Whoever carries a poker bluff over to his partners doesn't last long
An interview with Maxim Semelyak, first published in Russian by OnInvest. The full English translation is below.
On poker and investing, Jack Ma's words and the limits of gamification
You call your project the Little Poker Empire. Why little? Irony? Self-deprecation? Sarcasm?
No. Ambition.
Little is the most ambitious word there is. For me this empire will always stay little, even once it is big. Which means you have to keep moving. Always.
The little are fast, the big are heavy. When I worked at Alibaba, Jack Ma liked to say: small is beautiful. He meant the small businesses the company was built to serve, but the idea is wider. As long as you think of yourself as little, you are hungry, flexible and ready to learn. The moment you decide you have become big, you start defending what you have and stop building.
A lot has been written about poker and business – Liar's Poker, from the late eighties, about working at Salomon Brothers, comes to mind, or, more recently, the latest book by the statistician, forecaster and professional player Nate Silver, On the Edge, which is precisely about poker holding, one way or another, the keys to the whole of modern reality. How universal is that comparison, and can one say in turn that every businessman is a player, but not every player is a businessman? You came to poker as an established businessman – if it had been the other way round, how would it have changed your life and business strategy to have started playing, say, in your youth?
The comparison holds as long as we are talking about decisions: incomplete information, the price of a mistake, the ability to separate the quality of a decision from its result. Beyond that the differences begin, and they are serious. In poker feedback arrives in seconds; in business it takes months, sometimes years, and in that time you can talk yourself into anything. Poker is a game for one. Business is almost always done by a team, and the main work there is with other people's decisions.
So I would correct the formula at both ends. Not every businessman is a player: there are superb entrepreneurs whose strength is exactly that they take chance out of the process. And still less is every player a businessman. Poker is full of very strong people who in ten years have built nothing but a bankroll.
Had I started young, I think I would have learned earlier to price risk and to take losses more calmly. But there is a flip side: poker pulls clever people in, and at twenty it is easy to decide that the table is life. I came to the game with a frame already built – twenty years of management, my own mistakes, my own money. For me the table is a training ground, and I think that is the right order.
Poker is about working with uncertainty (unlike chess), and in that sense it is very much of the moment, given that for the last twenty years or so there has been a steady ideological cultivation of uncertainty and chaotic processes – quite justified, judging by world events – if we take Taleb's Black Swan as the starting point. So it is no longer only about narrowing the field of uncertainty, but in a sense about placing one's hopes in it. New studies keep appearing showing that experience does not mean a correct understanding of processes; JP Morgan Stanley recently declined to forecast oil prices; Palantir's Alex Karp rejoices at how AI has zeroed out human expertise – yesterday's decorated specialist is worth nothing today, and everything, roughly speaking, depends on the deal. As your site puts it, if your logic can be seen from the outside, others will carry it on without you. Do you think this intoxication with uncertainty is a sign of our times, or has the investment world more or less always been like this (as poker has) – not by the textbook, but in fact? How comfortable are you personally working under the sign of uncertainty, and which specific poker skills help you find your way in it?
Uncertainty has always been there; what has changed is the attitude to it. It used to be customary to hide it behind forecasts and models; now it is fashionable to admit to it. In investing it has in fact always been like poker: nobody knew where the market would go. Some assessed their chances honestly, others pretended to know.
About the phrase from the site – it is about something slightly different. It comes from a hand in which my opponent put in $45 of the $53.50 after I had stopped betting: he finished, himself, the story he had read into my actions. A logic that can be read is one your opponent carries on for you, and he does not re-check his conclusion. So the phrase is about managing what other people see.
Comfortable is a big word; used to it is closer. What from poker actually helps:
- Thinking in ranges. I don't know my opponent's cards, but I know which ones are possible and in what proportions. Same with a deal partner: you hold a set of weighted scenarios in your head and don't try to guess the one.
- Separating the decision from the result. You can play right and lose, and the other way round. An undeserved win is more dangerous than a loss, because it locks in a wrong habit.
- Respecting sample size. I have almost thirty thousand hands in this format in my archive, and my win rate is still statistically indistinguishable from zero. That sobers you up better than any study. If after thirty thousand decisions you cannot say with confidence whether you are a winning player, what can be said about a manager on the strength of five deals?
- A stake that matters but is not critical. Then uncertainty is survivable, and decisions are not made out of fear.
On expertise losing its value: what loses value is knowledge that can be learned. The ability to make a decision on incomplete information and answer for it has not been automated by anyone yet.
As for practical tools: in poker people sometimes use a randomizer. In one of my write-ups I discuss what to do when you face several decisions and all of them are right. The first option is to look at the possible negative consequences and ask yourself whether you can live through them. The second – if the consequences are roughly equivalent, and decisions like that have to be made all the time – is to trust a randomizer, with equal weights for every option or different ones, and pick what it shows.
The site draws a great many convincing parallels between poker and business: how easy it is to mistake a general tailwind for your own personal edge, how a poker room works on the logic of a marketplace, how a community card can resemble a cut in the lending rate, and so on. But, as they say, the map is not the territory. Are there, in your view, laws of poker that don't really work in business? Are there limits to the gamification of business at all, and isn't such gamification dangerous?
The first law that transfers badly is the free fold. I play Rush & Cash: after you fold you are moved to a new table instantly, walking away from a hand costs nothing, so you should open only with strong cards. In business walking away is never free. The team was waiting for a decision, the partner remembers how you left, the time is gone.
The second is repeatability. In poker the same situation comes up thousands of times, and expected value means something. Most big business decisions are one-offs: buying a company, moving to another country, parting with a co-founder. You cannot play them a thousand times and come out at the average, so there not losing everything matters more than winning on average.
The third is that relationships are disposable. An opponent at the table is gone within the hour, and a bluff offends nobody. In business the game runs for years with the same people, and reputation is worth more than any pot.
I see the limit of gamification where the game starts to stand in for reality. Poker is good as a training ground for thinking. When a company starts to see people as chips and quarterly numbers as a pot to be taken at any cost, it ends badly. A metaphor is useful as long as you remember it is a metaphor.
On people of the River and the Village, the exit point and arithmetic neutrality
In On the Edge Silver treats players (in the broad sense) as a caste of their own – he calls them people of the River: venture capitalists, crypto people and other techno-optimists, roughly speaking, for whom probability and intuition come first. Everyone else is people of the Village, representatives of the system, so to speak. And in the end those who take risks will survive, and the ones who take risks are those who can count. Do you see such player-investors as a distinct personality type, and do you recognize «your own», say, by how they run a business and do deals? And if so, by what signs?
I recognize the type Silver describes. The signs are simple:
- they speak in probabilities: «about a thirty percent chance, but the payoff is worth it»;
- they say «I was wrong» quickly and don't waste time defending old decisions;
- they can tell whether it was the decision that was good or only the result;
- they size the stake to what they are ready to lose;
- they walk out of a negotiation calmly when the price doesn't work, and come back six months later with no hard feelings.
With people like that it is easy to reach agreement even when our interests are opposed: we speak the same language.
I would argue with the thesis that the risk-takers will survive. Even among those who take risks and can count, not all will survive – variance is a bitch. It all depends on what you count as one hand. If a hand is a day, there will be thousands of them, and expected value has time to work. But if the hand is your whole life, you have exactly one, and then even a pair of aces guarantees nothing. My GG archive holds almost seventy thousand hands; aces came 271 times, and I lost 19 of them. In total the aces brought me almost $3,400, but in big pots, from $50 up, I lost with them almost one time in four: 8 out of 34. Had one of those eight hands been the only one in my life, no expected value would have consoled me.
At the same time the River needs the Village to have somewhere to play: without banks, regulators and rules there are neither markets nor casinos. By biography I live on both banks – Sberbank on one, venture and iGaming on the other.
Do you feel you have an edge in business after three years of poker?
I take a bad result over a short stretch more calmly, and more often ask myself what my real edge is before I go in. Frankly, I can't measure it as precisely as a win rate, and on the site I only write what I can count. What poker does show precisely is where I myself go wrong. For example, it looks as though I bluff on the flop more often than it pays.
You describe the idea of an anti-portfolio using the venture fund Bessemer as an example – the list of companies it did not invest in. This, by the way, echoes Jeanne Moreau's old remark that an actor should be judged also by the roles he turned down. What, in your view, is an acceptable ratio between portfolio and anti-portfolio in the investment world – two books, one showing the result, the other the real train of thought? Every investor makes mistakes, of course, but what if the mistakes start to prevail – how do you tell the point at which it is time to leave the game and become, so to speak, a person of the Village?
In venture it is better not to count the ratio at all. By the laws of that market most investments will not pay back, and the fund will be carried by one or two companies. Failures in the portfolio are the norm. What matters more is why you passed on what later became big. If the price was absurd, that is a normal pass. If you simply didn't see it, as Bessemer didn't with Google, that is knowledge about yourself, and expensive knowledge. But only if you reflect on it properly and understand whether that mistake has a systemic seed in it.
Poker has a good analogy. In the big blind against an open, nobody plays at a profit: not me, not the field. The job in that seat is to lose less. Fold everything and you lose exactly a dollar a hand. Defending, I lose 65 cents on average. It is still a minus, just a smaller one. Every investor has positions like that, and they should not be confused with losing play.
I would set the exit point by process. In venture and in poker alike, results stay noisy for years. It is time to leave when you have stopped understanding why you make your decisions; when the same mistakes keep repeating; when the stake has gone from meaningful to critical. That is tilt in the broad sense – any departure from your best game. And becoming a person of the Village sometimes turns out to be the most accurate decision of a whole career. Some personality types also benefit from changing format now and then. I myself move from one state to the other at intervals and enrich my experience on both sides.
Can one say that poker takes us back to a notional twentieth century, with its bracing adequacy and honest amorality (see Liar's Poker)? Should it be seen as part of the so-called right turn – a return to more or less traditional values, with the inevitable acknowledgment of one inequality or another (women, by the way, rarely play poker – at least Silver says so), an innate thirst for winning, and the fact that people, in games and in business alike, tend to deceive one another, the moralizing principles of DEI and ESG notwithstanding? You write yourself that poker, by making no claim to a moral position, rids you of falseness.
I wouldn't enlist poker in the right turn or in any other. Poker is outside morality in the same sense that arithmetic is neutral: the table has no position, the log has no opinion.
Deception in poker is honest, because everyone sat down knowing the rules. The bluff is part of the contract. In business deception is a breach of contract, and it accumulates in your reputation. Whoever carries a poker bluff over to his partners doesn't last long, especially in small industries where everyone knows everyone. Liar's Poker, by the way, was written as a fairly caustic critique of that culture, not as its anthem.
Where does poker really rid you of falseness?
In the attitude to results. You can't say «but we grew as a team» there. There is a number, plus or minus. I like that, which is why every number on the site is calculated from the hand histories, the unpleasant ones included.
There really are fewer women at the tables, but I see nothing in the game itself that would favor either sex, unless you go into gender stereotypes like greater emotionality or a lack of patience. In poker you play with your backside almost as much as with your head. It's no accident that tournament players talk so often about outsitting an opponent.
You write about the dual nature of poker – it allows for communication and for refusing it in equal measure. Poker can teach humility and non-participation – in chess, by comparison, you physically cannot skip a move. Classical capitalism, meanwhile, implies constant growth – so it turns out that poker, again taken as a metaphor for economic strategy, comes with more flexible settings?
Yes, for me that is the game's main property. I enter roughly one hand in four and fold the rest. You can't do that in chess; chess has zugzwang: every move makes your position worse, and you are not allowed to pass. Poker has no zugzwang – you can always fold.
Classical capitalism is built more like chess: you have to grow every quarter, and the market punishes a skipped move. Poker offers a different strategy. You take part selectively, and when you go in, you go in for real. Most of the time you do nothing and put up with nothing happening.
Business badly lacks this skill. We talk a lot about the courage to commit and little about the courage to walk away, especially when money, time and reputation are already in. In a piece for Bolshiye Idei I wrote that victory is very often achieved through non-participation, through not-doing. Since then I have only grown more convinced of it and practice it more and more, at home too. My wife, admittedly, isn't too keen on that :)
On coming back to life, Chinese partners and the next strikes of the Little Poker Empire
Following on from the previous question – you wrote that poker was, for you, a return to life. One mathematician argued that chess is less a game than a form of computation, while poker most resembles real life, with its skipped moves, reading the opponent, bluffing and absurdities. The same On the Edge quotes the poker champion Doyle Brunson saying that poker is a thoroughly human game and no computer will ever fully imitate it. But those words were said long ago, and the book was written a couple of years back, before neural networks had come into their own (Musk, by the way, compares the AI race precisely to poker). Solvers will clearly only get better, and Claude isn't standing still either – the banal question is whether technology will make human play pointless as such (just as it is now customary to fear for music, literature and so on)?
Poker came during a pause between two stages of my career and gave me back something that almost never happens in a top-management role: direct and fast feedback on your own decisions. In a big company months pass between a decision and its result, and the outcome is split among many. At the table you decide alone and know a minute later how it ended. It is a very alive feeling.
Machines have already beaten poker. Libratus beat professionals heads-up in 2017, Pluribus at a six-handed table in 2019. A solver computes the equilibrium better than any human; I analyze my own hands in one. Brunson was wrong there.
But what comes next is best shown by chess. A computer beat the world champion almost thirty years ago, and more people play chess now than ever. People are interested in the human game, with human mistakes. In poker that matters even more: the money on the table comes from other people's mistakes. Against a perfect machine you cannot win, only lose less.
The real threat is bots and real-time assistance online. That is a question of the game's integrity, and here I look at it as someone from the industry: how the rooms deal with it will decide what online poker looks like in ten years. But this story will have no ending: the rooms will never fully defeat the bots, and the bots will never defeat the rooms. It is a question of balance, and of knowing where it is worth playing today and where it is not.
Claude counts and argues for me, but it does not sit down at the table. That is a project rule.
If the last question was banal, this one is probably silly, but still – you mentioned that you first sat down to play with a group of Hong Kong investment bankers. Can one say that the principles of poker are somehow inherent in the Chinese way of doing business? I just got back from Guangzhou and was struck by how many people play cards in the streets there (OK, they are hardly playing poker, but still) – I can't recall anything like it anywhere else in the world, and it's not just market traders or delivery couriers, but quite hipster-looking young men in cafés.
The question isn't silly at all, and it is especially close to me: I am a sinologist by training and started out as a journalist in Hong Kong.
In Guangzhou you most likely saw guandan or doudizhu – «fight the landlord». Over the last few years guandan has become almost a business ritual in China; people call it the new golf: partners get invited to play the way they used to be invited to dinner. Plus mahjong, which the whole country plays. Games of incomplete information are part of Chinese social life, and far from a marginal part.
What is poker-like in the Chinese business style, as I see it, is patience and the long game. Chinese partners are very good at waiting, at not showing their cards too early and at counting a relationship years ahead.
But I wouldn't put it down to national character. The Hong Kong bankers played poker because it is the game of their profession: they priced probability and risk at work and trained at the table. And, if I remember correctly, they were mostly expats rather than locals :) People like that exist wherever money is made by pricing risk.
You wrote that daily300.fyi is only the first strike of the Little Poker Empire – what will the next ones be?
Today the Empire has three parts.
Daily 300 is the main content hub where poker meets business, and my calling card in the poker world. It is the anchor project and an experiment in several directions at once.
First – how to build a name in a niche where nobody takes anyone's word for anything, and how to carry an established reputation into a completely different industry.
Second – how far you can go with AI in analysis and writing if you keep it on a short leash of numbers and style. Everything on the site today is the product of full co-creation and co-making between me and Claude. We come up with things together and build them together, and with every iteration it understands me better.
Third – regular play over a long distance, what it is fashionable to call a challenge. That takes a certain discipline and self-organization.
Fourth – I am curious to see how much regular, formalized analysis can improve my own game.
And fifth – I want to understand which formats of game analysis people find interesting at all. The answers are already being put to use: the next two projects grew out of them.
The first is a poker trainer, exercises in poker wit and arithmetic. For now it lives inside Daily; in time it will get an address of its own. Daily 300 is in many ways unique, and that is its strength and its weakness at once. The trainer is different: it is a red ocean of every kind of paid and free service. So I am putting the weight on two things. First, I want to build something I will use regularly myself. Second, I want more fun and gamification: hence the daily workout, the poker casino, blitz and sharing results with friends.
The second is tableside.poker, a content-marketing agency that helps poker rooms retain VIP players. A pilot is under way with the first room. From there the project will grow into a full marketing and retention platform for poker companies.
In parallel I am building two more things. A network of social channels around Daily: the same content in other formats – long and short videos, reels, shorts, carousels. And a platform that brings poker into corporate events and training. For a company it is a way to see, in a single evening, how a team makes decisions when information runs short.