From Goldman Sachs to the NBA Part 3
former Partner & Managing Director at Karsch Capital
and currently the Analytics Guru of the Indiana Pacers
In Part 2 of our interview with Ryan Renteria, former Goldman Sachs Equity Research Analyst, Ryan talks about how and why he made a decision to retire from the hedge business at the age of 30.
After fulfilling a life goal to dedicate his life to volunteer work full-time, a drive instilled in him by his mother’s example, Ryan decided to tackle his next impossible challenge: landing a job in the front office of a professional basketball team. We asked him how he did it and pick up our exclusive conversation below.
You were hired to lead the analytics efforts for the Indiana Pacers. How did you get this job?
A former colleague connected me to one of the owner’s business partners and friends. I delivered my presentation to him and then he generously went above and beyond to advocate for me throughout the process. He called the owner who then asked me to come out to Indianapolis. I spent nearly a full day there in various meetings with the top basketball executives, senior management team and owner. Although I felt fortunate that a number of teams were interested in having me join them, I left Indianapolis knowing it was the best choice for me. I was attracted to the organization’s class, open-mindedness and strong young core. I knew the owner was a wonderful person and I had started to develop a special bond with him. When he asked me to join the organization I happily accepted.
How did your experience on Wall Street prepare you for this opportunity?
A Wall Street background, especially many years in institutional investing, is an ideal training ground for an NBA front office role. First, analytics is one important tool of an investor’s process for seeking undervalued assets in the same way analytics can be a key part of an NBA executive’s process when searching for undervalued players. The 9 years I spent using analytics on Wall Street was easily transferable to the NBA.
Second, investors must allocate capital with a focus on how different assets will fit together in a portfolio, with a goal of generating the highest returns per invested dollar. This is similar to how NBA executives must divide payroll dollars with a focus on how different players will fit together in a team, aiming for the most wins per dollar spent within the rules of the Collective Bargaining Agreement. My experience in portfolio construction and asset valuation was very portable to the NBA.
Third, successful investors understand the behavior biases that can hinder decision making much like NBA executives have to be cognizant of those same pitfalls. The reality is these core tools are applicable and valuable to most business industries.
How did your broader background and life prepare you for this opportunity?
When you grow up with limited financial resources, you’re forced to hunt for bargains whenever you buy anything. You can’t afford to overpay and that mentality stays with you forever. That background helped prepare me for value investing on Wall Street and for a role on a small market NBA team operating within the salary cap.
Along similar lines, growing up with some underdog characteristics forces you to develop a certain attitude and grit needed to overcome obstacles, which was very good preparation for this opportunity. Also, playing competitive basketball and intensely following the NBA from a young age helped me understand the game well enough to communicate effectively with coaches and front office executives in basketball language.
Can you describe the day-to-day of an analytics specialist during the season?
A good analytics specialist is focused on finding every possible way to help his team gain an edge in order to win more games. He can help the coaching staff prepare for their opponents, understand more about their own team’s tendencies or see what analytics would say about certain game strategies. During the season I spend the majority of my time working with the head coach as well as the assistant coaches.
What does that day-to-day look like during the off-season?
A solid analytics specialist must be able to evaluate personnel from a variety of leagues to help his organization acquire productive players that fit well with the team at a good value. He can help the front office evaluate potential trade scenarios, draft prospects and free agents. During the off-season I spend a lot of time working with the general manager as well as other front office executives. This is a good time to be updating, testing and improving one’s systems as well as conducting thematic studies.
What are some of the most unique things you’ve gotten to experience while working for the Pacers? Can you tell any stories about interacting with the players?
Presenting to our coaching staff in playoff preparation sessions and participating in those discussions has certainly been an incredible experience for me. Being in the war room on the night of the NBA draft and seeing the flurry of activity that can take place was really neat. Traveling with the team to Asia for a preseason tour and to some of our road playoff games has been amazing. Having some of the players seek me out to ask questions has been a unique experience. A lot of those things have been fun, but the best part has been watching the team make it to the conference finals the last two seasons.
In terms of stories, one embarrassing moment for me stands out. At the end of a shoot around, I was walking across the court and one of our starters suddenly passed me the ball. He asked me if all I could do was analytics or did I know how to shoot? I was wearing a slim-fit dress shirt so when I took the jumper my shooting motion stopped way too early and the shot fell well short of the rim. It was such an ugly air ball that he almost guilt-tripped me into running a down and back. I was hoping no one else saw it but right away the video guys started clowning me.
What do you see as the future of analytics in sports?
The use of analytics as a tool in sports will grow substantially from here. Executives across a variety of industries in the business spectrum are seeing the value of evidence-based decision making and hence increasing their organizations’ use of analytics as one piece of the puzzle. This is certainly true in sports where some of the earliest adopters and most fervent users of analytics have had great success, causing others to see the value in using every tool at your disposal to improve decision making. The ongoing explosive increase in available data will only further this trend.
About one year ago the NBA began providing all teams with a massive increase in data to use which is collected from special cameras in all of the arenas. I already had a heavy workload as the only full-time person handling our analytics, so we hired one of our top-notch summer interns after he graduated and it has been really great having him on board. More teams across a variety of sports will have analytics departments with multiple people given the greater amount of data.
You are living the dream of so many people, what advice would you give to someone with the same dream?
The first piece of advice is there is no substitute for meticulous preparation. Conduct extensive research on every aspect of your dream role. Figure out the knowledge and skills you need and form a process for learning them in-depth. There may not be “how to” books for hard-to-get unique roles such as certain jobs in sports so you have to be resourceful to find experts and teach yourself.
The second thing is you must figure out how you’re going to stand out from the thousands of people competing for the same dream, especially in sports where there is a extraordinarily higher number of applicants than jobs. What makes you uniquely qualified to solve this team’s needs? Seek expert advice on how to communicate that differentiation through your resume, cover letter and interview/presentation.
The final point is to develop the grit and perseverance needed to push through the lengthy preparation and huge obstacles that can occur while chasing a dream that a ton of other people want. Form a mindset that you will let nothing keep you from your dreams, continuously improve your process and be relentless in running through all walls.
You are now part owner of a Minor League baseball team, how and why did you get involved in that venture?
My passion for sports probably played a small role, but not because I love watching and attending sports games. I’m a firm believer in the Warren Buffett tenet that you should only invest in businesses you can really understand. I had a long history of intensely following sports leagues as a fan and consumer companies as an institutional investor. Since a Minor League Baseball franchise is a sports team whose business depends upon delivering a very fun experience for its customers, I was able to really understand the drivers of the business before purchasing part of a team.
Minor League Baseball is a rare home run for everyone involved. Families get a wonderful entertainment experience of an American pastime at a very affordable price (cheaper than going to the movies). Cities that may lack professional sports or many family fun options are often rewarded with an economic boost when they build a new stadium and welcome a team into town. Investors in teams receive strong economics due to a host of unique factors. I am looking forward to taking my son to his first game and building a lot of wonderful memories together at the ballpark.