The Poker Influence

High risk, high reward

Entrepreneurs on a start-up venture can learn a lot from a game of poker. Just like the poker players, they have to achieve the right combination of luck, risk, bets and have the ability to execute against the odds. Building a start-up is a game of high risk and high reward. You can have all the odds against you, but still win big if you know how to play your hand such as what innovation or product you bring to the market. 

It is important that you understand the risks on the table and evaluate risk by using data, gut, and rationale to make the best decision. Remember that the odds are never zero. About nine out of ten startups fail but what you can learn from poker is that although one ‘hand’ might have higher odds of winning, no hand ever has zero odds. 

Whether you have had an introduction to online slots or previously have gotten a taste of other casino games, it’s important to know that what sets poker apart from most of the other games played at a casino is that it’s a game of skill and not luck.

Outcome bias

In poker, you place your bets without knowing the hands of the other players at the table. Whenever there is a new piece of information, you evaluate the risk and make predictions of how the game might unfold. The same goes when you are an entrepreneur. You will constantly evaluate new data from the market, your competitors, customer feedback etc. You need to use what you know to make decisions based on what will increase your odds of success. 

It is however possible to have a great hand of cards and a high probability of winning and still lose. The same goes in certain business decisions. If you lose with a strong hand, the decision to play the hand still remains a good one, irrespective of the outcome.

It’s important to understand that the quality of a decision is different from the quality of its outcome. Those two things are independent. The quality of the outcome is clearly determining how people are viewing the quality of the decision. This is called ‘resulting’ in poker.

Looking at the long term

If you have a difficult business decision to make you should seek advice. In poker you don’t have this luxury, but in business it’s a good habit you have someone unattached to the situation give you their perspective. It can also be good to step away and consider if it was someone else facing this decision, what would you want them to consider and the outcome to be.

The best poker players focus on the long-term game and know how to minimise their losses. It’s the same in business. You should protect the activities that works for the future of the business and make strategic investments even when things are going well. It’s good to know the difference between what is nice to do and what is necessary to do.