Tough Decisions for Entrepreneurs: A Successful Business with Poker Strategies
Dan Hadford interviews Chris Sparks about Black Swan events, high risk/high reward decisions, and decision journals.
Audio recording below (21m38s). Full transcript following.
Podcast Transcript
Note: Transcript slightly edited for clarity.
Dan: Welcome to The Tough Decisions Network For Entrepreneurs. I’m Dan Handford, and my wife Dennae and I interview successful people sharing stories behind tough decisions that they’ve had to make along their journey as an entrepreneur. On the podcast with us today is Chris Sparks. Chris, welcome to the podcast.
Chris: Thanks, Dan. Excited to be here.
Dan: Well Chris, I want you to get us started and give us a little bit about you and your background as it relates to entrepreneurship.
Chris: Sure. So I’m the founder of a company called The Forcing Function, and I work with entrepreneurs who are on marathon businesses, and I help them achieve peak performance. So my bread and butter is structuring your schedule, creating habits and systems, making sure that resource … You know, time, energy, focus, are all aligned with the top priorities. And I deal with tough decisions every single day. I think decisions are what holds us back from making progress, a lot of different dimensions in our lives. And you know, really excited to discuss some of the frameworks that I’ve discovered to help overcome these decision roadblocks.
Dan: Well I want you to kind of get us started on that path of talking about these tough decisions, and you know, get us started with what I like to call a ‘sore thumb’ tough decision. So it’s a tough decision that you had to make in your background in your background as an entrepreneur that you know, had a not-so-good outcome and you either made the wrong decision or made a bad decision or just it didn’t turn out the way you had expected, but you know, you definitely learned some lessons through it. We wanna dive into that, as well as talk about some of those lessons.
Chris: Yeah. Man, I’d love to talk a little bit about in my experiences as a professional poker player. So in poker playing, it’s all about making decisions. In playing multiple games simultaneously online, I’m making a decision about every second on average, many of which are for thousands of dollars, for hours on end. And so the ability to continually make good decisions for long periods of time when things are against you is a muscle that I’ve very much tried to build up over time, but still events pop up which are obvious in hindsight, but were completely unexpected. And the biggest one for me that really changed the entire trajectory of my life was what we call Black Friday. So I was at the peak of my professional online poker career. This was April 15th, tax day, 2011. I’d just written off a nice six-figure check to the government, and I got a text from friends asking “Had you seen it?” And I hadn’t. And I looked online, and the online sites which I made my living on and had for a number of years were no longer accessible, where online poker had officially been shut down in the US.
And so overnight my way of making a living was gone, and to put it worse about half of my net worth had been seized by the government and was caught up in a bunch of red tape. So very much kind of deer in the headlights, not sure what to do next. And there were signs behind the scenes that something like this could happen, but I constantly shrugged them off in favor of wanting to believe the status quo would continue forever, because I was doing so well and it was too painful of an idea to think that, you know, the dream would end. And then one day very abruptly it did, and I was caught up you know, on my heels, not knowing what to do next. And many players were in an even worse position than me, where they had their entire net worth online, had bills to pay, families, et cetera. Didn’t know what to do. At one point online money was selling for thirty or forty cents a dollar. And I wasn’t sure “Do I sell off mine or should I be buying more?” And I had no idea what to do. I was completely stuck.
And I think the tough decision there was like “Is this the push that I should be thinking about doing something else with my life?” You reach a certain point as a poker player, as an entrepreneur, where like “This is my life’s mission. This is what I’m going to be doing for my life.” And I felt like I’d hit this inflection point of “Maybe this is a sign that it’s my opportunity to get out and do something that’s a little bit more positive sum.” And obviously the timing wasn’t ideal, but the future was so uncertain that I didn’t really see any other opportunity than to kind of walk away and explore what else was out there and see what would happen once the dust settled.
Dan: I’m just trying to like wrap my head around this entire process, because I can’t imagine that happening to me, you know, in different industries and things that I’m involved with right now. What eventually ended up happening?
Chris: Yeah, so an impartial site ended up buying the second site, and paying off players, but that was a three-year process for people to get their money back. I mean the final players just got their money back almost a decade later. And so for a long time I had to consider this money that I had earned lost, because there was no sign that anything would happen, and no buyers were stepping up. But you know, three years later I ended up getting all of the money back into my account as a lump sum on a single day. This kind of leads into the decision with the good outcome. I had been spending the majority of this time traveling. So once I walked away from poker I saw this as an opportunity to cross off all the items on my bucket list, many of which were kind of travel and experience related. And at the time when this large sum of money hit my bank account, I was staying on a beach in Thailand. I was effectively retired at twenty-three years old, and I calculated with the money that hit my bank account that day, I could live on this beach in Thailand for the rest of my life.
And I was very much enjoying retirement, and thought, you know, “I’ve cracked the nut. I have that FU money, I can do whatever I want.” But once that reality hit, just like “Wow, I can actually do whatever I want”, I was forced to confront “Well, what do I actually want?” And it really addressed this idea of meaning. A very core belief for me is that we need both meaning and happiness, and we constantly oscillate between those two, where being an entrepreneur is hard and sometimes it can take away from our happiness, but it brings us meaning, and that was very much what was missing in my life. And I looked at who are the friends that I know who are ambitious who are trying to shape the world? And they were all starting businesses. And that started my journey of “I want to be working with entrepreneurs. I want to be an entrepreneur myself. I want to be one of these people who are changing the world for the better.”
And I didn’t really have a concrete idea of how I would go about doing it, but that was the day that I decided that I was no longer going to pursue this idiotic treadmill. I was no longer going to do things that were zero-sum, but that I was going to take the skills that I had learned and put them in the service of others.
Dan: And so how did you at that point decide what type of business you were going to pursue?
Chris: In a nutshell, I tried a number of things, and offered my services for free, and figured out which ones that I was good at and which ones that were valuable. And so I tried my hand at a number of things. I did some angel investing, I worked in venture for a little bit. I did marketing consulting, I did analytics consulting. I joined a couple startups in New York, leading their marketing full-time. All very interesting, and I learned a lot.
These were multiple kind of three-month MBAs. But nothing really stuck out to me as something that I had a competitive advantage in and just really enjoyed. I believe that in order to be one of the best at something it has to be something that you would pursue anyway, something that you’re naturally called to. But something that was kind of a thread that tied all this together was I was getting advice on things that were outside of what I had declared myself was, and it more or less coalesced around “What is the best way of working?” Like how to achieve maximum output, how to become prolific, where in my pursuit of becoming one of the best online poker players in the world I had really internalized a lot of these concepts on how to perform at peak. How to make very tough decisions ongoing, every day. How to maintain one’s energy and focus. How to make sure that time is put in the most important places. These kinds of instrumental skills that I had taken for granted that were actually very useful to entrepreneurs, because as an entrepreneur your job is to make decisions.
And I had a couple friends who I just started informally advising on running their business. I mean I didn’t know a lot about how to run a business, but I was helpful to them because I was able to maximize their personal resources. And then one day one of these friends asked to start paying me, and I just created a simple google doc saying “Okay, you paid me this much, I will offer you these services.” And all of a sudden I had a business. And that client ended up referring me to a couple others, and it’s just been kind of growing there via referral. I think that’s really the only way to start a business, is someone offers to give you money, and then you try to figure out a way to get more.
Dan: Well, I think a lot of people get it the other way around, where they create the business and then try to figure out if people will pay you for what you’re trying to put together, and it’s this . . . The backwards approach. I like the way you said that, is you know, find somebody who is willing to pay you now, and then create a business out of that. And it sounds to me like you really have kind of … This is moving into this tough decision that you had to make that had a really good outcome, correct?
Chris: Yeah, exactly. I feel so strongly that I’m on the right path. I wake up every day and I’m excited and I have really exciting conversations and I help to create ripples by accelerating the progress of people who I think are doing really important things. And so it … Looking back, I don’t know how I ended up here, and it was a couple of these critical junctures where my hand was forced, and I had to make these tough decisions, that allowed me to take the step back and say “What do I really want?” That . . . The need to change paths allowed me to iterate towards the better path.
Dan: What are some strategies that you use now, from what you’ve learned in your poker days, but also what you’re doing now, that will help you when you’re faced in a tough decision?
Chris: Oh, I have so many. So I’m gonna frame these around kind of larger decisions. I’m happy to talk about kind of at the sub-second level, where I’m faced with a very tough decision at the poker table what’s going through my mind, but I think what will be most useful to this audience is facing these major decisions. So this could be within a business, you deciding which marketing channel or which product line to add, or on a personal level. “Do I get married or divorced? Which city do I move to?” Et cetera. I think a lot of these decisions have similar ways of thinking. The first one that I describe, I call it an expected value exercise. So expected value is one of the key concepts from poker. It’s basically looking at all the potential outcomes. What is the utility of each of these outcomes, and what is the probability of each of these outcomes happening? And more or less doing the option that has the highest expected value. And so how this works is I usually just pull up a spreadsheet, I list out all of the things that could happen, then I try to determine like “What is the expected outcome from this?”
And so sometimes I might do something that is you know, high risk/high reward. Sometimes I take the surefire bet. But the key there is to take things that are usually apples to oranges and put numbers on them. So I come out with a score at the end. And the really key part of this exercise, the key part of any decision, is it forces you to come to terms with what you value. Like what’s the crux? What are the core things that are driving this decision? And just kind of playing around with those numbers a bit you can realize “Oh, these things that I thought were important aren’t really affecting my decision that much.” Like any decision really comes down to a couple critical factors.
I would just follow that up with any major decision, to journal about it. I think this is especially important in investing, where immediately after we make an investment decision confirmation bias kicks in, and we just . . . You know, the phenomenon where people do more research after buying a car than before buying a car, is that we’re immediately looking for information so that we can pat ourselves on the back and sleep well at night. And we overcome this event by when we’re considering making a really big decision writing about it. What was going through our mind at the time? What were the inherent risks? And that way when we’ve had a little time for separation, say a few weeks or a month down the line, we can go back to that and see which of these assumptions we had coming in were valid. How was our process of thinking?
I think if we’re waiting ’til we have perfect information, we’re waiting too long. But as we capture our thinking patterns as we’re making a decision, the more that our process of decision-making is able to improve. And the final one that I would recommend is a pre and post-mortem. So pre-mortem being we simulate what is going to happen and we mitigate anything bad that we anticipate happening before it happens. So this can happen at the microlevel of … I’m about to send this really important email, and I had a premortem of “Let’s imagine I send this email and I get a reply that’s really angry saying “Oh, I can’t believe you would do that.” Et cetera. Some like unknown bad outcome. Well, we can take steps to remove that potential bad outcome in advance. We’re basically simulating what’s happening so we don’t have to make that mistake in decision reality.
I like to put a number on this, as far as like, “What’s my probability that this happens?” I talk a lot about habits. So, thinking about “What’s the probability that I wake up tomorrow, and . . . say, . . . “I’m working on a book. So, “What’s the probability that I wake up tomorrow and write five pages in my book?” And let’s say, “Oh, the probability is only fifty percent.” And I start thinking like, “What are the reasons there?” “Oh, well I think I wanna be up late tonight, I have a friend visiting. I don’t have a good place to write. Maybe it’s gonna rain tomorrow.” Et cetera. Well, I can think about these reasons ahead of time, and get rid of them, and so that “Oh, well actually if I set my alarm” or “Hey, say I have to leave this person at a certain point, I have to wake up early tomorrow”, et cetera, let’s say I get that percentage up from fifty percent to eighty percent. Right? So I’m increasing the chances of what I want to happen in advance.
Same thing after making a decision. With that decision journal. The postmortem, right? What should we have anticipated that we didn’t see? How can we learn from this decision so we make better next time? I think all of this really comes down to tightening these feedback loops, and these three steps of making what is implicit and what is intuitive into something that is explicit, goes a long way towards improving our own decision-making process.
Dan: All right. Well, we’re gonna take a quick break, and when we come back we’re gonna be talking to Chris about a series of quick questions and answers that we call “The Trifecta.”
All right. We are back with Chris Sparks, and we’re going to be going through this series of quick questions and answers that we call ‘The Trifecta’, and I want you to get us started, Chris, by telling us what is your favorite technology that you use in business that helps make your life easier every day?
Chris: Oh, man. Well I’m such a nerd for tools. You know, it’s a picking your favorite child type of thing. I would probably link the audience . . . Maybe we can put this in the show notes. I have a post I recently did, kind of an ultimate guide to online resources. So it’s a hundred resources for productivity performance. So I walk through all the things that I use in my business and personal life to gain an edge and kind of how I use them, and so I would refer the audience to that list, seeing what interests them personally. One I would definitely give a shout out to here is I think one of the most overlooked things for all entrepreneurs is getting eight hours of sleep. And the way to improve anything is by measuring it. And I think kind of hinting at my quote coming up. And I find the Oura Ring fantastic for tracking one’s sleep in a passive way. And so through using the Oura ring, I’ve been able to really improve my sleep, which has increased the energy and the ability to make really good decisions throughout the day.
Dan: And so let’s go right into that next one, about your favorite quote that you’ve heard that has helped you as an entrepreneur.
Chris: Yeah. I’ve gotta go with Peter Drucker’s “If you can’t measure it, you can’t improve it.” So the name of my company is The Forcing Function. And so what a forcing function is, is it draws your attention to the most important thing, and that’s what I see my role is. And if you are trying to improve something, you need ways to bring your awareness to it, and the best way is by putting a metric on it. Are your efforts leading towards this metric going up and to the right? And so that’s what I always encourage. Like if there’s something that’s important to you, find a way to track it, and by tracking it, it will automatically improve.
Dan: And what’s a favorite book that has helped you make better decisions as an entrepreneur?
Chris: The book that’s really core to my work as a peak performance trainer is called The Goal. I highly, highly, highly recommend it to every entrepreneur. The Goal is “How do you optimize any process?” And so implicit in the name is the goal, is that you are constantly doing so many things that feel like work, but aren’t actually tracking towards the goal. And that at any time there is one bottleneck, one constraint that’s most limiting our progress towards the goal, and that our job is constantly to be searching for this bottleneck and removing it. And the key takeaway here is as an entrepreneur there are so many things you could be doing at any given time, but most of those are wasted efforts because they aren’t leading towards the goal and they aren’t removing the bottleneck. So a huge red pill book for me. I highly recommend it.
Dan: And what’s the next thing for you right now, Chris, on your vision or your dream board, and how can the listeners reach out if they wanna follow you further?
Chris: Sure. So I mean my big goal for 2019 is to try to productize my secret sauce. I wanna take the conversations I have like this and distill it down into principles that any entrepreneur can implement in their own life. And my first step there is called Experiment Without Limits. That’s available for free download on my website. A hundred pages of my best strategies of what I’ve found with clients on what generalizes for peak performance. It’s a best practices workbook, that can be downloaded at my website theforcingfunction.com. If anything I’ve said today has resonated with you and you’re interested in seeing whether becoming a client might be a fit, I also have a performance assessment which is available for free on my website where I illuminate some of the ways that I help clients you know, kind of help you discover some of the ways that you might be able to improve your own performance.
Dan: I really appreciate you taking some time to be with us here today, Chris, and you know, you sound like you have a lot of good background and knowledge, and I’m looking forward to following you as you continue to grow in this entrepreneurial space, and looking forward to also having you on a future episode as well.
Chris: I’m honored, Dan. And yeah, thank you so much for having me. Would love to talk about more decisions in the future. I think this is really important, what you’re doing.
Dan: That’s awesome. Well, have a good rest of your day, and we will see you on the next episode.
Chris: Thanks.
Dan: Thank you for listening to The Tough Decisions Network. Be sure to visit toughdecisions.net to gain access to show notes for this episode, and to join our free weekly entrepreneur email where we will send you news about the latest technology for your business, inspiring quotes, and the latest books for entrepreneurs. That’s toughdecisions.net.