This won’t be a long article. Just to the point and hopefully with a nice angle to it.
I get asked at almost every conference I go to: “Will estate agents be out of a job?” or “Will PropTech make us all redundant?”.
I can almost see it coming now...A tentative hand goes up in the audience or question gets asked through an online app-based Q&A system, mid-way through the session and is immediately liked by an entire audience.
The question is often asked by a very particular audience as well. I won’t drag that out, I am sure you can imagine their demographic.
I have been doing a lot of travelling recently (and more to come in the next few weeks), and hence there is time to read books and watch the occasional film. I wanted to rewatch one of my favourites; Moneyball, based on a book of the same name written by Michael Lewis.
It is a famous baseball story of the Oakland Athletics, a major league baseball team, who in 2002, went on an amazing winning run, matching the all-time record of 20 straight wins. It is almost a classic underdog story; their annual salaries were the 3rd lowest in Major League Baseball (under $40m compared to the Yankees who were nearly $120m).
You get the picture. Underdog story and they very nearly made it.
It isn’t the ending that interests me much, it was some of the dialogue around the strategy the A’s (as they were affectionately known). Historically, and to quote Wikipedia here for a minute, “the collective wisdom of baseball insiders (including players, managers, coaches, scouts, and the front office) over the past century is subjective and often flawed.”
“Statistics such as stolen bases, runs batted in, and batting average, typically used to gauge players, are relics of a 19th-century view of the game and the statistics available at that time.”
Their General Manager, a gentleman by the name of Billy Beane, was central to the story; a flawed player himself. In fact, he was one of those let down by the system. Much lauded by the scouts, he just didn’t convert when under pressure.
The A’s, under his stewardship, weren’t doing so well. They needed a different strategy. He looked to a new theory; Sabermetrics. This wasn’t a new theory but was laughed at. Sabermetrics was the brainchild of Bill James and is the empirical analysis of baseball, especially baseball statistics that measure in-game activity. It was used to pick which players to choose when selecting a team.
They weren’t the stand out choices that the traditional scouts would make but they were based on fact and statistical analysis. Something that sat uneasy to most.
This interchange comes from the film between two of the core characters:
Peter Brand: There is an epidemic failure within the game to understand what is really happening. And this leads people who run Major League Baseball teams to misjudge their players and mismanage their teams. I apologise.
Billy Beane: Go on.
Peter Brand: Okay. People who run ball clubs, they 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. You're trying to replace Johnny Damon. The Boston Red Sox see Johnny Damon and they see a star who's worth seven and half million dollars a year. When I see Johnny Damon, what I see is... is... an imperfect understanding of where runs come from. The guy's got a great glove. He's a decent leadoff hitter. He can steal bases. But is he worth the seven and half million dollars a year that the Boston Red Sox are paying him? No. No. Baseball thinking is medieval. They are asking all the wrong questions.
They are asking all the wrong questions. Could this be what we are doing perhaps?
Then there comes the other key point of the film I enjoy. The interchange with the scout. The guy who had been doing it for years. The one who had the feel for the sport.
Grady Fuson: Billy, can we talk?
Billy Beane: Yeah. You're unhappy Grady. Why?
Grady Fuson: Wow. May I speak candidly?
Billy Beane: Sure. Go right ahead.
Grady Fuson: Major League Baseball and its fans...they're gonna be more than happy to throw you and Google boy under the bus if you keep doing what you're doing. You don't put a team together with a computer.
Billy Beane: No?
Grady Fuson: No. Baseball isn't just numbers. It's not science. If it was anybody could do what we do, but they can't cause they don't know what we know. They don't have our experience and they don't have our intuition.
Billy Beane: [dismissively] Ok.
Grady Fuson: Billy, you got a kid in there that's got a degree in Economics from Yale. You got a scout here with 29 years of baseball experience. You're listening to the wrong one. Now there are intangibles that only baseball people understand. You're discarding what scouts have done for 150 years, even yourself?
Billy Beane: Adapt or die.
Many of you will draw your own conclusions from this article and I hope you can see some parallels with our own market here.
This isn’t about data analysis as I hope you are already doing this. This is about a new way of doing things.
This could be about any new initiative coming into a business. This is about PropTech. This is about artificial intelligence. This is about different computer systems. Anything new that starts to show proven results.
Time is then limited to those that do not adapt and stick with the blinkers.
Adapt or die.
Harsh but true in the long run. Business moves on. People change. We have to change with them.
It’s just not cricket is it...
PS. how did it all end? Billy Beane, who got it all going with the A’s turned down a $12.5m contract to be the GM at the Boston Red Sox to continue his work at the A’s. Two years later, in 2004, the Boston Red Sox, using principles gleaned from his strategy, won the World Series for the first time since 1918.
PPS. The A’s strategy was a failure until the senior management of the team started to implement the changes suggested. The GM only picked the players, the manager selected the team on the day.