I have been playing poker since I was 18. Which is around 2001. A golden era for poker players and right before Chris Moneymaker made it WSOP champion. Setting a tone for new players where Chris made $2.5 Million with a $40 entry ticket.
The fact that someone out of nowhere could make that amount of cash, crowned world champion and was never spotted at the poker scene was mind-blowing. That led to an influx of poker players and…. home games popping up.
I remember the days I played for $5 with 5-7 people at the kitchen table, but went pretty fast sideways. It didn’t take long being soaked into a different world of poker where underground games were hosted and that $5 dollar buy-in quickly changed to $500-$5000.
Mind that I was a student back then, and a couple thousand dollars on the table playing cards, was not very common when you barely know anything about life.
Fast forward, I moved to the casinos and left the illegal circuit because I started to feel really uncomfortable knowing that there’s about $50K of cash lying around in a tin box from all the players buying into the game.
But, I was also very obsessed with the game.
Today, I still play cash games mid and high stakes, ranging between $500 to $20K buy-ins and major tournaments such as APT, WPT and USOP in Asia.
Poker Is A Game Of Skill
Anyone that played long enough will tell you that it’s heavily driven by skills and lesser of the luck factor. In fact, it takes so much study and discipline to get to the top.
This is where I started to realize how much skills I can acquire through different channels and back then (around age 20) I was not sure whether I was going to take the entrepreneurial route.
However, the more I played and the higher the stakes I entered, here are a few key things I learned:
- Variance: Up and downswings in bankroll. It was not uncommon for me to win $10K+ pots in a hand and run hot for months but then get beaten by 1 or 2% outers on the river crushing my bankroll over and over again losing $100K in a few months
- Reading situations: And react to it. Especially live poker. The ability to read players and their behaviour is part of the decision making process
- Know when to fold: You can have the best hand until the last card. And sometimes it’s hard to let go but throwing away a losing hand when you are dead certain you’re beat is not easy
- EV: Expected value: Tied to decision making, and knowing the long-term results of your decisions. Knowing long-term will net me more than short term, even when short-term would be a losing situation
- Tilt: Emotionally driven, and unable to make the right calls. Controlling tilt is a huge factor in poker, especially when you’re on a losing streak
- Risk and exposure: Bankroll management. You’re not going to play a 100K game when your entire bankroll is 100K. Golden rules are at least having 50 to 200 buy-ins available to take on the variance. Which means I cannot play higher than $2K buy-ins
- Risk of ruin: Combine tilt with bad management, you are setting yourself up for failure and the risk of ruin is almost guaranteed
The list goes on. But how different is that with entrepreneurship?
Entrepreneurship Is A Game Of Skill
Yup. It’s almost by learning poker, you acquire future proof skills to elevate your game in business. And here is how I look at it:
Even the best entrepreneurs can face bad beats at any given time. This could be price hikes, competition that came out of nowhere, bad reviews, downtime of your website or business, suspended accounts (ads, Vercel, etc). Think about the insane amount of swings you have as an entrepreneur.
Nothing goes in a straight line. When you start a business expect variance at any given time. It’s up to you to bake in contingencies beforehand to slow down or beat variance. I’ve seen lots of people crying about losses, churn or MRR.
Business requires assessment all the time. Most starting entrepreneurs do not read the situations well which leads to poor decisions in the process. It’s your job to assess, read into a fast-paced landscape and react to it. This could be implementations, optimizing flows, maybe tanked by Google SERPS, online reputation management, feedback and outputs.
The list goes on, but reading situations well is part of being more resilient and adapt where necessary.
Know When To Fold:
Accepting losses or call it a day is insanely hard for many people. Especially when you are emotionally attached to a project or build but if it’s not working after 2-3 years you should just toss it in the bin and take the losses.
I’ve seen many sides of this spectrum, where people ‘ship fast’ and kill fast because they think there is no validation. But that’s not the mentality either. This is tied to reading situations correctly and allow yourself to explore enough options before making a harsh decision.
EV: Expected Value
Ah. If anyone ever read any of my blog posts, then you know I mention plus EV quite a bit of times. And it’s no difference in business. For me working on +EV models is FUCKING CRUCIAL.
My decisions today should have a net positive impact long-term, even if I would eat losses for 2 years. But time and experience will help you read into those situations or decisions.
A prime example for me would be the directory I will launch in January. I am launching it with an expectation that I would eat losses for 2 years (time, resources, external help, development) before netting positive. But even with those losses, my EV would be plus based on anything else I do and my motivations why I built/launched it.
For starting entrepreneurs, calculating your EV is… unseen most of the time.
There were days, weeks and even months nothing swayed my way. Placing me on the edge of bankruptcy in the early days. That can lead to seriously bad decisions driven by emotional senses. And whilst I was good in controlling tilt in poker, in early stage business, I could not handle that so well.
Today, I wouldn’t care much if the place is on fire or half of my shit goes down. Because I developed an armor or kevlar taking hits that cannot get to my emotional side anymore. New entrepreneurs will face this 100%. And the best way to control tilt is to walk away and allow yourself a cooldown period so your rational side will overtake the emotional side.
Risk and exposure
Another one that’s pretty high in my ABC book for entrepreneurs. This could be from having enough runway to vendor locks or price hikes. Whatever decision you make in entrepreneurship don’t go with the wing it mentality. Instead, calculate your exposure and potential risk factors before making a decision.
Remember when Bubble.io decided to change their pricing and everyone got so mad? They were forced to change back to the old pricing,… JUST to re-enforce new models a few months later. What happens is that using platforms that can expose you to risk (in this case price hikes) can lead to bankruptcy or killing off your business because you cannot afford to pay the subscription.
How many Twitter projects have you seen being killed off because corp decides to change their tone and price models?
The list goes on, but yet again your exposure is related to your own decision making process and EV insights. Wrong decisions or exposing yourself too much to third parties if your businesses hinges on it can inflict some serious variance in how you operate. In case it goes south, the chances are you go on tilt and make hasty and wrong decisions.
I can go on, but I think you got the picture here.
Risk Of Ruin
And yes. There are tons of examples to highlight but my favorite will still be when someone builds their startup on top of a startup. Whilst that’s great and all supporting other indie makers or solos, I would never use immature products as core pillars to build a business.
Yes, more mature products are considered premium or more expensive but the chances they get shut down overnight is minimal.
I enjoyed writing this up in a very free-flow manner. And whilst I did not go into detail, I wanted to make a comparison between skills and elements learned in poker versus entrepreneurship. Both are heavily driven by skill with a certain luck factor involved.
Even today, I apply the same principles to any business or model I work on.
Playing poker was not only about winning. It was the ability to find your edge.
And the same can be said for businesses. Finding that edge over competition. Whilst you’re improving, so are they.
But I can guarantee you that because I started playing poker I significantly improved my game in entrepreneurship. Even today.