How learning to fold in poker made me a better business owner
With five young children at home, I don’t have a lot of time for casual socializing. But over the past year I’ve enjoyed a few low-stakes poker nights with some friends (along with my wife’s blessing).
When I first started playing poker a decade ago, friends expected I would quickly pick it up because I’m good with numbers. However, I mostly got crushed, even after I’d mostly figured out the odds.
Why? Because I was determined to win every hand.
It wasn’t until I started playing with a strategy that emphasized folding that I started to turn the tide – not to win every single hand, but rather to win the game by winning just the hands that mattered most.
Learning a new game
Success through folding reminds me of how startup founders often look at every new contact and every first meeting as a future client. In the first years after starting my firm, I’d invest heavily in every new prospect, relying on everything falling into place so my company could land the contract. It was the same poker strategy that relied on the right cards turning over.
But like poker, conducting business based on ‘hopes’ and ‘ifs’ doesn’t win the pot. Successful outcomes happen by examining what’s in front of you, knowing the odds and removing distractions so that you know when it’s best to chuck your cards, whether you’re stuck with a seven–two or mooning over aces in the hole.
We effectively entered a new game – a new market – and my company has generated almost as much revenue in a few months as we did in three years with the old strategy.
So now I fold a lot more when I see that early conversations aren’t clicking, or the client isn’t the right fit. We gave up on an entire market earlier this year when initial success was followed by a string of failures. And yeah, it hurts to pull out of the hand or even the game.
However, we effectively entered a new game – a new market – and my company has generated almost as much revenue in a few months as we did in three years with the old strategy, and with a fraction of the effort and cost.
Here’s how the principles of poker can help your company save money, focus better on what works, and drive better growth and profit.
Know the odds and don’t make bad bets
When you’re new to poker and business, you don’t always know what is a good or bad bet. You haven’t yet learned how to assess what you have compared to the market opportunities or how to stand out to your target audiences. Your sales funnel process is in its infancy, so you’re going to make some mistakes.
One early mistake I made was having zero litmus tests for prospects. This became painfully clear when the partner in a small business approached me for public relations services.
- He thought spending US$5,000 a month was equivalent to hiring a full-time communications director. (It’s about half for a small business.)
- He asked me to come to lunch to discuss the goals and when I arrived, he said he hadn’t read my questions. (Which meant we had to start over.)
- He had not told his partners that we were meeting. (Clearly, communication was not a company priority.)
This is not the guy’s fault any more than it’s the dealer’s fault for giving me a seven–two offsuit – the worst hand in poker. It was a lesson for me to seek out the opportunities I could, observe what cards come across my path and have a process to hold out for the game-winning river or to fold.
That’s why successful businesses have litmus tests that, yes, ‘lose’ some money but focus on the hands that are most likely to create profit and growth. The above meeting resulted in my creating the company’s first prospect litmus test – if you don’t answer some initial strategic questions by email, we aren’t having a meeting. You’re simply not serious about the conversation.
Dial in on bets that work
Every business owner learns the difficult lessons described above. We also learn along the way which initial service and product offerings work for different audiences, and we tailor everything to the audiences that work the best for us. Growth comes from folding early and often, which means wasting less time on bad prospects and ideas, and more quality time on what works.
Starbucks is going through this process as it tries to get back to profitability and re-establish its premium corporate coffee brand. The company was punished by investors after its Q2 2024 report appeared to blame app glitches, finicky customers and bad weather for declining sales – problems that weren’t issues for competitors.
As the excuses piled up, former CEO Howard Schultz saw a different problem: the company was prioritizing periodic customers at the brand value expense of its core target audience.
New CEO Brian Niccol appears to have a Schultz-like vision. He’s making Starbucks great again by bringing back writing customer names on cups, ditching higher prices for non-dairy milk and getting customers through the line faster by having self-serve condiments. Starbucks’ regular customers will appreciate the return to a premium coffee experience.
Growth comes from folding early and often, which means wasting less time on bad prospects and ideas and more quality time on what works.
The bet we’ve made on my business is that it’s not the clients with Champagne tastes and maybe Champagne budgets who will create the best bets. Instead, we’re focusing on two industries that historically have needed a little bit of help a few times a year – dollars that build up over time and which have resulted in a handful of big pot wins when crises hit our clients or when they make referrals.
This was a tough decision to make because we had spent five years on a plan that showed promise, gained early business and then tanked. The turning point literally came because I had just won two poker games where I experimented with folding, spent my chips when the odds were good and came away victorious. I realized that the same plan had to be executed to grow my business better and more consistently.
Watch the table as players change
Knowing the cards and the players at the table takes time. You have to carefully and measurably observe a lot of factors multiple times to determine patterns – and even then, Hubspot estimates that the average sales closing rate across industries is only 29 percent. That means you’ll get to find out if your system is truly working on less than a third of all your attempts.
And that assumes technology, new players or a recession don’t radically change the table mid-game. The new player changes everything because you and everyone else are now observing how they bluff, their folding preferences and how they react to a good hand.
Folding the five-year plan allowed us to reinvest hundreds of hours and thousands of dollars a year into a target audience that has driven much of our organic growth since 2020: public relations and marketing agencies that run into staff gaps created by fast growth, promotions, flu season and paid leave.
Our pivot was nothing more than taking a process that was already working and tweaking it to appeal to a hole in the market.
Instead of viewing these bigger agencies as competition, we saw them as friends in need. They were pre-qualified because they understand what we do and their pain point is an everyday reality. Furthermore, they understand the value of spending money on closing gaps so clients don’t miss media coverage opportunities.
Best of all, our pivot was nothing more than taking a process that was already working and tweaking it to appeal to a hole in the market.
Fold and stand based on the other players
Making a pivot is like learning how to read the table. The upfront odds might say keep going when you have a full house, but winning ultimately comes down to how you react to the other players and how they respond to you.
Securing new business works in the same way: you learn how the game is played and what systems give you the best chance of success. Then you test those methods against the party across the table. It doesn’t mean you’re going to win every time. But it does mean you’re going to be involved a lot longer and have more opportunities at the kind of pots your business needs.
Nobody can win at everything. The best athletes focus on one sport, the best musicians on one instrument and the best entrepreneurs on one business (at a time). Folding means narrowing in on becoming the best at what you do so that you can sit pretty when you get the three cards you need on the flop while everyone else is shoving chips into the perfect pot you’re about to win.