25 – January 25
“If you bet on a horse, that’s gambling. If you bet you can make three spades, that’s entertainment. If you bet cotton will go up three points, that’s business. See the difference?”—Blackie Sherrode
People always smile and look askance when I tell them I play poker. “You teach finances and you gamble?” they ask incredulously. Ah, but any poker player will tell you: Poker isn’t gambling. It is a game where, as in life, luck always plays a part, but over the long-term it is a certainty: Good players win and bad players lose. If you play well, it is possible to win consistently at poker. (Contrary to what the media commonly reports: Barbara Enright, one of the top women poker players, spent days filming a segment for 48 Hours. It was “too positive,” however. Instead, they profiled a gambling addict who lost all her money.)
Poker is fun, challenging, and takes a combination of skill and luck. It is a game of strategy, assessing risks vs. rewards, and taking your best shot when the odds are with you. The great players have strong minds, strong wills, patience and knowledge of people honed by many hours of observation. They also understand that luck runs in cycles and have a feel for when they are “running good.” And they have a positive winning attitude—they believe in their skill and they believe in their luck.
John Kluge, whose net worth was estimated by Forbes magazine to be $5.6 billion dollars had this to say about poker: “If you want your kid to succeed in business, maybe you shouldn’t send him or her to business school. Teach him to play cards instead. Card playing teaches you that luck is important, but how you play your luck is even more important.”
Some people go broke playing poker. Some people make their living playing poker. Just like life. For me, poker is fun. It challenges my skills, gives me adrenaline rushes when I’m running good, and I’m working on taking my “bad beats” with grace. I don’t have to dress up, I don’t have to be “on,” I can talk and be sociable if I want to or sit quietly if I don’t. This is a relaxing balance of energy for someone often in the public eye. I have a budget category under “Entertainment” labeled “Poker.” If I have fun and don’t exceed my budget, I consider it money well spent. When I win and have extra money, I’m happy.
Poker is fun and can be a rewarding hobby. But before you step inside the casino with your hard-earned cash, I suggest you study the game—the winning players do. Otherwise, you may lose your shirt.
Whatever your hobby is, have a budget for it, stay within it, then have as much fun as you can.
Whatever your life is, have a budget for it, stay within it, then have as much fun as you can.
“I am a lucky person. A powerful winning force surrounds me!” (Mike Caro, Fundamentals of Poker)
People often wonder why I like playing poker so much. “You’re a financial coach! How can you gamble?” they ask incredulously.
“And what part of life isn’t a gamble?” I retort. “The stock market? Going into business for yourself? Taking a new job? Moving to a new city? Getting married? Getting divorced? You take your life in your hands when you get behind the wheel of a car, jump on an airplane, or just walk across the street.
“You’re playing the odds every day of your life, calculating the risks versus the rewards of any given action. Putting money in a savings account has low risk but also low reward, investing in a new business has a higher risk but a potentially much greater reward.”
Playing poker is a fun game to play, but in addition it has helped me develop many useful skills that have helped me in my business. Do you have a hobby that is fun, teaches you valuable skills, and can make you money too? Here are some business lessons I learned at the poker tables:
- Patience. A poker professional once said, “To teach people to play poker, my first lesson would be to tell them to go outside and watch the grass grow for two hours. My second lesson would be for them to go outside and watch the grass grow for four hours.” Sigh. When the cards aren’t falling your way, you can’t make them come. You have to wait for the right cards, right position, or right situation. Trying to make a bad situation work will only get you busted. I once played in a poker tournament for 1 ½ hours without playing a hand, but my patience paid off and I finished in the money. I thought about that when the economy turned south and the public stopped buying…well, just about everything. So you wait it out, knowing the shift will come. It always does. Like it’s doing now!
- How to read people. You’ve heard about people having a “poker face”? That means they have the same facial expression whether they are happy or sad, strong or weak. Poker players are trying not to show their excitement when they have a strong hand, or to look strong when they are weak. Most people never school their expressions, and everything they think is writ large across their faces. When I talk with someone or teach my classes, I can see on their faces whether or not they agree with me – they smile and nod their heads, or they frown and shake their heads. They roll their eyes when they don’t believe me and they grimace when they hit their issue. When I teach teleclasses and don’t have the visual clues, I’ve been blown away to discover how clearly facial expressions show up in the voice! This skill alone has helped me improve my teaching skills and my ability to help others.
- How to suffer “bad beats” with grace. If you have an anger management problem, you probably shouldn’t play poker. Some of the “injustices” of poker will have you steaming! In the 2009 World Series of Poker Main Event, Joe Cada of Michigan went all in with two deuces, and Antoine Saout of France called with two Queens, far and away the best hand. The odds of Antoine winning were 4 to 1. But when a deuce came on the board, Joe had three of a kind and won the hand, while Antoine lost most of his chips and a few hands later was busted out of the tournament in third place. “That’s poker,” is the common refrain of poker professionals in these situations. Business owners say, “That’s business.” You have to be able to recover from your failures, your misses, your bad luck. Luck happens – both bad and good. Roll with it. Getting angry about it will just make you “go on tilt” and blow all the rest of your money. Because you just really don’t make great decisions when you’re angry.
- How to figure risk/reward ratios. Poker players with math skills have an advantage in the game. If the pot has $5 in it and somebody bets $20, there’s now $25 in the pot – but you’ll have to pay $20 to win $25. Not a good bet. Even if you have the best starting hand and the best odds right now, you can still lose, so this is not a great investment of your $20. The guy who bet $20 has given you “bad pot odds” to call. Many players get caught up in the thrill of the game and ignore the odds. Similarly, it always amazes me how many business owners aren’t regularly counting their money and figuring out their profitability on each sector of their business. Poker is a game of making good decisions, and so is business. Use your money wisely, when the odds of success are with you, and the reward is worth the risk.
- Don’t chase “sunk costs”. Or in other words, “know when to fold ‘em” and “don’t throw good money after bad.” Once you have invested money in a poker hand, you have to figure out if the other player has a better hand than you do. For example, I was in a tournament in Las Vegas and had Ace-King as my starting cards. I raised the pot. A friend of mine playing behind me re-raised and everyone else folded. Now I’m thinking that if she has two Aces or two Kings, she is going to be a 90% favorite in this hand. If she has two Queens or a lower pair, we are in a “race” and the odds are 50-50. I want to test how strong she is before I give up, so I raised her back. She promptly raised again, and I folded my hand. She told me later she had two Aces, so I escaped with a minimum of damage. Had I called “because I had already invested a lot of money” I probably would have busted out of the tournament right there. But a lot of players won’t give up when they think they are beat. In business, it’s the same. If you have a losing business strategy, throwing more money at it isn’t going to help you.
- Be lucky! “I’d rather be lucky than good” if a famous poker saying. In the Queen of Clubs tournament I won, there was a key hand where I didn’t have the best hand, but I got lucky. Like Joe Cada, I made three-of-a-kind to beat the other person’s bigger pair. In poker and in life, you have to take risks and get lucky. That’s why the average millionaire has filed bankruptcy 3.5 times. No one wins every time. But if you keep studying and improving your game, your odds will improve, and you’ll win more than you lose in the long run. The main thing is to stay within your budget and have fun.
And that is success – in poker, in business, and in life!