What Poker Taught Me About Business Plans

A few months ago my dad, a WVU alum, told me he was judging a Business Plan Competition for undergrads at West Virginia University. He floated the idea of me judging the competition as well saying that it would be a fun experience. I told him that it sounded interesting but I was too busy to get involved.

A few days later I receive an email from the coordinator of the business competition thanking me for signing up as a judge and sending me a link to the business plans I was to evaluate. My dad went ahead and signed me up despite my hesitations. At first I was a bit annoyed at how much time I would have to “waste” mulling over a few college-level business plans. However, judging the competition has actually served as a fascinating learning experience so far, and there are several more steps yet to go in the judging process. Looking over the business plans really helped me refine my thinking on how to look at investment opportunities and determine the feasibility of a business.

The two factors that shape the way I analyze any investment are my experience working at Goldman Sachs and the countless hours I have spent playing poker. How does poker possibly inform my investment analysis? It’s pretty simple. I think of a company simply as an asset (read: Stock or Bond) and the money I invest is the “risk” I’m willing to take on to earn the returns of owning that asset (in this case, owning that business). What is an ideal investment? One with high returns, and low risk. Wall Street analysts spend hours digging deep into financial data to find investments with attractive risk/reward.

The key distinction between owning stock and owning a company is control. This is why investing in a business you own or have an influential stake is much more attractive than investing in public companies, when your investments are at risk to wide market fluctuations. In both scenarios, its important to do detailed analysis on your investment, but at the end of the day having control gives you an extra edge over simply owning the SP500. One of the most important concepts in poker is making plays that have a positive expected value. In essence, this means the odds of me winning are greater than the amount of money I am risking. For example, if I have a 25% chance to win a $100 pot, but I only need to put in $10, that is positive expected value. My expected value is the chance of success multiplied by my potential reward. In this case, $100 x 25% is $25 expected value, so risking anything up to $25 to win that pot is a play that will always be correct. In this instance, risking $10 to win $25 is a 250% ROI!

Finding investment opportunities with a high ROI and a limited downside is both an art and science . Going through all of these plans has really helped me sharpen up my skills. I even broke out excel and did some pro forma analysis on a few of the concepts to see how feasible they would be under certain assumptions. I think the biggest take away for me has been to think of each of these businesses as an asset, with an initial investment and some sort of return – and asking important questions like – what is my return? What is my initial cash outlay? What are my big risks? What do I do if this business fails? How can I test some of these assumptions, etc etc. Helping out with this competition has already been a fascinating learning experience and I hope to learn more as I stay involved with the process. If your alma mater or a university near your offers a program like this, I highly suggest getting involved if you want to sharpen your skills and get some new ideas flowing.

The Books I Read To Make Over $1000 Playing Poker

Is that a fortune cookie?

Poker is one of my biggest hobbies and something I love playing. From blogs to books, I have read a tremendous amount about the game and I wanted to share my favorite poker books from my bookshelf with you.

BUILDING BLOCKS

The Pocket Idiot’s Guide To Texas Holdem (Burgess & Baldassarre)

This was the very first book I bought when I started to teach myself Texas Holdem. I already knew how to play but I wanted to round out the basics and make sure I had all my foundations covered. I think it never hurts to get a refresher and make sure your foundations are rock solid. This is my go-to for learning the rules, numbers, and basic odds.

STARTING OUT

Okay so now that you have the very basics down and know the rules. It’s time to start working on your strategy. These two books formed the core of my overall poker strategic thinking. Both books focus on all various forms of poker and aren’t limited just to Holdem. Great for building on the basics and getting onto more advanced strategic topics. Also useful if you like to mix it up at your home game and play a few hands of Omaha or Five Card Draw.

The Theory of Poker (David Sklansky)

This book really builds on the odds and fundamentals taught in the Idiot’s Guide. You start to learn more advanced topics like c-betting, implied odds, and semi-bluffing. This book builds your strategic understanding and poker vocabulary up so you can start to grasp some of the more advanced concepts in the deeper books.

Super System (Doyle Brunson)

Doyle Brunson – a poker icon – wrote this book many years ago and it was truly the first “poker book” ever created. The book features information packed chapters about various poker games, each chapter written by a respective expert in that particular form of poker. Great for rounding out your game and learning good solid aggressive poker from the Texas Dolly himself.

CASH GAMES

If you want to master deep stacked cash games – Dan Harringon’s series is considered the bible. This is mandatory reading for anyone who wants to take cash games seriously and learn advanced cash game strategies. In this two-part series Harrington walks through every poker play style and why they work and why they don’t. The books outline every street (from pre flop to the river) and how to play various hands and scenarios from every possible angle.

Harrington On Cash Games (Vol 1)

Harrington On Cash Games (Vol 2)

SIT N GOS

My personal favorite games to play are Sit N Gos (SNGS). These are small table tournaments from 2 player heads up to 9 player single table and sometimes even larger. These are quick and short mini-tournaments and offer a great way to make money playing poker. SNGs are easy to find online. Moshman himself has made hundreds of thousands playing online SNGs and he shares his wisdom in these two books.

Sit ‘n Go Strategy (Colin Moshman)

This book is awesome. This book hammers out all the key concepts of SNGs and gives you a full understanding of the math behind SNG play. A full breakdown how to play all the stages of Sit ‘N Gos from the start down to the most important part – the “bubble”- that determines if a player makes money or loses it.

Heads-Up No-Limit Hold ‘Em (Colin Moshman)

Heads up is such a drastically different game than almost any other form of poker that it requires an entirely different strategy. One of my personal favorite game modes because it is so aggressive and action packed – I found this book to be an invaluable resource. As you can see from the picture of my bookshelf, I’ve read through this one a number of times.

DIGGING DEEPER

Here are a few more books that I read to round out my game and dig a bit deeper. Not core by any means but good reads to sharpen up your poker mind.

Read ‘Em And Reap (Joe Navarro)

Really interesting book for finding tells and reads on your opponent. This book combines insights from Phil Helmuth and an FBI interrogator to give a list of concrete tells to look for in your opponents. Pretty advanced stuff and tough to pull off, but these reads can be valuable if you learn to make even a few of them.

Every Hand Revealed (Gus Hansen)

Get inside the head of a top pro player as he gives you his thoughts on every hand he plays over the course of a tournament he ends up winning. Gives you an awesome insight into how top pros read people’s hands. Great for adding another layer of depth to your game and learning to be aggressive in more spots than you think.

Zen and the Art of Poker (Larry W. Phillips)

Tilt’s a bitch. I’ve lost a bunch of money over the course of my poker career solely from tilting out and getting mad. This book encouraged me to step back and evaluate my game more objectively.  Part Sun Tzu and part poker playbook – this has some awesome quotes and some good philosophies for tilt management and staying objective about your game.

STORY TIME

Here are two books that don’t contain much poker strategy but are awesome true stories about poker players and their lives.

Education of a Poker Player (Herbert O Yardley)

I think this book is actually out of print but it’s an awesome read. Written in the 20s or 30s – the book reads a bit weird and can be slow at times. The best advice I have is to skip over the parts were he talks poker strategy and just stick with the stories. One of the craziest stories is how the author was a US spy in China and caught an enemy spy as a result of a poker hand.

The Professor, The Banker, and The Suicide King (Michael Craig)

Wild story about a businessman who tries to take on some of pokers top pros. The book is a bit dated now but still a pretty wild story. Shows you what life is like in the top circles of poker’s elite and how hard it is to find action sometimes.

PRACTICE MAKES PERFECT

Well – that’s my poker education in a nutshell. I’m sure you can find a few gems in there that would help your own game out. I think the biggest key to improving your poker game is just to play for real money. Play money is a joke and doesn’t teach you poker fundamentals at all.

I took 1000 play money chips in a couple weeks and made over 1mm play chips on Full Tilt when I was learning the game. I thought – wow if I can crush the play money games this hard, I can’t wait to start printing cash.

When I finally moved into playing real money games for the first time – I struggled to maintain my $100 bankroll for nearly 4 months – dipping down to at one point having my entire remaining $13 on one cash table and getting a lucky double up to keep my account from going busto.

Once I started delving into these books and really studying the game – I ended up making over $1000 playing $5 buy-in sit n gos. Poker is a tough game and the swings can be sick sometimes, but skill does win out over time.