Wynn-ing Ways Email 2 of 45: Knowing the Odds

Asymmetrical information

That’s a fancy way to say you have knowledge others don’t.

Having asymmetrical information is money, power, advantage.

I used to think that was the most crucial information—the secret stuff. Leverage.

The problem with that type of information is it is perishable. Once others have it, it loses potency.

Before I get back to my encounter with Steve Wynn, let’s explore information and decision making.

We all have an unspoken hope to get the inside information that propels us to success.

This is not the way!

Instead, having a decision-making process that drives your business has more value than asymmetrical information. Over the long run, a decision-making process will improve over time and give you confidence in the face of uncertainty.

Facing uncertainty is more common than getting ahold of a secret to trade on. Therefore, leave the secret chasing to others. Let’s instead understand how good decisions are made.

So here we go…

Have you ever heard of Frank “Lefty” Rosenthal?

He wasn’t part of the Outfit, but he knew those guys.

He is another Vegas legend who changed the face of the strip.

He was a mover and shaker in the sixties and seventies. On Lefty’s website, he considers Wynn #2 in top operators after Jackie Gaughan, who was, by the way, Steve Wynn’s mentor.

Few can say that Robert DeNiro portrayed them in a movie, but Lefty can.

Lefty was the real-life inspiration for Ace Rothstein in Scorsese’s Casino (This series may feel like a Scorsese movie between the cast of characters and the length of the emails).

At the pinnacle of his career, Lefty was running the Stardust (the Tangiers in the movie), the Fremont, the Marina, and Hacienda casinos for the Chicago Outfit. This was back in the day when the Stardust was THE place to stay.

Before Siegfried and Roy went to the Mirage, Rosenthal got them to the Stardust by giving them his wife’s Rolls Royce.

While Lefty was a convicted felon and regularly hung out with mobsters, his specialty was handicapping or odds making. Some say he was the best handicapper ever.

He started as a kid in the bleachers of Wrigley Field, making bets with Cubs fans.

He also made Book (facilitated illegal sports bets) he did it different.

Lefty knew if the basketball floor had just been waxed or if the star player had just found out his girlfriend was pregnant. In short, he made money in games of chance by knowing more about the possibilities than the others. Perhaps some of that looks like asymmetrical information, or inside trading, sort of, but it was how he used it to inform his understanding of outcomes.

Lefty didn’t bet on every game, just the ones he knew he had advantages in winning.

Out of the dozens of football games or hundred college basketball games on any weekend, he would bet on one or two. Ones where he knew the other oddsmakers had gotten the line wrong.

When Lefty was first put in charge of the Stardust, he set out to make it better, more profitable. He wasn’t one to let the status quo get in his way.

He was the first to open up a sportsbook inside a casino. Now every casino has one.

While he had a lot of latitude, he was told by the owners that the poker room was off-limits to him because it was a lock on a million dollars a year.

“The first time I strolled into the Stardust card room, my first impression was, the California Board of Prisons had arranged a tour for death row inmates from Alcatraz. That first impression wasn’t too far off. We could have been a safe haven for the FBI’s 10 most wanted. Every hustler, scammer and desperado had their space, and the rent was free. The dealers, floor men, and card room shift bosses were in with the scam. The only square guy in the room was the Card Room Manager, Meyer Goldberg, and he was in the twilight of his career, surrounded by teams, gangs, and “holdout artists.”

      ~Lefty Rosenthal

He didn’t listen. It took him eighteen months to turn the poker room around. While everyone was happy with the status quo, he wasn’t. He saw a reality where the poker room was a safe place for poker players free of skims and scams, and guess what…

more profit.

Five times more.

His expertise in gambling and understanding of the odds allowed him to see past the status quo and put the pieces in place to make things better. It was hard; he had guys who were OK with putting your head in a vice telling him to leave it be. He took the risk — knowing the reward.

Those who learn how to build advantage and systematize its accumulation will create a bigger and bigger lead. That’s the secret to getting it to work for you over time. That means building a system that works with cumulative advantage.

The status quo may not. Are you prepared to buck the trends and create your vision?

Where others are happy with the dodgy poker room, you do the work to clean it up and make it better?

Professional poker players understand that it is the system of playing poker that wins tournaments not having asymmetrical information. If you want a career and to accumulate wins in a tournament, you need a plan.

Pro poker and publishing are similar. Just like a poker player with a bigger stack of chips, they can push their advantage further when they have the upper hand. The best players also know when to wait out others until the cards are going their way again.

 In the beginning, a player needs to build their stack (bankroll).

In a hold-um tournament, you start with your entry fee. Let’s say 1000 dollars. By the end of the tournament, the last players will have a hundred thousand dollars because they have wiped out one hundred opponents. The winner of the contest will get everyone else chips-Winner takes all writ large. A big part of building advantage is conserving your chip advantage until they can leverage it more.

There is a fixed number of hands to be played. Just like you have a set number of launches to leverage.

Annie Duke is a professional poker player with over 4.2 million in winnings, playing no-limit hold-em. She is now an author with some of the best writing on decision making.

I’m currently reading her latest book, How to Decide.

To be a real pro, you need to know how the game is played, the probability of your hole cards given what you can see in the community cards, the ability to read people’s behavior, etc.

Asymmetrical information rarely exists. At the highest level of Poker, the players are math geniuses and experts in behavioral psychology. The tournament winner has to play hundreds of hands to win. Essentially, you need to have a reliable decision-making system that can deal with uncertainty.

This brings me to three points:

  1.    As the CEO of your publishing business, you need a decision-making system
  2.    Your business needs to be a system the optimizes your advantages when they are present and conserves your advantage when your chances of winning are low.
  3. You need to have the right expectations for the ebbs and flows of your business.

We will address the points above this season and give you some ways to think about how you’ll make future decisions and design your business system.

Annie has taken what she has learned around poker tournaments and shares how you can use poker strategies to become a better decision-maker.

If you want to go into the poker rooms and not get chewed up, you need to know how the room works. Have an eye for people like Lefty. To be a winner, you need to see when you can accumulate advantage and when it should be conserved.

There is an old poker room saying, If you look around the table and don’t see a sucker, you’re the sucker.

Hands of play

Professional poker players don’t try to win every hand. They try to make the most of what they have for that hand. It’s a combination of your stack (existing capital), the cards dealt, and the players you’re playing against.

Most times, the player fold. They are doing the minimum to stay in until they act. The small percentage of times that the conditions are correct.

For authors, we are going to have a set number of launches. In early rounds, the focus needs to be on getting to breakeven. Without a recovery of your investment plus a profit, you’re never going to be able to earn a living from writing.

We have two stacks we want to build: our reader stack and our capital stack.

In every round, you need to gain as many of the right readers as possible and hold on to them.

My observation of the state of play is that many authors are optimized for collecting the worse type of readers. Or maybe a better way of putting it is they are not segmenting their audiences enough and optimizing marketing for transactional readers.

Here are a couple of ways of thinking about what you’re optimizing for in a launch. By focusing on rank, you might stack promotions that target discount readers. Those that join your list are discount readers. Then you build a lookalike audience off of this list to get paid traffic based on the traits of bargain shoppers. A system of feedback loops optimized to concentrate on the transactional and value-driven.

Now, look at your organic sign up. The winning hand. Rather than thinking about how unfortunate it is that you don’t get more of these, think of your book as a filter qualifying the prospect. This is someone that bought your book and took the risk to sign up—a winning hand.

How do you play it?

Do you just throw this nice black hundred-dollar chip into the pile of overused dirty one-dollar chips?

No, it’s special. It is worth 100 of the others.

While most authors may segment that organic reader differently, they don’t have a conservation strategy. Is your treatment of an organic reader go something like this;

Email 1: Hi, I’m the author. Here is some free stuff.

Email 2: Did you get your free stuff? I love my (dog/cat /parakeet)

Email 3: Here are more books to buy from me

Dump to weekly deals newsletter

Is that how you want to be treated?

No!

I want the hotel owner to send me on a pirate adventure looking for a lost treasure in a hotel just about to blow up (watch the Steve Wynn Video).

I want to feel special and part of something.

In the beginning, you’ll only have one name on that organic list. That’s how it starts. Then it’s two, then ten, then one hundred.

A list of one hundred organic names you’ve nurtured is the list used to generate a paid traffic through a lookalike audience. An advertising campaign based on that audience inviting prospects into your story world is a cumulative advantage leverage point.

You’ve worked hard to stay in the game and build up your stack, and now you’ve been dealt pocket aces. Sure, it’s a winning hand, but if you misplay it, you’ll leave chips on the table.

Think like Lefty. Look for where the odds are in your favor. An organic sign-up is your edge; now, how do you leverage it or, at a minimum, not lose it.

Joe

P.S. Are you already blurring reality and fantasy?

If not, can you think of one way to bring your story world into the real world for your readers?

It can be something small like guest blogging characters or using a tool like a survey or a messenger bot to bring your characters to life.

Start with something small and test to see the interest level. As you move forward, you can exert your creative control and integrate things into your story that later can be used in promotions, launches, or newsletters.

Think of your hobbies and how they can connect with your story world. Are your books the basis of a game? Do you write mysteries and like to geocache? The injection of fun makes it engaging.