Poker is a popular game played by many in living rooms and, more recently, in world competitions. It’s popularity stems from the fact that it is easy to learn, extremely social, provides the opportunity for profit and takes a lifetime of commitment to master. And wow, with the practice and skill you can win a lot money; the top 5 players overall winnings range from $11,000,000 to $16,000,000. Yes, that’s 6 zeroes!
I tried playing poker once with a bunch of guys. I lost big time. My friends hustled $100 out of me. I might not be good at poker. But, I did find that there are many lessons entrepreneurs can learn from poker. Let me share 3 of those lessons.
1. Take calculated risks
If you don’t understand poker, you probably think that your chances of winning at poker is the same as winning the jackpot in a lottery. But, in fact, poker played well is not a gamble, but a game of skill and knowledge. Although there’s a significant element of luck, those who consistently win at poker use their skill, knowledge and experience to take calculated risks.
Take this example: Daredevil Robbie Knievel is about to jump a motorcycle over a row of buses. Most people would say that he would be lucky to make it out alive. To them, it’s a pure gamble, a roll of dice. But, what people don’t know is that Robbie Knievel considered the wind, speed and distance. He knows his motorcycle inside and out. To him, it’s not a gamble, but a calculated risk.
The same can be said about entrepreneurship. To those who don’t have the knowledge and the skill, entrepreneurship is definitely a gamble. But to those who have been applying the lean startup methodology to their startup, it’s not a gamble, but more of a calculated risk. Lean startup methodology is about trying to minimize your risks in a startup by continually validating, learning and pivoting. It provides a framework for entrepreneurs to take calculated risks when building a startup.
2. Be patient and disciplined
Since the best poker players take calculated risks, they bet seldom and only when the odds are in their favour. That’s why the best poker players only play 5 to 10 percent of the hands that they’re dealt. Patience in poker is one of the most important traits that separates successful players from the ones who go home empty handed.
Patience is also an important trait for entrepreneurs. People who win at business bet seldom and only when the odds are in their favour. Steve Ballmer, CEO of Microsoft, told Fast Company magazine that businesses and startups go through 3 phases: vision, patience and execution. It’s really exciting to be in the “vision” and the “execution” phase. But the difference between a wantrapreneur and a true entrepreneur is patience.
Your startup might go through 5, 10 or even 20 pivots (if you’ve never heard of pivoting for startups, check out Ash Maurya’s explanation) before you get your business model right. Twitter wasn’t always the micro-blogging tool; it used to be a marketplace for podcasts. Groupon wasn’t always the behemoth of daily deals; it used to be a tool to connect charitable social causes with donors. Don’t expect an overnight success with your startup. Expect 2 to 5 years of hard work before you make it big. So, be patient and disciplined with your startup.
3. Know when to fold
One of the biggest mistakes that amateur or novice poker players make is not folding a hand even though they know that they’re beat. Determining whether you want to play a hand or fold a hand can be an extremely difficult decision when playing poker. It is one of the most important decisions that you will have to make at the table. It can be the difference between a net win or a net loss at the end of the game. Watch the professional poker players on TV. They’re masters at folding hands and picking a winning hand; they fold over 90% to 95% of the hands!
The same thing is true with startups. Maybe your competitor has now squeezed you out of your niche market. Or maybe your market size is shrinking. Know when it’s time to pivot your business model or fold your startup.Edmund and I had to face a similar decision with our first startup, Pressistant. We found a competitor whose product wasn’t as good. So we aimed at releasing a product that was bigger and better than our competitor, manageWP. So, Edmund and I started to interview our target customers to validate our product. We created a launch page www.pressistant.com. I even created a teaser video by myself! Then, right when we were about to start coding our product, our competitor came out with a bigger and better version of his product. Edmund and I talked about it. We neither had the money, the resources, the credibility and the time to compete. We didn’t have a lot of money invested into the startup yet. So we decided to fold our startup.
It was a tough decision. But if we didn’t make that decision, then we wouldn’t have gotten a chance to work on our next startup Lesson Sensei, with two other amazing guys, Kurt and Mark!
The three lessons entrepreneurs can learn from poker are take calculated risks, be patient & disciplined and know when to fold. By applying the teachings of the poker table to the boardroom table, entrepreneurs can position their businesses for success for years to come!
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