6 Tips for Using Poker in Business
Poker requires smarts, savvy, and a whole lot of patience. It’s not a surprise that you can use the game’s lessons off the tables as well. WannabeCoder shares some specific tips about how poker strategy has helped his adaptability in business. Check it out!
“Over the past few months, I’ve been hunting for a new job. This process encompassed a few dozen interviews and culminated in two very attractive offers. In some of my most successful interviews, I mentioned that I play poker, and was able to describe how my understanding of poker strategy applies to the business world. Below are some of the analogies that I used that seemed to resonate with my interviewers.
- Refusing to bluff is a bad strategy, since you’ll almost always leave money on the table. My line of work often features negotiations with customers. If we start negotiations with our lowest possible offer, then we fail to capitalize on value that our customers would be willing to pay in excess of that starting point. Sometimes you need to threaten to walk away from the negotiating table in order to secure a better deal, too. At the poker table, if you notice that a player is only betting when he has very strong hands, then you know to never call or raise him, and fold off all but your very best hands. That competitor has lost value by playing an unbalanced strategy because their value bets are no longer effectively yielding calls.
- On the other hand, it’s dangerous to bluff too much. If every negotiation begins with unreasonable terms, your customers will be more likely to work with your competitors, or just wait until you come back with something more realistic. We’ve all seen “maniac” players try and bluff every hand, betting 9-4 off-suit and other weak hands. After a few hands, they’re going to get called down every time, and while they might get lucky once or twice, they’ll get slaughtered in the long run. The same thing happens in the business world.
- If you’re going to bluff, be prepared for the consequences of getting your bluff called. In the business world, you need to build a strong business case for developing your bluff, explaining to your executives and shareholders how your strategy works, why it will work most of the time, and noting the caveat that sometimes it’ll fall through. That way, on the rare occasions your bluffs do get called, you will have a track record of successes that outweigh the failures. Similarly, at the poker table, you need to demonstrate to yourself and your coaches that the bluffs you make are part of a balanced strategy that will have a positive expected value (EV) over many repeated trials.
- Maximize EV, but be aware that variance exists. In the business world, you want to be “seeking alpha.” Develop and execute strategies that grow your bottom line over time. There may be unavoidable hiccups that cause temporary setbacks. Sometimes an opponent will catch a miracle two-outer on the river, or you’ll get coolered with the second nuts, or in the business world, another company will unexpectedly launch a competitive product or roll out a dynamite advertising campaign. As a result, you need to mitigate your risks by playing with solid bankroll management in poker, or in the corporate world, have enough cash on hand to weather those (hopefully temporary) setbacks.
- You want to check/call/fold with most of your range, betting only your weakest hands as a bluff, and your strongest hands for value. This was probably the lesson the best connected with my interviewers. Assuming a well-diversified product portfolio, I won’t want to touch about 80% of the products, letting them slowly accumulate value. If I try to make moves with more than a small handful of products, my customers will complain, and the internal team will burn out by trying to do too much at once. With my weakest products, I’ll either discontinue them, or use the threat of discontinuation to encourage my customers to take them at higher prices. On the other end of the spectrum, I can leverage my strongest products to drive substantially more profit for my company. At the tables, trying to go for thin value by betting semi-strong hands increases my variance, while opening me up to check-raise and re-raise bluffs.
- On rare occasions, even weak hands can become the nuts. J-9 off-suit is not a hand that I’d normally play out of position, but if I’m on the button or one of the blinds, I might try and see a flop. Often I won’t connect and will fold to any bet, but sometimes a flop will come 7-8-10 rainbow. In the business world, I was able to turn a product expected to generate only $10K per year into a more-than-$1M-a-month juggernaut by recognizing changes in market conditions. Those situations don’t happen often. However, when they do, being able to identify the change and rapidly react can be very profitable.
The demands of my new job means I probably won’t be able to play as much poker as I have over the past few months. However, just as poker taught me valuable lessons about business, I hope that my experiences at my new company will provide insight into strategies I can use when I am able to hit the tables.
What lessons have you learned that apply to both poker and business?”