Daryl Morey - Systems Thinking in Sports

**Patrick O'Shaughnessy** (0:00)
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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 joincolossus.com.

**SPEAKER_2** (1:10)
Patrick O'Shaughnessy is the CEO and founding partner of PositiveSum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of PositiveSum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (1:43)
My guest this week is Daryl Morey, who is president of basketball operations for the Philadelphia 76ers. Daryl is a computer science graduate, but has become one of the NBA's most successful general managers during his time with the Houston Rockets and the 76ers. Together with my friend and past guest of the show, Sam Hinkie, Daryl pioneered the analytics movement in basketball. He's been so influential that his style has earned its own name, Moneyball, a nod to Michael Lewis's book about baseball, Moneyball. Daryl is also the co-founder of the MIT Sloan Sports Analytics Conference, which has become the gold standard forum for leaders in sports analytics. I had a blast talking to him about negotiation tactics, systems thinking, hiring, and a ton more.
Before we transition to the episode, I want to highlight the Founders Podcast, which is part of our Colossus Network. David Senra, who hosts Founders, has devoted his life to learning from history's greatest entrepreneurs, and every week he distills the lessons of a different founder. If you want an entry point, I highly recommend starting with episode 136 on Estee Lauder. I hosted David on Invest Like the Best this summer, and it's hard not to walk away insanely energized after listening to any episode with him. You can find a link to Founders and that episode in the show notes of this conversation, and you can search all past transcripts on our website, joincolossus.com.
Please enjoy this great conversation with Daryl Morey.
So Daryl, in preparation for our conversation, I had so much fun both talking to mutual friends, but also just rethinking about sports again for the first time in a long time. And you're probably the perfect person to ask this series of questions that I'm prepared to go into. But I wanted to start with principles about games in general and the makings or the features, in your opinion, of a perfect sport or a perfect game. And I start here because I've heard you say basketball is sort of a nearly perfect game, that it's always evolving, there's room for creativity and so on. And then I visited Michael Moebeson's skill versus luck spectrum. And you find basketball is pretty high in the skill spectrum, much higher than say football or soccer, but those have much bigger audiences. There's just so many variables to what go into making a great game or a great sport. And almost at like a philosophical level, I'd love you to start there by just describing what you think those key features are that make for like a forever game.

**Daryl Morey** (4:01)
I love that question because it's become pretty core as all these games are being created, new e-sports and things like that. And I have to say thanks for having me on, Patrick, long time listener. I'm very nervous just because a lot of the people I admire have been on, but I mostly worry about providing value to your listeners because I feel like you guys, speaking of skill, you have the highest value ratio of most podcasts. So obviously there's the skill, luck continuum, and Mobison, who's someone I've admired for a long time, has written about this and talked about this. And we even had some conversations about it recently at a Santa Fe event.