The Pomp Podcast - 309: Daryl Morey On Using Data To Make Decisions

Episode Date: June 5, 2020

Daryl Morey is the general manager of the Houston Rockets of the NBA. He is a strong proponent of analytical methods, having created the true shooting percentage statistic, and co-founded the annual MIT Sloan Sports Analytics Conference. In this conversation, we discuss the latest NBA update, how the Rockets use advanced analytics to make decisions, why Daryl spends so much time supporting civil liberties, what he thinks of SpaceX, and why he has been a proponent of Bitcoin since 2011. ===============================  Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at pompletter.com

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Daryl Morey is the general manager of the Houston Rockets in the National Basketball Association. He's a strong proponent of analytical methods, having created the True Shooting Percentage Statistic and co-founded the annual MIT Sloan Sports Analytics Conference. In this conversation, we discussed the latest NBA update, how the Rockets use advanced analytics to make decisions, why Daryl spends so much time supporting civil liberties, what he thinks of SpaceX and other technologies, and why he has been a proponent of Bitcoin since 2011. I really enjoyed this

conversation with Daryl, and I hope you do as well. Don't forget that I write a daily letter to over 50,000 investors about business technology and finance. I break down complex topics into easy to understand language while sharing opinions on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com or go into the description of this episode and you can click on the link there. All right, let's get into this episode with Daryl. I hope you guys like this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion

expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Daryl here. Thanks for doing this, sir. Thanks for having me on. I appreciate it. For sure. For the very few people listening who don't know who you are, Maybe let's just start with your background and how do you get to be the general manager of the Houston Rockets? I'll tell the quick, least boring version. Probably the easiest way to think about it is I worked in baseball for a bunch of years at a company called Stats Inc.

Where if people have seen the movie Moneyball, he and John DeJuan and some others founded Stats Inc. And I worked there and I worked in baseball because that's where the data was. So I always loved using data to get an edge, either with my friends gambling or playing Stratomatic baseball. And so that's how I got my start. I played basketball. I wasn't very good, but I played basketball in high school. And when the money ball revolution came, I got fortunate to get a job with the Celtics

initially, working with Danny Ainge. And then the prior owner of the Rockets wanted to make a change. the GM was retiring wanted to go and sort of a data money ball direction and I got my shot down here in Houston and in 06 and I've been doing it ever since which uh somehow I've made it this far so 14 years means you got to be doing something right uh we haven't had a losing season now of course we haven't won the title but uh unfortunately they don't give you a trophy for no losing seasons or someone just did the Vegas odds for the team that had the highest odds to win the title but didn't.

Of course, that's us too. But, you know, sadly, maybe this year. I think we're the fourth highest odds going in this year. Got it. And maybe just give us an update on the NBA and kind of like what's the plan as of right now. We'll caveat the whole thing with it could change, it feels like, at any moment. But just kind of what's the plan to finish the season?

Yeah, I can't say too much publicly until it's been officially announced, but I think people are seeing the news, and we're all excited for the restart. It does look likely that that will happen, and I think the plan is as good as it can be, given all the constraints that have been thrown at the teams and the league office and the players. But we should be playing games in not too long, and like I mentioned, they put enough of the plan out

that vegas has made odds on it so that you know fourth best odds i wish it was first but uh you know you want to go in with a healthy chance to win and we we have that yeah that's awesome how much does this uh does the data play into decisions in these environments right so like everyone for the most part has an understanding that look there's data being uh or data is driving a lot of the decision making in a regular season now you kind of have this like outside force that has completely changed what a season looks like uh players kind of being in the um you know rhythm of the season all of these out existential factors like how do you think about data playing into that yeah so first off all those outside factors if you're not one of the favorites they generally

going to favor you they just add more variance so that's a good thing for us uh in terms of like on the restart uh you know the eight games are going to be not too material um you know if going into the playoffs uh the playoffs then are going to be similar there it looks like it's going to likely be seven game series uh like like normal and so it's really going to be who you match up with in what order and winning those series and yeah the the data involved with a playoff series is a huge order it's like two orders of magnitude bigger than you'd do on a regular season game we're not like football where you have a week between games we generally have a tight window and things change with players being in and out so you can't overly prepare for each regular

season game and they have less meaning than each NFL game but the playoff games are different the amount of data and analysis broken down to a very minute level is massive for a playoff series and then the adjustments between games become pretty significant in the playoffs as well and actually one of the big things in the playoffs is how to not over adjust between games because what happens is every time someone's going to lose and they're always blaming issue x or y that they lost in the last game but you could have still had the right plan to win a war you just didn't you know it still could have been right to double down on 11 right you just got at three and you know the dealer had 20 so you're you're done but um so a lot of times it's try not

to over adjust in a playoff series yeah and for those that have seen money ball obviously they're you know billy bean and uh and the other characters are literally calculating this stuff with like hand calculators and pieces of paper uh i'm assuming you guys aren't doing that maybe kind of help us understand how much technology and and what we would consider more cutting-edge analytics is going into the crunching of all those data points versus what's you know shown in a movie like that that's based years ago yeah not a lot of calculators i mean except the cpu which does a billion of those a second but uh yeah you'd be i think people would be surprised just how how advanced it is at least at the analysis level the decision making level

tends to sometimes be uh you know caught up in the vagaries of human decision making but i would say the analysis level 25 times a second both prior to the playoffs and in the playoffs you get the position of the players in three dimensions the ball in three dimensions even the refs in three dimensions uh and you can imagine that firehose of data that all gets flowed into analyzing you know what plays you pick what shots you take how you run your defense all that and you know literally the job of myself and our group and the coach and even the players ultimately on the floor is how do you boil that data down into something that's going to make the biggest material difference and often just like anything in life that ends up being just a few

two or three key things and a lot of what you're doing with data is being able to discard things that aren't going to be material and ignore the things that are just noise and keep it only the signal yeah and the data collection obviously is probably one of the big inflection points for you guys being able to do this is that um hardware and technology that's integrated into every stadium and both teams get that or is it on a stadium by stadium basis or do you guys travel with equipment like how does that work yeah you're making a big good point and that you don't really get an edge unless you have differential data i mean you have better analysis but differential data is the best uh we used to at a time have differential data where we had some of that overhead data other

teams did and that was a huge edge the nba right or wrong and and you could easily argue right uh has given that technology to every team so every team has similar data you know we still have some proprietary data sets some other teams i'm sure do as well but that marginal edge from better data has not changed. It really is down to, you know, how do you best analyze that data and then flow it from analysis to coaching to players to hopefully winning on the floor. For sure. And then maybe let's just talk about the various, you know, stakeholders here and how they use the data. So the players themselves, I'm assuming they watch film, right? And then they're kind of aware of what i would consider um you know that type of data how much are they

digging into actual analytics and understanding you know on this spot on the floor this person shoots this percentage and i've got to push them here uh to a different spot on the floor um do they get kind of uh that level of granularity or is it more of they're aware of more you know higher level trends and don't worry so much about the actual analytics it's a spectrum so on one extreme you can read michael lewis's article on shane badia he's still to this day is he wanted the most information and he was able to read it all process that he was truly like a coach on the floor and analyzing data at that level and executing at that level to be fair to most players that's not even actually optimal with most players the game is a little bit closer to people who i don't

really golf but i've golfed so i get this i've had to take golf lessons it's a frustrating game when you're first starting when you're first starting you're given like a hundred instructions on where to put your elbow and shift your weight and everything and if you go up there thinking about thinking about all the um sorry i'm gonna kill that if you go up there thinking about all the things you need to think about to hit that golf shot you're gonna you're not gonna do very well like uh you need to on the actual time to actually hit the ball and play you need to you need to think about um only you know getting into flow right and most players are like that so so i would say most of our players we try to put them in the situation where they can succeed

and where they don't have to be conscious of all this data behind it the right plays the right strip sets the right structures then we also have a very veteran smart team that sort of gets how everything works um and then um you know and then on top of that we select players that already are playing in a way that uh works with coach d'antoni and how he wants to play so we sort of make it happen that way versus fire hosing the players with the information that is generally the way we do it got it and i'm assuming a lot of that uh maybe filter mechanism is at the coaching level where they're the ones calling the plays and trying to put people in position so they're probably much more uh aware of what the analytics are telling them yeah they're

always aware of whatever they need and they ask a lot of questions which you know where you can do custom looks at you know if i do this against that team how has it worked in the past um and then the coaches will narrow it down and then they know that like you've got to boil it down into the two or three to four most important things for each player and at the team level for the players to make sure we're doing the important things and executing very well. Yeah. And then I asked people for questions beforehand. And one of the questions I thought was really interesting was at the GM level, you obviously are well known for using a lot of this data and kind of seeking it out. How do you use it specifically around like contract negotiations,

right? So everyone knows that, okay, hey, look, it's great to go get the players that best fit your system. And you can use analytics to kind of pick who you want. The next step is really just how do you actually pay these players and what kind of analytics goes into that in that contract negotiation? Well, yeah. And I think as people sell with money ball, that is the job. You basically have a budget set by the collective bargaining agreement of what you can spend on players. And your job is to shove as many good players as possible into that bucket

and win the championship. And you have to be better than all 30. So you got to take, you got, you got to take risks. And obviously the rubber meets the road there, like in money ball, you've got to find players that you know are going to improve greatly so that their contract they're probably worth more than their contract and players obviously understandably would like to make what they're worth or something close to it or even more than what they're worth and so that that is the the core challenge and yeah for sure we do a lot of analysis to find these undervalued players right um and what's what would surprise a lot of people but

anyone who's like into a deal like anyone who does is like an m&a guy or deal guy or even a even a real estate broker right um the data underpins everything but what sets the market is really supply and demand so you don't really have a market until you've got you know probably two people on each side uh you know either buying or selling or negotiating a deal that have multi you gotta have multiple multi-party interests um and yeah even though the fundamentals underpin it the actual amount you end up paying a player comes down to like yeah i want a i want a three and d wing this year there's seven teams looking for one and only two good ones so no matter what you think that guy's worth his price is probably going to get driven up um just like uh you know

just like if you buy you know if you uh you know if you buy a house and you do all the comparables it doesn't matter when 10 people show up and are all bidding right so so you have to be willing to dynamically adjust in the moment and you have to keep those fundamentals in mind but if you only are driven off what the spreadsheet tells you or whatever you're not going to end up actually get into an optimal answer and when you're negotiating with uh i'm assuming usually it's the agents right um are you using the data like are you actually saying hey uh here's the analysis that we've done and this is why we're anchoring on a price or is that too in the weeds for the actual negotiation itself yeah that doesn't come up too often right because again on both sides most

players have a very experienced agent and most of the gms are pretty experienced so So, you know, sometimes agents will give you a big book of what they think a guy's worth, but it's irrelevant. It would be as irrelevant if I gave them a book of our analysis, right? At the end of the day, do they have two or more people interested in their services or not? If it's just one, you know, then they're probably in a not a great situation. If it's multiple, then they've got the teams in a better situation. You know, as you know, it always comes down to supply and demand. And it's not really about the analysis going in.

The analysis sets like maybe your own limits and when you walk away for both sides, but it doesn't really drive the negotiation. Yeah. Another question that we got from people was with James Harden. They were like, look, he's this mega global superstar, but he's also pretty reserved in a lot of ways that other stars aren't. Anything that you can kind of share just about like what he's like as a person kind of off the court and and your um interactions with him that would maybe shed a light more on uh outside

the superstar um kind of fandom that people have for him yeah i think this is why he gets a little bit i don't think the media is super fair with him but you know people say that all the time so you can take that for what it is but i really don't and but i think part of it is he he has a tight circle of people that uh that he trusts uh and with those people who he knows have his best interests at heart and he's had a uh and he's had a history with um they um you know he's very gregarious very open very smart like just this great guy and with everyone else he's not the opposite he's just he's just reserved he's not he's not a you know someone who you know is going to be a big media guy or things like that. So I think that hurts him a little bit. But I can

yeah, I can tell you privately, he's like a basketball genius. He's a great quality human being. And, you know, we've worked together for eight or nine years now, and I couldn't have a better partner to try and win a title with. And in fact, most days I wake up saying I've let him down because I haven't gotten him got him the right players to win a title. I love that. When you do win a title any uh any idea what you will do the next day well i'm pretty sure just so i know myself i'm probably not gonna enjoy it as much as i should i'll probably just be because actually the nba schedule and anyone who's won knows this because i know it because you get like three days before the draft generally after you win so yeah you're probably not gonna enjoy it

until maybe 10 years later when you're on your porch and you're finally fired or whatever you've You're tired, and you're sipping the cognac or something. But I think at the time, I'll just not appreciate it like I should because it is very difficult. Very few teams have done it. We have the most concentrated titles. It's the hardest to win a title in the NBA. There's less variance.

The favorites have a much bigger edge because, you know, it's a funny thing. On an individual game basis, an NBA game is generally the most predictable of all the major sports mlb nfl whatever and just to make sure the right team wins we play seven times like we should be one and done and the nfl should play seven times for example if you wanted to try and balance out uh the the general variance and we in my opinion we should have shorter series so there's more variance injected because right now it's it's too deterministic you know it's why you'll see teams win six times and in eight years or three times in five years you know that's happened many times and or or in pairs like miami did it's it's rarely you just win one because

once you get a systemic edge which has happened many times it's usually you have the best player in the league um you you end up uh you end up winning multiple times yeah um obviously the world is chaotic. That's part of the reason why the NBA is not playing right now. You have an owner that has this amazing business that just happens to be in a sector that's been hit the hardest around hospitality, all of that. How has that been just as an organization, knowing that the owner of the team's got other things going on and has to deal with trying to take care of thousands of other employees outside of your organization? What's that been like? Yeah, so at a high level, it's been very positive in that he has these businesses that are visible and really, you know, helpful to be able to talk about and things like free agency, like he owns car dealerships, he owns casinos that are top casinos, he owns top food restaurants, you know, some of the ones that are the most prestigious ones in their cities.

So those kinds of things helped me in my job in terms of selling free agents. So as usual, I, you know, I focus on what, what helps me in terms of like how he's been impacted. It's obviously been material and he's had his own comments on that, but, but I never feel it to his credit, you know, he's come in and, you know, his history is like, look, I'm going to be successful no matter what I do. And often that means having to change out leadership and things like that. uh he did a lot of research coming in and that research again as far as i know it sure seems

like a given he could have made a change he kept myself he kept ted brown the ceo he kept all our key people because we've had such a great track record and i've always appreciated that so he he's only made my job easier and in terms of the issues that he's faced which i know are material he that we've been shielded from that and that, you know, he's been very busy on all those things, but he's let us sort of run things throughout this whole time. Yeah, that's awesome. And, you know, son of a great leader, right, who can kind of shield people if they don't need to be impacted by it. Maybe kind of share thoughts on just like the world is different right now. And obviously, there's everything from the coronavirus to the economic crisis to now the the protest around

police brutality kind of how do you outside of your day job just think about you know what the world's going through or we're experiencing right now yeah I always think about the fact that I have a real platform and and and so do players and so do our coaches and and how to use that one thing that really hit me yesterday actually was you know one of my main jobs is to be able to take data information news process it and make good decisions and honestly i've even had trouble processing all the world news uh it's been and and it just shows the challenge that you know everyone that it shows the challenge that everyone is probably facing right now how to get your bearings on all these very important things that are that are happening that are happening at once

And so I think if if, you know, if our players and myself and others are having issues, then I think, you know, everyone's having issues. And in terms of using the platform, I've always used it very heavily from a civil liberties perspective. I think one of the reasons I'm on this is because I I'm I believe in, you know, people to be able to lead the life they want to live. and i mentioned earlier why i like houston uh it's a big reason i love bitcoin it's a big reason i have been big on free speech and freedom of assembly and voting rights and all the things i've done with the aclu um and to make sure that the you know you can never have um fairness of outcomes but you can have you can try to get to as fair fairness of people to uh be who they want be right and clearly that's never going to be fair but you can try to create systems and structures

and paths for people to make it as fair as you can and i think free speech is big on that is is big for that uh and i think you know even freedom of money which which uh maybe we'll get into and um and and obviously i mean voting like just to call out houston and i've talked to the so you heavily we might have the worst just to give houston some negative props we have the worst voting machines in the country as far as i can tell um they were put in a while ago you go into the voting booth i'm not kidding anthony you vote you it's a computerized thing you vote and it says congrats you voted and then it's like it that's it you don't get anything you don't get there's no receipt there's no like certified you know what you voted for you you could have hit the

wrong buttons you wouldn't even know right you don't know how it's recorded they're super hackable so i was a computer science major so i'm really uh obviously uh someone who has a lot of interest in technology that was where i came from prior to basketball and these are super hackable machines and so you know i've given a lot of money to the aclu to help fix those machines but it takes political action so that was probably too long of an answer to your your original questions no look you and i have talked you know obviously a lot about the investing stuff uh previously but but i think part of um what's so interesting is uh a lot of the protests obviously are happening under the um um kind of the the message of anti-police brutality right but what we're seeing is actually

the uh exposure towards a lot of the civil liberty stuff that you're talking about right in terms of free speech in terms of the freedom of assembly. And in the world that we live in today with social media platforms and kind of access to information, we get to see maybe it's not as, you know, kind of open and free and democratic as we like to think of ourselves, right? Yeah, absolutely. And I thought our rocket statement was really good. And it ended with, you know, Martin Luther King's quote, which I think is maybe one of the best ever, which isn't justice anywhere is a threat to justice everywhere. And, you know, if you're going to have justice, you got to have voting systems, you got to have court systems, you got to have freedom of speech, you got to freedom of

press has been a real issue in the last few days. And, and so although like people take a lot of infrastructure for granted, and we do more or less have it in the United States, but that infrastructure is critical if you're going to try and create a way for people to flourish in the United States and around the world. Yeah. And obviously for you, it's a little bit of a weird situation, right? In the sense of you can speak for Daryl, you can speak for the Rockets, and then there's the NBA stuff. And obviously there was the tweet that you had and kind of all of the the chaos i think around that how did that experience change the way you think now about when you speak out on things especially in the united states and and you know you donate money

which is to me always like that's the ultimate act of support right it's like i think actually to be fair i've thought about that a lot because i don't have a lot of money i'm very lucky to have it i mean like not obviously i actually think the ultimate act is donating your time and that's incredibly hard for certain people but I would put donating your time one and then money two just me personally as I've thought about it so fair so donate time then money and then kind of all the talk comes after that yeah and I guess just the experience with um the the original tweet around Hong Kong and all that like how has that changed the way that you think about um voicing you know the the things that you care about really yeah I mean in terms of like the

issues i care about those haven't changed and uh you know i do know lots of people around the world haven't graduated from mit where like 40 of my class is is overseas and and and in a lot of key places and financial centers and places like that so um it does give you a big worldview plus with my job i'm very fortunate to travel to a massive number of countries because one of the great things about the nba is how multicultural it is how you know great players come from you know from all over the world, uh, Dallas, you know, having multiple ones, you know, the, the recent young stars that, you know, Dallas still from New York. So, um, in terms of what has changed is really just maybe, you know, I, I would speak up on lots of issues, mostly civil liberties,

uh, and, you know, I always hoped that they would make an impact. Uh, but then obviously, recently one made a big impact and you know I think there's just a general awareness of you know that that the the potential for impact is is even bigger than I understood yeah that's part of the beauty and the curse of the social platforms right yeah I think it's mostly a beauty but it it can be a curse if used poorly I think there's some very prominent examples using their social media poorly lately so um and and to be very uh somewhat controversial like i i am very nervous about how social media you know either regulation by government or regulation by themselves or regulation by the crowd could lead to suboptimal outcomes i think

a lot of people want easy answers to why is why are people allowed to tweet this and they're real material issue there is because like bad info does spread faster i mean i think you know that's been established in the past but i think people feel it and know it even more now um and people want easy answers they want like i don't like what that guy's saying i want it down but the aclu has was founded on you know uh making sure that people can say what they mean and let the competition of ideas and that's an oversimplified view but media companies have more of a responsibility to handle this and do things like damp down how quickly negative viral info maybe spreads but some of the some of the easy solutions that people want

which is like that they're removed um and things like that i think are almost as dangerous as the bad information itself i you know look i spent a couple years in the military and i know either your father grandfather uh did as well and one of the things that yeah yeah and so one of the things that always um i think people don't realize is a lot of uh guys i was in the infantry so all guys um always would say is like look part of the beauty of free speech is uh i actually did something so that you have the right to say things i disagree with right like like that is the whole point of free speech is that it's not what whether i agree with it or not it's just that you can say what you want to say. When I try to preserve that culture of the Rockets, I don't think good

decisions are made until you have passionate people, hopefully as smart as you can, as smart and informed as you can, getting to something where each of them disagree, because that's where the learning happens. You don't really learn anything until two people who thought deeply about an issue come to a different answer. That could be with draft picks, free agents, or it could be with how to handle tweets that aren't the best tweets that are out there. Until you have that disagreement, there's no opportunity for learning. So we have a pretty combative culture. And I've heard that Microsoft is similar and some of these other great companies where I've studied people from there and talked to them. I do think you want very passionate people who come to strong

opinions, although weakly held, meaning if they hear something that's better, they'll quickly shift but you want them coming in having thought about it and you get to better answers that way but if you start to push down dissent by not letting people put out things that are potentially offensive or potentially that don't agree with you that's that's worse than letting it you know unfortunately get to maybe the wrong people and have it create bad outcomes because you're trying to create a system that lasts for a long time and i think the united states uh at its founding uh created probably the best system that's ever been designed now we could come up with better if uh charter cities happen or charter countries happen as people are talking

about but but you want to look at that infrastructure and make sure that the bill of rights is preserved uh and the basic freedoms are preserved because otherwise you could you can steer a whole country into ditch pretty quickly and i think you've seen how that's happened to some countries around the world for sure um you not only are a big proponent of data and analytics but also of just technology in general um two technologies i want to talk about one is the spacex launch just happened and then we'll get to uh to bitcoin itself but just i saw you tweeting a bunch about uh spacex and the launch and i didn't know that one of the astronauts up at the iss is a rockets fan uh so kind of talk a little bit about what that experience was like watching

yeah it's amazing so chris cassidy who i joke with he's a good friend he's a rockets fan he's actually from boston originally um he i call him the most there's been more invested in him than any person on the planet by the united states government he's a navy seal uh and he's an astronaut so you can imagine the level of investment we put in this guy and we we've gotten 100x what we put in the guy is like i always feel like completely lame compared to him when i'm around him because he's so amazing and uh yeah he's up in space again his third time He's going to be there for, I think, about six months. He just welcomed the SpaceX crew.

He had to launch off Soyuz every time he's been up because we did not have a launch vehicle, which was sort of a bit of a national embarrassment. So credit to SpaceX and Elon Musk for putting that together. It doesn't feel like they're getting enough credit. Honestly, the government got a little bit more abundant with the space program. And, you know, thank goodness for the entrepreneurs of this country and around the world for pushing uh innovation in that area and and it was to me it was a great moment it was it showed like what we can still do and and then we're going to go to the moon and then and then mars which i

think you know even though you can definitely argue the spending there maybe isn't optimal um i think you need to one thing that humans really really do well and helps us advance as as a civilization is having these sort of big big projects uh that push technology forward push hope forward push dreaming forward uh i think that money is very very well spent even though it's it's obviously significant and you could argue could go to social programs and things like that yeah it's one of these things where um you know look we've launched people to space before right but the fact that a private company has now done it at a much lower cost and the way that they do it you really are building the foundation for as you mentioned moon the mars and all this kind

of stuff and um i saw a bunch of videos online of you know young kids right i mean we're talking 10 or 10 years or younger watching america launch people into space and you could just tell like look these kids are into it right and maybe they don't want to go do uh rocket launches or be astronauts but if we can get them to be into science and technology and innovation like that ultimately is a net positive for not only the united states but but globally for innovation in general yeah this i'll be frank like this time period feels like this i didn't live in the 60s but i always asked my dad about it because he'd studied in history i was like dad you had like the civil rights movement the space program the assassination of a president vietnam you know like

it seemed like so much was happening in the 60s i was always like asking him what was it like being in the middle of and he had a cold war people thought they're gonna like it was crazy to me when he talked about the 60s and honestly the 60s still are crushing now as much as like you know people want this time to be crazy the 60s was way more crazy in my opinion um you know even with this pandemic which was pretty pretty predictable and i was getting a lot of shit from my friends for like hoarding in late december because i thought i mean there's going to be a pandemic that could be really really bad where like young people die and a high percentage die and that was a real possibility that something i've worried about and i'm sure many others have

worried about uh and early on we didn't know how bad uh the virus was going to be so i was like stacking up food thinking we might lose electricity i was like one of these crazy i was like why not like it's a precautionary principle uh and then when when we learned more about it i was less worried i thought we would just be in this period which is tragic because of all the people have died but um it's it's definitely less tragic than other pandemics in history um so anyway long long answer that like it feels like this is probably going to be the most crazy time of you know since i was born in the early 70s um and closest to the 60s that i've seen based on what you just said would we put you in the prepper category or was it more of a just response to this specific virus

i don't have the money to be one of those create like super preppers where they have like a they have like a silo like hugh howie's book wool like they have like a silo already picked out and stuff and an island they're gonna get helicoptered to but uh but no i mean i'm a prepper and that i'm a pretty long-range thinker i've always tried to be a couple moves ahead don't always succeed but i try to be um so i actually when i was doing the hoarding and my wife was like getting pissed at me because i was bringing home like canned goods and stuff that we'll just never eat if we don't i was like well yeah but if the supply chain goes we're gonna need this like she's like why don't have any place to store it what are you doing and so um yeah i i'd probably be 90 i'm

like two z's on the prepper but not the four z's like the silicon valley guys yeah i'm just imagining you walking in every day with canned beans and bags of rice and literally canned beans and bagged rice because i was like well if we lose the supply chain i think about this stuff i'm in vegas a lot because we play a lot of basketball we play a lot of basketball there vegas to me if the power went out in vegas it would be the zombie apocalypse in like 36 hours like the infrastructure like humans can't live in vegas really without like so much infrastructure that makes it like this crazy place that we put a whole society like the water would go quick it's too hot that you know nothing works none of that infrastructure will work unless we have our

basic utilities and if that goes which it could go in a pandemic and a major power outage like It would get ugly in Vegas fast. That's the kind of crazy stuff I think about. You're probably not wrong. You also spend a lot of time thinking about financial markets, right? Either both personally or just because there's so much analytics and data there. Maybe just give us a quick overview of how you've thought about the economic crisis that's come off the back of coronavirus, and then we can get into your deep interest in Bitcoin

specifically. yeah so i've been fortunate like i thought the market was pretty overbought like you don't know so i'm mostly dollar cost averaging in because the reality is the one thing i know is that i don't have no idea i don't have time to study this maybe you do so i'm mostly like a boggle just etf dollar cost average in and like don't worry about it because i don't have time but it hit where i thought it was too expensive where i was just like you know holding bitcoin and holding uh holding like cash basically because didn't have any other idea what to do and so you know when this hit um it was tragic but i was like well even though i don't know what's

going to happen and it could have had a lot of inflection points way worse and still could honestly like it's we're still in the middle of this i thought it was a buying opportunity so i used it as a time to get in which has so far been right but again this i mean the economic devastation at the ground level was so significant and so severe and obviously the market's looking multiple years out and in an irrational and rational way um it you know right now it looks good but this thing could still go down significantly i'm not betting in any material way right now i don't feel like i have any idea i generally don't sell winners because i don't want the tax impact hopefully this isn't super boring but this is like yeah and i'm in a lot of hedge

funds as you i like so i i try to learn from all the analytics guys on wall street because they have you know we have very good people but they have as good maybe better maybe in the same range and so you know i work a lot with a lot of these market neutral hedge funds um and then a lot of their problems are very they're hard they actually have harder problems than us like trying to predict markets and time series with multiple sophisticated uh actors is is actually much harder to forecast the only thing that's different is if you beat the s&p consistently by five percent everyone loves you if i beat the s&p average by five percent i'm like the seventh seed and i lose in the first round so i have to take more risks in basketball but uh generally um yeah i you know

just uh just popping off i don't know if i answered your question hopefully i did no no i think people are just fascinated by especially given your uh interest so much in data and analytics in sports right that perspective on the finance markets are really interesting when was the first time you ever heard about bitcoin you remember it was a long time ago and in fact i i laughed because i when i first was at the i'm pretty sure it was in 11 i had a tweet so i probably was i probably had a position in 2010 in bitcoin i'm almost certain because in 2011 as a giveaway so we have this open ideas line at the rocket it's just ideas at rockabelle.com people can still use it um where if people just want to send us ideas well look who knows and to get people to do it i

gave away one like 1.0 bitcoin back when it was like four dollars i don't know i just thought it was like why not it'll be fun and it'll get like i figured the right people who would give us good answers on ideas were probably the people ahead and like looking at things like bitcoin so i gave away one bitcoin in 2011 and when bitcoin was like 25 grand i was tweeting like well yeah the idea we guy was not worth 25 grand um so yeah i've been using i mean i've been using it so long i'm in the japanese bankruptcy case because i was an idiot this is actually how dumb i was at the beginning on the security of it and that's something people became more aware in the last five years six years was i i wanted to hold my bitcoin on exchange because it was like well what

if my computer died or whatever and obviously if you have the passwords you're fine but whatever um i was putting it on you know mtgox like mount gox right so i was like this and it i didn't know until they were hacked that that was actually originally a magic the gathering exchange like i had no idea i didn't know i had just read like hey if you want to trade bitcoin go to this mtgox i didn't do any research i mean at the time honestly i'm holding like who knows like i don't remember like 50 to 150 bitcoin at five dollars like who cares like i didn't really give a shit at the time i i was just holding it because why not i wanted to like understand it more or less and then uh and then obviously things things took off from there and the one thing that made me

really intrigued about bitcoin i can tell you initially is i have a lot of economist friends they all hated it and that made me more intrigued than anything i was like i was like wait a minute i've thought a lot about money it really is just a means of exchange and if you really think deeply about money it's really messed up like it makes no sense that it works at some level it only works because everyone says it works that's true of all money whether it be you know government issued money or bitcoin it only works because everyone agrees it works but at any moment that could end that's true of all money but if you talk to economists they had developed so many theories and methods about what it had to be that they couldn't get out of their

own headspace honestly and i was like all it is is a technology and it's a technology that facilitates exchange it you don't have to call it money call it something else like it's a technology that facilitates exchange so it doesn't fit all your theories that's your problem that's not that's not this it's like a technology platform for exchange it's not supposed to handle like money supply and it's not supposed to handle all that they they totally in my mind didn't understand it which made me way more intrigued i love you know i think anyone who gets into bitcoin or you're naturally constrained and you have to fight it sometimes because sometimes you just do things because you just want to be different um but in this case i felt pretty good that they

were off now when you bought bitcoin in 2010 2011 did you go tell them that you bought it as kind of like uh when when this works i'm going to come back and remind you of this conversation i thought it in my head but like whenever you say that you like the karma you know the karma comes back so um i've met you know like taylor's like a big guy that i've mentioned he still thinks it's all idiotic and gonna crash so i mean whatever my favorite was that goldman sachs report was like it was like you know it was like someone they unearthed someone from 2014 was like write a report it was it was pretty entertaining actually uh to read that thing so look i think it's kind of one of these things where if you're sitting at a large investment

bank and you know that you're going to write a negative report on an asset what do you do you go to kind of the comments the you know the lowest common denominator arguments that the older wealthy clients that you have that are going to watch will immediately just say yeah of course that's right. They just kind of buy into that because they haven't heard them dispelled yet, I guess, right? Well, and I'd almost agree with them that it's probably not the investment for most people. You have to know what you're getting into and why. So yeah, no, I would not recommend it for most people. I'd have to ask them their investment goals and what are they trying to achieve and what are their plans for it before I could recommend it or not. But yeah, I wouldn't

think you you know i don't think it's necessarily everyone should have it as part of a diversified portfolio which is also bullshit but but but i i have it because i i think it's a i think it's a strong potential future platform and generally all the issues that people see with it you usually using technology can can improve over time put layers on top of it uh all those things that people are already doing and i don't want to pass myself off as a bitcoin expert because it's probably clear i'm not even based on how i'm talking but i i am pretty good at like you know gambling i i like to put markers down on all future technology because the history is like everyone writes it off early and then it improves over time all the clay christians and stuff is

pretty true with new technologies yeah and then i guess the last part of this is there's the technology aspect, there's the, you know, money or economy side, but also there's a big overlap between Bitcoin and, you know, all the civil liberty type stuff that you really care about. And you mentioned earlier, kind of this idea of free money, not in the sense of cost, but in terms of freedom to the money, maybe talk a little bit about how you think about that. Yeah. And actually I was going to ask you a question on that, which is one thing that would really help the world is an unblockable satellite driven internet and i've heard and i'm curious if you've done more research into this i've done only the very high level cursory because i want it to happen but

i've never read anything reliable which is is that coming is it online like if we could get an internet that where someone in a failed state could bypass the infrastructure in their country by going to a satellite internet that's more free and open um is that close because if that's close that then bitcoin's got another inflection point right there because you can bypass your home country's issues so i'll answer this in two ways and i'll be kind of a little uh cagey on the second half but on the first half is the the simplest answer is um while it isn't the quote quote, internet, there are people who will write into the blocks on let's say the Bitcoin or the Ethereum blockchain, right? So we saw in the past, there was like a Chinese dissident who wrote some

things into the Ethereum blockchain, I think it was, and they basically were trying to make a record immutable, right? And if I remember all the details correctly, it was like something like there was a sexual assault case at a university, they felt like the government was trying to cover it up, they write it into the blockchain, anyone in the world can go and read it. So like there's that type of stuff, which is less internet functionality and more of just a way to keep an immutable record of a specific message. Then there's also a number of companies that are doing all kinds of different things. And so a couple are things like Unstoppable Domains, you've got this company Namebase, you've got an entire protocol called Handshake. And what they all

are doing in their own various kind of methodology is trying to create an unsensible internet, right? And the way that they do it is a little bit different each way. But really what you end up doing is you end up rebuilding all of the functionality and all the layers that make the internet the internet. You just do it in a way where now it's got decentralized ownership and no one government can step in and take it down. You can imagine that's awesome when you look at from the civil liberties lens, and kind of all of these authoritarian countries and stuff. Obviously, on the other side, there's plenty of people who, you know, that scares the hell out of them, right? And they're like, Oh, my God, every, you know, child pornographer is going to go and

use this. And, you know, the world's gonna end, right. And so, you know, there's, there's probably weight in both arguments. But at the same time, you know, the internet's been a net positive for the world, I think it's pretty hard to argue against that. And there's still people who do bad things on it um and you know we should stop them and kind of all of that but uh i do think that we will see some sort of uh internet like that the big question is just do consumers adopt it right i always go to like you and i aren't going to go do you something that's decentralized just because it's decentralized it's got to be a better product experience than the centralized version of it right and it seems like and maybe you're alluding to this the key thing is you've

got to be able to get some ability to flow zeros and ones to a household that is oh you know using in some electromagnetic spectrum that's unblockable that's like the basic thing you need and i don't again i don't know how close we are to that because without that people in yeah failed states can can be you know that don't have civil liberties can be blocked right can be can be kept off of the blockchains or whatever technology you might want to talk about yeah and the way that i look at it um and maybe this is the right way maybe it's not just the way i've used is um if you think of bitcoin as uh that exchange of value type platform right it's very similar to building other types of technologies for other use cases but you use same blockchain type stuff um you know

one of the uh examples that really caught my eye was uh in venezuela everyone always likes to talk about like the failed currency and all of that, but there was actually at one point a nationwide shutdown of the electrical grid. And I think it was only for a couple of days. And this is maybe like two years ago, a year and a half ago. And somebody basically had a generator at their home. They were able to get their electricity back on through the generator. And then they were able to make a connection. And I can't remember if it was through a mesh network or a satellite, but somehow they were able to get access to the Bitcoin network and they confirmed a transaction, right? they actually were able to do it. And so their whole thing was like, look, in a traditional

society, you know, like in let's say Las Vegas, if the power goes down, and you want to access money, you actually are dependent on the national grid or the citywide grid to get access to your bank, to the ATM, whatever it is. Here, as long as you yourself can get access to the internet, you don't have to be relying on anybody else because you can get out to this network that's running everywhere else. And so again, like that's such an edge case that I think a lot of people write that off and they're like, oh, that's not important. But when you then apply it to that functionality to so many different positions in life, whether you're an authoritarian government or the power grid goes out, or actually you just want accessibility, right? How many

currencies fail around the world and people want dollars but can't get them, right? To be able to literally just use an internet connection to get access to a currency is pretty powerful by itself. And so I'm with you. I think that this is the writing's on the wall, like we're headed that direction the big question is you know what technologies win what companies win how long does it take all of those details really matter because that's ultimately you know what determines the winners but trend wise i think this is uh this is kind of a foregone conclusion yeah we sort of know and i make that point a lot to to people even in the nba where i say you know they'll ask me about the elam ending which is like uh you know just it sounds like just a better ending to

a basketball game you don't have all the weird time distortions they go like yeah do you see than the nba and i'm like yeah i mean i don't know when but like i like why in 100 years would there's no chance in 100 years we're not finishing the games better we're not doing one free throw like we do the deal like all these basic changes for sure they're gonna happen it's just like we just don't know exactly what year exactly when it'll get approved but you know for sure it was like early on when we were at the rockets like we already knew that three pointers were much better to shoot and you know on our d league team we were shooting like 70 of them so again so it's like you knew directionally this was where the league was going to go it's just like how fast and when

you're going to be there i think that's uh you know that's something that's something that you learn from chess like sometimes when you're studying chess positions you don't really actually worry about which moves get you there but you say like okay if you can get that piece there you know that's going to be optimal and i think that's that's how when i think about the future because if you look at a lot of the prediction markets and you look at a lot of the people who use briar scores and the people who are systematic about how well they're there they're at forecasting you realize that really nobody's very good at it in any time period past like two to three years but you can you can say like look i know it's gonna look like we're gonna have robot

cars that takes us around i mean i'm mad because i ubered everywhere right so i was like uber's i didn't have a car i was uber's number one client i'm probably not going to uber for a little while and we knew that the human ubers were going to get replaced by robot ubers you know that was going to happen it just didn't happen fast enough i needed it faster so i could i'm gonna have to buy a car which i don't want to do at all not to buy a damn car which i don't want so i'm pissed that the robot ubers didn't come fast enough for me um but we know that we know that in the future for sure everyone's just gonna get in a robot uber and that's gonna happen is it 10 years i don't know is it 15 is it 20 but everyone's gonna be taking robot ubers everywhere yeah and and i

think part of this is uh you know whether it's bitcoin whether it's robot ubers or or the way the nba games and it's like when you know that that's the foregone conclusion uh there is a sense of frustration because it's not here today uh but also there's uh the work that needs to be done Right. And that, and going back to kind of the SpaceX and entrepreneur type stuff, to me, at least it's like, look, I'm glad somebody's working on that stuff. Right. Cause I'm not going to go build it. You're not going to go build it, but I sure want to ride in one. That's going to be awesome. Yeah. And I think all the time I'm wasting my time working on a round ball that bounces. And I mean, I try to make myself feel better that it's all for

entertainment, which is important at the end of the day. I think it's all about being happy. I I mean, and, uh, people make that oversimplified, but if you study the Greek philosophers, like being happy as a, as a regimented structure, basically. And so if we can, if we can make people happy and maybe basketball is part of that, but sometimes, you know, and I think, you know, all the people working in the NBA, when, when big events happen, like what is happening in the country now, you go, you know what, here I am working on an orange ball that gets bounced. And maybe, maybe I could be doing different things, but, uh, but, uh, you know, luckily

luckily i love what i do so it's pretty i love it i've got three questions to uh to wrap up one's from uh from somebody in the audience and then two that ask everybody the first is um the move from the kind of big man era of the nba into more of the three-point uh era that you mentioned uh do you feel like that has increased or decreased the entertainment value of the nba like how do you think about that from the fan experience well i can answer for myself and the league office i know from a league perspective they think it's increased it greatly uh i think that survey wise consistently what what fans want is the greatest athletes in the world which i do think the nba has uh we pay the most we we get the greatest after we just do i think people see that

um they want to see them making plays that humans really shouldn't be able to make on a court in amazing ways and and in our amazing game and close games hopefully but that's what they want to see so open court play transition play that's increased over time uh the spacing again allows our athletes to make these athletic amazing finishes at the basket um so in terms of like surveying in the league office i know that um people think it's it's much better i share that view i i've seen all the counter arguments and generally you look at any any major sport that has been around for a while you have you have analysts uh who are going to figure out and coaches and everyone who are going to figure out like here's a here's a way to play that's better

than another way and generally the right answer is like do the thing that works until someone stops you and so you know i think people are feeling like maybe there's a homogeneity in how we're playing um i don't share that but i at least understand the argument yeah do you think more nba players could go play in the nfl or more nfl players would could come and play in the nba and the reason i ask is this is the the greatest debate my friends and i had growing up which was which league could send more to the other league and be successful yeah i mean i'm biased so it's sort of unfair to ask but i think it's not i honestly don't think it's close the nba um you know could send for basically what the way the evidence of that would be pretty straightforward

there's a very there's a very few number of people on this earth who can play at a pro level in multiple sports i mean you have to be five standard deviations of the right to make a pro sport but if you are one of these unique guys you could play multiple and people know them from history um almost always they're going to choose basketball career longevity money uh career you know money off the court and on the court i mean it's just massive so when they have a marginal choice which a lot of them do like which one they're going to commit to um they almost always choose the nba yeah of course you would have a data-driven argument back i love it uh what's the what's the most important book that you've ever read most important book i've ever read is not

even close actually and it's somewhat embarrassing in that uh you know since i've gone to business school everyone like thinks it's a shitty book but i the seven habits of highly effective people i read that when i was young i was like not a good student in high school i was a bit of a troublemaker um and you know and i i honestly read this book at the right time when i was in my early 20s and uh you know it basically takes a lot of like other people's writing whether it be historic philosophical figures or even ben franklin and victor frankel and basically steals all their ideas but puts it into one book uh and does it in a very good way and i I read it at the right time for me and it's been pretty good underpinning.

And the nice thing is it's a whole, it's, it's wholesome too. It says, you know, basically be good to your neighbor is a big message there. I love it. Last question is a fun one. Aliens believer or non-believer and why? I think it's almost no question there's aliens. I mean, it seems like almost impossible. There isn't even if you say, you know the drake equation i think is it drake for me paradox yeah drake equation drake equation and then what's the equation i forget the drake oh drake i got it right okay

it's been a while since i've thought about it um yeah but but that that's only in the known universe like there could be i mean like if you're saying aliens and and by aliens are you saying like life form of some level of intelligence of ours are greater um it seems like almost 100 like it doesn't now if we're inside of a simulation which i think is sadly a reasonable probability as much as i'm a computer science guy i don't love the idea where live but you have to say that's got a pretty likely probability then i think then you're at 100 with that too because someone made the simulation so i i don't know i i would say extremely high enough can they get here and will we ever meet them who knows i i've asked this question to you know over 300 people and it

always is funny to me the people who have thought about it before have the best answers and it's almost always uh one data driven uh in terms of something you know hey the universe is so big but uh two is they've gone down the rabbit holes like the simulations or uh do we want to meet them or should we go find them before they find us and you know you kind of get into a lot of that science fiction on that and and and there's there's pretty good evidence that we don't want to meet them uh i think that's i think that's the preponderance of the evidence is on we probably don't want to meet the aliens uh but but yeah i've sadly thought i think anyone who's like a truth seeker who's science driven you at least are contemplating all these questions at some

point in your life for better or worse what's the best there's no aliens argument i've yet to hear one i'll give you a serious one and then a ridiculous one uh a guy josh brown uh from ritz holds wealth management came on and said that uh it's more likely that ghosts are real than aliens and i almost i almost shut down the interview and threw him out because that's ridiculous but uh no probably the best argument um it's like the simple argument right it's just like hey uh we've got tons of technology humans been around for a really long time uh and we can't prove that they're there so like until there's some signal or some sign of it you know then uh the likelihood has to be low again you know you can kind of pick holes in it pretty quickly i'm

biased because i think that there are aliens um but but i think that that's probably the uh the best argument although it's not a great one right it's just like hey until we find them then you know we can speculate all we want um yeah so if you if you take the time so apparently there was some alien encounter it looked like clickbait so i didn't even like spend the time to look at is that like was that anything it seemed like it had to be nonsense i didn't even read yeah so in uh don't hold me to the exact details but in like 2015 uh of course reddit um somehow uh these videos started to go viral on reddit um of you know quote unquote ufos and they were um you know kind of weird things moving through the air and you know if you want to really kind of uh investigate

them it would be very easy to dismiss it but if you wanted to believe then you know hey aliens were already here type thing and so uh those videos eventually people started to say they came from the department of defense and you know there was kind of all the conspiracies running wild uh those are the videos that were just released during the middle of the pandemic they were confirmed by um basically by the u.s government saying hey these are authentic now meaning they were from the video recording capture of a actual fighter pilot or something exactly so basically saying hey you know these videos were recorded by military personnel uh yes the audio is authentic and all of that what is interesting about it is one the reaction

wasn't nearly what you would expect because people had already seen the videos before so it was kind of like uh the error had been taken out of it a little bit but two is um the only thing that i always kind of go back to with the whole ufo thing is uh i'm interested in the truth behind it because uh it's a physics problem right the whole idea is that uh it's a ufo because they can't explain the physical movement of the object. And so, you know, look, there was a period in time where we didn't understand what you and I considered modern physics today, right? And over time, scientific process worked, and we figured it out. We still don't understand physics. Right? But like, at some point, we'll have better understanding, better understanding,

and maybe we'll be able to explain it at that point when we have, you know, more knowledge, or maybe it will still continue to be this thing that we can't explain. And so, So, you know, to me, it's one, fascinating that the government chose in the middle of the pandemic to decide that, hey, now we're going to say this is authentic. But two is, look, there's video of something that, you know, people way smarter than me can't explain. And so either it means that we've got to learn more to explain it or two, you know, there's something out there that has, quote, unquote, visited. I'm not ready to go that far, but there's video. I may have to look at it. I'm sure someone on Reddit has done this.

So someone analyze, make sure it's not some deep, deep fake or, you know, and that it does violate at least apparently some sort of physics that we think we understand. So the one that I heard, and I think there's three or four videos, I basically spent, you know, half an hour looking at one of them and kind of the pilot and what they said and audio and what the government said and all this kind of stuff. and essentially what happened is uh in some weird way it's going in one direction and then immediately goes in a different direction with such velocity and acceleration um that they're just like look the g would be like insane but yeah it doesn't have to have anything that would be sensitive to g so that's the other piece of it is not only if i remember correctly not only is the uh the change of direction the velocity the acceleration so kind of um uh you know eye catching but also then there's no exhaust so kind of like what what's actually driving the

the movement again i i'm not an expert so i i kind of like enter my a lot of things like you know david you know penn and teller stuff where like you know there's two of them when it appears there's one and i just seemed like i wasn't gonna learn anything so i didn't look at it maybe i maybe i should have i will say that out of everything i've ever seen on the aliens ufos all this kind of stuff that uh that really just had me thinking is um there's this gentleman bob lazar uh he's been on you know joe rogan he's got a netflix documentary that was eventually made whatever uh i don't know if there's been any kind of counter arguments to him but he essentially says that he worked at area 51 and uh gives like pretty detailed um overview uh from a very

scientific standpoint of they were doing research on things that they couldn't explain so not necessarily going as far as like hey you know there's aliens but just saying look there's you know um things that moved in the air that we had in our possession uh that we couldn't explain how they did what they did and to me like that's a much more realistic view of you know how science works than just like oh i think i saw an alien because there's a light in the sky like i you know oh i'll wait so it's in scientific american or something absolutely listen i appreciate you taking the time to do this um where can people go find out more about you uh and the work that you guys are doing with the rockets yeah just uh obviously uh twitter just d mori so pretty

pretty easy d-m-o-r-u-i is where i'm the most active for better or worse so awesome well i appreciate you taking the time to do this uh you've been uh you've been fantastic in terms of your viewpoint of the world so keep it up and the rockets obviously it's houston rockets uh twitter so but uh appreciate it and uh i don't know if i'd have done it if i'd known the yankees at but uh it's uh all good i enjoy other stuff i appreciate having me on so much thank you