MONEYBALL: Is the Talent World’s Most Undervalued Asset Old People?

Moneyball - A term describing baseball operations in which a team endeavors to analyze the market for baseball players and buy what is undervalued and sell what is overvalued. Unlike a common misconception, it is not about OBP, but whatever is undervalued at that time. It is most commonly used to refer to the strategy used by the front office of the Oakland Athletics. It derives its name from a Michael Lewis book of the same name.

That's the sports definition of Moneyball.  The more important application of the Moneyball concept is that in any talent economy - the one your company competes in for example - there's always undervalued assets to be recruited and acquired on the cheap.

The point of Moneyball is this - if you can recruit the undervalued asset at 60% of the cost but get 80% of the production the higher priced asset gives you, you're going to win as a company. Aarp photo

Which brings me to the point of the post.  What's the undervalued asset in today's talent economy?  Is it any of the following?

Ivy League grads?  No, too competitive and the price gets driven up quickly.

Young college grads? Probably not - not enough experience and they're probably valued correctly, even at their low salaries - for their skills and experience.

Generation X?  I think not.  Now in late 30's and 40's, they're in their peak earning years.  You may love the experience and energy combo, but this segment is not undervalued.  

Here's another thought.  If you're going to follow the Moneyball approach and invest in the undervalued asset that no one wants, let's face it - it's old people in the workforce.

That's right - I said old people.  Shock and awe. Some people consider me to be old in my 40's.  Bastards - I'm Gen X, which doesn't qualify as old.  Unless you're a punk kid, but you really don't have the experience to judge me - OK youngsters?

Here's why older workers are on my mind as the undervalued asset a moneyball talent approach would follow.   New Republic recently published an article on the Brutal Ageism of Tech in Silicon Valley, and the part that interested me the most was a counter-intuitive, Moneyball approach to older entrepreneurs by a outcast VC/angel investor:

"Midway through my first encounter with Dan Scheinman, he warned me that he was weird. He wasn’t wrong. Once, while he was fielding a pitch from two entrepreneurs, I watched him tear apart a bagel with his teeth like a flesh-eating predator. Later, I noticed him absently fingering poppy seeds from a napkin into his mouth.

Though he had ascended to head of acquisitions at Cisco during his 18-year run there, he always felt as if his quirkiness kept him from rising higher. His ideas were unconventional. His rhetorical skills were far from slick. “I’m a crappy presenter,” he told me. “There are people in a room whose talent is to win the first minute. Mine is to win the thirtieth or the sixtieth.” Back in the early 2000s, he proposed that Cisco buy a software company called VMware. It did not go over well. “Cisco is a hardware company,” the suits informed him. Why mess around with software?

Not that this shook his confidence. Scheinman simply concluded that he would have better luck if he made investments without clearing them through a bureaucracy. VMware, after all, became a $50-billion success. And yet, when Scheinman left Cisco in 2011 to become a venture capitalist (V.C.), he attracted not the slightest bit of interest from the established firms on Sand Hill Road."

That made Scheinman a lot like the Oakland A's when it came to talent he could attract on his own.  So he naturally zigged while others zagged:

"The only question was what to invest in. “I could see the reality was I had two choices,” Scheinman told me. “One, I could do what everyone else was doing, which is a losing strategy unless you have the most capital.” The alternative was to try to identify a niche that was somehow perceived as less desirable and was therefore less competitive. Finally, during a meeting with two bratty Zuckerberg wannabes, it hit him: Older entrepreneurs were “the mother of all undervalued opportunities. "Indeed, of all the ways that V.C.s could be misled, the allure of youth ranked highest. “The cutoff in investors’ heads is 32,” Graham told The New York Times in 2013. “After 32, they start to be a little skeptical.”

Naturally, Scheinman decided to lurch in the opposite direction. He became an angel investor, meaning he typically provides the cash the founders tap once they’ve exhausted their family members and credit cards. If the angel’s bet is sound and the company continues to grow, it will frequently need an “A round” of funding from a V.C. later on, usually between $2 and $10 million. Scheinman’s hypothesis was that, with enough money to pay their bills for a year or two, the older entrepreneurs could rig up a product that was sufficiently impressive to overcome the V.C.s’ prejudice. He could force them to wonder if maybe, just maybe, they were staring at a billion-dollar business."

Our natural instinct is to do what others do. Reach for the energy of the young person. Be skeptical whether the professional in his 50s has what it takes to climb the mountain again.

You might have reasons to really believe that.  But, if you also believe in the Moneyball approach - that assets ultimately get undervalued as the pack chases what's hot - it's clear what the undervalued asset is.

The undervalued asset is old people.  Or should i say <throat clearing sound> - deeply experienced workers.

Zig when others Zag.  The only thing you have to figure out is which 20% of deeply experienced workers are super talented and simply got caught in pack mentality that older workers don't have what it takes to compete in today's economy. 

This entry was posted in HR. Bookmark the permalink.

Comments are closed.