Filthy Lucre
Monday, 19 August 2013
Nick Wealthall on making money.
Let’s talk about making money. I’ll be honest with you, this is my second submission this month. In the first draft that sentence ended with the word “love”. There followed a 900 word treatise on the inescapable symbiotic links between Texas hold’em and making love with a soul mate. It was beautiful, provocative and graphic. It was also refused.
I will be releasing it on 2+2 in the coming weeks. Look for it under the headline “The column they tried to ban”. And I mean column sex-wise.
What were you told about making money as a kid? Or even as an adult? That it “doesn’t grow on trees”? That your money is “hard-earned”? That money is the “root of all evil”?
Most sentiments about money were created by people who have none, which is a bit like going to a play-money player to get advice before sitting in a nosebleed cash game. Or seeing someone put a sticking plaster on a cut then asking them how to perform open-heart surgery.
The fact is we’re engaged in a vicious battle for resources. It’s the meaning of life on this planet and it doesn’t stop when we’ve “got enough” because if it did all point to life, all ambition would disappear. I know you might think this doesn’t apply to you, that you have a nobler, higher ideal and that you don’t want to chase money. Well, if so, I wish you well, but there aren’t many people like that. After all, if all we wanted was enough resources to be comfortable no one would seek to better themselves in any way. Chasing the money is a good thing. With one big caveat – as you get it you should spread good juju with it and help those less fortunate.
But then I can write that with confidence because why would you be so into poker, a game where money is how we keep score, if not for money? Okay, I understand it’s a fun game and there’s an intellectual challenge, but I don’t see you playing chess for 14-hour all-night sessions.
The irony is that poker is not a great way to make a tonne of money in a reliable fashion. That doesn’t mean it can’t be done. Fortunes have been built many times from tiny or zero deposits in poker. And big tournaments can offer life-changing money that can sometimes secure you financially. But despite all that, it’s often a long road to hoe. Poker is a small-margin game that requires you to always be present to make money and to always play your best to affect that margin.
So there are easier, quicker, more sure-fire ways to get wealthy than poker; however, there are other ways poker can make you rich. Nothing else I’ve ever encountered in life can teach you as much, and as quickly, that you can take and transfer to the world outside to acquire wealth (and other advantages in life – see “The column they tried to ban” for details).
Here are my top three lessons from poker that can make you endless real-world ca$h:
1. Decisions NOT results
A HUGE difference between professional poker players and almost everyone else on the planet (excepting stock market traders) is that they understand how irrelevant the outcome of one or two trials is. The rest of the world is obsessed with results. One sports team wins a close game so they have “the heart of champions” the other are a “bunch of chokers”. In fact, the most likely explanation for any one outcome is variance – or luck. Poker players learn that only by focussing on process – on their decisions – can they improve and get the results they want without ever being able to control any individual result. In life and business the same thing is true – individual results are sirens luring you to overrate successes and underrate failures. Only by working on your decisions with money and in business, without getting hung up on individual results, can you achieve the outcome you want.
2. Failure is the Mother of Success
Here’s the dirty little secret of all successful people – they fail more than everyone else. They understand that without failing you cannot ever improve. Those that never get what they want often give up at the first sign of failure or trouble.
Poker teaches you, often brutally and repeatedly, that failure is a part of the process. Even the best tournament player on the planet busts out – ie, “fails” – in 75% of the tournaments he enters. Unlike most things in life, failure is a condition of poker; either you get used to it or you cannot prosper as a poker player. Poker players learn that they can still be succeeding overall (banking those Sklansky books) even though they fail in the moment, or have a run of failures. This kind of understanding and resiliency separates people, in life, away from the poker table, from those who don’t have it.
3. Small reliable margins beat the lottery mentality every time
Most people have a “lottery mentality” to making money or gaining wealth. Some literally think winning the lottery is the answer to their financial woes; others are constantly looking for that one killer idea that will make them rich, or that one big break. There are examples of this kind of success and the media eats them up with a spoon, but most fortunes are built over time by repeating reliable processes again and again.
Poker players know that if they have an “edge” they should push it as often and as hard as they can, within their bankroll. In fact, the process of being a professional poker player is exactly that. You don’t know which hand or which session or tournament will be a winner but you know if you have an edge over your opponents and repeat it often enough, you will be a winner and you can build a fortune.
Just like a professional poker player, the rich build their fortunes one customer at a time, one trade at a time, one deal at a time. After all, small margins are what keep the lights on in Las Vegas.