Inside My Brain

Thoughts about startups, tech, marketing, and life

CATEGORY: Poker

Process > Results

I recently listened to the book titled Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by poker champion Annie Duke

Being a poker player, I was naturally compelled to read this book. And being an entrepreneur, I totally understand the difficulty of making decisions with little information. And Thinking in Bets crystallized this concept really well. 

The premise of the story is that in poker (and life) you have to make decisions with imperfect or very little information, and due to luck, the right decision may result in a negative outcome. 

For instance, before the flop comes, pocket Aces is the best hand in poker. So it’s always the right decision to raise pre-flop. But against another pocket pair, there is an 18% chance you will lose. So if your Aces get beat by another pocket pair, were you wrong for playing your Aces the way you did? 

On the flip side, you can make a terrible decision and play your hand like crap, and still win.

Here’s another example. In Super Bowl XLIX, the Seattle Seahawks had a 2nd down at the New England Patriots’ 1-yard line with 26 seconds left on the clock and a chance to win the game. They had one of the best goal-line running backs in Marshawn Lynch. But head coach Pete Carroll decided to call a pass play, and Seattle QB Russell Wilson threw an interception to end the game 

Many have called this the worst decision in football history. 

But what if Russell Wilson threw a touchdown? What would people have thought about Carroll’s decision? They would have likely said that it was “gutsy”, “brave”, and “fearless”.

In reality, the decision actually made sense, primarily due to clock management and the defensive formation the Patriots ran. I won’t get into it here, but you can check out this Slate article and this SBNation article for more info. 

We all make decisions with imperfect information.

Maybe it’s a decision to hire someone for your team at work, and that person doesn’t perform as expected. 

Maybe you decide to buy a new house in a great neighborhood, but a black swan event happens and the house’s value goes under water. 

In both cases, you could have done all of your research correctly, checked off all of the boxes, dotted your T’s and crossed your I’s. But sometimes things happen that you have no control over. 

If this happens, do you doubt your decision-making abilities? Do you not trust your process anymore? 

Certainly, you should try to find the holes in your thought process. Did you not see something you should have seen? Did you not do enough research? 

But if you’re confident you did all you can do, you shouldn’t doubt yourself just because the outcome wasn’t positive. 

If the outcome turned out the way you expected, I’d bet that you would think you’re a genius, right? Right. 

So the point of this all is to separate the outcome from the process. Whether you were right or wrong, you can’t let the result of your decision cast doubt on the work you did to get there. 

I think this is a really important mindset to have. Process over results!

Have you been in any situations where you thought you made a correct decision that turned out negatively? I’d love to hear your thoughts!

In poker, business, and life, there’s only one real way to learn – by doing

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I took the last two weeks off from blogging because I was traveling for Thanksgiving to NY/NJ and the Amazon Web Services re:Invent conference in Vegas. I hope you didn’t miss me too much.

Anyway, while in Vegas, I of course had to hit up the poker table. Many times.

During one late night/early morning session, a pretty young guy (let’s call him Chad, I don’t remember his real name) who was also there for the conference sat down next to me. Nice guy, pretty chatty, and probably had a few drinks in him, like everyone else at the table.

He sat down with $100 and lost it within 20 minutes.

He whipped out another $100 and lost that within another 15 minutes, most of it to me on one hand.

He took out another $100. At this point, the guy sitting on the other side of him and I started helping Chad out a little. We told him how it was OK to fold once in a while (he essentially played every hand), the importance of position, and other poker fundamentals.

Regardless, he lost that last $100 pretty quickly.

When he left the table, I looked around and said “I guess there’s only one way to learn,” and everyone had a good laugh.

You can read all the poker books in the world and watch the World Poker Tour on TV, but once you step into that casino and sit down at the poker table, everything changes. And the only way to learn is to play a lot of real hands and probably lose some money.

You can read all the books and blog posts about how to build a company, recruit a team, develop a product, and more, but until you actually start putting in real work, you won’t learn how to do all that.

You can prepare yourself for raising that baby, but childcare books won’t ever prepare you enough for changing that first shitty diaper or dealing with a 2-year old’s temper tantrum.

The only real way to learn anything is to do it.

I’m not sure if Chad will learn from his experience in Vegas. After all, it was late, he was probably drunk, and it’s Vegas, so who really cares about losing a little money, right?

Regardless, the lesson is that there’s no better way to learn than by actually doing.

You’ll never be able to replicate situations at the poker table, in business, or life. The only way to learn is having the direct experience of doing.

So what will you do today to learn?

How business is like poker

Business can be a lot like poker sometimes.

Many people take the wrong approach to poker and gambling.

When gamblers are losing money, they will keep playing to try to win back their losses. I see poker players spend hours at the table, lose stacks and stacks of money, and have no idea why.

And when people are winning, they’ll “quit while they’re ahead.” They’ll win a little bit and be satisfied with having a few more dollars in their pocket.

I think that’s totally backwards. Maybe we can call it the “gambler’s paradox.”

When you’re down, you should get up from the table, take a break, and gather your thoughts to understand why you’re losing. Maybe even call it a day.

And when you’re up, either your luck is running hot or you’re doing something right, or both. So you should ride that wave as long as you can.

You tend to see this in business as well.

When things aren’t working in business, you may see people stick to the same strategy, pump more money into advertising, and use brute force in an attempt to make things better.

Instead, they should take a step back, analyze where things are going wrong, and adjust accordingly.

When business is going well, many companies rest on their laurels, slow down, and stop innovating.

This allows more nimble and innovative startups to enter and win markets.

When things are bad, take some time off to refresh and rethink.

When things are good, put the pedal to the metal and keep moving fast and innovating.

Don’t fall prey to the gambler’s (or business’) paradox.

What do you think about this paradox? I’d love to hear from you. Write your thoughts in the comments, tweet at me @mikewchan, or email me at mike@mikewchan.com.

I hope you found this interesting! If so, please share this article with the share buttons on the left. Then sign up for my email list below and connect with me on Twitter for future updates. And check out my podcast at GoandGrowPodcast.com!

The Rise and Fall of Online Poker

Last week, the U.S. Justice Department shut down online poker in this country, accusing 11 people of  bank fraud and illegally operating online gambling sites. You can read about it in the Wall Street Journal Online here and check out the very official notice on PokerStars here and below. I have a bunch of money on PokerStars and dreams of a very independent, lucrative career in poker (ehh, kinda), so I am not pumped about this.

This got me thinking about two things:

  1. The ongoing argument is that poker is truly a game of skill, and not chance, so is poker really gambling? In the short term, luck is a huge factor, but I do believe in the long run, it is truly a game of skill.
  2. More importantly, how amazing has the impact of online poker been to the overall industry?

Major online poker sites like PokerStars, Full Tilt Poker and the defunct PartyPoker have transformed the poker world just like Amazon.com changed retailing – the internet has been a disruptive technology that forever altered the landscape. Just like Amazon gave shoppers access to millions of products and streamlined the purchase process, online poker gave millions of poker players instant access to each other, and thus access to a plethora of poker games at all times of the day. Trips to Las Vegas, Atlantic City or the local cardroom weren’t necessary anymore. No more playing (and crushing, if he’s reading this 🙂 ) my old roommate heads-up; I had access to full ring games with people from Europe and Asia in the middle of the night.

This easy access for poker players ultimately led to the Moneymaker effect, which sparked the growth of poker shows on TV networks such as ESPN, The Travel Channel, and NBC, and the transformation of poker nerds to celebrity status. This then proliferated a virtuous cycle where poker players saw the potential for riches and fame, jumped online or to the local casino to play, achieved success and TV air time, and became role models for other poker players, and so on and so forth, leading to the explosive growth of the poker industry.

Now a lot of that is all gone. And for what?

Will the poker industry be able to survive without its online component? And what if other brick-and-mortar industries were stripped of their online components? Could they survive?

There are no more results.