Welcome back to The Sunstone Way.
I sure don’t envy the crew of coaches and athletic directors who had the task of choosing and seeding the teams in the NCAA basketball tournaments, both men’s and women’s.
Last Sunday saw so much drama – talented college athletes literally on the edge of their seats all across the country, watching the announcement show from New York City. Sure, there was little doubt on the UConn campus, or at Purdue, Houston, Arizona, Tennessee and North Carolina, for that matter, that they would be in the tournament. But even the conference champions with automatic entries weren’t sure where they would be playing or who they would be matched up against.
And there’s already been one big upset, with the Long Beach State men’s team coming from a four seed to win the Big West Tournament, going to the Big Dance for the first time since 2012. Go Beach!
And if you are a fan of one of the teams that were “on the bubble,” you have my sympathy. I knew my USC Trojans probably didn’t have a chance of lightning striking twice in one week after upsetting the Arizona Wildcats, but those players at Oklahoma, Indiana State and Pitt had hope until the very last moment.
Making The Decisions
A 12-person committee makes all these selections. They are armed with reams of statistics, from win-loss records to strength of schedule to whether teams are on hot streaks as the season comes to an end. They all are experienced, with years, often decades, of watching college basketball.
They are ranking the teams on past performances — and often looking at the track record and experience of their coaches. The idea is to reward the best teams with the smoothest path to the championship – when games begin, the No. 1 seed plays the No. 16 seed, 2 plays 15, etc.
If history is any guide, they’ve done a pretty good job. Of the 38 national champions since 1985, 23 have been a No. 1 seed and there are a few experienced coaches who have chalked up many of those championships for their schools.
Future Results
Still, they are trying to tell the future – to figure out who has the best chance of success on the hardwood. And, at least when I’m filling out my bracket, it’s a good idea to watch for the Cinderella team that will defy their logic.
You might remember that Cinderella not only got to go to the Dance, she ultimately won the prince as well. That’s the concept with a March Madness Cinderella team – they get one of the last invites to the Dance, then surprise everyone by making a run at the title.
Admittedly, you have to go back almost 40 years to find an actual title winner – Kansas, when they were seeded No. 6 in 1988. North Carolina State was seeded No. 6 in 1983, but won the title, beating two No. 1 teams in the process. (They were Virginia with Ralph Sampson and Houston with Clyde Drexler and Hakeem Olajuwon.)
But there have been several No. 11 seeds who made it to the Final Four. And just last year, No. 16 seed Fairleigh Dickinson beat a No. 1 seed, Purdue, in the first round. (Yes, they lost the next game.)
I love this quote from Indiana State Coach Josh Schertz:
“March Madness is not one Power 5 upsetting another Power 5. March Madness has always been about the underdogs having a chance to make a run.” How great is that?
Our Own Selection Committee
In many ways, the business of supporting early-stage venture capital goes through a similar process. Our investment committee and venture capital teams work with our affiliated accelerators – the Long Beach Accelerator and Lair East Labs – to choose Founders that appear to have the best chances to succeed. That process works for other potential investments as well.
We didn’t invent the approach. The established leaders in our business, Y-Combinator and TechStars, do the same thing.
There’s one big difference in what we do compared to the NCAA selection committee. Instead of being surprised by the Cinderella teams, we go looking for them. We nurture the underdogs and help them succeed.
Why? Because just like those underdog basketball players, the underdog Founders have that little bit of extra fire, that extra desire to succeed. And with a little bit of help from an experienced coach with a track record, they may just make a run at the championship.
That extra support from the community makes all the difference. It’s the American Dream at work, and it is the Sunstone Way.
As always, enjoy March Madness. And remember to be a Sunstone!
John Keisler
CEO & Managing Partner
Sunstone Management, Inc.
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More About Sunstone Management
Sunstone Management is a diversified private capital sponsor firm headquartered in Southern California. Identified by Financial Times as one of America’s Fastest Growing Companies three years in a row. In the latest Pitchbook rankings, Sunstone Management was #15 in the third quarter of 2023 nationally, and #18 in the fourth quarter.
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