Founders - #114 The Professor, the Banker, and the Suicide King: Inside the Richest Poker Game of All Time

Episode Date: March 9, 2020

What I learned from reading The Professor, the Banker, and the Suicide King: Inside the Richest Poker Game of All Timeby Michael Craig.---Subscribe to listen to Founders Premium — Subscribers can listen to Ask Me Anything (AMA) episodes and every bonus episode. ---Some Texas banker was playing poker with over $15 million on the table. 15 million on the table? This much cash would weigh over 250 pounds. [0:01]Founders #38 Jeff Bezos and Elon Musk The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos [4:12]Poker players are misfits / Poker as a capital intensive business / How to avoid going over the edge [6:51]The early life and personality traits of Andy Beal [12:20]Other founders mentioned in this episode: #59 Howard Hughes: Hughes: The Private Diaries, Memos and Letters; The Definitive Biography of the First American Billionaire.#65 Kirk Kerkorian: The Gambler: How Penniless Dropout Kirk Kerkorian Became The Greatest Deal Maker In Capitalist History.#67 Conrad Hilton: The Hiltons: The True Story of an American Dynasty[19:24]Professional poker players were the ultimate independent businessmen. They had no bosses, no employees, and no set hours. [20:36]He came. He saw. He was conquered. [26:01]The entrepreneurial emotional roller coaster + Bet on yourself [28:20]A young Andy Beal’s adventures in entrepreneurship [36:30]Beal Aerospace [49:45]How Andy Beal finds an edge in poker [55:04]The difference between knowing and doing [1:07:49]The benefits of facing tough competition: Andy had played abasing the best poker players in the world for nearly 300 hours. It was impossible to stick around against this level of competition and not improve. How can we simulate an environment like this for ourselves?   [1:09:45]What a bizarre, nonchalant way to start an important day [1:14:20]—“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

One of the players had just returned from the Bellagio. In the poker room, he saw the son of a poker world champion and some Texas banker playing heads-up Texas hold'em with over $15 million on the table. The amount simply would not register in my mind. I remembered from my earlier poker days stories about Doyle Brunson and Puggy Pearson playing rounds of golf for more money than Jack Nicklaus and Lee Trevino made in a year. I overheard pros describing their winnings in inches of hundred dollar bills. But 15 million dollars on the table? This much cash would weigh over 250 pounds. Don't ask how I know this. Suffice to say that people who weigh bundles of $100 bills keep a low profile. It just seemed like

more money than even a phenomenal poker player could accumulate, much less risk in one game. The bankers place in the game didn't make sense at all. But he's a billionaire, another player told me when I tried writing this off as urban legend. Even if the banker could throw around that kind of money, why would he? That curiosity started me on the road to the richest poker game of all time and took me inside the world of high-stakes poker. For most of a year, I learned about the unusual and impressive skills that separate the best players from the rest of the field. The

enormity of their successes and failures and their shortcomings which almost always stem from their strengths. I also had the privilege of witnessing the problem-solving skills of that Texas banker, Andy Beal. Beal, one of the great entrepreneurial minds of the information age, had accumulated great wealth, yet managed to remain almost completely anonymous. In fact, the Bellagio allowed him to register under the name Anonymous. From the time he was an 11 year old buying broken televisions for a dollar and fixing and reselling them for 30 or 40 dollars, to purchasing hundreds of millions of dollars of bonds and California

utilities and airlines when most investors were writing off those businesses, he has never been afraid to venture into new areas, teach himself the rules, challenge the experts and prevailing wisdom, and measure the results. His approach to poker and to risk itself is unique. By ignoring and even contradicting conventional wisdom, he became extremely wealthy. His hobbies made him an important and credible figure in science and mathematics, areas in which he had no formal education. As I learned more about his improbable career and unique approach to financial intellectual issues, I wondered why can't a wealthy, smart, determined person figure out a way to compete on even footing

with top professional poker players. Most important, I learned what a capricious game poker can be and what a difficult profession it can be even for its expert practitioners. In fact, when I started, I thought the central question of this book would be why Beal would attempt something so apparently foolhardy, taking on the best in the world at their game. But by the end of the story, the more pertinent question is why the professionals continued to take up his challenge. By the time the stakes reached their peak, the pros were potentially risking everything on an edge they realized was virtually non-existent. Okay, so that is from the beginning of the book that I'm going to talk to you about today, which is The Professor, The Banker, and The Suicide King, Inside the Richest Poker Game of All Time, and it was written by Michael Craig.

Before I jump into the book, I want to tell you how this podcast came to be. All the way back on Founders number 38, I did a podcast on the book Space Barons. And that book goes into the strategies by a bunch of modern day entrepreneurs and how they build private space companies. So they talk about Elon Musk, Jeff Bezos, Paul Allen, and Richard Branson. And they also mention Andy Beal. So for that podcast I decided, hey, I'm gonna limit the scope of what I talk about with, because I found it most interesting that Elon and Jeff were taking vastly different strategies for similar goals.

Right. But I also brought up during that podcast how I found I wanted more books on Andy Beal and I couldn't find any. Because I found him such a weird, unique character. And I had a bunch of people reach out to me and say, hey, there is a book on Andy Beal and it's this book. And then once I was made aware of the book, I obviously bought the book. And then what happened is, I have a stack of books,

probably close to 100 by this time that I'm going to eventually get around to turning into Founders episodes. But once I was made aware of the fact that this book existed, I then started seeing it everywhere. I'd see constant recommendations on social media. It would make a list of the most recommended or the top books for entrepreneurs and investors. After reading it, that makes perfect sense. So I just want to point out one thing. I get a lot of messages about people saying how much they're

learning from the podcast. Just know that it's a two-way street. There's so many entrepreneurs I didn't know existed, so many books I didn't know existed if it wasn't for you. So I just want to make you aware of that. And then if you ever have any books or people you want me to study, please keep these recommendations coming because a lot of them are outside of my view. I don't even know these people exist So you're being very helpful. Okay, let's jump right into the book Now here's the thing. This is a little different. I'm gonna focus what I'm gonna talk to you about is mainly on The characteristics of Andy Beal that I think can make him unique characteristics me we might want to copy in our lives

He's had extreme success in many different fields I He's had extreme success in many different fields. I think people like that are definitely worthy of study. And I'm also going to talk about the similarities of poker players. And really, they're very similar to entrepreneurs or investors, athletes, anybody that's trying to engage in something that's difficult and trying to succeed in a complex adaptive system. So to this point, I want to start with drawing your attention to the fact that poker players are very much misfits, just like entrepreneurs, investors, and anybody else trying to do something unique. And so here's a poker player, a professional poker player, describing the characteristics and traits that he possesses and that he feels a lot of his fellow poker players possess as well.

It says, most of us, maybe all of us, have a little sickness in us. The people that end up in the biggest games are the ones that have a little too much gamble in them, but they've managed to figure out how to use it to their advantage. Okay, more about poker. Let me just tell you right up front, I've played poker a handful of times. I know next to nothing about it. So I'm not going to really be providing any input here. I'm just telling you what the author, who's had a lifelong association with poker, he interviewed dozens, if not hundreds of professional poker players for the book.

And another thing, this book very much is not like a typical biography. It has a main story, which is that in May 2004, the largest poker game, the largest high-stake poker game of all time is played. I'm going to omit giving you any information that would ruin the story because I think the book is so fantastic. You should definitely read it. It's one of the books that I would stay up late at night. I knew better. I knew I should go into sleep, but the story is so fascinating. I think I read this book in like 36 hours. I could not put it down. So just keep in mind, I'm going to give you some ideas that even if you don't read the book, it's still going to be valuable to your life.

But I'm going to omit obviously the outcome of a lot of these games. Okay. So it says, this was interesting to me. I never thought about poker as a capital intensive business and then how professional poker players avoid going over the edge. So it says, poker is the most capital intensive business in the world. Like banking or securities trading, the commodity is money. But while technology and innovations like margins and interbank lending have supplanted the need for physical cash in the financial world, monetary transactions in the poker world have a medieval flair. Most of the high stakes poker players, through their years of success, have deliberately kept themselves undercapitalized. This is really surprising to me

because they have been aggressive about trying to shelter as much money from poker as possible. See, they're misfits. They have an addiction. So to overcome that addiction, they have to put their money in illiquid or less liquid assets than a poker game, which they could easily, and in some of the numbers in this case, the stakes are so high, they could wipe out their entire net worth in a few hours. So they're aggressive about trying to shelter as much money from poker as possible. They buy property, they start businesses, and they invest in the stock market. Okay, so now – oh, I do need to give you a note on the numbers that are in this book that I'm sure I'm going to reference. It also is important to understand the strategy because at the beginning of the book it talks about he was deliberate in bucking the trend

and approaching it differently he knew hey these people have been they're professional poker players they've been doing this her life much longer than me there's no way i'm going to beat them just copying them so i have to come in at a different i have to find a different edge and so one way he does that is he plays at extremely high amounts and he does that intentionally to make the other his competition uncomfortable and so this is just a note on the numbers in the book in this case he's the very first game that Andy plays he's playing versus two other professional poker players almost by accident one of them is this guy named Ted but here's the numbers he says yeah in 10,000 dash 20,000 Texas hold'em so

it says the blinds are five thousand,000 and $10,000. Just know the book is going to reference this. So you can play a poker game with 15-30, 10,000-20. Andy wants to push those two numbers as high as possible. And usually the poker players are trying to bring them on the other end of the spectrum. So he'll push that number, I think as high as like 100,000, 200,000 or 50,000 to 100,000. But this is the description. So in a 10,000 to 20,000 Texas Hold'em game, the blinds are 5,000 to 10,000. With three players, it was costing Ted a minimum of $15,000 every three hands just to sit at the table. Okay. So he's going to, these are already extremely high stakes, and Andy's going to keep pushing him higher. Beal was very aggressive. That's another trait of his that I'm going to repeat over and over again, playing nearly every hand, raising

most of the time. It was costing Ted $20,000 per hand to see the flop, and his bankroll was taking a beating. After 20 minutes, Ted was down to his last $100,000. So 20 minutes ago, Ted sat down at the table with half a million. So in 20 minutes, he's down $400,000. And that gives you an idea. You need to know that because this is integral into understanding Andy's strategy. He's obviously extremely, extremely wealthy at this time. He's obviously extremely, extremely wealthy at this time. He's a billionaire.

His bank, I think, at this time is making a couple hundred million dollars a year in profit, to give you an idea of what we're talking about here. So he's not going to be interested in just winning $20,000 or other cases. He wants these wide swings. Okay, so let's back up. I need to give you an intro into Andy Beal. I find this person, he's one of the most fast, I mean, it's hard to even say that given all the founders that we've studied, but he's one of the most fascinating people I've come across. All right, so it says, more than 20 years earlier, when he was just out of college and starting his real estate business, he would travel to Las Vegas to play blackjack. He counted cards, treating the trips like missions, and won as much as $50,000 on a weekend. He had even gotten barred from some casinos. Winning like that was exhilarating, but he was

a different person then. Though he did not spend lavishly on most things, he had long passed the time when making $50,000 was worth the effort a professional card counter would have to expend to win that much. He played aggressively by instinct. Andrew Beal's physical characteristics was a study in contrast. He was tall and broad with a large head balanced on a wide shoulder. He's one of my big-headed brethren. This is great to know. He was also quiet and soft-spoken, preferring listening to talking. But once he developed an opinion and chose to express it, this quiet reserve vanished. He would bludgeon opponents into submission with the force of his reasoning or just as easily probe someone with superior information with endless questions.

He had little use for idle chat. There's a person after my own heart here. He had spent nearly 25 years in real estate and banking and became one of the great entrepreneurial success stories of the last quarter of the 20th century. Nevertheless, he was virtually unknown, which suited him just fine. So let me give you a little bit more detail about that. And the note I left myself on this page is something I think about all the time, that bad boys move in silence. Andy was intensely private, building his real estate fortune, banking business, and other interests without accessing public capital markets, making no more than the required

minimum public financial disclosures, and without courting the press and drawing attention to himself. I love traits like that. I feel the same way. But it also, when I came across that section, it reminded me of what Claude Shannon, let me pull it up so I don't butcher this quote. It reminded me of what Claude Shannon said about Henry Singleton. Let me see if I can find the quote without wasting too much of your time.

Okay, I found the quote. This is Claude Shannon on Henry Singleton. It says, he always tries to work out the best moves, and maybe he doesn't like to talk too much because when you're playing a game, you don't tell anyone else what your strategy is. So we're seeing similarities between the way that Henry Singleton would conduct his business affairs and the way that Andy Beal does as well. Okay, so I'm going to fast forward to there's a series of games that have to happen over a several-year period before the highest-stake poker game of all time takes place. And so I'm going to give you a little bit of background and draw some interesting parts from these games. And so at this point, Andy is

coming to an end of one of his trips to Vegas, and he's talking to other professional poker players. And he has this idea. And he said, I want to play higher, Andy told Todd. Okay, Todd said, I'll play you higher. No, no, no, not this time. I want to come back and play a lot higher, like $10,000 to $20,000. Todd didn't think he was serious at the time they were playing a 400-800 game. This 400-800 game was not particularly large by Todd's standards, but this guy wanted to play for 25 times as much. Todd thought, this guy must be full of shit. It is so rare that a completely new player would play for such high stakes.

However, the pros would play whatever game he wanted. So that's how they, not giving away too much, but that's their opinion at the beginning. And he's going to get on some runs on them. So there's a back and forth. It's not a domination by either side, which is also surprising. And also speaks to the intelligence and creativity of Andy Beal and why we should spend time studying him. But they have this opinion at the beginning. I'll tell you right now, they do not hold that opinion later on. So he says, by the second day, so now he's playing,

he says, by the second day, Andy Beal was facing a lineup of the best big money poker players in the world. And he's going to continue, the author's going to continue explaining what's happening here. And this gives you an idea of the level of self-confidence that Andy has. He says, if Andy Beal was intimidated by the quality of his opposition, he did not show it. In fact, he insisted on raising the stakes. Now there's just one poker player who's playing against him her name's jennifer says jennifer had never played this high and noticed everyone was playing tighter than usual saving bets and abandoning the aggressiveness that was the hallmark of the highest stakes professional so andy's supreme level of

default aggressiveness is even throwing off the pros at their own game. He's doing this intentionally. He's trying to make them uncomfortable. But remember, this is also an insight that he—I don't know if he—I would say he stumbled into this by accident. So it says, Andy Beal's backing down the best players in the world by raising the limits, she thought. This is unbelievable. Andy won over $100,000 in a game filled with the world's top money players. He was flabbergasted. Maybe I'm actually a good poker player, he

thought. Okay, so at this time, Andy, he's going to stumble on the strategy, or I guess he's more intentional. He eventually says, I'm not going to play like a group of players like he was here. And he did this to isolate the probability that, or to decrease the probability that they were cheating. So eventually he wants, he says, no, I'm going to play you heads up. Now he'll play a collection of pro players, but he plays them one at a time and they have like a rotating team, which is even crazier because he just keeps playing and they can put in fresh people. So I want to tell you a little more about his reasoning.

He says he was more concerned about being cheated. Everything about them, meaning the players, and the game seemed aboveboard, but you really can never know, right? But they were all intimately familiar with both one another and all the angles while he was the only outsider in their game. So you understood. I'm not going to accumulate more experience in a short amount of time than they have for 20 or 30 years. In some cases, he plays professional poker players. They've been playing for four or five decades. So he's like, I've got to figure out a way to find my edge,

something that appears over and over again in these biographies. They know what they're strong at. They know what they're weak at, they know what they're weak at, and they make sure they play the games and engage in the businesses that will lead them to the highest probability that their unique skill set that they possess, they'll reach the success they want to accomplish, which I think is something that everybody has to internalize and think about. Now, on the very next page, there's a lot of people mentioned in this book that are also past episodes of Founders. So I'll put this in the show notes in case you want to use that as

a reference to go back. But it says, the influx of corporate investment in Las Vegas, first from Howard Hughes in the 1960s, then from Hilton family, and then lists a bunch of other people, and high-profile individuals like Kirk Kerkorian. So they're talking about, in this section, how different Vegas is in the 2000s, early 2000s, when this story is taking place, than it was, say, in the 60s, 70s, 80s. Now, Howard Hughes, I covered on Founders No. 59, Conrad Hilton, the founder of Hilton Hotels, on Founders No. 67, and Kirk Kerkorian, which is one of the craziest life stories, on Founders number 65.

So if you have not gone back and listened to all of them, I'd highly, highly recommend you do so. Now, getting to the point of this entire section, Andy's been thinking about it, and he says the ideal situation he realized was to play them heads up. So that's where he feels he's going to have the greatest advantage and the only advantage in being able to play them heads up so that's where he feels he's going to have the greatest

advantage and the only advantage in being able to beat them okay so now a little bit more about the personality like what kind of person becomes a professional poker player it says professional poker players with the ultimate independent businessman they had no bosses no employees and no set hours. It would be an understatement to say that poker players are difficult to manage. Most chose poker because they didn't want to be the subject to anyone else's rules. Every one of them was idiosyncratic about making financial and scheduling commitments. They all had phenomenal capacities for strategic thought, and they generally had few opportunities to exchange opinions

and rarely had to give in to someone else's authority. So this is also, if you're thinking about, we just talked about his strategy. I'm not going to play, I'm not going to sit down a table with five professional poker players and try to beat them all at once. I'm going to play heads up. You can rotate in all these other people, but it will be one-on-one. Now, that means somebody, he's essentially saying, I'm going to play a team of professional poker players. But poker players are not used to playing on the teams. They're lone wolves. Okay?

So this is also important to understand Andy's strategy. So there is one person that's like the godfather. I don't know too much about the poker industry, but from reading the book, it sounds like he's one of the OGs. His name's Doyle Brunson. He's the one that Andy, every time he makes a trip to Vegas, he's the one that Andy contacts. And Doyle Brunson is kind of responsible for herding cats, right? He's got to try to match these people. There might be 15 players, 10 players on the team, right? He's got to try to match these people. He's got to, you know, there might be 15 players, 10 players on the team, depending on who's in town, who's not playing in a tournament,

who actually has the bankroll. So that's the background you have to understand of, I think it's important to understand Andy's strategy of heads up, and also why he thinks that's advantageous to him is also because of the nature of his opponent, which is very smart. I mean, I'm going to say this over and over again. The dude's freaking brilliant, but it's very smart for him to pick up on that

and use that to his advantage. It just gives you the idea of the brilliance of his mind and his strategic ability. All right, so now we're going to get in a little bit about the negotiations between Brunson and Beal. Brunson explained the situation to Beal. He contacted everyone he thought might be a threat to get into the game, and though Beal would only play one opponent, the opponent would be playing his or her own money plus the money of the other players in the group.

Okay, so that's another insight about poker players. They're fine. They're much more comfortable living and dying by their own skills. It gets very uncomfortable when they lose somebody else's money. But if you're on a team, you're all pulling together resources. And it's the only way they could match Beal. Beal's much, I mean, he's wealthier than all of them combined. So again, this plays to Andy's advantage. Doesn't mean it's going to guarantee his win. He's just, again, increasing his edge little by little. He said, this disappointed Andy a little,

because he knew that even the professionals at a certain level would feel the pressure of the stakes. Remember, that's his strategy. I'm going to increase the stakes. I'm going to bring them into deep water where they're uncomfortable. And joining forces would minimize their exposure. But his main objective was to play heads up and he was getting his wish.

This part was interesting to me because what I'm about to read to you I think applies to, there's this well-known phenomenon about the entrepreneurial rollercoaster, it's this emotional rollercoaster. It really, what I'm about to read to you applies to entrepreneurs or really anyone that is doing anything that is hard. You know, you're going to have to navigate peaks and valleys and that's just the reality of life. So it says, poker could be such a lonely occupation and the low periods could be so devastating that seeing how players in your situation have succeeded could be an important sustaining force. So they're talking about the benefits of studying the history of your industry. Cuz inevitably what you're running into is not unique, it's not novel.

It's unique and novel to you, but it's not unique and novel to human beings throughout history. So I do agree with that. I do think I derive strength from hearing the stories of people struggling and then overcoming that struggle and understanding that the way I'm feeling right now is not unique. Okay, so I'm going to give you some highlights. There's a bunch of games that happen during this multi-year time period before the big game. And in some cases, you know, Andy does well.

He adjusts, he learns, and in some cases he gets wrecked. And so it says he's playing this guy named Howard. It says, Howard made short work of Andy, winning a million dollars in less than three hours. Howard played even more aggressively than Andy. Remember, Jennifer was talking about she was noticing Andy's aggressiveness was causing other players to back down, to not use one of their advantages. Howard didn't give in to that. He says, if it wasn't clear to Andy Beal before, it certainly was clear by now. He was far, far behind poker professionals in every area that counted for this game.

Beal had a lot of money and a lot of gamble. That's the compliment that professional poker players gave him, that he wasn't scared of risk. But not much skill. So they wound up taking him for, I think, like $5 million on this trip, something like that. And so then they start talking about amongst themselves what happened, and they're describing Andy in this next sentence.

He came, he saw, he was conquered. Okay, so a few weeks after he lost all that money, he decides, I'm going to go back and I'm going to change my strategy. And this is why one of the main things to understand about Andy is he understood the power of trial and error and that you derive knowledge through experience. There's a lot of knowledge that people could tell you, but some you're going to discover by accident through experience. So he's like, okay, well, maybe I made a miscalculation.

Maybe I'm playing heads up because that would limit their ability to cheat, but maybe I'm not good enough to play them one-on-one. So he goes back. He's like, okay'm gonna i'm gonna try to play in a group and see if this changes anything but there's one sentence that i think is extremely important um that that andy understood instinctively and that's the benefits of exposing yourself and competing against the very best in the world at what you want to do. So he says he specifically wanted to test himself and his developing theories against the best players. Now, why would he do that? Because he understood that's where you're going to learn the most. And his goal is on improvement, improvement of this very specific skill. So to do so, he's got

to expose himself to the ideas and the interactions with the people that are the very best at what he's trying to accomplish. I think that's extremely smart and extremely rare. And it's something I think about all the time in my life is like, am I taking it too easy on myself? Like comfort's a false God. We talk about this all the time.

Like maybe I should design an environment that's even tougher because it's the only way I'm going to reach my full potential. Anyways, back to the book. He says, why didn't Andy Beal insist on playing heads up as he had on the previous trip and he would on all future trips? Okay, so there's just one trip where he changes his mind and then through experience, like, oh, no, no, okay, my theory was sound. He just wanted to make sure he wasn't making a mistake by insisting on playing heads up. So

that's the entire point of this trip, that he's testing one variable. He's like, all right, maybe I should be playing in a group like everybody else. The result is, no, no, I need to go back to heads up because that is where I'm going to find my advantage. Now, I want to go back. I want to tell you more about this idea of the emotional roller coaster, which is extremely common. And another theme that we learn over and over again through these books and these life experiences is that at some point, you're not going to get the life you want unless at some point you've got to bet on yourself. Nobody is coming to save you.

So this is a professional poker player, one of the most famous. His name is Howard Lederer, I think. He's talking about both of these things. Most of the millions of new poker players and fans who saw Howard Lederer as bulletproof would be surprised to know that he spent a significant amount of his time at the pinnacle of the poker world, just one wrong move from financial ruin. This is now quotes from Howard. I definitely had periods of doubt and didn't want to admit defeat. I had internal dialogues saying how much regret I'd have to carry if I had to admit defeat. His skills and desire were so great that he had persevered.

So I've had tons of my mind playing tricks on me. I think you have had too. We're seeing Howard's going through the same exact time. Definitely had periods of doubt and didn't want to admit defeat. So he's going back and forth. He's having some success. He's having some failures. And he's like, you know what, I'm doubling in.

He says he cut out all the other activities, especially backing other players and then investing in too good to be true business deals. Since then, he had managed to keep his finances in order. Direct quote from him again. At some point, you have to say, okay, maybe it's just time to bet on me. So there's a lot of things going on there. One, he's betting on himself, but before he's able to bet on himself, he's, I think,

we talk about this idea all the time. Humans score in the abstract. We think that attention is just infinite and it's the opposite. Like what we direct our attention to is probably the most valuable, our attention is probably the most valuable, single most valuable thing we possess.

How you spend your time, what you're focused on is what you're going to improve. And yet we squander it, watching all kinds of silly things, spending too much time on our phone, just wasting the most valuable resource we have. And in this case, we see Howard. Well, one, I talk about it all the time. I think that's the biggest impact that Henry Singleton had on my life is the fact that he know he had he was a singular focus and since i've been introduced to

him and his ideas i find myself out just hacking and cutting out so many things that are just not necessary in my life and really focusing on what's the most important thing most the few things that are most important to me and the elimination of everything else and i'm still not perfect in that in that endeavor maybe never will be but I'm definitely better than I was a few months ago and I hope to continue that trend right but what Howard realized is like I want to be the best poker player in the world right that's that's what he's he's trying to do and I can't do that if I'm spending 10% of my time analyzing business deals maybe I'm

spending another 15% of my time but they deals, maybe I'm spending another 15% of my time, they call it staking poker players. What I would, the most, like, the analogy that came to my mind when I was reading this is, like, they're, it's like angel investors, like, founders investing in other founders, you know, it's very common. Poker players do that, too. They'll say, okay, you know, I'll give you, whatever, $20,000 for 10% of whatever you win. And if you don't win, they're not paying them back or whatever the case is. So you just realize, this is ridiculous. I'm not going to get to where I want to be in my life but with all these distractions. So let me get rid of my distractions.

I also know that this is not something that normal people even think about or consider. I also know it's something that you have to constantly remind yourself. You have to like keep yourself on that path. So like if you look at my lock screen on my phone right now, I have a quote and it says people need to, this is somebody that is independent artist that's talking about, you know, he struggled for many years, finally broke through. And he says, people need to prioritize. If you're not where you want to be in life, every second of your day and every ounce of your energy you have should be going towards things that bring you closer to your desired position in life. That's exactly what's happening with Howard, right? And so at the end of the quote, he says, some people be bullshitting

and then complain as if they're not the problem. So I put that on my phone just to remind myself that one, I haven't reached all my potential, right? And two, am I allowing distractions that do not serve my goal in life or what I want my life to be? And I figure if I just put it there, because, you know, you probably, I probably open my phone, what, I don't know, 50 times a day, something like that. That's, I'm going to see that reminder every time. Or what you're about to do on this device, is that serving where you're going, David, or not? Because if it's not, then you're lying to yourself. You're not interested in – I'm talking – these are my inner monologue now.

If you ever want to know what my inner monologue sounds like, if you've listened to the audio book by David Goggins of Can't Hurt Me, it's very similar to that. And I'm not saying I recommend that for everybody. It might be unhealthy, but it's just the way I talk to myself, so anyways, when I'm, now that I see that on my phone, I'm like, okay, you're either, you're either all in on this, you're serious about making sure that there's no slack in your life, making sure that you're getting to where you want to go, or you're lying to yourself, and that's fine. It's very common for you to lie to yourself, but, you know, I'm not. That reminder serves as, like, a check, like a slap in the face. Stop lying to yourself.

Either go all in or don't do it at all. And I just feel that, like, that kind of, like, I like that mindset because I have a hard time sticking to things. Like, either it's zero or 100. I think there was a famous quote by Clayton Christensen who just died and he says it's easier to stick to your principles 100% of the time than it is 98% of the time and I think there's a lot of wisdom in that word in his words. I think that came from his book like How You Will Measure Your Life which is

which also will probably be a future episode of Founders one day. All right, let me go back to the book. Okay, so now we're at, there's a lot of, Andy has these trips, right? At the end of the trip, there's like a reflection. So I want to pull out a lot of these quotes because it's interesting to see what he learned from a short amount of time. So it says, the experience confirmed his first impression. He would have a chance to do better and have more fun against just one opponent. So that's another thing. He's got all the money in the world. If he's not having fun, if he's bored, then why is he even doing this? And he learns that later on that at one point he stops having fun, so he stops playing. So he says, he would have a chance to do better and have more fun against just one opponent. He also noticed that the pros were not as fundamentally sound as he expected.

They were great at thinking and counter-thinking during the hand, at varying their play, and at reading opponents, but they seemed to get a lot of the basic pot-odd decisions wrong. So why am I bringing this up? One, you see his minded work. He's analyzing the situation, and he's looking for his edge. This is so important. He's realizing, okay, this is where they're weak and I'm strong because I can't just out-compete them.

They play all day every day and they have for decades. I'm not going to develop better instincts than them, so I've got to find a way in. And this is where he finds a way in. If he made the mathematically correct move every time, wouldn't that substantially reduce or even eliminate the advantage of the professionals? He doesn't know. This is his hypothesis. And if he could get the stakes high enough, maybe he could knock the pros off their game. So he's trying to look for this combination that will eventually give him the edge so he could beat the pros at their game. This works for high stakes poker. This works for investing. This works for building a business, making a product, selling a service. What is your edge? Okay. Now I'm going to go back.

This is more of like biography of, now the section is more of like, it functions like a biography of Andy Beal. And unfortunately, tell me if I'm wrong, I've looked, there is no, you know, biography yet of him. So he did sit down for interviews and talk to the author and even played poker with the author. So we do have some insight into the mystery of Andy Beal. So the note I left myself, this is a young Andy Beal, and then the mind will always play tricks on you. I don't remember why I left that note,

but we're going to find out together. 24-year-old Andy Beal sat alone in the Drab Housing and Urban Development Conference Room in Washington, D.C. He had bid $350,000 for an apartment complex that HUD was auctioning off in Gulfport, Mississippi. This is before he starts a bank. He makes a lot of money in real estate. He's not there yet. The 5% deposit he left at the bidding window, $17,500, was all the money he could scrape together from 10 years of hustling in business. Now he's 24. He's been working in business since a young, young man.

And then, you know, these are side little things, selling TV, stuff like that. He was used to being too young to do the things he did, but he was stepping up to an entirely bigger league. things, selling TV, stuff like that. He was used to being too young to do the things he did, but he was stepping up to an entirely bigger league. Alone with his thoughts, he was getting nervous. Now I remember why I left that note. Andy's stomach lurched. This is his inner monologue starts to turn real dark on him. He had no business being here. This was a man's game, and he was just some kid from Lansing, Michigan. Where did he come off thinking he knew what things were worth? I'm washed up, Beale told himself. I have no chance.

An argument raged in his head. So Andy Beale is one of the most gifted entrepreneurs of the last, let's say, 50 years. And he's not immune from this phenomenon. There's no reason to think we won't be. Um, so part of this comes because this guy sits down next to him and they're, they're both bidding on this, this, uh, apartment complex in Gulfport. And Andy, you know, the guy's like, Hey, what do you think this is going to go for? And Andy's like, Oh, it's going to go for $500,000 at the most. Remember his bids three 50 and the guy's like, no,

you're wrong because I bid more than that. And so that's when Andy's like, oh my god, I'm stupid. This guy's two decades older than me. He's much smarter. So he's like, OK, well, I could sit here and do nothing and lose my bid, or I can come up with a better idea. So he comes up with a better idea. Let me continue the monologue. I missed this part. That's absurd. You're out of your league. You gave it a shot So just let it die and go home Just get off and then the other part of his brains like almost like the devil and the angel on his shoulder Just get off your butt and submit one more nominal bid at least that way You've got a shot and while you're sitting here the clock is running. So he's going through it's like I'm very confused here

So he finds he's like I'm to lose this bid in Gulfport, Mississippi, but that's not the only thing being bid. So he finds this apartment complex in Waco, Texas, and he just makes a bid. He said, this is interesting, there's just so much randomness in life, right? So he just guesses. He decides to bid $217,000, has no idea, never seen the property, knows nothing about it. None of the remaining bids exceeded $206,000, however, and Beal had the winning bid. He was entering the big leagues of the real estate business,

not in Gulfport, Mississippi, as he had thought or planned, but in Waco, Texas. He had never even set foot in Texas. Okay, so he's going to do a couple things that's smart here. It wound up being a phenomenal deal. And before this, he had like a series of side hustles. One of them was fixing up individual houses, right? And so this is the first time he's ever dealing like a multi-unit, you know, huge apartment complex. Let me give you some background before I get there does it tell you he winds up i don't know if i left this in the notes but he he winds up making

okay i there it's coming up so i'm not gonna step over my point just remember that he bid two hundred six thousand dollars for this apartment complex in waco we're gonna set that aside for a second go back into his early life. Andy Beal had always wanted to know how things worked. When he was 11, he and his uncle Denny would go to the Salvation Army. They would buy broken television sets for a dollar or two. Denny showed Andy how to fix them,

and then they would sell them for $30 or $40 a piece. They would take out classified ads. His next business was purchasing kits for alarm systems, intercoms, and antennas, and installing them in homes and apartments. Now, he's doing this at very young. If you lived in Lansing, Michigan in the late 1960s and looked in the Yellow Pages for such a service,

you wouldn't know from the listing that the principal owner behind the company was just 17 years old. He starts going to college, but again, like we see over and over again, he's not interested in school, he's interested in life. And so he's only doing that, it says, he was only there because his mother insisted he continue his education. He did well in the classes he completed, but his growing business interest forced him to drop several classes. So I don't even know if he ever graduated college. It says, after turning 21, Andy discovered Las Vegas and the world of gambling.

Not content like some friends to go to Vegas to get drunk and crazy, he studied card counting systems and learned he could profit from that activity. He's got another business he starts. So this just gives you a background of the kind of person he is. He also started mid-Michigan building movers. When Andy was very young, he was fascinated by watching his uncle Denny move a house. They would just lift it off the foundation, put it on a trailer, and drive it off to a new location.

At the time in Lansing, Michigan, you could buy small homes on the market for under $1,000 apiece. Andy and his uncle bought several of them, moved them, and sold them for a profit eventually he owned about 15 houses around Lansing he did all of his own maintenance and repair work he sold or closed all of his business interests interests in Lansing and moved to Waco Texas that's what I said was smart it's

like well if I'm all in if this is all the money I have, I cannot be distracted. I've got to take this serious, and I can't manage this from Michigan. In 1970, now this pays off, in 1979, he sold the Waco apartment complex and collected a profit of over a million dollars. He's still really young. While attending a real estate, this is what I love about him, too. I'm going to keep interrupting myself here, because he treats every experience as a learning experience.

This is so fundamentally smart. While attending a real estate seminar, and think about how great this is. He's already making money, right? He's making a ton of money in real estate, but he's not resting on his laurels. He's like, there's no way I know everything I need to know. So he says, go into real estate seminars to learn more. And then this idea, this insatiable hunger for knowledge leads to another business. While attending a real estate seminar, Beale became bored and started contemplating the economics of the seminar business. Let's see.

There are 1,000 people in this room and each paid $300 to be here. That's 300 grand. They had to pay six speakers and one day's rental for the auditorium. After subtracting from marketing expenses, it was was all profit so what does he do between 1979 and 1981 it's two years Beal's company conducted over a hundred seminars so he's teaching people what he does which is uh seminars about getting loans from federal government, like he just did at HUD. So it says, yeah, seminar is about getting loans from the federal government. I think it's exclusively for real estate.

He made millions in the seminar business. It only took him two years. And he decided to return to real estate. He had to stop his seminar business because President Reagan announced the centerpiece of his plan for a smaller federal government and was cutting the very programs that were focused on the seminars. Andy Beal returned to the real estate industry and bought several more apartment complexes at HUD auctions. Beal was a bottom feeder and a cheapskate. He had no desire to pay inflated prices for trophy properties or speculate on grand new building projects. So at this time, he's going to go through the buildup of, there's this huge bubble in the 80s with SNL, savings and loans. And the book makes it seem, and I've heard about, I've seen this phenomenon and read a little bit about it, but I know, like I'm out of my domain here. But the book makes it seem, and probably accurate, that almost anybody could get an SNL charter before the bubble pops.

Okay, so Andy is one of these people. He gets his SNL charter right after it pops. And this is an important, I'm bringing this up because it's an important accidental benefit of his life. He says, so his friend had, there was like a bunch of people, they call them high-flying Texas SNLs, okay? They would offer 100% financing and weren't picking about what borrowers did with the money. So we've seen that play out over and over again ins, okay? They would offer 100% financing and weren't picking about what borrowers did with

the money. So we've seen that play out over and over again in history, right? And so he sees his friends making money, lending out money like this. He's like, why can't I do this? After a friend chartered a savings and loan, and he decided to do the same in 1984, his timing was excellent, though it looked the opposite at first, because the thing's about to pop. And then when it popped, there was a several-year delay in getting new charters for this. But he was already grandfathered in.

So it says, the delay, however, worked to Andy Beal's advantage. The avalanche of failing SNLs created a demand for the kind of bargain-hunting Beal and his thrift were prepared to

undertake. It just called him a bottom feeder, remember? The purchase of loan portfolios from closed banks and SNLs. That's what he's after. This is where he's going to build his entire fortune. Made a little bit of money, like a couple million dollars. That's fantastic money for any normal person, but this is where he's going to eventually turn into Beal Bank, and that's just going to make him one of the most wealthiest people in the world. Like the HUD auctions Beale attended a decade earlier, Washington was selling assets at a fire sale prices. So again, he exposed himself to all these other experiences and then used that knowledge later on to apply it to a different domain. So just like the federal government was selling entire apartment complexes

for way under value, they're doing the exact same thing with old assets of failed banks. Beale started his institution. It's eventually going to be Beale Bank. He converted it from a thrift to a savings bank in the 1990s with $3 million of his own money.

By 1996, when the distressed loan business began petering out, Beale Bank had grown to $1.2 billion in assets. In 1995, it generated $27 million in income. The next year, it was $48 million in income. So we see how fast this business is growing. By the year 2000, it was over $100 million a year. Despite his great and increasing wealth, Andy Beal never bought into the cultural equivalence of wealth and celebrity.

If his money had made him a public figure, it was not with his consent. To the contrary, he delighted in his relative anonymity. He rarely gave interviews and usually regretted it afterward. And he kept his business out of the public eye as much as possible. Bad boys move in silence. He never indulged in sports teams, television stations, or reality TV shows. None of his companies had ever gone public, so he never had to court investors or disclose anything about his operations to them or to the Securities and Exchange Commission. This is like my idea of heaven. His financial services entities filed the reports required by government regulation and nothing more.

Andy seemed like an ordinary guy. On casual observation, it appears there is less rather than more than meets the eyes. Taking a visitor to dinner, he drives a several-year-old clunky SUV. He doesn't have a chauffeur, no limousine, and no Mercedes. This is typical of his travel. He has never owned an airplane. The idea of spending $20,000 to fly from Dallas to Vegas, the approximate cost if he owned

or chartered a private jet, is beyond ludicrous to him. American Airlines flies back and forth between the cities 10 times a day, and the round-trip ticket costs under $300. That is the cost of a coach ticket, which is what Andy Beal purchases. His interests were unusual, as were his approaches to pursuing them. The only common thread was that once Andy's mind became engaged, he didn't do anything casually. So we learn a lot about Andy there. I think the main thing is he has enough self-confidence that he's fine thinking for himself. And even though people, he could look around to other peers of his, and they would engage in behavior like spending $20,000 for a two and a half hour flight

he's like that that just doesn't make any sense to me um it's not that big of a difference between what they're paying and what I'm paying is $19,700 I can wait 30 minutes at a gate to save $19,700 um okay so oh more more okay so I actually need, so now we got to the part of the book where this is my first introduction to Andy when I read Space Barons, right? And I didn't even bring up the fact that he started a company with his own money. In fact, SpaceX leases or bought

the property Andy had in Texas, and now they utilize it for their rocket company. But it says, in 1995, Beale read an article about the coming boom in satellite technology. He thought the relatively few companies capable of launching satellites and wondered if the cost of sending payloads into space could be cut substantially through greater competition. That's exactly what Jeff Bezos and Elon Musk believe. He spent two years learning. In 1997, the company, now called Beale Aerospace,

began scaling up. For three years, Beale Aerospace persevered over enormous obstacles. During the entire project, Beale had to compete with Boeing, Lockheed Martin, and NASA itself. They were all entrenched giants with government resources or rich government contracts. In October 2000, Beale Aerospace announced that it was ceasing operations. So there's more details in the book Space Barons if you want to know about this. I'm just giving you a basic overview in case you didn't know. It was reported that Beale spent $200 million of his own money on the project. Some silence there because that's an insane amount of money.

He lost $200 million insane amount of money. He lost 200 million on his own, of his own money. It's also why I have a lot of respect for him because he's got tons of skin in the game. He's fine. He's not taking loans and saying, oh, you know, I got $200 million worth of loans or investors' money. He's like, no, I'm going to do this myself. He had refused to comment on the cost, but maintained two things. First, he had no partners and bore all the costs, whatever they were, out of his own pocket. Second, this is a direct quote from him, it was a wonderful experience and I wouldn't trade it for anything, not even the money I spent on it. Just four months after shutting down Beale Aerospace, he wandered into the Bellagio poker room. Small wonder, given that he returned twice in less than two months, that he committed himself to improving. If Andy Beale's history proved anything,

it was that he did not attempt anything casually. I'm repeating myself here because the author repeats himself. It's very important for you to understand Andy Beal. Zero or 100. He's not going to dilly-dally. He had succeeded at most, though not all of his major projects. His successes had come against long odds. His accomplishments, even in failure, had been impressive. Later in the book, he's a very smart person, you know, he's, he's a very smart person. He's not infallible. He's still human, just like you and I. And he winds up making

mistakes in the poker room. In one case, I think he loses like 10 or $15 million in a relatively short time, maybe four days, something like that. And what was interesting to me, it comes after I read this. And for some reason I was, it comes after I read this. And for some reason I was getting upset. I'm like, Andy, what the hell are you doing? You're frugal. You don't spend money on superfluous things. You approach money making as an intellectual exercise.

You won't spend $19,700 more on a private jet charter, and yet you give away $15 million playing poker. And I realized an inconsistency of my own thinking. I was like, well, why does the fact that he lost $15 million strike you as, it's not my money, first of all. It's not infuriating. That's the wrong word. But, like, you know, I was agitated at what I was reading, I mean, that's what great books do, right, they provoke some kind of emotional response, could you imagine how boring this podcast would be if I didn't get excited, or frustrated, or anything, you know what I mean, like,

that'd be boring, and I was like, but you were just clapping the fact that he risked $200 million. Like he had the fortitude and like the gumption to say, hey, this is a really hard problem. I'm willing to risk my own money to try to solve that. And you thought that was admirable. And yet it's the same thing. Now, obviously, the outcome is not the same for humanity. It's better if we have access to more space through dropping how much it costs to access it, right? We might find things out there that could benefit our life back on Earth. But it's the same threat.

You don't know. What does Jeff Bezos always say? Like, you have to innovate and you have to take risks because if you knew it was going to succeed before you did it, it's not innovation. It's not a risk. And so Beal, the two different domains, I'm going to try to lower costs in reasonable rocketry. And I'm going to see if I can, if I have the skills, if I have a weird approach that I could beat poker pros. In both, what I realized is the inconsistency of my thoughts was in both cases, Andy is risking assets, financial assets, on whether

he could solve the problem or not. So I just realized I had to check myself. I'm like, oh, you're not even interpreting this correctly. If you sat down and thought about it a little bit more, you'd probably arrive at a different understanding. All so this is how andy biel finds an edge in poker uh he goes he goes to vegas for a weekend or whatever gets his ass kicked and so he goes back he's like i need to learn more so i need to find another edge because he'll he'll constantly make improvements and they'll work for a little bit and then he'll take a couple steps back and he'll do this over and over again which i think is a good way to approach any problem right so it says he wrote his own poker program in basic. It was very simple. It dealt out combinations of 52 cards in the deck and ran large numbers

of trials to determine the likelihood of different hands prevailing. In addition, he could set up situations and run them a million times to see the likelihood of different results. If you dealt out a million hands of poker heads up, you found out some interesting things. He knew, why is he doing this? Because he knew he would never have the probe's faculty for reading opponents, but he would put himself against any of them for knowing the percentages. So he's looking for a mathematical edge, something that they might not be doing. And this is the result of studying poker for almost a year. Howard, he's replaying that guy Howard who took him for over a million dollars relatively quick.

Howard immediately realized that Andy had focused a lot of attention on poker since being blown away in their last heads-up encounter. From Wednesday through Saturday, Andy Beal systematically mowed down the best players in the world, racking up decisive wins. This is another trip.

Between Tuesday and Saturday night, Andy Beal won over $5.3 million. And this is putting a financial strain on the pros he was playing. It says, the players had varying amounts of non-poker assets, some of them substantial accessing those assets would require breaking a cardinal rule of money management this the pokers poker players have developed their own um buffer or boundaries for how they manage their money and one cardinal rule is once money leaves the room it doesn't come back and now even though i said earlier there's a lot of back and forth. Andy wins some, Andy loses some. You know, if you want to know the outcome of the game,

you can, I mean, you can Google if you don't want to read the book, but you should read the book. It's fantastic. Now, I want to isolate though, what's happening here is when he starts studying, starts getting better. And this is now the professional poker players referencing Andy. And I think it's, which makes him so makes him such an interesting person to spend time reading about or studying. He says, that's a hell of an accomplishment if you could pull it off. To come to Vegas and play in a game bigger than has ever been played and face seven or eight of the top 20 players in the world and win, that is one hell of an accomplishment.

So that's exactly what the book is about what's happening now this they talk about the biggest game ever played this is before eventually the stakes get higher so they keep they'll set the record for the biggest individual game and then they'll keep going higher and higher until the very end the last few chapters of the book talks about the biggest game now eventually the edge he finds the pros pros find a way to neutralize it. And so, and he has to respond. And what he does is, this section is very Ed Thorpe-ian. If you listen to the podcast I did on Ed Thorpe. It says, closing himself off to the pros became an obsession with Beale, and he went far beyond conventional measures. With the amount of time

he spent deliberating before acting, giving away information, he developed a way to randomize his decision time. So he talks about the time he sees the cards and the time he acts on that information. So he's like, maybe I'm giving a tell and I don't even know because these guys are masters and women are masters at finding tells. So he was like, I'm gonna come up with a way to randomize this. He built a tiny battery operated motor that he placed inside his sock. The motor would issue a small vibration every eight seconds.

Andy would make his decision. He could either fold, check, call, bet, or race in whatever amount of time it took to decide. But he would wait to act on that decision until the next vibration. That could be a half second or up to eight seconds after he actually decided what to do. There would be no pattern to how long it took Beal to bluff, slow play, check and call, or make any other decision during a hand. This section I'm just bringing up a favorite idea of the podcast the books

are the original links this is about a guy that Andy plays against and meets during his expeditions in Vegas his name's Lyle Berman. Berman the wealthy venture capitalist casino operator world poker tour founder was a member of the group for the first time he had a lot in common with andy beal but they had never met both men were gamblers who had followed their instincts and curiosity rather than conventional wisdom to become successful in many different businesses so he's got in addition to founding the world poker tour being a venture capitalist a casino operator, I think, one of the founders and CEOs of Rainforest Cafe. He's got a weird collection of business ventures in his life. He also wrote his autobiography. It's called I'm All In. So as soon as I read about that, I found the book,

and I ordered it. So I don't know when, but it would eventually be a new episode of Founders of the Future. Okay. At this point, I'm fast forwarding a bunch to this story, like I told you over and over again. This time he's back, okay? And he's coming back after getting rocked and losing a bunch of money. And that's the thing, like, you can make an adjustment, and you could get a little bit of success, but you're going to run into another obstacle. It's not just like this straight shot up and Andy understood that because he's succeeding in a bunch of different domains. But what he does here is smart. He identified his weakness and then he he enlisted help to correct them. After nearly six months of

preparation Andy Beal thought he was ready. He asked Craig, so Craig is somebody that works for his bank, also plays poker, and they were practicing back in Texas. So Andy realizes, like, he gets so excited that he'll start winning. His system works at the beginning, and eventually he starts playing well past the time of he's exhausted and not focused, and they just run through him. So he says, he asked Craig if he wanted to come along to Las Vegas to keep him company, to be on the lookout for potential cheating, help evaluate his play, and to let him know if he was playing too many hours or letting his concentration slip. Craig accepted in an instant. So the last part of that, about letting your concentration slip,

what Andy realized is it's more noticeable to other people than it is to him. Because if his concentration is slipping and he's playing sloppy, he's not noticing that. All he's noticing is, wow, I was up 5 million, now I'm down 7 million. That's a big problem. Let me find ways to – so essentially the main point of me bringing this up to you is analyze your weaknesses and find ways to make – if you're not going to tournament strengths, at least to minimize

or to negate the potential effects of your weaknesses, which is exactly what Andy's doing here. This idea I mentioned earlier, but this is now explicit. This is the benefits of facing tough competition. Andy Beal had always known that to beat the professionals, he would have to grab every conceivable edge. There's that word again. They were just too good at too many things. He couldn't overlook anything relevant to the game

to find his advantage. I think that's also, it's exposing yourself to outliers, to the end of the spectrum, where he's not just playing with the best local poker player in Dallas, Texas. He's playing a collection of the top 20 poker players in the world. And you're going to learn rapidly when you do that. Now, he has a bankroll big enough that can justify paying for his education, where a lot of people don't. But I think this idea can be applied to a lot of different domains. Common trait, high levels of self-confidence.

A common characteristic for high-stakes professional poker players is a confidence bordering on arrogance. Playing against other pros and skilled amateurs night after night was so competitive that players would crack under the constant pressure unless they truly believed that they were better than anyone else. This is interesting to me because this is a thing professional poker players value. No teams, no interdependence, no politics, clarity and simplicity. I also think that we're going to see more and more. My own thesis behind this is that the future of work is going to be much smaller teams. You might have a company that has 100,000 customers and maybe three employees.

It's actually the premise of that book I did a podcast on. It's on the Founders Reviewer Only feed. I'm eventually going to make it, like redo it for the Misfit feed, but it's called Unscaled. It talks about this. It's essentially the opposite of what happened with the economy, the benefits of economies of scale and say post-industrial revolution to like that trend is reversing now in some domains. And so what the reason I bring this up is because what I think professional poker players value, I think a lot of other people

value, especially introverts. And I think we're going to be willing to be able to take a lot of these traits from professional poker and other domains like music and certain, uh, like even certain sports, like individual sports and apply it to, to your craft to business. So it says poker players are not team oriented. Most of them chose poker because they wanted to avoid the interdependence of conventional work. Uh, The thing, and then they talk about, like some poker players elaborate on this. The thing I really like about poker is the lack of politics. I mean, who really likes company politics?

No one, right? You could just sit down at the table and you're competing mind against mind. There's no pretense about it. There's no office. There's no backstabbing. So now Andy's back for another trip's no backstabbing. So now Andy's back for another trip. He's done more research.

Every time he'll go home, usually for a few weeks, but most times for a few months, and really try to improve on what he's doing. So let me just read, I think my note might even be longer than the section I'm gonna read to you, but it says, Andy gave out no information, but collected and learned from his competitors. So it's information.

He's essentially engaging in asymmetric information warfare here. But collected and learned from his competitors. He was aggressive, but under control. Under control this time, I should say, because he lacked control last time. And the continuing of my note says, this would increase your chances to win at a lot of other things, not just poker.

So here's what it talked about. Ted, one of the professional poker players, Ted agreed that Andy was outplaying them. Beal had made himself hard to read and was doing a good job at noticing when they changed speeds. He was always dangerous with his aggressive style, but if he could continue to keep such tight control of himself and remain methodical, he had an excellent chance of winning. I guess the early years of that world poker tournament, whatever it's called,

you've probably seen it on all of the networks. Before, you know, at the beginning of the book, it didn't exist. And then once it starts coming on TV, there's like an explosion of popularity. So tons of more people start playing poker. You have, you know, there's stories of people that enter a tournament with $40 and wind up winning $2.5 million. So, of course, when you hear stuff like that, just like anything else, humans are going to like flock in there. But they were also surprised at how big the ratings were. And it's not really surprising if you think about this sentence, he says, the idea was spreading

that poker players in general could be unusual, exceptional, attention-worthy people. I bring that up because it's the same for the founders that you and I study. I am extremely attracted to unusual, exceptional people. I like learning from them. It's fun. I think it's a great way to spend your time. And so we happen to do this in the domain of say, entrepreneurial entrepreneurs, for the most part. But you know, people find it worthy poker players study, I think, why do people watch professional sports, because it's one thing to watch a

basketball game at your local park, and it's another see something in the NBA, you want to see things done at the highest level. I just think it's a very common human trait. Now, I just told you that what Andy was doing was smart. He's studying, he's coming back every time, but the edge appears for a little bit and then is whittled away. And so this is the end. Sometimes it's whittled away through, not because we don't know better, because we can't, we're incapable of doing better at the time. So this is the difference between knowing and doing. His aggressive style and understanding of the fundamentals made him competitive. He felt his problem was that he was letting the pros get to him.

With nothing else to do but play and no set times to finish or go home, he was staying too many days, playing too long, and losing his focus. Once he became fatigued, he was easier to read. He knew he was becoming careless in many little ways. So let me pause there. What do you mean? We already know this. That's why he hired, he asked somebody that works for him to come and make sure he doesn't do this. But the difference between knowing and doing. One of the things he mentioned to Craig before the last trip was for Craig to let him know if he was playing too many hours or getting sloppy. Craig did exactly that, but Andy ignored him. Just another half hour or, oh, just a few more hands.

He was learning the game, but he had not yet learned to manage himself. That's so important because it's so human. If this is happening to Andy, undoubtedly it's happening to us. I veer off the path all the time. I do dumb shit all the time, stuff I know I should not be doing. Perfection's not the goal. But if we chase perfection, we'll eventually attain excellence. That's the goal. And so just understanding, it's not like, oh, I solved this problem and I'm done. No, it's a constant battle over and over again to stop you from sabotaging yourself.

Andy Beal is sabotaging himself. He's losing millions of dollars. It doesn't matter if he has a billion. Lose $15 million is going to hurt. It's going to make you feel uncomfortable. And I think, again, knowing, we just talked about the value of studying extremes. Understanding this happens at extremes. Understand it's probably going to happen to us.

Let's just be aware of that. And we'll work our way through it. Here's a note I left myself. It's a question. I don't know the answer to this, but I do want to know the answer. How can we simulate an environment like this for ourselves? Andy had played against the best poker players in the world for nearly 300 hours. It was impossible to stick around against this level of competition and not improve.

So maybe a proxy for that is studying the lives of exceptional people, reading biographies. But I do think what the author said is true. It's impossible to stick around against this level of competition and not improve. You just learn too much. So I just mentioned, you know, we all VR off the path. Here, Andy VRs off the path, and it costs him a lot of money. According to Todd, he won the group more than $13 million in two days. That's $13 million of Andy Beal's money. Affording the loss was no problem, but Andy Beal valued his money much more than he demonstrated at the end of the of the game he would fly commercial to save twenty thousand dollars on a private jet that was

a no-brainer he would even fly coach to save five hundred dollars but he sat but he sat there with todd that's a professional poker player he's playing not doing what he trained himself to do not having fun and gave away the last of the 10 million dollars. He was disgusted with himself. He had done the very thing he knew led to his defeat in the spring. He allowed himself to be worn down by playing too much, then playing badly in that condition. He didn't know whether he wanted to get away from poker forever or try again, but without making such a stupid error so I just saw this interview with the the fighter Conor McGregor and he's a very fascinating person even if you're not into watching fighting or any kind of sports at all

I'd watched the documentary it's on Netflix it's called notorious and you have Conor McGregor did the insight that this person had is insane where it shows him not he shows conor mcgregor in his early days when he quits his job i think he's like a plumber's assistant or something that he's in ireland he has no money uh he's getting he's him and his girlfriend uh at the time are having to live with his mother uh he's getting mail from like debt collectors and all kinds of stuff. And all he's talking was like, I know I can do this. I'm dedicating all of my time and effort thinking about how to become a professional fighter. I know one day I'll have, I'll be a champion. One day I'll have more money than, and I'll be able to set my mom up forever. My kid,

my grandkids will be rich. And what's interesting is it like shows him say this stuff when he had no reason at all to believe it. It's a fascinating documentary. It's only like an hour and a half. And you go from him telling you what he's going to do to seeing him do what he's going to do. And he does that through consistent effort, through learning, through watching what he pays attention to. He talks about this over and over again. And then what happens?

He's 28 years old. In one year, he makes like $100 or $150 million. And then he starts getting arrested, starts partying, starts drinking. He's doing all the things, the opposite of what got him in that position to begin with. This is fundamental to our nature. We have to understand that we are prone to make those same mistakes as well. So just recently, he decided, he's like, I'm not even the person I'm like, I don't like the person I've become, I'm disgusted. And so he goes back to the basics. He just starts focusing on fighting, starts focusing on training, starts focusing on being a good person, staying out of trouble,

doing all this other stuff. And then he gives this interview. And in it, he says listen when you know what you what you should do and you don't do it it makes you sick i felt that way andy biel and why am i bringing this up uh so i felt that way conor mcgregor felt that way and where we are in the story andy biel is feeling that way he knew what to do and he didn't do it and that feedback that feedback loop he's like oh i'm disgusted with myself being disgusted with your with your actions with your current state in life with the decisions you're making is a very powerful tool to implement change i don't even know if we're capable of implementing long-term change without that feeling so i just want to bring that to your attention because i think it's something that um should keep in the front of our minds.

Use the feedback that your inner monologue gives you to make changes, to adapt, to overcome whatever it is you're doing in your life that you know that you should not be doing. Okay, so now we got to the point where the big game happens. I'm going to admit, I'm not going to tell you what happens, okay? But I do want to share this weird thing. And I left a note for myself. What a bizarre, nonchalant way to start an important day.

This is the day that Andy, he's like, this is it. This is the day I've been waiting for. I'm going to finally get to play the stakes as I want to play them. But how he starts his day and like, for me, I'd be like, focus. I wouldn't want to do anything. He doesn't do that. On Wednesday, May 12, 2004, at 3.40 p.m., Andy Beal and Todd Brunson began the richest poker game of all time, 3.40 in the afternoon. How did Andy spend that day? He started it by wiring $15 million to Bellagio. Then he went and joined thousands of poker players who were trying to get a discount on a $10,000 buy-in

for a poker main event by entering $1,000 single-table satellites. It's almost like a tournament before the tournament, right? And he entered three satellites but did not win a seat. He's about to play for $15 million, and now he's doing a $1,000 buy-in. So, sorry. He did not win a seat.

It was a tedious experience mostly pursued out of curiosity. After that, he attended a Las Vegas business meeting from 2 o'clock to 3.15, and then he arrived back at the Bellagio. His $15 million was in the cage, and Todd Brunson was ready to play. Okay, so then here comes, over two days, they have the largest game in history. And I'm just going to end here with the reflection by the author. He says, I had an opportunity to learn from some very wise gamblers.

I would say founders exist, so you have the opportunity to learn from some very wise entrepreneurs. I can say two things for certain. First, it will be at least several decades before there is a higher stakes poker game than Andy Beal played against a collection, like a rotating collection of pros, on May 12th and May 13th, 2004.

And second, I wouldn't bet you on it. All right, so I'm going to leave the story there. If you want to read the book and support the podcast at the same time, please buy the book using the link that's in your show notes. It's available on your podcast player. That link, if you click it, I fixed it recently before it would open up into like a, like a webpage. It doesn't make any sense. So, cause then most people, I mean, almost everybody's listening to this on a mobile device. Now it opens up directly into the Amazon app. So the buying experience is a lot better for you, hopefully. But yeah, buy this book. It also links you right to the other, what, 100? It's like 112 or let's say 114 books on that list. I don't know the exact number at the moment.

But this is the mindset I have going into this. I just want to talk to you about something before we leave. Let's say I've done 114 books up until this point, right? The way the mindset I want, and it's been influenced heavily by the people I'm studying, is the way I look at, okay, 114 books down, great, 1,000 to go. Now, how long would it take me to read and analyze and make podcasts on that analysis of 1,000 books? A lifetime. And that's what I want founders to be. I don't want it to be another thing. I start and stop. I don't

want to quit at this. I think what we're doing here is very important. And the more you study it, the more you realize every single other person we study are doing, have done the same thing. They learn from and are inspired by the life stories of people that came before them. So to that end, I do need your help, uh, to get to book 1,114. Um the easiest way to, this is a Misfit episode, so you're already supporting the podcast financially, which is good. That's the most important thing to do. But I just do want to ask you if you could just help spread the word as much as possible. Email your friends about the podcast, text them links. If you're in, there's been people that are in like all these entrepreneurial or investing groups like Facebook groups or whatsapp groups

or telegram booths I don't I'm not in any of that so I don't know what they're talking about but if you're in that let the people know that if you're you're usually we group based on interest right so if you're interested in this undoubtedly you're part of some kind of social group whether it's your family friends professional groups that it would be also interested in that. So I am just asking for the favor that you tell as many people as possible about the podcast and not just today, but in the future. Every little bit helps. And that is, you know, on an individual basis, what you can do, because I think we're going to learn a lot, you know, from coming 114 entrepreneurs, but we'll

learn even more. That knowledge will compound just like money compounds over 20, you know, multiple decades. How cool would that be if, you know, this, this is something that can last over multiple decades. And we learned from a thousand, 15, I mean, there's been, well, there's more successful and interesting people in the, in history of the world than, you know, I can't live long enough. I could do this for another hundred years and not be able to cover them. But I do want to do as much as possible. And so if you just keep supporting financially and keep telling people that this podcast exists, because that's really, you know, I went back and made a list of all the podcasts that I listen to and that I listen to all the time, meaning almost every episode.

And almost every time I found that podcast through friends telling me. Because an unsolicited, authentic endorsement is the greatest weapon that any product or service has. And especially for podcasts. So anyways, that's it. I'm r or service has, and especially for podcasts. So anyways, that's it. I'm rambling.

Thank you very much for listening. I will be back very soon.