Moneyball's MICHAEL LEWIS explains how iconoclasts in business ‑ and sports ‑ find new ways to succeed.
October 30, 2006
By Brian O'Keefe
Photograph by Mary Ellen Mark
Michael Lewis is a sucker for revolutionaries. Over the past decade and a half, the former Salomon Brothers bond salesman has brought us face‑to‑face with a dazzling array of rogue innovators. His book Liar's Poker recounted how a group of grimy traders at Salomon roiled Wall Street. The New New Thing followed Netscape founder Jim Clark as he upended Silicon Valley's hierarchy to give entrepreneurs leverage over their investors. With Moneyball ‑ a portrait of Oakland A's general manager Billy Beane's assault on baseball's conventional wisdom ‑ Lewis inspired executives far beyond the realm of sports to rethink how they value assets. Lewis's new book, The Blind Side, uses Michael Oher, a gargantuan black teenager from inner‑city Memphis ‑ one of 13 children of a crack‑addicted mother ‑ to explain how an NFL‑caliber left tackle became one of the most highly prized commodities in sports.
FORTUNE's Brian O'Keefe recently sat down with Lewis to discuss the pursuit of greatness, why it so often leads to ostracism, and why Hollywood is waiting for its own Billy Beane.
The stars of your books typically find ways to capitalize on market inefficiencies. Is contrariness necessary for greatness? True greatness requires an ability to respond to challenges and overcome difficulties and suffer and endure‑and to think under pressure and act under pressure. America is built on ambition. And there are these little arenas of ambition in the country. There's Hollywood. There's Wall Street. There's Silicon Valley. There's Washington in politics. There's professional sports. And those arenas of ambition ‑ they tend to become ossified. When someone walks into one of those arenas and takes it on, I find that very appealing and healthy.
After Moneyball, everyone in baseball seems to recognize the value of having egghead computer crunchers. Yet Billy Beane's A's continue to outperform. Why? He is still measuring baseball players' value more precisely than other people and buying the ones where the market price was cheaper than their true value. When I showed up, the fattest opportunity was on‑base percentage. That inefficiency ended after the book was published, but the AN went ‑looking for other things. I know they had a proprietary system for measuring defensive ability. I've never been allowed to see it.
AGAINST THE GRAIN Lewis, a former Wall Streeter, sees a trader's mentality in many winners.
What sets someone like Beane apart, even when his peers have the same tools?
He has a real ability, like a really gifted trader, to act on his own judgments. This is painful for most people to do, because they face ridicule and ostracism. I think intelligence is overrated as a quality central to this kind of innovation. It's a kind of nerve. It's the ability to take a risk. On Wall Street everybody says he's a contrarian, and nobody is. It is so hard to recognize the moment when you are caving to conventional behavior. I've seen over and again in my subjects‑and there is greatness in this‑ a trigger that goes off in their mind, a switch that flips when they sense that everyone is going one way, and it's stupid. And they take pleasure in taking a bloody‑minded stance against it.
Have you found a common link among the innovators that you have written about? In all these cases, just about, necessity breeds innovation. People are put in natural underdog situations where if they do things the way that everybody else does, they are certain to lose. Where I have encountered greatness, there is an ability to go a different direction from everyone else while behaving with confidence and assurance as if you're just doing it the way things should be done. It's now very fashionable to be an innovator and to be a change maker. You get lots of people throwing the terms around. People think they are more unusual than they are. Whenever you see someone say, "I like to think outside the box," you know that they are so deeply in the box that they'll never get out.
You called Jim Clark a "conceptual artist" in The New New Thing. Do you think great achievement is a creative act?
If you are the kind of person who has a gift for changing things, that capacity is intoxicating and addictive. And having changed one thing, you can see how you can change other things too. So you develop within yourself ‑ if you didn't have it already ‑ the ability to imagine the world as different from how it is now. Bill Walsh [former head football coach of the San Francisco 49ers] is the best example here because he lost and lost and lost, but he could see the team was getting better. Everybody's making fun of his passing game, and he just stuck with it because he saw it worked better and it was getting better. Now, he probably stuck with it also because he didn't have a plan B. Nevertheless, the evaluation you do of yourself has to be independent of the world's evaluation of you. The pressure's always going to be to draw you back into doing things the way everybody else does them. Doing things differently is inherently threatening to people because if it works, it's damning of the way they've been doing things. That's why Billy Beane has taken such grief from baseball. He has made several thousand professional baseball scouts and 29 other front offices look a little idiotic. You can't do that without making enemies, even if you did it without being rude ‑ even if you never said a word about them that was unpleasant.
Since you wrote about Clark and the tech business, Silicon Valley has crashed and been reborn. Are you surprised? The thing that attracted me to Jim Clark was the subversion of the social order in capitalism. All of a sudden people who had been on top of the heap, the Wall Street types, were being shunted down to the lower position. And people creating businesses were now sitting at the top of the food chain. I thought, well, that's kind of how it should be. But I think the financial boom and bust also obscured some greater truths. The boom and bust got interpreted as "This is all great," and then "This is all bullshit"‑ the Internet and all this stuff is just baloney. The truth is that technological change is at the center of American prosperity. The Internet and related phenomena are very profound. And the people associated with them are important.
"Necessity breeds innovation. People are put in natural underdog situations."
You trained as an economist, right? Why do you write about sports so much? Both of my last two books, Moneyball and The Blind Side, are, at bottom, about how people get valued. The Blind Side is all about this kid who went from being worth zero, almost as valueless as a human being can be in America, and stigmatized as valueless, about to drop out of school and headed for a very bad end very quickly ‑ no prospects whatsoever ‑ to having a rather rich and full life and a pretty big expected earnings stream out of the NFL. So then the question is, How did all that happen? And in watching how it happened, you get a sense of the arbitrariness of the values that are attached to people. And you know that value in a lot of other people is just completely unrecognized ‑ and not just athletic value.
The movie rights for The Blind Side were just optioned by Fox. What do you think makes for a great movie adaptation? I have no idea. All of my books have been optioned, and none of the movies have been made. It's a process that's mystifying to me. A producer buys the book and then hires someone who knows nothing about the material to write the screenplay as if it's an independent expertise that has nothing to do with the subject. And then for $1 million they write a bad screenplay, and the studio loses interest.
Sounds like an inefficient market that's waiting for its Billy Beane. It is an inefficient market waiting for its Billy Beane. Moneyball resonated in the most extraordinary ways in Hollywood. Billy and I did two separate corporate performances, one for Sony's movie division and another for Fox. Other movie people got in touch with Billy. They're trying to figure out things like, How do we measure the contribution of Tom Cruise to a movie? Why do we automatically pay him $25 million? It's an industry trapped in convention, just like baseball.