Forgive the long post, I don’t have time to cut it, but I think it will be valuable…
Whether or not you’re a sports fan, I implore you to watch the next hockey game between the Las Vegas Golden Knights and the San Jose Sharks. At least, watch the opening rituals. Something truly extraordinary is going on with this team. I promise I’ll tie this to investing.
If you don’t know, the Las Vegas Golden Knights are an expansion team. The way an expansion team forms is the other teams must leave a few players “Unprotected” and the new team is allowed to draft players from those teams to build their roster. Las Vegas built an extraordinary team - they have passion, intensity, charisma, determination. Now remember, all these guys are elite professionals and they’ve been basically let go, betrayed if you will, by their old teams. They have chips on their shoulders. The city has totally embraced them. The marketing is off the charts - one of my all-time favorite logos. The name is perfectly aligned with the excess and grandeur of the team, a clever play on k/nights.
The team has won its first five playoff games. Last night, they ANNIHILATED a rival, the San Jose Sharks, in game one of their playoff series. It was one of the biggest spiritual and physical thrashings I have ever seen. It was 4-0 before the 10 minute mark.
I think this has huge implications for investing.
Here is a link to an article on how the LVGK built this monster…
From the beginning, the Vegas Golden Knights placed as much emphasis on character as they did on skill when evaluating players. McPhee and his staff did their homework about players’ personalities and reputations. They had team chemistry in mind each time they made an expansion draft decision. They never lost sight that they were building a team, not creating a list of players. McPhee assembled a team of players who feel they have something to prove because their former teams let them go. That was by design.
I am currently going through all my investments to check for this X-factor, this combination of elite leadership, collective purpose and sense of destiny. By “sense of destiny” I mean there are many times, in sports, when you just plain FEEL that a team is going to win. Our beloved Cubbies had it here in Chicago two years ago.
Among the stocks often discussed here I think I see these qualities in Hubspot, Shopify and Arista. Hubspot is disrupting the very real horror of interruption marketing. Shopify is led by a very competitive guy clearly doing what he loves…
According to his bio he got a computer at age six and was rewriting code by age 12. Now of course we must keep our BS detectors on full blast, but I buy this. It feels credible. And once I am convince the leader of my investment is elite, I am far less likely to get shaken out when the news, inevitably, turns on my stock.
While some may not be convinced the Golden Knight Factor is valuable, one thing I am 110% certain of. Absence of these qualities means your money will get smoked. For example, consider the recent collapse of the HMNY stock. The founder was formerly selling energy drinks. I won’t get into it here but for me, they failed the Golden Knight test miserably. I pulled a trigger too early on DHXM and bought because I thought kids content in a global marketplace with insatiable demand was a no-brainer. Then I realized management had no passion for kids programming, no history and as of this moment the stock is down well over 50% from my exit. They were last seen hiring consultants to tell them how to build a viable strategy! Mind boggling destruction of capital. And since I can’t shut up, consider the NFL’s Bengals franchise which has lost a playoff game after one of their players threw a dirty hit. Forgetting his name now, but he had a long track record of troubles.
Back to the NHL, recently, the Columbus Blue Jackets fell apart and lost 4 games in a row to the Capital. After one loss, coach John Tortorella stormed out of a press conference. He has had a great career, won a cup, but for my taste his temper and theatrics are not ideal. For the old guys here, I always liked Bjorn Borg’s quiet intensity over the theatrics of John McEnroe. I cringe when people say yelling at refs and storming off is a sign of passion. It’s a sign of immaturity and lack of control.
Tortorella Storms Out of Press Conference
To me this looks like a rattled, insecure guy who actually doesn’t have the answers or the strength of character to endure defeat with grace. I could name a trillion examples of this, which is why I love watching sports.
Recently former UFC Straw Weight champ Joanna Jedrzejczyk lost the re-match for the title against an incredibly focused, intense “Thug” Rose Namajunas. Joanna had lost her belt after a first round knock out and in one post fight interview seemed to blame her coach for her diet (or some other excuse.) I saw one analyst say before the re-match she was going to lose because she was not acting like a winner, a leader, a champion. The evidence was right there in that excuse. And sure enough, she lost again. And when she lost again, this time, she insisted she won though she definitely did not win. In fact, watching her post fight interview, with her face covered in bruises and insisting she won was borderline comical. Again, she is a GREAT fighter, and was a great champion. But she has limited her potential by failing to learn lessons, to act like a true leader.
Since OKTA seems to be impressing many people - and probably for good reason, I took the Golden Knight Factor out for a spin. I watched - and re-watched - an interview with Okta’s CEO, Todd McKinnon…
This is purely a first look, and not definitive. And the Golden Knight factor is never meant to be a stand alone metric. But for me, I give this interview a 7 on a 1-10, maybe a B-/C+
He seems very smart, and comes off like a good guy, a straight shooter. But I think I feel nerves here and I don’t leave this especially impressed. I think most of us only need one look at a killer leader to know it. Steve Jobs, Reed Hastings, Elon Musk and Bezos come to mind. I am not negative on McKinnon, just not convinced yet. And of course he may only have to be good if the software is killer. It seems the Chipotle CEO is off to a good start.
Lastly the best work I’ve read on the kind of leaders I admire most and invest in can be found here…
Jim Collins - Level V Leaderhip
If I could only do a single thing when picking a stock, I’d of course want to look at earnings. But my second choice would be to watch the CEO in action.
who is proud to say his love letter to Fooldom was read by David Gardner on the recent RB podcast. It’s a bit long (I don’t shut up) and maybe a tad braggy, but I wrote it after realizing April 22 was my EIGHTEENTH anniversary of being a Fool and I just really love, admire, respect and appreciate this community so much. It is the very best of what human beings and the Internet can be. Thank you all x 1000 again for sharing your time, hard work, brains and excellence so generously. It has really made my life and my family’s “fortune” so much richer.