On Wednesday, December 3rd, 2014, Golden State Warriors majority owner Joe Lacob was invited for a Q&A session hosted by Phil Sanderson. The following is a transcript of the talk, re-ordered by topic, and some quotes that we tweeted out last night have been highlighted in bold.
Part 2 has been posted: Joe Lacob: Size, Defense, Rebounding, Character, And Regretting Jeremy Lin
The Warriors are regarded as having one of the best business models in sports today. How did you do it?
A lot of hard work. I have to say, I wanted to buy a sports team for a long time and tried a long time and when we became a limited partner in the (Boston) Celtics, which was a great experience, when we finally got this team, which was one of the hardest things I’ve done in my life, just getting it, I thought, “How could anything be any harder?” It is really hard to get a sports team, to outbid some pretty famous people and rich people, and so on, but then the work began and it’s really hard to explain to anyone.
I had no idea it was going to be so difficult, couldn’t make any changes. We acquired the team on November 12th a few years ago and we kind of had to live with what that season was, which was abysmal. In fact, that first night, I turned to Peter Guber, my main partner, and I said, “We are terrible.”
That was my first reaction. I mean, it was just an awful team and I knew that. I had been a season ticket holder for many years, but it wasn’t until June the following year after the season, which was really only three years ago, that I knew we had to make changes.
Everyone has an opinion, right? In sports and everyday, they have an opinion. It’s a little bit different in venture capital when things take a little longer. You get to live under the umbrella sometimes, but of course the reality does come to roost, as we all know, but in this case you have to make decisions. You have to make changes and I knew in my heart we had to make changes in virtually everything. We fired or let go or changed about 80% of the management.
In fact, when the next Fall season 2011 was beginning, I wasn’t sure. I really didn’t know how we were even going to take tickets. I didn’t know how we were going to do anything. I was that nervous about it. It was very, very scary. I did hire a CEO, which was the first order of business, by September, and of course the season started in November and then we got on the path of turning it around, but it was a lot of turnaround, a lot of hard work.
Just a few statistics. I think we’re all really proud of, as you all know, about the record on the court from 23 wins out of an 82-game schedule to 47 to 51, and now this year will be our fifth year that everyone knows about. That was hard work and hopefully well-planned and so on, but the business side was a lot of work and not only changing management, which was Job One, but virtually every aspect of it.
People thought the Warriors had great crowds. Well, we did, but it turns out we were giving away a lot of tickets free. When you really dug into the revenues — and I had a smart guy who was my partner-owner, a guy named Marty Glick from the biotech industry, you might know, who I called one day and I said, “I need your help. I can’t do this by myself. We’ve got to look into the numbers we’ve got to look at this and that.”
I don’t know if you know him, but he’s very, very difficult and tough and he was what we needed in that situation, so the early days were just digging into all the numbers, what was real and what wasn’t. To make a long story short, since then we have doubled or tripled every single line item of revenue in the company through a lot of hard work.
How similar is it to being a board member or venture capitalist?
We all hear the same thing. Everyone of us has been in the situation and I learned from some of the best, including Brook (Byers, one of the four founding partners of Kleiner Perkins) sitting in the audience today, we all make the decision to change CEO too late, right?
No matter how many times you’ve done it, we’re always in that situation where we’re always waiting longer than we should wait and I’m very cognizant of that after all those years. In sports, it’s no different than a business. You really have to kind of get ahead of it.
Changing the coach when I started was easy. I fired Don Nelson before I even owned the team. I got in trouble for that, got fined, by the way. (The NBA) said, “You can’t fire him. You don’t own the team.”
I said, “No, I am. I’m firing him.” (laughs)
So we did that. Then we had an interim coach for a year — and that was clearly not the right guy — and I hired Mark Jackson and Mark Jackson was the perfect guy, I thought at the time, to bring in, to change the culture of the organization. He’s a tough guy and we really needed more than anything else just to change the organizational culture and he was really good at that.
He didn’t ever coach before, didn’t know X’s and O’s, really, but I thought the key was, could he hire the right management team, quote-unquote, around him?
Well he sort of did most of those things. The team got a lot better. We drafted well, we gave him talent, but the one thing I felt and especially during the last of his three years of tenure was, I thought we could be good, but I didn’t think we could be great.
That was a really tough call because you don’t just fire someone who had given us that kind of success, but we did. Part of it was, he couldn’t get along with anybody else in the organization and, look, he did a great job — and I’ll always compliment him in many respects — but you can’t not have 200 other people in the organization not like you and you can’t have a staff underneath you that isn’t that good.
If you’re going to get better, you’ve got to have really good assistants. You’ve got to have people that can replace you. We all know this from all of our companies. It’s Management 101. So a lot of other people on the outside couldn’t understand it. We did it. We brought in a guy that I think is going to be spectacular, already looking good.
You learn in sports, you’re only as good as what happened last night. Everything’s based on last night. Of course, it’s much more complicated. You have to have a longer-term view than that, in reality, but that is the way it is and right now, he looks great.
I think he will be great and he did the one big thing I wanted more than anything else from Mark Jackson, who just wouldn’t do, in all honesty, which was hire the very best. Carte blanche. Take my wallet. Do whatever it is to get the best assistants there are in the world. Period. End of story. Don’t wanna hear it. His previous answer was, “Well, I have the best staff.”
I said, “No, you don’t,” and so with Steve (Kerr), very, very different. He went out and hired a tremendous offensive coordinator, essentially — incredibly experienced, Alvin Gentry. He’s been a head coach four times. Steve had never been a head coach. Very important to have that experience and, on the defensive side, if you know basketball, he hired a guy that worked for (Tom) Thibodeau, who’s the best in the business, and has been with several teams and is one of the best defensive coaches in the league, Ron Adams.
That’s where it starts, is having a great staff where everybody is involved and communicates and all that stuff. So I think it’s going to be fantastic. I really do. I’m really excited about going forward with it.
[Stay tuned for the next part of the transcription]
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