This is the 140th installment of The Labyrinthian, a series dedicated to exploring random fields of knowledge in order to give you unordinary theoretical, philosophical, strategic, and/or often rambling guidance on daily fantasy sports. Consult the introductory piece to the series for further explanation.
About a month ago I mentioned that I was reading a stolen discounted book from Barnes & Noble called How the Wise Decide by Bryn Zeckhauser and Aaron Sandoski. One of my New Year’s resolutions was to read more, and over the last 131 days I’ve crushed the introductory chapters of at least 20 books, so on a scale of one to 10 I’m, like, smarter.
Zeckhauser and Sandoski interviewed 21 leaders across various industries to learn the common secrets of their success. Ultimately, they found “six core decision-making principles”:
- Go to the Source
- Fill a Room with Barbarians
- Conquer the Fear of Risk
- Make Vision Your Daily Guide
- Listen with Purpose
- Be Transparent
All of these principles are applicable to DFS and will be discussed in the rest of this piece.
Go to the Source
Per Zeckhauser and Sandoski, it’s easy for CEOs to isolate themselves in their offices and rely on corporate reports. While that information isn’t useless, it’s not as good as “going to the source to get firsthand information, far and away the best kind of information.” For Zeckhauser and Sandoski, “going to the source is the relentless pursuit of information from the field. It is hard work, and it takes a lot of time, effort, and imagination.” Reportedly, former CEO of Medtronic Bill George dedicated two-thirds of his work time to being out in the field collecting information from doctors, salespeople, developers, et al. He found that the conversations he had with all of these sources were more actionable than those he had with the people paid to report directly to him.
In DFS, going to the source is doing your own research. It’s prioritizing the research you do with the FantasyLabs Tools above the picks and lineups given to you by touts and random shady Twitter accounts. Going to the source is analyzing the historical spot of a player in our Trends tool for yourself. It’s building your own Player Models and constructing your own rosters with our Lineup Builder. It’s digging through the data in the DFS Ownership Dashboard and discovering the optimal exposure for various types of players.
To go to the source is to practice deliberately by combing through the database of DFS outcomes. This is the No. 1 rule. It’s almost impossible to make good decisions without good information, and often the best information comes directly from the source.
Fill a Room with Barbarians
Dean Kamen, the founder of DEKA Research & Development Corporation, reportedly requires his employees to sit in their conference room and argue the various sides of an issue when he’s trying to make important company decisions. He says that if outsiders saw those meetings they’d think his company were full of barbarians. In Kamen’s words (per Zeckhauser and Sandoski):
I like it when ten people walk into the room with ten different opinions and are so passionate they’re yelling at each other. I expect people to walk into the room carrying spears, ready to defend their position. My job is to decide when we’ve had enough battle and make a decision.
While DFS players don’t have a literal room of barbarians to rely on for input, the industry (and especially Twitter) can be a pretty barbaric and argumentative place — and that can be good. Ideally, you can consult various (and perhaps opposed) DFS resources, weigh the logic of their analytical arguments, and then use that information to help with your decision-making process.
Although it’s good to value your research above the noise of the touts, you don’t want to operate in a vacuum because DFS is a market with millions of other players. If you find the analysis of various sources persuasive, that’s good. If you think that analysis is bullsh*t, that’s still good — because you can leverage it, knowing that what is said on certain sites can influence ownership percentages in guaranteed prize pools.
You don’t want to be overly influenced by the barbarians — like Kamen, you have to make the ultimate decision — but it’s still good know what the barbarians have to say.
Conquer the Fear of Risk
Many CEOs act in a loss-averse manner, forgoing positive expected value opportunities because they fear losing — even if the odds and upside of winning far outweigh what’s at stake. Per Zeckhauser and Sandoski:
Loss aversion is endemic at every level of most companies. People fear to take risks because they believe a bad outcome will hurt their chances for promotion and higher pay. The result is that entire organizations spend vast amounts of time, energy, and money seeking the safest options rather than those that offer the greatest risk-adjusted returns.
In 1985, Steve Schwarzman and Peter Peterson founded The Blackstone Group with $400,000 of their own money. Today, the company is worth around $35 billion, give or take a few hundred million. How did they build a company so large in just 32 years? They seek to understand risk instead of fear it. They explore the opportunities that are too risky for other groups.
Profitable DFS players — just like profitable movie producers — are often contrarian, especially in guaranteed prize pools. Labs Co-Founder Jonathan Bales is basically the walking embodiment of what it means to be a DFS contrarian, and even though Labs Co-Founder Peter Jennings (CSURAM88) tends to be more of cash game player, eating chalk the way Jay Persson eats candy, Pete can still be a contrarian: I mean, this guy likes the Goo Goo Dolls.
In GPPs, contrarianism is the long-term +EV perspective. It’s not without risk, but ultimately the riskiest strategy in DFS is not being contrarian.
On top of that, I think there’s a good deal of risk in not playing GPPs. Some players prefer cash games, and that’s fine: I’m not saying that people should play most of their bank roll in tournaments. I do, though, think that at least a little GPP exposure is warranted in most slates. If you don’t want to play in GPPs, that’s OK. Just make sure your decision to avoid tournaments is based on risk-adjusted analysis and not loss aversion.
Make Vision Your Daily Guide
Vision is what unifies businesses. It guides the decisions a business makes. Per Zeckhauser and Sandoski:
Wise leaders know that to make the best decisions you need not only the right vision, but also the discipline to let that vision guide every decision you make, even seemingly innocuous day-to-day tactical choices. Your vision describes what you and the organization are trying to accomplish. Your vision also orders your primary objectives. It becomes the reference point against which you and everyone else in the organization measure what needs to be done and what can be ignored.
When Harvey Golub became the CEO of American Express in 1993, he inherited a problematic company that had sought to diversify its travel-related business by acquiring an investment bank and brokerage house. The integration of those services into the company hadn’t gone well, and the stock was down about 50 percent.
Golub’s vision for American Express was to make it “The world’s most respected service brand,” and he didn’t see how the investment bank and brokerage house fit in with that vision, so the company divested itself of them. Ultimately, the stock price went up 2,500 percent with Golub as CEO.
Playing DFS is like investing. In fact, it’s like running a financial group and managing a portfolio of investments. The best DFS players tend to act with an overarching vision in mind. That vision — a long-term +EV perspective — guides strategy. It makes it easier to survive short-term losses and struggles with variance. It even dictates the types of contests you play and the risks you take. For instance, if you’re just starting to play DFS and your vision is for you to be a steady, competitive player with a developed bankroll, then you probably don’t want to play in any qualifiers.
Your long-term vision tells you what to do on a daily basis.
Listen with Purpose
Per Zeckhauser and Sandoski, when great leaders listen — when they gather data — they do more than listen carefully. They listen with purpose:
It isn’t how you listen, it’s why you listen that’s important. In fact, the wise leaders we interviewed didn’t even realize they listen with purpose until it became clear in one interview after another. They almost unconsciously prepare themselves for each meeting by thinking through why they are asking for that person’s opinion. That way, they’re prepared to make the most of the interaction, taking away from it knowledge and impressions the other person had no idea he was conveying.
One person cited by Zeckhauser and Sandoski as a purposeful listener was Baxter Healthcare CEO Vernoun Loucks, whose company had two main business arms that were increasingly at odds with each other. Eventually, Loucks decided to spin off the lesser business in 1992, just five years after acquiring it. In doing so, he created about $1.5 billion of value for Baxter shareholders while enabling the parent company to survive. He made that decision after meeting with 135 of Baxter’s top managers at a retreat in Alaska and using their conversations to get a fuller sense of the company’s situation.
It’s not enough to fool around with the Trends tool and Models and hope you find high Plus/Minus values. When you research, you need to do so with a reason. You need to be responsive and listen to the data. You need to focus on asking the right questions and challenging your assumptions.
It’s not enough to subscribe to Labs. You need to subscribe with purpose.
Be Transparent
The value of this principle is so obvious one might say it’s . . . transparent. In business, leaders must be transparent with their investors and employees. They should be clear about how decisions are made and about facts in general. It’s the same in DFS. If you’re not transparent with yourself about how you make decisions or the facts as they manifest themselves in your bankroll, then you probably won’t be CEO of your personal DFS investment firm for long.
A Conclusion
To find the featured image for this piece, I googled “business images” (I think) and then eventually found some gag stock photos that Vince Vaughn and the cast of Unfinished Business did.
I forgot this movie even existed. It features the man who ate Vaughn; James Franco’s little brother; a British actor who’s way too good to be in this movie; the guy who tried to play Cyclops in the old-school X-Men movies; the wife in American Sniper; the first woman Peter Bretter has sex with after Sarah Marshall breaks up with him; and some other people who suck.
On Rotten Tomatoes, 11 percent of reviewers liked it. I would bet money that at least one of those 10 reviewers hasn’t even seen the movie, which might be the worst Vince Vaughn film of all time — which is quite an accomplishment.
I hope you enjoy the featured image. I spend about five hours per day searching the internet for images I probably can’t use.
And I don’t mean that the way it sounds.
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The Labyrinthian: 2017.45, 140
Previous installments can be accessed via my author page or the series archive.
