Jeremy Stein: Why 99% of the Analogies Between Business and Poker are Wrong
Ryan Graves
· 1 month ago
Calacanis would have a field day with this post, he's the king of the poker to biz analogies.
Solid argument Jeremy.
jeremystein
· 1 month ago
Even though he is an avid poker player, I've got about 3 million hands on him. This is an open invite for anyone wanting to take a shot. I think I can disprove just about any analogy.
Ryan Graves
· 1 month ago
Bold, I like it.
evreeland
· 1 month ago
Very good post Jeremy. I thought that at first you were calling out my post last week when I compared poker and trading? How do you feel about that analogy?
I think one key fundamental difference between poker and business is that poker is a zero sum game. Whereas in business I feel like some of the best opportunities are those in which wealth is created. Paul Graham discusses the importance of wealth creation in one of his essays http://www.paulgraham.com/wealth.html Although a lot of times in business we are competing against one another in order to gain market share, some of the best businesses are the ones that create an entirely new market.
jeremystein
· 1 month ago
i think there are a lot of similarities between poker and trading but i think your generalizations of competitiveness are far too broad.
you are right about zero sum games. that is definitely a difference. however, its not my intention to point out the differences. i can do that all day. i am focused more on the analogies and why they are wrong.
sayemislam
· 4 weeks ago
cool post here, but i think the big mistake you're making though is that you're taking a nice analogy and attacking it for not being a perfect fit across every scenario. and that's just simply not how most analogies work. playing cards should obviously not be taken as a complete substitute for the business game, but it's *definitely* awesome training for a lot of the skills required to succeed in it.
moreover, you're comparing bets made in poker to strategic bets made to expand in a market, which i agree, isn't a great fit because you can't bluff a crappy product in business the same way you could w/ a hand in poker. HOWEVER, the connection between the two is very strong for all aspects of deal-making and negotiating. and closing deals is what drives every business, which is why it's common to see entrepreneurs/investors with a lot of experience to be fond of this analogy.
every business deal is a zero-sum game in which both parties are bluffing their hands, assessing their cards, thinking long-term, and deciding whether to actually fold... deals commonly fall through of course. poker sharpens the applied psychology, the social cues, and all the strategy to optimize your deal-making skills.
of course, some deals aren't entirely zero-sum. like if you're an investor you're still going to play hard-ball with an entrepreneur up until the close, but both parties will only push so far because of the mutual long-term interests and relationship-building post-deal. this is in contrast to more transaction-oriented deals like sales and distribution partnerships.
i agree, the theory of reciprocity is a very valid critique of why poker isn't as good of a model for the game of business -- or even life itself.
that's why if you're serious about improving your business game and you're really ambitious you'll follow the lead of buffett/gates and pick up bridge too. with more than 635 billion possible hands, it doesn't suffer from the same limitations that poker does, making it the ultimate card game. you're bound to encounter new scenarios you never hit before and it takes real experience to win, just as in business and life. and unlike poker, if you have a shitty hand in bridge you can't bluff it; instead you optimize your situation by cutting your losses as much as possible.
on the other hand, bridge doesn't train you to read peoples' non-verbal social cues; poker does. that's why the latter is perfect training for deal-making and being a closer while the former is a good model for honing overall business intuition, risk management, and long-term strategy.
jeremystein
· 4 weeks ago
>>playing cards should obviously not be taken as a complete substitute for the business game, but it's *definitely* awesome training for a lot of the skills required to succeed in it.
i think there is a lot of luck in learning. im not convinced that the skills between poker and business are transferable. see this post: http://bit.ly/vtyQp
re: deals and negotiating. thats the theory of reciprocity at work. in poker i will eventually see every hand in every situation. thats not the case in business negotiations.
re: social cues. i don't believe in physical tells. most of that can be faked anyways. its all about hand ranges and pyschology in poker.
sayemislam
· 4 weeks ago
- i'm all about non-verbal cues. critical for really feeling each person's psychology and you could eventually sense whether someone's faking it or not. caro, brunson, and some of the world's best players would readily disagree w/ you.
- i think that saying that "learning in the short run comes down to luck" is a contradiction in itself. learning is always a long-term process and can't be looked at otherwise, and luck is discounted over time.
- yeah, you are gonna come across every hand in poker, but each hand is still going to be played with different players in diff scenarios (e.g. their psychology at the time, their perception of you at the moment, etc - all very critical factors), which makes a world of difference. when i knocked out "fast howie" in the stocktwits poker tourney, i probably had the same kind of hand sometime in my past few yrs of playing poker, but it was still my first time ever being in that scenario with people i've never played with before - making it more of a unique gameplan. same with closing deals.
jeremystein
· 4 weeks ago
>>caro, brunson, and some of the world's best players would readily disagree w/ you.
i do not consider any "tv" pros as some of the best players in the world. having played against many of them, they are generally terrible. the people that are actually the best players in the world agree with me.
the problem is that you are comparing apples to oranges, as many people are when they are making poker analogies. you are oversimplifying extremely complex theories.
All Comments
Solid argument Jeremy.
him. This is an open invite for anyone wanting to take a shot. I think I can
disprove just about any analogy.
I think one key fundamental difference between poker and business is that poker is a zero sum game. Whereas in business I feel like some of the best opportunities are those in which wealth is created. Paul Graham discusses the importance of wealth creation in one of his essays http://www.paulgraham.com/wealth.html Although a lot of times in business we are competing against one another in order to gain market share, some of the best businesses are the ones that create an entirely new market.
you are right about zero sum games. that is definitely a difference. however, its not my intention to point out the differences. i can do that all day. i am focused more on the analogies and why they are wrong.
moreover, you're comparing bets made in poker to strategic bets made to expand in a market, which i agree, isn't a great fit because you can't bluff a crappy product in business the same way you could w/ a hand in poker. HOWEVER, the connection between the two is very strong for all aspects of deal-making and negotiating. and closing deals is what drives every business, which is why it's common to see entrepreneurs/investors with a lot of experience to be fond of this analogy.
every business deal is a zero-sum game in which both parties are bluffing their hands, assessing their cards, thinking long-term, and deciding whether to actually fold... deals commonly fall through of course. poker sharpens the applied psychology, the social cues, and all the strategy to optimize your deal-making skills.
here's a good article on that - http://bit.ly/8mhGDR
of course, some deals aren't entirely zero-sum. like if you're an investor you're still going to play hard-ball with an entrepreneur up until the close, but both parties will only push so far because of the mutual long-term interests and relationship-building post-deal. this is in contrast to more transaction-oriented deals like sales and distribution partnerships.
i agree, the theory of reciprocity is a very valid critique of why poker isn't as good of a model for the game of business -- or even life itself.
that's why if you're serious about improving your business game and you're really ambitious you'll follow the lead of buffett/gates and pick up bridge too. with more than 635 billion possible hands, it doesn't suffer from the same limitations that poker does, making it the ultimate card game. you're bound to encounter new scenarios you never hit before and it takes real experience to win, just as in business and life. and unlike poker, if you have a shitty hand in bridge you can't bluff it; instead you optimize your situation by cutting your losses as much as possible.
on the other hand, bridge doesn't train you to read peoples' non-verbal social cues; poker does. that's why the latter is perfect training for deal-making and being a closer while the former is a good model for honing overall business intuition, risk management, and long-term strategy.
i think there is a lot of luck in learning. im not convinced that the skills between poker and business are transferable. see this post: http://bit.ly/vtyQp
re: deals and negotiating. thats the theory of reciprocity at work. in poker i will eventually see every hand in every situation. thats not the case in business negotiations.
re: social cues. i don't believe in physical tells. most of that can be faked anyways. its all about hand ranges and pyschology in poker.
- i think that saying that "learning in the short run comes down to luck" is a contradiction in itself. learning is always a long-term process and can't be looked at otherwise, and luck is discounted over time.
- yeah, you are gonna come across every hand in poker, but each hand is still going to be played with different players in diff scenarios (e.g. their psychology at the time, their perception of you at the moment, etc - all very critical factors), which makes a world of difference. when i knocked out "fast howie" in the stocktwits poker tourney, i probably had the same kind of hand sometime in my past few yrs of playing poker, but it was still my first time ever being in that scenario with people i've never played with before - making it more of a unique gameplan. same with closing deals.
i do not consider any "tv" pros as some of the best players in the world. having played against many of them, they are generally terrible. the people that are actually the best players in the world agree with me.
the problem is that you are comparing apples to oranges, as many people are when they are making poker analogies. you are oversimplifying extremely complex theories.