If you run a business, you should learn poker.
Let me clarify. You should learn Texas Hold ‘Em Poker. In person, around a table, with five to ten other people.
Poker will teach you on a gut level many of the key skills of decision-making, from distinguishing good opportunities from bad ones, to the best strategies for playing out those opportunities. Texas Hold ‘Em, in particular, balances luck with skill, strategy with tactics, mathematics with psychology, and internal discipline with social dynamics.
Don Dodge recently posted that startups play poker and big companies play chess. I disagree. I think we all play poker. Chess implies it’s all strategy with no place for luck. I think luck greatly influences success in business. Big companies may have a bigger chip stack and a better position, thus can play a loose game and still win. But smaller companies with a tight aggressive style, or occasionally when playing a long-shot, can win against the big guys.
Make Better Decisions
Poker teaches you to know when to give up, when to ride it out and when to double-down or go all-in. Understanding the dynamics of the fold-call-raise decision is critical when deciding the future of a project, employee or business.
Poker teaches you that not all well-made decisions result in successful outcomes, nor do all successes stem from good decisions.
In poker, you learn when to play a hand and when not to play. Your instinct, and its cauldron of psychological biases, may be convincing you to take the long-shot. But when you learn to sit and think it through, you’ll see that it’s far better to say no and miss an opportunity at a win, then to say yes too often and lose all your chips through attrition.
Improve Your Sales
To succeed in poker, you need to project confidence, read other people and manage group dynamics. Bluffing isn’t just about maintaining a stone cold face. It’s about persuasion—convincing others that you have certain cards, or don’t have certain cards, by sending body signals, talking to them, and, often, steering a group consensus to create social pressure.
And this is why it’s critical you play poker in person with a group of people. A no-limit heads-up game online, where two people play with unlimited betting, can help you learn the odds and get basic skills. But the real learning comes from sitting around a table with a group of people and watching the group dynamics ebb and flow. If possible, try to play with different people from time to time to learn different playing styles, and watch how the dynamics of the market (game) change with the players.
Strengthen Your Negotiation
Key to winning in poker is understanding the strength of your cards and position, knowing when to play aggressively, and learning how to calculate your outs.
You’ve likely heard the phrase “having a strong hand”. Poker teaches you what this really means and how to play your strong hand. Distinguishing between the best possible hand, one of the top hands, or a hand with strong potential, helps you understand when to play aggressively for a higher payout, when to push less aggressively and when to take what you can get.
Poker also teaches you to look for your “outs”, the potential future scenarios where you win. The more outs you have for a given hand, the greater agility your hand has and the greater chance you have at winning. Calculating your outs can be a short-hand for calculating the odds of winning, and in business where the odds are unknown, knowing your outs may be all you have.
Improve Your Execution
In poker, the person with the best hand doesn’t always win. Most hands never get shown. Sustained winning occurs by diligently applying skill, understanding the dynamics of the system, adjusting to changes in the environment and knowing that your cards are often irrelevant.
Too often we simplify the dynamics of a system to make it easier to understand. We attribute success to one or two factors. Poker reminds us that there are many forces in play, each affecting the other. Your success or failure in any specific game is the result of a combination of factors, with many factors outside your control.
To succeed, you must play rationally, but learn to change course when the environment changes. A new card or bet can radically alter the playing field. Knowing how the dynamics change, and how to adjust your playing style, is critical.
Poker can help you improve your business acumen. The decision patterns you learn playing poker can be applied when starting a company, hiring a key employee, acquiring a new business, or negotiating a partnership.
For myself, I use poker as a laboratory of decision-making, to discover decision patterns like Call-Raise-Fold and problems like the Sunk Cost Dilemma.
What decision-making skills have you learned playing poker?