31 Jan Are you playing at the right table?
In his book, Delivering Happiness
, Tony Hsieh, CEO of Zappos, talks about the similarities between poker and business.
After co-founding and selling the internet advertising network LinkExchange to Microsoft in 1999 for $265 million, Tony got into playing poker. I guess when you’ve made that kind of money at 26 you’ve got to do something with your time.
Anyway, during his time playing poker he noticed a lot of similarities with business and started making a list of the lessons that he learned (which he shares in his book)
One of his key lessons is: when evaluating market opportunities – table selection is the most important decision you can make.
A market opportunity could be a new product or service or even a new business. But, fundamentally, selecting the right place to play makes all the difference.
I often see this with businesses where the market or business they are in (ie: the table they have decided to play at) limits their potential for growth.
With markets we may be talking about the size of the market. This could be how many companies are in your addressable market (most companies overestimate this, btw). Or your market could be defined as companies with the ability and capacity to pay for your product or service. Established “market rates” usually drive how much you can charge (unless you can disrupt them).
As well as market selection, the type of business you are in makes a huge difference.
Your business model will influence (and often dictate) your ability to grow; it’s a major factor in determining the trajectory for your business.
If you work in a resource heavy, project-by-project business it’s hard to scale rapidly. And if you combine this with a limited market size it will significantly impact on the ability and potential for your business to grow.
At one extreme you have a freelancer working hand-to-mouth in a market constrained by high-competition, tight hourly rates and the need to constantly find new clients project by project. The potential for growth is non-existent.
On the other hand you may have a highly-scalable IP driven business (such as a software business) that addresses a huge global market with limited competition.
The point is this: the business model and market you choose will have more of an impact on the potential for growth than most other factors. More so than execution even.
You can be the best sweet shop in town but if you stay that way your aspiration for world domination may have to be scaled back a little.
Which brings us to Tony’s next business lesson from poker: it’s OK to switch if you discover it’s too hard to win at your table.
Published originally by David Regler on LinkedIn in 2014