Every now and then my friends and I will visit a casino. Whether it’s in Singapore, Australia, Macau… we somehow always find ourselves in a casino doing some gambling. I’m very cautious when it comes to gambling and the fear that it might turn into an addiction so I normally set myself a limit or a gambling budget and if I hit it, I’ll stop. Not a single bet more.
To add to that, I also don’t gamble big because I believe I have bad luck in gambling. While my friends often have moments when they win big, I normally go to casinos and lose. I imagine myself being the model gambler at a casino. I walk into a casino with some money and leave it all in the casino when I leave. So I always try to keep my limit to a minimum. Maybe $200 or so.
Then one day Ming watched me play a game of Baccarat at a table and he said “You know what… you’re playing this entirely wrong”.
I was intrigued. What do you mean entirely wrong? Isn’t gambling all about luck? And isn’t Baccarat a rather simple game. You bet on banker or on player and it’s an almost 50% chance to win either way. This is what I learned that really drew similarities to business.
1) In business and in gambling, we have to take our chances and bet big at the right moments, or slowly lose it all.
Ming said “In gambling you cannot just keep betting the same small amount you bet. If you keep doing that you’re going to end up nowhere and eventually because the odds are slightly tipped against you, you’ll die a natural death. You have to see opportunities, then take the chance and go for it”.
It’s just like business. In business the odds are always stacked against you just like how the odds are stacked against you when you’re in a casino. You also have a limited amount of capital or resources in business and you have to make them count. If you constantly bet the same safe amount without taking any chances then eventually the odds catch up with you and you lose.
2) In business and gambling, you have to have enough capital
“Your capital is way too small. Your total budget is $200 when each hand is a minimum of $50 (which seems to be the case in most casinos we visit). With so little capital you lose very quickly and you’re not giving yourself enough time to bounce back when the tide comes. If you’re going to play like that then don’t bother gambling. You’re just throwing away money”. That was the next piece of advice Ming gave me.
I reflected on my past gambling experiences and it all made sense. I started with $200. The minute I lose the first two hands I’m down to $100. By right I should bet more in my next hand so I could make it back but I didn’t have the capital to so I walk away from the table prematurely and a loser.
It’s the same in business. Not every business idea makes money immediately. Sometimes we need to wait for the “wave” to come and then ride it but each day or week we wait we lose money. The longer we wait the more money we lose. So if we don’t have enough capital to wait out the tough times and make money in the good times the business dies prematurely and you never have a chance to ride the wave and make it all back. If we don’t have staying power to wait for the wave then perhaps it’s true that we shouldn’t even bother going into it.
3) In business and gambling, you have to have resolve
One of my friends at the casino in Macau had a strategy in Baccarat. He wouldn’t bet on player or banker. He would bet only on whether the game would tie or not. He would look for games where there hadn’t been a tie in a long time and then bet on it. Ties don’t happen often but the odds if he won was 8 to 1. That means he can afford to lose 8 of the same bets before he gets 1 tie to break even. But if he increases his bet each time he loses he increases the payout and then could make more.
Another friend and I decided to follow his strategy. After 5 hands of losing straight we started to get jumpy. We were losing more and more money each time so we lost our discipline and decided not to go on with it. Literally one or two hands later, he got his tie and won big.
The difference between him and us was that my friend stayed the course. He had resolve… whereas we got scared when we were losing money and quit.
That’s like business. All businesses go through difficult times sooner or later and the ones who come out of it well are the ones who have a plan and are determined enough to stick to it.
When I think of these 3 similarities I can’t help but think of how business and gambling are alike. They both require capital, they both require people to take risks, they both reward the risk takers and they both test your determination and resolve. I realize now that perhaps I’ve been losing at casinos not because I don’t have gambling luck. But because I was playing it all wrong.
Timothy Tiah – Co-Founder of Colony, Kuala Lumpur Co-Working Space