You’ve got to know when to hold ’em
Know when to fold ’em
Know when to walk away
And know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealin’s done
-The Gambler, Kenny Rogers
As entrepreneurs and creatives, we are often told to never quit in pursuit of our dreams. Conversely, professional gamblers and e-sports players are taught that knowing when to quit is a core skill of successful game playing.
Games (and game theory) have extensive strategies for deciding when to quit, not just persist. This is because the vast majority of games have a win state and multiple players, of which only one can win. Therefore players must develop a quitting strategy in games to optimize chances of winning and maximize the value of their time.
While approaches differ dramatically among players, there are some generally accepted strategies that the best pro gamblers apply. Here are a few of my favorites. I believe they can be applied to any “winnable” situation in life:
Know Your Limit
Probably the most important line that any professional gambler sets is their maximum financial or time limit for a given play. The basic approach is to make an agreement with yourself that you’ll walk away when you reach this line. Great gamblers always know their limit, and rarely exceed it.
In contrast, many entrepreneurs go way beyond their means at some point, dipping into savings, eating ramen, sleeping on floors, going broke. While this is often touted as a great example of tenacity and the entrepreneurial spirit, it is a bad economic decision for the player. If your startup is going sideways, your expected return has declined. Taking on greater financial risk at that point is almost always a losing strategy.
If you include opportunity cost (the other money you could be earning by doing something else), persistence becomes even more expensive the longer you continue to do it. Meaning – if you don’t walk away when you hit your limit, you are compounding the potential for loss, even as your upside also declines.
Other Players are Playing to Win
No matter how friendly you are with your poker tablemates, it’s important to rememebr they are out to win the pot. This means you need to be very careful taking their advice or suggestions. A good player also knows that everyone at the table is playing their own hand, with their own money, against their own strategy, regardless of what you’re doing. That is to say, their motivation is to win, and the approach they will use to achieve that will be opaque.
In most entrepreneurial ecosystems, everyone is interdependent. Politics, relationships and even investment strategies may not be known to you. Therefore, you should not assume you know how any individual is likely to play the game, unless you have observed them for long periods of time. Therefore, you should only take advice from people who have no stake in the success or failure of your business.
Also remember that no matter how often an investor says “we are founder friendly,” it’s important to remember that this cannot be absolutely true. Situations change, and your investors will make strategic decisions based on their own circumstances regardless. This could be personnel related, fund-management related, or something else. Either way, you can’t play well assuming they will be there for you.
Count the Cards
Most super strong bridge and blackjack players are experts at tracking which cards have come up and what the probability is that a given card will come up next. In poker, players don’t always have complete visibility into everyone’s hand, but over time they can combine a bit of card counting with some behavioral analysis of other players to infer the next move.
Ultimately, that’s why you care about knowing the probability of the next step in your entrepreneurial (or relationship) journey. For example, if you are attempting to raise capital for a startup going sideways, once you’ve attempted to raise from all the friendlies and received “no’s”, you know that the odds of raising money have declined substantially. In a sense, you’ve played a hand of cards, and now must draw new ones from the deck – with fewer possible outcomes.
This means you must avoid “magical thinking” in your endeavors and think long term. To maximize your chances of winning, you need to be able to make multiple bets in order to ensure the probabilistic model has a chance to come to fruition. You can’t do that if it’s the last deal of the deck, you have no cash left, and you haven’t been counting the cards clearly.
Don’t Leave a Winning Game
Because poker games can last long periods of time with many discrete hands or even players cycling through, poker players tend to think of games in mid-play as being either good games or bad games. If the game you’re playing is bad, you need to quit when you reach your limit and not chase payback. If the game is going well, most pro players will advise you to keep playing.
The same applies to entrepreneurship. I’ve seen many successful and smart entrepreneurs leave their startups while they were going well because of some fight or disagreement or just because they were getting bored. If things are going well, this may not be the right time to die on that hill. Find another way to keep playing.
Don’t Be Greedy
In as much as you can, don’t push your game beyond the point of reasonable returns. Most entrepreneurs and high-driving individuals I’ve worked with in coaching view the absolute pinnacle of success as the desired goal. Every startup – regardless of potential – is described by its founders as being the next Uber, Google or Netflix. The idea is that if you reach for the stars, but only get part way, that will still be better than achieving 100% of your more reasonable dream.
I’d be the last person to ever counsel someone to lower their expectations. However pro gamblers understand that slow and steady wins the race. The goal is to still be playing years later, adding to your pile of winnings long term. Trying to hit it out of the park in your first hand of competitive poker will likely just leave you broke, and the same is true in entrepreneurship.
Quit Like Your Career Depends on It
Top pro gamblers will tell you to treat the game-playing as a job with defined hours, to-do lists, retrospectives, etc. They are in it for the long haul, and so are you. Your career, reputation, relationships (and hopefully money) will still be here after this project is finished. You need to have sufficient resources to get up, dust yourself off and try again. This won’t be your last at-bat if you don’t want it to be, but know your limits.
Quit While You’re Still Making Good Decisions
When you are tired, hungry, broke or feeling low, this is not the right time to be making good decisions about when (or if) you should keep playing. You need to make these decisions, setting boundaries and driving outcomes, when you are at the top of your game – not the bottom. Make sure you’re in the best possible mental state if you want to keep playing, and double check that your decisions are coming from a place of strength. Make all important decisions in the morning, and remind yourself of your personal commitments.
Quit While It’s Still Fun
This may seem obvious, but many entrepreneurs and high-achievers lose sight of this important issue: life is short, and enjoying yourself is paramount. As Tommy Angelo perfectly describes in his book, Elements of Poker:
“When you are winning, and you reach a point in the session when the happiness you will gain by winning more money will be much less than the pain you will endure if you lose, quit….”
“If you are stuck and you are not having fun, and the reason you are not having fun is because you are stuck, then it’s okay to quit while citing this to yourself as the reason: I want to have fun. I am not having fun. So I will stop this unfun activity, now.”
While I don’t believe the fun consideration should be the first criteria applied to making a decision about an entrepreneurial or artistic endeavor, it should be factored in to all the other elements
Knowing when to quit in gambling – as in life – is just as important as knowing when to persist. Leverage these lessons so you are still there to count when the dealing is done.
Daniel Negreanu, pro poker player, describes the calculus involved in how he walks away: