Straight Talk: What a Lifelong Love of Poker Taught Me About Business
Poker is a high-wire act that any CEO could recognize. You're managing risk at all times, and you're making decisions based on insufficient information.
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Some of the best entrepreneurship lessons can be taught at a poker table. Poker encompasses quick calculations, emotional intelligence and careful planning, so I wasn't surprised to learn researchers recently developed an AI program capable of dominating professional poker players in no-limit Texas Hold 'em. Thus far, Engadget shows the DeepStack program has managed to gain a commanding statistical advantage over its human opponents.
I've been a poker fan since high school; I remember playing late into the night with my friends while mowing down a box of pizza. Let's make one thing clear, though: I'm not a professional poker player. I've never claimed a spot at the World Series of Poker. I definitely don't have the processing capability of DeepStack. Even if the game has joined the ranks of "tasks better done by robots," I remain fascinated by what poker can teach us about business.
The hard thing about hard things.
During my all-night poker tournaments with my friends, the stakes were low and the camaraderie was high. I got into online poker during college, and I frequently played 16 simultaneous tables from the comfort of my dorm room. I was able to cover a good portion of my tuition with poker earnings.
I no longer play to pay the bills, but I'm still enthralled by the game's many variables. Poker is a high-wire act that any CEO could recognize. You're managing risk at all times, and you're making decisions based on insufficient information.
The difficult choices at the poker table are akin to author Ben Horowitz's classic example of executive decision-making in "The Hard Thing About Hard Things." "Hard things are hard because there are no easy answers or recipes," Horowitz wrote. "They are hard because you don't have the answer and you cannot ask for help without showing weakness."
Raising the stakes to take calculated risks. Running a company is the highest-stakes game of poker you'll ever play. I've had the privilege of speaking with thousands of entrepreneurs throughout my career, and it didn't take long to notice the same personas from the poker world popping up in my business life. There are numerous parallels between the boardroom and the poker table, including a few poker concepts that can torpedo even the most promising startup.
1. Don't go on tilt.
In poker, players who are "on tilt" are basically in a death spiral of negative emotions. You suffer one bad loss, and those negative feelings start to fuel bad decisions, setting off a chain reaction. Don't be the player who spirals out of control when the game smacks you down.
Emotional intelligence can soften these blows. Research from the University of Maryland indicates emotional intelligence is responsible for 58 percent of variations in personal and professional success. I've suffered some painful setbacks in my career, but working with a personal coach has snapped me out of several downward spirals. Our brains are hard-wired to fixate on bad experiences, but there are techniques to rewire our thinking more constructively. After a difficult loss, take time to think about the lessons you can learn from the experience.
2. Don't bluff too much.
A bluff in poker is a move designed to hide something. You might bluff to conceal bad cards or to hide a particularly good hand. Every table has a bluffer, and he typically exudes overconfidence, contradicting his odds of success.
Some bluffs make sense in business. Startup founders frequently bluff a bit to conceal the actual size of their companies -- which are typically much smaller. It's a dangerous tool, though. If you start to veer toward hubris or just plain lie, those bluffs can get you into trouble.
3. Don't chase the river.
In Texas Hold 'em, the fifth community card is known as "the river." Players who continue to bet and stay in the hand, with the hope of the fifth card magically bringing a victory, are said to be "chasing the river." A friend of mine would habitually chase the river card, even if it wasn't a calculated or rational move. The odds being stacked against him pushed his competitive spirit.
I've seen many entrepreneurs chase the river card. Resiliency and some amount of grit are essential traits for entrepreneurs, but it's important to know when to fold your hand. My buddy Jim Kane with Retailer Web Services recently made an interesting observation about public companies: He noted founders waste an embarrassing amount of shareholder cash trying to save or slowly wind down companies instead of shuttering operations when it's clear the odds have turned against them.
Related: Is it time to shut down your business? Don't ignore these 9 signs
4. Don't play bad hands.
Imagine you're playing Texas Hold 'em. The dealer passes you the seven of diamonds and the two of clubs. Statistically, you're holding the worst hand in the game. You're better off folding from the start.
Entrepreneurs often enter the startup world because they want to "play the game." Without some sort of strategy, experience dictates those entrepreneurs will lose. Of 26,000 startup business failures reviewed by Zoetis, 67 percent had no written strategic plan. If you haven't done your research and completed a lean canvas before diving in, you're holding 7-2 off suit.
Related: 6 Truths About Failure Every Entrepreneur Should Embrace
5. Always tip the dealer.
The dealer distributes every card, but she's never actually dealt a winning hand. Tipping the dealer is relatively inexpensive, but it's the right thing to do. Be ethical and generous, even if there's no apparent upside for you. What goes around inevitably comes around.
Pat Sullivan, founder of Saleslogix and Ryver, taught me the importance of throwing a "tip" to the other side during any negotiation. You can foster trust by offering a small chunk of information you weren't compelled to give. When I completed a management buyout in 2016, these small gestures paid tremendous dividends.
6. Don't play on credit.
If you can't afford to play, don't sit at the table. Competing with borrowed money muddies your strategy and exponentially increases the depths of your potential failure. In the business world, taking investments too early or from unsophisticated investors can be the equivalent of borrowing money from a Vegas loan shark. Bootstrapping goes in and out of vogue, but it's a reliable approach.
Related: 7 Ways to Bootstrap Your Business to Success
Venture capitalism has a place in the business world, but remember that only 2.5 percent of angel-funded companies move on to VC investments. Most early-stage VCs want to see you're capable of winning before they agree to back your seat at the poker table.
Poker is just a game, and your startup is likely the result of years of blood, sweat and tears. They're not comparable in terms of scale and importance, but that doesn't mean you should ignore the parallels.Poker taught me a lot about making decisions, taking risks, playing fairly and handling wins and losses. While my college education has paid dividends, my poker exploits have been similarly valuable. At the very least, I've been able to rationalize countless hours at the poker table.