The Big But

Avoiding error – not being stupid – generally matters more than making good affirmative decisions. Big but coming.

Larry Walters had always wanted to fly. When he was old enough, he joined the Air Force, but he could not see well enough to become a pilot. After he returned from Vietnam and was discharged, he would often sit in his backyard, watching jets fly overhead, dreaming about flying, and scheming about how to get up into the air. 

On July 2, 1982, the San Pedro, California trucker finally acted on his dreams.¹

Larry conceived his “act of American ingenuity” while sitting outside in his “extremely comfortable” Sears Roebuck lawn chair. He purchased weather balloons from an Army-Navy surplus store, tied them to his chair, and filled the balloons with helium. 

After packing sandwiches, Miller Lite, a CB radio, a camera, a pellet gun, a parachute, a life preserver, and 30 one-pound jugs of water for ballast – but without a seatbelt! – he climbed onto his makeshift craft, dubbed “Inspiration I.” His plan, such as it was, called for him to float lazily above the neighborhood rooftops at about 100 feet for a while, pounding beers, and then to use the pellet gun to explode the balloons one-by-one so he could slowly return to earth.

But when the last cord that tethered the makeshift craft to his Jeep snapped, Walters and his lawn chair did not rise lazily into the sky. Larry shot up to an altitude of about three miles (higher than a Cessna can go), yanked by the lift of four clusters of weather balloons, 42 in all, each about seven feet in diameter and holding 33 cubic feet of helium. He did not dare shoot any of the balloons because he feared that he might unbalance the load and fall (remember, he wasn’t wearing any sort of safety harness). 

So, he slowly drifted along, cold and frightened, in his lawn chair, with his beer and sandwiches, for more than 14 hours. A private plane buzzed below him. He eventually crossed the primary approach corridor of Long Beach Airport. A flustered TWA pilot spotted Larry and radioed the tower that he was passing a guy in a lawn chair with a gun at 16,000 feet.

Eventually, Larry conjured up the nerve to shoot several balloons before accidentally dropping his pellet gun overboard. It was never recovered. The shots did the trick, though, and Larry descended toward Long Beach until the dangling tethers got caught in a power line, causing an electrical blackout in the subdivision below. Walters was able to climb to the ground safely from there.

The Long Beach Police Department and federal authorities were waiting for him. FAA regional safety inspector Neal Savoy said, “We know he broke some part of the Federal Aviation Act, and as soon as we decide which part it is, some type of charge will be filed. If he had a pilot’s license, we’d suspend that. But he doesn’t.” Walters ended up paying a fine for regulatory violations.

As he was led away in handcuffs, a reporter asked Larry why he had undertaken his mission. The answer was simple and poignant. “A man can’t just sit around,” he said.

In 1976, Berkeley’s Carlo M. Cipolla published an essay outlining the fundamental laws of a force he argued is humanity’s greatest existential threat: Stupidity. “Lawn Chair Larry” provides excellent evidence in support of his argument.

Today’s TBL focuses upon how avoiding error – not being stupid – generally matters more than making good affirmative decisions. However, there’s a big but coming.

If you like The Better Letter, please subscribe, share it, and forward it widely. Please please me and do that.

TRIGGER WARNING: I’m going to do some sports math nerding-out this week. If that isn’t your cup of tea, I understand. This TBL is about football, but I really love to nerd-out over baseball.

In this Seth Godin interview with Tyler Cowen, Seth explained why he uses the word learning instead of the word education for what he’s trying to do. Education is an abstraction, he said; it’s about certificates and accreditation. Learning is different. From comments earlier in the show, Seth picked up that Tyler loves, or used to love, baseball. 

If you wanted to develop a baseball fan, Seth proposed, how might you go about it? 

“You don’t teach them the history of baseball, give them the baseball encyclopedia, quiz them about Abner Doubleday, and if they do well on the test, let them go to a game,” he said. “What you do is get them enrolled in the journey of being a baseball fan because five minutes of it was fun, and they want it again. The next thing you know, they’re learning statistics because they want to. They’re learning facts because they want to, not because there’s going to be a test.” 

That’s how it happened for me and – indirectly, at least – why you’re getting this TBL.

NOTE: Some email services may truncate TBL. If so, or if you’d prefer, you can read it all here. If it is clipped, you can also click on “View entire message” and you’ll be able to view the entire post in your email app.

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The Big But

“Years after Saturday’s Orange Bowl is over,” Darrell Fry wrote for The Tampa Bay Times on December 31, 1999, “it’s likely few people will be talking about Michigan quarterback Tom Brady.” 

In a world chock-full of truly dreadful predictions, this one ranks among the worst. As my friend, Mark Newfield, loves to say, “the Forecasters’ Hall of Fame has zero members.”

A quarter-century on from that folly of a forecast, Brady – by then widely regarded as the greatest quarterback of all-time – signed a $50 million contract in Tampa Bay, where Fry had made his forecast and been a columnist, and was Super Bowl MVP in his first season, as he led the Bucs to a championship. Fry had been out of sports journalism for over two decades.

Darrell Fry wasn’t the only person to underestimate Tom Brady.

Brady was the 199th pick of the 2000 draft, selected by the New England Patriots after six other quarterbacks, including the likes of Giovanni Carmazzi, Chris Redman, and Spergon Wynn. Even then, he was a clipboard-carrying back-up until Drew Bledsoe was injured and he got an unexpected chance to play. The rest became history. Brady is now retired as a seven-time Super Bowl champion, five-time Super Bowl MVP, 15-time Pro Bowler, and three-time NFL MVP. He was unanimously named to the 100th Anniversary NFL All-Time Team in 2019. He is a sure-fire Hall of Famer as soon as he is eligible for induction.

Every NFL team passed on Brady a bunch of times for a long line of nondescript players. Even the Patriots did, before selecting him as almost an afterthought.

Spoiler alert: Drafting NFL players is wildly difficult, inexact, and error prone.

Brock Purdy was “Mr. Irrelevant” in 2022 – the 262nd and last player taken in the NFL Draft. Matt Corral, Chris Oladokun, and Skylar Thompson are among the eight quarterbacks picked ahead of him. He only got the chance to start last season because of injury. However, he led the NFL in QPR (widely thought to be the best analytical measure of QB performance) this season and will be the third youngest quarterback to start a Super Bowl when he leads the San Francisco 49ers Sunday against Patrick Mahomes (the post-season QBR leader and the consensus best player in the game), and his Kansas City Chiefs. Mahomes was a first-round pick, but was drafted after Mitchell Trubisky and nine other guys.

Creating an effective strategy and a robust process for evaluating and drafting players is a huge part of the job for any NFL General Manager. Ya think?!

The Chicago Bears will pick first and ninth in the first round of the upcoming NFL Draft. We’ll get to the first overall pick shortly, but let’s first suppose you are the GM of the Bears and you’re preparing for that ninth pick. You look at a player the scouting consensus says is the 14th best player and think he’s better than that – perhaps the 4th best player. By contrast, the NFL consensus on another player is that he’s the 9th best player but you think he’s only the 19th best. If you’re right about these players, what does that gain you when the draft is held?

If the underrated player is available when your turn comes along, you can snap him up for an effective gain of five spots. That’s very good. If you’re right, you get the 4th best player with the 9th pick. Of course, since everybody else is scouting too, you may not be the only one who recognizes the underrated player’s true value. Anybody with a pick ahead of you can steal your thunder (and your pick). If that happens, your being smart didn’t help a bit.

On the other hand, if the overrated player is available when your turn comes up (in theory, he should be, because he’s the consensus 9th pick and you’re picking 9th), you’re going to pass on him, because you know he’s not that good. If you hadn’t done the scouting well, you would have taken him with your 9th pick (assuming 1-8 are gone) and suffered an effective loss of 10 spots by getting the 19th best player with the 9th pick. In that case, then, avoiding a mistake helps to the tune of 10 draft slots.

Moreover, with the overrated player, it doesn’t matter if some other teams also scouted him correctly. You’re aided by avoiding him no matter what. Recognizing the undervalued player (being smart) only helps when you’re alone in your recognition (or pick before your with-it competitors). Recognizing the overrated player (avoiding a mistake) always helps.

The upshot: You gain more by not being stupid than you do by being smart.² Smart gets neutralized by other smart people (good trades get crowded). Not being stupid (avoiding an oncoming train) is always a good thing.

The same principle can be demonstrated mathematically. Gather 10 people and show them a jar that contains 25 $1, $5, $20, and $100 bills (100 bills in all). Pull one out, at random, so nobody can see, and auction it off. If the market is efficient, the bidding should top out at just below $31.50 (how much less will depend on the extent of the group’s loss aversion), the value of the average bill {(1+5+20+100)/4}.

If you repeat the process, but this time let two of the ten prospective bidders see the bill you picked, what happens? If you picked a $100 bill, the insiders should be willing to pay up to $99.99 for it, and neither of them will benefit much from the insider knowledge. However, if it’s a $1 bill, neither of the insiders will bid. Without that knowledge, each of the insiders would have had a one-in-ten chance of paying $31.50 for the bill, suffering a loss of $30.50, and would have suffered a loss of some sort in 75 of 100 cases. On an expected value basis, each gained $3.05 from being an insider. Avoiding error matters more than making a smart decision. Once again, you gain more by not being stupid than you do by being smart.

As Charley Ellis famously established, investing is a loser’s game much of the time – with outcomes dominated by luck (rather than skill) and high transaction costs. If we avoid mistakes we will generally win.

When the error quotient is really high, our risks grow exponentially. Avoiding a mistake – not being stupid – becomes increasingly important. Obviously, in the NFL, that starts with scouting and analysis of players and their chances of success. However, there are severe limits to this risk reduction strategy. There is no way to settle for “market returns” in the draft.

Teams have to make choices. They have to go for broke even though error is routine.

Our general risk aversion, coupled with the velocity of information growth (technology supercharges liquidity), has hastened the adaptation of the “index mindset” throughout culture. Accordingly, we generally favor average results over extreme ones, a bird-in-hand over two in the bush, relative over particular truth, function over form, quantity over quality, mandate over merit, efficiency over exploration, passivity over action, predictability over tails, determinism over freedom of choice, mistake avoidance over smart decisions, evolution over revolution, adaptation over reformation, safety over risk, diversification over concentration, preservation over creation, velocity over due diligence, optionality over decisiveness, the general over the specific, growth over profit, and zero-sum over positive-sum, compound thinking.

The index mindset is about risk mitigation rather than ambition. It is about management and administration rather than opportunity. It is about the efficient frontier rather than the bleeding edge. It is about scale and cost efficiency rather than uniqueness and quality.

The index mindset plays it safe. It throws away a big shot for index returns. It is often the best approach. Not rolling the dice in order to avoid error is the index mindset.

Broadly speaking, the index mindset ignores that long tails drive everything and that risk and reward tend to correlate. And it offers no framework for determining when we shouldn’t index … when we should “go for it.”

As Wayne Gretzky famously said, “You miss 100 percent of the shots you don’t take.”

For Nassim Taleb, the index mindset means being a tourist rather than a flâneur.

“Rational flâneur (or just flâneur): Someone who, unlike a tourist, makes a decision opportunistically at every step to revise his schedule (or his destination) so he can imbibe things based on new information obtained. In research and entrepreneurship, being a flâneur is called ‘looking for optionality.’”

The index mindset doesn’t look for optionality, doesn’t dare to dream, doesn’t run for president, doesn’t go for the gold, doesn’t take leaps of faith, doesn’t take the last shot, doesn’t go out on her own, doesn’t create the next big thing, doesn’t go all-in, doesn’t storm the beachhead, and doesn’t demand (or expect) true love.

Still, it has become the default mindset of our world.

Avoiding error is easier said than done, of course. Especially when drafting football players. Most especially when drafting quarterbacks.

Every GM and every team misses on players. Every year. So, the best way to avoid errors in the aggregate is to scout well and accumulate picks to mitigate the cost of the inevitable mistakes.

That’s why trading down – trading a higher pick for more lower picks – is such a good strategy (one Bill Belichick of the Patriots frequently used). And that’s why Hall of Fame GM Ron Wolf famously suggested picking a quarterback every year.

Here’s the big but.

NFL teams need great quarterbacks. An average (replacement level) or even a decent QB isn’t likely to win a Super Bowl. It isn’t a coincidence that Sunday’s game features two quarterbacks who are outstanding. The costs of missing on a drafted quarterback are high. Very high. Losses. Dollars. Opportunity costs. Angry fans.

That’s not good.

Since the first forward pass was attempted in 1906, football has evolved to become a game dominated by passing and, increasingly, by quarterbacks. Nearly every play goes through the hands of the QB, who must break down massively complex offensive and defensive schemes and systems, make adjustments before and after the snap, and deliver the ball into tiny “windows” of space ... while being chased by huge men moving exceptionally fast desperate to launch him into oblivion. No other position demands as much mental and physical preparation. And he must lead the team.

Quarterback is, by far, the most important position in all of sports.

A recent Harvard Business Review analysis determined that four leadership variables – quarterback, coach, general manager, and owner – explain more than two-thirds of the variance in NFL team performance, and quarterback, at over 37 percent, is clearly the most important of the four. QB is “the most critical factor in team success.” Moreover, in the 21st Century, the quarterback has only grown in importance as the game has grown more complex and more dominated by offenses, most particularly the passing game.

Super Bowl champions tend to have a top-10 passing offense and rely on the passing game more than the running game (based on DVOA rankings).

Based upon DYAR (defense-adjusted yards above replacement) rankings, which show the value of a quarterback’s performance compared to replacement level, adjusted for situation and opponent, and then translated into yardage, Super Bowl champions generally have quarterbacks who grade out near the top.

Accordingly, the last 11 NFL MVPs have all been QBs (16 of the last 17; and 21 of 24 since 2000). So are four of the five finalists for this season’s award, including the winner, Lamar Jackson.

Since the AFL-NFL merger in 1970, 27 of 54 (50 percent) of top overall picks have been quarterbacks. Since 2000, it’s 17 of 23 (74 percent).

Based on the APY (average salary per year) of the top ten contracts at each position (to avoid rookie contracts and backups skewing the data), quarterback is by far the most highly compensated position in the game, averaging $46.23 million. By way of comparison, the top wide receivers average “only” $24.53 million, edge rushers $22.1 million, left tackles $19.48 million, and right tackles $16.78 million.

At $870,000, Brock Purdy is a steal (because he remains on his league labor agreement mandateded rookie contract, which severely limits his potential earnings), and allowed the 49ers to use the money saved to bolster their roster (of particular importance because of the NFL salary cap). No opening game starter this season earned less. At $59.4 million for the year, Super Bowl opponent Patrick Mahomes earned more than 70 times that amount, or more than four times that per game.

As should be obvious by this point, drafting QBs is exceedingly important and exceptionally difficult. For every Peyton Manning, there is a Ryan Leaf ... or perhaps more than one.

In today’s NFL, it is possible to win a Super Bowl without a great (“franchise”) quarterback, but it’s rare enough that no team should want to try.

Nearly all Super Bowl winning QBs in the salary cap era (from 1994) have been outstanding (roughly top quartile overall, usually higher). The exceptions were (a) two excellent QBs who won Super Bowls in years that weren’t their best (2007 season Eli Manning and 2008 season Ben Roethlisberger), (b) two QBs who had stellar playoff runs before mean reverting (Joe Flacco and Nick Foles), and (c) the only two true outliers (Brad Johnson and Trent Dilfer).

Due to salary cap restrictions and the value of franchise quarterbacks, it is generally better to draft a great quarterback than to buy one on the (sort of) open market (see Purdy, Brock). Of course, that’s much easier said than done.

When Purdy takes his first snap on Sunday, he will become the 67th different quarterback to start in a Super Bowl. And while he will also become the lowest draft pick (as noted, the last pick in the 2022 draft, the 262nd player selected) ever to start at the position, Kurt Warner and Jake Delhomme were even bigger longshots. They weren’t drafted at all. Thirteen of those 67 were top overall picks in their respective drafts (11 in the standard NFL draft, the top pick in the 1965 AFL Draft (Joe Namath), and the top choice in the NFL’s 1984 supplemental draft (Steve Young). Thus, one in five Super Bowl QBs were first overall picks. Half (34 of the 67) were first-rounders.

Terry Bradshaw, Jim Plunkett, John Elway, Steve Young, Troy Aikman, Peyton Manning, Eli Manning, and Matthew Stafford were first overall picks who won Super Bowls. However, over that same period (since the first Super Bowl in 1967), 20 quarterbacks who were first overall picks have not (at least not yet) won championships,³ including the last ten and and 16 of the last 18. And these as yet non-winners include some spectacular busts (JaMarcus Russell, ladies and gentlemen).

On the one hand: Of the QBs who have won Super Bowls in the salary cap era, only Kurt Warner (undrafted), Brad Johnson (9), Tom Brady (6, but he replaced a number one overall pick, Drew Bledsoe, due to injury that season and won his first Super Bowl), Russell Wilson (3), Nick Foles (3, but subbing for a 1 in Carson Wentz), Drew Brees (2), and Brett Favre (2) were not first round picks. Passer Ratings decline with every round of the draft except the sixth, the numbers for which are skewed by Brady.

On the other hand: Less than half (27 of 56) of quarterbacks drafted in the first round have had significant success in the NFL (obviously, depending on your metrics). The first QB taken has become the best QB from that draft less than one-third (7 of 23) of the time.

What all this means is that (a) NFL teams recognize how important QBs are; and (b) NFL draft evaluators generally recognize who won’t be a great NFL quarterback but not who will be. In other words, they can usually eliminate those who aren’t good enough but don’t differentiate well among those who might be good enough. Therefore, (c), there is a great deal of work to be done (and a great deal of opportunity) in this area.

As noted, the Chicago Bears have the first overall pick in the upcoming draft. Good luck with that.

Da Bears have a long history of poor draft choices at quarterback, including Cade McNown, Rex Grossman, and the aforementioned Mitchell Trubisky (traded up for and drafted ahead of Mahomes).

Chicago’s scouts wanted to take Joe Montana in 1979 but management had other ideas. After all, they had Mike Phipps.

In 1991, the Bears took Stan Thomas 11 picks before the Falcons took Brett Favre. In 2000, the Bears selected receiver Frank Murphy and then kicker Paul Edinger in the sixth round, before the Patriots selected Tom Brady.

The Bears had three fourth-round picks in 2017. At 113, they took linebacker Nick Kwiatkoski. Eleven picks later, it was safety Deon Bush. Then, defensive back Deiondre’ Hall was the 127th overall pick. At pick 135, the Cowboys took Dak Prescott, who was the NFL’s Offensive Rookie of the Year. The Bears traded out of the first overall pick in 2023, passing on C.J. Stroud and Bryce Young.

They took Justin Fields in 2021 but are said to be considering trading him to draft Caleb Williams this year, even though Williams is said not to want to play for Chicago.

Let’s just say the Bears have an interesting dilemma. And, while their history is really bad in this regard, they are hardly alone among the error-prone. Lots of mistakes get made. Every year.

Going into the 1998 draft, there was little doubt that Peyton Manning and Ryan Leaf would be the first two players (and QBs) picked. The only question was the order. The choice was generally thought to be a toss-up. Then-Newsday reporter Bob Glauber polled 20 NFL general managers prior to the draft. Fourteen said they would take Leaf. Manning became a Hall of Famer, set almost every NFL passing record, won two Super Bowls, and is one of history’s greatest quarterbacks, a legend by any measure. Leaf, of course, flamed out in a sad and incendiary way. Within just four years, he was out of the league and bound for prison, his short tenure in San Diego defined by poor play and poor choices.

Every year, teams select quarterbacks early in the draft, hoping against hope that they will catch lightning in a bottle and land a great one. They fail much more often than they succeed. Like Cecilia Giménez and her horribly (though it’s hard not to laugh) botched fresco “restoration,” NFL coaches are overconfidently sure they “develop” their guy into a franchise QB.

Drafting quarterbacks is fraught with difficulty and is probably a net loser overall. Note, for example, that first overall pick “busts” are far more likely to be quarterbacks than players at other positions. To be sure, we shouldn’t be surprised at the wide disparity of outcomes. The selection of quarterbacks, especially of the would-be franchise variety, are classic high variance picks, with wild potential swings to the upside and the downside by definition.

Suppose you are offered a chance to enter a coin-flipping contest that costs a dollar to enter where heads pays +50 percent while tails “pays” -40 percent. With sufficient flips and a fair coin, it seems that the net result should be positive. However, that only happens with a very large number of players pooling their resources. As Ole Peters has shown, the vast majority of players will crap-out on account of the “arithmetic of loss.” Positive outcomes are thus concentrated in a tiny number of lucky players who amass huge sums (that’s how VC works, for example). Accordingly, in that setting, and from an investment standpoint, it only makes sense to participate if you can “index” and play a very large number of games.

Here’s the big but: Creators, like NFL General Managers, must flip the coin alone and hope for the best.

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Totally Worth It

Feel free to contact me via rpseawright [at] gmail [dot] com or on Twitter (@rpseawright) and let me know what you like, what you don’t like, what you’d like to see changed, and what you’d add. Praise, condemnation, and feedback are always welcome.

Of course, the easiest way to share TBL is simply to forward it to a few dozen of your closest friends.

On Friday, January 5, 2024, the day a door plug flew off an Alaska Airlines plane mid-flight and freaked everybody out – 120 Americans died in motor vehicle crashes. Roughly 136 died from opioids. Perhaps 150 died as hospital inpatients due to preventable medical errors. About 230 died of COVID-19. And zero died in aircraft accidents.

You may hit some paywalls below; most can be overcome here.

This is the best thing I read in the last week. The loveliest. The coolest. The ugliest. The wildest. The most insightful. Tariffs don’t help (except, maybe, politically). Great idea. A governmental program. NBA chess.

Please send me your nominations for this space to rpseawright [at] gmail [dot] com or via Twitter (@rpseawright).

The 55.8 million Americans over 65, about 17 percent of the population, hold $96.4 trillion, which is about half of America’s wealth.

The TBL Spotify playlist, made up of the songs featured here, now includes over 270 songs and about 19 hours of great music. I urge you to listen in, sing along, and turn up the volume.

Billy Joel released his first song in 17 years.

The exquisite Joni Mitchell, now 80, won a Grammy this week and performed at the awards ceremony, as did Joel.

My ongoing thread/music and meaning project: #SongsThatMove

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Benediction

“When we consider how much our educational, political, religious, and even social lives are geared to finding answers to questions born of fear, it is not hard to understand why a message of love has little chance of being heard. ...Fearful questions never lead to love-filled answers.”

~ Henri Nouwen, quoted in The Gift of Restlessness, by Casey Tygrett

We live on “a hurtling planet,” the poet Rod Jellema informed us, “swung from a thread of light and saved by nothing but grace.”

To those of us prone to wander, to those who are broken, to those who flee and fight in fear – which is every last lost one of us – there is a faith that offers grace and hope. And may love have the last word. Now and forever. Amen.

As always, thanks for reading.

Issue 166 (February 9, 2024)

1. There are a wide variety of conflicting stories about the Walters adventure. Larry himself seems to be a less than reliable narrator. I’ve tried to piece the various strands together in the way that seems most plausible. Your mileage may vary.

2. Cf., Michael Mauboussin’s “paradox of skill”.

3. I don’t count Drew Bledsoe, who backed up Tom Brady in Super Bowl XXXVI.