What Successful Poker Players and Entrepreneurs Have in Common
Managing the risk properly is the challenge. Use the right intelligence to make your moves.
Opinions expressed by Entrepreneur contributors are their own.
I recently had dinner with a friend who was lamenting the recent failure of his startup. He had put his heart and soul into his company for more than two years, borrowed money from friends and maxed out credit cards. He had a cool product but the market just didn't respond to his idea.
My friend was now trying to decide whether to work at a big company, return to school or join another early stage startup. It was clear he was most excited about the last option, but nervous. He worried that if he became involved with another new company that didn't work out, he would be pigeonholed in the business community as someone just waiting for his next startup to come along -- a person unable to find a "real" job.
Being an entrepreneur is often seen as a risky vocation. Typically people who says they are entrepreneurs are perceived as unemployed or if they play poker for a living.
But I like to think about the similarity between being a professional poker player and entrepreneurship in a positive light. Here's why:
Related: What Bluffing, Folding and Betting Can Teach You About Entrepreneurship
1. Live to fight another day. Poker players know they aren't going to win every hand or every tournament. It's a statistical impossibility. They know they are going to lose money some days. The only factor that determines whether you are a professional poker player or not is if you can afford to keep playing at the professional level so that you end up winning more money than you lose.
The trick for entreprenurs is to minimize losses. Learn from them and live to fight another day.
2. Save your chips. Professional poker players do not really depend on luck to make their living. They don't play every hand hoping to win. In fact, they don't play the majority of hands. They play only those hands that they think they are most likely to win.
So entrepreneurs who follow Steve Jobs' advice and say "no to the hundred other good ideas that there are" will find the absolute best opportunities to go all in.
Related: Turning Passion Into Profits: From Playing Games to Playing for Profit
3. Practice makes any profession perfect. A person can't just can't decide to be a professional poker player, if he or she has never played before, and expect to do well at the first few tournaments. Entrepreneurship is no different: It takes years of flexing the innovation muscle and interacting with customers before developing proficiency.
4. Don't go all in without confirming your assumptions through smaller bets: Professional poker players thrive off information. They strategically risk small amounts of money to find out about an opponent's style of play.
Similarly, successful entrepreneurs know that it's impossible to predict customers' behavior in a vacuum. The only way to gain information about whether clients are interested in a product is to interact with them and find small opportunities as soon as possible in order to test their behavior.
For some entrepreneurs, there's only one opportunity to go all in on an idea. So my advice is to push the chips into the middle only when the odds are in one's favor.
Related: How to Win the Game of Life