In addition to being an investor, Scheinman is also a minority owner in the San Francisco Giants. Sitting on stage with Paul Martino, Managing Partner at Bullpen Capital, Scheinman spoke about how being a part of the baseball world taught him valuable lessons regarding his investing.
Since becoming part owner in the early 2000s, the Giants have gone on to win the World Series three times, winning it for the first time in 56 years.
"The first one is incredible, because you haven't done it in a long time, but to be able to repeat and repeat, there's a certain DNA that these guys have that they've been able to figure out," he said.
"Baseball, in a lot of ways, is the exact opposite of the tech business. Larry Baer, our managing CEO, says, 'It took us about 135 years to get to a $1 billion valuation.' But I've learned a lot about performance management of players, about what that means. You really know everything about your employees, what that means. And, just, what it's like to commit to winning every year, and what you have to do to do that. And what the organization has to do to do that. It's been great learning experience to be involved with incredible people."
Later on in the conversation, Martino asked Scheinman about whether he is more analytical or intuitive as an investor. Scheinman responded by talking about his experience as Cisco, when the bubble burst in 2000. At the time, the company looked at its investments and found that the 10 percent to 15 percent of deals that paid for everything else came down to one thing: did they like the CEO and will they stay?
"You had this situation where you sent people out sometimes who were generally low EQ who missed the most important question but came back with reams of analysis and numbers. So I believe you need both," he said.
"To be honest, this is why I'm not a total moneyball guy. In baseball, you need both. You need people who are going to sit in the locker room and like each other and be high character, and you need people who, of course, are going to hit the ball and produce. I'm a real believer that the 51 percent is in EQ. I believe that you have to be able to say, 'I'm going to be with this CEO for a long period of time, do I like her? Do I like him? Is it a match? Do I trust them? Do I believe in them?' And that has, so far, not failed me as my final test."
Data alone doesn't tell you enough, according to Scheinman, and he told another story from his baseball experience that highlights that fact.
"Buster Posey, the Giant's catcher. Major League Baseball teams, they came to scout him at Florida State. Buster Posey showed up half an hour late to practice every day. The groupthink among the scouts was, 'This guy is an ass,' because he was 30 minutes late. But nobody went and asked why is he showing up 30 minutes late. The guy who runs Giants scouting, John Barr, brilliant guy, told the scout, 'Ask why.' Turned out Buster Posey was tutoring handicapped kids how to play baseball," Scheinman said.
"That is how Buster Posey became identified to us, and we drafted him fifth. Four teams above us felt that,' This guy's an ass because he's showing up half an hour late to practice.'"
(Image source: twitter.com/marymkeane)