The Golden State Warriors: A Sports Unicorn
If you’ve been in a coma for the last two years, or on some kind of personal pilgrimage, or searching for new organic cures in a rain forest somewhere, then MAYBE you could be excused for not knowing about the Golden State Warriors. And unless you are a fan of another true contender — the Cleveland Cavaliers, San Antonio Spurs, and especially the Oklahoma City Thunder (yikes!) — then you really have zero reason not to admire them, even if just a little bit (or in secret).
Seriously, how could you not?
For many sports fans, the Warriors represent everything we love about sports: a scrappy group of players that nobody saw coming suddenly becomes the unstoppable force that no one can resist; the humble superstar who looks and acts like the kid down the street; the alpha male competitor who talks the talk and walks the walk; and a host of stars and role players that fully commit to the team concept.
I’m not a fan of the Warriors per se, but I have found myself wondering how I could get in on the action. I can’t help but think of the Warriors as the next big thing that I want to get in on early. But let’s be honest — it’s really not that early. If the Golden State Warriors were a startup, they would’ve already IPO’d. The parking lot would be filling up with Teslas. The founders would be gracing the covers of tech and business magazines. Everyone would know their names.
The Golden State Warriors aren’t a startup, though, it is an NBA franchise. A franchise that just won the championship last season, and finished this season with the best regular season record in NBA history (73–9). They are four Finals wins away from winning the championship back-to-back.
Their parking lot was already filled with Teslas and other luxury cars. They have already been on the cover of magazines. And although most of their starters, namely Steph Curry, have capitalized on a bunch of new endorsements, they were already household names. Men already wanted to be them, and women already wanted to be with them.
It’s weird to think about an NBA team as a startup. The NBA was founded in 1946. Many of the franchises we know today are over 70 years old, and already have billions dollar valuations (the L.A. Clippers just sold for $2b — and that was under duress). NBA owners, and players already make millions of dollars, and already fly around in private jets.
Comparing an NBA franchise (or any other professional team for that matter) to a startup falls short in many areas. It’s hard to connect all of the dots between high paid jocks and underpaid — if paid at all — tech geeks. We think of startups as very raw creations. We think of cold pizza, and ramen noodles. We think of them struggling to make ends meet, or at least struggling to make their way. We don’t expect to see them on nationally televised games, or endorsing national clothing brands.
That’s because we largely perceive the riches that come with professional sports as success, but what we have to realize, however, is that when it comes to professional sports the currency of success isn’t money — it’s winning.
Professional sports teams are established businesses, but the teams they put on the field of play every year are very seldom the same as they were the year before. In terms of their actual product (the team), franchises essentially start over every 5 to 10 years. Very few are lucky enough to have a Tim Duncan, or Kobe Bryant anchoring championship-level teams for 15 to 20 years. This also means that each new version of the team is a lean experiment of sorts, an MVP that validates individuals, lineups, and collective playing styles.
Teams as Hypotheses
Every permutation of a team MVP starts with a fundamental belief about how they can best win games, but also how they want to be defined. The ethos of a franchise can vary greatly, from up-tempo “finesse” teams like the Phoenix Suns team of the early 00’s to the rugged bruising Detroit Pistons of the Bad Boy era. This unique value proposition is often based on the culture of the franchise and the region it is based in, but it is also strongly influenced by the actual team make-up (personnel) for that season including the coaching staff. For all intents & purposes, the Golden State Warriors hypotheses might read something like:
Hypothesis #1: Using analytics is a better way to build and manage a team
It’s not surprising that in a region known for tech startups that the local team would behave like one. It’s almost a given when you consider the majority owner, Joe Lacob, is a former startup CEO and a current venture capitalist. They strongly believe that their lean startup-esque approach to business, including using analytics (they won 2016 “Best Analytics Organization” Award at 2016 MIT Sloan Sports Analytics Conference), and generally embracing innovation, is at the foundation of their team’s success. Joe Lacob isn’t shy about telling you about it either, as a New York Times article revealed earlier this year.
Hypothesis #2: Aggressive 3-point shooting can win a championship
One of the most visible outputs of the team’s emphasis on analytics is their embrace of 3 point shooting. For 2015–16 regular season, the team finished 1st in all 3 point shooting statistics (total/per game): attempts (2592/31.6), made (1077/13.1), and percentage (46%).
Hypothesis #3: A coach with the right philosophy and style can help this team win a championship, even if he is unproven.
For the 2014–15 season, the Warriors tested a hypothesis that was considered very controversial and risky at the time. Despite a 50 win season the previous year, the leadership decided to fire their popular head coach, and replace him with a coach that they felt better matched their team structure and culture.
Enter coach Steve Kerr. Despite his popularity as a player (Kerr won 5 championships with the Bulls & Spurs), and as an analyst (TNT), Kerr had no previous experience as a coach. He briefly served as a GM of the Phoenix Suns — a team that at the time had a very similar playing style to the Warriors.
Product Market Fit
Almost by definition, professional sports teams have product market fit. Playing a sport and entertaining fans is a proven value proposition that has existed for centuries. In many respects, professional sports teams of today achieve product market fit by default.
Having said that, franchises are subject to geography, local economics, fan density, and a couple of other potential factors, but in almost any factor worth considering the Warriors score big. Their home court, Oracle Arena, is in Oakland, CA, a trip of just a few miles for affluent fans residing in Silicon Valley. This includes tech entrepreneurs, investors, and well paid employees from companies like Google, Facebook, and Uber. The Warriors have a very literal product market fit: selling a great product experience in a place where it’s in high demand, and to people who can afford it.
User Acquisition (& Scaling)
Very few of us are noble or loyal enough to consistently attend games for losing teams. Not only is it horrible waste of time and money, it is truly aggravating. So, naturally, we expect poor teams to have a hard time selling tickets, while winning teams like the Warriors should have a hard time NOT selling their tickets, merchandise, and sponsorships. We would be right on both accounts, and that is because, as many in the tech world know, a good product is the best kind of growth strategy. There is no sales pitch, nor marketing campaign that converts better than winning, because there is simply is no user experience better than winning.
But winning in and of itself is only part of the story. In an age of SportsCenter Top 10s and Vines, where fans consume much of their sports as highlights and soundbites, the teams that entertain the most get the most visibility.
This is arguably the Warriors greatest asset. It’s not just that their good, it’s that their exceedingly entertaining to watch. Top to bottom, the Warriors are as talented as any other team in the NBA, maybe more so. So yeah they’re competitive, but more importantly their interesting. They use their athleticism, skill not just to win, but to electrify. On any given night, they treat fans to a buffet of outlandish 3-point shots, jaw dropping fast break plays, and some of the most creative plays in and around the rim.
Everybody loves a winner, so casual and diehard NBA fans alike have largely gravitate toward the Warriors in droves. It is thus no surprise that the Warriors rank in the top of the league for tv ratings, jersey sales, ticket sales and attendance, and any other metric worth measuring. What’s really funny to note is that for all intents and purposes, because of the salary cap the Warriors cost of good sold (at least for the players) is the exact same as the worst team in the league (by record for the 2015–16 season), the Philadelphia 76ers (10–72). As a result, the Warriors “customer acquisition cost” as measured by their league-leading tv ratings is almost exponentially lower. It’s almost not even a cost at all.
All of this amounts to a successful franchise by any objective fan or business standard. And while can agree that every team’s (or business’s) success benefits from at least a modicum of good fortune(players, health, gameplay outcomes, referee calls, etc.), we can probably also agree that fortune favors the bold. Kudos to the Warriors for being a bold.
If you like this weird lean startup-ish analysis of a sports team, please consider recommending it and sharing your feedback.
Also, if you are legitimately interested in the intersection of sports & startups then maybe you should go ahead and follow me as well. I’ll be blogging about this stuff on my journey to launching my own sports startup.
