What Texas Hold'em Taught Me About LOSING
When you can do everything right and still lose, the only solution is better planning.
The tournament director's voice still haunts me sometimes
His voice, flat and procedural, announced to the room: "Seat 4, Table 7 is eliminated." Fifth hand of the night. I'd driven three hours to play, paid the $250 buy-in, and lasted about twelve minutes. My pocket aces, the hand every poker player dreams of, the nuts, the absolute tippy-top of the starting hand hierarchy, had just been cracked by ten-deuce offsuit. Doyle Brunson's hand, they call it, because the godfather of poker won back-to-back World Series championships with that garbage holding in the late seventies. Doyle can have it. I never want to see those cards again.
Here's what happened. I was "under the gun": first position after the blinds. That means you're supposed to play tight, only premium hands, because everyone else gets to act after you. I looked down at two red aces, hearts and diamonds, and tried to keep my face blank while my heartbeat kicked up. You don't want to slow-play aces from early position; you want to build a pot. I made a standard raise to three times the big blind. Not tricky, not fancy, just textbook.
The action folded around to the big blind, a woman in her fifties who'd been watching me for the previous four hands. I can only describe her expression as escalating irritation. I'd raised pre-flop three times already, winning each pot without a showdown, and apparently, this offended her sense of table decorum. Without looking at her hole cards, without even touching them, she grabbed her entire stack and declared, "All in."
My brain seized up for half a second. An all-in raise over my open, on the fifth hand, with 100 big blinds effective? And she hasn't even looked? This was either the dumbest play I'd ever seen or the most brilliantly unhinged. Either way, with pocket aces, I literally had no choice. This is the hand you wait for, the premium of premiums. I called so fast I nearly knocked over my chip stack.
She smiled, flipped over her cards like she was revealing a royal flush, and tabled ten-deuce offsuit. The worst reasonable holding in poker. Not even suited. The kind of hand you're supposed to fold pre-flop from any position without thinking about it. The dealer fanned out the flop: king, seven, ten. She'd hit her ten. She had exactly 5 outs; she'd need to improve to either two pair or trips. I did the math, and my aces still had a 90% chance of winning. Unless she hit a ten or a two.
The turn card peeled off: a two, Two pair for her. The river was a blank. I was eliminated.
I walked to my car redoing the math in my head, just to feel something other than rage. Pocket aces against ten-deuce offsuit is approximately an 88-12 proposition. She was supposed to lose this hand 88 times out of 100. The specific scenario where she hits two pair by the turn, catching a ten on the flop and a deuce on the turn, with neither of those cards pairing the board to give me a better full house, runs about 3%. I'd made the right decision. Obviously. Unquestionably. Any rational player would've done exactly what I did. And yet, I was out of the tournament, and she was stacking my chips. All my correct decision-making had bought me nothing to show for it but a long drive home, a receipt, and a bad beat story.
This is the thing about poker that maps so uncomfortably onto real life. You can play perfectly and still lose. Annie Duke, the former professional player turned decision science consultant, calls this phenomenon "resulting", the tendency to judge decisions by outcomes rather than process. A terrible decision can work out beautifully because luck smiled on someone undeserving, and a brilliant decision can blow up in your face because the cards didn't cooperate. The universe doesn't care about your carefully calculated edge. My pocket aces were an 88% favorite, which is about as good as it gets in poker, short of having a made hand against a drawing hand. But 88% isn't 100%, and that residual 12% is where the game lives.
The Kelly Criterion Problem
Driving home that night, the cold reality of my elimination settled in. I kept replaying the hand, the percentages, her casual shove. It was the correct play, by all mathematical measures. It started me thinking about risk.
What if I was offered a coin flip, a 51% chance to double my entire net worth? Every dollar in my bank account, every asset I own. Expected value says: absolutely. It's a +EV bet. Statistically, if you ran that wager a million times, you'd end up rich. What about a 60% chance? Or 99%?
Rationally, the math dictates taking every single one of those bets. The expected value is positive. But I knew I wouldn't do it. Losing everything, even that 1% of the time, isn't worth the upside. I began to grapple with the Kelly Criterion problem.
The Kelly Criterion tells you how much of your bankroll to risk when the odds are in your favor. It's designed to maximize growth, but it assumes you're playing thousands of hands, not just one. And it assumes your bankroll is a pre-set amount of money, not your rent, your kid's tuition, your dignity. Kelly maximizes growth rate, not survival. And in a tournament, just like in life, you can't grow if you're already out.
That's why poker pros say, "A chip and a chair." Because the moment you're all-in, your tournament life becomes binary: you survive, or you don't. You keep planning, or your plans end right there. The cold math might scream "shove!" But there's a human instinct, shaped by millions of years of avoiding catastrophe, whispering, "maybe wait for a better spot."
That instinct isn't irrational. The utility of money isn't linear. Doubling your net worth might feel good, but it doesn't feel twice as good as losing everything feels bad. That fundamental asymmetry is hardwired into us. It's what keeps us from dying young and broke. The real question, I realized, isn't just about the odds, but about when the potential upside truly justifies the risk of total ruin.
What I learned that night, beyond just another bad beat to add to my collection, was that scenario planning isn't just about imagining what might happen. It's about reckoning with the fact that even when you map out all the possibilities, assign probabilities, and make the optimal choice, the world can still punch you in the face. The question isn't whether you plan well. It's whether you can keep planning after your plan falls apart. Can you walk back into another tournament, look down at aces again, and push your chips forward, knowing that sometimes, more often than you'd like, the ten-deuce is going to crack you?
The Eisenhower Problem
That night was years ago, but it really clarified something I'd been thinking about in both poker and work: how vital scenario planning is. That's true even when, maybe especially when, you know the plan itself might be worthless. Dwight Eisenhower, back when he was a five-star general, not yet president, said it perfectly:
"Plans are worthless, but planning is everything."
He meant that once you're actually in combat, once the enemy engages and starts shooting back, your carefully crafted plan just vanishes like morning dew. The enemy never does what you expect. The terrain changes. Half your intelligence turns out to be wrong. But the sheer act of planning, forcing yourself to imagine what might happen, to think through potential issues, to develop quick reactions for chaos, that's what keeps you alive when things suddenly go wrong.
Eisenhower was talking about D-Day, but he could've been talking about my aces getting cracked. He could've been talking about any situation where you have to make decisions under uncertainty, with incomplete information, and where the consequences really matter. The very definition of an emergency, Ike noted, is that it's unexpected. You can't know when disaster will strike. But if you've really immersed yourself in the possibilities, if you've mentally rehearsed what you might do in various awful situations, you're less likely to freeze when the actual crisis hits.
I didn't freeze at that poker table. I'd played enough hands to have mental models for this kind of situation: strong hand, aggressive opponent, all-in pressure. My plan was to call with aces. The plan didn't work because she hit her 12%, but at least I had a plan, which is better than being paralyzed. And after the hand, I could update my mental model. This particular opponent will put in huge bets without looking at her cards, meaning she's not playing poker in any conventional sense. That meant standard hand-reading wouldn't apply to her, and I should probably avoid her in future hands, because you can't play poker against chaos.
Shell's Ghost of the Future
The business world has its own version of getting aces cracked, and the companies that survive are the ones that "Eisenhowered" their way through. Royal Dutch Shell is a famous case study.
In the early 1970s, a strategic planner named Pierre Wack convinced Shell's leadership to start running "what if" exercises about the global oil market. They weren't trying to predict the future. That's impossible. Instead, they wanted to stretch their imaginations about what might happen. What if OPEC became militant? What if oil prices quadrupled? What if supply lines got disrupted?
The executives thought these scenarios were just academic exercises. But then in 1973, OPEC embargoed oil, prices quadrupled almost overnight, and the global economy seized up. Most oil companies panicked. Shell didn't. They'd already seen a ghost of this future in their planning sessions. They'd already imagined what they'd do. So when the crisis hit, Shell's management had reflexes. They'd trained their minds to expect upheaval. As one retrospective put it, Shell "seemed to have anticipated the crisis," not because they were clairvoyant, but because they'd taken scenario planning seriously enough that when one of their scenarios became reality, they weren't starting from scratch.
"The scenario where oil prices collapsed seemed absurd. But Shell had rehearsed it."
Before 1973
Shell runs "what if" scenarios about oil market disruption
October 1973
OPEC embargo hits, prices quadruple overnight
The Result
Shell responds quickly while competitors panic
When the Bluff Becomes History
Poker has its own folklore about plans that seemed insane until they worked. Chris Moneymaker's name still comes up in card rooms, and not just because he was the most skilled player at the 2003 World Series of Poker. It's because he pulled off one of the gutsiest bluffs in poker history at just the right time.
Moneymaker was an amateur, an accountant from Tennessee who'd won his seat through an $86 online satellite. He was playing heads-up for the championship against Sam Farha, a professional who had every right to assume he'd destroy this nobody. Then the hand that changed poker arrived. Moneymaker tried to draw to a flush, but he missed. He had nothing. Yet, he looked at Farha across the table and moved all-in anyway, pretending to have a monster hand. Farha stared at him, trying to get a read. The ESPN cameras caught every agonizing second. Finally, Farha folded what turned out to be a pair, which was the better hand. Moneymaker had bluffed him out of the pot with complete air.
That bluff shifted the momentum of the entire match. Moneymaker went on to win the championship and the $2.5 million first prize, launching what poker people call "the boom." Millions of amateur players flooded into the game, convinced they too could turn a small buy-in into life-changing money. But what interests me about the hand isn't the outcome. It's that Moneymaker later said it was planned. He'd been observing Farha all night, building a model of how the professional thought. And in that moment, Moneymaker ran a scenario in his head: What if an amateur could outfox a shark by making the shark overthink it? The scenario was low-probability but high-reward. He had nothing to lose, so he bet on it.
This is scenario planning at its most aggressive. You don't just imagine defensive contingencies, you imagine offensive possibilities. What's the bold move that could change everything? What's the stretch scenario where you win not by grinding it out, but by taking one massive, calculated risk? Good scenario planners think about this too. They don't just prepare for disaster; they prepare for opportunity.
Of course, history remembers the successful bluffs. For every Moneymaker, there are a thousand failed bluffs we never hear about, where the guy got called and went home broke. The point isn't that you should bluff more. The point is that by imagining the scenario where a bluff could work, mapping out what you'd need to believe about your opponent, what you'd need to represent, what the pot odds would need to be, you give yourself permission to try something audacious when the stars align. And sometimes, they do.
A Chip and a Chair
There's another poker saying I often think about: "A chip and a chair." That phrase comes from Jack "Treetop" Straus, who won the 1982 World Series of Poker Main Event, even though he was down to a single $500 chip at one point. He thought he was eliminated. He literally stood up to leave the table. But then someone spotted one last chip hiding under a napkin. Straus sat back down and pulled off one of the most improbable comebacks in poker history. The idea of a player with almost no chips coming back to win the whole thing seemed absurd, but it happened. And now every poker player knows: as long as you have a chip and a chair, you've still got a chance to win.
I remind myself of this whenever things look bleak. Not just in poker, either. The comeback scenario is always in the deck. It's low-probability, sure, but it exists. Planning for it involves staying in the game, not giving up, and keeping your head clear for that one good opportunity that might present itself. That, too, is scenario planning.
Duke's Insight: We're Betting Against Ourselves
Annie Duke built her second career teaching corporations how poker players think. Her book Thinking in Bets has become a minor bible in Silicon Valley. She really nails something most people intuitively get but can't quite say: we're always gambling. Every decision we make is a bet on a future we can't see. And often, we're not even betting against another person, we're betting against all the versions of ourselves we aren't choosing.
I found this idea quietly devastating when I first encountered it. Every time I make a choice, whether it's to call the all-in, fold the hand, take a new job, or stay where I am, I'm voting for one possible future. I'm essentially letting a hundred others die off. When I called with my aces and got cracked, I was choosing one specific outcome. There was the me who doubled up and cruised to a deep run, the me who busted out early, and even the me who somehow managed a disciplined fold to preserve my stack. Only the me who called got to exist. All those other versions died the moment I pushed my chips forward.
Process Over Results
Annie Duke wants us to get comfortable with this. You can't pretend to know what's going to happen, and you're not always in control. However, you can control your process. You can think clearly about probabilities and separate the quality of your decision from the randomness of the outcome. This helps you avoid what she calls "resulting," which means judging a decision by whether it worked, rather than whether it was sound.
"You can control your process. You can think clearly about probabilities."
This is tougher than it sounds. We're naturally wired to learn from results. If something succeeds, we tend to think we did everything right. If it fails, we often assume we messed up. But in a probabilistic world, even good decisions can lead to bad outcomes, and sometimes bad decisions succeed purely by dumb luck. Think about the person who bets their life savings on a lottery ticket and wins. They didn't make a good decision, just one that happened to work out. Similarly, when I called with aces and lost, it wasn't a bad decision. It was a great decision that just didn't pay off that time.
Good Decision
Sound process based on available information
Random Outcome
Results influenced by factors beyond control
Long-Term Edge
Process wins over large sample sizes
Duke's most valuable insight is the idea that you should evaluate decisions the way poker players do: by the process, not the outcome. After a session, the real question isn't, "Did I win?" It's, "Did I make good decisions?" If you played correctly, using a sound strategy based on the information you had, then a loss is simply feedback about variance. If you played badly and won anyway, that win is just noise. Over a large enough sample, the process is what truly matters. The results? Well, those are just what happened.
I've started applying this at work. After a project wraps up, I try to separate whether it succeeded from whether our strategy was sound. Sometimes we execute perfectly and still lose because the market shifted, a competitor did something unexpected, or a key stakeholder left the company. That doesn't mean the plan was bad; it means we got unlucky. And sometimes we win despite ourselves. Maybe the product has a flaw customers don't care about, or we miss deadlines but the client is understanding, or a desperate pivot turns out to be genius. That doesn't mean we planned well; it means we got lucky.
The trick is keeping these two things separate. If you have a good process but a bad outcome, learn what you can, but don't abandon the process. If you have a bad process but a good outcome, don't get cocky and repeat the same mistakes. Duke emphasizes this point because it's so counterintuitive. Our brains desperately want to combine decision quality and outcomes into the same thing. But they aren't the same.
The Boardroom and the Battlefield
Maria Konnikova, a New Yorker writer and psychologist, decided on a whim to become a professional poker player. She learned this lesson the hard way. Training with Erik Seidel, one of the world's best players, she heard him stress one point over and over: focus on the process, not the result. Did you make the right play? Everything else is just noise. During a tough period when Konnikova was playing well but still losing, Seidel told her something she immediately wrote down and taped above her desk: "Focus on the process, not the luck. Did I play correctly? Everything else is just BS in our heads."
I've got that quote taped above my desk now too, because it's so easy to obsess over outcomes. In business, it often means staring at quarterly earnings or stock prices and forgetting to ask if the strategy even made sense. In poker, it means beating yourself up after a bad beat, even if you played the hand perfectly. The world is full of people who got lucky and think they're geniuses, and others who failed despite doing everything right and think they're cursed. Keeping these two things separate takes real discipline.
Konnikova's poker journey also taught her something else important: how much of what happens to us is genuinely beyond our control. "Here was the cruel truth," she writes in The Biggest Bluff. "We humans too often think ourselves in firm control when we are really playing by the rules of chance." This was a huge revelation for her. She'd spent years studying decision-making and cognitive biases, yet she still underestimated how little control we actually have. Poker stripped away that illusion. You can do everything perfectly and still lose. The cards don't care about your skill, your preparation, or how badly you need to win.
But that doesn't mean we should just give up. Instead, the answer is to focus on what you can control: your decisions, your reactions, your learning. "Life is based on making the best decisions you can from information that can never be complete," Konnikova points out. That's what scenario planning is all about. You'll never have all the data. You'll never see all the cards. But you still have to choose how to play the hand. The only smart approach is to imagine several possible futures, assign a rough probability to each, and then bet on the one that makes the most sense given what you know.
The corporate world has picked up on parts of this. Venture capitalists, for example, explicitly think in terms of bets and portfolios. They know most startups will fail, but a few will return 100 times their investment. Jeff Bezos famously said he makes decisions when he has about 70% of the information he wishes he had, because waiting for 90% means you're just too slow. Military strategists talk about OODA loops (observe, orient, decide, act). They understand that you're always operating on incomplete information and need to constantly update as new data comes in.
The Drive Home
Poker is where I practice being uncertain well.
I still play poker, though not as often as I used to. I've also learned to manage my bankroll better, so one bad beat doesn't wipe me out. I keep coming back because poker is where I practice handling uncertainty. In a world where so much is beyond my control, like market crashes, personal setbacks, or random twists of fate, the poker table offers a contained space. It lets me rehearse making decisions when I don't have all the information and the stakes really matter.
Each session feels like an exercise in scenario planning. What's my opponent likely to have? Given how they played, what range of hands makes sense? What are the odds they're bluffing? What happens if I call and I'm wrong? What happens if I fold and I'm right? I can't know for certain, but I can assign probabilities and make the best decision with the information I have. Then, the cards come out, and I find out which scenario I'm living in.
The real lesson, though, isn't about poker technique. It's about making peace with uncertainty. Scenario planning doesn't make the future predictable, nor does it guarantee you'll make the right call. It certainly doesn't prevent disasters. What it does is expand the range of futures you're prepared to face. It keeps you from being paralyzed by surprise. It gives you something to fall back on when your Plan A collapses. Most importantly, it trains you to keep making decisions even when you know you might be wrong.
That night I got knocked out with aces, I learned something no poker book could have taught me. I learned that you can do everything right and still lose. Mathematical expectation and practical reality diverge when your stack has a stopping point. The low-probability scenario sometimes happens, and when it does, you have to be able to shake it off and keep playing. Not just in poker, but in everything.
I think about this whenever I'm facing a high-stakes decision at work. Should we launch the product now or wait? Make the hire or keep looking? Double down on this strategy or pivot? The answer is never clear. There's always incomplete information, always uncertainty, always the possibility that I'm about to push all my chips forward with pocket aces and some maniac is going to show up with ten-deuce and crack me. Still, I do the analysis anyway. I map out the scenarios. I assign probabilities. I make the call.
Because the alternative is paralysis. The alternative is waiting for certainty that never comes. The alternative is folding every hand because you're afraid of getting unlucky. And in poker, as in life, you can't win what you don't put in the middle.
Shuffle up and deal.
Works Referenced
Annie Duke, Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts (Portfolio, 2018).
Maria Konnikova, The Biggest Bluff: How I Learned to Pay Attention, Master Myself, and Win (Penguin Press, 2020).
Dwight D. Eisenhower, "Remarks at the National Defense Executive Reserve Conference," November 14, 1957.
Kees van der Heijden, "Scenarios and Forecasting: Two Perspectives," Technological Forecasting and Social Change 65, no. 1 (2000): 31-36. This article discusses Shell's scenario planning from the 1970s.