Tuesday, March 16, 2010

"First, and foremost, Holdem Poker is a game of Big Cards" ~Mike Caro

Poker begins as a war for the antes, a zer0-sum game of competitive strategy with a big sprinkle of luck. Over the long haul, winning is not a matter of luck. Winning is the outcome of optimized winning strategies.

"Aces are larger than life and greater than mountains."

-- Mike Caro

In the comment text below I posted an article I wrote for The Net Effect called How To Bet On Research... The entrepreneurial answer is that you want to own the casino. My fiancé Audrey Kerwood teaches you how here. <= CLICK

Before I begin today's eCommerce blog, who else remembers Matt Damon's character Mike from Rounders? MIKE: Why does this still seem like gambling to you? I mean, why do you think the same five guys make it to the final table of the World Series of Poker EVERY SINGLE YEAR? What, are they the luckiest guys in Las Vegas? It's a skill game.

Mike Caro explains that winning Holdem Poker is a game of Big Cards. The first step to winning strategy is selecting what starting cards are worth playing. This is critical to net winnings. This basic principle appears true in entertainment.

Free entreprise appears to me as Poker Without Cards. Success in free enterprise appears to me as opperating around similar sound principles to poker. Entrepreneurial success is a game of selcting winning Big Opportunities. Simply because you hold and ace doesn't mean that veteran entrepreneurs would go all-in on the same many opportunities.

Mike from Rounders: You can't lose what you don't put in the middle. But you can't win much either.

Discretion is the bigger half of long-term winning strategies. The easiest way to win the most amount of money is to play every single hand. The downside to this "winning" strategy is that you'll lose more than you win. So, poker is a game of getting the most out of your wins, and staying out of as many non-winning situations as you can.

Every poker player gets burnt in a crooked game. Every entrepreneur has bought a course, or a piece of software that didn't do what it said, and the guarantee was worthless. That's just part of the game. Just because some of the players are crooked, doesn't mean its a bad game.

"Avoid people with gold teeth who want to play cards."

-- George Carlin

Your eCommerce "business plan" might have you selling The ACE Product over the holiday season, but without a plan for traffic, it's like an Ace-Six off-suit. Betting hard at it is actually more profitable than betting sheepishly, and if you are only betting on this, you'll experience a lot of roller-coasters. With poker, as in eCommerce, the more hand you play well, the less of a roller coaster you experience. The trick is to follow profitable strategies and not get psyched into the sucker bets.


What's the ephemeral sound of a poker player who just got lucky? As he is raking-in his winning pot you hear him say defensively, "They were suited." This player's stack is likely to be volatile, more often than not ending the night with nothing but felt. Playing cards because they are suited is a losing strategy.

Suited cards have more potential, but remember this is a game of Big Cards. Pocket aces are fantastically better than every other starting hand, and they still only give you a 3:1 advantage against any given player, and you are a slight underdog against a family pot. You gotta bet to make yourself a winning player.

An unpaired Ace will win about half the pots in a heads-up game. You see Poker starts by rewarding Big Cards, and this has a greater impact on your outcome than most people work into their decision process. This means most novice Holdem Poker players will under-value the importance of holding Big Cards. In eCommerce, a high-converting store + floods of traffic is like holding Ace-King, also known as Big Slick.

This is where I've seen folks go bust, suddenly betting their entire marketing budget on PPC this week because it worked last week so well. I pray for them. I'd prefer to see them betting a much smaller percentage of their marketing budget so quickly.

Poker is a game that combines the classic Tortoise & Hare mindsets. You need to be a Tortoise to wait for the right hand to play. Then, you need to be like the Hare that goes all in when you truly have the best of it.

POKER reveals much more about human psychology, than any game I've ever played next to direct response branding.

MIKE: In Confessions of a Winning Poker Player, Jack King said, "Few players recall big pots they have won -- strange as it seems -- but every player can remember with remarkable accuracy the outstanding tough beats of his career.".

Under-valueing Big Cards might thwart the novice, many rapidly growing business owners over will over play their entrepreneurial Ace-King. Most ameteur poker players will play their life like their playing a tournament. On the one had, the verve and focus will produce massive results. On the other hand, the escalating tensions and time constraints warp long-term winning strategies. How do you make the most amount of money on Poker? You own the casino.

I walked away from being a career poker player largely because I didn't love beating people. I walked away from being a theatrical magician because I wasn't fascinated enough by having people look at me. I'm still hoping to make a livelihood from writing fiction. In the mean time, my fiancé and I are working on opening online stores we think of, in some ways, like owning casinos.

Owning a casino means running a business. A casino without traffic of customers is expensive instead of profitable. Having customers without enough drink runners or broken equipment also won't be profitable for long. Sure, you have teams of people to fix problems, but how do you build up to that? Most people successful have worked with a mentor to get them through the building curve. Business ownership is more than the numbers on a page.

"If scientific reasoning were limited to the logical processes of arithmetic, we should not get very far in our understanding of the physical world. One might as well attempt to grasp the game of poker entirely by the use of the mathematics of probability."

-- Vannevar Bush, architect of the Internet

Business ownership, that's what it is to own a casino. Owning your own casino is now easier than it's ever been. Similar to being an entrepreneur to the world, it's easier to get the infrastructure than it's ever been. For most new store owners and casino owners, this doesn't mean you open your doors and you make money. And, just because you have a profitable new ad words campaign, doesn't mean you invest your entire stack in this weeks campaign. In Boise, ID I met a couple brothers that are consistently winning betting over $100k in ad words a day. They make $5k-$12k a day profit. That means that if they have 9 profitable days in a row, one disasterous day would wipe them out if they were repeatedly going all in. They don't go all-in, though. They are doing fantasticly financially.

The key to being a professional poker player is making enough so you don't have to do anything else in life. I learned this performing magic. The trick to being a professional magician for me, was making enough doing magic so I didn't have to make money any other way. It's as simple as that. Many folks approach poker or business like a hobby, as if how much money they make on that particular Saturday is important. This is the hardest lesson Mike said he has teaching mindset: "How much money you made in a session is far less important to me than if you made the most profitable decisions."

Mike Caro explains that most losers take a short-term perspective on their money. Mike Caro teaches to always play best poker. Part of that is selecting which games you want to play. Your likelihood of winning is almost contingent on having enough money to play. Mike teaches poker from a mindset that is strikingly similar to the eCommerce mindset Audrey Kerwood teaches.

Below, in the comments, I'd love to know what you think. Also, I posted an article in the comments called How To Bet On Research... The entrepreneurial answer is that you want to own the casino. My fiancé Audrey Kerwood teaches you how here. <= CLICK

1 comment:

Ben Mack said...

How to Bet on Research

I want to start with the three most important takeaways of this article:

1. A confused mind won’t buy.
2. Customer offers must be easy to understand.
3. Repetition works.

Let’s begin…

Sales Offer = Customer Proposition.

Business is a proposal made to a customer that is accepted and delivered. Sustainable businesses make irresistible offers that are accepted again and again and again, at a premium price, to customers who become irrationally loyal.

The best way to learn how to make an irresistible offer that is accepted again and again and again (at a premium price) to customers who are irrationally loyal is to model and swipe the successful sales systems you see around you. (PLEASE NOTE: Plagiarizing is NOT swiping, it’s stealing. That aside, swiping is key to entrepreneurial success in Direct Response marketing.)

In poker, there are only two ways to make more money: make more money with every pot you win, and put less money in the hands you don’t win. Simply put… Make more money when you make money, and invest less in losing propositions.

Avoiding Losing Propositions

Making an unclear customer proposition is like wearing sales repellant. Confusion leads to inaction, which kills sales. If there is one lesson I want to you take from this article, it is that a confused mind won’t buy. (I should know! One place I have great room for growth is making my ideas simple. )

In 1996 we asked 200 Baskin Robbins customers how interested they would be in buying a $1.99 Ice Cream Sundae with Warm Cookies, which included two-scoops of ice cream of your choice with two freshly baked chocolate chip cookies, whipped-cream, hot fudge or caramel, peanuts and a cherry on top. Slightly more than average said they wanted to buy our $1.99 warm cookie ice cream sundae. However, after tasting this product, over 90% said they wanted to buy another $1.99 Ice Cream Sundae with Warm Cookies. The taste-testing research house said that our test product had the highest taste satisfaction rating they had ever seen in their 23 year history of taste-testing products.

I thought, “Ice Cream plus Warm Cookies, what’s not to love?” I championed the new product. I proposed a sampling campaign, figuring that if we got folks to try one, they’d want to buy more.

RESULTS => Twenty Baskin Robbins’ franchise owners invested $12,500 in the equipment to bake cookies in their stores. After our 30-day market test, the new product was deemed a flop.

LESSON=> Beware of confusion. There was something confusing about our product description.

We never overcame the intial communication challenge that out of those who had never actually tasted the warm cookie sundae - only slightly more than average said they wanted to buy one! I figured that the smell of cookies baking would fix that.

What happened was… The test flopped harder than any product test in about seven years. Bummer. Ben looked baaaad. I lost trust from my client and a score of franchisees lost money following my bad advice.

My biggest lesson learned… Nobody ever lost money underestimating the laziness of the American mind. If we can’t immediately grasp the proposition, we won’t buy. If there is one lesson I want to you take from this article, it is that a confused mind won’t buy.

If there is a second lesson I want to you take from this article, it is that surveying your customers is never as accurate as testing what they actually do in a buying environment.

Part II => For advanced marketers only! http://authorsbusinessplan.blogspot.com/2010/03/how-to-bet-on-research.html