The inspiration for success in business often comes from places where you would least expect it to – and the Blackjack table is the perfect example.
According to Jeff Ma, serial entrepreneur and founder of the MIT Blackjack Club, many of the basic rules followed by card counters at the blackjack table can be used by entrepreneurs to improve the performance of their start-up and to maximize business growth.
In the early 1990s, the MIT Blackjack Team developed a method of card-counting that incorporates basic math (or basic strategy) to predict the outcome of every hand accurately and drastically improve the number of winning bets that were placed.
As a result, members of the team pocketed hundreds of thousands of dollars in winnings and have had their stories immortalized in the New York Times bestseller, Bringing Down the House, as well as the Hollywood Movie, 21.
Following his days in the MIT Blackjack Team, Ma has since launched or helped to launch four separate companies. Three of these were bought out by corporate giants Demand Media, Virgin, and Yahoo. He now also acts as an advisor for several other successful start-up companies and attributes much of his success to the Blackjack Business Model.
According to Ma in his interview with AutoDesk, entrepreneurs can give their business the best possible start by merely adhering to the same principles used by the MIT Blackjack Club as they stormed the casinos of Las Vegas. Below is a list of those principles and how they can be applied to a new start-up business.
Aggression Over Passivity
By learning the basic strategy for blackjack, players can significantly decrease the casino’s advantage from 3% down to 0.5% for every hand. However, though players can learn this strategy, in theory, many of them still struggle to make the right decision when playing at casino floors or online blackjack.
According to Ma, “when a player has a bad hand, such as a 16, and the dealer has a marginal up card, such as a seven. The optimal strategy, in this case, is for the player to take a card. But if they get a six, seven, eight, nine, 10, jack, queen, or king (more than 60% of the deck), they will lose automatically.
So, the natural tendency is for the player to stand pat on this hand (not take a card) in the hopes that the dealer himself will have to take a card and will bust.”
However, statistics show how this passive approach, in fact, causes more problems for the player in the long run and is the main reason why many players fail to win. Rather than sticking to the basic strategy and being the aggressor, the players that choose to be passive place power into the hands of the dealer which inevitably leads to their downfall.
From an entrepreneur’s point of view, this same logic can be applied. Success in business never came from being passive, and leaders must be prepared to make tough decisions for the good of the company rather than shying away from them.
Hesitation and doubt will inevitably lead to failure, and an entrepreneur must be strong-minded, determined, and absolutely confident of what needs to be done.
Knowledge Is Power
Knowing every aspect of the game is crucially important when implementing the basic strategy in blackjack. Card-counters rely on data to make those winning decisions, and they must stick to the protocol and set plan at all times despite whether or not their instincts are telling them otherwise.
With this in mind, an entrepreneur's most effective tool when building their business is knowledge. By learning everything they can about the market they are involved in, about their competition, about their customer, about their product, and about the history of the industry they are operating in, they can use that knowledge to make important decisions that drive the company forward.
Failure is a Necessary Evil
When the stakes are high at the blackjack table, a loss can seem catastrophic, and even the greatest card-counters in the world have experienced them at some point in their careers. Jeff Ma, for example, when reflecting on a game that saw him lose $100,000 in just two hands, claimed:
“I never really did doubt myself or the system I was a part of. In fact, in many ways, I looked at this as only a minor setback and still believed that because our strategy [and] our process was so strong, the short-term failure meant nothing.”
Suffice to say, Ma’s achievements in blackjack and other areas of his life have far surpassed his failures, and this element of self-belief and belief in one’s strategy is something entrepreneurs should aspire to.
Rather than dwelling in defeat and succumbing to self-doubt, it is essential that business owners stay focused on being successful and making positive improvements to the company.