Cards And Business

Author Robert Fulghum said he learned everything he needed to know in kindergarten. Jon Hirschtick, founder of SolidWorks Corp., a Concord, Mass., engineering-software company, says much the same thing about the blackjack table.

While a student at MIT, he learned about card counting, and then used his skills to beat the blackjack odds in Las Vegas. The idea is to count the cards as they are dealt, and then change your betting strategy as the odds shift for or against you. Capers like his are the background for the new Kevin Spacey movie "21," which opened this past weekend to mediocre reviews but large audiences. Mr. Hirschtick described the business lessons he drew from his time playing cards.

I learned that even when you play perfectly, you can lose a hand. In order to work the advantages that card counting gave us, we'd have to play thousands of hands. If you just play five or 10 hands, you might lose. By the way, the movie makes it seem that every time we sat down to play, we won money. That was not true.

In business, I see people all the time jumping to conclusions from very little evidence. People might try a marketing program or a sales strategy, and if it doesn't work, they will assume right away that someone is doing a bad job. Instead, they should ask what we asked in blackjack: Is this person playing right?

What exactly are the odds in blackjack?

The average player has roughly a 47-53 disadvantage to the house. An expert player who does everything right, but who does not count cards, can reduce the odds against him down just a quarter of a percent. While the advantages for a card counter are continually shifting, when we would see an advantage of one-half of a percent, we would increase our bets significantly. An advantage of 4% or 5% would be unusually high. A 10% or 11% percent advantage would be a once-in-a-career thing.

Luck has a lot to do with any given hand. But in the long run, good players end up on top. If you and Tiger Woods have a putting contest, one putt, winner-take-all, you have a chance to beat him. But if you do it 1,000 times, he is going to beat you.

Are there blackjack techniques other than counting cards?

Yes. One involves noticing the bottom card of the shoe when it was offered for the cut. With a lot of practice, you can put the plastic cut card at a precise number of cards up from that bottom card. The number of cards depends on the bottom card; it might be 20 cards up for an ace. That means that after the cut, the ace will be the 20th card dealt.

Which goes to show that the most dangerous decisions you make are the ones you realize are decisions. Like where to put the cut card.

So even card counters never could escape the laws of luck and chance.

A lot of individual success is based on luck. Even in business. In fact, one of the tricks involved in hiring people is figuring out whether they were playing their hands correctly, and not merely whether they won or lost during the last hour.

Knowing when to bet seems important.

When you have calculated the odds very carefully, and you know you have the advantage, you have to put out the table limit. Business is filled with examples of people who have the advantage, but who don't bet enough money. It's a powerful lesson from blackjack.

[Via - StartupJournal.com]