One of my most widely read essays was written in 2012, called MLB’s Customer Alignment Problem. In that article, I explained how increasingly, MLB’s revenues and franchise values were strongly tied to cable and satellite network fees. That was a problem because:

• cord cutting was shrinking the cable and satellite TV network industry
• live sports like MLB was the only thing propping up the cable and satellite TV network industry
• this indirect income stream disconnected the industry from direct feedback from their real customers, the fans
• without direct feedback, MLB would likely be slow to react to needed change, both positively and negatively

It seemed like a Ponzi scheme to me, or a house of cards, or a Jenga tower, pick your favorite metaphor. Every cord cutter takes a block out of that Jenga tower with them when they go. You never know when the tower is going to fall over, you just know that eventually it will.

That was eight years ago. Cord cutting has continued apace. It’s not so much that old fans cut the cord. It’s that they die, and aren’t replaced by young fans. Young people simply don’t buy cable TV. The average age of a baseball fan in 2007 was 53. In 2017, it was 57.

So now you’re starting to see articles asking things like Are Millenials Killing Baseball? The answer, of course, is NO, THEY’RE NOT. MLB simply isn’t reaching them, because MLB’s incentive structure stops them from meeting Millenials where they are.

Of course, last we checked, baseball isn’t dead. Last year, MLB’s revenues were fine, ratings were fine, attendance was fine, everyone was making money. And over the last eight years, most of those regional TV networks who had such a wobbly mutual dependence with MLB have gotten themselves folded into much larger corporate conglomerates.

But what happens if we pull some really big blocks out of that Jenga stack?

In the time of the pandemic, the trend has become clear — cord-cutting is happening faster. While widespread stay-at-home orders have catapulted the growth of streaming, the coronavirus pandemic has accelerated a parallel trend: a sharp decline in subscriptions to the cable bundle. Pay-TV providers are coming off their worst quarter ever, shedding more than 2 million subscribers in the first three months of 2020, or around 3% of the customer base. That’s equal to roughly 40% of the total losses pay-TV providers suffered all of last year.

Ouch.

None of us know the inner financial workings of any MLB teams. Nor do we know any of the inner workings of any of the Pay-TV providers. It’s easy to sit on the sidelines and say as many people do on Twitter, “You’re billionaires, suck it up.” But I think that attitude is based on an outdated idea of some sole Scrooge McDuck owner who sits on a pile of gold coins in his vault somewhere, where the price of a ballteam is a pittance for them. But nowadays, most MLB teams are so expensive that there are very few Scrooge McDucks who can own a team by themselves and pay for it with cash. Most teams are owned by an assembled group of people who pay for it using loans secured with collateral. These ownership groups really don’t want their collateral touched. That’s especially true if it’s some large publicly owned conglomerate on the stock market. Covering losses is not anywhere near as simple as asking McDuck to pull another coin out of his vault. Instead, getting any sort of decision made is a big giant mess of regulations and internal politics.

All of which is to say, this pandemic is creating a lot of pressure on MLB teams from a lot of different directions. And the first sign of that pressure is when the weakest link in the MLB value chain starts to break. And that weakest link is…drumroll please…the minor leagues.

Minor league teams and minor league players have a strongly dependent relationship with MLB, with absolutely no leverage at all. They are a source of cost for MLB, with very little direct revenue coming back to MLB. So when MLB revenues start to get squeezed, where do you think they’re going to look first to cut costs? The place with the least resistance to those cost cuts and the least effect on revenues, of course.

So now all of a sudden, the minor leagues are going to be reduced from 160 teams to 120. The draft is going to be reduced from 40 rounds to 5. What could the minor leagues and the new potential minor leaguers do about it? Nothing. They’re the weakest links in the chain. It was inevitable that they would be the first to crack.

You wonder, then, if this pandemic drags on for another year or two, what are the next-weakest links in the chain? Who will be the next group of people that MLB’s structural issues will collapse on top of?

* * *

Nobody could foresee this particular pandemic coming at this particular time. But the fact that some negative externality could lead to financial problems within MLB: that was entirely foreseeable. It’s been built into MLB’s business model for over a decade now.

One thing this pandemic has made clear: we are terrible as a society, and perhaps as a species, at dealing with slow-motion disasters. There are so many problems we can see coming from a long ways away, but we don’t do much about them because they’re a long ways away.

Until they’re not, and then it’s too late.

There are many slow-motion disasters that we aren’t doing anything about. Pandemic preparedness, in hindsight, was an obvious one. Climate change is another, of course.

Interestingly, the Republican Party has the *exact* same slow-motion disaster happening to them as MLB. Their whole business model, like MLB’s, depends on cable TV networks keeping old white people attached to what they’re selling. Their problem, like MLB’s, is that their demographic keeps getting older and dying off, and the young people don’t have Cable TV, don’t watch their schtick, and so they don’t buy into what they’re selling fast enough to replace the old ones who die off. It’s a slow demographic train wreck happening for them, and you can see it coming. The Republicans *know* it’s coming, that’s why they keep trying to hold that demographic train wreck at bay on the backs of America’s politically weakest links by restricting minority voting access and cutting immigration. That may work for awhile, but at some point in the next decade or so, demographic shifts will cause some big states like Georgia and/or Texas and/or Florida to flip, and then it’s game over. Their only advantage over MLB is that they only have one incompetent competitor to worry about, while MLB not only has to fend off their rival sports to stay afloat, it also has to fight new innovators like Netflix and video games and social media for attention.

The pandemic has added urgency to Republican dilemma, too, because if the economy doesn’t recover by November, that demographic train wreck might happen this year instead of 10-20 years down the line. So you’re seeing Republicans putting a lot of pressure on decision makers to “open up the economy” as soon as possible. But that, in itself, is another slow-motion disaster about to happen. The shelter-in-place orders have lowered the R0 of the disease from 2.5 to about 1.0 or even below 1.0, but as soon as it opens up again, the R0 will jump back up again. It probably won’t jump all the way back up to 2.5, because many people will be cautious and avoid high-risk activities, but it will probably jump back up to something like 1.5. And that means the death rate will look like it’s holding steady for a month or three, but then the exponential growth will start to take effect, and we’ll get a surge of illness and deaths in August or September or October that will be as bad or worse than the first one. But this time, the fall guys won’t be the politically weakest links as much as the physically weakest ones, who just happen to be the kind of old, sedentary people who spend a lot of time watching baseball and Fox News.

And then what?

The human brain is amazing. It can take a very limited amount of information, and turn around and give you an instant decision based on that limited information. Computers, on the other hand, are really bad at that. With a computer, all the variables must be filled in, or the program won’t run.

The Oakland A’s are trying to build a new baseball park. There are questions in the Oaklandsphere whether they should build it at the Coliseum or at Howard Terminal. Much of the debate around those questions takes place in a foggy, muddled soup of barely identifiable information about (a) how much the ballpark would cost, and (b) how much money it would make if they built it.

But hey, we’re human beings! Our lives aren’t math problems in a textbook. We go through our lives dealing with incomplete information almost all of the time, no big deal. Just because we have almost no idea at all about any of the money involved with this doesn’t mean we can’t end up deciding with conviction that we prefer one site or the other.

So we end up ignoring the information we don’t have and focus on information we do have. Or, we make wild guesses at the information we don’t have, and go with that. Or, most likely of all, because we’re human beings and building a ballpark is really not our job, we’re not going to spend any energy to think it through at all, so we’ll just stick with our gut reactions to the idea, and that’s good enough.

And therefore: messy, muddled ballpark debates.

Not really any different from any other debate in human affairs. It’s all cool.

EXCEPT.

Except: this is the Oakland Athletics we’re talking about.

The Oakland A’s. Team Moneyball. The organization out of all human organizations in all human societies in all of human history that is most famous for turning life into a math problem.

Back when statistical analysis in baseball started to become a thing, a lot of old school types tried to argue against it. And they kept getting their asses handed to them, because they didn’t understand sabermetrics. Their arguments (“Batting average and RBIs are good enough! Watch a game, not the computer!”) were utter crap. This is a point I’ve made before, but the best arguments against sabermetrics are made by the people who actually understand sabermetrics, who know what its true flaws and blind spots are.

Sure, the math in ballpark building is different from the math in baseball games. But sabermetrics is not just about the math. It’s about how you think about the game.

Remember this conversation in Moneyball?

People who run ballclubs think in terms of buying players. Your goal shouldn’t be to buy players. Your goal should be to buy wins. And in order to buy wins, you need to buy runs.

What is the ballpark equivalent of that conversation?

What do most people think the goal of building a ballpark is? What should that goal really be?

Let’s try to be creative. We may not have any of the numbers, but we can figure out how we would approach them if we did. Let’s try to move past muddled conversations, and think about how the A’s might be thinking about this ballpark. What would Jonah Hill tell Brad Pitt if they were building a baseball ballpark instead of a baseball team?

Let’s try to understand why the A’s might be making the choices they’re making. Let’s Moneyball a ballpark.

Investing and growth

Let’s begin by talking about investing. Why does anyone invest in any particular thing?

I think the most common (muddled) answer to that is, “to make a profit.” But that doesn’t answer the question. Because the question was, why does anyone invest in any particular thing? Lots of things make a profit. You could invest in a 1-year US Treasury bond today and make a profit of about 1.6% in that year. Or, you could invest in a 30-year US Treasury bond today and make a profit of about 2.3% a year over 30 years. Or–and here’s the rule of thumb to keep in your head–you could invest that money in a boring stock market fund and make a profit of (historically, on average) about 7%-10% a year. So why are you investing in that particular thing and not some other thing, like a Treasury bond or a stock market fund?

If we think of mere profitability as the goal–that as long as we don’t lose money, it’s fine–we don’t have a Moneyball mindset. We’re more likely to continue doing what we did before, because we didn’t lose money. This kind of thinking tends to lead people to prefer the Coliseum site, because hey, the Coliseum worked for 50 years, didn’t it? We can probably build a nice, cheap stadium on that site and make our money back in the end, so if it’s not broke, why fix it?

But if mere profitability is the end goal, the A’s ownership team probably shouldn’t invest in a ballpark at all. They should sell the team, and put the money in the stock market and make their 7-10% a year.

But when you start to think that an investment in a ballpark needs to grow at a rate greater than 10% a year, well, now we have a much more complicated question with a much more unclear answer. We should be asking, “What rate of growth are we trying to achieve with our investment?”

Volatility of outcomes

OK, suppose we get the growth idea. But there’s another kind of muddled thinking that comes with that, and that’s to make a single estimate of growth, and make a choice based on that. Suppose we estimate that the Coliseum site will grow at 15% and Howard Terminal at 30%. We should choose Howard Terminal, right? Not so fast.

Those single numbers are just estimates. In reality, there’s a whole range of possible outcomes. I think most people would guess that the range of possible outcomes at the Coliseum is smaller than at Howard Terminal. Suppose (pulling numbers out of the air) the Coliseum could grow somewhere between +10% and +20%, while Howard Terminal could grow somewhere between -20% and +50%. Are we willing to risk a big loss for a chance at spectacular growth? Or do we want a safe bet with a smaller upside?

There’s no obvious answer to that question. I can understand preferring the choice with the lowest downside or the choice with the biggest upside, but insisting that one or the other is obvious and clear is, well, obviously and clearly wrong.

So we shouldn’t be asking, “Will this make a profit or not?” We should be asking, “What is the range and distribution of possible outcomes, and how comfortable are we with those possible outcomes? What are our minimum acceptable and target growth rates for our investment?”

Ways to grow

That brings us to our third source of muddlement. When we say “grow”, what do we actually mean by that? How do we actually grow a business?

The ballpark translation of that first Jonah Hill sentence is probably something like, “people think if you build a nice ballpark, you’ll sell more seats.” Which, like “buying players” is both true and at the same time muddled. It’s not a Moneyball way of thinking about it.

The Moneyball way to think about it this is to start breaking it down like Jonah Hill does. In sabermetrics, you want to buy wins. In order to buy wins, you need to buy runs. Where do runs come from? Lots of different places: batting, running, catching, throwing, pitching, all of which have their subcomponents, each of which has its different price in the marketplace. What’s the most cost-effective way to purchase those subcomponents to assemble the runs and wins you need?

The Moneyball ballpark question then becomes: what’s the most cost-effective way to assemble the subcomponents of a ballpark that we need, in order to achieve the growth that we want?

Big Things and Little Things

On the baseball field, there are many statistical subcomponents you can try to improve on. Some of them, however, will have a bigger impact than others.

There is a statistic called the “Beane Count“. It was invented by writer Rob Neyer shortly after Moneyball came out, and is named for A’s executive Billy Beane. It tracks two main statistics, on each side of the ball. Those are:

• Walks
  • Taking walks
  • Not yielding walks
• Home runs
  • Hitting home runs
  • Not yielding home runs

If you look at Beane Count for 2019, the top 6 teams in Beane Count in the American League were the six teams that made the playoffs. In the National League, five of the top 6 teams in Beane Count were playoff teams, and the one that wasn’t, the Milwaukee Brewers, was 7th. So the stat correlates with the primary goal of winning.

But there’s another key feature of the Beane Count that is significant for our purposes here: these particular stats kind of give you something for free. On both walks and home runs, the ball is not in play. You don’t have to participate in defense and baserunning. So you win the game, in a way, by avoiding having to play the game.

If we want to translate this piece of Moneyball to ballparks, there’s an analogous game we want to avoid playing if we can. Making a profit selling things is a difficult game to play, and achieving growth is even harder. In the normal game, you make a product for [$X]. The supply/demand curve directs you to sell it for [$Y], and so you end up with a margin of [$Y – $X].

Can you sell enough volume at that margin to reach your growth target? If that seems hard, is there a way you can get something for nothing out of $X or $Y to make it work?

Let’s make a business equivalent of the Beane Count. Call it the Kaval Count, after A’s President Dave Kaval. It tracks the things you can do that help you avoid playing the straightforward business game. Like the Beane Count, the Kaval Count has two main ideas, each split into two sub-ideas:

• Covering costs externally
  • Subsidies
  • Arbitrage
• Breaking the laws of supply and demand
  • Become a tech company
  • Become a monopoly

Subsidies

For decades, direct subsidies from local governments have been by far the #1 method for professional sports teams to reach their target growth numbers. Tell a city, “Help us pay for the cost of building our sports facility, or we will find another city who will.” In some parts of the country, cities have figured out that this is a bad deal. But as long as other parts of the country haven’t figured this out, it will continue being used.

So the Texas Rangers are constructing a new ballpark. How did they make the numbers work? They got someone else to pay for much of it. The Atlanta Braves also recently built a new ballpark. How did they make the numbers work? They got someone else to pay for much of it. The Oakland Raiders are building a new stadium in Las Vegas. Why? They got someone else to pay for it.

Oakland and Alameda County fell for this scheme in the 1990s, when they built Mount Davis to lure back the Raiders from Los Angeles. That plan did not work out at all, and the city and county are still deeply in debt from it. They won’t fall for that scheme again.

So direct subsidies for the A’s to build in Oakland are out of the question. However, there are certain infrastructural costs of construction that fall under the category of the normal activity of a city: building roads and transportation hubs and electrical grids and storm drains and sewers, etc. So while they may not get help subsidizing the building itself, it may still be politically feasible to get some of the surrounding infrastructure paid for. That alone is unlikely to get the A’s to their growth targets, but it may help some.

Arbitrage

Construction costs are not the only costs of building a ballpark. There is also the cost of the land we are building on top of.

In some cities, there is land which is zoned for one kind of use, but would be more valuable if it were zoned for some other kind of use. There is also the idea that the demand for land near a ballpark becomes more in demand simply because it’s near a ballpark.

In these cases, we’re not actually reducing the cost of building the ballpark. But we can arbitrage the difference between the value of the land without a ballpark, and the value of the land with a ballpark, and use that difference in value to finance the construction of the ballpark.

This is what the A’s are trying to do in Oakland.

Howard Terminal and the Coliseum are zoned somewhat differently, but most of the land for both sites is currently being used as parking lots. At Howard Terminal, it’s being used to park trucks while they wait for shipments at the Port of Oakland. At the Coliseum, it’s used to park cars for a bunch of sporting events that, because the Raiders and Warriors are moving, aren’t going to happen there any more.

So the question becomes, can the A’s acquire these land parcels at the value of a parking lot, and make them more valuable than a parking lot?

The government agencies who control these parcels have to try to figure out, how much is this land worth if they did nothing with it, or if they sold it to someone besides the A’s? The A’s have to figure out, how much could they make either parcel (or both parcels) worth if they built (or didn’t build) a ballpark on top of it? And somehow, those numbers have to work for both sides of the negotiations on the land.

This is where the arbitrage becomes a math problem. And we’re not the A’s, so we don’t have the numbers. We’re not doing the math. We don’t know if the numbers will work to meet the A’s growth minimums and targets or not. Best we can do from the outside is understand how the math would work on the arbitrage, if we did have the numbers.

And if the math works, it’s a more ethical way to finance a ballpark, because you’re not taking someone else’s money with no promise of returns or ownership in order to finance your own growth. You’re taking the inherent surplus value of a Major League Baseball team, and turning that, indirectly, into the money to build the ballpark.

Becoming a Tech Company

This is the Kaval Count element least likely to apply to a ballpark. But I want to bring it up, because it seems like the A’s under Kaval and COO Chris Giles have been trying to think like a tech company, even if the nature of their business doesn’t let them technically become one. Even if a ballpark can’t have the unique economics-busting properties of software, there are advantages to be gained by a tech-company approach.

I’m going to use Ben Thompson’s definition of a tech company from his blog, Stratechery:

Note the centrality of software in all of these characteristics:

• Software creates ecosystems.
• Software has zero marginal costs.
• Software improves over time.
• Software offers infinite leverage.
• Software enables zero transaction costs.

The question of whether companies are tech companies, then, depends on how much of their business is governed by software’s unique characteristics, and how much is limited by real world factors.

Software is a compelling thing to invest in, because it can break the laws of supply and demand. Usually, when you sell a unit of something, whether a product or a service, there is a cost to producing and distributing each unit. But with software, the cost is practically the same whether you sell one unit or one billion units. Your growth rate is never limited by supply, only by demand.

A ballpark is a physical asset, not a digital one. So it’s supply is necessarily going to be finite. The fire marshal will only allow a certain number of people into your space. You’re going to have a finite number of seats. You’re going to be limited by geographical distances; it’s hard to sell access to a ballpark in Oakland to someone in Oregon or Nevada, let alone Australia or Japan. So a ballpark can’t have the potential infinite reach that software can have. (Although, you never know, maybe some future AR/VR software may change that…)

But just because you’re too physical to have infinite reach doesn’t mean you can’t increase your reach by significant amounts, or even orders of magnitude. So let’s go through Thompson’s points, one by one:

Creating an ecosystem

The most valuable software platforms enable other people to find and create value on top of the software. This creates network effects, where the more people who are on a platform, the more useful the platform gets, which entices more people to join, and so on. Cyberspace ecosystems can grow exponentially into a winner-take-all status in a way that normal economic activity historically hasn’t.

The most successful ballparks do often create an ecosystem of other businesses around them. Bars, restaurants, parking lots and so forth all thrive when placed in proximity to a ballpark. Their loyal customers can become the ballpark’s loyal customers, and vice versa. Urban ballparks can have desirable network effects. But because this ecosystem is limited by geography, it won’t grow exponentially like software can.

Zero marginal costs

Software breaks the laws of supply and demand by having essentially an infinite supply. The cost of making the first unit of software sold is fixed, but any additional units adds almost zero additional costs.

A seat in a ballpark can only be sold a finite number of times over the lifetime of that seat. In addition, for every X number of seats you sell, you need to hire Y number of ushers and ticket takers and so forth. And there’s also the minor detail that in every professional sport, roughly half of all revenues end up going to the players on the field.

But if you start to think like a tech company instead of a traditional sports team, you can come up with innovations that look more like a zero-marginal cost product than a seat at at ballgame. The A’s Access program, introduced by the A’s in 2019, is a subscription of access to the ballpark instead of seat tickets. A’s Access may not be a zero-marginal cost product, but it has a lower marginal cost than a seat does. It allows the finite geography of a ballpark to be filled more fluidly over the course of a game and a season. That fluidity can enable a team to build a smaller ballpark, because you don’t need to hold as much inventory on hand to accommodate the same number of customers.

Improves over time

Subscriptions are attractive to both software companies and software customers. Software companies like them because they create a more steady and predictable stream of income. Customers (especially business customers) like them because they allow them to use the software flexibly with their needs without having to make any big up-front commitments.

The thing that makes the software subscription engine run is the fact that software keeps improving over time. A new version comes out regularly, and if you’re subscribed, you’ll automatically get the new and improved version. If it didn’t improve, people would probably prefer to just buy the software up-front and hold on to it as long as possible.

Traditionally, it is hard to say that a ballpark improves over time. It is a large building, and once built, changing it significantly is usually very difficult and expensive. In addition, the ballpark is designed to host a baseball team. Baseball is a zero-sum game. It is impossible to keep improving a baseball team forever. It’s going to cycle between good years and worse years.

Still, if you were committed to it, you could probably design a ballpark to be much more modular than they’ve been historically. You could plan to have different sections of the park be replaced by something new far more often than they have in the past. This would allow for more experimentation with various products, and allow the ballpark over time to keep evolving into something more attractive to subscribers and more profitable for the business.

I don’t see any evidence that the A’s have planned any modularity with their Howard Terminal renderings, which look rather monolithic. I find that a bit surprising, since the A’s under Kaval and Giles have been quite willing to shoehorn various sections of the old Coliseum into modular experiments.

Software offers infinite leverage

Basically, this means you can take the software you’ve built and move into any market in the world immediately and sell it.

Obviously, that’s impossible with a ballpark. You’re bounded by geography. But that doesn’t mean you don’t want to expand those boundaries, so you can reach as large an audience as possible. This is where the exact location of the ballpark and the ease of getting there matters.

Zero transaction costs

Of the five criteria for a tech company, this is probably the one where baseball fits most closely. To achieve zero transaction costs, you want purchasing your product to be entirely self-service. With individual tickets, you still have ticket booths, but many tickets are now sold online. Traditional season tickets tend to still be handled with salespeople, but there’s no reason the A’s Access subscription can’t be entirely self-service, as well.

Become a Monopoly

Growing a business profitably is really hard when there’s a lot of competition. Competition makes you have to fight for the available demand, downward pressure on your prices, and hence, profits. The only way to avoid that is to become a monopoly, and have no competition.

A totally pure monopoly is not really a thing that exists very often in the wild. A coffee shop may be the only coffee shop in a certain neighborhood, but it’s still competing with the coffee shops in the next neighborhood over, plus with the coffee you can buy in a grocery store and make at home. But even a small monopoly of some sort lets you keeps prices higher than you otherwise would without the competition, so it helps your profit margins.

Most professional sports teams have monopolies in their local markets in their sports. If you want to see Major League baseball in Denver, the Rockies are your only choice. But the Rockies compete with the Nuggets and the Avs and the Broncos for sports dollars, and with TV and film and theater and music for entertainment revenues.

Up until now, the A’s have probably held one of the weakest monopolies of any professional sports franchise. They share the Bay Area baseball market with the Giants. And up through the 2019 season, they’ve shared the relatively small Oakland sports market with the Warriors and the Raiders.

But that’s about to change. With the Warriors and Raiders leaving, the A’s are going to be the only major sports team in the East Bay. Their “Rooted in Oakland” campaign is designed to promote that fact. The A’s have an opportunity here to grab hold of a monopoly in the East Bay on the one hand, and then start competing harder in the adjacent markets if they can.

This is where the design of the new ballpark really matters. If the A’s build a ballpark that looks like every other sports facility, then they’re competing with every other sports facility. But if they can build something unique, that provides an experience that nobody else in the region or the world, can provide, then they would be creating another kind of monopoly that no one else can compete with. That’s why the A’s looked outside the box to find an architect who could bring something different to the table.

Of course, there are other ways to generate wins besides the statistics in the Beane Count, and there are other ways to generate profitable growth besides the elements of the Kaval Count. You can win baseball games by hitting single and doubles, and by playing great defense and baserunning. You can also win the traditional business game by selling a higher volume of a better product made at a lower cost than the competition’s.

The point is we want to think about the ballpark in a Moneyball fashion. In building a new baseball team, we’re not just replacing one player with another. In building a new ballpark, we’re not just replacing a bunch of seats around a baseball field with some other seats around a baseball field. We’re assembling a bunch of subcomponents as cost effectively as possible. Can we assemble those subcomponents in a way that they add up to reach our targets?

So why would the A’s choose Howard Terminal with its political and physical hurdles over the Coliseum? Well, maybe the math of those subcomponents tell them so. Maybe the math says there’s a bigger opportunity for arbitrage at Howard Terminal than the Coliseum. Maybe the math says an ecosystem in Downtown Oakland will create bigger network effects than an ecosystem in East Oakland. Maybe the math says they can leverage the location of Howard Terminal into a wider market, particularly of those coming off work both in Downtown Oakland and Downtown San Francisco, than they can at the Coliseum location. Maybe the math says can hold a bigger monopoly with a unique waterfront ballpark with a rooftop park with views over the bay than they can with some sort of ordinary ballpark at the Coliseum site.

And maybe there are reasons beyond the math for making some of these decisions. Maybe the A’s have goals for this ballpark beyond just economic growth. Maybe they really do want to make a cultural impact on the East Bay community with this ballpark, and they think they can do that better at Howard Terminal, numbers or not.

We can’t know for sure, of course. We don’t have the numbers, the A’s aren’t sharing them, so we can’t do the calculations ourselves. But we can take the time, especially when it’s our jobs to do so, to try to understand the way the A’s would think things through.

As I was writing a letter to my third-grade daughter’s principal in support of a change in homework policy (a letter which I’ve posted here), it occurred to me I was making a point about a phenomenon that isn’t unique to education at all, but happens in a lot of other fields, too: baseball, business, economics, and politics.

I don’t know if this phenomenon has a name. It probably does, because you’re very rarely the first person to think of an idea. If it does, I’m sure someone will soon enlighten me. The phenomenon goes like this:

* * *

Suppose you suck at something. Doesn’t matter what it is. You’re bad at this thing, and you know it. You don’t really understand why you’re so bad, but you know you could be so much better. One day, you get tired of sucking, and you decide it’s time to commit yourself to a program of systematic improvement, to try to be good at the thing you want to be good at.

So you decide to collect data on what you are doing, and then study that data to learn where exactly things are going so wrong. Then you’ll try some experiments to see what effect those experiments have on your results. Then you keep the good stuff, and throw out the bad stuff, and pretty soon you find yourself getting better and better at this thing you used to suck at.

So far so good, eh? But there’s a problem. You don’t really notice there’s a problem, because things are getting better and better. But the problem is there, and it has been there the whole time. The problem is this: the thing your data is measuring is not *exactly* the thing you’re trying to accomplish.

Why is this a problem? Let’s make a simplified graph of this issue, so I can explain.

Let’s call the place you started at, the point where you really sucked, “Point A”.
Let’s call the goal you’re trying to reach “Point G”.
And let’s call the best place the data can lead you to “Point D”.

Note that Point D is near Point G, but it’s not exactly the same point. Doesn’t matter why they’re not the same point. Perhaps some part of your goal is not a thing that can be measured easily with data. Maybe you have more than one goal at a time, or your goals change over time. Whatever, doesn’t matter why, it just matters they’re just not exactly the same point.

Now here’s what happens:

You start out very far from your goal. You likely don’t even know exactly what or where your goal is, precisely, but (a) you’ll know it when you see it, and (b) know it’s sorta in the Point D direction. So, off you go. You embark on your data-driven journey. As a simplified example, we’ll graph your journey like this:

On this particular graph, your starting point, Point A, is 14.8 units away from your goal at Point G. Then you start following the path that the data leads you. You gather data, test, experiment, study the results, and repeat.

After a period of time, you reach Point B on the graph. You are now 10.8 units away from your goal. Wow, you think, this data-driven system is great! Look how much better you are than you were before!

So you keep going. You eventually reach Point C. You’re even closer now: only 6.0 units away from your goal!

And so you invest even more into your data-driven approach, because you’ve had nothing but success with it so far. You organize everything you do around this process. The process, and changes that you’ve made because of it, actually begin to become your new identity.

In time, you reach Point D. Amazing! You’re only 4.2 units away from your goal now! Everything is awesome! You believe in this process wholeheartedly now. The lessons you’ve learned permeate your entire worldview now. To deviate from the process would be insane, a betrayal of your values, a rejection of the very ideas you stand for. You can’t even imagine that the path you’ve chosen will not get any better than right here, now, at Point D.

Full speed ahead!

And then you reach Point E.

Eek!

Egads, you’re 6.00 units away from your goal now. You’ve followed the data like you always have, and suddenly, for no apparent reason, things have suddenly gotten worse.

And you go, what on Earth is going on? Why are you having problems now? You never had problems before.

And you’re human, and you’ve locked into this process and weaved it into your identity. You loved Points C & D so much that you can’t stand to see them discredited, so your Cognitive Dissonance kicks in, and you start looking for Excuses. You go looking for someone or something External to blame, so you can mentally wave off this little blip in the road. It’s not you, it’s them, those Evil people over there!

But it’s not a blip in the road. It’s the road itself. The road you chose doesn’t take you all the way to your destination. It gets close, but then it zooms on by.

But you won’t accept this, not now, not after the small sample size of just one little blip. So you continue on your same trajectory, until you reach Point F.

You stop, and look around, and realize you’re now 10.8 units away from your goal. What the F? Things are still getting worse, not better! You’re having more and more problems. You’re really, really F’ed up. What do you do now?

Can you let go of your Cognitive Dissonance, of your Excuse seeking, and step off the trajectory you’ve been on for so long?

F is a really F’ing dangerous point. Because you’re really F’ing confused now. Your belief system, your identity, is being called into question. You need to change direction, but how? How do you know where to aim next if you can’t trust your data to lead you in the right direction? You could head off in a completely wrong direction, and F things up even worse than they were before. And when that happens, it becomes easy for you to say, F this, and blow the whole process up. And then you’re right back to Point A Again. All your effort and all the lessons you learned will be for nothing.

WTF do you do now?

F’ing hell!

* * *

That’s the generic version of this phenomenon. Now let’s talk about some real-world examples. Of course, in the real world, things aren’t as simple as I projected above. The real world isn’t two-dimensional, and the data doesn’t lead you in a straight line. But the phenomenon does, I believe, exist in the wild. And it’s becoming more and more common as computers make data-driven processes easy for organizations and industries to implement and follow.

Education

As I said, homework policy is what got me thinking about this phenomenon. I have no doubt whatsoever that the schools my kids are going to now are better than the ones I went to 30-40 years ago. The kids learn more information at a faster rate than my generation ever did. And that improvement, I am confident, is in many ways a result of the data-driven processes that have arisen in the education system over the last few decades. Test scores are how school districts are judged by home buyers, they’re how administrators are judged by school boards, they’re how principals are judged by administrators, and they’re how teachers are judged by principals. The numbers allow education workers to be held accountable for their performance, and provide information about what is working and what needs fixing so that schools have a process that leads to continual improvement.

From my perspective, it’s fairly obvious that my kids’ generation is smarter than mine. But: I’m also pretty sure they’re more stressed out than we were. Way more stressed out, especially when they get to high school. I feel like by the time our kids get to high school, they have internalized a pressure-to-perform ethic that has built up over years. They hear stories about how you need such and such on your SATs and this many AP classes with these particular exam scores to get into the college of their dreams. And the pressure builds as some (otherwise excellent) teachers think nothing of giving hours and hours of homework every day.

Depression, anxiety, panic attacks, psychological breakdowns that require hospitalization: I’m sure those things existed when I went to school, too, but I never heard about it, and now they seem routine. When clusters of kids who should have everything going for them end up committing suicide, something has gone wrong. That’s your Point F moment: perhaps we’ve gone too far down this data-driven path.

Whatever we decide our goal of education is, I’m pretty sure that our Point G will not feature stressed-out kids who spend every waking hour studying. That’s not the exact spot we’re trying to get to. I’m not suggesting we throw out testing or stop giving homework. I am arguing that there exists a Point D, a sweet spot with just the right amount of testing, and just the right amount of homework, that challenges kids the right amount without stressing them out, and leaves the kids with the time they deserve to just be kids. Whatever gap between Point D and Point G that remains should be closed not with data, but with wisdom.

Baseball

The first and most popular story of an industry that transforms itself with data-driven processes is probably Michael Lewis’s Moneyball. It’s the story of how the revenue-challenged Oakland A’s baseball team used statistical analysis to compete with economic powerhouses like the New York Yankees.

I’ve been an A’s fan my whole life, and I covered them closely as an A’s blogger for several years. So I can appreciate the value that the A’s emphasis on statistical analysis has produced. But as an A’s fan, there’s also a certain frustration that comes with the A’s assumption that there is no difference between Point D and Point G. The A’s assume that the best way to win is to be excruciatingly logical in their decisions, and that if you win, everyone will be happy.

But many A’s fans, including myself, do not agree with that assumption. The Point F moment for us came when, during a stretch of three straight post-season appearances, the A’s traded their two most popular players, Yoenis Cespedes and Josh Donaldson, within a span of six months.

I wrote about my displeasure with these moves in an long essay called The Long, Long History of Why I Do Not Like the Josh Donaldson Trade. My argument was, in effect, that the purpose of baseball was not merely winning, it was the emotional connection that fans feel to a team in the process of trying to win.

When you have a data-driven process that takes emotion out of your decisions, but your Point G includes emotions in the goal of the process, it’s unavoidable that you will have a gap between your Point D and your Point G. The anger and betrayal that A’s fans like myself felt about these trades is the result of the process inevitably shooting beyond its Point D.

Business

If Moneyball is not the most influential business book of the last few decades, it’s only because of Clayton Christensen’s book, The Innovator’s Dilemma. The Innovator’s Dilemma tells the story of a process in which large, established businesses can often find themselves defeated by small, upstart businesses with “disruptive innovations.”

I suppose you can think of the phenomenon described in the Innovator’s Dilemma as a subset of, or perhaps a corollary to, the phenomenon I am trying to describe. The dilemma happens because the established company has some statistical method for measuring its success, usually profit ratios or return on investment or some such thing. It’s on a data-driven track that has served it well and delivered it the success it has. Then the upstart company comes along and sells a worse product with worse statistical results, and because of these bad numbers, the establish company ignores it. But the upstart company is on an statistical path of its own, and eventually improves to the point where it passes the established company by. The established company does not realize its Point D and Point G are separate points, and finds itself turning towards Point G too late.

Here, let’s graph the Innovator’s Dilemma on the same scale as our phenomenon above:

The established company is the red line. They have reached Point D by the time the upstart, with the blue line, gets started. The established company thinks, they’re not a threat to us down at Point A. And even if they reach our current level at Point D, we will beyond Point F by then. They will never catch up.

This line of thinking is how Blockbuster lost to Netflix, how GM lost to Toyota, and how the newspaper industry lost its cash cow, classified ads, to Craigslist.

The mistake the establish company makes is assuming that Point G lies on/near the same path that they are currently on, that their current method of measuring success is the best path to victory in the competitive market. But it turns out that the smaller company is taking a shorter path with a more direct line to the real-life Point G, because their technology or business model has, by some twist, a different trajectory which takes it closer to Point G than the established one. By the time the larger company realizes its mistake, the smaller company has already gotten closer to Point G than the larger company, and the race is essentially over.

* * *

There are other ways in which businesses succumb to this phenomenon besides just the Innovator’s Dilemma. Those companies that hold closely to Milton Friedman’s idea that the sole purpose of a company is to maximize shareholder value are essentially saying that Point D is always the same as Point G.

But that creates political conflict with those who think that all stakeholders in a corporation (customers, employees, shareholders and the society and environment at large) need to have a role in the goals of a corporation. In that view, Point D is not the same as Point G. Maximizing profits for the shareholders will take you on a different trajectory from maximizing the outcomes for other stakeholders in various proportions. When a company forgets that, or ignores it, and shoots beyond its Point D, then there is going to inevitably be trouble. It creates distrust in the corporation in particular, and corporations in general. Take any corporate PR disaster you want as an example.

Economics

I’m a big fan of Star Trek, but one of the things I never understood about it was how they say that they don’t use money in the 23rd century. How do they measure the value of things if not by money? Our whole economic system is based on the idea that we measure economic success with money.

But if you think about it, accumulating money is not the goal of human activity. Money takes us to Point D, it’s not the path to Point G. What Star Trek is saying is that they somehow found a path to Point G without needing to pass through Point D first.

But that’s 200 years into a fictional future. Right now, in real life, we use money to measure human activity with. But money is not the goal. The goal is human welfare, human happiness, human flourishing, or some such thing. Economics can show us how to get close to the goal, but it can’t take us all the way there. There is a gap between the Point D we can reach with a money-based system of measurement, and our real-life Point G.

And as such, it will be inevitable that if we optimize our economic systems to optimize some monetary outcome, like GDP or inflation or tax revenues or some such thing, that eventually that optimization will shoot past the real-life target. In a sense, that’s kind of what we’re experiencing in our current economy. America’s GDP is fine, production is up, the inflation rate is low, unemployment is down, but there’s still a general unease about our economy. Some people point to economic inequality as the problem now, but measurements of economic inequality aren’t Point G, either, and if you optimized for that, you’d shoot past the real-life Point G, too, only in a different direction. Look at any historically Communist country (or Venezuela right now) to see how miserable missing in that direction can be.

The correct answer, as it seems to me in all of these examples, is to trust your data up to a certain point, your Point D, and then let wisdom be your guide the rest of the way.

Politics

Which brings us to politics. In 2016. Hoo boy.

Well, how did we get here?

I think there are essentially two data-driven processes that have landed us where we are today. Both of these processes have a gap between what we think of as the real-life goals of these entities, and the direction that the data leads them to. One is the process of news outlets chasing media ratings. And the other is political polling.

In the case of the media, the drive for ratings pushes journalism towards sensationalism and outrage and controversy and anger and conflict and drama. What we think journalism should actually do is inform and guide us towards wisdom. Everybody says they hate the media now, because everybody knows that the gap between Point D and Point G is growing larger and larger the further down the path of ratings the media goes. But it is difficult, particularly in a time where the technology and business models that the media operate under are changing rapidly, to change direction off that track.

And then there’s political polling. The process of winning elections has grown more and more data-driven over recent decades. A candidate has to say A, B, and C, but can’t say X, Y, or Z, in order to win. They have to casts votes for D, E, and F, but can’t vote for U, V or W. They have to make this many phone calls and attend that many fundraisers and kiss the butts of such and such donors in order to raise however many millions of dollars it takes to win. The process has created a generation of robopoliticians, none of whom have an original idea in their heads at all (or if they do, won’t say so for fear of What The Numbers Say.) You pretty much know what every politician will say on every issue if you know whether there’s a “D” or an “R” next to their name. Politicans on neither side of the aisle can formulate a coherent idea of what Point G looks like other beyond a checklist spit out of a statistical regression.

That leads us to the state of the union in 2016, where both politicians and the media have overshot their respective Point Ds.

And nobody feels like anyone gives a crap about the Point G of this whole process: to make the lives of the citizens that the media and the politicians represent as fruitful as possible. Both of these groups are zooming full speed ahead towards Point F instead of Point G.

And here are the American people, standing at Point E, going, whoa whoa whoa, where are you all going? And then the Republicans put up 13 robocandidates who want to lead everybody to the Republican version of Point F, plus Donald Trump. The Democrats put up Hillary Clinton, who can probably check all the data-driven boxes more skillfully than anybody else in the world, asking to lead everybody to the Democratic version of Point F, plus Bernie Sanders.

And Trump and Sanders surprise the experts, because they’re the only ones who are saying, let’s get off this path. Trump says, this is stupid, let’s head towards Point Fascism. Sanders says, we need a revolution, let’s head towards Point Socialism.

And most Americans like me just shake our heads, unhappy with our options, because Fascism and Socialism sound more like Point A than Point G to us. I don’t want to keep going, I don’t want to start over, and I don’t want to head in some old discredited direction that other countries have headed towards and failed. I just want to turn in the direction of wisdom.

“It’s not that hard. Tell him, Wash.“

“It’s incredibly hard.”

Once upon a time, about a billion years ago, life was simple. Everybody lived in the oceans, and everybody had only one cell each. This was quite a fair and egalitarian way to live. Nobody really had significantly more resources than anyone else. Every individual just floated around, and took whatever it needed and could find, and just let the rest be.

This golden equilibrium was how life did business for a couple billion years. There was no such thing as jealousy or envy, and as a result, everyone lived pretty happy lives.

Then, one day about 800 million years ago, a pair of single-celled organisms merged to become the first multi-cellular organism in the history of the earth.

At first, these multi-celled creatures were just kind of like big blobs of single-celled organisms, and didn’t cause a lot of problems. Everybody was still kind of doing the same job as everyone else, even if they had organized themselves into a limited corporation of sorts. Most other single-celled creatures just figured they were harmless weirdos hanging out together, and ignored them.

Image credit to Julian Frost via Creative Commons License

They could not have been more wrong. For once the multi-cell genie was out of the bottle, Pandora’s box could not be closed, and the dominos began to fall. This simple change may have seemed innocent at first, but little did the single-cells know that they were the first creatures on earth to fall victim to the innovator’s dilemma. The single-celled creatures were far too invested in the status quo to change, and consequently ignored the multi-cellulars as irrelevant, and did not realize until it was too late that the game had suddenly shifted.

Continue…

I don’t remember the first time I ever saw a video game. I doubt it was as early as 1973. I know my next-door neighbor had an Atari 2600 in 1978, and I had a Mattel Electronics Football game around the same time. I know I went minigolfing for a couple birthdays in between there, and the minigolf place had an arcade. They probably had Pong, if not a few other video games in the arcade. Probably, then, I first laid eyes on a video game around 1976 or so.

So this Random Wikipedia article, 1973 in video gaming, comes a few years too early for me to have any personal memories. As a historical landmark, it’s one year too late. The big year in video gaming is 1972. In 1972, Atari was founded and they produced Pong. Additionally in 1972, Magnavox introduced the Odyssey, the first home video game console.

So 1973 was a period of infancy for video games–after they were invented, but before they became a major force in popular culture. Did the people working on video games back really believe it would later become a huge deal? Or did they assume they were just part of a temporary fad, just trying to figure something out, maybe eking out a living or something if they’re lucky, but not really suspecting they were incubating a baby entertainment industry that would eventually be as big as movies or TV?

And what’s the 2013 version of video gaming — the rough beast that’s just a baby now, barely even noticed, but one day will grow to be king of the world?

I’m looking to buy some office-type furniture for our home office. So I looked in our IKEA catalog, but I didn’t really see anything that satisfied me. However, the catalog had a pointer to their IKEA Business web site, so I typed in the URL, and clicked around. It was just a bunch of marketing hype. I could not find any actual products.

Do you remember the first time you stepped into an IKEA store? How utterly confusing it was? How you were led into the display section of the store, and the store seemed to just go on and on and on forever? How you had no idea how you would actually decide on buying any of this stuff? And how if you actually did decide you wanted something, how in the heck the process of actually buying stuff worked? How some things you have to order upstairs with a sales person, and then pay for it first downstairs at the register, and then pick it up after the register at delivery services? How other things you can’t order upstairs, and you have to go pick up yourself in the warehouse, and pay for it after you pick it up? And how other things were neither preordered upstairs, nor picked up in the warehouse, but instead were found in a section of the store called the “Marketplace”?

I’ve been shopping at IKEA stores since 1979, so this doesn’t confuse me anymore. But I was thinking about this as I read an article in the Washington Post by Dylan Matthews called “Is Sweden awesome because it mooches off the U.S.?” The article links to a new economic model that predicts that “cuddly capitalist” states like Sweden really only work when there are “cutthroat capitalist” states like the US operating alongside it.

I don’t really have any opinion on how valid or useful that economic model is. I suppose it sounds plausible. But as Matthews points out, Sweden isn’t exactly a good example of cuddly capitalism anymore, while the US isn’t a pure example of cutthroat capitalism, either. Sweden has had a right-wing government for half a decade now, while America has been run by a left-wing president. Sweden isn’t as “awesome” as some American left-wingers seem to think, nor is it as dystopian as some American right-wingers do. I don’t think that the differences between the countries are a simple as a two-dimensional scale of with “capitalism” and “socialism” on the other. There are lots of other differences, too, like culture.

* * *

“Cuddly capitalism” is a weird term. IKEA isn’t cuddly. It’s a user-interface nightmare. It’s designed for the efficiency of the organization, not for the benefit of the customers. And IKEA isn’t alone. When I visited Sweden this summer, I found that the whole country seems to operate on this mentality. It’s a country of the bureaucracy, by the bureaucracy and for the bureaucracy. And I’m not just talking government bureaucracies here. IKEA is as capitalist as they come. It’s everywhere.

I went into a Burger King at one point to get some fast food for my kids who were getting cranky. I tried to see what they had on their menu, and how much my choices cost. They didn’t have a menu, just some gigantic photographs of about five different value meals to choose from. What if I don’t want a value meal, just some hamburgers? What did that cost? I couldn’t find the information. So I said, forget it, I’ll just go next door to McDonalds.

When I went to McDonalds, same thing. No list of what they sell, just five gigantic pictures of their extra value meals. I went up to the counter. “Do you have a menu somewhere I could look at?” I asked. “No, unfortunately, we don’t,” she said.

A restaurant without a menu! The concept had never occurred to me. I guess they just assume that their customers have been there before, and already know exactly what they want, and don’t care how much any of it costs.

Everywhere I went in Sweden, I started noticing the same thing. Buses, subways, airports, grocery stores, convenience stores…a sort of implicit assumption that everybody already knows how their crazy system works. (And trains. Don’t get me started on how horrible it is to interact with the Swedish Railway system.) Every time I tried to ask for help, I got snippy answers from annoyed customer service agents. “Of course, you can’t buy that kind of subway ticket from me, a subway employee, here in this booth at the subway station gates where I sell many other kinds of subway tickets to many other subway customers, you have to go next door into the convenience store to buy that kind of ticket. Don’t you know anything, you idiot?” they said with their tone of voice if not their actual words.

When I complained to my wife about how unhelpful these people are, she said she never experiences that in Sweden. “But I always ask in English. Why don’t you try asking in English yourself next time?”

So I started doing exactly that. Even though I can speak Swedish quite fluently, for the rest of the trip, whenever I needed any customer service at all, I asked in English instead of Swedish. And…magic! All of a sudden, people were quite nice to me! “Of course, I’ll help you, you poor dumb American who has never seen or experienced our advanced civilization before, I’d be happy to help you navigate through the finer details of our wonderfully efficient system.”

I’m sure these Swedish organizations sure are indeed efficient, from point of view of the organization, not the customer. But this organizational efficiency can exist only because Swedish culture tolerates it. As a Swede, you are expected to conform to the way things are organized. If Swedes had a more confrontational and unconformist culture instead of a consensus-driven one, these unfriendly user experiences would have to change, because the confrontations would start costing them too much.

* * *

When I want cheap furniture that I can pick up today and bring home with me immediately, nobody is better than that than IKEA. They are masters at packing large furniture into small flat, car-sized boxes at low prices. As Clayton Christensen points out in his book “How Will You Measure Your Life?”:

It’s fascinating that in forty years, nobody has copied IKEA. Think about that for a second. Here is a business that has been immensely profitable for decades. IKEA doesn’t have any big business secrets–any would-be competitor can walk through its stores, reverse-engineer its products, or copy its catalog … and yet nobody has done it.

I wonder if would-be competitors walk through IKEA’s stores and get as confused as the customers. They somehow think that the whole key to IKEA’s success is this overwhelming, confounding customer experience. Potential competitors can’t understand it or imagine how to replicate it, so they don’t bother.

The customer doesn’t hire IKEA because they want a confusing experience. They hire IKEA because the job to be done is cheap furniture which can be easily transported home. A confusing customer experience isn’t necessary, it’s just happens to be that way, because it’s more efficient for IKEA to do it that way, because Swedish culture let such unusual operational processes grow into being.

But there’s no reason that someone can’t create a furniture company focused on low prices, transportability AND a pleasant customer experience. The potential is lurking there under the surface, like a clerk waiting to be asked a question in English instead of in Swedish.

Yesterday, I mentioned in passing how I enjoy baseball on two levels: one level in rooting for my team, and another in the aesthetic quality of the game. The day before, I defended the idea of cross-pollinating new scientific ideas with older fields of human endeavor, to see what comes out of the mix. So today, let’s make a new hybrid.

How can we explain the psychological attraction in rooting for a team? Why, when we’re watching two teams that we have no previous attachment to, do we often find ourselves rooting for one team or another anyway? And how is this different or separate from the aesthetic joy of watching a game?

* * *

As I write this, I am watching Ian Kinsler bat against my favorite baseball team, the Oakland A’s. On the rooting level, I want him to fail and flail badly. But on an aesthetic level, I admire Kinsler. His at-bats, the way he takes bad pitches and fouls off good pitches until he can get a good pitch to hit, are probably the most consistently good at-bats I’ve seen from any player since Rickey Henderson. If our enjoyment of sports were only about rooting interest, I should be incapable of appreciating Kinsler at all. If our enjoyment of sports were only aesthetic, I wouldn’t have a reason to want to see him fail.

Can baseball fandom be fully expressed in a mere two-dimensional chart, with rooting on the x-axis, and aesthetics on the y-axis? No, of course not. For instance, suppose the A’s pitcher were Bartolo Colon. Colon was suspended in August for performance enhancing drugs, but let’s say he’s served his suspension and now he’s pitching. Do I still root for him to succeed? Yes, he’s on my favorite team. But now there’s a moral dimension on the z-axis added to the mix, too. We can go on. Fandom is complex.

* * *

But still, we want to talk about it, so we need to model it. Do we need modern science to do so? Not really. For example, Aristotle, addressed such issues over two millenia ago. Here’s a paragraph on Aristotle’s aesthetics, from a 1902 version of Encyclopedia Britannica:

Elsewhere he (Aristotle) distinctly teaches that the Good and the Beautiful are different (heteron), although the Good, under certain conditions, can be called beautiful. He thus looked on the two spheres as co-ordinate species, having a certain area in common. It should be noticed that the habit of the Greek mind, in estimating the value of moral nobleness and elevation of character by their power of gratifying and impressing a spectator, gave rise to a certain ambiguity in the meaning of to kalon, which accounts for the prominence the Greek thinkers gave to the connection between the Beautiful and the Good or morally Worthy.

Not sure if Aristotle meant Good and Morally Worthy were separate things or the same, but I’ll assume they’re separate. So applying Aristotle to my example above, the A’s are Good, Ian Kinsler is Beautiful, but Bartolo Colon is Morally Unworthy.

* * *

Aristotle’s three dimensions are a kind of model of this aspect of human nature. And since this model is still being discussed 2,000 years later, we can certainly say that this model has a certain level of usefulness. But does this model accurately map to the actual structure and organization of the human brain? Can we explain this structure in terms of evolution, that there were some sort of selective pressures which led to this behavior?

Aesthetics and morality are huge subjects, so I’ll pass on those in this blog entry, and just focus on the rooting aspect.

Group behavior has always been a bit of a tricky subject for evolutionist to explain. It’s easy to explain selfish individual behavior: it’s behavior that’s directed towards passing your genes on to the next generation over the genes of your rivals. The prevailing explanation for most of the last 40 years or so has been kin selection: unselfish behavior towards your kin helps pass more of your genes along to the next generation. Any sort of unselfish behavior toward people who are not your kin is just sort of a side effect of unselfish behavior towards your kin.

But that’s an unsatisfying explanation, particularly if you apply it to team sports. Why do I go to the Coliseum, dress up in green and gold with thousands of other A’s fans, 99.999% of who are not my kin, and cheer the team together with them? It’s really hard to make a convincing argument that I’m doing it to pass my genes on.

The alternative explanation is group selection. Group selection is a theory that fell out of favor in the 1960s, but in recent years has been making a comeback. In his recent book, The Social Conquest of Earth, E.O. Wilson argues strongly in favor of group selection as an explanation for human social behavior.

Under group selection theory, human evolution happens in two dimensions. There’s a selfish dimension that pushes individuals to promote their genes over others within their group. But there’s also a dimension that pushes us to behave in ways to promote the genes of the group over the genes of rival groups. In times of war or drought or famine, those groups who behave in ways that encourage cooperation instead of selfishness survive to pass their genes on more than the groups whose individuals behave more selfishly.

Under group selection theory, the behavior we see in team sports makes much more sense. We naturally form emotional attachments to our groups, because we were evolved to do just that. As E.O. Wilson points out, every single animal that exhibits social behavior (including the one Wilson is expert in, ants) evolved its social behavior to protect and defend a nest. So we root, root, root for the home team, and find it extremely irritating when invading Yankee fans come into our home nest and chant for their team, instead. The joy we feel when our group wins, the pain we feel when our group loses — those are emotions that evolved in our brains to promote the genetic survival of our groups.

* * *

Note I said “our groups.” Jason Wojciechowski has an article today (Baseball Prospectus, $ required) on the use of the word ‘we’ in reference to team sports. Is it appropriate for fans to use the word “we”, or should that be limited only to the players on the team? Jason tries to define that line somewhere in along the lower level employees of the team. I don’t think that works (which Jason ultimately acknowledges).

Former Baseball Prospectus writer Kevin Goldstein used to rail against fans using ‘we’ on Twitter all the time. At one point (which I can’t find now — Twitter search sucks) — he argued that you don’t say ‘we’ to refer to your favorite band, so why should you do so for your favorite team?

I strongly disagree with Kevin here. A band is different from a team. You like the band primarily because of the aesthetic experience it provides you. But as we’ve seen here, the aesthetic experience is only a small part of the experience of watching baseball. Sports are the most popular activity on earth right now not because they provides an aesthetic experience alone — but because they have gone beyond that and tapped into the a primal root of human evolution: the network of emotions that group selection has hardwired into us.

The reason professional sports is a profession at all is because it creates the feeling of ‘we’. That feeling is the main point of team sports. We-ness is the product.

To have a business that sells a product, we, and then to deny those customers the use of the very word that best describes the product–that’s madness.

Scott Adams of Dilbert fame has a thought experiment on his blog today. He wonders: what would we do if there was a drug that could increase human motivation? Adams writes:

As a practical matter, it might be cheaper and easier to tweak the motivational chemistry of people who are in bad circumstances instead of trying to fix their circumstances and hope that’s enough to stimulate their natural motivation.

I don’t want to pick on Adams’ essay too much, because it’s a thought experiment, not a serious proposal. But on the other hand, it’s an instructive example to use, because it shows some of the mistaken assumptions we make about human motivation.

Yesterday, I said that I wanted to read Clayton Christensen’s new book, “How Will You Measure Your Life?” So I went ahead and bought it for my Kindle, and began reading. And coincidentally enough, Christensen spends an early chapter talking about the latest scientific understanding of human motivation, specifically in regards to the workplace.

The basic misunderstanding that Christensen points out is that most people assume there is a single scale of job satisfaction that looks something like this:

But it turns out job satisfaction and job dissatisfaction are two completely unrelated things. You can be both satisfied and dissatisfied with your job at the same time. There are actually two scales, not one, that look more like this:

and

The reason for this, Christensen explains, is that dissatisfaction comes from external influences. Things that cause dissatisfaction are things like an unsafe work environment, not having the right tools to do the job, bad relationships with colleagues and managers, and low or unfair pay. Fredrick Herzberg, a leading researcher on motivation theory, called these things “hygiene factors”.

An impure, or “unhygienic”, work environment makes us dissatisfied. But a pure environment doesn’t make us satisfied. Satisfaction is internal, and it arises from the relationship between the individual and the work. Do you have responsibility over what happens? Is the work challenging? Are you improving? Is the work important? As I mentioned the other day, Daniel Pink calls these motivators “autonomy, mastery, and purpose.”

So there’s a function in the brain where “autonomy, mastery, and purpose” are the inputs, and motivation is the output. Can you replace that input with a chemical, and still get motivation as an output? That seems unlikely to me. The input isn’t a mere chemical, it’s a complex set of biological wires.

But whatever — that’s science fiction. What matters is this: even if you could fix motivation with a pill, you still wouldn’t have fixed demotivation, because that’s a completely separate thing. If you want to lift people up, you can’t just make them or tell them or teach them to be more motivated. That’s only half the equation. You also have to fix the external factors that are demotivating them at the same time.

And maybe if we had a two-party system that worked, the party that wants to tell people that they should be more internally self-motivated could work together with the party that wants to fix all the external factors that demotivate people, and we could actually get something done around here.

My mom lives in Sweden, but she worked in the US for 10 years, so she qualifies to get a small little Social Security check each month. When I talked to her on the phone the other day, she complained that she wasn’t getting a very good exchange rate anymore. “That’s because you live in pretty much the only country on earth whose government hasn’t screwed up their economy,” I said. The relative health of the Swedish economy versus the rest of the world makes the Swedish crown stronger and worth more. When she tries to buy Swedish crowns with her US Dollars now, she doesn’t get as much as she used to.

Then we talked a bit about the American elections. I’m finding this year’s elections mostly uninteresting. Romney is trying (not too successfully) to stick to the narrative that Obama has screwed up the economy. I can agree that the US economy has been mishandled, but at the same time, I find that everyone else’s economy around the world (save Sweden’s) has been mishandled, too, and most of them have been mishandled far worse than America’s. I wouldn’t trade America’s economy right now for Europe’s. Or China’s — they’ve got a real estate bubble that’s probably going to burst soon just like ours did in 2008.

So America isn’t doing so well — but the competition is worse. That kinda makes us like a young athlete who is playing in a league that he’s too good for. He doesn’t have to work to improve; it seems pretty safe to just use his same old tricks to win the game he’s playing today. He’s not challenged by outside competition to innovate. And so I see both political parties are pretty much sticking to the same old playbooks they’ve used since I was a kid in the 70s and 80s. There are really no new ideas in this election.

I feel, though, that these playbooks are almost all used up. Each party is very near to getting what they have fought hardest for during my lifetimes. When the Democrats finally get gay marriage and universal healthcare on the books, which will probably happen if Obama wins, what will they want next? When the Republicans finally get taxes down as far as they can realistically go, and they’re pretty darn close, what’s their plan beyond that? I don’t see anything. It just looks like trench warfare in America to me after that, pushing the lines six inches here, six inches there, but not really getting anywhere new.

Which is fine, as long as the rest of the world stagnates along with us.

I worry, though, that the technology of the 21st century is producing a tectonic shift in economics itself. These sorts of disruptive technological shifts can punish the old guard who are too slow to change, and create new winners out of those who are less invested in an old way of doing things.

I’ll give some examples of what I mean. Here’s a talk by Daniel Pink about the what the latest science tells us about human motivation:

The interesting thing there is that basic carrot-and-stick economics–pay someone more if he does a good job–works remarkably well as motivation if the task is mechanical and/or routine. Those types of tasks formed the large majority of jobs all throughout human history, until the invention of the personal computer.

What has the computer done to those types of jobs? They’ve taken them over. If a job is repetitive or routine or algorithmic, a computer can now do that job cheaper and more effectively than a human being. So human beings have to move on to other types of jobs.

What types of jobs are those? Jobs that require human creativity and complex cognitive thought. And these are precisely the jobs where Daniel Pink points out that monetary rewards suppress productivity instead of enhancing it.

What does it do to the science of economics when higher monetary rewards suddenly start resulting in lower productivity? How do you design economic policy around that? The old playbooks that our political parties use now don’t address that question. Those old playbooks assume carrots and sticks always work. And they did work just fine, up until the time that you could fit a whole network of supercomputers in your pocket.

Computers also affect basic economics by ruining the supply/demand ratio. Throughout human history, up until the computer, anything of an economic nature that was made or done, was done in an environment of scarcity. Anything you can think of, there was a finite, limited supply of that thing. But now, thanks to computers, you can make 7 billion copies of this blog entry with barely any extra added cost to you at all. Scarcity does not exist in a digital environment. Supply is infinite.

This goes beyond just digital media. It affects other areas of human endeavor, like education. Our education system is designed around the concept that information is scarce, and it needs to be transferred from teacher to student, in order to prepare them for adulthood. But now, information is not scarce, students can acquire as much of it as they like for practically nothing. The jobs today’s kids will have when they grow up will not depend at all on what information they have, but on their skills in manipulating an infinite supply of information in creative new ways. How do we set up our educational institutions to function in a world of information plenty?

And soon, as 3D printers become more and more ubiquitous, scarcity will become a thing of the past for many physical objects, as well. What does that do to the manufacturing industry? What kind of policies do we need to manage that transition?

I have no answers to these questions. Neither do any of today’s political parties or candidates. It’s too new, too strange, and there’s not really a competitive threat that is forcing them to try to figure any of this out.

But at some point, if we Americans don’t at least start asking ourselves these new questions instead of re-asking the same old ones, some upstart countries will. And when the upstarts ask themselves these questions, at least one of them will be a Billy Beane-type who figures out some good answers, and moves his little country from an afterthought to a powerhouse. If we’re serious about winning the 21st century like we did the 20th, we should work hard to Moneyball them before they Moneyball us. Otherwise, we’ll wake up one day as the stodgy old rich team needing to scramble to catch up, wondering what happened to the good old days when America did things better than everyone else almost as a mechanical routine, without needing a second thought.

As Apple announces the iPhone 5 today, I want to make a confession. It’s a bit embarrassing for someone like me who has spent his career in high tech, but here goes: I don’t have a cell phone.

At first, my reason was this: I lived and worked and played on a very flat island with no tall buildings, so coverage was awful. I had reception in only one room of my house, not at all in my office three blocks away, and spotty reception where I play indoor soccer. I spent 95% of my time at those three places, and I wouldn’t be getting what I was paying for. When I went out somewhere that coverage was better, I’d borrow my wife’s cheap pay-as-you-go phone, and my needs were met.

The cell phone service providers made a mistake. They gave me an opportunity to learn that I could live without them.

* * *

This is the image of an industry suddenly collapsing.

Why did the newspaper industry suddenly collapse like that? Because it got hit from two sides at once by the Internet. Craigslist and eBay took away their classified ad business, while blogs and online news sources directed their readership elsewhere for the same information. Newspapers might have been able to handle a one-front battle, but a two-front battle was catastrophic.

But there’s something else that hurt the newspaper industry: the indirect nature of their feedback loop. It’s a business model that provides a service to one group of people, while taking money from a different group of people.

The best kind of feedback for a business is revenue. If your revenue increases or decreases, you’re going to notice. But when the users of your product aren’t providing the revenue for your product, your feedback loop has a natural delay to it. The people who give you revenue might lead you to innovate (or not) in a direction your users won’t like, and you won’t notice that you’re making a mistake because it takes a while for that problem to reach your bottom line. So you react too slowly, and that slowness can be fatal.

* * *

In fact, all businesses that rely on advertising have this problem. Their users want one thing, and the revenue generators want something different. So if a company like Facebook starts alienating their customers in an effort to maximize their revenues, they may find themselves not just the subject of an Onion parody, but ruining their business before the bottom line has time to let them know they’ve made a mistake.

* * *

Amazon CEO Jeff Bezos is a very smart man. He understands this problem. He knows that the key to keeping ahead of the rapid pace of high-tech change is to master the feedback loop between what his customers want next, and what his company makes next. That’s why in his Kindle press conference last week, he laid out this doctrine:

Think about the major players in high tech right now: Microsoft, Google, Facebook, Twitter, Amazon, Apple. Which of these has their revenues most directly aligned with what their customers want? It’s probably in roughly this order:
Amazon/Apple
(gap)
Microsoft
(gap)
Google
(gap)
Twitter/Facebook.

Amazon and Apple sell most of their products directly to their users. When their customers buy something they make, they know the product is good; when they don’t buy, they know immediately they made a mistake. Microsoft doesn’t sell directly to users– they sell to distributors and OEM manufacturers, so there’s noise injected into their feedback loop, and they land just a little lower on this spectrum. Google sells ads, but their ads are often directly related to what the customer wants; if someone is searching for jeans, they get an ad for jeans. Sometimes the ad happens to be exactly what the user wants.

Twitter and Facebook, on the other hand, need to inject their ads into an environment where the users wouldn’t really want to see ads at all if they didn’t have to. This leads to customer dissatisfaction, expressed not just in the Onion parody above, but also in a real-life alternative social networks like App.net who are trying to sell directly to users.

* * *

My favorite product of all is probably Major League Baseball. I consume a lot of Major League Baseball. But MLB is going in a very tempting, but dangerous direction. When MLB began, a vast majority of their revenues came from the product their users consume. They sold tickets to the games, and that’s how they made their money. But more and more of MLB’s revenues are coming from indirect sources.

At a local level, if you’re a team like the Oakland A’s, who play in an antiquated stadium that doesn’t generate a lot of revenues, a big proportion of your money comes from TV and league-wide revenue sharing. So you can do things over a number of years, like threaten to move away and trade away favorite players, that damage your brand but aren’t directly noticeable in your bottom line. Ownership may not even know how much their fans hate them, because their loyalty to their local team keeps them around despite their dissatisfaction. But eventually, there may be a straw that breaks the camel’s back. Los Angeles Dodger fans may have hated owner Frank McCourt for years, but it was only in the last year of his tenure that the dissatisfaction actually became truly noticeable in attendance figures. The feedback loop in baseball has quite a long delay.

In recent years, baseball’s misalignment problem has accelerated almost exponentially. Like the newspaper industry, the source of this change is new technology. Unlike the newspaper industry, however, the change has caused MLB’s revenues to increase, not decrease, dramatically.

The reason for this change is twofold:

1. The DVR allows people to skip through commercials on TV. This makes live events, which people can’t skip through, a much more valuable delivery mechanism for advertising.
2. Internet video allows people to watch television shows and movies without subscribing to any sort of cable or satellite TV service. Cable/satellite may or may not be shedding customers at the moment, but it’s certainly not growing much, and without sports would almost certainly be shrinking. This makes sports networks extremely important to cable and satellite providers: without them, most people will eventually learn to do without cable TV, and just get all their content from the Internet.

So this sets up a strange mismatch between what MLB customers want, and what their revenues tell them to do. MLB fans want to watch their favorite team on whatever device they prefer. But MLB’s revenue stream is depending more and more on their customers NOT being able to watch their team over the internet, forcing them to watch on TV.

MLB’s revenues come less and less directly from baseball fans, and more and more indirectly, from TV networks and cable/satellite providers.

This causes MLB to lose control over the customer experience of their fans. If a TV network and a cable provider can’t come to an agreement on price, for example, Padres fans can go a whole season without being able to watch their team on TV. And if not all TV networks are available on all cable/satellite services, fans have to scramble around to watch the games they want.

Or, fans just go without. And what does that do? It ends up teaching them that they can learn to live without your product. That too, may not be noticeable right away, until it snowballs too late for you to do anything about it.

* * *

But you can’t really blame MLB, can you? If you’re the Los Angeles Angels and someone wants to pay you $3 billion dollars over 20 years for your TV rights, do you turn that down? No, probably not.

In expectation of an even larger payday than the Angels got, the Los Angeles Dodgers recently sold for $2.1 billion. Given that the estimated value of the Dodgers just a year before that was about $800 million, over 60% of the value of the franchise lies in that regional TV deal.

But think about that for a second. The new owners of the Dodgers spent $1.3 billion dollars on a business model that:
(a) depends almost entirely on another industry that isn’t growing, and would be in steep, steep decline without your industry. If either one of your industries catches a cold, the other one will necessarily start sneezing.
(b) puts your industry in a complete misalignment with your customers, requiring you to prevent your customers from consuming your product in the way they’d prefer, distancing yourself from the revenue feedback loop, making it more difficult to know if you’re doing any long-term damage to your product, and where you need to improve.

The new Dodger owners obviously didn’t care. Maybe they didn’t think about these risks. Or maybe they did, and thought the math worked anyway. Or maybe they considered it, but they thought they could sell the team to someone else before the whole house of cards fell in, like an investor in a Ponzi scheme who doesn’t think he’ll be the one who ends up being the victim.

Who knows. But me, I wouldn’t touch a business model like that with a 10-mile pole.

Here’s day 2 of my experiment in learning to become a writer. I’ve got an hour and a half now to write something, and it just doesn’t feel like enough time. I am operating on the assumption that learning to work within these restraints will be good for me. My problem is that my particular brain doesn’t seem to be designed to work within such restraints. It tends to make a million connections between things, and I have a very hard time knowing when to stop making those connections.

So it doesn’t really help that I just finished listening to James Burke’s delightful new speech called “Admiral Shovel and the Toilet Roll.” If you’ve watched Burke’s previous PBS series called “Connections” and “The Day the Universe Changed“, you’ll recognize my problem in Burke. Burke specializes in drawing seemingly endless lines of connections between things. In this particular speech, he manages to draw connections between Mozart’s music and the invention of the helicopter, and the crash of a fleet of ships off the coast of France in the 16th century and the invention of the toilet roll.

But Burke does manage to pull all these seemingly random connections together under a common theme to make a point, which is this: the industrial revolution began with a recipe from Descartes about how to break things down into their component parts to study them. These disciplinary silos are what brought us the incredible detailed knowledge of the world we humans now possess. However, Burke argues, these silos have become so specialized and detailed that most major innovation now comes in “the unexplored no-man’s land between the disciplines.”

If I wanted to follow a conventional path to a writing career, I would probably try to plant myself firmly within one of these disciplinary silos, and grow within it. After all, within these silos live the corporations who have the money to pay you for your skills. For instance, I probably have enough connections and respect within the baseball writing industry to get a foot in the door there. I have the technical skills to immerse myself in baseball statistics. But I resist, because that’s not where I feel like my particular brand of brainpower would be best suited.

I am aiming for that no-man’s land Burke speaks of. I have a lot of interests: from baseball to computer science, from neuroscience to politics, from poetry to business, from religion to aesthetics. In between these things, that’s where the most exciting stuff remains to be discovered.

Yesterday, the San Francisco Giants opened a Giants Dugout Store in the suburb of Walnut Creek. Why is this worthy of note? Well, take a look at where this store is:

View Larger Map

That’s deep in the center of Contra Costa County, one of only two counties that are, by MLB definition, the territory of the Oakland Athletics.

That in itself wouldn’t be such a big deal if the Giants were not also making the argument that letting the Oakland A’s move to San Jose is a violation of their territorial rights to Santa Clara County, and should therefore not be allowed.

This is not the first time the Giants have stepped on the A’s turf. When the Giants won the World Series in 2010, they paraded their trophy all around the Bay Area, including two cities in Contra Costa County: Walnut Creek and Richmond. But their parading did seem to carefully avoid any city in Alameda County.

Meanwhile, though, the Giants are still resisting the A’s move into “their” territory of San Jose:

• They have created and funded a “grassroots” movement against the A’s stadium in San Jose, which just on Friday filed a lawsuit against the San Jose ballpark.
   
• For similar reasons, they have enticed their own ballpark sponsor, AT&T, who happens to own a parcel of land needed to complete the San Jose ballpark, to flat out refuse to sell that parcel at any reasonable price, thereby forcing the city to engage in a complicated eminent domain procedure to get the parcel secured.
   
• They have purchased San Jose’s minor league team, thereby doubling up on the “territorial rights” argument, and ensuring that a negotiation over compensation must be completed before the A’s can build their ballpark.
   

So what gives? Why are the Giants still behaving like territorial rights are sacred in “their” Santa Clara County, but like they don’t matter in the A’s Contra Costa County?

Perhaps the Giants Dugout Stores are a separate corporation from the Giants themselves, and are therefore not covered by the territorial rights, but if so, that’s just a legalese cover story. These two entities are tied at the hip. You know the Giants could have just said the word, and there would not have been a Giants Dugout Store in Walnut Creek.

So what’s really going on here? I can think of two explanations that make some sense. Either:

1. A swap of Contra Costa County for Santa Clara County between the Giants and the A’s is a fait accomplit. There are t’s to cross and i’s to dot, but that’s eventually going to happen. Any resistance the Giants are showing now towards the A’s moving to San Jose is all about leverage: how much money will the Giants get in compensation for the loss of their territorial rights?

   One argument for this interpretation is that the A’s themselves haven’t complained one peep about this store, and they didn’t complain about the trophy parading, either. If there was no such tacit agreement, and I were the A’s, I’d be raising holy hell about the existence of this store.
    
   Or:

2. The Giants have launched a full-out war against the A’s. They intend to do everything they can to force the A’s out of the Bay Area while they have the chance.

   In this scenario, the Walnut Creek Dugout Store is a beachhead to push the A’s out of town. They attack the A’s from the west as usual, and from this Dugout Store, they launch a propaganda campaign to weaken the A’s support from the east. And from the south, they employ every possible legal maneuver and manipulate every single sock puppet they can to prevent the A’s from moving to San Jose.

   The argument for this scenario is that this is the scenario that produces the best possible financial outcome for the Giants: the A’s leaving the Bay Area. The A’s would be stuck in the Coliseum with dwindling fan support and nowhere else to go but to some other metro area that can build a stadium for them. For the Giants shareholders to maximize the return on their investment, this is the optimal strategy to take.

In either case, though, the territorial rights argument is now over.

In the first scenario, it’s over because the Giants have given up. The Walnut Creek store is about launching a new marketing campaign to win over the new set of fans that they ‘acquire’ in exchange for the A’s moving to San Jose.

In the second scenario, then the Giants Dugout Store in Walnut Creek invalidates the whole “we just want the A’s to respect our territorial rights” argument as just bullshit. The Giants don’t really believe in, care about, or respect territorial rights at all. Instead, the Giants actually only care about pushing the A’s out of the Bay Area entirely. They want the whole Bay Area market to themselves, so they can make a lot more money when they eventually sell the team.

It was former A’s owner Walter Haas who let the Giants have Santa Clara County in the first place, when the Giants were trying to build a stadium down there themselves. He did that because Haas always had the bigger picture in mind: both sports and businesses do not just exist for profits alone; they are an essential part of the fabric of our communities. Anyone who walks on the UC Berkeley campus and sees the Haas name all over the place knows he believed that deeply. Capitalism works best when capitalists understand that their businesses aren’t islands unto themselves. When corporations live for profits and profits alone, you end up with people occupying Wall Street.

I’m hoping that Scenario #1 is closer to the truth than Scenario #2. It would be extremely disappointing if it wasn’t. Giants CEO Larry Baer was actually once a board member of one of the companies I helped found, and I had always respected him before. I’d like to think he, as a former Cal grad, is capable of a Haas-like vision that extends beyond just the corrosive idea that ‘maximizing shareholder value’ is the sole purpose of a corporation.

Normally, I’d just give the benefit of the doubt to the Giants, assume innocence until proven guilty, and that Scenario #1 is likely the truth. But doing so in this case requires me to believe facts not in evidence. It requires me to interpret the A’s silence as acceptance. The only facts that have been presented publicly involve the Giants aggressively moving against the A’s desires and interest, and the A’s just shutting up and taking it. I have no idea what is going on behind the scenes. So therefore, I don’t know quite how to interpret this.

The arguments are done, and the jury has the case. Is the Giants move into Walnut Creek a benign marketing play, or an act of malign selfish corporate greed? We anxiously await the verdict.

I’m sure my friends who work at Apple will have better Steve Jobs stories than this one, but this the one I’ve got, and this is the day to tell it.

Back in August of 1996, I helped found a company called Intraware. We started the company on the basic idea of being a reseller of web software to corporations. We also wanted to eat our own dog food — to use the web software we were selling to run our business efficiently.

The problem was, back in late 1996, all this software sucked. I was looking for some software, any software, that I could use as a platform to program our corporate web site with, and I literally could not find anything that I could actually get to do what I wanted it to do.

So during this process of searching for a functioning web programming environment, I went to a conference at the Moscone Center in San Francisco. I don’t even remember what the conference was, but I do remember there were a ton of web software companies there with booths and stuff.

And at some point during this conference, Steve Jobs was giving a presentation. This was during the Jobs’ wilderness years away from Apple. He was presenting the latest stuff that his company at the time, NeXT Computers, was working on.

I decided, what the hell, I’ll check out. I had already given NeXT’s WebObjects a look-see and rejected it. I thought it was way too complicated with too big a learning curve for our needs, plus their code generated the longest, ugliest damn URLs I had ever seen. (Which was odd, since Jobs’ companies otherwise never made anything ugly.) But maybe I’d learn something new.

Ten years later, whenever Steve Jobs gave a presentation, it was the hottest ticket in town. But back in 1996, I just showed up to his presentation, wandered in, and found a seat somewhere around the third row, and sat down to enjoy the show.

I honestly can’t remember a damn thing he presented. I do remember his stage presence, though. And then this: about 3/4 of the way through the presentation, he stopped to give an aside. “By the way,” he said (I’m paraphrasing it from memory here), “we’re looking for distributors for our products. So if you know anyone interested in distributing our stuff, please contact us.”

Looking back on that, it’s pretty funny. Can you imagine Apple begging for distributors? But that’s where NeXT was at the time, having trouble getting their foot in the door of corporate America.

And, as it so happens, the problem that NeXT was having was exactly the problem that Intraware was founded to solve. So when I got back to the office, I told our people, and they contacted Jobs’ people, and meetings started to happen. And then, not too long after that, there was an agreement.

Part of the agreement was that in exchange for selling NeXT products, we would get free use their software, and free training. So for a week in early December of 1996, I spent a week at NeXT headquarters, taking classes in how to program using WebObjects. I remember getting a tour of their very nice offices. We walked by Jobs’ office at one point. He wasn’t there.

So anyway, everything was ready and lined up for Intraware to start selling NeXT products after the new year except crossing the t’s and dotting the i’s on the final contract.

And then, on December 20, 1996, Apple bought NeXT. Steve Jobs returned to Apple.

And NeXT didn’t need no steenkin’ distributors anymore. Sorry, guys, deal’s off.

So we never sold any NeXT products, and we never used any either. Well, except the ones that later became part the MacOS. All I had left to show for that week I spent at NeXT was this little story.

But hell, if Intraware had to get shafted so that the rest of the world could enjoy the fruits of Steve Jobs’ labors at Apple over the following fifteen years, it was worth it. I’d happily offer up that sacrifice all over again. Rest in peace, Mr. Jobs. You were an inspiration.

Neal Stephenson has written an essay called Innovation Starvation, about how we don’t seem to be able to get big stuff (like going to the moon) done anymore.

It was interesting, but from my perspective, it seemed off target, for a couple of reasons.

1. Is the premise true?

OK, so we’re not going to the moon, or Mars. But does that mean we’re not doing big things? To me, the web, Google, Facebook, Twitter, smartphones and such…those are all Big Things. They are all recent high-tech developments that have significantly changed the world we live in. But because they emerged from the wilderness of an unplanned economy instead of some Big Pre-Planned Project, they don’t count as Big Things? I don’t buy that.

2. Does competitive knowledge really reduce innovation?

Stephenson offers this scenario:

Most people who work in corporations or academia have witnessed something like the following: A number of engineers are sitting together in a room, bouncing ideas off each other. Out of the discussion emerges a new concept that seems promising. Then some laptop-wielding person in the corner, having performed a quick Google search, announces that this “new” idea is, in fact, an old one—or at least vaguely similar—and has already been tried.

I have indeed witnessed something like that. What I haven’t witnessed is the existence of patents or competitors stopping very many people from moving forward on an idea. Patents can be worked around. Competitors don’t matter if you have access to a market that you think you can exploit first, by leveraging existing relationships with customers or vendors that you already work with. Case in point: the 100 gazillion Groupon clones out there.

So I would disagree that information from the Internet is stifling innovation. On the other hand, I would argue that the success of the Internet is causing certain kinds of innovation to be preferred over others. Innovators these days love the idea of companies like Google and Facebook and Twitter because if a company like that hits it big, they can create gargantuan results with very little capital. Just hire a handful of programmers and: Kaplowie!  Riches galore.

Yes, I’ve sat around tables and thrown around ideas. And every time I’ve thrown around a business idea that involved human beings interacting with other human beings, instead of computers interacting with computers, I’ve been politely ignored. Because there’s no Kaplowie!  when humans are involved. That takes hard work, and who wants to get rich doing hard work, when you could get rich with all this low-hanging Kaplowie!  fruit that still seems to be hanging around to be plucked?

So I don’t think that we’re being starved of innovation so much as we’re experiencing a temporary kind of pickiness. But when things (like innovation investment) cluster in one place, it creates holes in another. Somewhere out there in the business world, there’s a Billy Beane waiting to exploit the gaps in the business ecosystem that are being created by current investment preferences.

In a recent episode of Louie, Louis CK tells a joke that he admits he doesn’t know how to finish. It involves a duck who thinks he’s special because he has a green head.

This blog entry — heck, this blog — is like that. I’m not sure where I’m going with it, I don’t know how it will end, I just have a feeling that I’ve got something here that can come together in the end.

* * *

I recently took one of those online narcissistic personality tests. I scored “normal”. But the only reason I even got as high as normal was because I had an over-the-top score in the “superiority” subsection. I’m not vain or power-mad at all, but dammit, facts are facts. I’m special. I have a green head.

* * *

The Louie show fascinates me. If you put me in a focus group where I was holding one of those dials while watching it, I’d probably flatline at the bottom the whole episode. I squirm, I cringe, I feel uncomfortable the whole time I’m watching it, thinking “I hate this I hate this I hate this.” Based on my real-time reactions, the network execs would probably cancel the show. But when you ask me afterwards how I feel about the episode, I usually love it.

Nobel Prize winning behaviorial economist Daniel Kahneman had demonstrated how humans have two distinct kinds of happiness. There’s a happiness that one experiences in the moment, and there’s a second kind of happiness that one feels in remembering things afterwards. The two kinds of happiness don’t necessarily correlate with each other at all.

The standard sitcom focuses like a laser on the experiential kind of happiness. We’ve all watched these shows–30 minutes of set up, punchline, laugh–but the remembrance of it usually leaves us feeling empty. I think Louie’s uniqueness stems from an indifference to the happiness of experience, if not an outright avoidance of it. The show cares more about afterwards, the happiness of memory.

* * *

Steve Jobs recently retired as CEO of Apple Computers. It’s been a helluva career. In the one and only commencement speech he ever gave, Jobs said:

Again, you can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

From most accounts, Jobs could be a mean sonofabitch to work for. The experience at the time of creating all those great Apple products was probably miserable thanks to Jobs’ harsh taskmastery, but after seeing the results, the memory of it afterwards was probably amazing.

* * *

But there’s one nagging question I have about this philosophy: what if you only think you have a green head? What if your self-image is deceptive? What if you’re really something other than what you think you are? Why a duck? Why a no chicken?

* * *

There’s a scene in another episode of Louie where Louis CK has lunch with a Hollywood executive. She asks him for his sitcom ideas, and he starts explaining his idea for a show that avoids experiential pleasure. But he can’t explain how it’s special, how it pays off in the end. He’s envisioning a green-headed duck, trusting that the dots will connect and there will be a green-headed duck in the end, but what he’s describing sounds to the executive like a chicken with some sort of deadly disease.

It’s safer and easier, not just for network executives but for human beings in general, to follow the immediate feedback, to trust the constant data streaming in from our current state of happiness, rather than ignore that short-term data and believe that something larger and more rewarding will emerge.

Postponing pleasure now for a bigger payoff later is very risky. If you’re not special, if you can’t make the dots connect, if there’s no big payoff in the end, no pot of gold at the end of the rainbow, no heaven waiting for you after a virtuous life, if you don’t really have a green head, then you’ve got nothing to show for it but misery. No happiness from experience, and no happiness from memory, either.

That’s why shows like Louie don’t get made very often. That’s why companies like Apple are unique rather than ubiquitous. Because most of the time, none of it was worth it. You were just being an asshole for no good reason.

* * *

I’ve worked in the high tech industry from the infancy of the world wide web, and I’ve seen a lot of companies (including some of mine) start out with the Applest of intentions. But then the feedback starts coming in, from customer service and sales, and it’s nearly impossible for anyone who isn’t a complete narcissist to say “nope, our customers are wrong and our vision is right.” Because usually the customers are right and your vision is wrong. So you follow the feedback. Be the bird that you are, and you usually have a pretty decent gig.

* * *

Modern electronic writing is primarily a pleasure-of-the-moment activity. Today’s blog entry is forgotten tomorrow. Our tweets are out of mind as soon as they scroll off our feed. We’re reacting in the moment to last night’s game, this morning’s article, tonight’s political speech. Which is fine, that’s what these media are meant to do. They’re chickens. Chickens are great, as long as you’re not expecting a duck.

* * *

Lately, I’ve had offers to write for a number baseball outlets out there. I’ve thought about trying a Craig Calcaterra, to see what I could accomplish I left my old, higher-paying career to commit to writing full time.

But so far, I’ve (mostly) resisted that temptation. My gut tells me, “don’t make that commitment.”

It’s partly because I don’t have all my ducks in a row in my personal life to make that practical right now. I quit writing regularly two years ago because I was juggling too many balls in my life, and I ended up doing a half-assed job on all of them. I hate feeling like I’m not living up to expectations, I hate feeling like I need to work 24/7 in order to avoid feeling like I’m not living up to expectations, so I resist making commitments that would create any expectations. Hence, for now, this blog, where I can do what I like, when I like, how I like with maximum flexibility and minimum commitment.

It’s probably also because I’m narcissistic enough to believe I’m unique. I’m not ready to cooped up and commit to a life as a chicken. I’m not ready to accept that this is how I finish this story. I feel, rightly or wrongly, that I’m my own species, who simply has not yet encountered the right variety of poultry to fall in love with.

I want to run a thought experiment. It’s regarding the discussion going on in the blogosphere about third parties, started by a recent New York Times column from Tom Friedman:

There is a revolution brewing in the country, and it is not just on the right wing but in the radical center. I know of at least two serious groups, one on the East Coast and one on the West Coast, developing “third parties” to challenge our stagnating two-party duopoly that has been presiding over our nation’s steady incremental decline.

Soon after Friedman’s column came out, former George W. Bush political advisor Mark McKinnon confirmed that there were indeed such third-party machinations going on behind the scenes. He published his centrist manifesto as a bit of a preview.

This being the blogosphere, there were also plenty of debunkings of the third party concept, led by Brendan Nyhan. And David Frum makes this point:

But to create a credible alternative, alienated Democrats and Republicans will have to rally around reforms that can make a positive difference to the great American majority – beginning with realistic ideas to accelerate economic growth, generate jobs, and raise incomes. That’s the abandoned ground of American politics, the true No Man’s Land. But there’s no need to wait for a third party to claim that ground. It’s there, waiting, for a Republican party that can liberate itself from the screamers and the haters, and rediscover its tradition of affirmative governance.

All of which is fine. I’m not going to quibble about any particular policy ideas here, or whether there are structural obstacles to a viable third party. But there’s one point that I feel is missing from the debate, which is basically the same point I made in my last blog entry about marketing a statistical approach to baseball. So again, I’ll leave it to Steve Jobs, talking back in 1996 about marketing Apple, to explain:

The dairy industry tried for 20 years to convince you that milk was good for you…and the sales were going like this (downwards). Then they tried “Got Milk” and the sales have gone like this (upwards). “Got Milk” doesn’t even talk about the product. In fact, it focuses on the absence of the product.

Steve Jobs’ point is this: explaining how MacOS is better than Windows won’t sell Macs. Explaining how milk is healthier than soda won’t sell milk. That’s not how effective marketing works.

Similarly, your Third Party can have all the right policies, they can have the best manifesto ever written, explaining how its policies are clearly better than those of the Democrats and Republicans, but if it doesn’t form a deep emotional connection between the Third Party’s core values and the core values of basic, ordinary Americans, it will fall flat.

In fact, this is probably why the Tea Party movement has resonance. There are no coherent policies. It’s all about the emotional connection.

But to be truly great and successful brand in the long run, you have to have both: great products AND that emotional connection to a clear set of values.

* * *

I’m an engineer, so when I get curious about an idea, I like to start with the question, “What does it look like?” Then once we have a general idea of what we want, we build a prototype. So let’s do that.

What does a viable Third Party look like? Following Jobs’ advice, we have to approach that question by asking, what are its core emotional values? Being “radically centrist” or “restoring sanity” doesn’t really resonate emotionally with me at all. To compare, let’s look at the core values we already know work, from the Declaration of Independence:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.

This to me is the biggest problem of the viability of a third party in America. This frickin’ brilliant sentence is THE statement of American values. The sentence is divided into two basic halves: the first declaring equality as a core value, the second declaring liberty as a core value. And probably as a natural result, we have two main political parties in America, one which at its core defends and promotes equality (Democrats), and another which at its core defends and promotes liberty (Republicans). The reason a third party like the Libertarians can’t take hold is that they’re competing for a very similar core value with a much bigger competitor.

A viable third party needs to somehow promote and defend a different core value, one that’s not represented in that sentence. But what?

* * *

I’m sure there are probably several candidates for such an alternative value, but I can really only think of decent one. It is represented by this speech by General George Patton:

When you, here, every one of you, were kids, you all admired the champion marble player, the fastest runner, the toughest boxer, the big league ball players, and the All-American football players.

Americans love a winner. Americans will not tolerate a loser. Americans despise cowards. Americans play to win all of the time. I wouldn’t give a hoot in hell for a man who lost and laughed. That’s why Americans have never lost nor will ever lose a war; for the very idea of losing is hateful to an American.

The weakness here is that this values statement isn’t explicitly spelled out in the Declaration of Independence or the Constitution. We can argue that our competitive character is implicit in the Constitution: the First Amendment basically sets up a structure where every idea–whether political, economic or religious–is forced to constantly compete in a free marketplace of ideas, without end. It is that very competitive nature which has driven America to triumph in the past, and can again.

Since we’re just prototyping, we don’t have to get it exactly right, so let’s go with it. This is something that we Americans do feel in their guts. We love to compete. We hate to lose. We want to kick ass.

OK, so we have our prototype’s core value: we’re emotionally committed to focusing on figuring out how to help our communities, our states and our country WIN in a competitive world. We believe in the virtues of fair competition. And we want the BEST everything: economy, military, schools, security, health, roads, space program, air, water, marble players — anything we can compete in we want to compete hard, and compete to win.

* * *

Now, let’s make up some sort of rationalization for this. Why do we need a party like this, and why now?

Americans don’t feel like they’re kicking ass anymore. Why not? Well, partly because we kicked ass in the past. Before, we took our free-market democracy and smashed those Fascists and Nazis in World War II, and then we wore down and wiped out those Communists and Socialists during the Cold War. And we turned all those countries we defeated into countries like us: free-market democracies.

The question for the 20th century was whether free markets and democracies are better than planned economies and totalitarian governments. That’s settled, we won, it’s no longer the issue. But our current politics, with its focus on the left-right axis, still acts like those old issues are still the new ones.

Instead, the real questions for the 21st century are ones like, what is the most effective form of democracy? What is the best way to manage a free market? And how do we set up a system which gets us to the optimal solutions faster than our competition? If we want to compete and win the 21st century like we did the 20th, then we need to be focusing on these questions. And the current two parties, by naturally focusing so much energy on their own core values of freedom and equality, often take their eyes off the ball that’s currently in play. And when we lose our focus, we let our competition catch up to us.

* * *

All right, now that we’ve got some fake reason for its fake existence, what do we call this prototype party? The old Raiders fan in me suggests the “Just Win Baby Party”, but that’s a bit presumptuous. Especially for a third party which, at the start, is more likely to lose than win. So I’m going to suggest the “Competitive Party”.

* * *

Finally, we need to figure out what an actual Competitive Party product looks like. How do we approach coming up with solutions when we begin our thought process from this core value? What kind of policies emerge when we think this way? Does the end product look different from either of the other two parties? Maybe we can debate those questions in the comments here, and then I’ll draft up some sort of prototype platform in my next post.

…is don’t talk about sabermetrics. So I’m going to talk about being kicked in the balls, instead. Then I’m going to explain how my being kicked in the balls is totally relevant to marketing sabermetrics. OK? Let’s go:

I once wrote a blog entry on my old Catfish Stew blog about being kicked in the balls during an indoor soccer game. It went a little something like this:

Somebody forgot to give the goalie the message. Instead of easing up when we got close to contact, he came at me like some freakish combination of Ronnie Lott and Scott Stevens. He ran full speed for the ball, jumped as high as he could to knock it away from me, and in the process, sent his knee full force straight into my groin, and slammed the rest of me right into the hockey-style boards.

The follow-up to that story is that earlier this year I ended up playing on the same team as the goalie who had crushed my testicles a few years before. So I had to forgive, if not forget. Now, you may suspect that the moral relevant to sabermetrics is that those who seem like an enemy could may turn out to be your greatest ally later. Perhaps thats true, but..I wouldn’t temporarily pull myself out of my blogging retirement to make so simple a point.

No, I want to add a more complex point to the conversation going around about the marketing of sabermetrics. The conversation was initiated by Will Carroll, picked up by Tango Tiger, and finally reached Carson Cistulli’s keyboard yesterday.

Reading Cistulli’s message reminded me of an old YouTube video of Steve Jobs introducing Apple’s Think Different and Screw the Grammar ad campaign back in 1996.

If you’re interested in the problems of marketing sabermetrics, you should watch this whole video. But here’s the quote that is particularly burned onto my brain:

The dairy industry tried for 20 years to convince you that milk was good for you…and the sales were going like this (downwards). Then they tried “Got Milk” and the sales have gone like this (upwards). “Got Milk” doesn’t even talk about the product. In fact, it focuses on the absence of the product. –Steve Jobs

Now there’s a reason that quote comes to mind so easily for me. The insight — that listing a bunch of facts about your product is not very effective; the best marketing campaigns make an emotional connection between your core values and those of your customers — is brilliant, but that’s not why I remember it so well. The insight itself is just one in a list of facts about marketing, and probably wouldn’t stick with me very long without an emotional connection.

The reason is this: when I became teammates with the goalie who had earlier impaled me, I found out that in his day job, he was the milk industry executive who had spearheaded the whole original “Got Milk” marketing campaign.

Ever since I learned that, I can’t help but pay extra attention any time I hear any variation of the phrase “Got Milk”. There are very few emotional connections as effective as a solid kick in the nuts. Thus, when Carson Cistulli writes something with similar themes to the Steve Jobs speech, and the quote about “Got Milk” pops right up in my mind.

Now, to turn Steve Jobs’ point into a lesson for sabermetrics: Creating a list of facts explaining how sabermetrics is better than old-school analysis is not the best way to market sabermetrics, just as explaining how MacOS is better than Windows is not the best way to market Apple.

What makes it particularly difficult in this case is that sabermetrics is essentially about removing emotions from the equation. That makes an effective marketing campaign for sabermetrics somewhat of a paradox.

Nonetheless, the questions remain. What are the core emotional values of sabermetrics? What are sabermetricians committed to in their souls? Once you’ve answered those questions, then you start formulating a way to make sabermetrics more mainstream and popular.

So, baseball fans: Got Facts?

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