Heads up for the Market
27th December 2022
The more I think about heads-up poker, the more I realize its concepts apply to entrepreneurs with novel ideas & their start-ups in relatively new markets, such as the elder care space in India. Usually, a new sector will have only one or two strong contenders offering their services. While each has specific benefits here, they also have a lot of potential threats, and maneuvering around them is the key to their success.
When playing against one competitor, it is crucial to understand and learn their strengths and weaknesses. Like in poker, where you constantly try to learn better plays from strong opponents, the aim should be the same with strong players in the professional field. Which areas do they excel in? Is there anything that you can pick up from them? And once you have understood the fundamentals of a successful play, you begin improving and improvising them to ensure you are never exploited.
Another example is that of market capture. If there are only a few big names in the game, you can invest your time, effort, and money in virgin territory. In poker, you do not progress to higher stakes poker, knowing that the field is dominated by more skilled players until you master your stakes. Similarly, why enter an area influenced by someone else until you master the art of your services in a neutral space?
Furthermore, you can afford to make bold plays in heads-up poker because the likelihood of emerging victorious is much higher than when you’re playing with a full quorum. If you spot a high equity opportunity, such as a flush or a straight draw, you can semi-bluff more frequently since many more cards are still in the deck than if they were dealt out to multiple opponents. When it is just two players on the table, both are constantly masquerading in front of each other, trying to achieve dominance. Similarly, when you only have one competitor, you can make them believe you are stronger than you are, forcing them to back down. This becomes increasingly important due to the perceived low barrier of entry in new industries – it is crucial that you demonstrate your fearlessness through daring plays.
Next comes the weaknesses. In poker, your primary motive is to stack your opponent and make as much profit as possible. In the short term, luck has an element to play in this. But in the long run, you will only be a profitable heads-up player if you understand your opponent’s flaws and how to capitalize on them the best. For example, suppose you know your competitor runs an inefficient operation or have insight into their burn rate. In that case, you can begin strategically putting together messages to subtly highlight elements of your superior operation or the financial efficiency of your business to put them on the defensive and increase your chances of winning their customers and investors over.
However, on the flip side of this coin, heads-up poker & working in a new market space comes with certain disadvantages, too. If you are on an eight-way table and card dead, you can wait for a good hand with little to no repercussions to your stack. If you are heads-up, there is no time to wait – you will bleed out before making any progress! Furthermore, even though poker is a game of decision-making based on incomplete information, the advantage of playing against multiple opponents is that this information is more readily available. You can observe the 3-betting and 4-betting action that occurs before the action reaches you, whereas when it is just two players, you are forced to move to the next stage of the game with limited knowledge. The same concepts apply to fresh start-ups.
It is essential to realize that all of these factors are two-way streets, and founders should be aware of their strengths and weaknesses to maintain their chip lead over their opponent for the duration of the game, resulting in an eventual win.