“Now Ev’ry gambler knows that the secret to survivin’
Is knowin’ what to throw away and knowing what to keep.
‘Cause ev’ry hand’s a winner and ev’ry hand’s a loser,
And the best that you can hope for is to die in your sleep. ”
Kenny Rogers “The Gambler”
I don’t remember exactly when I caught the poker bug but as with most things I get into, it was way past the peak of when it was popular.
This was after Black Friday when the government shut down all the legal poker websites so I started playing on a Caribbean site called Carbon Poker.
I ended up playing at least 3 hours of poker a day online for about 2 years. For awhile I was playing 8-12 hours a day on weekends. I never made thousands of dollars and at my best I was probably a little better than a consistent break even poker player online and a guy who could win a couple hundred bucks from the tourists out here on the strip pretty consistently.
I recently was deleting things off of my computer and deleted my old carbon poker account which had about 500,000 hands of poker logged in my tracking software so it got me to thinking about what I learned about poker and decision making during my brief foray into the poker world.
Here’s 9 things I learned about business and decision making from playing poker:
- Luck is a MUCH bigger factor than anyone wants to believe. This is the biggest lesson I learned from poker and it is super important. Luck is usually the biggest factor in any success story and no one likes to talk about it because it makes us feel like we are less in control of our lives. Obviously you need to work hard, and make the right decisions but oftentimes the difference between the Ipod and the Zune is luck.
- You have to evaluate decisions regardless of results. The right decision does not always yield the intended result. This doesn’t mean that it wasn’t the right decision. It’s the right decision to make a continuation bet after the flop if you raised when you entered the hand, no matter what your cards are. Likewise you can make the right decisions on a product, do everything correctly on the launch and the product can still flop. That’s why you have to evaluate decisions in postmortums, based on the information you had at the time. Poker is a game of trying to make the right decision with incomplete information.
- There’s a ton of math in poker and math scares americans. The biggest challenge for me when it came to learning poker from various books and online courses was the math. There’s a ton of math in poker. Expected value calculations, calculations for hand ranges based on the number of decks and cards dealt, the odds that the opponent is holding what he/she is projecting is in their hand. You have to do a lot of math and do it pretty fast to be a great poker player. Even when using software that does a lot of the math for you. Another thing you’ll learn is that most American poker players not only don’t know the math but are too scared to even make a basic attempt to understand it. One of the only things I had going for me as a poker player was I put in the time doing the math. That alone was enough to beat most tourists in low limit games.
- Study the data, not your memory. Another interesting phenomenon around poker players and gamblers in general is that they remember results much differently than what the data said. You’d run into a lot of guys who swore they were break even poker players who my tracking software said lost hundreds of dollars per hour. You have to study the data not your imagination. Men lie, women life, data doesn’t.
- Tilt is real and not just in Poker. Tilt is a poker word for when a player gets emotional and throws away all common sense chasing after pots they have no business being in. The otherwise pretty bad movie Molly’s Game has a good example of tilt when the otherwise tight winning player is bluffed by a known loser and then tries to beat him on every hand leading to his ruin. Tilt is real, and it happens in business and in relationships more than people realize. An executive is on tilt when he responds to a bad advertising campaign by pouring more money into it. A woman is on tilt when she has a fight with her boyfriend goes out with her friends to flirt and ends up cheating. Emotions affect decision making and it’s important to understand how you get triggered and avoid making important decisions when you are on tilt.
6. Life is regression to the mean. The game of poker ebbs and flows. Sometimes you sit down and get dealt a pair of kings twice in 10 hands. Othertimes you have to fold 30 times in a row. But overall everything tends to regress to the mean. If you’re a bad player even if you win big one night over time you will give it back as your performance returns more to what it should be. This is how life works as well. People chase the idea of consistent performance but life regresses to the mean. You’re always going to have good months and bad months. But at the end of the day as the great street philosopher turned Beyonce’s husband Sean Carter once rapped “You are who you were when you got here.”
7. People overweigh recent information. This is often called The Recency Bias in the world of finance. People pay WAY too much attention to things that happened recently and tend to overweight those factors in their decision making. You can do a quick poker experiment to see recency bias in play. The next time you win a big pot or force everyone to fold pre-flop with a big raise, immediately raise again on the next hand and 75% of the table will drop out right away because they assume you must have something again since you won the last pot. Even though this goes against both the math of poker and common sense. People do the same thing when picking financial advisors (picking the guy who had a great year last year), and with the Hot Hand Fallacy in basketball. Base rates are base rates no matter what just happened.
8. If everyone is playing the ideal strategy the ideal strategy becomes inefficient. Online after Black Friday the poker economy got scrambled. No legal sites meant there were less low level players with deep pockets. This meant that when I joined Carbon poker most of the players were pros or semi-pros. This lead to running into a lot of people playing “The Right Way.” Which is to only enter the pot when you have a pair of Jacks or better. “Super tight” in poker parlance. Some players would play 40 tables at a time and only enter hands with a pair of kings or better. With so many people playing this ideal strategy, the strategy became inefficient because you could scoop up tons of blinds and small pots by being aggressive knowing that everyone else is playing tight. The same thing happens in business. Take for example my speciality of content marketing. Right now everyone is using the “ideal” content marketing strategy creating data driven posts or videos and distributing them through networks of blogs and social media. This means that right now the ideal strategy is inefficient and the people who are going to be getting great results from content marketing are the ones who find a different strategy to hack their way to success. This happens in every industry and is often called “disruption.”
9. Playing things tight is easier said than done. In the book “Siddhartha” by Herman Hesse he writes ” I can think, I can wait and I can fast.” and I swear he wrote that about successful poker players. As I wrote in the last point the ideal poker strategy is to only play hands that have a high probability of taking down the pot. You really shouldn’t be using a wide range of hands and at most should be playing a distribution of about 18% of the deck. That sounds good in theory but in practice few people have the patience to only play that few cards. Even the pros. Whether it’s boredom, a longing for action or simply misreading a situation it’s easier to say you play tight than it is to actually do it. It’s easier to come up with a strategy, a goal or a diet than it is to actually stick to it and most of the time we end up cheating. But those who can stick to a strategy and wait often are much more successful when the big payoff comes.
That’s about all I got today for life lessons from the Poker table, as always feel free to add things you’ve learned from poker or any game that have helped you with life in the comments.