When longtime Kleiner Perkins venture capitalist Joe Lacob and his fellow investors bought the Golden State Warriors in 2010 for a record $450 million, there were plenty of doubters on the sidelines. The Oakland-based NBA team had reached the playoffs only once in the previous decade and a half. It hadn’t won a league title since 1975. Just 7,000 die-hard season ticket holders warmed the seats. Lacob was one of them.
“We were so bad!” the 1983 Stanford MBA graduate candidly told a Stanford audience gathered in Maples Pavilion on Sept. 10. “We weren’t a very good basketball team, and we weren’t very good as a business organization. In our first year we lost $25 million.”
Six years later, the Warriors are worth about $2 billion, and their 14,500 season ticket holders rank among the happiest fans in the nation. Besides clinching the NBA Championship in 2015 under new head coach Steve Kerr and coming achingly close to repeating the feat in 2016, the team has posted a record-setting 238 season wins over the past four regular seasons. Golden State television ratings were through the roof last year, two-time NBA MVP Stephen Curry’s jersey is the hottest-selling piece of merchandise in the NBA, and soon the team will be playing in a new 18,000-seat arena on the shores of Mission Bay in San Francisco.
Lacob reflected on the Warriors’ stunning turnaround at an awards ceremony hosted by the Stanford Graduate School of Business Alumni Association. While previous winners of its Entrepreneurial Company of the Year (ENCORE) Award have been well-known Silicon Valley companies, this year selection committee members took the unusual step of recognizing a sports franchise. The Warriors, they said, were to be commended for “redefining sports management, pioneering the use of sports analytics in the NBA, and adopting new technologies that have transformed the fan experience.”
Lacob, a former biology major who made his initial fortune investing in medical technology, internet, and energy companies, was joined onstage by Warriors General Manager Bob Myers, who was named 2014-15 NBA Executive of the Year, plus two of the organization’s best-known players: 2015 NBA Finals MVP Andre Iguodala, and seven-time NBA All-Star Kevin Durant, who joined the team in July. Together with award selection committee chairman Geoff Yang, MBA ’85, they discussed what it takes to be a winning professional sports organization in America today, as well as a winning business venture.
It Takes Year-Round Dedication
Lacob frequently is asked how he turned the Warriors around in such a short time. The answer, he says, “isn’t one big thing; it’s a lot of little things. … There’s a relentless — and I capitalize that word — pursuit of excellence every single day in this organization.” Every person associated with the Warriors has a common purpose and common goals and buys into a culture of working hard. Those who resist the idea of being on task 365/24/7 are not asked to come aboard, he says.
It's Not Mom-And-Pop Anymore
Years ago sports franchises often were family-owned or run by investors as a side business. Today that limited approach is unworkable. “These teams are worth too much, and there are too many people watching,” Lacob says. “It’s just big business, and the truth is, these teams cannot be run like small organizations.” He says sports franchises would do well to emulate successful Silicon Valley companies like Apple and Google, which tend to invest in diverse areas, including technology, entertainment, media, and real estate.
Emotional Stamina Is Critical
“It’s hard to build a company. It’s hard to turn around an organization like this. It is hard to be in the limelight all the time, and it’s hard to absorb losing sometimes,” Lacob says. Yet even when the Warriors experienced their most heartbreaking recent loss, in Game 7 of the 2016 NBA Finals, he recovered quickly and put it out of his mind for the rest of the summer. “All I think about,” he says, “is getting better; that’s what our job is.” Fortunately, he adds, sports teams “get results every day,” and they can use that data to improve continuously.
Hire People Who Love What They Do
GM Myers told the audience that he loves basketball so much that he’ll frequently pull over to the side of the road to watch kids’ pickup games. He looks for the same passion in players and coworkers. “You want to find people who love the game and are thrilled to go to work every day,” regardless of whether there’s money involved, he explains. A good way to learn about potential hires, he adds, is to shoot some hoops with them. “You can learn so much more in half an hour playing basketball than you can [in an interview] asking them about their hobbies and where they went to school. You can learn whether they’re selfish, whether they cheat, or if they are smart, hard-working, and competitive.”
Cultures Are Composed of People
Team culture “is not about some guy who scores 20 points in a game,” Myers told the audience. Rather, “it’s the story of people sacrificing and doing it all the right way.” A perfect example of this ethos, he says, is Warrior forward Andre Iguodala. Despite the fact that he was a highly respected player who’d been named to the NBA All-Defensive First Team, Iguodala abided by coach Steve Kerr’s decision to remove him from the starting rotation in 2014-15. When he finally did get a chance to start, with Golden State down 2-1 in the 2015 NBA Finals, “he was ready,” Myers says, smiling at Iguodala, on his left. The result was a national championship — and a finals MVP award for the patient player.
The ENCORE Award was created in the late 1970s by the Bay Area Chapter of the Stanford GSB Alumni Association to recognize the entrepreneurial spirit of companies springing up in Silicon Valley. Previous winners have included companies such as Apple, Genentech, Cisco, eBay, Google, Tesla, Netflix, and LinkedIn.