Here's What Entrepreneurs Can Learn From Poker
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Entrepreneurship is not an easy journey, it's filled with hurdles along the way. It requires you to think and evaluate your each move before you play it, much like a game of poker.
Here's what entrepreneurs can learn from poker.
Choose Your Battles Carefully
Success in business often depends on understanding which position works for you and gives you an edge over your competitors (or “competitive advantage”, to use jargon). In poker, the parallel is game selection - choosing which hands to wager on. Playing every hand in poker is a sure recipe for failure! Conversely, every time you get a hand where you have the better cards (“the nuts” in poker lingo) then you need to play aggressively to maximise your upside from that hand.
One further point: in poker, there are four rounds of wagering, and between each round new cards are revealed. What was a winning hand initially may sometimes change into a weak hand - in which case you need to change your strategy, and quickly. The same thing happens in business, and especially in startups - your competitors actions, new regulations, or technological advances can often erode your edge and leave you in a weak spot - sometimes you need to adapt, and sometimes you need to pivot! Competitive balance changes over time and what was once a positive edge could now well be a “negative expected value” situation in poker terms.
Trust Your Instinct, But Lay it on a Bed of Experience
While running a business, you cannot always accurately calculate the odds, and what you can’t measure, you can’t manage. In such times, you have to trust your instincts - and more your experience / knowledge base, the better your instincts will be. As a startup founder, if you don’t have sufficient experience yourself, then buy/ borrow/ leverage that experience from others around you: how? By selecting the right employees / board members / investors respectively.
And keep in mind that if your instinct is to fold, even if you have good cards, then that might be the best call - conserve your capital / energy and wait for an optimal situation to make your move.
Move Out of Cost Traps / Don’t “Tilt”
In mind sports like poker, we understand that any money put in the pot is no longer ours, and thus all future decisions in play must be made without thought to the investment made in previous hands. The dynamics in a mind sport change at every turn with the player losing a good hand in a second. The best players recognize this variance and always detach themselves from the amount already invested. This stops them from ‘tilting’ or scrambling to cover ‘losses’ that they have invested in. Similarly in business, you have to take tough decisions and regularly trim out underperforming assets. They have to be weeded out so that you have space to start something new. Some things don’t work despite our best efforts and as an entrepreneur I’ve learnt to make tough calls by being detached from previous decisions. (As an entrepreneur, keep in mind that your “investments” could be in business ventures / products / features, or even in the people that you hire!)
Learning is an Ongoing Process
You never stop learning. Period.
The key is to always keep an open mind and be ready to accept that there might be something that you do not know and should learn about.
As an entrepreneur, you will primarily learn from your customers and your own team, but also keep reading about what’s happening in the industry; keep attending conferences; keep meeting bankers and advisors. Much the same applies to my poker and scrabble skills - a lot of learning happens through active preparation, but the more I play and the more I meet other players in tournaments or across the table, the more I learn!