The photo above was taken in 2010 I believe while I was playing in the World Poker Tour LA Poker Classic at the Commerce Casino.
I used to take playing poker very seriously. I spent countless hours playing out hands in my head, reading forums and books to go along with thousands of hours spent playing online (before it was deemed illegal). My best stretch was when I was 22 and cleared a shade under $10,000 in 4 months during a summer. I was pretty good but I really disliked the unhealthy lifestyle that came with playing for 8-12 hours daily to make a living.
Poker is a zero sum game. This means that in order for there to be a winner, there has to be a loser. And at times the best play was to target those who would exhibit signs of addiction as those people aren't playing a sound game, mathamatically speaking, This is not something I feel particularly proud of but that's the game.
And while I no longer play to pay my bills there were a lot of lessons I picked up playing cards. Many lessons that translates over to life and business. Here are a few of them.
Expected Value (EV)
In probability theory the expected value of a random variable is the sum of the probability of each possible outcome of the experiment multiplied by the outcome value (or payoff).
Simply stated EV (in poker) is the amount of money you can win or lose on your average bet. It's often explained by flipping a coin, which is an example of neutral EV. What are the odds it will be heads or tails? Over a small sample size it's 70% tails, extrapolated over 1,000 or 10,000 flips, it will be closer to 50/50.
No one, not even the best players win every tournament, let alone every single hand they play. Whether you play well or poorly, you'll win some and lose some. Good players are profitable over the long haul because they maximize their spots when they're winning and minimizing losses when cards aren't running their way. They focus on making good decisions regardless of the outcome.
This rings true in business. If you continue to put yourself in the best position by playing the positive percentage plays, more often than not you'll be a winner.
Which leads me to the next point.
You can do all the right things and still lose
This one drove me insane. How can I be an overwhelming 95% favorite and STILL LOSE!!!
Because like in life, you aren't in control of everything so anything can happen. Yes you should've won, you should've gotten that business because you're better than your competition, but a'las they've decided to go with Joe-Trainer instead. That's completely out of your control and you need to accept the cards of life as they fall even if they're not in your favor. Move on to the next play.
Always Moving Forward
Piggybacking off the last point, even if you don't get the business, you can't dwell on it for long. Continually beating yourself up for mistakes isn't going to help you change for the better. It's only a complete failure if you fail to learn from your mistakes.
There were so many times I made the wrong move at the table which cost me tournament wins and money! I was angry/sad for a bit but ultimately I would reflect on what I could've done differently. There's no point in being upset with something that's now in the past.
Learn from the past, be in the NOW, and always be preparing for the future.
If I bring in $1,000 and spend $900 of it on going out. I'm not left with much else for anything else. Let alone any unanticipated expenses.
Knowing how to budget your money is an invaluable skip to learn. You need to stay within your means because you never quite know what might happen. In the case of Poker it might be a few dry months where your cards couldn't hit the side of a barn; in life it could be a car accident or broken appliance you clearly weren't expecting.
It goes without saying again: Always be saving and stay within your means so you can weather the bad times. If you take one too many risks, you might play yourself right out of the game.
Know Your Numbers
What are the odds of flopping a third Ace when you have two of them in Texas hold em?
Odds of flopping a straight?
How about completing a flush on the river if I only need one last card?
I know these numbers off the top of my head like the back of my hand. I'm not rain man, I just memorized them. But knowing your numbers is just as important in business.
What's your conversion rate for free consultiations to paid clients?
Run any marketing campaigns? What's your CAC (customer acquisition costs)?
What are your food costs?
You don't need to know these things at an accountant level, but you should know what's going on behind the scenes. Knowing the lingo helps you communicate with experts and understand what's going on in your business.
In case you were wondering:
Flopping 3 of a kind 8.5:1 or 10.5%
Flopping a straight about 1%
Completing a flush on the river, assuming you have all 9 remaining cards of that suit, is roughly 18%.
Understanding basic human psychology
Most people have watched high level poker on ESPN and imagine that pros can detect any facial tick or lean which gives them an edge. While this is sort of true, what great players pick up on are patterns. I would often pay close attention to deviations in patterns:
How did they play after losing a hand?
Does that change if it was "unlucky" versus playing poorly? Do they even think that was a poor play?
Are they more talkative when they're nervous? Do they always take a sip of water when making a borderline decision?
It comes down to understanding how people normally act and if or when there's a change, deciphering what it means. When dealing with clients who are resistant to change, knowing how to pick up on non-verbal cues has been an invaluable skill to have cultivated.
This is calculating the odds of completing your hand and the future bets you would collect if you do. You need to take stock of the percentage chance you have to complete you hand versus the amount of money already sitting in middle of the table.
Simply stated: Calculating risks is a little more cut and dry in poker since it's all math. But the same basic principles apply where you need to take stock of what an investment of time or money will cost you, and whether or not it's going to be worth doing. If you make decision"x" what will be your return on investment? And how long will it take for you to break even?
Poker is a game that's easy to learn but hard to master. There are only a few of the lessons I've picked up from this game. I believe poker is a fantastic training camp for those looking to cultivate skill necessary for business and critical thinking.