
Lessons learned from a failed poker software business - matt1
http://www.mattmazur.com/2008/11/all-in-expert-lessons-learned/
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vlad
I don't think you had a failed poker software business. You wrote, released,
and announced some software. That's simply step one, and the very minimum.
Next, you need to iterate, which may include adding features found in other
software, creating a web version, and more. I see very few lessons here, and
they are on how to fail.

~~~
matt1
Yep, you're right. As I mentioned in the post, I use the word "business"
liberally for lack of a better term. If there had been a future for the
product I would have iterated, created a web app, etc, but I decided it wasn't
worth the effort. As far as the lessons, figuring out how something fails is
strongly tied to figuring out why it succeeds.

~~~
breck
"but I decided it wasn't worth the effort."

Good decision. It seems like you have a lot of talent and can make a LOT more
money in a vertical other than poker. Also, it will probably be more enjoyable
in another domain.

My 2 cents. We tried to a business in the lottery space once because it seemed
there were no good tech companies there, there was a ton of money at stake,
and lots of innovation to be done. But after a short time it was really
demoralizing to be in that type of vertical. Fail fast and move on!

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halo
I note that on the website there seems to be no real screenshots of your
application in action that give me a good idea of what it does and how it
works. In my opinion, this is a huge mistake - I generally won't download
/anything/ unless I've seen a screenshot first.

~~~
matt1
You mean the little dinky gradient grid on the front page isn't enough? Just
kidding -- thanks for the feedback.

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mikkom
I think taking down the site was a bad idea, after reading your article, I
would have bought it (my pain treshold for random purchases goes somewhere
around $20 so if you decide to sell it for under that, please drop a notice).

I'm an entrepreneur myself (We sold our company to a quite big company about
1,5 years ago), I think what really went wrong was not the product, niche or
anything like that. It was the marketing/sales. You should never underestimate
how hard selling even a good product is.

also, this kind of a product will never "get old", the principles behind it
will be the same forever so if it's good and you get enough people who
purchase, you will get snowball effect by mouth to mouth marketing.

I think the worst decision you made was to waste your work when you took the
site down. I also think your name is awful, it's so generic that it's hard to
even find using google so what I would do is to republish the program with
catchy name and add a link from your blog.

Also it's not a bad idea to hang in places like digitalpoint forums and hire
some indian to submit your tool to X directories, that will cost you about
$10-20 and you will get a lot of google goodness.

edit: you are giving it free now? Okay suits me but I would have bought it.
How about adding at least a donation button?

~~~
matt1
Very good post. I have a lot to learn about advertising. While it's nice when
your product sells itself, there's clearly a lot of value in a great
advertising campaign. I could have done much better following through after I
launched.

I liked the name, but the problem was the three words: all+in+expert. There
was a time after it launched where the site came up as #1, but now its faded
into oblivion. I thought it succinctly captured what the software was about,
but as you said, maybe it wasn't catchy enough.

I'm launching a new site in a few weeks which I'm going to do a few things
differently with. The digitalpoint idea isn't bad.

No need for a donation, your advice is far more valuable than $20 will ever
be.

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nadim
Thanks for sharing the insight. A few months of work in exchange for some
valuable lessons learned - well done.

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Tichy
It sounds as if you didn't try any advertising at all, except for a small
announcement in a poker group? I think you should have put a lot more thought
into how to get users to find your product. Like, sometimes (often, maybe),
people don't even know they could use something and that something they could
use exists. You have to educate them.

~~~
matt1
Good point. I added a bit of clarification to the article since it did read
like the one post was the only thing I did.

After it launched I decided that the best way to demonstrate its utility was
to search poker forums for problems and then post the ALL IN Expert results. I
wound up adding a feature to the software that let people export the results
in a forum-friendly format which also linked back to the site. This helped
bring some people to the site and if I had continued it for some time it may
have brought in a few more registrations. In hindsight maybe I should have
done this more. It's hard to say... No matter how much you prod a dead duck
it's not gonna move much.

~~~
Tichy
Not saying that it would have been successful, hard to say.

But reading "Advertising is a tax for being unremarkable” seems a bit harsh.
In some businesses, there simply is no other way. For example recently I heard
from some online dating services that they really boil down to the hard
calculation of "how expensive is it to convert a user we bought with
advertising". Like if they raise their conversion rates, they can afford more
advertising, and so on. Sure, maybe sometimes there will be a "hit dating
service" that spreads through word of mouth, but the others seem to do OK,
too.

Especially in Poker it seems advertising is huge?

~~~
cabalamat
> In some businesses, there simply is no other way. For example recently I
> heard from some online dating services

I don't think advertising is necessary for an online dating service. For
example, quite a few of my friends are on OK Cupid, and as far as I know they
don't do much advertising.

"Advertising is a tax for being unremarkable" is a really succinct way of
putting it.

~~~
Tichy
Even if you can be successful without advertising, it seems a bit silly to be
against it. If you know that by investing 100000$ in advertising, you can earn
another 1000000$ in revenue, why would you not do it? Just because it loses
you points in the indie scene?

I used to be all negative about advertising, but I changed my attitude since I
realized that nature itself relies heavily on advertising. A beautiful flower
is advertising, too. Even a flower has to announce "I am here" with colors and
odors. Maybe in some cases a "social recommendation mechanism" is also at work
(like the bees who inform other bees about food sources), but without such a
mechanism, how are your clients going to discover you?

~~~
sokoloff
One example answer is that if your gross margin is anything under 10%, you
shouldn't spend $100m in advertising for $1mm in marginal revenue.

Doesn't happen often in software, of course.

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Tichy
I admit you have lost me here - why should one not make that investment?

~~~
sokoloff
Let's say your gross margin is 9%.

You spend $100K in advertising. You get an additional $1000K in revenue, on
which you make a 9% profit. You bank $90K profit from this.

You're $10K worse off for having done that advertising.

~~~
Tichy
OK - not so used to terms like "gross margin" ;-)

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alexhu
I'm guessing your problem is a miscalculation in target market.

People will be either

1: Very good at poker. In which case they can go through this mental, odds-
calculating process in their head without the need for software. or

2: Not very good at poker. In which case your software is immensely confusing.
They need to be able to put opponents on a range of hands (how does a novice
guess what an opponent most likely has? half-likely has?) in less than 20
seconds (the time online poker software gives to each player per turn).

I play poker pretty often, and can tell you that odds calculation is never a
fixed thing (so it's hard to replicate with software), and even considering my
poker background, the screenshots of your program still confused me.

~~~
mattmaroon
1) Wrong. Complex odds can't be calculated in your head. Even the math PhDs
who do well at poker calculate EVs against a range of holdings with a
computer.

For instance, if you can calculate your equity with T9s against a range of
(AA-22, Ak-AT, A9s, KQ-KT, K9s, QJ-QTs)in your head, consider yourself a
genius.

The type of software he built is very popular among people who are good at
poker or trying to become so.

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mynameishere
Does "estimating your opponent's hands" have any value? If you could do that
with any certainty you probably don't need a calculator.

EDIT: I realize that estimating your opponent's hands is important. Basic
poker there. I'm talking about "estimating your opponent's hands" which is
featured in one of the calculator's screens. That seems like an iffy thing to
feed into a computer. It's a garbage-in-garbage-out situation.

~~~
jd
Being able to figure out what kind of hand your opponent has is the difference
between winning and losing poker. You usually make a guess based on previous
behavior, how much aggression your opponent has shown so far, the position
your opponent is in (acting first is a huge disadvantage) and so on.

If you make no estimate what kind of hand your opponent has you can only
reason in three ways:

a) you assume he always has the best hand. So you throw away your hand.

b) you assume he always has the worst hand. So you put your chips in.

c) you bet big if you have good cards, and you throw your cards away when your
cards are lousy.

Clearly (a) and (b) are bad strategies.

The last strategy is not as bad as the other two, but still terrible. More
often than not your cards are bad. So your opponent will figure out you're not
willing to make large bets with lousy cards, so every time you don't bet, he
will, and every time you bet, he won't. You're going to lose your chips that
way. Basic game theory.

So you need to figure out what cards he could have been dealt so that his
actions make sense. Then, from that range of plausible cards, figure out how
often he has a better hand than you do. If you like your odds, you put your
chips in. Otherwise, you throw your cards away.

It's a lot more complex than this, of course. But the point is that
"estimating your opponent's hands", as difficult as it may be, is absolutely
crucial if you want to win.

~~~
Retric
I suspect that the best long term stable strategie is to randomly assign a
personal value for this hand. Something like .75 to 2x the actual value of
your hand before the bet to reduce the amount of signal your sending out. If
your both doing this and playing perfect poker then nobody wins.

Finding what the best random function might be would be an interesting test of
machine learning. But in the real world few players are going to do something
like this so finding out what their approach is is going to be a better
approach.

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lazyant
Perhaps you can make an online free version and put some ads?

~~~
matt1
Given the small target audience, I don't think it would be worth it to convert
it into a free web app. Anyone that wants to toy with it is welcomed to
download the desktop app now anyway.

~~~
lazyant
I was mentioning it because there may be people interested in a web version of
the poker calculators. As far as I know the known names (pokerstove etc) are
all Windows-based and only Ed Miller has an online equity calculator in his
page.

There may be more poker players like me who doesn't use Windows at home and I
could see the value of having a re-sized small web window while playing with
just three boxes (pot, my stack, opponent's stack) plus a small pre-selection
of opponents ranges (ex: top 10%, top 40%, any two) so it can be used in real
time.

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dhimes
Thanks for posting. I'm finding myself in a similar situation, but I've
adopted a different strategy. I'm writing a second, semi-related app that I
hope will help build the brand equity. There are a lot of insightful comments
in this thread.

My marketing and advertising are weak.

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daemon
You would have generated the target 40K in profit if you'd have simply taken
the time you spent on developing the odds application, and put it into
building a poker bot and playing limit hold'em instead.

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rms
Why don't you give it away for free to people who sign up using your affiliate
link for a poker room?

~~~
mattmaroon
Hard to make any money that way. Most people who want this type of program
already have accounts at the one or two sites worth playing at.

~~~
rms
I was thinking of this program, which is distributed that way.
<http://www.calculatem.com/> There are a lot of casual users who would
definitely be interested in something to give them an edge, but I guess the
problem is they don't know such programs exist.

And sure, most people probably already have accounts at their preferred sites,
but it doesn't hurt to have it as an option. It's easy enough to open a new
poker account (well, it was when I was playing before Bush messed things up)
and getting the typical bonus + software could be enough to play for a week at
a second tier site.

~~~
mattmaroon
Those calculatem people are constantly emailing me asking if I'll link to
them.

~~~
rms
Looks like that strategy is working for them.
<http://www.google.com/search?q=poker+calculator>

~~~
mattmaroon
Yeah, not bad at all. It's labor-intensive, but does appear to pay off.

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brent
$10 (or $40) isn't enough for me to take you serious. Would you make a move on
$10 stock advice?

~~~
mattmaroon
I would buy a $10 program that aided me in making stock picks if it were
simply doing mathematical computations for me. This is more the equivalent of
a program that computes PE and dividend ratios than one that says "Buy AAPL at
$95". Except that dividend ratios can be computed trivially in your head,
while equity against a range of holdings given certain chip stacks cannot.

~~~
brent
Point taken. I didn't read the details. Sounds more like it truly is worth $0.

~~~
mattmaroon
Yeah I'm not sure exactly what it does that some of the free ones don't.

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Fuca
How can this be a Fail? Give it for free if that what it takes then adapt it
to make money.

~~~
matt1
"Give it for free if that what it takes then adapt it to make money." -- I
laughed.

With a lot of work it might one day make some decent change, but again, it's
not worth it at this point.

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time_management
I wouldn't consider this a failure. Guessing that you don't want to run into
legally shady territory (assuming you're in the US) and start an online
gambling site, it's hard as hell to make money in _anything_ related to games,
especially public-domain card games. For example, I'd doubt that the designers
of card games like _FreeCell_ and _Ambition_ ever made a cent off their
inventions.

I'll point this out, though: games do well when the economy tanks, so I
wouldn't give it up just yet. ( _Monopoly_ was invented, in its modern form,
during the Great Depression.)

~~~
mattmaroon
You have no idea how wrong you are. There's a tremendous market for poker-
related apps. It's an industry that rakes in at least hundreds of millions
annually.

If I told you what I made off of this sort of thing in the pre-UIGEA days (and
especially before Party spun off its skins sites) you'd shit your pants.

Top rakeback providers made 6 or maybe even low 7 figures per month at the
pinnacle. The Poker Tracker guys have sold many thousands of copies at $50 a
pop.

Games in general are the only thing monetizing well right now on Facebook and
MySpace platforms too, and the #1 most profitable is almost certainly Zynga's
Texas Hold'em.

~~~
time_management
I looked into it a little bit. You're completely right. I was wrong.

I remember looking at the casual games business in 2006 and realizing that
there was almost no money in it at the time, but that changed, and Texas Hold
'em is, anyway, it's own beast.

I'm very surprised, though, that the Texas Hold 'em blip is still sustaining.
It's a fine game, but you'd think people would get sick of playing the same
game after a while, and look into something more adventurous.

~~~
mattmaroon
Well, poker has been popular for over a century. Hold'em has a lot more cachet
due to having relatively (for poker) low variance, yet still enough that any
clown can win. It's got faster action than anything but a craps table. It
takes only a few minutes to learn and can never truly be mastered. It's still
got that kinda seedy feel to it. High school kids think a top poker pro is on
level with a rock star or pro athlete (I know because I was one for a while
and my wife is a teacher).

I think TV ratings have come down a bit, but I'm pretty sure it'll be around
for a while. I wish other games like pot limit omaha and badugi were more
camera friendly, as they're a lot more skill intensive.

