Moneyball in Startups

Why data is overrated in informing the path to outlier success

As a lifelong Yankee fan, I suffered through a torturous World Series over the past week. While I’m grateful we were there at all, it was painful to see us miss in so many key moments that could have resulted in a very different outcome.

One thing that strikes me (as I’m sure it does many baseball fans) is how so many teams today are optimized for regular season wins. This is baseball in the moneyball era. Regular season wins sell tickets. It’s rational! But in the playoffs, the sample size shrinks. The correlations between actions and wins remain roughly the same but the volatility inherent in those correlations doesn’t get smoothed out over 162 games like in the regular season. Crazy things can happen as a result. In fact, since 2001, the best regular season record has only won the World Series roughly 1/3rd of the time (8 of 24 years).

Startups are similar to playoff baseball. You don’t play to the long run correlations, you play to win. True venture outcomes are rare, so why be informed by medians and averages? Doing the median or the average won’t get you to the far end of the outcome distribution.

Instead, doing the little things right every day will help you win in the long term. Do you call back that customer tomorrow? Why not right now? Have a great engineer on the hook? Get on the plane and go close them. Small decisions made every day can be the difference between winning and losing (there’s an Any Given Sunday reference in there somewhere…). Don’t waste a minute!