So, I’m out in Vegas this week playing in the World Series of Poker. I’ve been looking forward to it for years. It’s quite an event, with tens of thousands of some of the best players in the world. There are so many analogies between poker and the business world. Heck, I make them in my blogs all the time. They are kind of the same tries and truisms though. Most of those analogies deal with poker as one or more hands you are dealing with in a very micro sort of way. I started thinking of different ones though. Ones that deal with the decision to enter a large and expensive poker tournament and what that means. Talking with some of the professional poker players out here, I started to think of some new angles and thought I’d share them. Just for fun. It really is a business for many. It’s how they make their money. It’s not just a hobby or something to do to kill some time. It has many similarities to an entrepreneur starting a company. Similar thought processes and risks. Similar types of outcome risks and rewards. No real lessons here. Just fun parallels between startup defense businesses and the business of tournament poker.
You could make a case that joining and playing in a large multi-day tournament is a lot like starting your own small business. Just one with a very small life. And in fact, for many, poker is a true profession that pays the bills. Or doesn’t, in more cases than people would like to admit. Let’s focus on one big tournament though. Each person chooses to make a financial investment in a competitive environment using their technical knowledge, passion, and the American dream. Out of these many people choosing this path, only a minority percentage of them will actually “make it” or in poker terms, “make the money”. This is true in the startup world too. You hear it often. Only 20% of startups “Make it”. Yet despite these horrible odds, people press for this dream and press press press to beat the probabilities. The large majority of entrepreneurs, AND, a large number of tournament enterers, will finish their quest empty-handed. Or worse. This is not a safe route. It takes fortitude and a willingness to bet on yourself. To really take a deep look inside and decide if you can take that kind of risk. Obviously, the stakes are much higher in a small business startup. But hey, it’s just an analogy!
Another similarity I realized recently is the definition of “Make it” What exactly does that mean? In my entrepreneur career, it felt like a Boolean. A Pass/Fail proposition. The truth is actually much different. As it is in these large tournaments. In a tournament like the WSOP Main Event or the WSOP Colossus, about 15% of the enterers will “make it”. That means 85% finish with less than they started with the day before. Just like a startup defense entrepreneur. The 15% that do succeed though do not do so in the same way. The large majority of the “winners” barely win. The pay scale is weighted so heavily on the top couple percent that the remaining 10 or 12 % are making very small wins. You hear about the big multi-million dollar prizes for the winners. What you don’t hear is that most of the ones who “make it” only get 1.5 or 2.5 times what they put in as an investment. This also tracks with startups. Many small businesses that do make it, are making some money but certainly not living the high life. They are eking out a living but it’s a hard life that involves constant daily risks and few comforts. Like in poker, you have to consider more than just that 15% success rate. You need to consider the likelihood that you won’t be hitting that homerun. Can you live with that?
Some other parallels I pondered during the 15-hour days:
- 13-hour days. Starting up a defense business is never an 8 to 5 job. It’s exhausting. It’s always on. And often when you finally lay down to get some sleep you’re so hyped up on adrenalin or other thoughts, your nights are restless.
- Luck. You really cannot win a poker tournament on luck alone. But you absolutely cannot win without going your way. It’s not really possible to win a poker tournament if you’re a bad player either. Even with luck. The winners are both skilled and have some luck augment that skill. This is undoubtedly the same for entrepreneurs, starting a company. You cant make it and succeed if you’re bad but lucky. You need to be both. It’s almost impossible if you’re very skilled and unlucky. That’s just the breaks. Life isn’t fair. Neither is business. Neither is poker. Some days you just aren’t fortunate enough to capitalize on your skill.
- Investments. In business, you often need to get outside investors to help you carry the water and de-risk your personal stake. Or just to plain afford it. These big tournaments have the same deal going on. Mini-capitalism ecosystems where other people “stake” players to enter in exchange for a portion of their winnings. For example, these tournaments can cost between 10k and 100k, or more. That’s a lot of money. A good player will have more luck finding people to stake him or her to de-risk their personal financial load. What happens if that player loses? Just like in a startup, investors lose all their money. Not fun. Especially when you recall at least 85% of the field will lose everything! It’s easy to focus on the home runs but unlikely. We keep doing it though. We are passionate. We are capitalists. We believe in not just our dreams but want to help and row alongside others and their skills and passions. Is it smart? Not mathematically usually. But it is one of the engines that drives our country.
While there are many of these types of parallels, let’s be really honest though. It’s just for fun. Starting, operating, and hopefully succeeding with, a new business is a far more noble calling than playing poker for a living. The small businesses in our towns really are the true bread and butter in our neighborhoods. The American dream is still alive and well even with all the risks. I meet people every week deciding to take that plunge. Many won’t succeed. Some will. A couple will hit a home run. They all provide services, products, and jobs that drive our communities. I have been on both sides. The heartbreak of failure is never forgotten. The thrill of success and the feeling of providing homes for your employees and their families for years is beyond fulfilling. As much as I love poker and see the analogies, at its core it will never come close to the life of a person trying to start up a company. So for those of you thinking of taking that plunge with your own startup, may you RUN GOOD and fade the outs. Shuffle up and deal.
If you are someone, or know someone, who is looking to start their own small defense business and need professional consultation, give High Stakes Partners a call. If you’re a poker player as well, even better, but don’t hesitate to contact our startup experts in the defense industry for individualized help. We’re here to talk poker, poker parallels and all things small defense business! Call now.