled teams just sort of know what each other need. They don't look at feedback as I'm being attacked, get off my back, bro. They look at feedback as like, my teammate's trying to help me and he's trying to help us reach our goal. It was a shared resilience. Teams that often face adversity actually get better. They invite adversity. They're anti-fragile.

And they look at the market and say, no, we're ready for this. We're prepared. And our competitions fall in apart because they're brittle, we're lagging. We're better. There's a shared enjoyment. You just love coming to the office. You love being part of this group, a shared eliteness, a shared. a shared identity, you know, and I play for the Miami Heat.

You know, we go out and we play a game in Charlotte on a Tuesday night and we say, look, guys, we got bigger goals than the Hornets. They just want to play off the season. We want to be immortal. Our goals are different. And there's low turnover to gel teams. Those are the thought that like, you'd be crazy to leave this team, this organization. Because who has it better than us?

Nobody. Yeah, nobody. Yeah. That's the goal of every leader, every group. Every department, you want your team to have accountability and resilience and cognition and a sense of identity and low turnover. And you got that. Hold on to that, baby.

That's money right there. I love that so much. And I think anyone who hears about the coherence or the gel team, they want to be all in. And if they're on one, they're thanking their lucky stars and they're not on one. What can you do to move? Let's just leave the disastrous team out. But what do you do? If you're on a brittle team, so you got the people, they got the mission orientation, but they don't trust each other.

How do you go from one of the other quadrants into the gelled team? And what role does coaching or leaders play? Because, like, is it the players that make that happen or the teammates? Or is it the coach or is it everybody? It can happen two ways. It can happen from top down and from the bottom up. When I play for the Memphis Grizzlies, it was both. But, like, I'm super proud that we took that team that was the worst team in North America.

And three years later, we made the playoffs. How did we do that? Well, it started with just identifying a few people who cared, who had high trust, and who had a high mission focus. And you know what? Those people for me was my good friend, Paul Gasol and I who cared and wanted to be part of a winner. And I was a Hall of Famer. And we started doing the right things. We started staying late. We started to support our teammates. We didn't make excuses. We didn't throw people under the bus in the media. And it's funny. Like people who were sort of on the fence and maybe not leave. leaders. Guess what? Their behavior started to skew towards being part of a gel team. Yeah. You could see the behaviors and the habits just changed. It didn't happen overnight with the repetition and positivity. We started to win a few more games and we said, you know, we got something here. We got something here. And all of a sudden, in the locker room, the malcontents, they were so obvious. They were so obvious who was holding us back. They kind of self-select and they weed themselves out. And they became so apparent that like, these guys are not with us.

get them out of here. And the pure pressure of a group is so strong. It can turn people bad. It could also really positively impact a team. And so from the bottom up, creating that positive social peer pressure and expectation that this is what we're about. When we come to the office, this is why we try to win championships. And obviously, it's the job of the leadership from top down to reinforce that every single day. every single day. Coach K, every single day, we knew what it meant to play for Duke basketball.

There was not a day we said, man, I wonder what our standards are. Our standards are, we communicate more than everybody else. We look at each other in the eye and we're talking and we don't lie to each other. Those are the three standards of Duke basketball that we talked about every single day. And it's exhausting for a leader. But the great ones do it. Man, there's so much in there. I think that the positive peer pressure, the B-PERS, the B-PERS, part of the we, the self-selection, the everydayness of the everyday grind that comes from leadership, but then the possibilities that come from that. And then the other thing you mentioned that you and I, I think, share a lot of love for is this concept of anti-fragility. And just for everyone,

Shane does live this where he extends it outside of everything. It's in the friendship. I mean, when Amazon bought Whole Foods in 2017 is now five and a half years ago, I called Shane. I said, man, this is a big one. What are we going to do? You know, I was trying to make sure we were there and we could make something work. And Shane sent me an email I still treasure to this day. And I'll read you guys, there's this paragraph that it closes with. It's something that's always meant a lot to me.

But it ends with you have a chance to become anti-fragile. You remember sending this, Shane? I do. How lucky you are. You get better with chaos and adversity. Staying with your plan, keeping the troops morale high, reinvention, but strengthening your pillars and foundation. You'll come through the other side galvanized.

We'll look back and say, yeah, No shit, of course. Ravi had everything under control. He's a boss. But we'll laugh because you're just doing what you're there to do. And then we'll go to Napa and drink the really expensive shit. The concepts of that coherent team and gel team, that's one of my favorite things to aspire to and to be proud of when you're part of one.

Yeah. The line is thin, my brother. The line is thin. And winners read the history books. Champions write the history books. But in any championship journey, there's always that line where you're like, Oh shit, we may not make it. In 2012, I go join the Miami Heat.

I'm playing with LeBron, B. Wade, Chris Bosch. We won two championships. And people are like, yeah, of course. It was inevitable. Yeah. People forget we were down three to two to the Boston Celtics, playing game six in Boston in the Eastern Conference Finals. There are articles written that morning saying,

when the heat lose tonight to Boston, who is the first player to get shipped out? So we all know this. We know it. Like, if we lose this game, they're blowing up this team. We all have new addresses next year. The grand experiment, the big three, it failed. So we're talking, like, major mud on all of our resumes. And there's no, like, big rah, raw, speech.

But lucky when you got a guy named LeBron James, pretty good. I don't know if you've heard. LeBron goes out. And he was like, he looked possessed. He looked possessed. Because he knew his entire legacy was based on that single game. Yeah. And so that was how thin the line was.

He goes outskirts 45, grabs 15 and six assists, a couple blocks. Dung San Jason Terry almost kills him. Like a historic, historic performance given the most pressure he's ever had his entire life. We won, beat Boston Game 7, go on to win the NBA championship, and people don't realize how small that line was, how thin that line was between ubiquity and immortality. Now we can laugh by it and say, yeah, it was inevitable. Well, it wasn't inevitable at that point. That is what you appreciate. You appreciate going to the edge and questioning everything and say, no, no, no.

The process has been pure. It's been right. We're about the right things. We just need to continue to do what we do. Code K said, you don't need to reinvent yourself in championship games, but you do have to be the best version of yourself. That's how you get through adversity. You don't need to reinvent and start going yolo and changing what you do,

but you need to be the best version of yourself. version of who you are in the toughest times. That was true. Thank you, LeBron. I love you. Well, let's talk about that same thing. You talk about the team, and I know you're not going to want to do this, but talk about yourself, that same journey of the thin line between the championship and irrelevance, because that happened. That happened for you in that playoff series against the Spurs. That happened in that entire playoffs. And I think it's a good microcosm. Yeah, well, I have also lived it personally. In 2013, I was the starting power. forward for the Miami Heat, all 215 pounds in me. And so every night I guard guys 30, 40,

50, 60 pounds heavier than me. They just beat the hell out of me. Well, I could do one thing. I could shoot that rock. And so I shot a career best 43% from the three point line that year. Going in the playoffs, we're the favorites, feeling good, making threes, but I'm exhausted. And something happens. I go through the worst slump my entire career. Can't hit a shot. And I'm embarrassed. I feel I'm letting the team down. And I'm getting beat up. I'm just like trying everything come out of this rut to a point where I'm four for 30 from the three point line.

They're writing articles about me in Miami, their Twitter's talking about me. So before game seven of the Eastern Conference finals against our rivals, Indiana Pacers, I go to Eric Spolsor, our coach, and say, coach, like, I know I've been horrible. This is what I'm built for. Game seven. You put me in that game, I'm going to do something. And Coach Spowe says, yes, Shane. Well, I go to the gym that night.

I don't play in the first quarter. Half time rolls around, no playing time. Third quarter, still have all my warm-up stuff on. Fourth quarter, we're up 40 points going the last four minutes of the game. It's apparent. We're going to beat the Pacers, go back, play the Spurs in the championship. Who is the only player not to get in the game? Me.

It was the first time on any level from YMCA ball to the NBA, I had the words DNPCD, did not play coach's decision. first time a coach said to me without saying to me, Shane, our best chance of winning does not involve you one second on the court. And so I'm crushed. So we're going back to the finals, but I'm thinking to myself, is this it? Am I done? Am I washed?

I've had a heck of a run here. Is this how my career ends? So I had a pity party that night, the next morning I said, you know what, that's not who I am. If I'm not playing, I'm going to be the most prepared, the most enthusiastic. I'm going to help my teammates prepare. And if I get my chance, I'm going to produce. So I don't play for the first half of the series. Game five I get in the game, bank in a three.

You know, I get the Bronx cheer from the crowd. Game six, I make a couple threes. Well, here we are, game seven of the NBA finals in Miami, something every kid dreams about. So I don't need to make a speech this time, but if I get in, I'm letting a flat. It's going up and start the game five for five from the three point line. And the game, NBA finals, game seven record,

six for eight from the three point line, score 18 points, and we win the championship. And when the clock hit zero, it was unexpected to say it at least. I wasn't even expecting that sort of performance. But when the clock hit zero, I finally understood what the entire journey was from Little League playing for Big Ed, when I was a kindergartner, to the NBA finals, the work, the sacrifice, the process, the failure, the success. It all led me to that moment.

And I was ready to capitalize because it wasn't about me. It was about, again, what I need to do for my team. And that's the most proud I've ever been of an individual performance in my entire career because it came at the most stressful time with the most on the line. It was about us. It was never about me. And you and the team, you went to the edge. You know, you went to the edge and then it was sweeter because of that.

And I think that that's true for companies, too. I mean, you got to taste the, oh, my gosh, this thing might not work. And I might be failing in order to come through on the other side and feel like you earned it. And that's the happiness that comes from that. Well, this is interesting, Shane. One thing, businesses don't have these trophy moments the same way that athletics does. You have a championship. This is what we're going to.

You know, in business or in investing, if you don't have those same kind of trophy moments necessarily, how do you motivate, how do you get everyone around a shared mission when the mission is not quite as obvious and year by year? How do you do that? How have you seen great leaders do that? What have you observed? I know you spent a lot of time with companies. What works? Kuby Brown did something really genius for a team that was trying to learn to win.

And this is the Memphis Grizzlies. He came in and totally changed the culture. And when you play in the NBA, you play 82 games a year. And that's a lot of games. It's tough to stand in game one and say, I want to win 50 games this year. It's just, the season is so long, it's such a grind. You can't even like wrap your head around it. So he did something very, very simple for a team learning to win.

He said, look, we're going to break up our entire season into sets of three home games and three road games. That's all we're going to worry about. And our goal is to win two out of three home games and one out of three road games. We do that. We will be 500 at the end of the year, win 41 games. We'll be close to the playoffs. And it sounds so simple, but that's all we focused on.

If we won two games, we would say, we have a chance to get a plus game, guys. There are these little, like, micro goals that we had for a young team that was learning to win, which in retrospect was an amazing part of a stretch goal. For people trying to figure it out, you do have to make a bite-sized and you have to celebrate the process. And it can't be so grandiose that people can't get their arms around it. I learned that from Hubey. And that was a big reason why two years after implementing that system,

we won 50 games a couple of times mid-playoffs and totally changed the culture. Oh, that's cool. I like that. One of my favorite statements in business is this idea that I heard from someone which is you got to translate your mission into your metrics. But what you're talking about is input metrics, not just output metrics, not just about the 50 wins, not just about the championship. It's just like, let's go do the right stuff.

It'll show up. And if we do that consistently, it'll show up in the output metric. So just let's go and take the big problem and turn it into some smaller ones. When you think about, again, take it from basketball to business, you mentioned your no stats all-star. That was a great descriptor that Michael Lewis gave me. How do you find those people in a company? what are the characteristics?

And if you're a leader or somebody listening to this, or if you are somebody who is that, what are the characteristics that make somebody that outside of athletics? From a leadership standpoint, you have to be obsessed with your people. That's your job. Coach Kay was so obsessed with his people to the point where like, he never saw me play in the NBA,

not one game live. He was so focused on his own guys. Like, no one would ever call him during the season because all he would talk about is his own team. He was so obsessed about what his people needed and what he needed to give his people. When I was a junior, Duke had just lost players to the NBA draft for the first time ever. All right, my roommate Elton Brand, William Avery, Trajan Langdon graduated, Corey McGettie left for the draft.

All that was left was some really talented freshman named Carlos Boozer, Jay Williams, Mike Dunleby, and three holdovers, Chris Carrow, Nate James, and Shane Badiate. And people were like, Badiye. You're like, Badiye is going to replace Elton Brand, the first pick in the draft? I probably had my doubts too. And so Coach K knew this. And so I was interning at a public relations firm in Chicago and he called me one day and said, hey, Shane, like, how are you?

Doing great. I have a question. Did you wake up thinking about being the ACC player of the year next year? And I sort of laugh. Come on. Coach, quick! Coach Kay hung up on me. It's kind of weird.

So he calls back the next day about the same time. I said, sorry about that, Shane. I got a serious question. Did you go to work today? and say to yourself, I'm going to be a first-team All-American and get us back to the Final Four. I sort of laugh. Go, Coach, click. You know, I'm going to come up on me again.

And the third day he calls back. I finally wised up and he said, oh, sorry about the shame. I got a very serious question, you know, at lunchtime a day. Did you think about being the national player of the year going back to the Final Four and finishing the job this year and winning the championship? And I said, Coach, absolutely, I'm your guy. You can count on me. And he said, look, son, we can't be that.

team unless you were that guy. And you cannot be that guy until you believe you are that guy. And so that only comes with having intimate knowledge of your personnel, your people understanding. Like, I had some insecurities and that's the pep talk that I needed. Look, when you're trying to identify these positive energizers in any organization, there was a study actually a Butler School of Business study that I inspired. Who are catalysts within organizations? So they did a wide study across a multitude of industries and professions, and they found catalysts who were like me who maybe go overlooked and undervalued, but they share a lot of traits that actually are an amazing engine to any group structure, any corporate structure.

And the shared traits of humility, selflessness, a desire to see teammates or others do better self-starters, people who listen well, people who laugh at themselves, people who ask pertinent questions, people who are present, people who are just ready. In other words, all of these attributes, they're not like God-given. You didn't learn this at Duke University or Stanford Business School. These are all traits that you control. You control humility. You control yourself You control your work ethic. And the people that control those to the 95th of 100 percentile, those are the people that are adding tremendous, tremendous value to your group and your organization. And it's your job as a leader to identify those people.

Don't look at the resume. Don't look at the hard skills. You have to look at the soft skills of attributes and traits that people develop because they want to develop them. You know, it's fascinating because that's true in so many walks of life. I think about that. We probably try to tell our kids that. You've got to focus on what you can control. You decide your level of aggressiveness. You decide your level of enthusiasm. You decide how good you are to your teammates. And I think that the other thing that you mentioned a bunch is just sort of the everyday nature of leadership, which is that you have to know your team well enough to know what to say.

That's not the can speech that Coach Kay gave you, right? It's a speech that was relevant for you. And then this is interesting as I think about founders. It's not the resume that does it. It is truly a bunch of these other things. And a lot of it, Shane, is like you and I have talked about, it's whether other people will want to come with them because you can't build it by yourself and whether people are going to want to come with them on that journey for a long time. And so it's amazing the level of applicability of some of this inside and outside of it. And people have a pretty good bullshit detector. Yeah. For the most part. You know, there's always few that slipped to the cracks.

People may not always have the answers of the correct way to go down the path, but they often know, this ain't the way, homie. The antenna goes up. So, again, to be pure of spirit, pure of the journey, pure of team, it comes out. And people will appreciate that and follow you. I love that. Well, look, this thing could go on forever like some of our Zooms do. But we probably need to wrap.

So let me wrap with, this has been an unbelievable conversation. Let me wrap with Patrick's signature question, which is, what is the kindest thing that anyone has ever done for you? Well, this is easy. It's the sacrifice my parents made for me to have every opportunity. My parents were not college-educated people. They didn't know anything about investing. They didn't know anything about getting a master's degree or doctor degree.

But they knew enough to surround me with books and people. that had much more success in terms of professional success that they couldn't provide me. They sacrificed a ton to give me Detroit Country Day. They scrounge together with every last dollar to make sure they could pay for an education and just a chance. And I saw what it meant to go to a fantastic school like Duke and have success and have aspirations and dreams to change the world. And they sacrificed everything for me to have that opportunity.

Man, they drove me around to every single basketball. football practice and an AAU tournament in the country. This is before their phone. So they just sat there and watched me practice. I look at that now and I can never, ever, ever repay my parents for what they sacrificed in the kindest way possible so I could live my dream. Shane, thank you. Thank you for doing this.

Thank you for your friendship. It's something I'm eternally grateful for. I had a great time doing this with you. Ravi, always surround yourself with people that are smarter than you, more compassionate than you. and you're that guy for me. I love you. I love you too, buddy. If you enjoy this episode, check out join colossus.com.

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