Should Athletes Get Equity? - [Glue Guys, EP.36]

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The obvious question chain is sort of like, should athletes receive equity as part of their compensation?

Right.

At the professional level or at the college level? Which one do you want to talk about?

Oh boy.

Professional.

Great. So professional. Okay, so the obvious answer that would like endear me to lots of people, I think, who are athletes is be like, yes, obviously they should. They're the product, they're the ones, they're the talent, whatever. I just don't. I think the answer is like, certain guys should get some and most guys shouldn't get any would be my guess. Okay. And I think that the reason for that is, if you think about it, if you take an NFL or NBA franchise right now, okay, and you imagine that they're worth a certain amount of money when somebody buys it. Okay, let's say they're worth five to $10 billion when somebody buys it. The question is like, what are they going to be worth in the future? Right. And how much of that is attributable to any one specific player that increase. Right. And I think that in many ways that's like actually kind of akin to a mature company. Like if Microsoft or Google or like, you know, some big company is worth a certain amount and they hire an executive or a team member, right? They will figure out like how much stock do you get as part of your compensation. But those guys today as mature companies generally like dilute by like 1% or less a year. Like the equity that they're giving out per year at, when they're a scaled company is really, really, really small. And so it's not like they're giving out 20% of the company or 30, any of that. So I think the first question is like, how mature is the asset and what role will any individual play in the value of that asset? You know what I'm saying? And so I think you have unique situations. Like, should Michael Jordan have been given equity in the Bulls? Yes, like the Bulls for forever have equity value that is increased because MJ was there and frankly the whole NBA. Michael should have had equity in the entire NBA because the entire league grew in value.

But if you take Scotty Pippen wouldn't agree with you.

Okay, fair.

Because he would say, hey, if I wasn't there, MJ wouldn't be mj.

So sure, I'm putting words in Scotty's mouth, but should MJ share it with other people? Here's the question though, which is like, if you are a average NBA or NFL player, are you contributing to the future equity value of this franchise? Like, is it worth something different because you were on that team or not? And I don't know, do I think the average player on the, on a team creates incremental equity value for that team? That's long term. Like, I don't know, I'm not sure if what evidence I would use to support that.

No, I would say your replacement, again, this kind of goes to the whole WAR figure in baseball. Like, no, theoretically, to your point, Ravi, like those teams, there are replacement players of your caliber out there and they could go put on that uniform and the show goes on. And I think, you know, basketball lends itself to this conversation much more than football, in my opinion, because there's only five players on the court. A single player can have an unbelievable impact not only on a team, but a league. I mean, obviously, I think, you know, MJ being an amazing example, but you could see LeBron, right, like when he was taken, I mean, the value he brings to a franchise and if he got equity and what he was, the time he may be willing to sacrifice. Right, for, for that, for that one in football. I, I mean, how many, how many guys fit that bill? There's, there's not many.

Yeah, and the thing that's so interesting about LeBron just as like an example and Shane, you know, should obviously we should talk about this more. But, like, it's so interesting because a lot of it's about the durability of the value. So, like, if LeBron goes to a team for four years and then he leaves, has he durably increased the equity value of that franchise? I mean, during the time he's there, yes. But when he leaves, like, probably. Is Cleveland worth more? Because LeBron played there, you know, for four years.

You got to make the vestment criteria a little longer.

But that's my point, which is, like, what you really need is, like, you.

Also have to separate the individual franchise value from the league value.

Yes, yes, yes.

That's a really important thing. Like, look, the Memphis Grizzlies, the smallest, you know, market team in the NBA. They're worth four or five billion dollars.

Yeah, right.

And I wouldn't. I wouldn't pin that on any one player that came through the door as great as Paul Gasol was and Marcus Soul and Zach Randolph and John Morant. Like, I would not say those guys propelled the. The franchise, the $5 billion valuation, but, you know, who did? The NBA did. Yeah. The amazing marketing machine behind it. So there's so many factors that go into the valuation of professional sports leagues, Right? And, you know, and the question I would ask is the reason why MJ and LeBron are, you know, the two greatest players of all time because they won, right? And they produce on the. On the highest scene, and when the drama was the highest, they produced. And, you know, we remember Jordan's greatest game, 63 in the Garden, LeBron's, you know, chase down block, all these. All these amazing plays. And so what about the players who had the talent, I'm not gonna say were as good as those two, but just didn't. Didn't ever do it. On the scene might be hall of Fame players, right? But you would say they were good players, but they, like, I played against transcendent players. Guys like Carmelo, Anthony, Tracy McGrady. All right? Those guys never made an NBA Finals. You know, Carmelo made Western Conference finals once, right? Like, those guys were amazing. On a different team with different teammates. I can say that I was team X. Team X teammate. They went three or four, you know, three or four championships, you know, all of a sudden, like, oh, man, their value to the league is unbelievable. Right? But we ding them because they didn't. They didn't. They didn't win, you know, and, you know, but don't you think. And so we're trying to isolate the best case scenarios, but there's so many shades of gray in this, this argument between the average player, between the, you know, top notch player that didn't have team success so didn't drive playoff ratings which we judge greatness by.

Right?

Yeah, just so many, so many gray areas in this.

I just.

Don't you think that. I think the interesting thing in this is that the moment you make equity the incentive as opposed to a giant salary, I, I think you potentially change the way these guys play and are motivated. Right. Like, because then it is truly, and I'm not saying these guys weren't that, but like it is all about the team, right? Like the team's success and my success and, and, or my, you know, the value of my equity are directly tied together. So it's like as many scoring titles as I can put up and we don't win games which there's been a lot of guys in the NBA that are phenomenal scores and highlight real guys, but we know like haven't one and their style necessarily didn't lend itself to that. But all of a sudden you potentially take one of these guys and you change, you change their motivation.

Don't you think time frame plays a big role in that, Robbie?

Right, yes, yes, yes, yes, yes, yes. Well, so I actually think that both these things are true because. All right, so one, if you take your point on like does, does equity change them as motivation? Yeah, for sure. Like the likelihood of somebody staying with a team if they have equity in that team and a very long vesting period, everything can change. Like they might be like I'm just going to stick around right now. The only reason to stick around in a team is for like your view of your legacy effectively. Right. Rather than like some, there's no monetary reason to stay beyond like some marginal difference I guess in the NBA if you stay with your current team. But like for sure the equity could change the behavior there. I actually think. Shane, you know what's fascinating about the. I don't know if this is true in the NFL, but the NBA max salary concept is dramatically unfair to the best players in the league. Right? Like the top, top, top guys, you know, like.

And what you know, you know why that is?

Well, you tell me. It's because of the union, I thought.

Because there's more guys in the middle like me than there are like guys at the top of the food chain. That's why. Yeah, yeah.

Like the, the equivalent to the Bezos, the equivalent to the Zuckerberg, the equivalent to the Sergey Brin, Larry Page, those Guys are underpaid in the NBA, right. Whereas in the rest of the world they like get their unique value because like there is no max salary component. So that's one thing. That's definitely true. But, but, but, but Alex, you and I were talking about this the other day. I think you were saying Matthew Stafford will make like 300 million in salary or something in the, in his time.

As a. Yeah, he's number two on the all time earning list.

Okay, cool. All time, dude. There aren't a lot of people that are non founders that have made more than $300 million even if you count their equity. Do you see what I'm saying? From like being a player on a team or being like an executive at a company. So my only point to this is even today people like everyone likes to talk about equity, equity, equity. Making $300 million over 10 years. If Matt Stafford had made a million dollars in cash and had a 2,250 million dollar equity package over 10 years, people like, man, that's pretty good. Like, and so my only point is the best guys actually have like sort of mirrored equity anyway because you know what I'm saying, like they make.

I understand what you're saying, but my pushback is one. It's probably closer. Obviously. Matthew's played 15 plus years that he's made that.

Yep, yep.

He has taken way more risk than any of these guys gaining equity in a startup. I mean there's a guy that physically. Right. Like on any play can have a catastrophic injury. Right. Like he inherently takes way more risk. He is still undervalued because of the value he is creating, especially as a start, an elite starting quarterback for his franchise. I mean winning a Super bowl for the Rams, I mean it would be hard to put a figure on what that meant and still means to the valuation of the Rams. Right.

Well, is it hard though? Like what are the Rams worth?

Well, they're mo. It's hard because they're moved from St. Louis to LA like single handed, like.

Order of magnitude, like 5 billion. Like what do we think they're worth? $10 billion. Like.

Oh, I think it's closer to 10.

Okay, great, let's just call it 10. My only point is if Matthew Stafford was given 3% equity in the Rams, like 3%, that's a huge equity package. Like non founder, that is a massive, that is a CEO equity package, right? Yeah, 3%, he would have made $300 million. And my only point is like, yep, dude, like not that many guys are ever getting 3% of something.

He also like another, another just fun pushback for you. They're all your founders aren't. Aren't paying taxes as a, as a W4. So he like, okay, it's well paid. We are. It is. You're a, you're a salary earner. Like, you know, and so it's, it's a little different in that regard.

But no, obviously he brother Badier only played with places that didn' state income tax. He was.

You know what's interesting, you know what's interesting though, is to your point and I, I completely agree with you that the superstars, especially in the NBA with the cap salary, are underpaid. This is the exact same argument that Phil Mickelson was making.

Yeah.

When he. Before he left for li. Right. Like that the guys that move the needle, the top 25, 50 names in golf, have no guaranteed income. Right. Other than their sponsors, and are grossly underpaid. And this was like his big, giant gripe. Obviously. I, you know, it, it evolved into the live golf in the current state of professional golf. But just interesting to think about.

So is the European soccer model the best model? There's no salary cap, so if I, I can pay whatever I want. I can pay any transfer fee I want and I have a deal with the team I buy my player from and a deal with the player that I, that I sign and there's no salary caps and if I have the most money, I can have the best players. Is that what would make the NBA and the NFL better? You know, the owners say no. The owners are like, no, no, no, no, no, no, no. We like these controlled salaries.

Well, as a league, it's more uncompetitive, but like from a true market standpoint. Right. Like there's less regulation. And so, you know, theoretically, obviously the market's working and if somebody has more money and is willing to spend it and it nets results as a league, though, the NFL would be the giant example against this. Yeah, right. It is the most regulated. It has the strictest cap.

Yeah.

It has the most parity. And probably in this country, baseball is probably the worst example that it is really suffering from this. Right. Like, it has the least amount of parity. You look at what the Dodgers are doing, the Mets, like these guys, these big markets that have bigger regional TV deals, they don't have any kind of shared revenue nationally or very small, I should say. And so if you're the Milwaukee brewers, it is hard to compete with the LA Dodgers and football. The amazing thing is that it's all shared revenue.

Yeah.

Right. And so the Green Bay packers in this exam, same example, have the same funding, TV revenue and can, can play with the, the LA Rams. Right? Like think about it. The Green Bay packers, there aren't a hundred thousand people, I don't think that live in Green Bay, Wisconsin.

Right.

And yet they. It shouldn't exist. It shouldn't exist. And I think if it was an like a free market, it probably wouldn't. But the NFL has done such an amazing job in creating parity and putting rules in place that, that create parody. That. Right? Like you have, that, you have this deal.

Yeah, but we're so used, we're so used to that though, right?

It's rare. That's why the NFL though, we have.

That in college football. We've always had that in college football.

Hired. Are you in soccer, like watching, you know, like I love Man City, but it's like every year, right? And it's like Bar and, and there's two teams in Spain. It's just Madrid and Barcelona.

Yeah, but this is the question.

We've always had it in college football. Always, you know, even before nil.

Right? Yeah, but Shane, this is where I think this is the heart of the question, which is what is the thing that's being optimized if you're optimizing the NFL. Okay, you guys have said in the past that you didn't play for the.

For who? For define for who.

No, no, I get it, I get it. I'm saying if the NB is the NFL, the NFL, right, Is an entity that is, I think, owned by the owners of the NFL team and each of them owns. I'm not going to. I don't know if he's exactly right, but each of them owns 1/30 of the NFL. Okay, so a group of 30 billionaires is optimizing for the unit of the NFL. And then it's not that each individual team is the optimization function or the players on that team. If that's the optimization function, the US model is pretty great, right? Because the NFL does extremely well and frankly each team is actually less important. You know what I'm saying? And nobody is more valuable than, you know, the entity. If the optimization is for one individual team. Right. Then this is definitely depends on whether you're a large market team or a small market team as to whether it's good for you. And if the optimization is one particular player, it's definitely not the best thing. Do you see what I'm saying? I think the Big question is like, well, for whom are we optimizing the thing that's interesting on European soccer? And I don't know this well, but it seems like the optimization function is at the one team level, which is sort of like this system is designed to like if Man City wants to do something, they should be allowed to do it and players can move freely, whatever. The NFL is optimized, it seems like, so that in 20 years the NFL is still dominant. Not that one team is there, not that one player is there. And there's an inherent belief that they effectively are flexing their monopoly power. Like you can't. Alex, like you tell me, what would the pay have had to have been? How much better would the pay have had to have been for you to play somewhere other than the NFL, knowing that you could play in the NFL twice? Three times.

Yeah, it would have to be high. I mean, this is, you know, again, we had Steve Young on. He's a, he made this decision, right. He went to the usfl. There have been upstart leagues. We're currently, UFL is rolling right now, spring league. Um, it would have to be dramatically higher. Dramatically.

Do you think double or triple maybe?

Yes.

Okay, Shane, what about for you, what would it have taken knowing you could play and produce and be an NBA champion? Okay, what would it have taken for you to play somewhere other than the NBA?

Triple.

Triple. And so I, I think the interesting thing about that is what they're really doing and this is what the PGA was not able to do with these live guys, is there sort of the promise is in non monetary compensation to the player, which is that we'll give you enough and we will give you the, the pride of playing against the best effectively. Right. And I think that what we learned was that like so far the NFL is, the NFL and the NBA have been able to sustain that. And the PGA Tour has not. And the PGA Tour is not both because it's individuals, not team. Right. And also because they let them play in the majors. Like the only thing that PGA really has, I think is like, look like these four. If they said you can't play in the majors if you go to live, I don't think these guys would have gone.

Yeah, they don't own, they don't own a single one of the majors. Yeah, the PGA Tour. And that's, I do think you hit it. Like the great dilemma that, that, that golf's facing right now is the guys that went to live and certainly got compensated versus the guys that deserve to stay and haven't been Right. But if still there is some value they've created, Rory has created some level of value by staying on the P tour for sure that he has not captured.

Yeah.

At all. And so an eventual merger or whatever hopefully may end up coming. But like how do you rectify that?

I think the honest answer right now is like it hasn't been rectified because the players don't get equity. But I think that it almost the only way I think to do it would, it would have to be that there's only very specific players that end up getting it. You can't do a like peanut butter spread equity program. It would be a crazy steep slope of one who gets it at all. And if they get it, how much do they get right and how long is the vesting period? So like one thing I would find super interesting is if Cleveland, when they drafted LeBron, okay, I don't know what Cleveland was worth when they drafted LeBron, but probably in the hundreds of millions of dollars. Right. If Cleveland in 2003 said, hey LeBron, we're going to give you 7% of our franchise, okay. Like a huge equity package, we're going to give you 7% of our franchise, but it's on a 12 year vest, okay. So you've got to be here, you know, and we're going to back end weight it. But if you turn us into the franchise we think we can be, we're going to be worth $8 billion. And in addition to your comp, you're going to make $500 million. But you got to like stay in Cleveland, you know, Would that have been enough to keep somebody like LeBron in Cleveland? Maybe not, because he can make more than that from Nike. Like the equity package they probably have to give him is like 15%, if I had to guess. And so. But the only thing is nobody else on the team gets any. And what do they think about Lebron if he owns 15% of the frickin team and they don't own any?

Hey man, you got a rebound, you rebound.

I think they would have been brilliant. I think it would have been brilliant.

Yeah, because he would have stayed.

Yep.

And Shane, what do you think it would feel like as a player on a 12 person team if one guy's got a huge chunk of equity and nobody else has any?

Look, as long as I was getting taken care of, I would have been fine with it.

Cool.

Everybody, you know, look, I play with guys who made, you know, quadruple what I, what I made certain Years, Right? And I didn't begrudge those guys. That was just a function of the market and function of where I was and how I was compensated. And, you know, I, I never, baby, I never, I never, I never held guy salary against them. So even if he was getting equity now, if, if he started, you know, pulling rank and, you know, sort of bossing me around because he, you know, I own, you know, I own this place. You better, you better pass me the ball like. No, no, screw you.

Yeah, yeah. You know, so the integrity of the game is the thing.

Yes.

Okay. Alex, did, did anybody ever. Because, Shane, like, one thing I always wonder about with you is how representative are you of, like, other people's emotions on this? Because you're like, hyper rational. Do you think anybody ever behaved differently on a team because of pay differences?

I would say that the five most important factors in any, any professional happiness, you know, I would include professional sports, is status, cause, liking, organizational camaraderie and money.

Sorry, Status.

Status, cause, cause, camaraderie and money.

Got it.

Okay. So if those things are satiated to a level that's acceptable, you don't really care what the structure is, despite anyone else's. What anyone else is doing. Okay, so five. Those five things are satiated. I, I can roll with any, any structure because I.

Going to be in the book. Shane.

Huh?

Are those going to be in the book that comes out next year? Those are good.

Those are good. That, that's. I, I didn't come up with that.

Are they in that specific order? No, no. Okay.

No.

Different for every person.

Everybody has a different feeling about what their level of status for you, Alex.

Is all about the status. You know what I'm saying? Dollar bill, not the other one, dollar bill.

You know, everybody, everybody has a certain level of money, you know, where they feel compensated fairly. Right? It's not, it's not about being, you know, compensated. Next, it's, is my work appreciated? Am I compensated for, for that fairly? You know, everybody has a certain baseline of, you know, does my work matter? You know, what, what, what are we here for?

Right?

Let's make a buck. Win a championship, do something. Create a legacy. Everybody has a baseline of liking their work, right? So you can have all that. You can have everything else, but if you hate what you do, all right, you're not going to be fulfilled, right? And there's a certain level of camaraderie that's in the locker room on the buses for professional athletes or the water cooler at the work that you have to have you can't work in a silo and feel fulfilled. And, and of course, like that's the human game. Right. And so whether, whether that's an equity structure, whether that's a salary structure, those factors don't change.

Robbie, I think to your question, I think you were asking like the only time I've ever seen it in football, and it's a, it's a very specific kind of case is when a free agent signs a big contract with a new team.

Huh.

Because he, to deserve it. He's obviously played well or shown that he can play well, but he did it in a different building.

Yep.

Right. And so all of that kind of earned trust totally. And, and earned capital that he has is essentially gone. And now the new team though, all they have are these huge expectations. Right? So you walk in and the new team is expecting. Right. Because we just handed you this big contract. And I'm saying, even as a fellow player, I'm not talking from like a, when I say ownership, we like or coaches like, no, we, we, we went out and spent again, we have a finite amount of money in our cap. We're trying to win and we spent it on you. And you come in and there are a lot of expectations on that player. And I think if they don't like it, and this is rare, but like there are, there are times like they've, they've cashed in, right. They hit their second contract. It's life changing money. And sometimes you, you've, I've definitely seen guys that like, totally. They don't, they, they've kind of cashing it in at that point. Right. Like they've hit it. They don't really give a. If we're winning.

Yeah.

Right. Like, this was a phrase that I, I, I became accustomed to my first year with the Niners when I would hear it and we sucked, man, we sucked. But like, I'd hear vets walk around the locker room, they would just be like, CTC baby. CTC man. And first, you know, because I didn't give a, just cut the check. Like, and that, that dynamic.

Yeah.

Is, is, is not good. Like if that's going on in your locker room. And, and it's different because don't get me wrong there, I've been around on the other side. Like, guys come in and maybe don't live up to their contract, but you can tell they wear it, right. It means something to them. They're working their ass off.

Totally.

Like, and, and you don't ever fault a guy for that. Right. Like, but I've definitely been around.

So, Alex, you know, what's so interesting about what you just said is there's one analogy that's really strong in startups, and then there's one that's not. So the one that's super strong is, like, if some executive gets hired, you know, and everyone knows executives get, like, reasonable equity packages, whatever, and obviously everything they've done is somewhere else, right? And if they come in and they're not good at the startup, people are fucking pissed. Like, people have the exact same reaction you had of like, I can't believe that this person's here. And then, remember, they have a title that the other person is like, this is not right. They have. They represent, like, a cultural change in many ways of, like, we don't care about the people that built this place, you know, and they know they're making a lot of, you know, equity. So, like, what you just said is super resonant at the startup. The interesting thing is they can't do the CTC attitude because it only works if the company works. And so the other thing that the people are so mad about, about the new person is like, you're not even helping us. You're not even, like, we only get paid if it all works.

You're bringing down everybody, right?

Like, it's not only that you're taking part of our pie, you're reducing the size of the pie. You're like. And so there is, like, vitriol that goes to founders when they bring in somebody like free agent signing from the outside who doesn't move the needle. There is such hate for that person. But on the flip side, if somebody comes in from the outside and they make a difference, I mean, they are beloved, right? Because remember, like, they're lifting everybody else's boat.

But can people separate that, though? Can people separate the contribution? All right, you ask us, you know, what would it take for us to, you know, play somewhere else? Can. Can the average worker separate and understand the risk and what equity really means?

You do it.

You did it because you did compensation. So, like, you know, you're talking the language and you advise this for your father.

No, no, no, no, no.

But can the app. Does the average professional, do they understand the true value of risk and of equity?

No, but this is where, you know, you, brother Badier, have given the best language on this, which is if you want to earn your equity package, you have to make it obvious, like, it has to be that this thing wasn't good before you got there. And it's a lot better now. And it is clear to everybody. Do you see what I'm saying? Otherwise everyone else is just in the gray of like, no, no, no. But, but I did this one thing that doesn't show up in here and it's like you, we won 18 games last year and we won 52 this year. Like the only people that people really believe consistently have like earned their equity are people where it's like it was going like this and now it's going like this, you know, And I guess if you're listening, it's like going down then going up, right? But I think that. And then to your second question, which is do people properly understand risk and equity upside? No, generally not. I think that for most people, what they want, just like you said on the five factors, most people, money for them is like, is it enough to live on, to do, to live the life that they want to live and do they view it to be fair? A huge element of the reason these like compensation bans exist is just to tell someone you have some framework for arriving at it and it's like you are leveled appropriately, we are paying you in line with your peer group. It's not that anyone actually like understands that terribly well. It's like a mechanism to demonstrate fairness.

Do you, do you believe, Ravi, that the incentive, like the motivation that equity is supposed to create, right, like again in the employees, right, like that you, you're going to stay here for a given amount of time invest and you're going to bust your ass and if you make us better, you make more money, right, like that. That, that's a different incentive than players have with contracts and you know, whether or not they have guaranteed money. Do you, does it work?

Yes, but not for the reasons that people think it works. So yes, but I have like a perspective. I've thought about this a lot. One, it's not because people are doing perfectly rational economic class calculations on the value of their equity. So one reason it works is um, there is a camaraderie to we all own part of this business. There is a non linear benefit that comes along by looking at everyone like we're all owners here that has value, right? Because people feel like they're part of something, you know, and they feel like again there's like a non monetary compensation component of I'm not just a worker, I'm an owner, you know, so that's one, two, it allows you to get people to that you wouldn't otherwise get. It gives you an excuse to have low cash. Like, if you really think about it, if you just have. If you don't have the equity side, you don't even have a real business. Like, if you're a startup, you don't even have the money to pay somebody a lot of cash, right? And so you can't get enough people who are good in the building if you don't have some other currency. And so realistically, what ends up happening, the value of the equity is it gets you people that wouldn't come work at your company because you have a new thing to pay them with. You know what I'm saying? It's like another. Another chip, you know, so that has tremendous value because it also allows them to tell their parents. Remember, these people that come work at these companies are young to be able to tell their parents, like, hey, like, don't worry that I'm only making this in cash. I actually can also earn this equity, right? And like, that's like really valuable. Like the number of times a leader thinks about with a young workforce, like, what are they going to tell their parents? Huge deal. You know, what are they going to tell their friends? Huge deal. Okay, so that's another reason it works. And then the third reason it works is provides you. It provides you with hope. Like, if I can show you what it can be worth if we're really big, even if we're not going to get that big. Like, one of the things Uber used to do when it handed out its comp package during, like peak Uber was they would be like, here's what your comp package is worth of or worth like $500 billion. And like $5 billion is a lot of money. Okay. But people would, like, see a number that's like, oh my God, $500 billion, like, looking up and it like, that hope provides real value. You know what I'm saying? Of like, man, this could really be the thing. Like the number of people that will say stuff like, well, yeah, if I just work here and like, really works, like, I never have to work again. And it's like, that's a pretty low likelihood for some of these companies, you know? But I think that it does. It doesn't do it the way people, Alex, think it might, which is like real rational economic calculations. It's much more vibes, you know, than it is anything else.

Yeah, that's interesting. All right, Shane, I'm flip it on you. You're a gm, owner of a basketball team. Do you think equity compensation could work for the right people in basketball? And if so, who out there right now would you view as like a potential. Are there any.

I guess I don't think it could work just because of the constraints of the collective bargaining agreement.

No, no. Say. They say that was gone. I. I should have prepped that. It's legal. You're allowed to do it.

Shane is at Commissioner Badier, you know, with a map.

Is there anybody out there right now that you would be willing to give a little equity to your team to.

To recruit them or to retain them? Both.

Either one.

Both.

No, because I wouldn't. I wouldn't give any equity just because you're. You're one play away. You're one play away from being saddled with something you just can't recover from.

Oh, that's interesting.

So just from. From a risk standpoint, you just can't do it. You just can't do it. Yeah, it might be amazing, but you're one. You're one bad fall and, you know, one bad collision, and then you're saddled with a percentage of your franchise out the door that you can't even.

You're not giving Wemby a little piece, huh?

No, he had blood clots. I mean, that's. That's serious. He missed half a year with blood clots. That's, you know, that's no laughing matter. But like, oh, that's case in point. Like, case in point, like, something weird happened.

Risk. This is badier. Being like, I'm not playing at this table. You know, the.

These.

These odds aren't right. But I do think you're deserve it.

Probably.

But if I.

You're. You're asking if I will put on my commissioner's app and my. My GM hat. No, that. That's not fiscally responsible.

So what's. So I think the thing that would be cool. So let's make. Let's take somebody that. I think. I think if the warriors had given Curry equity some number of years ago, knowing what we know now. Right. He would have earned it multiple times.

Hell yes.

Right. Like, the value of that franchise is so much higher and consistent.

And the NBA.

Sorry. And the NBA, but they consistently attribute it. One of the credits, actually, to the Warrior organization is like, even if you talk to, like, our friend Mike D. Like so much of the value they do attribute, like, we have Steph Curry. Like, we are so lucky that we get to work with this guy. But so what's really interesting about that was I would bet you if Steph had gotten equity in the team back in the day, One, I would bet you he would have been like, you got to give some of this to the other guys. You know, like, he wouldn't have just taken it all himself. And I actually think if he didn't do that, it would have created a weird strife, which is today they get to talk about them as a group, you know, like, Steph Iguodala, Draymond Clay. Like, they talk about them as, like, the group that created the value. And if Steph was the only one with equity, I actually wonder if it would have been, like, almost harmful in a weird way, because they couldn't, like, treat them as, like, the unit. Do you know?

I mean, I know there's been different cast of characters for the. You know, the Four Rings and all the success, but, like, I mean, Steph is still held. I mean, I don't really view that as a career.

I don't view that as, like, money wise. Alex, he hasn't earned. He hasn't earned as much more than the other guys as his contributions would have suggested it. Do you see what I'm saying? Like, if you add up Steph's career earnings relative to, like, Draymond's, it's not like he's, like, 10 times higher than Draymond. He might be, like, two times higher than Draymond.

So you're saying he's been underpaid?

Yes. Yes.

Yeah, that's what I.

And my point is part of the camaraderie that's come along with them and allows them to say their stuff is that Steph's pay is more similar to theirs than it should be. My only. Can I.

Can I say that Steph Curry has been criminally underpaid, and he would not be Steph Curry if Draymond Green wasn't there.

Can I say that this is interesting? They can both be both.

Like, that's the backdrop of all this. Like, totally, totally the context of your team that allows you to be this guy that produces at the highest level when the lights are brightest. You only get there because you're part of. You're a cog in the team. Coach K used to say this to us. He's like, look, are all role players, every last one of us now it's some of our role to go out and score 20 a game. Grad, 10 rebounds for some of us, our role is to practice hard and prepare the guys who are scoring 20 points, you know, in practice every day. But we cannot be who we are unless everyone performs their role to the best of their ability.

Right.

For the Golden State warriors, they did okay. Kudos. Hallelujah. You know, there are a lot of great players who did not have that luxury of having, you know, hall of Famers, Iggy around them and Draymond and Clay, right? Who were fantastic, Fantastic. And so to punish those guys because they didn't have the supporting cast like that.

But the frustration, Shane, my suspicion is my first. The frustration for some of these guys, I would suspect, is, yes, Steph couldn't have been Steph without Draymond. Steph probably could have been Steph if there was another owner willing to spend the money in place of the current owner. Do you see what I'm saying? Like, the. The. The. The. The owners actually are replaceable above. Like, other. If you, like, replace them with a similarly situated rich guy, you know, by.

The way, without Steph Curry, Draymond's not Draymond. Right? It works all the way around. I'm having a hard time saying, yes, absolutely. This is a black and white cake.

It's.

It's. It's way too contextual to. To come up with a definitive answer.

Alex, can I give you guys a very weird analogy that this is making me think of, though? Okay, So I was talking to this guy today, okay? So Alex and I, as you know, we live in this small town where there's just one school, okay? Just like a one public school. And he was commenting. We were at, like, the local coffee shop, and he was commenting, this guy doesn't live in Woodside. And he was sort of like, man, you, like, know all these people that come around, like, dude, it's a town of 5,000 people. Like, everybody kind of knows each other. Plus, like, being an Indian person in Woodside adds to that, right? And, like, in that, you know, you are more noticeable around. But the point was, I was like, the real thing is I said something about the school. He's like, your kids don't even go to the school. I'm like, yeah, but the community's still based around the school. So, like, we were actually talking about, like, the auction and the events and all that stuff around it. He was saying he lives in another town in, like, you know, Northern California. And he's like, actually, our town has. Does not have the same vibe of, like, one school. I was like, what do you mean? He's like, well, at one point, somebody created, like, a charter school, you know, inside of the town because the local school didn't provide, you know, something that they wanted. And he's like, it's actually been like pretty split for the community in terms of like, it's positive and that there's another school that has choice for the community. But it's very negative in that there's no community for the town anymore. There's no consistent community because, like, everyone's at different schools. And so what's really interesting is again, like from like an economics perspective, choice is a positive. You know, like if you can add another choice, that is a very good thing because then people can choose what they want. But practically speaking, there is an unintended consequence of having like this good choice, you know, which is that you have a lot less community. Like he was lamenting that he doesn't have the community that's had by something that's supposedly good. And I think the reason I was thinking about this vis a vis the equity and all this stuff we're talking about is inherently, you would think it is only positive if players were to like, receive equity for the players. And I think the only point that's kind of weird to think about, like you said on the contextual points and whatever, is it's possible to me that there are some team dynamics that change by there being more levels of unevenness within the players. Whereas I think today there is some value of like it's the players, quote unquote, against the owners and they're all in it together, you know. And I think that if you blur that, my suspicion is there would be some more complexity in the relationship that's not easy to forecast. That was just something that I thought about.

Well, that.

That's happening right now with nil.

You're going full marks on us here, Robbie. You just want socialism. Are you shitting me?

But like that, that, that's the locker room right now in every college football locker room.

Is it?

That's the locker room. The pay is not equal.

The pay is not equal. Right. And there are guys, you know, who. And there's no transparency either. So no one really knows what anyone's getting.

So. Matt.

So that dynamic is, is, is spicy in college basketball and college football.

Yeah. That's interesting though, in business and I was going to push back on this, Robbie. Like the equity packages are very different in the startup world. Yes, but do they not know that's not transparent? Right. So like the difference in that, you know, obviously professional sports, everybody knows what everybody's making.

Yeah. No, no, no, no. Unless somebody up. There's no sharing of the.

But it doesn't create. Why, why doesn't it create in your argument? Why doesn't that create dissension?

Well, I think, I, I think, remember, I, I think differences in pay amongst players is totally accepted and normal. I think what I was saying is differences in currency, like, if the point is that somebody is an owner versus somebody is an employee, remember in the startup world, everybody's an owner. And so if the point was that one person gets equity and no one else does, I could imagine that having negativity. Of course there needs to be dramatic differences in pay. In fact, I would argue that there should be bigger differences in pay, both in startups and in sports. I actually think that it's too compressed and it doesn't reflect the value of the. I think the highest performers tend to be the most underpaid people.

Funny story. So when I played, I invested in a hotel in Memphis and it happened to be one of the, the NBA team hotels, you know, so I'm proud. I'm a young guy. I'm like, yeah, you know, I'm an owner, you know, a landowner, you know, I, you know, part of this hotel. That was the worst mistake I ever did because guess what? Every time I went to the city, you know, guys are bitching about, man, the pancakes were cold, man, like my, the shower didn't get hot enough. Like, like, so, like it was the biggest mistake that I told anybody I.

Was an owner, right?

So owning ownership's not everything it cracks up to be. And so, like, I could see that, I could see that in locker room, couldn't you? Like, you know, all of a sudden my homes gets equity and you know, you know, the backup safety comes in, man, Pat, man, these extra, man, we need better eggs in the, in the, in the team room, man.

Come on, suck, man.

What are we doing here, man? Come on. And that would be, that would for sure happen because guys don't understand how equity works.

There's a lot of bitching. A lot of bitching goes on in the locker room, in the training room.

So the guys might say, you could have this equity back, man. This is for the birds.

Hadn't thought of that.

Heavy is the head that wears the crown.

Yep, yep.

Yeah, I love that. Alex, you're trying to put me in the socialist bucket. No, man, I'm a capitalist. I'm a capitalist. Just making a kind of a point on the currency, you know.

My only argument on that is, listen, I, I just. When you're in the locker room and you're around greatness like that, everybody knows they're great and they're special and then like to use A business term. They're unicorns. Right? Like, as. I don't. Don't. I mean, Draymond and Clay and KD and, you know, Andre, like, they all know, though, that Steph's the unicorn.

Yeah.

You know what I'm saying? And not that they're like. And again, there's levels to all this, but, like, everybody knows LeBron Scotty doesn't.

Know it about MJ, but everyone else does, you know?

You know, like, I. I don't. I don't know if they. There's not a guy that I think would have said, hey, Tom Brady isn't a, you know, like, look what he did over 20 years. I don't think there's anybody in Kansas City's locker room that would, like, look at Patrick and be like, man, he doesn't deserve this. This guy isn't changed. This guy isn't different. He doesn't change it. Change the game.

I think it. It raises an interesting point, all right, when you're making a widget, okay, or you're offering a service that is much more measurable than a creative business, right? So how do you. How do you measure value in a creative business? And I would argue that professional sports are a creative business. Is it impact? Is it time spent? Is it ideas? Is it reach? Right? And that's why this is such a difficult conversation, right? If we're make. If we're making widgets, all right, if we're making iPhones, we can measure, right? We can measure ebitda, we can. You know, there's a hundred ways to measure everything, but in creative businesses, it is much dicier to split up credit and the influence.

Yeah. I think attribution of it is the hard part in all of them, though, Shane. So, like, to me, what people in business would always say is, like, the sports are so much easier to measure because there's wins and losses. You have an objective thing at the end that's like, what did you. Did you win or did you lose? Right. Did you win the championship or not? You know, in ours, like, if. If the numbers go up but the multiple comes down and your stock price goes down, it's sort of like, did you win or did you lose? Right? So I think that it's so interesting to hear you say it. I think that in every business, it is or in every type of organization, creative or not, I think you can probably figure out what you want to measure. I think the issue is attributing the credit within it, if it's, like, working or not. And so the Heat win the championship, what percentage of the credit should go to LeBron, D. Wade, Bosch, you, whomever, like that's the trick is sort of like, you know, delineating who does what. A stock price goes up. What percentage of the credit does the CEO deserve versus the head of design versus the. Not like that, I think is a lot more art than science all the way across the board. What's.

What's one thing you wish you knew about equity when you were doing it at Instacart? That. That you know now in your new life, Ravi, that you wish you knew back then? Besides, you should ask for more.

Yeah, of course. Always should ask for more. If you're going to ask for more money, ask after you've done something unique and excellent. Don't just like, be thoughtful about when you're asking. People are human beings. Their likelihood of giving you more is way frickin higher if you have just like done something amazing. You know what I'm saying? Like, don't ask when you're thinking about it. Ask when they might say yes. So that's one. The second thing is, I think actually, Shane, benchmarks are really important, but most people use the wrong benchmarks. This is actually interesting. Like, I think everyone uses like compensation data and they go like, what is the range for this thing? But they don't learn what unique looks like. They don't. They don't spend enough time understanding what's possible. And so I think that this logic, kind of the point that we're all making today is that there's a range of typical performers that's maybe here, like, you know, one to four, whatever. And then the people that are truly unique are like 12. Like, they really are. They are really different. They're not. They break the range. And so I think one thing that I wish I had understood more at that time, not for me, but just in general was like, what do the twelves get right? Because then it allows you to search differently for those people, you know, and to offer them different things. And I think it's basically like the rules are different for the people that are truly unique. I wish I had known that. And I think that one, it's inspiration to try and be truly unique. And then it's also inspiration if you are truly unique, to like, get paid as such. Right? But I think to me, so much of what we're saying is, Shane, I was thinking about your thing of like, you wouldn't give it to somebody because what, they're one play away. But actually the way you would structure that, it would be like, hey look, if we are, if you come here and you win the MVP four times and we win five NBA championships and our equity value goes up by 10 times at the end of that, I will give you this much equity and we'll write it contractually down because you would give it to them at the end, but you would agree on it at the beginning. And my point is, obviously that's not perfect, but I actually think you could still solve it that way. But you just need to set the bar in a way that's so absurd. Like I'll give you guys an example. That's kind of weird. But you know this guy Brett Taylor I've talked about before, he's the CEO of Sierra, that company I'm on the board of. So Brett is the chairman of OpenAI and he's like a really, really, really unique talent. Okay. He was described, he's the co founder of Google Maps, inside of Google. And there was this guy named Paul Buckheit who created Gmail, who was talking about Brett one time and he's like, there's this concept in Silicon valley of a 10 times engineer, a 10x engineer, which is that they're not like a normal engineer, they're 10x more valuable than a typical one. Steve Jobs talked about this. Paul Buckheit is like Brett Taylor. One weekend he rewrote the entire Google Maps, like software, like all of it. He just like by himself one weekend rewrote the whole thing. He's like. And it's like totally changed the trajectory of this thing and it changed exactly what it was going to be. He's like, Brett is not a 10x engineer or a hundredx engineer. Brett is a 10 000x engineer. That's. And this is from the guy who created Gmail. Like he's like a super legit dude. And I think the point there is like whether or not Brett is a thousand x in your or ten thousand x engineer. Like he's different. He is different. He's super, super, super unique. Someone like that ought to get paid pretty differently than someone who is a normal engineer. And so I think what he shows in that case is like how high is up. And I think that, I think everyone in business would be well suited to understand that there are a few people who exist who are. They're just completely out of the normal distribution of performance and they don't come along very often, but when they do, you should compensate them.

I agree with you, Robbie. Good luck trying to find other people who have their share.

I agree, I agree, I agree. You know, but if you find them, pay them, you know, do something, you.

Know, I just to, to bring this back around. And I, I couldn't. I totally agree with you. And I, I, I love the analogy. Like, part of the equity is maybe you keep them, you know, and if you're the Cleveland Cavs and like, you could have had LeBron for his whole career or, you know, you can grab one of these, you know, again, unicorns and you can lock them down, I, you know, potentially worth it.

Yeah. Just like I think the answer for all of us is if you did it, it would have to be extremely, for an extremely unique person. It's not like the typical. And if you did it, you have to make sure that you can't take into account that in sports there is a dramatic risk that exists that doesn't exist in other parts of the than other analogous industries of like, physical harm. You know what I'm saying? That, like, that affects your investment. But yeah, I, I mean, I'd love to see some of these guys get equity. It just would be a pretty specific group.

I also don't, I think we're discounting when an owner would or GM would fall out of love with a player. Oh, yeah, it's easy to love. It's easy to love, you know, Prime LeBron and, and all these guys when they're doing it, man. But if they're 80% of what their peak was and you're still on the hook for equity, you know, makes these owners and these GMs very uncomfortable.

Well, also, yeah, I mean, take Nico with Luca.

Yeah, right.

Like, you know this. What if Luca had an equity package for Dallas?

Yeah.

You know, and Nico falls out of love. Shane, I was going to ask you about this. Similarly, LeBron told a story on Pat McAfee recently of how there used to be chocolate chip cookies on the plane and then one day there just wasn't. And the theory is that Riley didn't like you guys eating chocolate chip cookies on the plane. Is that true? Is that like, do you, like, remember that happening?

That's a true story. The one thing about the Miami Heat culture is that it's world class.

Right.

And you cannot be world class if your body fat is over 8%. Just can't do it. And so chocolate chip cookies were a proxy for less than world class, and so they were removed.

I just feel like, to me, the example though, of like, you're Pat Riley, you have, you check body Fat every week. You already have the mechanism in place. And now you have LeBron James. Like, you have certainly at the time, the best player in the world on your team. And you're implementing discipline on the plane through the cookies. And it's just like this dude, he's just built different.

It's a mindset. It's a mindset, right? It is a mindset. So when we're in that, we're in that game seven, right? In a huddle, tie game, 20 seconds left. We can look at each other in the eye and say, you know what? Those guys ate the cookies. We didn't. That might be the difference.

If you.

Could see the food that gets eaten on an NFL plan by these big 350, 370 pounders.

Can you tell me my, my shooting. My shooting coach, Chip England, who, you know, worked for the spurs when, when we played him in the finals and the year after, he would always call me when I was in Miami and say, hey, Shane, what are you doing, man? I'm out having a steak and a nice bottle of wine. Are, you know, Are. Are you. So he'd rub it in. So it's, you know, Shane.

Alex, what do you think the calorie consumption is for some of the big guys in the NFL during the season?

Outrageous. I told you guys the night before the game, Kansas City. Mandatory. Mandatory from Coach Reed, a full spread. Haagen Dazs. Has to be. Haagen Dazs ice cream bar, sundae bar. I mean, you. Every topping you can imagine when you go into like a. An ice cream shop, laid out all the sauces. Fudge, caramel, like whipped cream, nuts, walnuts, pecans, like, you name it. Sprinkles, gummy bears, M&M's. I mean, it is enormous. Every. Every single night before the game, did.

You guys have to change? This has nothing to do with what we're talking about, but did you guys have to change your eating habits dramatically post retirement?

Not really. No.

Isn't that. I would have my guess, obviously this is not true, but my guess is with the level of exercise that you're doing as a professional athlete, combined with the age. Right. I would have thought that you guys being not exercising like that, there's no way you can replicate that level of physical fitness, I don't think. Right. Physical exercise and absolutely not. You know, getting older, I would have thought that you were like. Because you guys kind of look the same as you did when you were playing. Like, what am I missing?

I. I'm. I don't know about you, Shane, but I was a guy that struggled to put on weight my entire career. And so I was. Guys are either in one or two buckets. You have the weight loss guys. You have just as many guys, Robbie, that are on the weight gain. Right? Like, so we'd have once a week weigh inside. Okay. Like, literally so like every Thursday morning you had to come weigh in. We didn't. They didn't fat test us, thankfully.

But you.

Every week, but you weighed in and you had to wait. You had to hit. Half the team fell in the bucket that they were trying to make weight, right? Like, oh, oh. And I was that. I mean, I. I was full breakfast. I was chugging protein shakes to make my weight. And then you'd have the other half. You'd have the guys in the sauna and steam room that morning in their sweatsuits trying to cut right. So like. And typically post career follows that guys.

Oh God.

Are one of two buckets. This is like where you've seen these linemen that look. Yeah, so skinny now. And those are guys that like, they eating was a chore for them.

How much? What was your playing weight?

I played at like 217 pounds, 218.

What do you weigh now?

I'm below that. Oh, I'm like 2, 210. I'm a good day.

And what about you, Shane?

I played at probably 220 or probably 224 right now. 225.

Wow. I. Yeah, that makes sense. It makes sense. The bucketing that you're saying, which is like, you know, depends on which one you are sa.