Deuces Wild? Finding the Right Partner

"It's amazing what you can accomplish if you do not care who gets the credit."

– Harry S. Truman

Todd and Zach used to be best friends. Now they don't talk to each other. When they decided to quit their day jobs and play poker full time, they needed a hedge against going broke. They figured by pooling their money and splitting the profits, they would reduce their risk. It seemed like a perfect marriage.

Right away, Todd got hot and Zach went on a losing streak. Now that his bankroll was bigger, Todd didn't need Zach's losses bringing him down, so he broke off the partnership. What he needed was a line of credit – not a partner – and dumping Zach cost him one of his best friends and his reputation.

Many poker players choose to build partnerships to reduce risk, but most of these relationships turn sour. Poker shows that money often brings out the worst in people.

A partnership, like a marriage, hinges on two important variables: finding the right person, and being the right person. You can change and evolve, but you're drawing dead if you think your partners will do the same.

Most people overestimate their own value and feel let down by their partners. It's easy to forget your partner's contributions when you are carrying the business. But if you're keeping score to begin with, there are probably some deeper problems.

The first and most important step when starting a partnership is to figure out where it may fail because of you. If you're a high-fluctuation live player or a streaky tournament player, the biggest reason you will fail is running out of cash. Thus, it makes sense to find a partner who can meet those needs. One choice is to find a backer with deep pockets. His gain will come from taking a piece of your big winnings. Your gain is the security of knowing that you'll have the resources to stay in play. Another choice is to partner with a player who is more of a grinder, who may not have as high an hourly win rate as you. He'll benefit from your big scores, and your fluctuations will be balanced by his consistency.

A cyclical business can minimize fluctuations by partnering with or creating a steadier line of business in-house. The business of home mortgage refinancing (refi) is dependent on interest rates; business booms when rates drop and fizzles when rates rise. The business can fail due to the state of the economy. That's why it's a natural to partner with a traditional mortgage lender that specializes in the steadier business of financing first-time homebuyers. The boom times in refi create a windfall for the company, while the steadiness of first-time homebuyers keeps the business afloat.

Another critical step of forming the right partnership is to choose someone you are rooting for. When you do something that makes the business money, human nature dictates that you're going to want it for yourself. If you like your partner and know that you'll be happy to see that person make money alongside of you, this instinct will fade. Besides, success will be bittersweet if you despise your partner, and failure will be absolutely miserable.

Attend the Berkshire Hathaway shareholders meeting in Omaha, Nebraska, and you'll see that Warren Buffett and Charlie Munger epitomize a relationship in which two people are rooting for one another. Their partnership has thrived because of mutual respect and the desire of each to see the other do well. Author Janet Lowe wrote: "Munger and Buffett are two very smart men. They both were doing well financially before they met. When they joined forces, they both did much, much better."

Before jumping into a partnership, either in poker or in business, figure out where it may fail because of you. Then, make sure you address that weakness and find a person for whom you are rooting. Make the mistake of choosing the wrong poker partner and you may lose your cash and a friend. Choose the wrong business partner and you are destined to enrich an attorney.

Greg Dinkin is the author of The Poker MBA: Winning in Business No Matter What Cards You're Dealt, which will be published by Crown Business in April 2002. For six steps to building a solid partnership – plus a joker – send an E-mail to greg@ventureliterary.com, subject heading, PARTNER.