Jeff Ma – Making Decisions with Data

**Patrick O'Shaughnessy** (0:04)
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, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_3** (0:24)
Patrick O'Shaughnessy is 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 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 O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:47)
My guest this week is Jeff Ma. Jeff was on the famous MIT Blackjack team from the book Bringing Down the House, but spent his career in and around the fields of analytics and data science.
He studied sports betting and analytics, built companies for analyzing human capital, and ran the data science and analytics group at Twitter. You can find links to his book and podcast in the show notes.
Our discussion today is on a number of fascinating ways that data is being used to make decisions in the worlds of sports and in business. Please enjoy. So like a Billy Beane moneyball type story or from a moneymaking standpoint, the horse racing in Hong Kong type story, typically always comes back to kind of quantitative analytics. So tell me a bit about how you think the state of the art is today. A lot of people will know moneyball, but what has evolved the most? How have analytics and the sophistication of the users of those types of systems evolved?

**Jeff Ma** (1:40)
I would say at the sports level, not the sports betting level, but the sports level like the Billy Beane level, the way that it's evolved the most is just acceptance. People believe in this. So in basketball, there are analytical strategies that you see on the court. I don't know if you know, but three is worth more than two. So teams that shoot more three-pointers, they're more analytically driven, especially certain three-pointers. The corner three, which is much closer, it's closer than the rest of the three. So people shoot it at a higher percentage. That's why you see so many people trying to shoot corner threes, and you see the best defensive teams trying to take away the corner three because it's a highly efficient shot.
And across sports, I would say there is much more of an acceptance that you need some form of analytics to basically compete now, both from a player personnel standpoint and then an on-field strategy standpoint.
I think the more interesting thing or the evolution as sports is going forward is going to be around data. And that's sort of like the classic analytics paradigm, which is that you can't have any strong analytical system unless you have good data. For a long time, sports data has been pretty bad. Generally, the data that's captured is the data that's easy to capture. It's the data that describes what's happening in the game. It's not what is ultimately the best thing to build out an analytical system to predict what's going on. With things like player tracking and with computer vision and all these different types of things, we're getting much better data to understand how to predict games. Specifically in baseball, originally you would have very, very, very old data that wasn't useful.
But now they literally have cameras that are capturing launch angle and spin rates of the ball and velocity and exit velocity of a hit that allows you to build better bottoms up models to predict what would happen in a game. Because think about baseball, if all you capture is there was a pitch and then there was a single, a single could be a ground ball that just happened to find a hole, or it could be a rocket that just landed short of, in Fenway Park, it could be a rocket that hits off the wall and should have been a home run at any other ballpark, but someone basically hit it right directly into the wall and the defender made a great play.

**Patrick O'Shaughnessy** (3:51)
Do you think a fair way to describe this would be more of a focus on the quality of the process of a given action versus the outcome of that action, like the quality of a shot versus whether or not it went in?

**Jeff Ma** (4:00)
For sure. I mean, that's definitely a good way to look at it. The challenge with that, both the value and the challenge with that, is that you're talking about almost having somewhat of a qualitative judgment.