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Transitioning from Poker - my thoughts

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Romm3l   Germany. Mar 24 2015 15:41. Posts 285
Hello

I have noticed that threads here related to transitioning from playing poker as a primary means of income have garnered a lot of interest. I thought some may find it useful if I weigh in and share my own experiences and thoughts, and at the very least I'll benefit myself from organising my thoughts on the subject when I reflect and try to write them here.

Quick backstory
I dropped out of uni to play poker during the mid~2000 boom years. Did well at online hsnl and later hsplo, and managed to save a decent amt of what I earned such that I have ample financial breathing room. Quit poker in 2013 to restart uni from square one (undergrad economics). Targeting a career in investment management - fairly competitive and hard to get into so im not guaranteed anything, but my odds are looking ok currently having secured a relevant front-office internship at a major asset manager. Also got married and started a family.


Poker vs traditional careers
As we all know playing poker rewards luck and skill, and anyone can get into playing and will be guaranteed on average an equal share of luck in the long run, making skill the primary determining factor of expected outcomes. By contrast getting good jobs and working within an organisation may involve not just how well you can do the job but many other factors like how well your managers think you can do the job, your network and relationships, etc. Not to mention some barriers to entry: just getting the job in the first place is a job in itself, with interviews, assessments and competition from other applicants.

It's very easy to think of the situation with poker as better or fairer, especially when it's the situation that happens to favour you more (i.e. when you're playing poker). If we ignore these normative constraints and think only in terms of what gives you the best outcomes, I would argue it's not bad to have the other stuff.


Barriers to entry
It's an economic reality that a field with no barriers to entry and potential to profit will become crazy competitive over time such that profits get competed away (see: perfect competition model in econ 101, and a previous blogpost of mine where I look at the consequences applied to poker). Try winning at online nlhe cash today. Try trading goods on ebay. Try being a coder for hire on quora. Sure you can make some money doing all these things, but your economic profit (net of 'economic costs' which include the effort you put in and what this effort would have yielded if it was instead put into your second best use of time: your opportunity cost) is going to be very low because of the competition. Unless you manage to find some underproduced niche in these things, you are one of many commodity producers and your market price is going to get bid down to or below your economic cost.

A field with barriers to entry protects you from competition and lets you make more profit than one without - this is as true in the labour market as it is in business. Barriers to entry are no good for people outside those barriers, but are great for people inside them. Some barriers can be crossed with a lot of effort others may be unwilling or unable to put in. For initial entry into the job market, barriers to entering a good job may be your academics, extracurriculars, and quality of your educational institution. Later on in a career those barriers may be the unique and unreplicable skills, experience, relationships, credibility and reputation you've built up through your career. I want to highlight one 'barrier' that I personally underestimated or didn't know the importance of, but now think is a huge determinant of outcomes:


Social capital
Since the 'cognitive revolution' 75,000 years ago humans started to get bigger brains and use them for increasingly complex communication, coordination and innovation, allowing us to go from somewhere in the middle of the food chain to right at the very top, driving tons of much bigger, stronger, faster and scarier species to extinction. With the agricultural revolution 12,000 years ago the size of our communities and extent of our co-dependence took on another dimension. We are built to be social animals that gain from cooperation with community.

(online) Poker is probably one of the few ways to make a living that don't require any social skills and in my experience, just like with muscles and lifting, it can be a case with social skills of 'use it or lose it'. Unless you're a naturally social and likeable guy (like my good friend Quentin/mipwnya, who by the way is a beautiful man) it's possible that years of not having to use many social skills leads to atrophy in this area. Compounding the problem is the fact poker seems to disproportionately attract people who were slightly uncomfortable or awkward in social situations in the first place.

It turns out that in working for organisations, it's one of the most important skills you can have. An organisation is a large-scale coordination of many people with many different skillsets to produce profitable things that no single person could possibly do. Social capital is a vital part of performance within an organisation, and building networks relationships, reputation, trust and credibility is vital to even getting opportunities for interesting, well-paid work within good organisations. It also serves as a very strong barrier to entry in the market for good jobs, which is very very good for the people inside that barrier. If a natural conclusion of all this is that getting inside barriers to entry is a better idea than being a competitive commodity producer, building social capital might be an important thing to not overlook.


Closing thoughts on poker: Barriers to exit
I found as you get years deeper into a poker career, your (real as well as perceived) barriers to entry into other occupations increase. Your CV gap becomes bigger. You may not like returning to square one at an older age. Your social skills may atrophy more and it may become more and more out of your comfort zone to leave poker. You can get in a situation where as your set of alternative opportunities starts to close, you feel increasingly poker is one of the few only options. This creates (probably mostly perceived) barriers to exit from poker. While in reality you do have an alternative opportunity set you'd be comfortable with (many seem to be turning to coding, or have ideas of 'starting a business of some kind'), if we take the view to an extreme that poker/gambling is going to be your only lifetime income, then the associated observations should be pretty scary. If you are reliant on a source of income to sustain you for life that may not even be viable in 10 years, you need to be making, saving and investing very large income today to not run out of money in the future. Poker profitability trends are already not very much in your favour, from what I can see. I don't want to open a can of worms that iirc has been discussed to death in other threads, but continuing to play poker might not be a wise idea for long if you're not making a lot of money and it might be making transition more difficult the longer you stay in the game.


Closing thoughts on programming: putting the ideas together
I'll end with this as programming seems to be a popular transition choice judging from some comments. I suspect this is in part because it shares some characteristics of poker that may be appealing: no barriers-to-entry, performance more easily judged on what you can build so you might not have to get out of your comfort zone with this uncomfortable business of building social capital, and potentially an immediately gratifying feeling of solving puzzles. It can be a great road to go down, or a terrible one. Coding skills are very much in demand and will continue to be so indefinitely. However you’ll do much better if you create barriers to entry for yourself within coding than if you don’t. I’ll start with a story and extract generalisations:

Last summer I did an internship in equity research for a small independent boutique. They do proprietary quantitative investment analysis on global stocks and sell it to buy-side institutions who manage money on behalf of households, pension funds, sovereign wealth funds, etc, who pay pretty generously for the research. The subscriber section of the website (the main way clients interact with the product, unless they’re big clients in which case they get a more tailored service) is impressively coded and connects up to our data backend (result of analysis) to display results and lay everything out well. All of the coding and tech grunt-work is outsourced, mostly to various groups on quora at minimum cost relative to revenues. Those Indians, Brazilians and eastern-Europeans do a fine job building hard stuff (when told exactly what’s required of them and nothing is left to their ‘initiative’) that’s vital to the end-product, but receive a minimal share of compensation the research firm makes. The founder gets the lion share. Prior to starting the company he was a senior manager at a major American ‘bulge-bracket’ bank and so not only knows quite a lot about investment research but also has a large amount of credibility and contacts. This is why clients value his product highly and wouldn’t buy something put together by people they didn’t know or who didn’t have the same credibility/background.

While working with the founder I was able to deliver a pretty decent project that involved coding (in VBA/excel) which people on quora could not. I learned VBA/coding in a few weeks prior to beginning so my level is nothing like actual experienced programmers. However I added value where coders on quora couldn’t by combining a basic level of coding with a basic knowledge of finance/investing, social capital and initiative. Whereas hard-core coders on quora are useless without a very unambiguous specification of what the code needs to do, I could have lunches with the founder and talk (read: mostly learn from listening to him talk) investing, what he’s trying to do with the analysis and why. Then I’d implement it without needing to be told exactly with the code needs to do as I know in high-level terms what’s needed and can come up with my own ways to attack the problem. Here I also met another friend of the founder who used to work for a major bank but now just does VBA/excel solutions for a living. From his perspective it’s easy work and easy money that pays well, and people hire him over people they don’t know who could easily do the job because his networks and past experience in traditional jobs gives him credibility and contacts.

Generalisations: if you have social capital and can communicate effectively and build relationships with the organisation and people paying you to work, you’ll deliver better results and be more likely to be hired again than someone who doesn’t. If you can combine coding with another field, and view coding as just a tool you must learn to implement solutions that help deliver useful results in that other field, you’ll be much more useful and hireable than someone who is purely just a coder. Both of these are potentially profitable barriers to entry.

Closing thoughts on ‘starting a business of some kind’
For reasons mostly covered my gut feeling is this is a great idea at some point in life, but much more so after having been in traditional work for a good while first, and built experience, skills, social capital, networks and credibility. This will expand your opportunity set of potentially businesses to enter and allow you to find more profitable niches with larger barriers to entry. The opportunity set of potential businesses available to someone who has just quit poker and insists on remaining their own boss is much narrower and consists much more of things with no barriers to entry (with associated lower expected outcomes).

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bigredhoss   Cook Islands. Mar 24 2015 16:19. Posts 8648

how did they go about hiring programmers from Quora, just messaging random people who seem knowledgeable and making job offers? i mean i get that they were looking to outsource coding jobs...but with all the sites dedicated to matching employers with low-cost labor, why search at a Q&A site? it seems like going to 2+2/LP and trying to message random people to see if they have a chip set they'd be willing to sell you, instead of going to eBay or Amazon or something. sorry for getting off the main point, it just seemed weird to me framing Quora as a place people go to rent coders instead of odesk, freelancer.com, etc.

Truck-Crash Life 

LemOn[5thF]   Czech Republic. Mar 24 2015 17:27. Posts 15163

Nice post, some cool concepts. Like going back to my Econ class

I have to agree with the social skills deterioration in poker being being probably the largest barrier to entry to a "regular" job.

93% Sure! Last edit: 24/03/2015 17:27

Romm3l   Germany. Mar 24 2015 17:46. Posts 285


  On March 24 2015 15:19 bigredhoss wrote:
how did they go about hiring programmers from Quora, just messaging random people who seem knowledgeable and making job offers? i mean i get that they were looking to outsource coding jobs...but with all the sites dedicated to matching employers with low-cost labor, why search at a Q&A site? it seems like going to 2+2/LP and trying to message random people to see if they have a chip set they'd be willing to sell you, instead of going to eBay or Amazon or something. sorry for getting off the main point, it just seemed weird to me framing Quora as a place people go to rent coders instead of odesk, freelancer.com, etc.


Sorry my fault, I'm getting the names of these sites mixed up. I believe the site the co used was elance. Substitute elance for quora when reading my post


hiems   United States. Mar 24 2015 18:05. Posts 2979

Nice write-up.

I am playing live games and try being social on a regular basis with people and try to do a decent job. In the back of my mind I do hope these little things help me in the future. Exactly how I am not 100% sure.

Im not making enough money for being a poker player so I do have to think about these things or either get better at making more money.

Another thing I thought is that for most people playing poker, a fresh start getting a traditional degree is a huge investment that may not be viable. I agree with you 100% that 'starting a business of somekind' needs credibility, experience, etc but the feeling I have is that I somehow have to establish these things organically and stick to fundamentals like good investing, positive balance sheet, smart personal finance decisions.

Lastly there are antisocial jobs with little to no barriers to entry out thereally that provide good expected cash flow that I think are important emergency hedges (OTR driving or something similar).

I beat Loco!!! [img]https://i.imgur.com/wkwWj2d.png[/img] 

Mariuslol   Norway. Mar 24 2015 19:18. Posts 4742

There was a lot of closing thoughts

 Last edit: 24/03/2015 19:18

traxamillion   United States. Mar 24 2015 20:06. Posts 10468

Great post


PoorUser    United States. Mar 25 2015 03:07. Posts 7471

I agree. Quentin is a beautiful man.

Also nice post. Thanks for this.

Gambler Emeritus 

Baalim   Mexico. Mar 25 2015 03:30. Posts 34246

your timing was flawless, you played NLHE in the good times, switched to PLO at the right time and quit poker before it required some serious study, nice.

Ex-PokerStars Team Pro Online 

bigredhoss   Cook Islands. Mar 25 2015 13:44. Posts 8648


  On March 24 2015 16:46 Romm3l wrote:
Show nested quote +


Sorry my fault, I'm getting the names of these sites mixed up. I believe the site the co used was elance. Substitute elance for quora when reading my post


ah ok, was wondering since i waste a decent amount of time on quora and never thought of it being used like that

really nice post, and i agree with a lot of your points. what advantages/disadvantages does investment management has as a career path compared to i-banking?

speaking of barriers to entry, i think one thing that turns a lot of people away from finance is that it has a reputation for being hyper-focused on pedigree, i.e. if you didn't graduate from a top X school with 3.9 GPA and great internships, you can gtfo. i know you're back in school and just did an internship last summer, but do you think this perception is accurate? when applying to your internship did you use your poker experience to sell your analytical ability?

couple points that don't necessarily contradict anything you said but just add another perspective:

what you said about your firm outsourcing code is a good illustration of why programmers should aim for companies where coding is a core part of their product (as opposed to say, at a company that makes tractors or something, where they'll just be considered a 'cost center' to be cut whenever it's feasible). companies like Microsoft, Google, Apple, etc. don't hire entry-level employees for the code they produce on day 1 or maybe even year 1, they're making an investment in someone who:

1. can code at least close to their standard
2. shows aptitude to understand concepts (abstract logic puzzles that have nothing directly to do with code are common in interviews)
3. has good communication skills and can discuss concepts with others (pretty underrated skill in this industry)
3b. can speak fluent english and work in the US (or whichever country is concerned, just using US since it's what i'm most familiar with)

i'm just saying, there's a reason you can find people on elance from Pakistan with (supposedly) a PhD in machine learning and xx years experience looking for work at $15/hr, and silicon valley is still happy handing out $120k/year base salary+benefits to solid entry-level employees (and the job market is great for employees atm).

wrt comments about starting a business of some kind after establishing yourself in some field, i think programming is arguably the most useful preparation for that.

i think the strongest argument against going into programming is simply that it's not for everyone. a lot of people just find it too tedious and boring, and pursuing it as a career will probably make them miserable.

Truck-Crash LifeLast edit: 25/03/2015 13:46

Romm3l   Germany. Mar 25 2015 19:32. Posts 285

ty lemon/traxa/pooruser. indeed baal :D


  On March 24 2015 17:05 hiems wrote:
Nice write-up.

I am playing live games and try being social on a regular basis with people and try to do a decent job. In the back of my mind I do hope these little things help me in the future. Exactly how I am not 100% sure.

Im not making enough money for being a poker player so I do have to think about these things or either get better at making more money.

Another thing I thought is that for most people playing poker, a fresh start getting a traditional degree is a huge investment that may not be viable. I agree with you 100% that 'starting a business of somekind' needs credibility, experience, etc but the feeling I have is that I somehow have to establish these things organically and stick to fundamentals like good investing, positive balance sheet, smart personal finance decisions.

Lastly there are antisocial jobs with little to no barriers to entry out thereally that provide good expected cash flow that I think are important emergency hedges (OTR driving or something similar).


I live in UK, here there is financing available for tuition+expenses on fairly generous terms that transfer risk to the state (you only repay the loans+interest if you're later earning a decent salary). I have no idea how it works in USA, all I know is the ivy league schools are eye-wateringly expensive and parents tend to save early for tuition. Would love to hear more about the system over there, esp if the second tier places are any cheaper and what the difference is in terms of opportunities available to graduates from the different categories of schools (i.e. EV of the degree).



  On March 25 2015 12:44 bigredhoss wrote:
Show nested quote +



ah ok, was wondering since i waste a decent amount of time on quora and never thought of it being used like that

really nice post, and i agree with a lot of your points. what advantages/disadvantages does investment management has as a career path compared to i-banking?

speaking of barriers to entry, i think one thing that turns a lot of people away from finance is that it has a reputation for being hyper-focused on pedigree, i.e. if you didn't graduate from a top X school with 3.9 GPA and great internships, you can gtfo. i know you're back in school and just did an internship last summer, but do you think this perception is accurate? when applying to your internship did you use your poker experience to sell your analytical ability?

couple points that don't necessarily contradict anything you said but just add another perspective:

what you said about your firm outsourcing code is a good illustration of why programmers should aim for companies where coding is a core part of their product (as opposed to say, at a company that makes tractors or something, where they'll just be considered a 'cost center' to be cut whenever it's feasible). companies like Microsoft, Google, Apple, etc. don't hire entry-level employees for the code they produce on day 1 or maybe even year 1, they're making an investment in someone who:

1. can code at least close to their standard
2. shows aptitude to understand concepts (abstract logic puzzles that have nothing directly to do with code are common in interviews)
3. has good communication skills and can discuss concepts with others (pretty underrated skill in this industry)
3b. can speak fluent english and work in the US (or whichever country is concerned, just using US since it's what i'm most familiar with)

i'm just saying, there's a reason you can find people on elance from Pakistan with (supposedly) a PhD in machine learning and xx years experience looking for work at $15/hr, and silicon valley is still happy handing out $120k/year base salary+benefits to solid entry-level employees (and the job market is great for employees atm).

wrt comments about starting a business of some kind after establishing yourself in some field, i think programming is arguably the most useful preparation for that.

i think the strongest argument against going into programming is simply that it's not for everyone. a lot of people just find it too tedious and boring, and pursuing it as a career will probably make them miserable.


Thanks for the insight into the coding job market. I def don't know much about it and it's always interesting to get more perspective from people who do

I think what you said about the importance of pedigree in entry-level recruiting in finance does tend to apply, but only for the most competitive roles ("front-office" revenue generating roles at investment banks or asset managers, or consulting at the firms McKinsey, Bain and Boston Consulting Group), and what I hear is that it makes the most difference in the just getting an interview step. This may be different for 'unusual' candidates, e.g. ones that have already worked for a year in something else after graduating and want to get into banking or whatever, but for undergrads applying to internships/graduate roles straight out of school every single applicant tends to look identical on paper, and so you can expect a resource-efficient way to filter the staggering pile of applications would be to instabin everyone who doesn't have top grades from a top school and some relevant work experience. It's unfortunate but understandable from their point of view. I think getting into the middle-office roles at banks (operations, risk), insurance, big four accounting (inc tax/audit), finance for a corporate or something like tech-consulting are all fine ways to start a career with more accessible entry requirements. I absolutely sold the poker thing in applications/interviews as I guessed not presenting a nearly decade-long CV gap as a big positive in light of what I was actually doing, would be suicidal (the vast majority of my applications were rejected nonetheless).

Going back to your point about coding freelance vs coding for a wonderful tech company like Google, presumably just getting a job at a place like that has significant barriers to entry at least comparable to the top jobs in finance? To what extent can and do those places screen you on criteria different from the signals used by the top finance jobs (what you call pedigree)? From your list it looks like they're investing in potential and want to develop great people internally - how do they go about looking for that potential (besides puzzles in interviews)? Besides that your points 3 and 3b are pretty much in line with my view of the world and I'd call those some good barriers to entry that can work well for you in general at the expense of our poor pakistani phd friend.


AndrewSong    United States. Mar 26 2015 08:51. Posts 2355

Thanks for the write up


Baalim   Mexico. Mar 27 2015 11:19. Posts 34246

sick thing is that your biggest contribution to the poker world was the ROFL thread

Ex-PokerStars Team Pro Online 

Royal_Rumble   Germany. Mar 27 2015 20:24. Posts 1760

nice post, insightful and thought inspiring. So may I ask how you see your own future now? I guess you are 10 years older than your average fellow students.

money won is twice as sweet as money earned.  

Romm3l   Germany. Mar 29 2015 11:42. Posts 285

^ thanks. Yeah I am about that much older than my classmates and when I enter fulltime traditional work I will be that much older than my entry-level junior peers. I have no problem with that and have no problem fitting in with people in their early 20s. Infact I think 30 is an excellent age where you can easily fit in and still enjoy socialising/partying with younger people (and still have as much energy/motivation as them) but also have much more commonality with people in their 30s-50s. If I had left it another few years to quit poker, I have a feeling it would become much more difficult/awkward to restart so I was very happy to quit when I did and not waste precious time dilly-dallying in a useless "transition" phase where I'm not fully committed to moving on. As for the future I have no idea what I can reasonably expect but I'm pretty excited to see.


Romm3l   Germany. Mar 29 2015 12:07. Posts 285


  On March 25 2015 12:44 bigredhoss wrote:
Show nested quote +


really nice post, and i agree with a lot of your points. what advantages/disadvantages does investment management has as a career path compared to i-banking?


Missed this question before,
Investment banks do a fairly broad range of stuff - by 'i-banking' I'll assume you're talking about services to corporates such as M&A advisory and financing transactions (e.g. debt issues, IPOs). And by investment management I'll assume you're talking about traditional asset managers that pool retail money into 'funds' and invest them in traditional asset classes (equities, bonds), as opposed to fancy stuff like hedge funds, private equity, wealth managers.

The idea with investment banking is you work insanely hard for the first two years, 80-90 hour weeks. A lot of it is monkey grunt work but you learn a really broad range of skills and business related knowledge. You get paid well and the first two years opens doors to a massive range of stuff you can move on to. Good if you want a great career and want to keep your options open regarding where that career actually leads, and want to develop a very well rounded set of skills including very good interpersonal skills as well as great analysis/modelling skills. Investment management (analyst roles) are probably fewer hours and work than investment banking and have historically paid less (though since the post-crash regulations the difference is becoming smaller). The main thing you're judged on here above all else is quality of your analysis and performance of your investment recommendations. It's more specialised with less scope for moving into a different career than investment banking. Another disadvantage may be increased career variance, since markets are hard to predict and your picks may run bad. On the flipside the top-end ceiling for pay on the buy-side is potentially much higher, e.g. toptop hedge fund managers taking home hundreds of millions or even billions (though you have to be a supersicko and run great to get there).

take this with a grain of salt, it's my perspective as someone who isn't yet working in these fields so i may not be well-informed.

 Last edit: 29/03/2015 22:08

TianYuan    Korea (South). Mar 30 2015 04:40. Posts 6817


  On March 27 2015 10:19 Baalim wrote:
sick thing is that your biggest contribution to the poker world was the ROFL thread


Romm3l is ket o_O...?

Hm.. Off-suite socks.. 

RiKD    United States. Apr 02 2015 18:52. Posts 8533

Thank you. This was awesome. I firmly believe in all of this stuff and in many ways social capital principles saved my life but never saw it written from an economics perspective which is cool. I never really understood "barriers to entry" until this and now it is crystal clear.

From my experiences, this blog is just an awesome nugget of truth and insight. Thanks again.


RiKD    United States. Apr 02 2015 19:28. Posts 8533

Oh, and this just re-popped into my head:

There was a lot from this I would love to discuss and I think I just like discussing stuff like this anyways but:

The part about starting businesses:

I also agree with what you speak. I remember when I was younger I would have all these ideas but execution of the idea is what is important. I am unsure exactly where do go from there but like the reason many businesses are successful and especially long term is because of repetition and quality. Innovation is important but if the people and infrastructure are not there to support that innovation the project is screwed. Infrastructure is super important. Funding for minimal interest is super important. Having the capital available or willing backers at reasonable rates to support variance is super important.

meh. I do not really know where I am going with this post other than it would be cool to discuss more on this stuff on here.

Peace, Love, and Tolerance


Romm3l   Germany. Apr 24 2015 09:25. Posts 285

^really happy you enjoyed the post, happy to hear any other thoughts you or others have. for now I've ran out of steam on the topic pretty much

+1 business idea by itself is worthless, and execution seems to be where all the value is based on what i understand too


 



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