(Note: This article starts with poker and ends with business – skip down if you just want the business lessons.)
One of my hobbies is playing No Limit Texas Hold ‘Em Poker. Every once in a while I have a chance to join a tournament or play a live game and it’s always a different experience. A recent chance to play was no different…
I’d intended to join a tournament (since that limits any potential losses to my entry fee) but wasn’t able to get there in time, so I decided to stick around and play low-end table-stakes for a while just for the social experience and practice. Besides, tournaments often bring out more players, so there was more varied action all around.
I sat down at a $1-$2-$3 game (CA small-stakes games have a big blind, small blind and an ante on the button) and bought in for $200. My second hand, under the gun (first to act after the deal), I was dealt a pair of kings and was in good position to limit the field of competitors from the start. I bet out hard, resulting in only one other player calling me and staying in the hand – a good outcome, but not great because he was to my left, meaning I have to start the rest of the rounds of betting and he’d get the benefit of acting last, forcing me to act with less information. I’d have preferred at least one more player stay in just to change the dynamic up a little (but it turned out not to matter in this case).
The flop came with three lower cards, with no threat of a straight or flush for my opponent. Unless he had pocket aces or a pocket pair with the third card being one of the three flopped, I was in the lead (head-to-head, a larger pocket pair beats a smaller pocket pair 80% of the time, or 4 out of 5 times; the odds of my opponent flopping a set was around 12%, or 1 time out of 8).
What happened? You guessed it – he had a lower pocket pair that connected with the flop – he had a set. Even though I played strong but not overly strong, my higher pair of kings lost to his lower set of three jacks. Even though I’d started with the best hand, I’d lost. The rub? That cost me my entire $200.
Fast forward to later – I’d bought back in for another $200, worked my way down to $50, then worked my way back up to $600, ending the night up $200 from where I started.
How does this apply to business?
You have to play more than the hand you’re dealt. That might sound trite, but I work in a field that moves very fast and requires an ability to infer ‘what cards a competitor holds’ and evaluate the risks of a competitive action on the fly with limited information – should I raise the stakes, concede the hand to change the holdings and play again the next round, or invest just enough to keep going because the odds are good I’ll be able to win? Playing just the odds on my cards gives my opponent the advantage of being able to predict my actions; playing in such a way as to provide misdirection or doubt may provide a competitive advantage that can be exploited for the win.
Failure must be an option, but you must learn from failure to make it profitable in the long term – to win, you have to be willing to lose. Losing after starting with the second strongest hand stung. In the long run, though, playing from that same starting hand the exact same way results in a win more often than a loss. The catch? Over time, to win 80% of the time you have to lose 20% of the time (my other ‘big’ loss of the evening was when my ace/jack lost to a king/jack – again, the better cards in the long run).
Leveraging risk requires understanding more than what you can see. In this case it was more than just the mathematical odds of winning, it was leveraging the incremental information I gained about my opponents each round that allowed me to alter my strategy based on whether I was playing from a position of strength or weakness. With a more conservative opponent, playing a little narrower odds with smaller payoffs provided an advantage, leveraging risk for my benefit. With a more loose opponent, playing more conservatively allowed me to avoid unnecessary losses and deny them ‘gratuitous’ wins, albeit at the cost of a smaller return when I did win.
Winning isn’t always fun. Winning $350 on my way from $50 back to $400 wasn’t near as fun as winning the next $200 that was all profit, but it provided the foundation to make that possible (that, and the fact that the majority of that next $200 came from a single hand where I started out more than 50% likely to win and was a guaranteed lock before the hand ended). While I’d prefer to do nothing but win, “the grind” of multiple small wins simply doesn’t provide the same endorphins as the perfect setup, playing from an advantage against an unsuspecting opponent and ending up with the absolute best cards in play… and the spoils of victory. Winning through ‘the grind’ is work.
Always tip the dealer. In every win there are people that played an indirect part in the success. In poker, although the dealer has no impact on individual play, their ability to maintain order, keep a cadence and perform the ‘grunt work’ of dealing and shuffling time and time again is what makes the game possible. The difference between an unmotivated yet still professional dealer and a dealer motivated to keep with the pace of the table and style of the players has a subtle but positive effect that can’t be understated. Look around at your teams – the people that played a part in the win that’s likely to go unnoticed – and tip them, whether it’s kudos, bonuses or simply a “thank you, your work didn’t go unnoticed!”