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Building a startup is like a game of poker. Both are a game of high risk, and high reward. What entrepreneurs can learn from the game of poker is that a successful startup is the right combination of the luck, risk, bets, and a founder's ability to execute against the odds. Here are 5 lessons entrepreneurs can learn from the game of poker:
1. Odds are Never Zero: About nine out of ten startups fail. Founders have cited that the reason for failure can come down to a number of factors, e.g. insufficient capital (29%), the wrong team (23%) bad location (9%) or even a failure to pivot (7%).But what you can learn about startups from poker is that sure, one ‘hand’ has higher odds of winning than another, but no hand ever has zero odds. What sets poker apart from the rest of the games played at a casino is that—the house doesn’t always win. An entrepreneur can have all the odds against him/her, but if they know how to play their hand -- what innovation or value-added product they bring to their market -- then they have a chance to win big.
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2. Evaluate Risk: A gambler is someone who 'takes risky action in the hopes of a desired result.' Many would argue a poker player is not a gambler. Instead, one judge says that 'poker is more a game of skill than of chance.' Like startups, a thoughtful and diligent entrepreneur is one who understands the risks on the table and uses data, gut, and rationale to make what he or she feels is the best decision. Don't gamble, evaluate risk.
3. Don't Wait for Perfect Information: In poker, you place bets without knowing the hands of the other players at the table. With each new piece of information, you evaluate the risk and make predictions about how you foresee the game unfolding. This is the same situation that you are in as an entrepreneur. You will never have perfect information. Instead, you are constantly evaluating new data from the market, the competitors, the customers etc. So you need to use what you know to make decisions based on what will increase your odds of success. Sometimes you have to pivot and sometimes you have to push through. But if you spend too much time waiting for all the cards to unfold, you may just miss your shot. You have to take bets on imperfect information.
4. Don't Underestimate Luck: Entrepreneurship is a game. There will be a lot of losers and very few winners. Like in all games, you can gather as much information as you can and calculate all the odds correctly, but some unforeseen wild card might take you by surprise. Luck, randomness and the right timing plays a significant role in your success or failure.
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5. The Entrepreneur is the Secret Sauce: Poker does require luck, but how you play your cards will ultimately determine your outcome. How big of a win or a loss is in the hands of the player. Investors will always say that one of the most important reasons to invest in a particular startup is their belief in the founder. The entrepreneur is the one who evaluates the risk, takes the bets and calls the shots. Without a strong visionary and executor, an idea is worth nothing. The entrepreneur is the secret sauce.
There are a lot of people who say they want to be an entrepreneur but at the end of the day, you just need to put your chips on the table. Take this advice from two-time World Poker Tour champion Daniel Negreanu:
“The majority of players are looking for reasons to fold. I am looking for reasons to play. ”
If you have the drive to win and start your own venture, what are you waiting for? Go all-in.
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