Start From a Position of Strength

My friend Doc took every penny he had and sat down in a pot-limit hold'em game. In this particular hand, there was $4,000 in the pot and Doc was down to his last $1,000. Jake, his opponent, put him all in with a bet of $1,000, and Doc had an easy decision to make. With $5,000 in the pot, if he had a one-in-five chance of winning the pot, he should call.

He thought he had a fifty-fifty chance of winning, so it was a no-brainer to risk $1,000 to win $5,000. The problem was that if he lost, he would be on the rail. He was playing with "case" money at stakes far above his means. Even though the mathematical move was to call, it also meant that there would be a 50 percent chance that he would go broke. A lack of cash creates fear. Surviving and shrewd negotiating do not go hand in hand.

Doc put himself in a position where he could jeopardize his livelihood by running out of cash. He thought fast. "You want to cut a deal?" he asked Jake. "I'm pretty sure I got you beat, but I can't afford to take the loss. How about I take $1,000 out of the pot right now and you can have the other $4,000?"

You don't see a deal made very often at the poker table, and as he should have, Jake saw it as a sign of weakness. If Doc had him beat, he would have called the bet. Jake pondered his options. If he took the deal, he had a 100 percent chance of earning $4,000. If he didn't take the deal, he would have a chance to earn an extra $2,000, but at the expense of losing a sure $4,000.

Mathematically, Jake's decision was easy. Because he had plenty of money, the fear of losing didn't affect him, and he was able to concentrate on making the optimal decision – not just surviving. He knew that he was going to take the deal, but because Doc showed weakness, he decided to negotiate an even better one.

"I got you beat, Doc," said Jake, "but I don't want to see you go broke. Take $500 and let's play the next hand."

Doc didn't have to do the math. A 100 percent chance of winning $500 vs. a 50 percent chance of winning $5,000 wasn't much of an equation, but he was acting from a position of weakness and knew that Jake liked to gamble. In fact, Jake took more pleasure in seeing Doc sweat than winning the pot. Doc knew enough about his opponent that if he said no, Jake wouldn't back down. But, he was desperate to cut a deal, so he said, "Give me $900 and I'll be happy."

Jake had Doc on the ropes. "Since I'm feeling so benevolent, I'll split the difference with you. Take $700 and go find yourself a lower-stakes game. Take it or leave it."

Doc had little choice. Because he was in a position of weakness, the terms of the deal were dictated to him, instead of by him. By taking the deal, he would preserve the $1,000 he had on the table and take another $700 from the pot. "OK, Jake, we got a deal," he said as he took the $700 from the pot, while Jake grabbed the remaining $4,300. The last thing Doc wanted to know at this point was that he had cut a deal when his opponent had a worse hand, but his curiosity got the best of him. "By the way, Jake, what'd you have?"

"I'll show you if you show me," Jake said. In unison, they turned their cards faceup. Jake wasn't bluffing; he had aces up. Doc had a set of deuces. Had he called, he would have had $6,000 in front of him instead of $1,700.

Your adversaries – and even your allies – are constantly judging your reactions and are ready to pounce at the first sign of weakness. Whether it's a poker hand or a business deal, if you enter a negotiation in survival mode like Doc rather than win mode like Jake, you'll be taken advantage of at every turn. Nobody pushes Doc around in a penny-ante game – a sure sign that it's where he belongs.

The biggest card you can play in a negotiation is your willingness to walk away – something you can't do if you're desperate. That's why you are at your best, both in poker and in business, when you play within your means and don't have to win. That's starting from a position of strength.

Greg Dinkin is the author of The Poker Principle: Winning in Business No Matter What Cards You're Dealt, which will be published by Crown in April 2002. He is also the co-founder of Venture Literary (www.ventureliterary.com), where he works with writers to find publishers for their books and producers for their screenplays.