Konnikova’s Data

Park of poker’s appeal  is that people balance consequences and rewards. Thoughtfully in the best cases. But the lessons aren’t always obvious.

Nate Silver notes that live poker can be boring because participants don’t play that many hands. Yes, Maria Konnikova replied, that’s one way to look at it.

“There’s a perception that live poker can be boring because if you’re playing well you shouldn’t be playing that many hands. There is a lot of time you are just sitting there. But something I learned from Eric Seidel is that the times you are not in a hand are some of your most valuable opportunities to gather data.”

Konnikova recounts to Silver a time she was disposed as chip leader by an opponent who, after a day of play complimented her on her previous tournament. Why? It was televised. He picked up on her over aggressive style (something Konnikova notes in her book, I highly recommend The Biggest Bluff) in that tournament, and he used that against her in this one.

So rather than play as the thing-to-do, observe and learn are the things to do. Konnikova (and Seidel) reframed poker folds from something passive to something active. This is the same trick Annie Duke used for her poker clients. Duke reframed the action from playing hands to making good decisions.

Barry Ritholtz calls this the don’t just do something, sit there challenge. It’s hard to break the action-progress association. Yet there are situations, beyond poker, where not doing is more important that doing.

The basic level of learning a new thing is the advice to “just do it”. Just exercise/save/invest/read more. That’s difficult, especially without an anchor. A better way might be to substitute something of the same class. In the case of poker, Duke and Konnikova substituted one verb with another, and gave a reason for doing so.

I’m on a big pickleball kick right now and this advice, along with Winning Ugly from Brad Gilbert points in a clear direction: my game isn’t so much about hitting winners first but hitting winners second. A lot of my level is about setting up n+1 shots. Rather than beat an opponent down the line, with varying success, my aim should be to hit feet high down the line, move them, wait for a ‘green light ball’ and then hit winners. 

onward and upward

Why Hank Aaron’s father didn’t want a better house.

“I tried to get my father to move to a house I bought for him. There was one morning he was outside, trying to crank start his car,” Aaron recalls what his father said:

“Listen. I know what you’re trying to do. You’re trying to get your mother and I to move to that house you just bought. But we’re not going anywhere. All these people here, there’s not that many, maybe five or six families, these are friends of mine. I can wake up in the morning. I walk down. I can say hello to Stella, or whatever. These are friends of mine. I’m not going anywhere. So, you can take that money you paid for a house and get a refund.”

Aaron’s estimated net worth was twenty-five million dollars when he passed away, but this comment from his father shows value.

‘Peloton doesn’t offer discounts’

One of the challenges of running a business is seeing a business from the customer’s perspective. Internally your worldview is all website updates and payment processing, employees and benefits, and hiring and HR. Externally the customer wonders: does this do what I want?

Enter jobs-to-be-done.

Job-father Bob Moesta joined Customer Camp to conduct a mock-interview with Amanda about her Peloton purchase. It’s really good. You don’t even need to conduct ‘JOBS’ interviews to get something good from watching. For instance, framing.

Amanda wanted a Peloton. After getting and liking an Oura ring, and hearing her friends talk about Peloton she wanted one. It was better than a treadmill—if she wanted to run she could just run outside. So, Amanda and her husband watched for a Black Friday deal. None came.

A holiday deal? Nope. Is there any discount? No. There’s not really a Peloton discount, and Amanda was hearing about shipping delays (thanks Covid). So Amanda and her husband ordered one, financed with Affirm.

“Finance a stationary bike?!?!?” – Boomer

Well not really, it’s a 0% loan. It’s basically a payment plan. Actually Amanda notes, it’s like a gym membership.

Now here’s the magic trick business model: Peloton pays Affirm a commission for each bike sold and financed. 50M$ in Q3 2020. Peloton doesn’t offer discounts but it does offer 0% financing. And that’s the magic.

This, as regular readers know, is Alchemy. The financial picture is the same for Peloton: they have a retail cost and accept less than that to sell more units. The question is how much less and to who? Having Affirm be the who and the amount be vague creates value. Buyers hold Peloton in higher esteem and it just feels good to finance something at 0%. As one friend told me “it’s free money.”

To the accounting office it’s the same. To the market it’s different.

The JTBD of WINE

A group of investment bankers sat down. It was going to be a good night for Danny Meyer. That was good, it was three-months into his first restaurant.

The man at the head of the table asked for a chardonnay. Meyer delighted. He’d just got in a premier cru Rousseau. It was $45 a bottle. In 2015, Meyer joked, that might buy you half a glass.

Meyer walked out and proudly presented the wine.

“That’s not a chardonnay,” the big banker said.

“What I needed to have done at that very moment, which I trust I’ve done since. When he said, ‘This is not a chardonnay’, I should have said, ‘It sounds like you want a California chardonnay.'”

Danny Meyer, YouTube 2015

Instead, Meyer argued that it was. It went back and forth and the banker brought in the table, each member of which nodded in agreement that it was indeed not a chardonnay.

It was probably less than a minute. Meyer retreated and returned with a cheaper wine from California and that’s the story behind his most important lesson, the irrelevancy of being right.

Wine is odd. People buy wine for all kinds of reasons. The Barefoot founders figured out one way. But there always is a reason. That’s the lesson Danny learned. It’s their reason.

Part of the wine boom from 1980 onward was because wine was presented as doing one job: conveyed in an inaccessible language. Robert Modavi first communicated differently. The Barefoot founders did too. They found out there were other ‘jobs’ of wine.

When I delivered newspapers as a kid I loved the Best Buy ads where I could compare MB and GB and RAM on every new Dell, Compaq, and Gateway computer. But what really mattered was the job: will this play Warcraft II?

Apple figured this out.

Meyer figured this out.

This trips up operators all the time because it’s economic to use shorthand. But shorthand cuts out the magic, the feeling, the job—which is the soul of what a customer hires a product. Don’t be right, do your job.