For those of you who are poker players and entrepreneurs, you may get a feeling in your gut that this headline is accurate; if you don’t let’s see if I can convince you otherwise. For those of you who are not poker players, in particular tournament poker players, I will try to lay out the analogy in very clear terms and define any special poker words or phrases, to see if I can convince you as well.
I thought it would be fun and instructive to develop this analogy, as after my family and friends, poker and entrepreneurship are two of the things I love most in life, and I’ve been doing both since well before my 10th birthday. My story with poker started sitting on my Dad’s knee as a kid, watching him play and more often than not, win, at various types and levels of poker games in our dining room. It was there that I learned so much about human behavior, and specifically about how logic, emotion and luck all play very important roles in the success of all poker players … and entrepreneurs.
Ok, so let’s set the scene for how being an entrepreneur, especially a startup entrepreneur is very much like playing in large poker tournaments. I will use No-Limit Texas Holdem poker as the example, since this is the game that has become the most popular in recent years, given the meteoric rise of such events as the World Series of Poker. So, imagine that you have entered a large poker tournament, either online or a live in-person event. You paid $10,000 to enter the tournament. For sake of argument, let’s say there are 2,000 players, so that would be 200 tables of 10 players each. In order to win the tournament, you need to be the last player standing. Do you like those odds? But at a minimum, of course, you’d like to at least make the final table so you can get some “TV time”. Besides the TV time, reaching the final table in such an event would mean that you’d bring home several hundred thousand dollars, at a minimum, which wouldn’t be bad given your $10,000 entry fee.
Now that the scene is set, let’s talk some specifics. It depends on the particular tournament, but you don’t usually start with the same number of chips as your buy-in amount. In other words, in this particular example, you wouldn’t necessarily start with $10,000 in chips; you may start with $1,500. It doesn’t really matter, as long as everyone starts with the same amount and the “blinds” structure reflects the starting chip amount. What are “blinds”? These are the blind bets you are forced to make each time around the table. With $1,500 in starting chips, the usual starting blind structure is 10/20. This means that each time the dealer button comes around the table, you will be forced to bet the “blind” amount, first the “small blind” ($10, in this case), then the “big blind” ($20, in this case), so in total you’ll be forced to be $10 + $20 = $30 each time around the table. This doesn’t seem like much at the beginning, but the blinds steadily increase, usually every 15 minutes or half hour. This is done so that people can’t just sit there and not get involved in the action and simply wait forever for a huge hand to come. It is designed to keep the game moving; otherwise tournaments could last an intolerable amount of time and would be very boring.
So now that you understand that you will not be able to sit there and wait to participate until you have a pair of Aces, let’s talk about what this means in practicality. Well, it can mean different things to different people, depending on their nature and how much the entry fee means to them. It is not uncommon at the beginning of a large tournament to see many people go “all-in” (bet all their chips) almost without regard to what cards they have in their hand. This is crazy, right? Well, yes and no. It’s crazy because they’re risking their entire entry fee right away, without having been able to play for a while and receive other information that may be helpful to them. It’s not crazy because, as most veteran tournament players will attest, you typically need to get some early momentum in order to have any chance of winning or reaching the final table. I’d say it would be less crazy if, in the example above, they didn’t go all-in “almost without regard to what cards they have in their hand”, but with a very strong starting hand. As veterans, they know they will have to suffer some “all-in moments” at some point during the tournament, so the philosophy could be, “I may as well suffer them with a great starting hand, regardless of when I get it in the tournament”.
This is an interesting juncture to start bringing the analogy back to entrepreneurship. First, do you think it’s realistic that most entrepreneurs starting up today will need to invest $10,000 or more to get their businesses off the ground? While there are exceptions, of course, I’d say the answer is definitely yes. Some great businesses have been started for less, but on average, it takes more than that to get a business off the ground. Second, is it accurate to say that although you may not be physically sitting at a table with your competitors when you start a business, you will have competition, and in most markets, that competition will be very intense? Third, do you believe that among the various competitors you’ll be up against, there will be “aggressive players”, “loose players”, “tight players”, and every variation in between? Finally, do you believe that some people “show up to the tournament” to win and others show up just for the entertainment of being there? Is this not also true with entrepreneurship that some people are there to make as much money as they possibly can, to “win”, and others are there for different reasons – they may like to make some money, but that may also not be their primary motivation?
So how do we use these ideas to help us in our own quest as entrepreneurs? First, I’d say that you must realize that logic, emotion, and yes, luck, will play a role in your success as an entrepreneur. Just as with poker, you must do everything you can, to “get your money in good,” but you must also realize that luck will play a certain part in your success in a particular initiative. The good news in entrepreneurship is that, unlike in tournament poker, your success is not binary — you’re not either in or out, but rather you have the chance to get back up, dust yourself off and try again. And that you MUST do to be successful as an entrepreneur. Second, realize that if you are by nature very conservative, sometimes you may need to “change gears” and step outside your comfort zone to be successful as an entrepreneur. In poker, if you become too predictable, you’re dead.
The same can be said for many aspects of entrepreneurship. You must be willing to get “outside the box” you’ve created for yourself and do so without fear. Finally, and perhaps most importantly, realize that you are being “blinded off” in entrepreneurship as in tournament poker. You constantly have to make blind bets and you cannot sit there and do nothing. In entrepreneurship, these “blind bets” come in the form of all those little and not-so-little recurring and non-recurring expenses you’re paying to “be in business”, non of which benefit you unless you’re willing to make your move and take a chance at “winning the tournament”. I’m not advocating that you go all in right away, in fact I think it’s a good idea to get as much other useful information as you can before making your “all-in move”, but I implore you to not just sit there and watch everyone else play the game. If you do, you will have wasted your time and “entry fee” unnecessarily. If you had the motivation to get started in your business, then you have what it takes to succeed, but you must have confidence in yourself, be an active player and not wait for success to come to you.
I’d be interested to hear your thoughts. Please enter your comments below or by clicking on “Responses” on the top right corner of this post.