You Gotta Have a Plan

by Henry Jacobson

Regardless of our walk-of-life, we need to have a plan. Just winging it doesn’t work.

When I moved my family to Las Vegas in August, 2009, to play live cash game poker on a full-time basis, it was a hell of an interesting thing to do, but I couldn’t have done it without a plan.

I’m referring to a plan to build a business and have the discipline to invest my time, attention and capital in the right way.

We all need to eat right, get exercise and plenty of sleep. We need a balanced life outside of poker games, casinos and card rooms. They’re just our office. I have a wonderful wife and a son who plays little league. I want to have enough time and energy to go on dates with my wife and help coach the team. If I don’t invest in bringing balance to my life outside of poker, the whole thing won’t float. I’ve come to believe that’s true for any walk-of-life.

As a young person, I played competitive tennis on a high level. To be successful required training, discipline, skill and healthy living. I understand poker the same way. Poker is a straight-up, non-political, game of skill. We succeed or fail based on the merits of our money management, training and ability. There isn’t much room for screwing around and if you enjoy playing a game for a living, it shouldn’t matter. If you do have lifestyle “leaks”, you will go broke and end up quitting soon enough. I didn’t know any professional tennis players that had the ability to burn themselves out with overplay on one extreme or partying on the other and still show up day-in-day-out with their “A” games. Poker is no different.

This has always seemed like really basic stuff to me, but I’m constantly reminded by really good poker players how badly planned and managed their careers and bankrolls are. Consequently, I’m going to get into the weeds on this to bring light to an important but misunderstood subject.

Theory in Practice
The following illustration may prove helpful to understanding the financial realities of being a cash game poker pro. Keep in mind that this example is based on playing No-Limit Hold’em exclusively. For the live player making a go of it for the first time, playing No-Limit Hold’em probably makes the most sense as it is the variation that most card rooms spread as much or more than any other. This is an important consideration for the professional looking for games on a day-in-day-out basis. No Limit Hold’em will usually provide the best game selection. For the poker player who considers themselves a professional because they beat the poker games they play in, but always seem short on cash because they can’t beat the sports book, craps tables and strip clubs, this may also prove helpful.

To illustrate an example, If we start with a poker bankroll of 50 buy-ins for No-Limit Hold’em (one buy-in = 100 big blinds) and get to the point where we’re making $30/hour playing $2/$5 No Limit Hold’em, and we can live on $20/hour, we can play poker for a living and possibly have a lucrative future as a player. At $20/hour x 120 hours/month, we can make $28,800/year and have a growing poker bankroll. In this example, our bankroll should start at 50 buy-ins x $500 = $25,000, and be growing at a rate of $10/hour x 120 hours/month, or $14,400/year. If we can maintain a full-time schedule for a year, we should have a reasonably stable income of $28,800, a decent lifestyle and a $39,400-and-growing bankroll. At this rate, we will be able to move up in stakes to $5/$10 No Limit Hold’em in about 2 years. You’ll note that we’re describing “full-time” as 30 hours of play per week, which is less than the traditional 40-hour work week. This is because we have to account for travel time to-and-from games, time spent waiting to be seated in games and time spent studying away from the table. When we take all these factors into account, our work week can reasonably involve 40-50 hours per week of poker-related work, give or take a few hours.

We should note that this formula allows us to contribute $20 of our hourly win rate to our “salary”, with $10 of our hourly win-rate going towards growing our bankrolls. Our hourly wage should not exceed two-thirds of our maintainable hourly win rate. Since we will be paying ourselves based entirely on the number of hours we play, and not on whether the hours were profitable or not, we must be careful not to over-estimate our win-rate. In fact, until we have adequate results on record to conclusively establish a sustainable win rate, we should err on the downside when determining the percentage of our actual win-rate to pay ourselves as an hourly wage.

We are going to be our own bosses and enjoy a lot of freedom, but we’ll be working hard and not making a lot of money.

The tricky part of this plan is the convergence of the 50 buy-in bankroll and the skill level to beat $2/$5 No Limit Hold’em for 6 big blinds per hour, which is beating it soundly. At this level you’re a reasonably solid No Limit Hold’em cash game player but not a great one, and you’re not getting rich.

Different players find their ways to this point in different ways:

  • Some have the money for a poker bankroll because of a prior career, inheritance or gift and were in a financial position to invest the time to develop their skill in smaller games while legitimately working their way up to a $30/hour win rate.
  • Others need less money to live and can play their way up by starting with a smaller bankroll they cobble together through the addition of a part-time job and a leaner playing schedule. Becoming a “prop” player or picking up some dealer shifts in a local card room can be a great way of supplementing our poker earnings and has the double benefit of keeping us immersed in the action.
  • Still others can find backers to stake them, which usually means giving up 50% of their profits, plus the 100% they will give up if they find themselves in “make-up” (that’s the money you owe your backer when you find yourself in a losing position with your stake). That said, being staked has provided a successful path for many players.
  • And other variations.

All involve hard work and discipline, and all involve having a solid plan.

A Word on Variance
Poker is a game that involves a high degree of variance. “Variance” is poker’s euphemism for “luck”, or in the case of “negative variance”, bad luck; and in the case of “positive variance”, good luck. The one we worry about is negative variance. We worry about it because we know it will be there about half the time and we know that half the time can sometimes feel like all the time. It’s also the case that negative variance can occur over long periods of time. This is why we need to be bank rolled properly and possess the mental toughness to tolerate long downswings while continuing to work on our games. It is the potential for long downswings due to negative variance that compels us to pay ourselves and hourly rate based on a percentage of our sustainable win rate. This way we are assured that we will be paid regardless of how variance is affecting our play over time. This will lower the stress associated with a long downswing because it won’t be affecting our income.

If we become good poker players, study away from the table, live balanced lifestyles and manage our finances and bankrolls properly, we should be able to tolerate the impact that variance will invariably bring to our bankrolls. We will also see our bankroll grow if we stick with our plan. A growing bankroll is critical if we ever want to get beyond a $30/hour win rate and move up in stakes to $5/$10 and $10/$20 No Limit Hold’em and bigger action variations such as Pot Limit Omaha.

Variance

 

A Word on Shot Taking
There are those who support an approach to bankroll growth that includes taking shots at higher stakes levels as a strategy. While I am in favor of finding ways to expose ourselves to bigger games and the way they play, I am not in favor of exposing ourselves to downswings that don’t fit our bankrolls. I have found that for most players who have worked hard to build their bankrolls, taking a big hit as the result of a shot gone wrong can be demoralizing and tilting. Poker is a marathon, not a sprint. We don’t want to subject ourselves to the emotional pain and bankroll damage that a shot gone wrong can produce. Poker is stressful enough. If we are one of those people who have the temperament to lose 15-20% of our bankroll in a single session and shrug it off, some form of controlled shot taking may be for us. It’s just not for me.

An approach to exposing ourselves to bigger action that’s worked well for me, is to sell a portion of our action in a bigger game. Let’s say, for example, we are a $2/$5 No Limit Hold’em regular with a $30/hour win rate and we want to expose ourselves to $5/$10 No Limit Hold’em action without exposing our bankrolls to a loss beyond what we are willing to lose in a single session of $2/$5 No Limit Hold’em. For the sake of our example, we’ll assume that our stop-loss limit for a single session of $2/$5 No Limit Hold’em is three buy-ins, or $1,500 (which I recommend). The same stop-loss limit in a $5/$10 No Limit Hold’em game would translate to $3,000 for a single session.

Subsequently, in order to limit our downside to $1,500 in the $5/$10 No Limit Hold’em game, we would need to sell 50% of our action. If we are a full-time $2/$5 No Limit Hold’em regular with a 6 big blind per hour win rate, we should not have too much trouble selling 50% of our action to our friends and other players that respect our game. As a 6 big blind per hour winner in $2/$5 No Limit Hold’em, we are a favorite to beat $5/$10 No Limit Hold’em assuming our game selection is reasonable. This should be a safe assumption based on our $2/$5 No Limit Hold’em success. Consequently, our action carries a positive expectation for our backers. I have used this strategy successfully to boot-strap my way all the way up to $25/$50 No Limit Hold’em. The beauty of this strategy is that when we get to the next stakes level legitimately, we will have done so comfortably and without ever appearing to be, or feeling, we are “scared money”. Our downside exposure will have been bankroll-appropriate, and we will know the game and the players when we get there.

Our action can be sold in increments of 5%, 10%, 20% or more. My advice would be to sell increments of 20% or less. A backer who incurs a small loss in a new backing arrangement will be more inclined to give us another shot. If we can establish a winning track record and the perception that our action carries a positive expectation, we will develop a reliable group of backers to which to sell action as we move up the stakes levels.

shot taking

A Word of Caution about Action Selling
When selling action, we need to be very clear with our backers regarding the terms of our arrangement. We should establish a clear understanding of what our stop-loss limit will be so that our backers know what their maximum downside exposure will be. We should also be clear about how we will communicate with them during a session. For example, I always text my backers to let them know the time I sit down in the game, when I end the session, and my profit or loss for the session. Finally, we should always establish a clear understanding of the time and place we will meet with a backer to pay-off in the case of a win, or collect in the case of a loss. If we are sending or receiving the funds by wire from a bank or e-wallet, the details of those arrangements should be clearly established in advance. Settling promptly and without fail is the key to establishing trust, which is critical to any live backing arrangement. With trust, the arrangement can evolve in a positive direction that involves more flexibility for the player.

My Experience
I had a very rigorous plan. I had enough capital from a prior career to hire a solid and affordable coach and the discipline to develop solid play and study habits. My coach went by the online name of “Jennifear” and some of us who read this will know her.

I started at the $1/$2 No Limit Hold’em level which is the smallest live No Limit Hold’em game spread anywhere and certainly in Las Vegas. I started with a 50 buy-in bankroll (50 x $200 = $10,000). Once I had increased my bankroll to an amount sufficient to play $2/$5 No Limit Hold’em with a 50 buy-in bankroll (50 buy-ins x $500 = $25,000), I moved up to that level. Once I had increased my bankroll to an amount sufficient to play $5/$10 No Limit Hold’em (50 buy-ins x $1000 = $50,000), I moved up to that level and so on. I earned each advancement.

Henry Jacobson WSOP 2016

Henry Jacobson

As my two-year run in Las Vegas was coming to an end, I had built my bankroll to approximately $120,000 and was playing a mix of $10/$20, $5/$10 and sometimes, if the bigger games were particularly tough (and I am a game selection nit), $2/$5 No Limit Hold’em. I accomplished this in 100 weeks.

During this 100 week span, I maintained a “Daily Bankroll and Play Journal” in which I would write reviews for the hands I played in each session that bore review. I would analyze them to the best of my ability and on a weekly basis forward them to Jennifear for further review. Jennifear also hosted a weekly online study group that involved both live and online players. These types of on-line study groups can be facilitated on a zero-cost basis using freeware like Skype, Team Viewer and Mikogo.

In addition to documenting hand reviews in my Daily Bankroll and Play Journal, I kept track of my bankroll, kept notes on other regulars, noted games and stakes played, hours played and time of day, profit or loss for each session and the salary amounts I paid myself from my bankroll. Over a 100 week period I recorded more than 1,000 pages of journal entries.

I kept track of the hands I wanted to study by taking breaks from the game as often as necessary and entering notes into a notepad application on my mobile device. I also use a application called Poker Journal to record all my results and other financial events affecting my win rates. With time, I only needed to record my hands once at the end of each session as my ability to recall small details from the action steadily improved (as does the recall of all players who are paying attention in-game).

With the exception of the use of on-line hand ranging and equity simulation tools, opponent evaluation and live play hand review is mostly an analogue process. Consequently, live players must be particularly diligent when in-game if they are serious about improving and moving up the stakes levels. Players that don’t pay attention to the action in front of them are giving away a big edge while not putting themselves in a particularly good position to work on their games away from the table.

For more information on how to could join the Bear Hug Poker team, please take a look around our website at www.bearhugpoker.com. If you’re a hard working, professional poker player, fill-out an application form and we’ll be happy to consider you for a stake. Also check out our weekly video postings on YouTube (search for “Bear Hug Poker”), Twitter and Facebook.

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