What Kobe Bryant taught me as an investor: The Work

On Jan 26, 2019, Sunday afternoon, I was having luncheon with a prospective client. My phone was in my jacket, but I could hear it vibrating throughout the meeting. I was wondering what was urgency messages all about? I checked my messages an hour later and found out the missed messages were about Kobe Bryant’s death.

One of my friends sent me a snapshot of a new’s article and I supposed it was fake. I thought social media was jumping to conclusions. I checked various social media websites and popular news outlets, but I came across the same inevitable truth. I wanted to feel like Kobe was still present, so I kept watching replays, replays, and more replays of Kobe.

I was in disbelief the entire day and wished that some other news would report that it was merely a minor accident. It was heartbreaking to learned that his daughter died in the crash with him. I could not imagine what it would feel like to live through a devastating accident. Kobe inspired me so much and I will miss him dearly. Everyone can relate to Kobe because he was authentic. There was no denying Kobe’s passion and the way he lived his life was inspirational.

Who Was Kobe Bryant?

Kobe Bryant was the youngest 17-year-old out of high school entering professional NBA basketball. Early in his career, Bryant was not given many chances to play even though he was a better player than most of his teammates. When he had a chance to play consistently, the NBA fans saw flashes of his swag and talent. As Kobe Bryant’s career progressed, it was undeniable that he was destined for greatness. 

18 years ago on 2002, I was fortunate to witnessed an NBA match between Kobe Bryant and Michael Jordan. It was my first time going to an NBA game. It was a home game in Washington, DC; the Wizards led by MJ vs Lakers led by Kobe Bryant.

The game was very close, but the wizards edged the win over the Lakers in the final few seconds. It was in this game that MJ told Kobe he could ‘wear those shoes, but never fulfilled them’. Micheal Jordan’s critique irritated Kobe so much that he stop communicating with his team for two weeks. In the following game against the Wizards, the Lakers won with Kobe’s vengeance of 55 points.

Michael Jordan VS Kobe Bryant – 2002.11.08

There were many similar stories about Kobe’s vengeance game, where he always found ways to pull ahead and improve his skills. Kobe’s work ethic and pursuit of wisdom and knowledge resulted in 5 NBA championships and a long list of legendary achievements. 

Discipline & Work ethics 

Kobe’s work ethics are legendary. The best highlights of his career were not on ESPN; it was on early mornings and dark nights when Kobe would practice more than anyone else. Kobe was always the first and last player in the gym. He strictly follows an exercise regime. When he was injured, he found ways to practice, like working on his weakness or using his other uninjured hand. There were no off seasons for Bryant; his summer workouts have been exactly as intense as the regular seasons. Working hard, both on-the-court and off-the-court, was a consistent effort. Kobe lived and showed what perseverance and hard work means.

Talent can only take one’s profession so far in their career. For instance, most starting players in the NBA have the potential to score 20 points per game and some have scored 20 point game, but most players cannot consistently perform at a high level every night. Most investors will have some years of beating the marketplace in their lifetime, but most investors cannot consistently beat the market average over a lifetime. The few that can consistently perform at a high level have shared one trait, hard work.

Bryant believes he should work hard as if he never possessed any talent. Why does Kobe Bryant work so hard? “To think of me as a person that’s overachieved, that would mean a lot to me. That means I put a lot of work in and squeezed every ounce of juice out of this orange that I could.”

Hard work is about commitment and there are no substitutes for hard work.

Blackberry had all the resources to compete against Apple, but it has been contracted to a small software company and is no longer relevant in the phone industry. Blackberry attempted to recapture its market share with a rushed unfinished smartphone… Blackberry simply did not put in enough R&D nor provided the engineering team enough time to deliver the promised features. Apple won already; Blackberry could never rival the same hours of commitment.

Actively Seeking Wisdom and Knowledge

Kobe was resourceful to leverage every tool to make him a better basketball player. Kobe watched soccer and realized soccer players had a freedom of movement. He noticed that soccer players used more ankle torque than basketball players, but they suffered less or the same probability of ankle injuries. Kobe started researching information to improve his signature shoe. He requested Nike to remove a few millimeters off the shoe’s sole to deliver better traction and incorporate the soccer shoe’s advantages. The new signature shoes resulted in a low top that features structural ankle support, improved traction and response time.

Bryant would cold call basketball players and business leaders to learn about their success. He studied how animal predators would attack a pray to incorporate movements into his jump shots and studied psychology to mentally mess with his opposites. Kobe would study players’ weaknesses and studied the referee’s foul calls. Some would describe Kobe’s behavior as a little weird, but champions in the same pedigree would view this obsession as very normal. 

Many successful people have an obsession about their work, it’s a very common trait that is found in leaders, business professionals and investors. The Walmart business model is built on low prices and efficiency. Walton soaked up wisdom from everybody he could — from competitors to Wal-Mart’s entry-level associates. Sam Walton leveraged every opportunity to make the stores and products more cost-effective. Elon Musk was months away from bankruptcy and he spent months sleeping in the Tesla factory to turn round the company. Warren Buffett went through 10,000 pages of Moody’s manual to acquaint himself with every single public company. Once he found a few suitable investments, he would study everything he possibly could about these companies and invest accordingly.

Champions are constantly improving and getting better skills. In a world of sports, championships are determined by a fraction of a second, one snap, one turnover, or other marginal variables.

In the world of investment, marginal variables are going to determine million dollars of earnings or a path towards bankruptcy.

Kobe Bryant’s dedication to basketball is inspirational. He influenced people and shared his wisdom. Bryant’s Mamba mentality is to work hard and live up to your potential.

Kobe believes he should work hard as if he never possessed any talent.

The 1970s-1990s – Hobby stores arbitrage and demise

Long before the days of the internet, auction platforms and hobby stores, it was a very simple arbitrage market for collectible shoes, artwork, games, and cards. The market wasn’t efficient at pricing hobbyist collectibles. 

Finding rare cards was difficult, it was only available through newspaper ads, neighbors, acquaintances, and hobby stores. Rarity was empowered by the proximity of where, and how you can buy a product. Baseball cards’ popularity grew in the 1970s – 1990s and spurred the growth for new hobby stores to sell the trendy commodities. It costs very little to produce baseball cards, and it was easy to sell paper cards for a significant profit.

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By the early 1970s, the first professional card dealers emerged

During the dial-up internet era in the late 90s, consumers were not familiar with the internet and suspicious of buying products online. Consumers still trusted a local hobby store over the internet. Hobby stores took advantage of customers’ distrust of the internet products and sell the same merchandise for a much higher price.

There were many times, I paid a premium price at the store over the listed “official card price index” report from hobbyist magazines. It wasn’t easy to buy from the internet, there was no way to confirm or guarantee that the money you paid online was going to honored. It was common for hobby stores to list the same merchandise at higher prices than the market’s selling price.

Over time consumers started trusting online marketplaces like eBay and slowly collectible items became price efficient. Sports card revenues hit their peak in 1991 at $1.2 billion, and the cards were flooding the market. Since then, it has dropped to under $200 million and Hobbyist lost interested in baseball cards. The saturation of hobby stores hit a peak after owners realized there were more baseball cards than they could sell. Hobby stores started looking like junk storage rooms and most baseball cards lost its value. 

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Baseball Cards Liquidation sale

Savvy-experienced store owners who recognize the early demise of their baseball cards quickly sold their entire inventory and stores. The market gave plenty of signals that Baseball and collectible cards were not worth much. The hobby store owners that were smart made it out with a decent profit and shift their attention to the next collectible thing. The new owners who took over the hobby stores were the last ones holding the bankruptcy bag.

Where was Under Armour in 2001?

Before Under Armour became a famous sports brand worn by professional athletes, it was a small business founded in 1996 in my home state, Maryland. Kevin Plank, founder of Under Armour designed shirts to help cool down an athletes body during training. Under Armour clothing was available through a regional mid-size sport’s retail chain called Modells. Modells were also one of the first major retail chains to carry their brand.

I still remembered the moment UA apparel caught my attention in Modells. As soon as you enter Modells, Under Armour was the solitary thing you could look at because it was visible in front. It was situated on the button on the front left entrance and Nike was located near the front right entrance of the store. UA had this skin tight shirt on display that looks hi-tech and innovative. UA shirt was like no other clothing apparel that I have ever come across, the material felt light and smooth. I decided to buy a $40 shirt in 2001 that was worth my entire paycheck for mowing two lawns.

Purchasing an expensive shirt wasn’t the best financial decision, but I felt cool for being the first kid in my neighborhood to have an Under Armour shirt. I did not know anything about Under Armour business model yet, but I knew their shirt pulled in my skinny teen body felt like I transform into a superhero. I felt proud wearing UA gear and shouting “we must protect this house” during basketball games and gym workouts. I was attracted to the brand because the unique logo and the marketing motto “Protect this House”.

The UA business model started out, targeting the male demographic customers. UA is much more than a one trick pony company that sold skin tight shirts. They rapidly expanded their business in over 2,500 retail stores near the end of 2002, and shortly less than a year later it started offering Women’s apparel. In 2005, UA went IPO to expand their brand domestically and introduce more products.

15 years after, I am still wearing the UA shirt to basketball games, this time with a real superhero “Batman Embalm” that cost me over $50 dollars.    I bought more UA apparel and a few pairs of their place, but I am not the only kid anymore to purchase UA gear. There are children all over the world wearing UA and Adults in the gym are challenging my status quo as a superhero with their own UA superhero shirts.

UA grew tremendously and became competitive enough to challenge the sporting apparel industry leaders like Adidas and Nike. Its IPO gained over 800%, turning from a market size of ~ $770 Million to the current valuation of ~$8Billion! In that respect is no doubt, UA became a successful business and a household brand. Early UA investors have tons of earning money over the last decade. UA continues to expand to multiple clothing apparel lines and even introduce hi-tech sport electronics.

The business environment was very challenging in the early 2000s.    On Jan 2002, Kmart became the largest retailer in American history at that time to file for Chapter 11 bankruptcy. By the summer of 2002, US Airways, shared Kmart’s faith and declared Bankruptcy. Many trade names from the early 2000s have disappeared and became irrelevant. Today, many investors and shoppers recognize the UA brand. UA offer products for nearly every major sport and is a world-wide brand. While Under Armour has been wildly successful so far, they are really small compared against Adidas and Nike. Stay Tuned for my next BLOG on learning what is keeping Under Armour, UNDER PRESSURE!