18 Dec 5 Business Lessons from Poker
“ALL IN!”
I’ve been playing the great game of poker on and off for the last 35 years. Poker is a game of skill and luck–it requires strategy, patience, and calculated risk. In many ways, business and entrepreneurship are the same. Every week when I play with my Port Washington Poker Club (shoutout to our sponsor, the Poker Timer), sometimes I win, and sometimes I lose, but I always learn valuable lessons which help me navigate life as an entrepreneur. Here are 5 key takeaways:
- Don’t bluff too often
It’s not that bluffing never works, but it has to be done in moderation. Constant bluffing makes you lose credibility. This becomes obvious in poker when people stop taking your raises seriously, but it’s also very true in business. You can’t build strong relationships by faking it till you make it. In fundraising or sales, for instance, it might be advisable to selectively exaggerate your company’s capabilities, or your product’s benefits – but lying about key metrics or core functions will quickly lead investors or customers to abandon deals – and worse yet, erode trust.
People appreciate sincerity and authenticity. Over-reliance on BS will inevitably lead to your downfall–you’ll lose trust and respect.
2. Understand the risk and reward
Poker is about weighing potential gains against relative losses. You make bets according to the pot size, risking a proportion of the pot equal to your estimated chances of winning the hand. The same is true of business decisions. It’s essential to understand the potential reward and what you are personally willing to risk to get there. Just as different poker players have different ranges, (don’t ask my friends about my range, I love 10-8 suited), different businesspeople have different appetites for risk. Carefully evaluating risk and reward maximizes your chances of avoiding recklessness while simultaneously not passing up key opportunities. And remember:
Sometimes the biggest risk of all is not taking a risk.
3. Know Your Audience
In poker, understanding your opponents’ tells, i.e., their opponents and behaviors, can give you a decisive edge. For example, knowing if someone is prone to bluffing can make you more confident in calling her raise. Knowing the players involved is also crucial in business. Whether dealing with customers, investors, or colleagues, tailoring your approach to their specific needs and preferences enables you to achieve better outcomes. In both poker and business, the way you learn your audience is observation. Pay attention to non-verbal cues and feedback.
4. The Top Hand Doesn’t Always Win
Sometimes, the best hand is unwilling to call a raise and folds. Even the best hands can lose because players can’t perfectly account for human behavior. In business, the most qualified and best-prepared don’t always succeed. And the best ideas almost never succeed against a more persistent, driven person with worse ideas. This is why adaptability and flexibility are so important–you have to be able to adjust to unforeseen circumstances outside of your control. Preparation is important, but it isn’t everything. Recognize that the outcome won’t always be the most likely.
5. Be Patient but Always Ready to Act
Poker requires waiting for the right opportunity but being quick to seize it when it arrives. Most hands won’t amount to much, but each round you have an equal chance to get something workable. This dynamic of patiently yet attentively waiting is applicable to business as well. In this way, balancing patience with readiness to act can set you up for success.
You needn’t take most deals you are offered, but when a good opportunity comes, fortune favors those who act quickly and decisively.
Now it’s YOUR turn. Do you play poker? If so, what have you learned along the way that’s applicable to your career? Which of these five principles do you agree with the most? (Or disagree with?) Would you call, fold, or raise this hand of 5 principles?
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