The Entrepreneurship philosophy in Texas Poker
I like Texas Poker a lot even though I don’t play it very often. This game is a good way to test a person’s vision, intuition and strategic thinking. The rule of Texas Poker is simple but delicate, in the process of which you can calculate winning odds and capital return, as well as profiling the true nature of humanity.
Card table is like a market in some sense, each person’s call and the fold will eventually affect and change the whole market. However, the implementation of details in the two games is quite different. For example, we all know that each and every behavior has a certain expectation in Texas poker game, which can sometimes be paramount in the long term. Yet the expected value is highly correlated with others’ behaviors and the pool value. As a result, it can be assumed that online AI programs (e.g., Cepheus) can definitely defeat human players (humanity as you may say) in the long run; Or if we have a SNG player in several tables at the same time, certain level of ROI can also get guaranteed when technology is properly developed. Go back to the real life investment, it relies on long-term mechanically fixed strategy operation, and is almost impossible to get good grades.
Texas poker, by contrast, reflects the spirit that is a better fit to entrepreneurship, such as the ability to face risks.
1. Making mistakes at the lowest cost
As is known to us all that, while choosing direction is vital in business, table selection is the first important decision one has to make in Texas Poker. To some extent, it determines how far you can go. Once the boat of business sets up sailing, the most terrible thing on the trip will be low sales on good products, despite all that effort you have devoted. So in the early days of a startup, it is important to be fast, aggressive and accurate. This kind of violence aesthetics, only the Texas Poker players can naturally understand.
For entrepreneurs, the two hole cards in hand are like their “products”, and the pot is like the “market”. Only the best match can win the pot, or win the market. If you are a savvy entrepreneur, the best strategy will be getting flop cards’ information at the minimum “cost” (bet), which is a key factor in determining your destiny in most cases. So when rivals raise big bets, you will tend to choose a fold as “exit”. It’s just like the market, when the giants are burning money without knowing the market for sure, it will be a smart move for entrepreneurs, especially those of small companies to learn how to get away from the market. Likewise, when a Texas poker is facing with a over-betting player, it’s wiser to call small in an attempt to retain power and survive.
It would be stupid to ignore your position, your opponents and choose to UTG all-in even if your cards are damn good, because it can cause you to end up with nothing. Remember to raise a few times before all-in at the button. At least it’s more reasonable. Start up a new company, too, is ultimately determined by “the market”. As a result, before getting to know any market information, instead of “making” (what you think is) the best product, your task is to figure out if the product is suitable for the market at the lower cost.
A good entrepreneur should be “obsessed” with the market trend. The sooner you know about the market, the more (learning) opportunities you will have before running out of money. Unlike the Texas poker, in which you cannot control what your hole cards are, in real life you will know what you have in hand, and can try the best to catch as more useful cards as possible. In addition to professional skills, one’s success depends on many other factors, such as the ability to determine whether to join the table, and what kind of hole cards should you carry and play.
Once there is a New York based creative e-commerce website named Quirky. It has designed many good products but failed to last long, because they did not think thoroughly about the real need of customers. Back to the days when Quirky owned hundreds of millions of cash, it would launch more than 50 products per year regardless of the basic law of entrepreneurship. On the contrary, initially many Angel investors did not dare to invest Uber in the early stage because of its credit card payment system vulnerability.
However, Uber never stopped improving its system afterwards and thus making it a very successful business. So it is of great importance to take market opportunities into consideration when assessing a team, from an investment point of view, on its early stage.
2. Always receive and interpret information
Texas poker can also make us realize the secrets of the “interpretation” and “decision making” profoundly . In the era of massive date, even the experts and decision-maker who have the most information can make lots of wrong judgment. Because they can not always tell the key information from meaningless one. Predictions will definitely be less accurate when they are based on the wrong data.
Those who make the most mistakes are usually the “hedgehog”-type gamblers, who are overconfident and firmly convinced that they can pull back the game. This type of person is very courageous and good at summarizing basic rules. They tend to do pretty good until running into the real masters, when new changes have taken place and they are reluctant to modify their judgments. The extreme confidence on their judgments can sometimes have the behavior become some sort of “performance”.
It will be a completely useless sample if you have just observed a dozen of the opponent’s hole cards and had just one all-in before the flop. When the other party delays, it does not necessary mean he/she is afraid of the money bubble. Or there is an opponent that you are very familiar with, and he has a history of bluffing in All-in; It is very likely for you to think that his behavior is consistent with past record tithout noticing the fact that both of you have drunk a lot tonight. This judgment can be wrong because the model itself is wrong, let alone it omits one important variable beyond the sample.
The preset of position or overconfidence is a horrible thing. Losers in gamble tend to interpret anything that is “relevant” as “causality”. There is a common experiment in economics: put up a box of money for auction , people can make an offer based on his guessing, and final winner will be the highest bidder. The result of this experiment shows that the winner’s bidding price is always higher than the box’s real amount of money. This is the same case in business and investment. The optimism of market can be interpreted as a buy signal, so as to make the wrong call.
Texas poker teaches us to acknowledge “uncertainty” bravely. It is unnecessary to pursue absolute perfection in many scenarios, as long as the judgment is better than the rivals’ so as to ensure the victory. After all, it is remaining objective and always updating judgments that lead to higher odds. High level players are always very calm in the game, even when they get a bad beat because of the river card. There is no mood swings, he/she can still maintain the right track because he/she has already got adapted to looking at everything from an objective point of view.
Texas poker is, of course, used to describe that business has its limitations. There is no way to determine quickly if the strategy is winning or losing in the business world. It is also impossible to start the next game immediately. However, one thing remains same, the most intelligent player is also the most adaptable one.
Nowadays with the rapid developing and ever-changing technology, nobody knows for sure if this is the future or just a bubble. It is a great challenge to founder’s ability of interpretation. Take the Internet of Things for example. IOT is now advancing in an unprecedented scale; many products related to IOT have come to the market. However, the systemic problems such as low cost sensors, mobile devices centralization and fast wireless network, etc. have not been considered yet. Quantitative change will ultimately cause a qualitative change; this is the core direction of thinking.
3. Assessing the power of quantification
Above, it was mentioned that when facing an “all-in” situation where information is lacking, it is hard to make a judgment. However, if one holds a bargaining chip, calculating the odds of winning can help to make a reasonable choice to call or fold. One only needs to use high school level mathematics to easily calculate the minimum expected rate of success for a call to be worth it. Additionally, accurately calculating the probably strength of an opponent’s push and call is the important skill of SNG. After accurately calculating the probably strength of an opponent’s card, the calculations of ICM is the key.
To take another example, in mathematics, the famous Bayes Theorem has huge importance to Texas poker. It doesn’t force us to constantly calculate according to a formula because the amount of calculations would be too much. The real essence lies in real time correction. For example, at first a player might be very fierce, but after some time this same player might begin to fold a lot. We should correct our understanding of this player. With every fold, the judgment of the player’s style gets more precise. Conversely, if one’s understanding of the opponents style is very precise but the opponent begins to change style, the understanding of the opponents style must change accordingly.
The essence of Bayes Theorem is to convert probabilistic estimates into concrete numbers and then calculate more accurate numbers when information about a new circumstance becomes known. This kind of model is very stable because people, unlike computers, are influenced by feelings, not just logic and will make rash decisions, especially when encountering unknown and stressful situations. For example, if the opponent keeps calling “raise” multiple times in a row, how should we judge the situation? Should we keep our previous stance with this new information?
Actually, the only thing we can do at first is make an ordinary calculation as to the opponents machinations or estimate the nit probably. After every move, continuous corrections must be applied to calculate the new number. Although not necessarily completely accurate, it can allow us to avoid some illogical probabilistic calculations.
We can find more realistic examples such as during 9/11, normal people thought that a terrorist attack was unimaginable, and that a second time was completely impossible. In reality, if the probability of a terrorist attack on a plane is one in twenty thousand, after the first plane crash, the probability that the crash was caused by a terrorist attack changes to 38.5%. After a second plane crash the likelihood rises to 99.99%.
Turning events into numerical probabilities has a great effect on me. Starting a business is very complicated and there are many factors that affect the success or failure of the business. Being proactive can increase the probability of success for the business. For example, some possible important proactive things are content creation, social network management, and number of ratings. The further on this list, the less effort is required but the sustainability also increases. There is a law of 72 that allows us to know how long it takes for something to double. For example, if the number of users increases every week by 3%, the time it takes to double is 24 weeks (about 6 months) given by 72 divided by 3. In my past experience, the sensitivity of the numbers is very useful.
4. Failure is also a kind of growth
Texas poker is a simple game to learn, but a complicated game to master. When you think you’ve reached the highest mountain, you find that there’s an even taller mountain to climb. You won’t know how big the distance is until you go from not understanding what your opponent is doing, to having a deep understanding of your opponent’s thinking.
The factor that decides winning or losing is not necessarily the cards in one hands. A cool head and logical thinking are the necessary ingredients to create a high change of winning.
Even if you hold strong cards, you can still lose the hand but gain negative feelings. However, once success or failure has been decided, we cannot change the outcome. We can only enjoy the course of events and think back after the outcome to make sure not to make the same mistake again. Long term practice helps to keep one’s thinking clear.
Card games are won and lost, which is exactly what life is. Life is like a card game, in winning and in losing, the most important thing is to gain experience, learn, and never give up hope. Maybe the next hand will be a straight flush. Enjoy the moment and regard every loss as a way of growth. This is the amazing road of Texas poker. It is also the amazing road of life.