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Where Business Meets Basketball
November 29th, 2012 “When you come from nothing or not too much, you want to get somewhere,” says Joe Lacob, CEO and Governor of the Golden State Warriors. Prior to joining the Warriors ownership group, Joe had his hand in helping establish over 70 companies in a period of 25 years. Listen as he shares key components to his success such as his decision making process, management style and how his experience in Venture Capital influences his management of the NBA Warriors, and how he is currently turning the team around.
Alan: Welcome back, we have here with us today Joe Lacob. Joe is the owner and the CEO of the Golden State Warriors, he’s also a partner at Kleiner Perkins Caufield and Byers, a world famous venture capital company located here in the Bay Area, Joe welcome to today’s show.
Joe: Thank you Alan, very glad to be here.
Alan: Now Joe this is a bit of trivia here, but I understand that you didn’t start off wealthy and that you’re the first person in your family to graduate from college. But now looking back, you’ve had a hand in many successful companies and are currently the CEO of the Warriors. To what do you attribute your success?
Joe: Oh my, I don’t know if I can attribute it to anything in particular… hard work, motivation to achieve and to become somebody in something. As you pointed out, I’m proud of the fact that I’m the first person to graduate in the history of our family. Fortunately there’s going to be a lot more of those now. But… it’s just drive. When you come from nothing or not too much, you want to get somewhere and I think the hardest thing that I worry about with my kids is that they’ve come from a pretty good environment now. I hope that they have the same, and I think they do, but it’s hard to have the same motivations when you start out with nothing.
Alan: Now I should point out that in spite of the college graduate, you come from a line of ancestors that were very entrepreneurial, immigrating from other-
Joe: Actually, that is interesting and true. My grandfather died when I was five or six, so I don’t remember him very well, but he was a little crazy… He had as I’m told, many many businesses. When he immigrated to the United States at 16 years old I believe, he already had many business ups and downs. He made a lot of money, lost a lot of money, would make money and would lose money. He had a chain of launder matts- he was bombed out in Chicago by Al Capone because he didn’t pay protection money- and that’s a true story. He had luggage factories, he had all kinds of things- very entrepreneurial but also kind of lost it all too.
Anyway I come from a back ground like that. My father was not necessarily entrepreneurial; in fact when I was growing up he used to tell me all the time, ‘he worked for the same company for 40 years’ and he used to tell me all the time- every day, ‘don’t do what I’m doing.’
He was upset that he didn’t get to go and finish college. He started and his father pulled him out and he blames that to some extent- I don’t know if it’s fair or not- but he stayed in the same company. He did well, he raised a family, but never made it big. And he always tried to encourage me to be entrepreneurial and try to take chances.
Alan: So with that said when you started out at college, what was your major?
Joe: Well I went to UC Irvine in southern California, the Ant Eaters. I grew up on the East Coast, and at the age of 14 moved to California, went to High School and then went to college locally at UC Irvine. I majored in Biological Sciences that had a very heavy background in a Biology and Chemistry. I wanted to be in science and wanted to be in medicine in that field- I really had every intention in doing it. As I went along and took a few jobs working in the morgue… (Laughing) it was quite interesting.
Alan: (Laughing) That must be interesting.
Joe: It was quite interesting. I worked in other hospital environments and realized something during that process, though I didn’t admit it until my senior year. I really don’t think I would have been very good at it- that is being a physician. I just don’t think I was cut out to do it. I liked the science but didn’t like the idea of treating people and being involved in all that. I became a little lost at that point and went on to complete a Master’s in Public Health at UCLA and then took a job. The job was in the early days of the HMO industry- Health Care Management in Southern California. But more than that, even though it was healthcare, it was business. I had no experience or exposure to business classes of any sort in college, but I very quickly realized that this was for me.
Alan: So you eventually ended up into venture capital. How did that transition take place?
Joe: I worked several years in southern California in a management situation in an emerging HMO company. I did very well at it and decided that I needed some management- some business education. I applied to some business schools and was lucky enough to get into Stanford amongst a few others. That was the turning point in my life, getting into that school- I didn’t expect to, but I did and getting in there and going to the business school of Stanford was a tremendously eye opening experience. I moved up here and as we all know, it’s an incredible environment here in Silicon Valley. Ultimately started working for a company known as Citus- which doesn’t exist anymore. It’s up the road a bit from where we are now, in Emeryville. I was there for four years. It was a very entrepreneurial time in the biotech field in the early 80’s. Biotechnology was taking off in a big way. I was in the right place at the right time with the right educational experience and perhaps business motivation and orientation. I wound up having a business plan to start a company, brought it to various venture firms with a partner and after about four years it ended up getting funded by Kleiner Perkins.
Alan: Interesting. So it’s quite a path are you really an example of the American Dream. It’s been a grass roots effort of coming up through education and what it takes to be successful in running a business, but no one handed you anything, you did it all on your own.
Joe we need to take a quick break but I’d like to hold you over, getting more on your back ground and getting more on the Warriors. We’ll be right back after these messages.
Alan: Welcome back, I visiting today with Joe Lacob, he’s the CEO of the Golden State Warriors, also a partner with the venture firm Kleiner Perkins Caufield and Byers. Before the break, Joe, we were talking about your journey and how you got to where you are today. I’d like to go back and focus on your process of how you make decisions. Do you do that more on a gut feel or do you look at the analytical data more.
Joe: That’s a very interesting question. In startup venture capital, which is the kind of venture capital that I practice and have for 25 years, there’s this debate that comes on when you’re trying to hire people and when you’re trying to hire people into the firm. Is that person good at analyzing things or operating? So are you an analytic type or an operating type. How do you make decisions? There’s always been this feeling with people in the industry that have worked with me- I’m not analytical I’m a ‘gut investor’ I think is the term you would hear. I think there’s some truth on the outside of that. It may look that way, but actually I don’t think it’s really true. I think the truth is in my case- I analyze things very deeply, I spend a lot of time and I’m very analytic actually. But the thing is once you decide, once you kind of have a feel for which way you should go, and by the way, in startups, it not always obvious. There’s always a lack of data, you’re never going to have perfect information. That’s something you’re going to have to become comfortable with. You’re going to have to make a decision and go- don’t look back- and make it happen. It’s about making it happen. It’s not necessarily that it’s going to happen on its own or somehow it’s going to happen because of this influence or that influence. You have to make it happen. That is the part that becomes almost force of will. You have to be right, you need to set yourself in the right direction, but I think that you can make things successful if you work really hard and just keep pushing.
Alan: How do you get to those hard decisions- when you’re looking at something that will be disruptive to a company- you may say it’s time to fold this company or its time to really expand and we’ll put a lot of money into it. What type of process do you go through?
Joe: Well there’s a lot of analysis, obviously the traditional business analysis anyone would do, about the industry and about the competitors about pricing depending on what kind of business it is. At some point you just have to make a call. There’s imperfect information as I was alluding to before and you just have to make that investment, you have to go with it and have to make it happen. You have to help the company. In the case of venture capital, I have to help those companies succeed in any way I can and that doesn’t involve sitting back and just watching if it succeeds. It involves helping that company in a forceful and obvious way whether you’re helping them recruit or helping them do this or helping them do that.
Making decisions is one thing, but once you make the decision you just have to go forward and make it happen.
Alan: So when you look at things, there’s a lot of people because of who you are and the track history that you’ve created there. There’s a lot of people approaching you- ‘Joe can you take a look at this’ and it’s obvious that its more projects than you have time available. How do you decide which projects are actually worthy your time?
Joe: Well a little bit of that is just being around an industry for a long time and recognizing what is a trend, what are the things that are going to happen. Anyone can look back and say what has happened, the question is, can you look forward. That’s not always going to be right, but sometimes when you’re in and around an industry enough, you talk to the right people and you’re a part of it- you should have hopefully, a feel that something is going to change in a given industry. And again you hope you’re right, you go out and make it happen. I’ve been fortunate in a number of companies that I’ve invested in over the years. Another thing that I believe in and that I’ve done is to be ahead of the curve- which makes it a little more dangerous, because you’re usually the first to do something. That’s always the hardest, but if you’re last, or if there’s six other people that have done it- generally it’s going to be too competitive. So my view is, do the analysis, pick the right people, go make it happen and try to be early. And if you’ve done the rest of that work right, maybe you hit it big.
Alan: I’m visiting here today with Joseph Lacob, he’s the CEO of the Golden State Warriors and also a venture capitalist with the firm Kleiner Perkins Caufield and Byers. Joe we need to take a quick break, but when we come back I want to dwell more on the Warriors. What’s happening here? There seems to be some positive trends happening.
Joe: Oh my favorite topic.
Alan: Alright, we’ll be right back after these messages.
Alan: Welcome back, I’m here today with Joe Lacob, he’s the CEO of the Golden State Warriors. Joe has been visiting with us today about his career path, but what’s really exciting and we want to get to this topic is the Warriors. Joe, there’s a good trend I see happening here and it’s not happening by accident- you’ve designed this. Tell us, what goes into running the Warriors and how are you building this organization?
Joe: Oh boy, that could be a long answer. It’s a lot more work than I ever thought it would be, and the venture capital business, Alan as you know; I’ve been involved in starting 70 companies over 25 years. All kinds of companies, all kinds of situations- this is more complex than any of them. This is buying a $450 million business, a lot of money, a big risk for me and for my co-investors… what we didn’t know was that there was going to be a lot more work to turning this around than we thought. We knew on the court there would be a lot of work, as you know the Warriors only made the playoffs once in 17 years when we bought the team, now it’s been once in 19 unfortunately. It was a big turnaround there, it was also a big turnaround on the business side. Unfortunately I had to do something, which after six months of not doing anything- just letting things happen, a lot of the press wanted me to make changes and I said ‘no we’ll give everyone a chance, I need to observe this first hand, can’t listen to other people, I need to see it firsthand’. Six months into it I realized all the changes that needed to be made, it took the next year to year and a half- we’re two years into it now, and there’s been many many changes on the business side that a lot of people don’t see. Changed most every vice president in the organization with the exception of two and we’ve turned the coaching staff and the medical staff, pretty much everything and have tried to create the most important thing of all, and probably the hardest thing- change the culture of this organization along business and basketball sides of things. Not an easy thing to do, we’re not done but we’re getting there. The business organization I’ll brag- I think is one of the best in sports at this time. We have hired some of the greatest people from all across the country in every one of those aspects that help run an organization whether it be selling or finance or whatever.
On the basketball side we’ve turned over the complete roster- new coaching staff. Last year was our second year and I had hoped to do better but realized half way through that we just weren’t going to get there with our core of our two small guards. Took a lot of heat from fans who were Monte Ellis fans and I understand that, but we had to do it, we had to make a change, he was our most tradable commodity, we had to get bigger, we had to get stronger, we had to get more defensive, we had to rebound better.
So here we are, just starting our third season, our big man that we traded for is still not on the court. We’re hoping to get him back and we’ll be even better, but what we have done is changed the culture.
Mark Jackson has instilled, regardless of what you think of his coaching strategies, some people are critical other people are positive, he’s turned this thing around and made it a very tough defensive oriented, rebounding oriented organization. We’re now today, I don’t know what it is today but I think fourth in the league in rebounding and fourth in shooting percentage against… we were last in rebounding for the last four years- it’s hard to do that by the way.
So we’ve turned this organization around and we don’t even have Bogut back. We’re 8-6, we’re first place in the Pacific division as we have this conversation this morning. We’re not satisfied, but I think we’re on the right track. We’ve managed to create what the vision was that when I and Peter Guber and the new organization came in, we said, ‘It may not be as exciting offensively and it may not be what Warrior fans are used to’ and I’ve been a Warriors fan for 20 some odd years- look I like fast paced offensive too but re first need to learn to defend and rebound, then we can add to that.
Alan: What is your vision for the Team? How do you mark your successes?
Joe: Last year I got into a little trouble. I didn’t predict playoffs but something I said got interpreted that I did and Mark Jackson did. We think we’re going to make the playoffs this year and that is unequivocally our goal and has been from day one. I think I saw this year going, as young team- half the roster is first or second year players- but we have some veterans too. The goal is to stick around 500, stay in the race until we’re about half way through and hopefully get Bogut healthy. The rookies which we think are a really great draft class and we get them playing up to a level like Clay Thompson. Fortunately our rookies have kicked in early this year. We’re a little bit ahead of the schedule, but I think if we can stay in it for half the season, our schedule gets a little more home oriented, a little easier, Bogut gets healthy and we make a real concerted run in a very rough western conference- we’re a playoffer and hopefully we’ll go from there.
Alan: It’s a remarkable trend, especially seeing yourself number one in the Pacific Division early in the season. Do you have any inspirational stories about the team or a player, that has impacted you, about how you build your life or the team?
Joe: I’m so busy that I don’t have a chance to reflect sometimes. This has been a lot of work and of course we’re also working on the arena in San Francisco- it’s a lot of work, it’s like a whole other business. I haven’t had a lot of chance to reflect, but I will say I am very encouraged by the quality of character of players and other people that we have in the organization as well. At the end of the day, there’s achieving the goals that we want, but there’s also achieving them in the ways that we want to achieve them. It’s very important to have quality individuals as part of this organization with character. It’s not our win loss record yet because it’s still yearly. I hope we’re successful, but I’m proud of the fact that we have a tremendous group of players that all get along and that are good guys. We have really good guys; we do not have a bad guy among them. We have purged our organization of anyone that boarders on bad guy, and I’m proud of that. I’m proud that our coaching staff does things the right way, I’m proud that our business staff is really trying to do things the right way and build something that is sustainable for the long run.
Alan: I was at the game the other night with the Timberwolves; these guys are a lot more physical this year. I’m watching them down on the court and they’re a different team, there’s a different style of play that they put in there, is that by design?
Joe: It’s completely by design. If you go back two years ago and look at the transcripts when I took over this I said, ‘We’re going to change this. We’re going to get bigger, stronger, meaner, tougher’ and that was the orientation. We had to become a defensive and rebounding team first. I don’t know, maybe it’s from the time I spent with the Celtics or maybe the image of what we think we need to do to turn this around, but that kind of mental toughness leads to physical toughness and leads you to at least be competitive. From there on you do need the great players to make great plays and we’ll take it from there and become a great team hopefully.
Alan: We need to take a quick break Joe. Let’s have you on for another segment. You game?
Joe: I’m game; I can talk about the Warriors as long as you want.
Alan: We’ll be right back after these messages.
Alan: Welcome back we’re visiting with Joe Lacob, he’s the CEO of the Golden State Warriors. Before the break we were talking about Joe’s rebuilding of the team and Joe, obviously there’s a great passion within you as you go through this process of putting a new team together from the ground up, but what do you enjoy most about your job and building this organization?
Joe: It’s probably a different answer than you might expect. The thing about venture capital that I loved for all those years and still do some of it is the fact that we were creating something: building companies, hiring people, creating jobs, depending on what the company does, something good that was going to change the world. The bad part about it is, building a company takes a long time. For someone that’s impatient, you want it to happen faster and sometimes things don’t happen fast. I’ve been on the boards of companies for over 12 years. What I love about the Warriors and what I love about sports is that you get instantaneous feedback. Every game you go to is like life and death for me. It is hard, but I love the fact that we get feedback, we see how our plan is progressing every day. There are practices I’m going to see today. I’m going to see if Andrew Bogut is practicing, that’s a big thing for us. Thursday night we have another game. Can we go from 8-6 to 9-6 and start to pull away a little bit, create a little cushion and help our first half run towards the playoffs. Every day is a new day. I love the fact that you’re constantly getting feedback in the system. You’re selling tickets; everything about it is in real time, that’s really fun for me.
Alan: You’re really hands on then, you’re down on the floor and watching the operations, but tell me, give us something we don’t know about the Warriors.
Joe: I’ll give you one little story that I love, I’ve told it a few times already this week and I’ll have to edit out a few of the words- something about the growth of an organization and how good our rookies are this year. In the huddle in Denver the other night, Jarrett Jack, a veteran was getting beat by Ty Lawson driving through the lane repeatedly. You know he’s a very quick guard and gives us fits. When they came back to the huddle at a time out, Ty Lawson said to Draymond Green, a rookie who was in the game- “you gotta step over, you got to stay in front of that guy, you have to get over and help on the defense”. And Draymond Green who is a rookie who could have just meekly responded or not said anything said, ‘You got to stay in front of your man’ he used a couple of other words in there which you can only imagine, ‘you got to stay in front of your man’. They got in an argument back and forth and Jarrett Jack said, “These are NBA players, they’re quick.” And he said, “Well you’re an NBA player” this is Draymond Green, “You’re an NBA player.”
I think that shows you maturity, toughness, kind of a different sort of guy that Draymond Green and Harrison Barnes is as well and to some extent Festus- three rookies that are all contributing. That’s very special. Draymond Green went to college for four years; he was national player of the year. Harrison was considered one of the best players in the country, he only played two years in North Carolina but he’s been training his whole life for this. These guys are a special group and I think the situation tells you more than you need to know.
Alan: I love watching these guys this year, they’re so intense on the floor. They’re determined- you can just see it in their eyes. When they’re there, they’re physical, they’re aggressive and the inside is just a different game than what it was-
Joe: And they don’t give up. Let’s just hope that this continues on, that this is really the true character of this team as the year progresses- and I think it is. They do not give up and a lot of that is Mark Jackson’s personality. Rubbing off on this team I believe.
Alan: I don’t remember how many games the last year that they were 1-2 points behind. The last few games that they played they were behind until the third quarter, then in the fourth quarter they pulled away.
Joe: We’d rather not be behind of course. We do seem to have a problem in the first quarters getting going. I don’t know what the cause of that is, it could be youth, it could be a number of things, but the team is resilient.
Alan: Joe just to wrap things up I’d like to really thank you for being here today, for giving us the inside on the Warriors, we really wish you well the remainder of the season.
Joe: Well thank you very much and once again I’d like to thank all the Warriors fans for sticking with us all those years and for sticking with our ownership group here for the last two years. It obviously can’t happen overnight to turn these things around, but we’re doing the best we can. I think we’re getting there and think we’re going to make the Warriors fans proud.
Alan: Thanks again for joining us here on American Dreams. Join us next week on KDOW 1220.
About Joe Lacob:
In his role as Co-Executive Chairman, CEO and Governor, Joe Lacob is the co-managing member of the Golden State Warriors’ ownership group. He also serves on the NBA Board of Governors. Lacob’s NBA and professional sports experience dates back over two decades, including a five-year tenure as minority owner of the Boston Celtics, where he served on the basketball committee. He earned an NBA World Championship ring with the storied franchise before selling his minority stake and making an NBA record-setting bid to purchase his hometown NBA club – a longtime dream of the Atherton resident.
Since purchasing the Warriors and assuming control of the team on November 12, 2010, Lacob has been the driving force behind many of the creative changes that have transpired with the organization, including several prominent personnel additions and an emphasis on transparency. This past summer, during his first full offseason as owner, he recruited two of the most experienced, successful and respected individuals in NBA circles to join the organization, landing NBA Hall of Famer and basketball icon Jerry West as an executive board member, and hiring longtime league and team executive Rick Welts as president and chief operating officer. Additionally, Lacob played a significant role in the hiring of Mark Jackson as head coach, as well as the hiring of successful sports agent Bob Myers as assistant general manager/vice president of basketball operations. In an effort to connect directly with the team’s fans and open the lines of communication, Lacob answers questions from fans via the Owners’ Box feature on the team’s website and frequently conducts in-studio interviews with local radio and TV outlets. In September, he spoke directly to nearly 3,000 of the team’s Season Ticket Holders at an exclusive event at Oracle Arena.
Lacob has been a partner of Menlo Park, California, based Kleiner Perkins Caufield & Byers since 1987. Though still an active partner in the firm, he has relinquished his managing partner role in order to pursue his lifelong goal of owning and operating an NBA team. In his role as a venture capitalist, he has led investments in over 50 start-up companies across multiple fields in life sciences and medical technologies, the internet and energy. Prior to joining Kleiner Perkins, Lacob was an executive with Cetus Corporation, FHP International, a health maintenance organization, and the management consulting firm of Booz, Allen & Hamilton.
Lacob received a Bachelor's in Biological Sciences from the University of California-Irvine, a Master's in Public Health (Epidemiology) from UCLA and an M.B.A. from the Stanford Graduate School of Business. He credits his master’s degree in Epidemiology (biostatistics) with providing him with a background in statistics that helped drive his passion for sports. It also played a role in his decision to invest in Sportsline – one of the first sports internet sites – and one of Lacob’s earliest sports success stories.
He was also a primary investor and pioneer of the American Basketball League, a professional women’s basketball league that eventually lost out to the WNBA. Lacob also was and continues as one of the original partners in the Pebble Beach Company, an effort formed to bring the historic Pebble Beach resort and golf course back to long term American ownership. Additionally, Lacob has been involved with Stanford basketball for over 25 years and is a fixture in his courtside seats at Maples Pavilion.
Lacob currently serves on the Board of Directors of one public company, Align Technology, as well as several other privately-held companies, including Autonomic Technologies, NeuroPace, Therox, SunDrop Fuels and TransMedics.
In recent years, Lacob has been involved in industry organizations including the American Heart Association and the AHA Roundtable. He has also been very active at Stanford University, serving on advisory boards at the Medical Center, Business School and Athletic Department. Lacob’s philanthropic interests focus on education, both in the community and with universities. He has also provided scholarships to a number of high potential academic and athletic high school and college students in need.
An avid golfer, Joe has been a longtime participant in the AT&T National Pro-Am at Pebble Beach. He has played in a regular pick-up basketball game, and still does, at least twice weekly for over 30 years at Stanford and occasionally joins Warriors employees in pick-up games at the team’s facility. Most importantly for Warriors’ fans, Lacob has been a passionate fan of the Bay Area club that he now owns – supporting his local franchise as a loyal and dedicated Season Ticket Holder since 1998.