Lessons in Taking Risks: Poker, Sales, and Taking Money from Kids.
Written on Sept. 13, 2013
My first lesson in risk was when my grandmother taught me blackjack before I was 10. We played with nickels and dimes until our fingertips turned silver and shiny. She taught me that over time, the house always wins, but if you understand how the game is played, and you wait until just the right moment, you can risk big, and the reward is worth it.
At Christmas parties, my family plays poker, blackjack, and other games. We play with real money, and we let the kids gamble too, if they want. As one of the oldest of the next generation of kids, I was one of the first to play with all the adults. I would sheepishly approach the table of towering adults with their towering stacks of chips and lay down wrinkled $20 bills I had stuffed in my pocket. They never took it easy on me. They took my money over and over and over again. Occasionally, I’d get lucky, but they had no qualms about emptying my wallet of my recently gifted Christmas money.
When I talk about this family tradition of mine, a lot of people seem a little taken aback. While I understand their reaction, I see my family poker games as getting an early lesson in taking risks. It taught me that if you’re not careful about taking the right risks, you might end up having to leave the adult table broke and forced to play Pokémon with your younger cousins.
I’m an entrepreneur, in profession and spirit. By definition, I live my life by taking risks. I often meet people in much more stable, traditional career paths; they are comfortable, secure, and bored. When I urge them to take the entrepreneurial leap, they say “I just couldn’t…I’m not as comfortable with risk as you are.”
The thing is, I’m not comfortable with risk. My hands get clammy, my heart pounds, and my breath gets short when faced with risk. Before I go to a party where I don’t know anyone, I have to jump up and down to release the knots in my throat and listen to Macklemore’s “Can’t Hold Us”. To be honest, even after all the risks I’ve taken in life, sometimes it takes a hard shove for me to take the leap.
Humans overvalue the consequences and underestimate the rewards. It is easier, more natural, and less difficult to not take risks. Our brains literally make things feel unpleasant and uncomfortable for us when we encounter a situation that is unfamiliar. Risk-taking requires you to make a decision in which you don’t know the result. Risk-taking means you might win, but it also means that you might lose. So, it’s easier and safer to just not take them.
Recently, at Chewse, I’ve had to jump headfirst into sales. My official internal title is Customer Acquision. For those that don’t speak startups, customer acquisition in an early-stage startup basically means testing multiple channels to find ways to acquire customers at a reasonable cost that will scale.
To be honest, I was hoping that sales wouldn’t work because I saw sales as the most misaligned with my natural skills. I’m not aggressive, I have a hard time selling something that people don’t need, and I often let others control the conversation while I sit back and observe.
I didn’t want to do sales because I was scared of rejection. I didn’t want to put myself out there only to have the other person look at what I had to offer, and just say no. Sales is facing rejection dozens of times a day. Paul Graham says that running a startup is like being punched in the face repeatedly. Sales rejections absolutely feel like an uppercut to the chin sometimes.
But, even broken jaws heal. Skin develops callouses. Cuts become scars. The more you encounter rejection, the more you understand that it’s not all that bad. It doesn’t matter if this particular phone call goes well or not. It doesn’t matter if this particular person you meet likes you or not. What matters is that you’re taking a risk that has a positive expected value. You’re taking a risk that will pay off in the long-term.
Expected value is a fairly common term in statistics, but I know it well because of poker. After years of losing my money to family at the Christmas parties, I began to seriously study it when I was about 15. I probably read 20 or so books on poker, including books on statistics and body language. One of the core concepts of poker is the idea of constantly making +(Positive)E(xpected)V(alue) decisions.
Every risk that you make has an expected value. You can’t get too attached to one hand, or one sales phone calls, when you’re taking risks and making bets. What’s important, is that over the long run, you can expect a positive value because you’re making the decision that is statistically going to provide you dividends in the long run.
For example, if you and I bet $1 on a coin flip, that expected value is zero. Over thousands of flips, we would probably have close to the same amount of money, so each risk you take has an EV=0. Now, if you give me $2 for every bet, but I still only have to pay $1, then I should be making that bet every single time. I’m taking a +EV risk by participating in this, and it’s the right decision, even if I lose 20 times in a row. Understanding that will help you to stop obsessing with the prospect of a single coin flip, a single sales call, a single rejection.
Putting sales into a poker framework has made me better at it. Because I’m not as scared of the consequences of an individual rejection, I’m more willing to ask for what I want, more willing to steer a conversation, more willing to negotiate around objections. And ultimately, if I’m still not able to paint the value of what I have to offer, that’s okay. I’ll understand if what I’m selling isn’t for you, because it will be for someone, someday.
I’m better at sales now and I find myself taking more and more risks in my everyday life. It feels liberating to not be so attached to individual outcomes and to focus on the long term value. I think this Christmas, I’ll be sure to thank all my aunts and uncles for the lessons they taught me. What better way to thank them then by emptying their wallets.