

What I Learned About Entrepreneurship From Watching the World Series of Poker - hshah
http://gigaom.com/2009/11/04/what-i-learned-about-entrepreneurship-from-watching-the-world-series-of-poker/

======
gizmo
This is probably the dumbest article I've read in a long time. Rant with lots
of poker terminology on the way:

Where to start:

> Both [poker and entrepreneurship] rely on acting strategically under
> conditions of extreme uncertainty

This is true in a sense, but only in the shallowest sense. In entrepreneurship
there's real uncertainty, having no idea what you have to do, and knowing that
there's no real way to determine if you're even on the right path. Often,
you're just in the dark. With poker the uncertainty only applies on the scale
of a single hand: "Does he have it?". Even then you know almost exactly what
your equity will be against the range (possible holdings) of the other player.
So when few chips are at risk you optimize for equity, and if almost all your
chips are at risk you better have the nuts (best possible holding). The
uncertainty that remains is of the "dice rolling kind", not of the "what is
this guy up to" kind. Since the "dice rolling kind" of uncertainty is beyond
your control there's not much to learn from it.

> Why are some terrible entrepreneurs so successful?

Is this even true? I can't think of any terrible and successful entrepreneurs.

> In the World Series of Poker, no professional has won the Main Event in
> seven years

Okay, so what are the characteristics of the World Series of Poker? Starts out
with a reasonably deep stack (skill matters a lot), takes days (endurance is
crucial), ends with short stacked play (lottery). You can get through the
first stages with luck, and since the amateurs outnumber the professionals
there are no surprises here: a lot of amateurs make it far into the
tournament. You have to have endurance, which favours the young. And in the
end very little skill is involved, because the mathematically correct play is
to put all your chips in (to maximize fold equity) and often you're only a 2
to 1 favourite when you get called. So only if the final table consists mostly
of professionals can we expect a professional to win. I argue that the middle
phase (endurance) is the most important, and that therefore one of the 21-25
year old internet players will win most of the tournaments in the next few
years. They have millions of hands of experience, which means they're far more
likely to intuitively do the correct thing when tired and worn out because of
days of play. They're almost as good as the TV pros, but younger. They also
have as advantage that they can recognize the TV pros, but the TV pros don't
immediately know which of the young players are the sharks and fish.

> Yet the Main Event has been won year in and year out by a complete unknown
> player.

Last year it was won by an unknown but incredibly skilled internet player. He
probably played more hands in the last 5 years than almost all TV
professionals.

> a given pro will play thousands of poker hands

Thousands? Haha.

> Similarly, given enough amateurs in the field, the law of large numbers
> means that at least some of them will get lucky enough times to outperform
> even the best pros.

Not neccessarily. In a deep stacked cash game an amateur will _never_ win over
a pro. Not ever. Real amateurs have a chance only because of the lottery
aspects of the world series. This is by design: it makes for better TV.

> and, if you find advice that seems to work, be ready to go all-in.

What does that even mean in the context of entrepreneurship? How do you go all
in with a company? By signing a 10 year lease on office space (just stupid)?
Is there ever a good reason to go all in with your company if you don't face
certain doom?

> Take any advice (including mine), and think it through for yourself.

Why? Most advice is terrible, or simply not applicable to your situation. And
it's almost impossible to distinguish between good advice and bad advice (by
definition). And since two people always argue the opposite, how can you
possibly agree with them both? I think a lot of interesting things can be said
about how to best take advice, but the solution probably isn't to listen to
everybody and then go all in.

To conclude:

Poker is zero sum. Entrepreneurship is not. Poker is about exploiting
mistakes, entrepreneurship is about creating value for your customers. Poker
has known optimal strategies, Entrepreneurship does not. You could just as
easily compare entrepreneurship to chess or monopoly, and the comparison would
be just as shallow and meaningless.

~~~
BrandonM
_Thousands? Haha._

Yeah, that was pretty hilarious. I was trying to reach a milestone at the end
of September and I put in over 5500 hands on 9/30 alone in about 11 hours of
play.

The only correction I have to your post is: _They're almost as good as the TV
pros, but younger._ Most of the cash game Internet pros (and many of the
tournament Internet pros) are much better than the TV pros (other than a
select few like Ivey and Antonious, who also play online anyways) because the
Internet pros have played so many hands and tirelessly gone over areas where
they are losing money to improve. When you're playing 400-500 hands/hr, a
small improvement in your game can mean a difference of over $25/hr for mid-
high stakes players. Many of these players aren't "TV pros" simply because
they make a better hourly rate playing online where they can put in 8x the
hands in the same time span, or because they don't (yet?) have the bankroll to
risk losing $100K+ on a single hand.

I'm sure you (gizmo) know all this, but I thought some of these points would
be useful information for the HN reader who is less knowledgeable about the
poker world.

Here's one more tangent point you might find interesting about deep stacks
([http://www.twoplustwo.com/magazine/issue56/Savage-Deep-
Stack...](http://www.twoplustwo.com/magazine/issue56/Savage-Deep-Stacks-Good-
For-Poker-Tournaments.php)). Here a well-known tournament director points out
that deep stacked tournaments typically hinder the pro. Of course this doesn't
apply to cash games (which you were obviously referring to), but because of
tournaments' increasing blind levels and the need to end after a period of
time, deeper stacks at the beginning actually mean a more-pronounced lottery
period later on.

~~~
dustingetz
who are you on 2+2? and wtf is giz doing posting on an entrepreneur board? (im
assuming she's giz from 4L)

~~~
BrandonM
I don't really post very much on 2+2; I just lurk a bit. I'm a member of
FlopTurnRiver and the training site GrinderSchool. Thanks to an affiliate
signup with RakeBackNation (and paying upwards of $1300/mo in rake), my GS
membership is basically free at this point.

------
joblessjunkie
The author has a depth of understanding about poker that's surprising, coming
from someone who has only watched on television.

I've been playing seriously for a decade, and this is the most insightful
breakdown of the game I've read. Kudos.

~~~
BrandonM
Honestly his idea of how professionals play profitably in poker is pretty
awful. To say that a pro's bets are merely probing for information to let him
know when he is beat is a gross oversimplification. "Betting for information"
is actually a common leak (a sub-optimality) in beginners' and even solid
players' play.

Most bets (there are some exceptions, but they are very few) have one of two
purposes:

1) To make a hand with good equity (the chance of winning if no one ever
folded) fold, especially a hand that is currently beating your own.

2) To get value from a hand with worse equity that will call.

The best situations are where your bet is doing both. For example, if we
raised preflop with 8-7 and are greeted with an A J 8 flop with 2 clubs, we
can bet and get hands like 10-10 and 9-9 to fold, while hands like a flush
draw or straight draw will call. We can bet sometimes on the turn against
certain players and get all but an A to fold.

Contrast this with a situation where we have K-K on an A 8 2 flop with no
draws. A LOT of bad players bet small here so that if someone raises (or even
calls), they can assume they have the A and fold. This is a huge mistake.
We're only folding out hands we beat, getting called by hands that beat us,
and possibly giving a smart opponent a chance to bluff us off the best hand.
It is much better to check and let an opponent with a hand like QJ hit a worse
pair (or give someone with TT a chance to think he might have the best hand
when the turn is a 9) so that we can make money from a couple bets.
Furthermore we give aggressive opponents a chance to bluff at us.

When we bet for information, _our bet has no value_ , therefore we make no
money from it. When we instead bet for value (or to fold a better hand) we do
make money (in the long run) from our bet.

This post got longer than intended, but seeing your comment get a few upvotes,
I wanted to make sure that people didn't think his insights were _actually
good_. The most insightful thing he said was:

    
    
      Professional players are so much better
      than amateurs that they can make a living
      in many cases, becoming very very rich by
      exploiting the difference between their
      level of skill and the level of the people
      they play with.
    

Don't let yourself (meaning the reader, not necessarily the poster I'm
replying to) be one of those amateurs too often ;). Beyond that, especially
considering that he says, "I can't play poker..." I would definitely not take
his poker insights very seriously. The parallels with entrepreneurship,
however, are pretty interesting.

------
aidanf
"In the World Series of Poker, no professional has won the Main Event in seven
years."

This just isn't true. Last years winner, Peter Eastgate, was a professional
poker player. In fact at last years final table there was 6 professional poker
players, an accountant, a student and a trucking company manager.

Just because they're not one of the big-name TV-pros that get promoted by ESPN
as big names doesn't mean that they're not professional. In fact many of the
big-name pros are not actually very good in comparison to the online pros.

------
ojbyrne
"Over the course of a year, a given pro will play thousands of poker hands,
and so this shift in probabilities adds up to dramatic winnings."

I don't actually know if that's true, but my impression is the exact opposite
- that pro poker players have basically parlayed a bit of initial luck into a
lucrative career that really has little to do with differential skill and more
to do with self-promotion.

Which, to my mind, is just as useful a perspective on entrepreneurship.

~~~
karzeem
I get what you're saying re self-promotion in the case of pros who make money
from endorsements and the like. But for most (and quite possibly all) of the
pros good enough to have endorsement deals, most of their income is money won
at a poker table. How does self-promotion help there?

~~~
ojbyrne
As I said, I don't really know enough to say, but are there stats to show that
"most of their income is money won at a poker table?" And how much of that is
due to being invited to tournaments?

------
leelin
As I was reading, I was so sure the big lesson was going to be: Pros don't
want to all-in coin flip against a no-name amateur. Therefore, a startup
should compete against big companies by taking the battle away from the
incumbent's comfort zone.

I guess I was surprised to see for once an article advising us to act more
like the Goliaths and not the Davids.

