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Lessons in Entrepreneurship from Poker – Different strategies for different stages

Posted on:January 24, 2024

In tournament poker, various phases and situations demand different strategies. Your stack size and the tournament stage are usually the most crucial factors, but there are many others that good players understand.

In the early stages of tournaments, you’ll generally want to play conservatively, aiming to build a stack by engaging in speculative hands, particularly when in a favorable position. Your main goal is to capitalize on weaker players who overplay their hands in different ways, either by participating in too many pots or becoming attached to strong yet relatively inferior hands. While you don’t want to appear overly conservative, you should still maintain a fairly tight playing style.

As you enter the midgame, the dynamics shift. Before antes kick in, you won’t be trying to steal as many pots or engage aggressively. However, once they do, you’ll want to continue building your stack by becoming more assertive while weaker players tighten up. Additional stages include those just before making money, the period immediately after that leading up to the final table bubble, and finally, the final table itself. Studying poker concepts like Nash Equilibrium and the independent chip model (ICM) can provide valuable insights.

Interestingly enough, these concepts also parallel startups and product development. The stage of your company or product—whether it’s in alpha or beta testing, general availability, pre-seed funding, or even publicly traded—affects how you think about delivering services and software. Many people lament the changes that occur as a company scales up; however, I’d argue that these transitions are natural and often rational given the evolving state of your organization.

Similarly, in poker terms, your “M” or the number of rounds left at the table can be compared to a startup’s remaining funding or runway. Just like in poker when your ability to play is limited unless you replenish your stack through aggressive moves or strategic timing, companies must also adapt their strategies based on their resources and stage of development.

Sometimes in business, when you’re running low on runway, it’s time to go for a Hail Mary. This isn’t a perfect analogy, and I won’t dive into specific examples of startups and companies to illustrate the point. Maybe I’ll touch on that in some other post, but I believe you can make the connections yourself.

Like other lessons, poker serves as a microcosm for these situations, allowing you to develop an intuition that many people seem to lack, and that intuition is invaluable as an entrepreneur.