Capitalogix

Beyond The Snap: Business Lessons From Football

The NFL draft happened this week, despite the Quarantine.

I was happy to distract myself from the economy and news cycles.

Football is something I used to love to play. And it is still something that informs my thoughts and actions.

Some lessons relate to being part of a team, while others relate to the coaching or management side of things.

Some of these lessons stem back to youth football ... but I still learn things watching games – and even more from watching Dallas Cowboys practices at The Star. 

Think about it, even in middle school, the coaches have a game plan. There are team practices and individual drills. They have a depth chart, which lists the first, second, and third choice to fill certain roles.  In short, they focus on the fundamentals in a way that most businesses don't.

The picture, below, is of my brother's high school team way back in 1989.

To re-state, most businesses are less prepared for their problems than an 8th-grade football team. Now, that sounds offensive to some of you, but if you think about it ... it's pretty true. 

Losing to An 8th Grade Team

I shot this video right before the COVID-19 shutdown.  I encourage you to watch it.  I think it's 3 minutes well spent.

 

Teams think about how to improve each player, how to beat this week's problem, and then how to string together wins to achieve a higher goal. 

Contrast that with many businesses. Entrepreneurs often get myopic ... they get focused on today, focused on survival, and they lose sight of the bigger picture and how all the pieces fit together. 

The amount of thought that goes into football - which is ultimately a game - is a valuable lesson for business. 

What about when you get to the highest level? If an 8th-grade football team is equivalent to a normal business, what about businesses that are killing it? That would be similar to an NFL team. 

Let's look at the Cowboys. 

Practice Makes Perfect

How you do one thing is how you do everything. So, they try to do everything right. 

Each time I've watched a practice session I've come away impressed by the amount of preparation, effort, and skill displayed.

During practice, there's a scheduled agenda. The practice is broken into chunks, and each chunk has a designed purpose and a desired intensity. There's a rhythm, even to the breaks.

Every minute is scripted. There's a long-term plan to handle the season ... but, there was also a focus on the short-term details and their current opponent.

They alternate between individual and group drills. Moreover, the drills run fast ... but for shorter time periods than you'd guess. It is bang-bang-bang – never longer than a millennial's attention span. And they move from drill to drill – working not just on plays, but the skillsets as well (where are you looking, which foot do you plant, how do you best use your hands, etc.).

They use advanced technology (including advanced player monitoring, biometric tracking, and medical recovery devices ... but also things like robotic tackling dummies and virtual reality headsets). 

They don't just film games, they film the practices ... and each individual drill. Coaches and players get a cut of the film on their tablets as soon as they leave. It is a process of constant feedback, constant improvement, or constant renewal. Everything has the potential to be a lesson. 

Beyond The Snap

The focus is not just internal, on the team. They focus on the competition as well. Before a game, the coaches prepare a game plan and have the team watch tape of their opponent in order to understand the tendencies and mentally prepare for what's going to happen.

During the game, changes in personnel groups and schemes keep competitors on their toes and allow the team to identify coverages and predict plays. If the offense realizes a play has been predicted, they call an audible based on what they see in front of them. Coaches from different hierarchies work in tandem to respond faster to new problems. 

After the game, the film is reviewed in detail. Each person gets a grade on each play, and the coaches make notes for each person about what they did well and what they could do better.

Think about it ... everyone knows what game they are playing ... and for the most part, everybody understands the rules, and how to keep score (and even where they are in the standings). Even the coaches get feedback based on performance, and they look to others for guidance. 

Imagine how easy that would be to do in business. Imagine how much better things could be if you did those things.

Challenge accepted.

Ending The World With A Paperclip

Every week I send out an e-mail on Fridays with 20 light links and 20 market-moving links. If you're not getting that e-mail, you can sign up here. On Sundays, I send out our weekly commentary (which this article is a part of, along with 5 new light links and 5 new market-moving links (you can sign up here).

My son sees the links before they're posted. He was interested in one of this week's links - The Way the World Ends: Not with a Bang But A Paperclip. 

As a result, he played the game Paperclips to completion.  While he characterizes it as “wasting a whole night,” I think it gives us insight into the addictive nature of clicker games and into how the world as we know it could end with a paperclip. 

There are spoilers ahead, so if you intend on wasting three hours on a browser game, you may want to skip this article ... no, you're good? OK, here it is. 

Frank Lantz via Decision Problem

The game starts with you clicking a button to create paperclips but quickly spirals from there. Through setting up automation to create paperclips and then to have it start automatically buying the wire for you, you begin focusing on other projects - specifically creating a better trading algorithm to leverage the money you're making and improving your company's AI and Quantum Computing capabilities. 

Hmm, starting to sound familiar ...

Initially, your AI is focused purely on maximizing paper clip demand and production.  It can increase marketing to increase demand and make your autoclippers more efficient to produce more paperclips per unit wire. If you look at the projects in the above screenshot you can see projects like: 

• Full Monopoly - Establish full control over the worldwide paperclip market
• Global Warming - A robust solution to man-made climate change
• HypnoDrones - Autonomous aerial brand ambassadors

Projects like curing cancer or solving global warming gain trust and allow you to invest more money in processors and memory (which end up setting you up to take over the world.)

Fast forward to Zach beating the game ...

Frank Lantz via Decision Problem

When you release the HypnoDrones all of the resources become available for Paperclip production, and you gain full autonomy. Your inner benevolent dictator feels satisfied and your mother’s expectations for your potential are partially fulfilled.

At this point in the game, Zach had created less than half a billion paperclips but was worth several billions of dollars. It took him 2 hours and 44 minutes to beat the game. 

Is it a game, a parable, a prediction – or an advanced intelligence’s test of human nature?

 

Super Bowl 2020

A friend has two tickets for the 2020 SUPER BOWL — both box seats. He paid $2,500 for each ticket, but didn't realize last year when he bought them that it was going to be on the same day as his wedding. If you are interested, he is looking for someone to take his place — it’s at St. Dominic's Church in San Francisco at 3pm. Her name is Melissa . She's 5'7 about 140 lbs. She's a good cook, too. She'll be the one in the white dress.

 

As for the Super Bowl, it seems like this will be a good matchup. The KC Chiefs are in it for the first time in 50 years (and have an amazing offense), while the 49ers are coming off a series of tough seasons (but have an amazing defense). It will also be a Super Bowl without Bill Belichick's scowl gracing our screens. 

It's not just the fans that are excited about the matchup, it's also the bookies. Two years ago, gamblers set a record by placing $158.6 million in Super Bowl bets. Expect more of the same with gambling now legalized in an additional 13 states beyond Nevada. 

 

If you're still looking for a bet – there's another wishful thinking approach you could take to find one ... it is called the "Super Bowl Indicator."

 

 

The theory is that a Super Bowl win for a team from the AFC foretells a decline in the stock market and a win for the NFC means the stock market will rise in the coming year. So, if you're hoping for a strong S&P you'd be rooting for 49ers. 

There's one big caveat ... it counts the Pittsburgh Steelers as NFC because that's where they got their start (or as a data scientist would caution ... they did that to fit the data better). 

With that "adjustment," at one point the SBI was "right" 33 years out of 41 - an 80% success rate. Sounds good, right?

Come on ... you know better. It's been wrong four of the last four years ... another sign of spurious correlation if you weren't sure. 

Here are some other "fun" stock market fallacies:

• January Indicator
• Aspirin Count Theory
• Hemline Indicator
• Sports Illustrated Swimsuit Indicator
• Men's Underwear Index

 

Back to Reality

Rationally, we understand that football and the stock market have little in common, and we probably intuitively understand that correlation ≠ causation. Yet, we crave order and look for signs that make markets seem a little bit more predictable.

The problem with randomness is that it can appear meaningful. 

Wall Street is, unfortunately, inundated with theories that attempt to predict the performance of the stock market and the economy. The only difference between this and other theories is that we openly recognize the ridiculousness of this indicator. More people than you would hope, or guess,  attempt to forecast the market based on gut, ancient wisdom, and prayers.

While hope and prayer are good things ... they aren’t good trading strategies.

As goofy as it sounds, some of these "far-fetched" theories perform better than professional money managers with immense capital, research teams, and decades of experience...

I have a thought experiment I sometimes ask people. 

What percentage of active managers beat the S&P 500 any given year?

... Now, what percentage beat the S&P 500 over 15 years?

Recently, the answer is about 5% (and that's in a predominantly bull market).  For the record, that's significantly worse than chance. Perhaps that means something they're doing is hurting, not helping. 

 

 via Gaping Void

There's simply too much information out there for us to digest, process, rank, and use appropriately.

Every second you spend looking at a market is a second wasted.

There are people beating the markets — not by using the Super Bowl Indicator ... they're doing it with more algorithms and better technology. 

There will never be less data or slower markets. A good reminder that if you don't know what your edge is ... you don't have one!

Onwards.

Here Are Some Links For Your Weekly Reading - January 19th, 2020

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• Artificial Intelligence: How to Measure the I' in AI. (TheNextWeb)
• Samsung Sheds Light on Its 'Artificial Human' Project. (EnGadget)
• Secrets from a Former FBI Negotiator on How to Get What You Want. (TheLadders)
• Here's the Advice Mark Cuban Would Give His 20-Year-old Self. (CNBC)
• Want to Grow 10X? Here are 17 Books about Business and Life You Should Read in 2020. (TheLadders)

 

Trading Links:

• The Decade of the "Young Old" Begins. (WorldIn)
• 2019 A Year to Forget for Hedge Funds. (Benzinga)
• Fortnite Made $1.8 Billion in 2019. (CNN)
• Amazon Partners with Lamborghini, Rivian to Offer Alexa Voice Assistant in Vehicles. (CNBC)
• Apple Made Investors Half a Trillion Dollars Last Year. Time to Hedge Your Bets. (Barrons)

What Does The Average NFL Player Look Like (By Position)

Football season is officially underway! In honor of that, here's a look at each position's composite player!

As you might expect, different sports have a different ratio of ethnicities. For example, you might expect more Pacific Islanders in Rugby or Asians in Badminton.

The same is true for different positions on a football team.  Apparently, offensive linemen are more likely to be white while running backs are more likely to be black. 

Here is a visualization that shows what happens when you average the top players' faces in various positions?

osmutiar via Reddit

Composites are interesting.

While you may be thinking "this player must be unstoppable" ... statistically, he's average.

The "composite" NFL player would be the 848th best player in the league. He's not a starter, and he plays on an average team. 

We found the same thing with our trading bots.  The ones that made it through most filters weren't star performers.  They were the average bots that did enough not to fail (but failed to make the list as top performers in any of the categories).  The survivors were generalists, not specialists.

In an ideal world, with no roster limits, you'd want the perfect lineup for each granular situation. You'd want to evaluate players on how they perform under pressure, on different downs, against other players, and with different schemes. 

That's what technology lets you do with algorithms. You can have a library of systems that communicate with each other ... and you don't even have to pay their salary (but you will need data scientists, researchers, machines, data, alternative data, electricity, disaster recovery, and a testing platform).

You won't find exceptional specialists if your focus is on generalized safety. Generalists are great, but you also have to be able to respond to specific conditions.

Onwards.

Here Are Some Links For Your Weekly Reading - September 1st, 2019

 

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• Google and Amazon Use Smart Speakers for 'Surveillance,' Top Tech Investor Says. (Finance)
• Streaming TV is about to Get Very Expensive Here's Why. (TheGuardian)
• Professional Video Game Player Signs Deal with Adidas. (CNW)
• Giant Virus Has Evolved Its Own Kind of CRISPR to Destroy Invaders. (NewScientist)
• Pole-Dancing Robot Strippers' to Perform Next to Human Dancers on Stage at Nightclub. (TheSun)

 

Trading Links:

• Surprise, Surprise, Warren Buffet Was Right: Machine-Managed Investment is a Better Bet. (Forbes)
• How ETFs Swallowed the Stock Market. (Wall Street Journal)
• Do We Really Want a Microsoft of Marijuana? (New York Times)
• Businesses Can Now Claim Their Trademark Blockchain Domains, Before It's Too Late. (Finance)
• Ray Dalio Warns of 'Serious Problems' and a Bond 'Blow-off' as a Repeat of the Late 1930S Looms. (CNBC)

 

 

Finding A Way – Just Do It!

It's hard to fight Mother Nature.

Willpower isn't always enough. 

The trick is recognizing that you can create conditions that make your success much more likely.

No matter how much internal resolve you have, changing the story you tell yourself, and the environment you create for yourself, are reliable ways to make meaningful and lasting change.

Is How You Do Something, How You Do Everything?

On some level, I think so.  To make the point, let me start with a brief story. 

I was at the gym and getting pretty close to the end of my workout.

Frankly, I was at a point where being done was way more attractive than the option of doing additional exercise.

Over time, I've developed many habits and beliefs that focus on finding the best next step - or a way to do just a little bit more. So this time, I used reverse-counting to help me finish that workout strong.

I started with 10 push-ups. I know I can do 10 push-ups, even at the end of a hard workout. Without putting my knees down, I can rest in plank position for a moment or two ... then I do nine more push-ups. That has to be easier than 10, right? Then eight more ... seven ... six. You get the point.

Each set is a little bit harder than the one before; but mentally I'm prepared for it, and can convince myself that I'm so much closer to the goal.

So I get to three, and sweat is dripping off my nose, my arms are shaking, and my hips want to sway. Somehow knowing that there are only two more sets, then only one more, allows me to finish.

That story could have been about creating profitable trading systems, developing a new database, or recovering from a setback.  It's about finding a way, regardless of external circumstances.

Finding a Way to Do Just a Little Bit More.

There are many times that it seems easier to do nothing, or to give up. That's just not my nature. It's not in my "nurture" either.

My father used to say that the secret to success was getting up. What he meant was that if someone knocked you down 10 times, then the secret to success was getting up 11 times. And if someone knocked you down another time, then the secret was to get up 12 times. There's a lot of truth in that.

I laugh when I think of all the little things I do that condition me to take the best next step. Here are a few examples of small things that help define that mindset.

• I never stop reading until I finish a chapter.
• Also, when I play a strategy game on my iPhone, I never stop until I win.
• And, when I play a strategy game that I'm good at, I never stop until I achieve a certain score. 

It doesn't matter if I'm frustrated or tired.  I find a way.  Each of these things, in its own small way, helps condition me to know that I can do anything I commit to do.  Ultimately, what that means is that regardless of what happens, my outcome depends most on what I choose to do.

Sometimes these habits seem silly, quirky, or even a little bit OCD to me. Yet, they serve me.

Many benefits come from knowing that the game's not over until you say it is ... or until you win.

Moreover, it's comforting to know that there's always a best next step, or at least a different perspective that will create new opportunities and possibilities.

I tend to take that perspective in business as well. We focus on the progress we're making, and what that makes possible, rather than how far we are from the ultimate goal. Why? Because, as we continue to make progress, the things we shoot for are bigger and farther away. Focusing there would always show a shortfall. Obstacles and setbacks become the raw material for new growth, ideas, and strategies.  The trick is getting back up, isn't it?

Sometimes the best advice is simple. Nike got it right in their ad ... Just Do It.

Here Are Some Links For Your Weekly Reading - June 9th, 2019

Tuesday was the 30th anniversary of the Tiananmen Square Protests. Here's a video of Chinese college students being asked about the event. It is a pretty interesting look at censorship and fear of government consequences for lack of free speech. 

Here are some of the posts that caught my eye recently. Hope you find something interesting.

 

Lighter Links:

• China's Big AI Advantage: Humans. (News)
• The Natural Genius of Ants is Helping Us Build Better Algorithms. (Wired)
• 5 Myths about Strategy. (HBR)
• Percentage of Americans Who Never Traveled beyond the State Where They Were Born? A Surprise? (Forbes)
• At Disneyland's New Star Wars' Attraction – Brace Yourself for $200 Lightsabers, $42 Cocktails and 4 A.M. Lines. (MarketWatch)

 

Trading Links:

• Billionaire Mike Bloomberg Tells Harvard Graduates that Money Isn't Important. (TheLadders)
• The Radical Plan to Change How Harvard Teaches Economics. (Vox)
• Apple Patents the Foldable iPhone Display; Here's What It Looks Like. (ValueWalk)
• Quantum Computing Will Change the Digital World beyond Recognition. (Metro)
• Atlanta Fed President Bostic Does Not See a Rate Cut this Year like the Market is Telegraphing. (CNBC)

 

Happy Mother's Day

 To those of you with young children, here's a peek into your future.

After years of hard work and your best efforts (OK, mostly your best efforts) ...
I predict that your adorable bundles of joy will someday wish they could send you this card.

So, take a moment to think about your Mom ... and remember that she was very young when she did those things to you ...

... and what you make them mean is up to you.

Here's a funny clip from SNL in honor of Mother's Day.

 

 

Social Media Is Changing Everything: A Reprisal

I came across a post from 2009 about social media. 10 years later, with the knowledge of how much data we use today, it's quite a read.

Here it is in its full glory. 

Social Media Is Changing Everything: October 18th, 2009

My son won't use e-mail the way I did. So how will people communicate and collaborate in the next wave of communications?

Here is a peek into the difference that is taking hold.  I was looking at recent phone use.  The numbers you are about to see are from the first 20 days of our current billing cycle.

• • My wife, Jennifer, has used 21 text messages and 38 MB of data.
  • I have used 120 text messages and 29 MB of data.
  • My son, at college, used 420 text messages, and is on a WiFi campus so doesn't use 3G data.
  • My son, in high school, used 5,798 text messages and 472 MB of data.

How can that be?  That level of emotional sluttiness makes porn seem downright wholesome. 

But, of course, that isn't how he sees it.  He is holding many conversations at once.  Some are social; some are about the logistics of who, what, when, where and why ... some are even about homework.  Yet, most don't use full sentences, let alone paragraphs.  There is near instant gratification.  And, the next generation of business people will consider this normal.

Is social media a fad? Or is it the biggest shift since the Industrial Revolution?

Welcome to the World of Socialnomics.  This video has a bunch of interesting statistics ... and is fun to watch. 

 

 

Other Resources:

• • Here is a link to a short-version of this video.
  • This reminds me of the "Shift Happens!" video.
  • Worth Looking At ... Here are the Stats.

Social Media Is Changing Everything: April 20th, 2019 

Looking at the stats from 2009 is pretty funny

• My son was using 472 MB of data a month
• Hulu had grown from to 373 million total streams in April 2009
• Only 25% of Americans in the past month said they watched a short video on their phone

For some context, I looked up the comparative numbers for 2018. 

• I picked a random month in 2018 ... in August my son used 10.85 GB of data. He doesn't text as often - but has sent/received 282,000 snapchats since downloading it 5 years ago.
• Hulu has over 20 million subscribers who streamed more than 26 million hours a day in 2018 
• People spend over five hours a day on their smartphones on average. 70% of web traffic happens on a mobile device, and more than 50% of videos are watched on mobile (93% of twitter videos). 

Here's what happens every minute of every day on the internet

via Lori Lewis and Chadd Callahan

 

A little different than 2009 ...