Here's What Entrepreneurs Can Learn From Poker

Sometimes you need to adapt, and sometimes you need to pivot

learn more about Sudhir Kamath

By Sudhir Kamath

Shutterstock.com

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

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!

Sudhir Kamath

CEO and cofounder at 9stacks

Formerly MD/ CEO of Suntera Energy, one of India’s few oil exploration companies successfully producing hydrocarbons outside of India, Sudhir believes in being able to switch between ideas / big picture and execution / micro-detail.
A Computer Science graduate from the Delhi Institute of Technology and an MBA from the Indian Institute of Management, Ahmedabad, Sudhir worked with consulting firm McKinsey & Co before becoming the CEO of Suntera. He’s also been an angel investor in companies like INI Farms, Vienova Technologies, Shiksha Finance and Swas Healthcare.
Sudhir is passionate about mind sports like Scrabble and poker and loves introducing these games to new players. He also likes sharing very interesting links each day on Facebook - and some of them can be fun to read - you can follow him here.

Related Topics

Thought Leaders

The Collapse of Credit Suisse: A Cautionary Tale of Resistance to Hybrid Work

This cautionary tale serves as a reminder for business leaders to adapt to the changing world of work and prioritize their workforce's needs and preferences.

News and Trends

Uravu Labs Raises $2.3 Million In Seed Funding

With the funding, the startup aims to take a significant step towards commercializing renewable water solutions, primarily directing the funds towards scaling up and forging new partnerships with leading players in the hospitality and beverage sector to expand their reach and impact

Leadership

5 Winning Habits That Will Transform Your Leadership Skills

Ready to take your leadership skills to the next level? Discover the five winning habits that will transform you into an exceptional leader!

Business Process

Why Embracing Chaos is Crucial to Your Success and Longevity

Chaos engineering is a popular idea in software engineering, centered around the premise that deliberately breaking a system to gain information will ultimately help improve that system's resiliency. Given the uncertainty of our times, CEOs might want to apply this type of approach in their corporate sustainability strategies.

Living

21 Productive Things to Do During Your Commute

How to use this frustrating "wasted time" to get smarter, more focused and re-energized.