Some of the best entrepreneurs like Tony Hsieh, Sam Altman, and Chamath Palihapitiya say they learned a lot about business from poker.

I’ve been a startup entrepreneur for 4.5 years and co-founded two startups. I’ve been playing poker for around a year, and while I’m not an expert, I’ve played enough to win poker tournaments in the local casino.

Poker has a few lessons to teach every entrepreneur. Poker can teach you about choosing a startup idea, timing, luck, risk, and dealing with people.

Without further adieu, here are the lessons!

Choose the table to sit at carefully

In poker, there exists a term ‘fish’. That’s how professional players call amateurs who are at the table to lose money. As a poker player trying to make money you try to find a table and play with ‘fish’.

I covered how this translates into business in a previous article, but here’s a great summary of the point from Tony Hsieh, the CEO of Zappos:

“In business, one of the most important decisions for an entrepreneur or a CEO to make is what business to be in. It doesn’t matter how flawlessly a business is executed if it’s the wrong business or if it’s in too small a market. In a poker room, I could only choose which table I wanted to sit at. But in business, I realized that I didn’t have to sit at an existing table. I could define my own, or make the one that I was already at even bigger. (Or, just like in a poker room, I could always choose to change tables.)”

The industry you choose matters a lot. Microsoft and Apple enjoyed the golden days of software and PC revolution.

Would have Bill Gates and Steve Jobs achieved the same heights if they were in the restaurant business? We will never know but there are reasons to think they wouldn’t, even if they were super passionate about what they do.

Timing is essential

In poker, where you sit at the table in relation to the starting player matters a lot. The table positions can be divided into early, middle,

and late in accordance to when one needs to make their move in a certain round. People in the early positions make their move first and people in late positions end the round. The positions rotate round after round.

Credit: Poker4beginners, http://poker4beginners.com/secrets-of-poker-table-positions/

In short, late positions are golden in poker.

They are so valuable that professional players would exchange better cards for worse ones if they could just get a better position. The reason is simple. If you move last, you have more time to gather information on what your opponents have as they are forced to move first.

To me, this poker metaphor is about timing. Even the best cards might not be worth playing out of position.

There is a great TED talk that explores this thought in detail. In short, according to researchers the single biggest reason startups succeed is timing.

One example is Airbnb starting after the 2008 financial crisis when people needed extra cash and were willing to explore the possibility of hosting strangers in their house if it meant paying for their bread.

It’s about understanding people.

Reading people gives you the ultimate advantage in poker. With amateurs, you can see their bluff in their body language. On a professional level, reading people is often considered very hard if not impossible to pull off. It’s what separates professionals and amateurs in poker.

Understanding people is also crucial in business. Moreover, in comparison to poker, the advantage doesn’t wither away as you grow.

Success is not about the quality of your product. It’s about the perceived quality of your product by others. Can you convince them to buy? Can you deliver them a great experience of using your product? It’s all about people, understanding them, and delivering to their needs.

Take calculated risks

“Feeling lucky” doesn’t cut it if you have 2 and 7 offsuit, which is the worst combination of starting cards in poker. The best poker players are able to calculate the probabilities of success and not be swayed by their emotions.

The same applies to business. Many entrepreneurs go back to a 9 to 5 job after one failed startup.

Yet, what are the chances of success with a startup? 1 in 100? Moderate success for 1 in 20? If you were to truly internalize those odds, you would realize that often it’s not about you, but rather about a bad lottery ticket. Buy another one, bad beat is not a reason to give up on your dreams!

Accept that luck exists and aim to make the best decisions despite the whims of fate

Do you know how people wear a lucky T-shirt to every important occasion because they got lucky in it once? Don’t make false associations like a Pavlov’s dog, which is taught to associate stimulus and response.

In poker, there are so known bad beats, when unlikely events happen. The best players still make the same decision next time, even though they got unlucky with it the last time.

They know that something unlikely happening once doesn’t affect the probability of it happening again in a similar circumstance.

Similar things happen in business. I had a situation in my startup when a big corporate client representative passed away. Sometimes shit happens, accept it, do the same in a similar situation, and in the long run, luck will even out.

Exception 1: Work with the best people

I’ve previously mentioned that in poker you try to play with people who are worse than you, ‘fish’.

In business, it’s the opposite. You want to hire and surround yourself with people who are better than you.

For me, it’s about a community. I recently joined GrowthClub, a community of founders with an average of $5K+ MRR where founders exchange growth hacks and build genuine connections in 1-on-1 video calls.

I loved it so much for providing me the support and networking with like-minded people that I ended up joining the company as an advisor.

Exception 2: Sometimes, bluff works in poker. It does in business too, but it’s not worth it.

Credit: RadioTimes, https://www.radiotimes.com/news/on-demand/2020-06-09/game-of-thrones-kit-harington-jon-snow/

Everyone knows about bluffing in poker. Sometimes, it even works in business. Examples such as Theranos and Enron are plentiful. To explain why even if it works you shouldn’t attempt it, I am just going to leave the quote from Jon Snow of Game of Thrones here:

“I’m not gonna swear an oath I can’t uphold. Talk about my father if you want, tell me that’s the attitude that got him killed. But when enough people make false promises, words stop meaning anything. Then there are no more answers, only better and better lies, and lies won’t help us in this fight.”