Choosing the Right Game: Be Market-Driven, Not Ego-Driven

Ever have visions of going to Las Vegas and teaching legends like T.J. Cloutier and Johnny Chan a lesson or two? Cloutier and Chan sure hope so. The pros make a living off the home-game champions who want to test their egos against the best.

You don't need to be a world-class poker player to be a winner – as long as you don't play against world-class players. Pros don't make money so much from their own expertise as they do from their opponents' mistakes.

The first thing I do before going to a private game is call and ask about the lineup. I know that if there are more people in the game who play to gamble, and not to win, it's time to do business. If the game is full of a bunch of professionals, I'll call some other games. If, for some reason, all the live ones have taken the night off, I'll take the night off, too. Playing against a bunch of pros would be about as smart as trying to sell an unknown carbonated cola beverage in a red can in the city of Atlanta.

Doing research is actually harder in a casino. The first thing you should do when you get to the poker room is watch. Go from table to table and study the action. If you see lots of chips on the table or lots of big pots, you know that you have found a loose game. But don't stop there. Become an investigator and start asking questions. If you know a player in the game, ask him how the game's going and try to get a report on unknown players.

The floorperson is another great resource, because he knows the players better than anyone.

In 1995, I worked as a prop player at a casino in Los Angeles. I reasoned that I was going to be putting the hours in anyway, so I might as well pick up a paycheck. It was a win-win situation all the way around – so I thought. The $25-an-hour salary was not enough to make up for what I lost by not being able to choose my own game. When I spotted a "mark" and tried to get in his game, other pros usually beat me to the punch, and I was stuck filling up other games in which I had no choice but to play. After three months on the job, I gave it up and reminded myself of the No. 1 rule of success: Game selection is everything.

Players go to Las Vegas to test their skills against the best. The smart ones view these expeditions as training, and return to their own games with more refined skills. The egotistical ones view these games as a challenge, and often go broke vowing to beat the pros. Notice how the words "smart" and "egotistical" are used as exact opposites.

Before you sit down to write a business plan, look at the market and try to find the easiest "mark." If you want to test your ego, start training for the "Ironman" competition.

Entrepreneurs tend to do their competitive analysis after they have decided on their idea. The whole point of their exercise is to find the flaws of their competitors and show in their business plan why they are better. A common refrain usually goes something like this: "I don't care how many sports bars there are in this town, mine is going to be the best! And besides, there's always room for another."

The time to learn about your competition is before you go into business. Just as you would evaluate a poker game before making the buy-in, use the same diligence to assess your competitors in the marketplace. Just because all the sports bars in town are packed on Monday nights during football season, it doesn't mean they are all making money (visit a few on a Wednesday afternoon).

In the book The Millionaire Next Door, the authors advise you to follow seven simple rules in order to become a millionaire. The last rule is, "Choose your occupation wisely." It points out that most millionaires work in "nonglamour" industries. Forget about Bob Costas, the average garbage collector makes more money than the average sportscaster. While you may not find owners of plumbing or scrap metal companies nibbling on caviar at the country club, you will find them depositing big checks at the bank, working their own hours, and playing poker while their more "esteemed" colleagues are stuck at the office.

The No. 1 reason businesses fail is the same reason that poker players fail. They are ego-driven instead of market-driven. In both games, whether you win or lose is determined by how you prepare.

For five tips – plus a wild card – for starting a successful business, send an E-mail to [email protected] – subject heading, Game Selection.