Thursday, February 4, 2010

Know when to walk away

As with poker, so it is with life.

My brother gave me a poker book for my birthday a while ago. Every student of business or human behaviour should study poker. One particular concept that the book makes is that of an hourly rate. If you are playing poker for money, then you need to find the right level, where you can expect to win enough to justify your presence at the table. The same is true of a business venture, or even at an individual level, how you spend your professional time. If you are working on a collection of projects, then the expected pay off from those projects needs to be worth your while. If you reckon the likelihood of a payout multiplied by the probably amount, then that's your rate. If it's not worth it, then you need to do something about the probability or the size of your payout.

Similarly, your odds will work out over many hands, so the more ventures you have, the better. If you're staking it all on one big pot, then you had better be lucky. As the man said: you have to know when to fold 'em.