It’s not the most common piece of business advice, but being an entrepreneur and building a financial fortune is a lot like being a professional blackjack player. As you’ll find out on your journey through the world of business, though, the most unlikely ideas are often the most valuable. Sure, blackjack and business might not seem like natural sparring partners, but if you actually get in among the two disciplines and hammer out the details, you’ll see there’s a lot you can learn by playing cards.
Indeed, if you look at where some of the world’s greatest entrepreneurs started, many didn’t start in the same field they ended up in. However, what they did do was use the skills they’d learned in their previous jobs to inform their future business decisions. In fact, this is something Jack Ma, the former blackjack player, did. The subject of the movie 21, Ma was an expert blackjack player that used his understanding of probability and strategy to create a management software program that he later sold to Twitter for $50 million.
While it takes a bit of time and talent to have the same journey as Ma, there’s no reason you can’t take some skills from blackjack and apply them to business. So, with this in mind, we’ve outlined three things you can take from blackjack and use as you plot your next money-making venture.
Learn to Analyze the Situation
A major skill in blackjack is being able to look at the current dynamics and then make your move based on this. For example, one of the first things you will find about playing blackjack is that you need to know and calculate when is best to split pairs, when to double down and when to surrender. However, only once you understand these fundamental concepts can you then start to apply them in the correct situation, as Twitter’s Head of Data Science, Sid Patil, would tell you – yet another prominent manager who learned blackjack early on. In simple terms, splitting a pair allows you to invest another bet and turn your hand into two fresh hands (i.e. using the two cards you split). This move can give you a significant advantage over the dealer, but only if you make the move at the right time. The basic premise is simple: if the dealer is strong, i.e. they are showing a 10 or an Ace, it’s usually best not to split. However, if the dealer is weak, i.e. showing a 4, 5 or 6, then splitting is a solid move. A similar idea can be used in business.
What’s crucial here is that you study the table dynamics and make the move at the right time which is almost identical to the strategy we suggest in our guide to choosing stocks. Sometimes an industry is worth investing in, sometimes it isn’t. Therefore, your job is to analyze the markets and decide when the time is right. To put it another way, just because a move is known to be a strong move in general, it doesn’t mean it will always be a strong move. Take, for instance, Friends Reunited. One of the sites that basically started the concept of social media, Friends Reunited was first devised in 1999 by Steve Pankhurst and his wife Julie. By 2005 it had amassed more than 10 million members and was bought by British TV broadcaster ITV for $227. Unfortunately, by 2009, interest had faded and it was sold to publisher DC Thompson for $32 million. Despite its fall, Friends Reunited was a good idea, but the timing wasn’t quite right. In contrast, Mark Zuckerberg did have the right timing and that’s why Facebook is now worth $407 billion and doesn’t look as though it’s going anywhere soon.
Start From the Bottom
Perhaps the most important lesson you can learn in business and blackjack is don’t try and run before you can walk. In other words, start off small and within your means. For example, the main point professionals like to stress in any blackjack strategy book is that you should never play at stakes you can’t afford. As a general rule, players should never take more than 5% of their bankroll into a single session. So, if someone had $1,000 in their bankroll, the maximum they should take into a game is $50. The idea behind this theory is that you won’t go bust when bad luck strikes, but you still have enough ammunition to make healthy incremental gains when things go your way.
The same is true for business. Spending like a millionaire when you’re just starting out is a recipe for disaster. Even if you’ve got the best business idea in the world, something can and probably will go wrong. If you’ve invested too much on a single item, you may take a financial hit that cripples your business. Just as you need to assess your available capital and then develop a betting strategy based on this figure when you play blackjack, you also need to plan your business expenses. Using a step-by-step plan that considers everything from your fixed costs to one-off payments, you need to work out what you’re spending and portion it out evenly if you want your business to survive.
Be Prepared for an Emotional Rollercoaster Ride
The final skill you can take from blackjack and apply to the world of business is emotions. As we’ve written about before, emotions can often hinder the progression of an entrepreneur. If you’re not willing to accept that things will go wrong and push through the bad times, you’ll never make it. The same is true in blackjack. Thanks to something known as variance, you can make all the right moves and still come away from a session with a loss. Basically, because no single move is 100% guaranteed to beat the dealer, there will be times when you win and times you don’t. For example, hitting with 11 against a dealer showing a 5 is described as a positive expectation move because, in this situation, you will win (statistically) more times than you’ll lose.
However, it’s not 100% certain you’ll win every time. Regardless of this fact, you should still make the same move over and over again because, in the long run, you’ll come away with a profit. Naturally, making the same move even if it’s been unsuccessful ten times in a row isn’t easy. However, this is where you need to learn to control your emotions and simply focus on the facts.
This is exactly the same in business. Yes, times will be had and it might not seem like things are working. However, if you have clear plan and you know a certain strategy will work, you need to plough on regardless of the short-term results. If you can do this and stick to the other skills we’ve outlined, you should be well on your way to becoming a successful entrepreneur or, at the very least, a competent blackjack player.