Why entrepreneurship is like playing Poker

Recently, I did a talk at JFDI, a Y-combinator-quality incubator for South East Asia, where I shared how it is like to be an entrepreneur.

A lot of people tend to think: Being entrepreneur is about having a $1B+ home run in the first try. But it’s almost never the case. The best way to describe the life would be through an analogy of playing poker.

Why poker? Well, it is one of those few card games, where you are not playing against a bank/dealer, but rather amongst the players themselves. Winning a hand is not just a matter of having the best card, but also how you play the hand (since having the best card may not necessarily lead to a win).

Lastly, it’s about knowing when to double down (put more resources), when to fold (call it quits) or when to call the other’s bluff (competitors who posture rather than being a real threat).

The slides I did at JFDI are at the bottom of the article. Here’s a summary of the talk:

1) We all start at a level playing field with almost similar start-up capital;

2) Rarely on the first round will we ever get four Aces and clean up the table right away;

3) Pragmatic approach in lowering risk would be to play each round and win a little, round over round, rather than looking for that 1 super home run. Plan to play for the long-haul;

4) Know when to fold or when to double down. Unlike a traditional game of poker, there’s a time limit to playing entrepreneurial poker. Therefore, one would have to maximize the number of rounds one can play in a finite time for best possible result;

Entrepreneurship is inherently risky, however, we can take certain steps to limit those risk factors that are within our grasp.

Interestingly, Fred Wilson from Union Square Ventures (NYC) wrote a post eight years ago, unknown to me, on how being a venture capitalist is like playing poker. An entrepreneur and a VC are partners of the same coin. Guess which is heads and which one tails?

Photo: Ross Elliot