Note: This is part IV of a five part series. Access the first installment HERE, part II HERE, part III HERE, and part V HERE.
“[Poker] exemplifies the worst aspects of capitalism that have made our country so great.”
Walter Matthau, American Actor
I have discussed in this series a number of books and games parents can share with their children which will cultivate an entrepreneurial mindset. As your child matures, games which involve; luck, strategy, probabilities and financial wagering reinforce a child’s ability to take calculated risks. Poker is one such game.
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As I note in MBA Education and Other Oxymorons entry, my roommates and I hosted a weekly poker game while attending Wharton. Many of the entrepreneurial lessons I learned from this adjunct Wharton study group, you too can share with your children.
“It never hurts for potential opponents to think you’re more than a little stupid and can hardly count all the money in your hip pocket, much less hold on to it.”
Amarillo Slim, Poker Professional
Amarillo’s advice is consistent with my comments in the Startup Competition; get to know your competitors on a personal basis, while appearing as innocuous as possible.
The same is true with poker. The more you know about your fellow players, the better job you will do of reading their mannerisms, betting styles, bluffing techniques, etc. Be vigilant and keep your eyes on your competition, especially when they are dealt their hands. Watch their reactions, and then extrapolate their potential future decisions based on their past behavior.
While observing your competitors, always maintain your composure, irrespective of the quality of your cards. Just like in business, your goal is to not to become the center of your competitors’ attention. Let the other players focus on each other, while you quietly sit back and count your mounting pile of chips. At your startup, maintain a poker face, stay out of your competitors’ crosshairs, and keep them guessing as to whether or not you have a winning hand.
Hold and Fold
“If, after the first twenty minutes, you don't know who the sucker at the table is, it's you.”
At the risk of placing an earbug of a bad Kenny Rogers song into your head, in business and poker, you really do need to know ‘when to hold em’ and ‘when to fold em’. This is where skill separates the consistent winners from the occasional victor. If you are appropriately attentive as cards are played, you can calculate the basic odds of completing various winning card combinations.
You must make the same type of basic probabilistic calculations when guiding your adVenture. However, do not make a Tom Sawyer mistake and attempt to calculate the probability of every permutation in your hand. Be like Huck. Make a commonsense estimate of the approximate likelihood of building the most probable hands, keep your mouth shut, and your eyes and ears open.
Ante-up – Just like in business, there is a cost to playing each hand of poker. You must invest your ante at the start of each hand with no guarantee you will get it back. Thus, it is akin to the sweat equity you put into your adVenture, never knowing if your efforts will yield a return.
Lady Luck – Luck is alive and well in both poker and the startup world. Successful players properly evaluate the potential impact of luck, based on probabilities. However, in cards and real-life, you can have a dramatic impact on your ultimate success by ensuring that you recognize when good fortune presents itself, and augment your luck with sound, strategic decisions. You have to make the most of the cards dealt to you, both in poker, and when charting the course of your adVenture.
King Cash – Like Monopoly, if you run out of money while playing poker, it is “game over.” Even if you have a great hand, if you do not have enough money to stay in the game, your cards are worthless. Managing your cash by strategically placing your financial bets is equally important at your startup. You may develop a winning product that customers are willing to buy, but all is for naught if you do not have the cash to execute your plan and deliver upon your product’s value proposition.
Grinder – In poker parlance, a “grinder” is a player known for their conservative, tenacious style of play. Such players have the cash management skills necessary to stay at the table and wait for a winning hand. In business, such players are analogous to serial entrepreneurs. They have the stamina and tenacity required to continually try new avenues until they identify a successful business model which they then execute mercilessly.
Make Them Pay – When you have a winning poker hand, you must maximize the size of the pot. However, if you bet too aggressively, you risk spooking one or more of the other players into folding, thus decreasing your winnings. If you bet too conservatively, you may also end up with a suboptimal pot, as the other players may not wager as much as they would otherwise be inclined.
In business, you also have to run hard and fast when you have a winning solution. If you find a market niche or product category in which you are dominant, you must make the necessary financial bets to help you maximize the return from such opportunities. If the opportunity is good for you, you can be assured competition will eventually emerge and diminish your share of the advantageous opportunity. Thus, decisively taking advantage of an emerging opportunity is required to optimize your outcome.
“Whether he likes it or not, a man’s character is stripped at the poker table; if the other players read him better than he does, he has only himself to blame. Unless he is both able and prepared to see himself as others do, flaws and all, he will be a loser in cards, as in life.”
Anthony Holden, Author of poker strategy books
Dealer’s choice is a variant of poker in which the person who deals the cards rotates from player to player with each hand. The dealer is allowed to decide which game will be played. A number of poker games offer the dealer an inherent advantage with this variant, as they can see all of the other players’ cards before having to decide on their next move.
Business offers market leaders similar advantages. By establishing the industry standards and creating a sustainable first mover advantage, it can be advantageous to be the dealer and force your competition to follow your lead. When it is your turn to deal, always call a game that plays to your team’s strengths, as described more fully in Two Brothers.
Seven Card Entrepreneurial Stud
With Walter Matthau as your guide, you no longer need to sneak out to play cards. The next time Poker Night rolls around, bring your kids with you. This will allow you to tell your significant other that you are not simply playing cards, you are honing your offspring’s entrepreneurial skills. You can further persuade your spouse by reminding them that even if your children do not lead an entrepreneurial life, playing poker with them will help them avoid losing their rent money to their college roommates.