Poker + business + applied lessons from Nassim Taleb

This summer, a casino opened up right by Boston. And I’ve swung by a few times to play Texas Hold’em — low stakes cash games.

As mentioned in my Liar’s Dice article, I love games that involve incomplete information, strategic deception, and reading people. Pokers offers an exciting challenge that complements my career.

As a start-up CEO, I’m constantly communicating with people via meetings, calls, emails — etc. At a poker table, it’s nice to be able to just sit back, relax, gather insights and make quick decisions.

Poker, like investing — is a highly analytical, solitary affair involving incomplete information — and it certainly embodies parts of my old hedge fund job that I miss.

How I play poker

My playing style is very much aligned with my personality.

I try to be very disciplined.

In general, I try to limit my losses, and really press my advantage when I have it.

At the poker table, what this means is that I will slowly lose small amounts of money, on average, for an extended period of time. And once in a while, the losses will be punctuated by a big win that will more than make up for everything.

For those of you who’ve read Nassim Taleb– this strategy should sound somewhat familiar. Taleb wrote in The Black Swan about how he became financially independent. His investment strategy was to lose money year after year. But when a previously unthinkable event happened, i.e. the 2008 financial crisis — BOOM –he made back his losses manifold.

So an hour in my shoes at the poker table might look something like this.

This is a relatively volatile strategy, but what is unique is that it is only volatile in one direction. (High Sharpe ratio, low Sortino ratio)

There are generally only positive surprises. And that is exactly what I want out of poker and in general, what we all want out of life … right?

To my knowledge, no one else plays cash poker like this. And this strategy is working out decently for me so far. Perhaps it won’t work at higher stakes tables — but we shall see.

Business — the most complex and exciting game of all

The concept of stomaching small losses and doubling down when there is a clear advantage is uncannily similar to my own business experience.

At DeepBench, we are constantly running little experiments. Sometimes they work, sometimes they don’t. We have a core business model that enables us to experiment. You can think of us as one big stack of poker chips, and we are at the table making bets.

Sometimes our experiments open doors for us and lead to areas where we want to double down. Or we are forced to do so by necessity. When the odds are in our favor — we are always prepared to go all-in with our chips. (Note, this experimental mentality is a hallmark of Amazon’s success.)

One key difference between business vs. poker decisions is that there are more things we can do in business to stack the odds increasingly in our favor. And sometimes, we can choose an entirely different game to play.

That is what makes business a much more complex and exciting game for me.

So while the stakes for running a start-up are far higher than your average poker game, ultimately, my philosophical approach to both business & poker is one and the same.

Work life harmony + freedom

About a year ago, my friend and VC investor Li Jin told me that she doesn’t believe in work life balance, but rather — she embraces work life harmony. Her words resonated strongly with me given the lessons I’ve learned from studying Warren Buffett.

For me, work life harmony means merging the professional and the personal so that work and play become one and the same. The beauty of this approach is that you will never be bored.

In contrast, I have another friend who like myself is a startup founder who likes poker. She is quite good at it — far more so than me. However, she does not tell people she plays, because she is afraid of what people like her employees & investors would think.

I can see this friend’s point of view and respect it — but I have a different approach. For me, the only way to be happy is to be free. For me, freedom requires authenticity & transparency — and that come with a risk. But as Nassim Taleb says:

I try to be purposeful with how I spend my time. And I feel fortunate to have a found a hobby in poker that aligns well with my strengths & long-term goals.


About the author: Yishi is a former hedge fund investor and current entrepreneur who enjoys thinking about businesses in his free time.

He is the CEO of DeepBench. We connect users with experts on any topic in any industry, and we also license our software to enterprises to better unlock expertise internally. (Check us out if you are interested in joining our network or using our product!)

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November 17th, 2019

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