Business and poker have a lot in common. They’re both incredibly complex, they both often involve playing with high stakes, and the difference between a losing hand and a winning combination can be difficult to spot for those who have never played the game. Being an amateur poker player has certainly helped me in business, and while you don’t have to play a hand yourself, there’s still a lot you can learn from the game.
If you’re looking to run a successful business, it might be a good idea to sit down and look at these lessons you can learn from the game of poker.
You’ve Got to Know What You Have
Someone who has never played poker before might be a little mystified by all the combinations of cards and what they mean. One of the first things players learn when they play poker isn’t how to bet, ante, or even bluff; instead, the players learn how to identify what they have in their hands. It doesn’t matter if they’re playing five card stud or Texas Hold’em, every single new player in the game has to learn what his or her cards mean before they can play.
Not only do you need to understand the difference between a straight and a flush, you have to know which one beats the other. Many in business, just like beginner poker players, don’t always understand the value of their cards. Sometimes they’re sitting on a royal flush without a clue in the world, or they think their pair of 8s is a million-dollar hand. Chances are you’ve probably encountered this in business too.
If you’re looking to make your business successful, you’ve got to know your assets and liabilities are. There are innumerable businesses that have tried to make big plays when they didn’t realize they had nothing of value and the only stories sadder are those about businesses that were sitting on winning hands while doing nothing.
It’s absolutely vital that you understand what your business’ strengths and weaknesses are before you start making any major changes. If you fail to do so, you’re going to lack the frame of reference necessary to determine if your next hand is actually one that’s worth playing. And it’s particularly important to keep in mind when seeking investors, or if you’re someone looking to invest. You don’t want to be the idiot going all-in with a pair of 8s.
Playing poker teaches you to truly understand value, and in particular relative value. You might have a million-dollar idea but others might have the same, and if they have a head start or other advantages, you have to weigh that when choosing whether to enter the market and how. In business and in poker, your gameplay is informed by the value of your hand.
You’ve Got to Play the Cards You’re Dealt
Assuming you know how to read your cards, well now you’re stuck with the task of figuring out what your strategy is going to be for the hand you’ve been dealt. Just as in business, you have to learn to play the cards that you are dealt.
While there are certainly many variables that come into play during any game of poker which can drastically affect the outcome of a given hand, every game eventually comes down to knowing what to do with what you have. You can’t complain that the other player has better cards or spend time wishing that you had been dealt something better; instead, your job as a player is to figure out the right moves to make with what you have sitting in front of you.
Good business owners understand that they won’t always get dealt what they want. In fact, just like getting a royal flush, it’s rare that in business you’ll have every possible advantage you could hope for.
A good business plan understands this and will give you an outline for what success could look like while keeping reality in mind. You don’t want to build a business plan that becomes increasingly dependent on “ifs”. “If customers really love this product…if we get one celebrity to retweet us….if I find a great deal on electrical components….” These are people who put all their hopes on the “river card”, the last card dealt in a game of poker, and they’re actually great to play against because they keep adding to the pot despite their decreasing odds of success. Sure, we all love the underdog story of striking some great fortune right when it’s all on the line, but the reality is business and poker are all about the odds. You don’t want to keep throwing good money after bad just because there’s some astronomical chance something might swing your way. If I’ve learned anything from poker, it’s that the river usually disappoints.
And in business things don’t always go according to plan either, leaving you to work with what you have. As an example, at a previous company we had a caterer get the date wrong for our holiday party, and we only noticed their mistake when nobody showed up with the food! What’s worse, we even had clients attending. So one of my coworkers and I went out to McDonald’s, ordered everything they had in stock and kept our party-goers from starving. Some of the clients even got some nice Pokemon Happy Meal toys. Since Mickey D’s wasn’t up to everyone’s expectations, but just a quick fix in a bind, we took the refund from the caterer and bought everyone some personalized Visa gift cards so they could treat themselves to a nice dinner. Even though the whole ordeal didn’t go as planned, it was very memorable and the gift cards were a great way to make it up to everyone.
So instead of spending time trying to bend the world to the way that you’d like it to be or waiting around hoping it magically transpires, take that energy and focus it on adapting your own business to the world around you. Once you start learning how to play the cards that you have, you’ll be in a better chance to figure out how to win.
Know When to Fold and When to Go All-In
Some hands in poker are natural losers. If you ever watch professionals play, you’ll see them put down their hands before the rest of the cards are even revealed. They’re not doing this out of cowardice, but rather out of an acknowledgement that some hands just aren’t worth the price of being played. As a business owner, you have to realize that there are some situations that you just can’t take advantage of and turn a profit. There are times when you just don’t have the money to expand or to make a big push into a new area and you have to put down your cards. You’re not losing the game here, but rather making a strategic decision to protect your funds.
At the same time, you do have to be aware that you can’t win without taking some risks. There is a point in every poker game where a player’s hand is strong enough – or the player perceives the other players’ hands to be weak enough – that he or she bets it all in one go. Though risky, this kind of risk can pay off in a way that leads to a huge payday.
“The most fundamental overlap between poker and the business world is weighing risk and reward,” says Jeremy Wien, 2018 World Series of Poker winner. “We should always be assessing risk and reward in our decisions. This isn’t to say avoid risk; most successful business people and all successful poker players take big risks, but they do so thoughtfully by weighing that risk and the potential reward.
As a business owner, you need to be able to recognize those situations in which the apparent risk will give you a chance to gain a fantastic reward.
Business owners can learn a lot from poker. They can learn the importance of identifying their own assets, the necessity of moving forward with their businesses as they are, and the value behind taking risks and playing it safe. Business is often a gamble, so make sure that you take the important lessons away from games of chance when you can.
Bill Macintosh is an all-around geek who’s worked in Information Technology for over 20 years after getting his Master’s degree in computer applications from Boston University. He loves Star Wars and Star Trek equally, and blogs regularly about technology, business and geeky entertainment at Chowder Bucket.