They got it right: Why Stephen Curry deserves to be a First Team All-Star

Curry vs. Westbrook

Much has been written about the fact that Russell Westbrook was not chosen for the first team on the Western All-Stars. The implication appears to be that he was more deserving than Curry. I believe that Westbrook is one of the greatest athletes to play the game and one of the better players currently in the league. Yet, I also feel strongly that so much weight is being placed on his triple doubles that he is being unfairly anointed as the more deserving player. This post takes a deeper dive into the available data and, I believe, shows that Curry has a greater impact on winning games and is deserving of the first team honor. So, as is my want to analyze everything, I spent some time dissecting the comparison between the two.  It is tricky comparing the greatest shooter to ever play the game to one of the greatest athletes to ever play, but I’ll attempt it, statistic by statistic.

 

Rebounding

Westbrook is probably the best rebounding guard of all time (with Oscar Robertson and Magic Johnson close behind). This season he is averaging 10.4 rebounds per game while Curry is at 4.3. There is no question that Westbrook wins hands down in this comparison with Curry, who is a reasonably good rebounding point guard.  But on rebounds per 36 minutes played this season, Westbrook’s stats are even better than Oscar’s in his best year. In that year, Robertson averaged 12.5 rebounds playing over 44 minutes a game which equates to 10.2 per 36 minutes vs Westbrook’s 10.8 per 36 minutes (Magic never averaged 10 rebounds per game for a season).

 

Assists

You may be surprised when I say that Curry is a better assist producer than Westbrook this season. How can this be when Westbrook averages 10.3 assists per game and Curry only 6.2?  Since Oklahoma City plays a very different style of offense than the Warriors, Westbrook has the ball in his hands a much larger percentage of the time. They both usually bring the ball up the court but once over half court, the difference is striking. Curry tends to pass it off a high proportion of the time while Westbrook holds onto it far longer. Because of the way Curry plays, he leads the league in secondary assists (passes that set up another player to make an assist) at 2.3 per game while Westbrook is 35th in the league at 1.1 per game. The longer one holds the ball the more likely they will shoot it, commit a turnover or have an assist and the less likely they will get a secondary assist. The reason is that if they keep the ball until the 24 second clock has nearly run out before passing, the person they pass it to needs to shoot (even if the shot is a poor one) rather than try to set up someone else who has an easier shot. For example, if a player always had the ball for the first 20 seconds of the 24 second clock, they would likely have all assists for the team while on the court.

Table 1: Assist Statistic Comparison

Curry vs. Westbrook Assists
*NBA.com statistics average per game through Feb 1st, 2017

When in the game, Westbrook holds the ball about 50% of the time his team is on offense, he gets a large proportion of the team’s assists. But that style of play also means that the team winds up with fewer assists in total. In fact, while the Warriors rank #1 in assists as a team by a huge margin at 31.1 per game (Houston is second at 25.6), Oklahoma City is 20th in the league at 21.2 per game. If you agree that the opportunity to get an assist increases with the number of minutes the ball is in the player’s possession, then an interesting statistic is the number of assists per minute that a player possesses the ball (see Table 1). If we compare the two players from that perspective, we see that Curry has 1.27 assists per minute and Westbrook 1.17. Curry also has 0.47 secondary assists per minute while Westbrook only 0.13. This brings the total primary and secondary assist comparison to 1.74 per minute of possession for Curry and 1.30 for Westbrook, a fairly substantial difference. It also helps understand why the Warriors average so many more assists per game than Oklahoma City and get many more easy baskets. This leads to them having the highest field goal percentage in the league, 50.1%.

 

Shooting

Russell Westbrook leads the league in scoring, yet his scoring is less valuable to his team than Stephen Curry’s is to the Warriors. This sounds counterintuitive but it is related to the shooting efficiency of the player: Curry is extremely efficient and Westbrook is inefficient as a shooter. To help understand the significance of this I’ll use an extreme example. Suppose the worst shooter on a team took every one of a team’s 80 shots in a game and made 30% of them including two 3-point shots. He would score 24 baskets and lead the league in scoring by a mile at over 50 points per game (assuming he also got a few foul shots). However, his team would only average 50 or so points per game and likely would lose every one of them. If, instead, he took 20 of the 80 shots and players who were 50% shooters had the opportunity to take the other 60, the team’s field goals would increase from 24 to 36. Westbrook’s case is not the extreme of our example but none-the-less Westbrook has the lowest efficiency of the 7 people on his team who play the most minutes. So, I believe his team overall would score more points if other players had more shooting opportunities. Let’s look at the numbers.

Table 2: Shot Statistic Comparison

shots-table
*NBA.com statistics average per game through Feb 1st, 2017

Westbrook’s shooting percentage of 42.0% is lower than the worst shooting team in the league, Memphis at 43.2%, and, as mentioned is the lowest of the 7 people on his team that play the most minutes. Curry has a 5.5% higher percentage than Westbrook. But the difference in their effectiveness is even greater as Curry makes far more three point shots. Effective shooting percentage adjusts for 3 point shots made by considering them equal to 1½ two point shots. Curry’s effective shooting percentage is 59.1% and Westbrook’s is 46.4%, an extraordinary difference. However, Westbrook gets to the foul line more often and “true shooting percent” takes that into account by assuming about 2.3 foul shots have replaced one field goal attempt (2.3 is used rather than 2.0 to account for 3 point plays and being fouled on a 3-point shot). Using the “true shooting percentage” brings Westbrook’s efficiency slightly closer to Curry’s, but it is still nearly 10% below Curry (see table 2). What this means is very simple – if Curry took as many shots as Westbrook he would score far more. In fact, at his efficiency level he would average 36.1 points per game versus Westbrook’s 30.7. While it is difficult to prove this, I believe if Westbrook reduced his number of shots Oklahoma City would score more points, as other players on his team, with a higher shooting percentage, would have the opportunity to shoot more. And he might be able to boost his efficiency as a shooter by eliminating some ill-advised shots.

 

Turnovers vs Steals

This comparison determines how many net possessions a player loses for his team by committing more turnovers than he has steals. Stephen Curry averages 2.9 turnovers and 1.7 steals per game, resulting in a net loss of 1.2 possessions per game. Russell Westbrook commits about 5.5 turnovers per game and has an average of 1.6 steals, resulting in a net loss of 3.9 possessions per game, over 3 times the amount for Curry.

 

Plus/Minus

In many ways, this statistic is the most important one as it measures how much more a player’s team scores than its opponents when that player is on the floor. However, the number is impacted by who else is on your team so the quality of your teammates clearly will contribute.  Nonetheless, the total impact Curry has on a game through high effective shooting percent and assists/minute with the ball is certainly reflected in the average point differential for his team when he is on the floor. Curry leads the league in plus/minus for the season as his team averages 14.5 more points than its opponents per 36 minutes he plays.  Westbrook’s total for the season is 41st in the league and his team averages +3.4 points per 36 minutes.

 

Summing Up

While Russell Westbrook is certainly a worthy all-star, I believe that Stephen Curry deserves having been voted a starter (as does James Harden but I don’t think Harden’s selection has been questioned). Westbrook stands out as a great rebounding guard, but other aspects of his amazing triple double run are less remarkable when compared to Curry. Curry is a far more efficient scorer and any impartial analysis shows that he would average more points than Westbrook if he took the same number of shots. At the same time, Curry makes his teammates better by forcing opponents to space the floor, helping create more open shots for Durant, Thompson and others. He deserves some of the credit for Durant becoming a more efficient scorer this year than any time in his career. While Westbrook records a far larger number of assists per game than Curry, Curry is a more effective assist creator for the time he has the ball, helping the Warriors flirt with the 32-year-old record for team assists per game while Oklahoma City ranks 20th of the 30 current NBA teams with 10 less assists per game than the Warriors.

An Analysis of Kevin Durant’s Free Agency Decision

There is much controversy over whether Kevin Durant should leave OKC and if so, what team he best fits with. In evaluating what makes the most sense for him I’d like to cut through emotional clutter and start with objectives:

  • To be rated among the best ever, a basketball player needs to win championships – which is why LeBron James left Cleveland originally and why Bill Russell (8 championships) usually gets rated above Wilt Chamberlain (2 championships) despite the fact that Wilt was clearly a much more complete player and why you don’t typically see the great Patrick Ewing, Allen Iverson or Elgin Baylor (all 0 championships) getting ranked that high among the greatest players of the century .
  • When you win championships, people soon forget how stacked your team may or may not have been – LeBron is sometimes referred to as a failure in his first Cleveland stint despite taking the worst team in the league to the NBA finals and few talk about how good Michael Jordan’s supporting cast was in making the playoffs even when he was playing baseball instead of basketball.
  • I believe Durant understands that and his primary objective is to win championships so that he can rank higher among the greats.

How can he best accomplish that?

  • Kevin Durant could stay in OKC because of the emotional concept that it’s “his team” and he should not abandon them. The idea being that helping them win is somehow better than helping someone else win. If he does, his chance of winning a championship would be less than 12.5% (1 in 8) since they would probably need to beat San Antonio, Golden State and Cleveland and it’s hard to rate them as favorites in any of those matchups.
  • If Durant went to Golden State they would likely win the Western Conference again and have an easier schedule than a Durant led OKC could have in the playoffs. They are already the favorite to win the title even without Durant and the odds of them winning would increase significantly should they land him. Golden State is also a perfect fit for him as it plays a team game that would improve the quality of his shot opportunities. How does a team simultaneously double team Durant, Curry and Thompson? So not only would this increase his chance of winning, it also would likely increase his shooting percent and his assists.
  • The other team that he could pick with the best opportunity to win would be Cleveland but there is no cap space there and it’s unlikely that this would be a fit.
  • The third strong opportunity is San Antonio. While this would be a fit, the path to a title would not be as likely as Golden State or Cleveland because several key players are aging. However, adding Durant would create a strong trio that could challenge Golden State and possibly would be favored over them. But not the overwhelmingly favorites that the Warriors would be with Durant. Also going from one small market to another would not add the media draw that would lead to maximizing endorsement income.
  • Although there are rumors of Boston, Los Angeles, New York, Washington, Houston and Miami also courting Durant, none of these teams would solve any of his objectives. None would give him a high probability of winning a championship and would solve even less for the emotional component of the decision.
  • The question that was rattling around all year was “Why would the Warriors want Durant.” The answer is obvious and even more obvious after their game 7 loss – he will make them better. Adding one of the 5 best players in basketball, who shoots for a high percentage, plays defense well and is team oriented makes any team better.
  • What about the argument that adding Durant would use up so much cap space that the Warriors would need to shed other key players? I agree that they would not be able to keep Harrison Barnes and Festus Ezeli. But the reality is that Ezeli is not a key player and they should not match the high price he is likely to get in the free market, regardless of whether or not they get Durant. By Durant (and in the future Curry) taking less than a max salary, the Warriors could make sure that they kept Iguodala and Livingston plus all starters (including Andrew Bogut) other than Barnes. The rest of the team could be filled in and I would predict the Warriors could attract others who are willing to take lower salaries in order to be on a championship team. So, I suspect the remainder of the supporting cast will be as good as this year. If Durant is willing to take a salary that enables keeping the 6 key players mentioned, then he will maximize his chance of winning a title. When the cap goes up next year, he and Curry could take higher, but not maximum, salaries so that the team around them could continue to include Iguodala and Livingston.
  • What about the argument that Durant should maximize his compensation? My answer is that he will maximize his compensation by taking a lower salary and going to the Warriors because his endorsement money will increase by far more than any salary he forgoes since he would be playing on the highest profile team in a major market and winning championships. To quantify the opportunity, Michael Jordan made more in 2015 from endorsements (12 years after his last retirement) than he did in all 15 years in NBA earnings. Curry is already proving that and can easily take a lower than max salary when his contract expires in another year as his endorsements will dwarf his salary. And winning more championships will only increase all the key players’ outside revenue dramatically.

 

Next Gen Selling vs Old (or “Traditional”) Methods

In this post I want to compare the buying experiences I’ve had recently when purchasing from an older generation company vs a newer one. I think it highlights the fact that ecommerce based models can create a much better buying experience than traditional brick and mortar sellers when coupled with a multi-channel approach. The two companies I want to highlight are Tesla (where my wife recently purchased a car) and Warby Parker (where I recently bought a pair of glasses). I’ll compare them to Mercedes and LensCrafters but you should understand it almost doesn’t matter which older gen companies I compared them to, so just consider the ones I’ve chosen (due to recent personal experience) as representative of their industries.

Controlling the buying experience

Warby Parker began opening retail “Guideshops” a few years ago. I recently went into one and was very pleased with the experience. They displayed all the frames they have and there were only two price categories which included the prescription lenses and the frames, $95 and $145. I selected a frame, went over to the desk and received assistance in completing the transaction. The person assisting me took one measurement of my eyes and then suggested I get slightly better lenses for a charge of $30 which I think was only necessary due to my particular prescription. There were no other charges, no salesperson, no other upsells, no waiting while the glasses are being made. Once I paid by credit card, the glasses were put in their cue to be made at their factory and shipped to my home within 10 days (with no shipping charge) and my receipt was sent by email rather than printed. From the time I entered the store until I left was about 10 minutes.

Compare this experience to buying a pair of glasses at LensCrafters. At LensCrafters the price range of frames is all over the map without any apparent reason except many carry a designer brand logo (but are unlikely to have been designed by that designer). To me the Warby Parker frames are as good or better looking as far more expensive ones at LensCrafters.  Even if you select a frame at LensCrafters that costs $95-$300 or more, the lenses are not included. A salesperson then sits with you and begins the upselling process. Without going into all the details, suffice it to say that it is very difficult to discern what is really needed and therefore it is hard to walk out of the store without spending $100-$300 more than the cost of the frame. Further, since the glasses are made at the store you come back in a few hours to pick them up (of course this is a positive if you want them right away; I usually don’t care).  I have typically spent well over an hour in the buying process plus going for a coffee for the 2 hours or so it took for them to make the lenses.

Tesla has been very adamant about owning and controlling their physical retail outlets rather than having their cars sold by independent dealerships. This gives them multiple advantages as they completely control the buying experience, eliminate competition between dealers, reduce distribution cost and can decide what the purpose of each location is and how it should look. They have also eliminated having cars to sell on the lot but instead use an ecommerce model where you order a car exactly the way you want it and it gets produced for you and brought to the Tesla physical location you want for pickup. Essentially, they have designed two types of physical stores: one that has a few demo models to enable test drives and one that also has a customer service department. This means that the latter is a much smaller size than a traditional car dealership (as it doesn’t need space for new car inventory on the lot) and the former is much smaller than that. The showroom approach occupies such a small footprint that Tesla has been able to locate showrooms in high foot traffic (high cost per foot) locations like malls.  In their sites at the Stanford Mall and on Santana Row (two of the most expensive per square foot), Tesla kept the cars for test drives in the parking lots (at a fraction of the cost of store footage). When my wife decided to buy her second Tesla (trading in the older one) we spent about an hour at the dealer as there was no negotiation on price, the car could be configured to her exact specification on a screen at the dealership (or at home) and would be manufactured for her. There were no upsell attempts, no competing dealers to visit, and really no salesperson but rather a facilitator (much like at Warby Parker) that answered questions.

I bought my new car from Mercedes and had a much less pleasant buying experience. It starts with the fact that the price on the car isn’t the real price. This means that one needs to try to go to multiple dealers as well as online to get a better handle on what the real price is as the dealers are difficult to trust. Each dealer now has its own online person (or team) but this is actually still buying from a dealer. There is also a strong encouragement to buy a car in inventory (on the lot) and the idea of configuring the way one wants and ordering it is discouraged. The cars on the lot are frequently configured with costly (highly profitable) options that are unnecessary so that even with a discount from list one typically spends more than ordering it with only options you want and paying closer to list. After multiple days (and many, many hours) spent online and visiting dealerships I decided to replicate the Tesla concept and order a 2016 model to be built exactly how I wanted. Because I spent many hours shopping around, I still was able to get a price that was an extra $4,000 off list from what I had been offered if I bought a 2015 off the lot. The car was the color I wanted, only had the options I wanted and would have a higher resale value because of being a 2016. Since the list price had not increased and there were no unneeded options on the car I actually saved about $10,000 vs taking one off the lot with the lower discount even though all additional options I wanted were bundled with it.

Receiving the product

In the Warby Parker example, the glasses were shipped to my home in a very well designed box that enhanced their brand. The box contained an upscale case and a card that said: “For every pair of glasses sold, a pair is distributed to someone in need.” Buying at LensCrafters meant returning to the store for the glasses. The case included was a very cheap looking one (creating an upsell if one wanted a nicer case) and there was no packaging other than the case. However, I did get the glasses the same day and someone sat with me to make sure they fit well on my ears (fit was not an issue for me for the Warby Parker glasses but could be for some people).

On the automobile side, the car pickup at Tesla was a much better experience than the one at Mercedes. At Tesla, my wife and I spent a little over an hour at the pickup. We spent about 20 minutes on paperwork and 45 minutes getting a walk through on how various options on the car work. There were no attempts to upsell us on anything. At Mercedes the car pickup experience took nearly 4 hours and was very painful as over 3 hours of it was spent on paperwork and attempts at a variety of upsells. To be fair, we had decided to lease this car and that time occupied a portion of the paperwork. But the attempted upsells were extreme. The most ludicrous was trying to get us to buy an extended warranty when the included warranty exceeded the length of the lease. I could understand that it might be of value to some but, in our case, we told the lease person that we were only doing the lease so we wouldn’t own the car at the end of it. There were also upsells on various online services, and a number of other items. The time this took meant we did not have enough time left to go over all the features of the car. This process was clearly the way each person had been trained and was not a function of the particular people we dealt with. The actual salesperson who sold me the car was extremely nice but was working within a system that is not geared towards the customer experience as dealers can’t count on buyers returning even if they buy the same brand again.

Summary

There is a significant advantage being created by new models of doing business which control the complete distribution chain. Their physical locations have a much smaller footprint than traditional competitors which allow them to put their shops in high traffic locations without incurring commensurate cost. They consolidate inventory into a centralized location which reduces inventory cost, storage and obsolescence. They completely control the buying experience and understand that customer satisfaction leads to higher life time value of a customer.

 

SoundBytes

In my SoundByte post dated April 9, I discussed several of the metrics that caused me to conclude that Stephen Curry should be the 2014-15 season MVP. He subsequently received the award but it still appeared that many did not fully understand his value. I thought it was well captured in the post by looking at EFG, or effective shooting percentage (where a three point shot made counts as 1.5 two point shots made since its worth 50% more points), plus/minus and several other statistics not widely publicized. This year, Curry has become even better and I realized one other statistic might help highlight his value in an even better way, points created above the norm (PAN).

I define PAN as the extra points created versus an average NBA player through more effective shooting. It is calculated using this formula:

PAN= 2 x (the players average number of shots per game) x (players EFG- league norm EFG)

The league’s effective shooting percentage as of December 6 is 49.0%. Since Curry’s effective shooting percentage is 66.1% as of today date, the difference is 17.1%. Curry has been averaging 20.2 shots per game this year so his PAN = 2 x 20.2 x 17.1%= 6.9. This means Curry’s shooting alone (excluding foul shots) adds about 7 points per game to his team versus an average shooter. But, because Curry is unselfish and is often double teamed, he also contributes heavily to helping the team as a whole be more effective shooters. This leads to a team PAN of 14.0. Which means the Warriors score an extra 14 points a game due to more effective shooting.

Interestingly, when you compare this statistic to other league leaders and NBA stars, Curry’s contribution becomes even more remarkable. While Curry add about 7 points per game to his team versus an average shooter, James Harden, Dwayne Wade and Kobe Bryant are all contributing less than the average player. Given Curry’s wildly superior efficiency he is contributing almost twice as much as Kevin Durant.

Efficiency

With Curry’s far superior individual and team contribution to shooting efficiency, it is not surprising that the Warriors are outscoring their opponents by such record breaking margins.

To further emphasize how much Curry’s PAN impacts his team we compared him to Kobe Bryant. The difference in their PANs is 11.8 points per game. How much would it change the Lakers record if they had these extra 11.8 points per game and all else was equal? It would move the Lakers from the second worst point differential (only Philadelphia trails them) to 10th in the league and 4th among Western conference teams. Since point differential correlates closely to team record, that might mean the Lakers would be competing for home court in the playoffs instead of the worst record in the league!

Transforming Education

I was recently interviewed on NBC regarding education, market valuations and the accuracy of my forecasts of market trends made in 2001, among other things (www.pressheretv.com). Since the interview stimulated thoughts on the education market, I thought it was worth capturing a few in a post.

Why the quality of education in the United States trails

According to the World Bank, the United States leads the world in Gross Domestic Product, dwarfing anyone else. The U.S. GDP is 70 percent ahead of number 2 China, and almost 4 times the size of number 3, Japan. Given this wealth of resources, it is somewhat surprising just how low we rank in K-12 education among nations:

  1. 36th in mathematics for 15 year olds[1]
  2. 24th in reading for 15 year olds[1]
  3. 28th in science for 15 years olds[1]
  4. 14th in cognitive skills and educational attainment[2]
  5. 11th in fourth-grade mathematics and 9th in eighth-grade mathematics[3]
  6. 7th in fourth-grade science and 10th in eighth-grade science[3]

Part of the problem is that much of our priority as a country tends to emphasize short-term gratification over long-term issues such as investing in primary education. But the problem goes much deeper.

Classroom sizes have been increasing

Parents Across America, a non-profit organization committed to strengthening US public schools, point to studies that indicate that students (especially in grades K-3) who are assigned to smaller classes do better in every way that can be measured. Of 27 countries shown in a 2007 Organization of Economic Cooperation and Development (OECD) survey the United States ranked 17th in lower education classroom size, at 24.3 students per class. While other countries are investing in reducing classroom size, the U.S. is going in the other direction. Of 26 countries included in the OECD data from 2000 and 2009, 25 either decreased classroom sizes or kept them about the same. The United States was the only one that increased classroom sizes during that period.

Heterogeneous grouping exasperates the problem

In years gone by, U.S. classrooms were homogenous, as children were separated according to their skill level. This practice came under heavy criticism because it was viewed as discriminatory.  Throughout the United States, schools shifted to heterogeneous classes not because this technique was proven to be effective but rather in an effort to promote “political correctness.”

One teacher pointed out that “administrators love to boast that their school has heterogeneous grouping…but the administrators aren’t in the classroom, and they don’t see the disappointment on the faces of students when a new experience is presented and not everyone remains on the same page.”

Another teacher stated: “That ideal [of heterogeneous grouping], is an ideal….Truth is, in our experience the low-end kids tend to pull down the high-end kids, rather than the other way around. The class pace slows, and the teacher has to in effect devise two lesson plans for each period, one for the accelerated students and another for those who have low skills.”

In the past decade, many teachers have moved toward creating homogenous groups for reading and math within their heterogeneous classroom. One teacher who has 17 years of experience teaching in New Hampshire said that the second graders in her class showed up on the first day with a bewildering mix of strengths and weaknesses. Some children coasted through math worksheets in a few minutes, she said; others struggled to finish half a page. The swifter students, bored, would make mischief, while the slowest students would become frustrated, give up, and act out.

“My instruction aimed at the middle of my class, and was leaving out approximately two-thirds of my learners,” said this fourth grade teacher at Woodman Park Elementary in Dover, N.H. “I didn’t like those odds.”

So she completely reorganized her classroom. About a decade ago, instead of teaching all her students as one group, she began ability grouping, teaching all groups the same material but tailoring activities and assignments to each group. “I just knew that for me to have any sanity at the end of the day, I could just make these changes,” she said.

Flexible ability grouping, when used appropriately, works. According to a 2010 meta-analysis by Kelly Puzio and Glenn Colby, students who were grouped by ability within a class for reading were able to make up to an additional “half of a year’s growth in reading in one year.” Similarly, a 2013 National Bureau of Economic Research study of students who were grouped by ability found that the performance of both high- and low-performing students significantly improved in math and reading, demonstrating the universal utility of this tool, particularly as our classrooms become more academically diverse.

In summary, I believe that teachers have a more difficult time today than ever before. Their classes are getting bigger, their budgets are smaller, and heterogeneous grouping for the class means that effective teaching requires splitting the class into homogenous groups that each require a different lesson plan. Teaching parts of a class separately leads to less quality time that a teacher can spend with each group.  Without essential one-on-one instruction time, students suffer. If the class isn’t divided into 2 or 3 homogenous groups for lessons the students suffer even more, as they are denied level-appropriate learning.

The current system discriminates against the lower two-thirds of society

What I find surprising is that more people don’t realize that the practice of heterogeneous grouping is actually discriminatory to the lower two-thirds of society. Wealthier families typically live in neighborhoods with better school systems (with students that are more homogenous in skill levels); can readily afford tutors for their children; can provide after school access to learning centers; give their children prep courses for various subjects and for SATs; and if all else fails, send their offspring to a private school. Those in the lower two-thirds, economically speaking, have more limited access to additional help outside the classroom, cannot afford private school, often have parents without college education who are less able to help them, and may not even take an SAT prep course. Each of these put them at a disadvantage versus those that come from the upper economic strata of America.

I myself had hardworking parents who had not gone to college. My father was an immigrant and had to work before completing high school. But my education was accelerated because homogenous grouping was the norm at that time. This included being placed into a class of high performers who all received 3 years of curriculum in two years and therefore skipped a grade. I also was able to take a competitive test that enabled me to be accepted into Stuyvesant, one of the very high-end public high schools in New York City, geared toward helping public school students receive an honors course level education. I firmly believe that the access I had to be paired with students that were high achievers played a very important role in my subsequent success.

Technology provides a range of alternatives

One potential way to bridge the gap is by having multiple teachers in a classroom but I think this would be extremely unlikely to be funded out of constrained government resources. A second possibility is to provide teachers with the training and technical resources that could be used to enhance the student experience. All too often when technology is utilized, it is not integrated into curriculum and/or very complicated to use.  However, in recent years, there have been advances in K-12 education through the use of technology that is relatively easy to use and integrate to curriculum. For example, an Azure portfolio company, Education.com has created online workbooks and games that are aligned to the Common Core and are sold to parents and teachers for a starting price of $49 per year, making a subscription affordable to everyone.  Millions of teachers and parents in the K-5 levels now are basic members of the site, which offers weekly emails and limited educational resources that can be consumed free each month. With a Pro subscription, a teacher can print out unlimited workbooks, worksheets, and lesson plans for their class. The company estimates that roughly one billion worksheets are printed each year by parents and teachers for students to use. While teachers are likely to print worksheets that complement their current curriculum, parents can use printable worksheets and workbooks as supplemental material to help their kids in academic areas where their skills need strengthening. The fact that about 8 million parents and teachers come to the site in a peak month also indicates how strong the need is for these types of materials.

Education.com’s Brainzy program is a first step at individualized learning. It uses games to practice strategies for mastering core curriculum for students in kindergarten through 2nd grade. I have also met with a number of other companies who are creating products that can provide students with personalized learning tools. What Education.com and others are doing is still early steps in a process that I believe will lead to individualized education. If the United States keeps insisting on heterogeneous classroom composition but couples this with under-investing in education and requiring teachers to divide their time into separate lesson levels, then computer tools for the individual personalized instruction of each student appears to be the solution that can bridge the gap.

SOUNDBYTES

  • Stephen Curry picked up right where he left off last year scoring 40 points in the first game of the new season on strong shooting. Over the last 11 games, the Warriors remain undefeated behind Curry’s league leading scoring. After 11 games, Curry is averaging 33.4 points per game, a full 5 points ahead of the number two, James Harden, at 28.4 points per game. On Saturday night, in Curry’s 427th game, he surpassed the number of threes made by his father, Dell Curry, over his 1,083 game career. Earlier this year, we discussed why Curry deserved to be the clear NBA MVP and analyzed his scoring efficiency adjusting for his ability to hit threes from seemingly anywhere on the court (he was subsequently voted the MVP) .

Curry backup

  • Curry’s shooting has been even more dominant this year. Even based on “standard” statistics, Curry leads the pack not only in scoring average but also in field goal percentage. At 51.7% he trails only Blake Griffin, who has only taken 3 three-point attempts this season, in the top 10 scorers. Looking at “Field Goal Efficiency” (FGE%), a metric introduced in our previous post, that calculates a 3-point field goal as worth 1.5 times a 2-point field goal, we see Curry’s true dominance this season. Also, “True Shooting Percentage” (TS%) assumes that 1 of every 9 foul shots is part of a 3-point (or 4-point) play and therefore considers 2.25 foul shots as the same as one field goal attempt (since most pairs of foul shots replace a field goal attempt). Looking at these metrics we continue to see Curry’s clear dominance. Curry’s performance is off the charts as he is nearly 7 percentage points ahead of the second highest of the top ten scorers in FGE% and he is also well ahead of anyone else in TS%.
  • In a recent ESPN segment, Brad Daugherty called Curry “un-defendable”. If he continues to shoot the ball at this level, the road to a second consecutive championship and another MVP seems well paved.
[1] Organization for Economic Cooperation and Development (OECD), Program for International Student Assessment (PISA). 65 educational systems ranked.
[2] Pearson Global Index of Cognitive Skills and Educational Attainment compares the performance of 39 countries and one region (Hong Kong) on two categories of education: Cognitive Skills and Educational Attainment. The Index provides a snapshot of the relative performance of countries based on their education outputs.
[3] International Study Center at Boston College. Fourth graders in 57 countries or education systems took the math and science tests, while 56 countries or education systems administered the tests to eighth graders.

The Argument for Curry as a Unicorn

In our previous post we posed the potential for Stephen Curry to become a Unicorn (in venture this is a company that reaches $1 billion in value). While it was mostly for fun, on reflection we decided that it actually could prove valid. This post will walk you through why an athlete like Curry (or potentially James Harden, Russell Westbrook or Anthony Davis) could become a Unicorn should they be elevated to the elite status of a LeBron James.

curry unicorn

The Precedent for Creating a Corporation Owning an Athlete’s Earnings Exists

In April 2014, Vernon Davis offered stock in his future earnings via a venture with Fantex, Inc. as part of a new financial instrument being sold by Fantex. Davis offered a 10% share of all future earnings from his brand marketing company to Fantex, which would then turn around and divide it into shares of a tracking stock that can be traded within their own exchange. The offering was 421,100 shares, valued at $10 each, for a total of $4.2 million. This implied a total value of the “Vernon Davis Corporation” of $42 million. Davis’ current salary is $4.7 million and endorsement income about $1.75 million for a total income of $6.5 million. Given that the longevity of football players is rarely into their mid-thirties coupled with Davis being over 30 at the time, it seems likely that he had no more than 3-4 years left in his playing career. Putting those facts together makes it appear that Davis was unlikely to earn much more than $42 million going forward and might earn less as we would expect his income to drop precipitously once he retired. So buying the stock was probably viewed as more of a symbol of support for Davis and its “market cap” appears about equal to his expected future earnings.

NBA Stars are Among the Highest Earning Athletes’

The current highest earner of endorsements in the NBA is LeBron James at about $44 million per year (Kevin Durant is second at $35 million). The highest contract in the league is Kobe Bryant at about $23 million per year (and had been $30 million previously) with the 10 highest players in the league making an average of over $21 million. Given the new TV contract scheduled to go into effect in the 2016-2017 season, it’s been projected that the cap will increase from about  $63 million today to $90 million in 2017 and be nearly $140 million by 2025 (10 years from now, at age 37, Curry should still be playing). Let’s make the following assumptions:

  1. Curry’s salary will go from a current level of $11 million in 2015 and 12 million in 2016 (4 other Warriors will be paid more that year) to about $30 million in 2017 assuming the top salaries tend to be about 1/3 of their team’s cap as they are today.
  2. It will be up to $40 million in 2025, or less than 1/3 the projected $140 million cap.
  3. His endorsements will reach midway between the current levels experienced by LeBron and Durant, to about $40 million by 2017 (they are currently at about $5.5 million from Under Armour)
  4. His endorsement income will rise by about 10%/year subsequently, through 2025 to reach $92 million in 2025
  5. He will continue to earn endorsement income (but will retire from playing) subsequent to the 2025 season.
  6. The level post 2025 will average $60 million per year for 10 years and then go to zero.

The last assumption is based on observing the income of retired stars like Michael Jordan (earning $100 million/year 12 years after retirement), David Beckham (earned about $75 million the first year after retiring), Arnold Palmer (earned $42 million/year 40 years after winning his last tournament), Shaq ($21 million), Magic Johnson is now worth over $500 million. Each are making more now than the total they made while playing and, in several cases, more per year than in their entire playing careers. So assuming Curry’s income will drop by 1/3 after retirement is consistent with these top earners.

chart

This puts his total income from 2016 through the end of 2035 at over $1.5 billion. All of the above assumptions can prove true if Curry continues to ascend to super-star status, which would be helped if the Warriors win the championship this year. They could even prove low if Curry played longer and/or remained an icon for longer than 10 years after retiring. Thankfully, Curry has remained relatively injury free and our analysis assumes that he remains healthy. Curry is not only one of the most exciting players to watch, but is also becoming the most popular player with fans around the league. Curry now ranks second overall in total uniform sales, behind LeBron James.

So while the concept of Stephen Curry as a Unicorn (reaching $1 billion in value) started as a fun one to contemplate with our last post, further analysis reveals that it is actually possible that Fantex or some other entity could create a tracking stock that might reach that type of valuation.

As a VC, I would love to invest in him!

SoundBytes:

  • In the recent game against the Blazers there was further validation of Curry’s MVP bid. Curry delivered eight 3-pointers, hit 17 of 23 shots and went 7-of-7 in his 19-point fourth quarter. His last two threes were a combined distance of 55 feet, setting a new record for threes in a season and breaking his own record!
  • To understand just how well Curry shot, his Field Goal Efficiency was 91% (he had 8 threes bringing his equivalent field goals to 21/23). Not only was this higher than anyone who scored 40 points this year or took at least 20 shots in a game, we believe it may be among the highest ever for someone taking 20 shots in a game.
  • As a comparison, the two Portland stars, Aldredge and Lillian, each had strong games and scored 27 and 20 points, respectively. But, to do that, they took 46 shots between them (double that of Curry) and only scored 2 more points in total for the extra 23 shots!
  • The 4th quarter performance by Curry, cited above, translates to a 114% FGE rating, which is averaging more than 100% shooting as he scored 16 points on 7 shots. When foul shots are taken into account, his True Shooting % was 137% as he scored 19 points on 8 field goal attempts (counting the one on which he was fouled).To draw a comparison, when Russell Westbrook scored 54 points against Portland on April 12 he took 43 shots, 20 more than Curry (23 more if we include shots that led to foul shots).

Is Stephen Curry Becoming a Unicorn?

Why Curry should be the clear NBA MVP

Much has been written about the importance of discovering and investing early in “Unicorns”, companies that eventually cross the $1 billion valuation threshold. In basketball, teams make tough decisions as to whether to sign individual players to contracts that can be worth as much as $120 million or more over six years. The top few players can earn a billion dollars over their career when endorsements are added to the equation, assuming they can last as long as a Kobe Bryant or Tim Duncan. Clearly part of the road to riches is getting the recognition as one of the elite. This year, several players previously thought of as “quite good” are emerging in the quest to be thought of as “great”. Nothing can help a player put his stamp on such a claim as much as winning the MVP. In the spirit of trying to identify a future “Unicorn” in professional basketball, I thought it would be fun to analyze the current crop of contenders.

Given an unusual emergence of multiple stars, this year’s NBA MVP race is one of the most hotly contested in years. There are five legitimate candidates: Stephen Curry, Russell Westbrook, James Harden, Anthony Davis and LeBron James. All of them are having spectacular seasons and in most years that would be good enough for them to win. But only one can take the MVP crown. LeBron is the reigning king of the league and has long ago hoisted his flag atop the mountain. But, he has won the MVP title a number of times and while he remains a solid choice, he is not a clear choice. Therefore, it appears almost certain that most voters will favor a candidate who has yet to win. In the last few weeks Davis seems to have faded from consideration so, in this post, I will provide the analysis that has led me to determine that Curry is a more worthy recipient than Westbrook and Harden.

Scoring

Basketball columnists and analysts often focus too much of their evaluation of success on a player’s scoring average. In an attempt to help understand a player’s full value, John Hollinger created a Player Efficiency Rating (PER) that incorporates several statistics in the hope it provides a single rating that determines the best player. While it is a truly worthy effort, we feel there is quite a bit of judgement incorporated in what value to place on different statistics.  For example, it rewards players who take more shots even when the extra shots are 2-pointers at a low field goal percentage (taking extra 2-point shots at over a 31% increases the rating even though that is well below what the rest of his team would likely shoot). We would place more value on giving the ball up (and having a lower scoring average) than taking a low percentage shot.

I am surprised that the simplest calculation of scoring efficiency does not surface as a regularly reported statistic. Some sources occasionally report an “Adjusted Field Goal Percentage” (AFG%) that counts a 3-point field goal as worth 1.5 times a 2-point field goal. We believe this is the correct way of viewing a shooter’s effectiveness and called it field goal efficiency (FGE%). It calculates the percentage as the equivalent of 2-point field goals made per field goal attempt (FGA):

FGE% = (2-point shots made + 1.5 x 3-point shots made)/FGA

There is one statistic that analysts call True Shooting Percentage (TS%) that goes one step further. It also takes foul shots into account. It assumes that 1 of every 9 foul shots is part of a 3-point (or 4-point) play and therefore considers 2.25 foul shots as the same as one field goal attempt (since most pairs of foul shots replace a field goal attempt). TS% is calculated by adding the field goal attempt equivalent of foul shots to normal field goal attempts to determine the equivalent number of attempts used by a player. By dividing points scored by 2 we know how points scored equates to 2-point field goals made (FGME). This translated to the following formula for TS%:

Equivalent field goal attempts (EFGA) = FGA + FTA/2.25

FGME = points scored/2

TS% =FGME/EFGA

Now let’s compare Curry, Harden and Westbrook based on these statistics all on a per game basis:

Slide1

Harden and Westbrook are neck-and-neck in scoring average, each about four points per game higher than Curry. But Curry plays fewer minutes per game and takes fewer shots. His shooting efficiency at 58.6% is by far the highest of the three by a significant amount (a full 14% higher than Westbrook and 7% higher than Harden). It is also the highest in the league for players that have taken at least 8 shots per game (which includes all of the top 100 players by scoring average). At over 90%, Curry is the number one foul shooter in the league. But Harden and Westbrook are also hitting roughly 85% of their foul shots. Therefore, the fact that they get fouled much more than Curry brings each of their TS%s closer to Curry’s. Still, Curry is a whopping 10% higher than Westbrook and 2.5% higher than Harden. It is apparent that the scoring average advantage is more a function of Curry playing fewer minutes and being more selective in his shots.

To see the impact of this we calculated their scoring average per 36 minutes played (which we consider about average for a team’s star) and points scored per 25 equivalent field goals attempts:

Slide2

So, even if he played the same amount of time as Harden and Westbrook, Curry would trail in average points per game, primarily because he still would take fewer shots. But if he took the same number of equivalent shots he’d have a higher scoring average than both.

A Few Other Statistical Comparisons

While scoring efficiency is an important measure of a players value to his team, several other statistics like assists, rebounds, and steals are also considered quite relevant. To make comparisons fair, we adjusted to the average per 36 minutes for each:

Slide3

For steals, Westbrook and Curry are close to dead even with Harden about 11% behind. However, Westbrook is the clear leader in rebounds and has 7% more assists than Curry with both well ahead of Harden.

Each of these three players leads their team’s offense. They all control the ball attempting to score themselves or assist others in scoring without turning the ball over, as every turnover is a lost scoring opportunity. The ratio of assists to turnovers helps capture effectiveness as a guard. On the defensive end they each can compensate for a portion of their turnovers by stealing the ball. The ratio of steals to turnovers captures how well they are able defensively to partly compensate for depriving their team of a scoring opportunity. But attempts to steal the ball can lead to more personal fouls. The ratio of steals to personal fouls helps understand defensive effectiveness. Here are the comparisons:

Slide4

Harden and Westbrook are 25%-40% behind Curry in all of these categories. What the first ratio tells us is that Curry passes the ball more accurately and/or takes less risk so that he gets his assists without turning the ball over as frequently as the others. Another way of looking at it is that the extra 0.6 assists that Westbrook averages per 36 minutes comes at the expense of one extra turnover vs Curry.  The steal/turnover ratio tells us that for every 3 turnovers Curry has, he is able to get the ball back twice through steals. The others recover less than half of their turnovers through steals. Finally the steals/personal foul ratio shows that Curry is quite effective defensively with a ratio that is over 30% better than either of the others.

 

Curry Creates the Most Team Success

So, what is the bottom line that helps capture the impact of the various statistics we have shown? Of course one measure is the fact that Curry has helped his team achieve a much better record. What other measure should be considered in evaluating a potential MVP’s impact on a team? Given Curry’s extremely high Field Goal Effectiveness, does his taking fewer shots help the team more than Harden and Westbrook taking more shots and scoring more? The league average for scoring per game is roughly 99.9 points (through about 76 games of the season). Each of the three help their team score at a higher rate than that, but Curry has led the Warriors to the highest scoring per game in the league. The comparison:

charts

A natural question is whether this superior offensive performance comes at the expense of inferior defense.  So we should include the average points given up per game by each team to round out the picture. Notice the Warriors allow fewer points per game than the league average while both the Thunder and the Rockets allow more than the league average. The combination for the Warriors means that they have the highest plus/minus in the league by quite a bit (the Warrior’s 10.4 is 60% higher than the Clippers who are second at 6.5), and it is nearly double the sum of the plus/minus for the Rockets and Thunder combined.

Slide6

The league also maintains plus/minus differential by player. That is how many more points a team scores than opponents when that player is on the floor.  In all three cases, it seems clear the players are driving the team’s effectiveness as their differential exceeds that of the teams (meaning that without them on the floor, the other team, on average, outscores their team). This statistic takes offense and defense into account and helps measure the influence a player has on his team’s effectiveness.

Slide7

This means that Curry is responsible for a 12.0-point improvement in plus/minus when on the floor versus how the team does when he isn’t, while both Westbrook and Harden improve their team’s plus/minus by 5.0 points. Given his top score in plus/minus, much higher Field Goal Effectiveness and TS%, combined with driving the Warriors to the top record in the league, it seems that Curry should be the league MVP and is on his way to becoming a Unicorn. As a VC, I would love to invest in him!

SoundBytes:

  • The recent ESPN selection of the top 20 players of the past 20 years is quite enlightening in how well the NBA markets their elite players compared to other sports. Despite the fact that football and baseball have a multiple of the number of players and are more popular sports, five of the 20 were from the NBA:
    • Number 1: Michael Jordon
    • Number 2: LeBron James
    • Number 8: Kobe Bryant
    • Number 11: Shaquille O’Neal
    • Number 14: Tim Duncan
  • There were 3 from football (all quarterbacks) and 2 each from baseball, tennis and soccer. And one each from 6 other sports (hockey, boxing, golf, swimming, track and cycling).
  • The four emerging stars (this includes Anthony Davis) we have discussed all have the potential to be on a future such list but their status among the greatest will also be dependent on their ability to win multiple championships. Winning MVPs makes a player great, winning multiple championships makes them one of the greatest.
  • Last night’s game against the Blazers was further validation’s of Curry’s MVP bid. Curry delivered eight 3-pointers, hit 17 of 23 shots and went 7-of-7 in his 19-point fourth quarter. His last two threes were a combined distance of 55 feet, setting a new record for threes in season and breaking his own record!