Poker and Entrepreneurship: How Similar Are They?
There are many similarities between poker and entrepreneurship, with LinkedIn even promoting poker as a must for any entrepreneur. Both poker and entrepreneurship are high risk for a potentially high reward, and many skills from poker apply to entrepreneurship, and vice versa.
What is the crossover?
1. Odds are never zero
It is estimated that 90% of start-ups fail. There are a variety of reasons for this, including lack of capital, lack of market space or need, competition, poor marketing, lack of a business model, or a lack of passion to name but a few. What can be gleaned from poker is that whilst hands have different odds of winning, the odds are never zero. Therefore, even a poor hand, played well, has a chance of succeeding, no matter how slim.
2. Learn to fail
With such a high proportion of new businesses failing, entrepreneurs need to have a thick skin and be able to accept failure. Equally, in poker, there can be only one winner; in a game of four players, it is guaranteed that 3 will fail. This gives poker players comping strategies to deal with failure and how to pick themselves up for the next opportunity. In poker, it is vital players bounce back when they lose a hand they were a favorite to win. This is known as dealing with bad beats and is a skill that is very transferable in a corporate setting.
This brings us to the next aspect of poker that can help in the world of business: luck. In poker, it is not always the player with the most experience or knowledge that wins. Sometimes, a lucky hand is all it takes. In business, luck will sometimes play a part in the success of a venture. Being in the right place at the right time may mean the difference between success and failure.
4. Risk Management
Poker is a game of risk; players will analyze and evaluate their hand and the likelihood of winning. It is often said that poker is not gambling, but a game of skill. In much the same way, a successful entrepreneur will do the research to understand the market, the product, and the risks, and use data to guide decision making and evaluate the risk.
5. Imperfect Information
Entrepreneurs often have to make decisions with incomplete or imperfect information. In poker, players must place their bets knowing only their cards. As cards turn, they get more information, and decisions can be made on the new information. But ultimately, the player has to make decisions, often quickly, using minimal information. Entrepreneurs will constantly be evaluating market data and information from competitors. They must be able to change direction and strategy as required. Waiting for all the information to present itself means often that it is too late, and the business is no longer viable.
6. Emotional Control and knowing when to walk away
Success in poker is down to being able to keep a ‘poker face’. This is the act of hiding emotions and not showing opponents if the hand you hold is good or not. In poker, players also need to know when to fold. This is hugely important in business, as decisions should be driven by facts and data, rather than emotion. It also allows entrepreneurs not to be too emotionally invested in the venture. Thereby allowing them to step away if it is not working and move on to the next thing.
7. Know your Competition
When starting a business, entrepreneurs need to know the market. There needs to be a genuine need or market gap to ensure the product or service they are providing has a client base. Otherwise, they are likely to fail. By conducting market research, and testing out the competition, entrepreneurs can identify gaps in the market for new products. Or, they can see if there is a desire for better versions of what is already out there. Of course, this data is not always readily available. There will be work to be done to get this information. In poker, players must learn to decipher their competition. Whether through a combination of their betting habits, or any tells, and any other information available.
8. Know your own hand
Playing poker is all about statistics and knowing what your own chances are of winning. Of course, even a strong hand can be beaten, but it is all about probability. In business, it is important for an entrepreneur to know what they hold, and how much money they have to spend. Running out of funds, in business as in poker is a sure-fire way to lose. Additionally, it is not always about how much money you have, but what you do with it and how you make it work for you.
9. Long-Term versus Short-Term Strategy
In poker, as in business, it is about the over-arching strategy. Poker players may get a bad hand and choose to fold, knowing that they can make the gains further down the line. They may also look to a lower-stakes table where the reward is lower. However, the risk to build up capital to move back to the big leagues can be tough. In business, these strategies are also important. Entrepreneurs will not always succeed in everything they do. But, as long as their activity contributes to the long-term goal, and they stay afloat, it increases the chances of success.
On the surface, poker and entrepreneurship are vastly different. One is a game, a hobby, the other a potential life-changing activity. However, there are a number of similarities, and many reasons for entrepreneurs to play poker. Decision-making and risk management, and knowing when to stop and when to proceed. Don’t forget, learning how to manage emotions and identify human behavior are also vital to both the successful poker player and entrepreneur.