2015 World Series of Poker 3rd place finisher, Neil Blumenfield, is no stranger to pressure. He has been in the extremely competitive software technology business for years. As one of three Team888 Pros to make the 2015 Main Event final table, the ex-businessman is now carving out a career as a poker pro.
In my knockout press interview, after finishing third in the 2015 WSOP Main Event, I responded to a question by pointing to the similarities between software startups and tournament poker. There is a lot of variance. Only the top 10% cash. And, only the top 1-2% make any real money. Cute analogy, I thought.
But given more thought, the similarities are not only striking, but the skills required and learned are largely overlapping. Others have written about what poker has taught them about business. My experience is the inverse. Spending 30+ years in business has made me a much better poker player.
I experienced a somewhat forced and extremely fortuitous career change shortly after my 61st birthday. In the two weeks between my first 2015 trip to Las Vegas to play in the WSOP in early-mid June, and the Main Event in early July, I was laid off from my technology job. My startup software company had been purchased by Intuit two years earlier, and my tenure there had now run its course.
While it was not surprising, it left me with few good options for making a living. As it turns out, many of the skills that helped me succeed in technology startups would also help me succeed at the poker table.
Have a Game PlanSuccess in startups requires vision. Every company looks for the visionary who can see where the market is going, figure out what customers will buy, and in very rare cases, create whole new markets (think Oracle, Google, Facebook, Uber). Once a long term vision is defined, the successful entrepreneur steps back and creates the game plan for executing the strategy.
That game plan has to include a fair amount of leeway to deal with unexpected or unlucky events that impact the strategy. It's starting to sound more and more like a poker tournament. In business, you must either play to the strengths that you have coming in, or make a concerted effort to develop strengths where you are weak. You may build strength through training, hiring, or through acquisitions. And you must continually adapt and refine your strategy to deal with internal and external changes and new data.
In tournament poker, as well, you must start with a game plan. Through the course of an event, you have to refine and adapt to changes in stack sizes, table dynamics and tournament situations, including ICM (Independent Chip Model used to determine the dollar value of your chip stack as you approach and get in the money). Even within a hand (like a customer sales opportunity) you need to adapt as more information is gained and re-evaluate your plan for the hand on every street.
Anyone who enters a poker tournament without a game plan for success is depending strictly on luck to win. This is more and more true as one progresses deeper in a big tournament. In preparation for the final table of the Main Event, my coaches and I focused on a strategy that involved analysing and picking “spots” to 3-bet and 4-bet pre-flop when it was likely that the players who opened (initial raise) or re-raised (3-bet) would have a very difficult time calling.
This strategy played to my skill, as I was pretty good at finding these opportunities. It was also pretty low risk, as I would be taking a fairly small risk to pick up a decent amount of chips. And, if someone came over the top (4-bet vs my 3-bet or 5-bet vs my 4-bet), I usually had an easy fold and could move on to the next hand without a major hit to my stack. But even this simple strategy required a clear plan of action in general and in specific tactics.
On the general side, what if the first 1,2,3 shots all failed? How would I adjust when people became aware of what I was doing? (The final table of the WSOP is aired “live” on ESPN with a 30-minute delay, so any move that I made would be known to everyone at the table 30 minutes later.) And in a specific hand, what if someone re-raised or just shoved? How to proceed in the event I got called? As it turned out, on Day 1 of the final table, my spots pretty much all worked. I 3-bet more than anyone else and only lost one hand when I had 3-bet or 4-bet. Even then, the strategy had to be re-evaluated for Day 2 as there was a lot of new data on what I had done and how others had played.
The key to success, however, was coming in with a clear vision of how the night would progress, determine the tactics for executing on the strategy and leaving a reasonable amount of flexibility to deal with unexpected or unfavourable events and the availability of new information.
Get the Best People on Your TeamIn business, when hiring, I always tried to find people who could take my place and who had strengths that complimented my own. If I was running Professional Services, I wanted regional managers who could do what I do, hopefully, better. If not today, certainly in the future. If I was not strong in Marketing, I needed a rock-star Marketing person. But, equally as important, was never hiring prima donnas. I wanted people who were ambitious and talented but who were truly team players.
I was very fortunate to put together an all-star coaching team to work with me between July and November. This team was led by Amir Lehavot, who finished third in the 2013 Main Event. I had met Amir a few years earlier, playing poker, and we had developed a casual friendship. So when I was laid off by Intuit two weeks prior to the Main Event, I called Amir to talk about getting some coaching and turning professional.
We met on Day 2 of the Main, at a point where I had no fantasies about a huge cash. And Amir, who is gentle but honest, and extremely analytical, painted a very gloomy picture of professional tournament poker and the very high variance even for elite players (and I was certainly not in that category). So, we tabled the discussion, but kept in contact as I progressed through the seven days in July. When I made the final table, it was clear to me that Amir was the obvious choice for my coach. He was most skilled where I was most in need of help, on the mathematical, analytical side of the game.
We planned to run two final table simulations, with professional players playing the other eight players. We did as much research on the other eight as possible, reviewing all available hand histories and Amir put together an unbelievable team for the simulations. We worked with some of the same people that Amir had worked with in the simulations he ran in 2013: Ryan Welch, Matt Stout, Brent Hanks, James Carroll and then added guys like Justin Young, Ben Palmer, Mike Benvonuti, Brendon Myers and the brilliant, Tom Marchese. I can’t imagine a better team (although Cal Anderson, Joe McKeehen’s coach and Fedor Holz may have been nice additions).
When we went into the first simulation in early October, I thought my game was in pretty good shape. I had a lot of confidence having spent about six solid weeks with Amir. But I was in awe of the guys around the table, and that was probably part of the reason I made three bad mistakes in the first hour of play. But these guys are not just great players, they are great people and fantastic teachers. They were patient with me, and by the time we reconvened in late October, my play was much improved.
The week before the final table, I spent another long day with Matt Stout and Tom Marchese, focusing mostly on ICM and short handed play and when we were done, for the first time, I felt ready to play the final table. Without the work that I put in with Amir and these guys, there is no chance that I would have finished as high as I did. And I made friends for life.
Adjustments Are Part of the GameIn 1996, Visigenic, a startup company where I was part of the early team, went public. What was amazing about that event was that the product that led to the IPO had nothing to do with the initial product or plans for the company. We had started to build a visual interface for application development and along the way had built a platform that would allow this interface to access data. Before customer one, we pivoted the business to focus on this data access technology (ODBC for those who care). And while this led to some revenue, the IPO was enabled by an acquisition of a company who had totally different technology that facilitated distributed application development (CORBA). Another pivot based on new data that was designed to lead to the same endgame via a totally different path.
On Day 1 of the final table, I did not need to make major adjustments to the strategy I came in with, but I did need to continually reassess and vary my approach to avoid being predictable. I probably failed to do this optimally on Day 3 of the final table. Josh and Joe had seen me 3-bet light, so when I 3-bet vs Josh with A7h, he 4-bet shoved, knowing that, especially three handed, my 3-bet range would be wide. I had to fold in a hand where I was ahead. (He had KJ.)
It would have been better to adjust and just 3-bet shove, precluding his move. In any tournament, if I am playing at a table that is very tight, where players are not doing a very good job of balancing their ranges and are very risk averse, I will play a strategy that is designed to exploit those tendencies. But if I am then moved to a table with a bunch of analytical players with a lot of online experience and success, the strategy needs to be significantly adjusted to deal with a new situation, new data and a different kind of opportunity.
Could I make those adjustments without having been through parallel situations in business? Maybe, but the startup background makes the adjustment almost instinctive.
You Must Take (calculated) Risks to WinWhile some software companies succeed by taking proven ideas and executing better, the big winners take big risks in previously unknown or unproven markets. I had my real start in software at Informix (then Relational Database Systems, RDS) in 1983. There were a few other companies that had started selling commercial relational database systems (Ingres, Oracle, Unify) but when we presented to customers in 1983-84, the first slide in the deck was, “What is a relational database system?” That slide came out a few years later, but we were betting on a new technology.
In addition, Informix made two more bets: that microcomputers would succeed, and that UNIX would be the operating system for those machines. Oracle and Ingres ran on bigger, more commercially successful VAX machines running VMS. This was pre-IBM PC, and the microcomputer landscape was confused with dozens of manufacturers, none of whom were (or are) well known. And UNIX was fairly known in academia (developed largely at UC Berkeley) but unproven in the corporate world. So, we took not one, but three big bets. If any of them had failed, Informix would have also been a failure. But all three bets proved good, and Informix went public in 1986 and eventually commanded a multi-billion-dollar market cap.
In tournament poker, you must take risks. You simply cannot succeed waiting for AA or only risking chips with the nuts. You need to evaluate and re-evaluate your market (the table) and make moves that include bluffs and thin value bets. But you cannot do this in a vacuum. You must have a good understanding of your market coming in and understand what risks are likely to pay off. In bigger, slower tournaments, you can be a little more patient waiting for “spots”. But even in the Main Event of the WSOP, with 30,000 starting chips and a slow structure with two-hour levels, if you only play premium hands, your stack will dwindle away, and you end up getting knocked out going all-in with QQ vs AA or with top pair, top kicker vs a set.
In faster tournaments like the local daily tournaments with 20-minute levels, you must be even less risk adverse while taking advantage of the typical player who never folds top pair and hates to fold KT or any A to a pre-flop raise.
You Need to Understand Your Customer and Your Competition
In business, you need to know what your customers’ needs are and what their motivation is:
- Are they interested in innovation or in playing it safe?
- Are they very cost conscious?
- Are they willing to take significant risks for the promise of a big win?
- Are they looking to advance their career or just avoid getting fired?
I remember a customer meeting at Informix where we discussed the customer needs and the product fit. After about an hour, the Sales VP, who was the best salesman I have ever worked with, asked for a break and took our team to a separate room to discuss the proposal we would make. He asked me, the technical sales guy, what I thought and I explained what I understood the customer needed and what we should propose, which was something like a $150,000 deal. The VP said he actually thought they were looking for a much bigger solution than they had indicated and proposed a deal of over $250,000, which the customer rapidly agreed to. He had a much better read on his customer than I did. This still amazes me.
In tournaments, the same set of human needs and desires apply:
- Is the other player just trying to cash?
- Are they unwilling to take risks?
- Are they reckless?
- Will they never fold top pair, even on a very dangerous board?
While physical tells are occasionally of value in determining how you play a hand, the other players’ macro needs and desires provide a much better read.
The work we did to analyse the other players at the final table was critical in determining our plan for playing. We knew that Joe McKeehen was capable of making very tough river calls with marginal holdings. So the plan was to avoid bluffing him on the river without a pretty convincing story. (I missed following through with that one on Day 3 with Q8!)
We expected Pierre to play pretty cautiously and rarely turn a marginal hand into a bluff on the river. So, when I made a full house in a hand with him on Day 2, I bet the river instead of checking to induce a bluff on a very dangerous board. Had I played the same hand against Max, Zvi or Josh, I would have checked the river as I had “capped” my range by checking when the turn paired the board and the third spade on the river made the board very dangerous for a top pair hand. Zvi, Max or Josh would have been much more likely to bet that river with any two cards to push me off top pair (K’s) or an over-pair (AA).
It Is a Long Haul
One of the tendencies that has disenchanted me with software startups, is the growing trend to look for quick, big wins with no regard for developing a real business or growing long term customers. This is not appealing to me. More interesting is building a truly sustainable business that depends on great employees, real technology and loyal customers. In that world, you need to be focused on the long term and be agile enough to deal with short term setbacks, which are inevitable.
In tournaments, you must play consistently. There will be bad beats. If you’ve never lost to a two-outer, you haven’t played much. You cannot get upset. You cannot go “on tilt”. You need to re-assess your stack, your position at the table and in the tournament, modify your tactics and move forward. While it's easy to say don’t tilt, every player has gone on tilt and made bad decisions as a result.
It’s just hard to call a bad player’s shove with the best hand and have them “suck out” by hitting one of the three outs they have in the deck. After all, you are a 10-1 favourite.
So, you have to tell yourself three things:
- You played the hand well. There is nothing better you could have done.
- If you get it in as a 10-1 favourite 11 times, you will lose one statistically. That’s the game we play.
- You want that guy to make that move. It is so +EV (positive expected value) and, in the long run, you are way ahead.
You want the guy who is truly gambling, trying to get lucky, playing. You make your living off that guy. If you are looking to play a game where no luck is involved, that guy will not play (certainly not for long). Take up chess.
You Have To Do Your HomeworkNo matter how successful you have been, you cannot continue to succeed in software without staying up to date and adapting to change. The industry and the technology change at lightning speed. You need to listen to smart people. You need to constantly read about the market and look for changes.
I have seen very successful entrepreneurs continually try to draw on their successes from a decade previous. While that experience is informative, it is critical to understand that everything has changed. And what was successful a decade ago or a year ago may have little impact on today’s changing market.
Poker players also must always stay current. You can point to dozens of pros who had success in the years before online poker. However, they failed to adapt to the dramatic changes brought on by online players and the massive wealth of data they have used to define new strategies and tactics.
The game was played largely by feel and instinct twenty years ago. Today it is all about maths and game theory. There are now 100’s of good poker books and 100’s of valuable videos available to learn from. If you don’t work on your game, you will not succeed. Working with pros like Amir Lehavot, Matt Stout, Ryan Welch and Tom Marchese, I was impressed not just by their knowledge of the game, but by their work ethic. They spend as much time studying away from the table as they do playing, and it shows in their consistent level of success.
My business career brought me a great deal of success, by any definition of the term. But it has also prepared me for my new career at the poker table.