You may be playing cards with your friends in a dingy basement, smoking a cigar and swapping old war stories about bad beats. Or you could be in Las Vegas, with toothpicks propping your eyes open and your butt glued to an unforgiving chair, vowing to quit as soon as you get even. That’s the same thing you said three hours ago when you made your last withdrawal from the ATM. So why is it so hard to call it a night and come back another day?
It’s hard because money is involved, and with money comes emotion. Sure, the rational thing to do is to set a limit on your losses and stick to it; but you’re human, and it’s human nature to push harder when you’re losing. Quitting when you’re behind means owning up to the fact that you lost. And even though the implications of losing more could jeopardize your livelihood, your actions are likely to be guided more by emotion than by reason.
Poker teaches you that following the laws of human nature can lead to poor decision making. The players who win consistently are the ones who fight their natural tendencies and instead use logic and reason to make sound strategic decisions. The winners in business do the same thing.
Your first decision in poker, as in business, is to decide whether or not to even play the game. Before you decide, you’ll want to know things like: How good are your opponents? Do you have a big enough stake?
How much is the house take, also called “the vig”? Once you’re dealt a hand, you’ll ask: How much money is in the pot before the draw, and how much money is expected to be in the pot after all the betting? Then, what are the odds of catching the cards that will make you a winner?
A business is just like a poker game, and therefore, you need to ask and answer the following questions.
How good are your opponents?
Every business needs to understand its competitors.
Do you have a big enough stake?
Every business needs adequate financial resources.
How much is the vig?
Every business has to cover its overhead before it can make a profit.
How much money is in the pot before the draw, and how much money is expected to be in the pot after all the betting?
Every business needs to know how big the market is and how much of the market that business can hope to conquer.
What are the odds of catching the cards that will make you a winner?
Every business needs to know how to calculate risk.
These are the questions that Warren Buffett, Bill Gates, and Steve Wynnask before they get involved in a business. As you’ll see, all three men have used principles from poker to succeed in business. Good poker players and good businesspeople are often one and the same.
In poker and business, if you don’t have a good hand, you don’t have to play. At times, this means folding after you have already invested a lot of money. Good players recognize these “sunk costs,” and rather than chase their initial investment, they focus on the next opportunity. What makes poker such a great metaphor for business is that luck can play such a big factor in short-term success. In the long run, however, the money goes to those who continually put the odds in their favor by making good decisions.
In the movie My Little Chickadee, Mae West asks W. C. Fields, “Is this [poker] a game of chance?”
“Not the way I play it,” he replied.
Forget about all the stereotypes that go along with gambling—poker is a game of skill, not a game of chance. Sure, people get lucky every now and again, but those who win over a sustained period of time do so because of specific skills. Once you’ve learned those skills, you can transfer them to almost any aspect of business.
Ever wanted to get inside the head of a poker champion and find out how he thinks and why he is so good at knowing what others are thinking. Based on our experience, there is no better training ground for business than a poker game, where your ability to measure risk and make split-second decisions determines whether you cash out a winner.
Throughout The Poker MBA, you will be taken to high-stakes poker games all over the country, including the World Series of Poker in Las Vegas, where the best poker players in the world compete for a first-place prize of nearly $10 million. We’re not just going to be telling you who won the pot. We’re going to tell you how and why he or she won the pot and show you how to profit using those same skills in business.
In addition to meeting world champions like Amarillo Slim and Bobby Baldwin, you’ll also meet some of our poker buddies, including Ace, a player who makes a living at the poker table. By examining Ace’s game, you’ll learn how to think like a poker pro and see how his techniques can be applied to your business. Then there’s Ace’s polar opposite, Doc—the guy with all the answers, none of the money, and a million excuses. By watching Doc in action, you’ll see his mistakes and learn how to avoid them.
Seventy million Americans play poker, and hundreds of millions more play the game worldwide, yet very few can make a living doing so.
Those who do play professionally possess a rare set of skills and, in most cases, are equally adept at business.
If you took the time to list the characteristics of a world-champion poker player, you would create a list that is almost identical to those of a world-class businessperson. World Series of Poker champion Amarillo Slim can be described in much the same way as billionaire Bill Gates. Both men are:
• Strategic thinkers.
• Shrewd decision makers.
• Cool under pressure.
• Driven by a purpose with an incredible desire to win.
• Adept at reading others and seeing things from another’s perspective.
• Able to balance risk and reward.
• Willing to risk their last dollar when they have conviction aboutan idea.
• Disciplined enough to handle adversity and recover from a loss.
• Good enough actors to “fake it” and win—they can bluff.
By using the principles outlined in this book, you will achieve an edge over your competition and learn the skills that aren’t taught in a traditional MBA program. As skilled poker players and successful businessmen, we will show you that these characteristics can be taught, and more important, that they can be learned. This book is not an instruction manual; it’s a series of principles that translate into business success.
Whether you are an intern, a department manager, a salesperson, an entrepreneur, or the CEO of a major company, basic poker skills can be used to add to your success in business. By understanding successful poker strategy, you’ll learn how to read people, close deals, negotiate contracts, measure risk, motivate employees, build a brand, create customer loyalty, and make day-to-day business decisions that will contribute to your bottom line.
The Poker MBA takes you inside the high-stakes world of poker to show that winning at poker and winning at business are one and the same. Making a living at the poker table is reserved for a select few, so don’t expect to parlay what you leam in this book into a fortune on the felt. What you can expect is that by applying the skills of a champion poker player, you’ll be on your way to earning a fortune in the game of business.
This book is about improving your ability to think and execute so that the odds stay in your favor and you leave the game a winner.
If you’re a little rusty on your poker skills, go to Poker/Business Lingo for a description terms. If you already know the rules, turn the page.
Just don’t let anyone else see your cards.