In Defense Of Grinding - The ‘Peter Principle’ And Poker
“In a hierarchy, every employee tends to rise to his level of incompetence” - Dr. Lawrence Peter, The Peter Principle
“In a cardroom, every player tends to move up until he can no longer beat the game” - me, right now.
Dr. Peter’s observation was originally intended as somewhat of a joke, as is my corollary. But like many jokes, there is some underlying truth involved. Peter’s observation was this: if you have an hierarchical organization of people, and each person has a fixed set of skills, and you promote people based on competence you will inevitably promote any given individual to the point where they are not competent, and there they will remain.
It’s not hard to see how the same situation can develop in poker. If you have a player with a fixed level of skill and he starts playing & moving up in stakes as his bankroll improves, eventually that player will hit a point where he’s no longer a favorite in the new bigger game. If he’s a professional player (one deriving the majority of his income from poker), this is a colossal disaster. His income has become negative, but you can bet his expenses are just as high as ever. Unless such a player quickly moves down a level, he’s pretty much sure to go bankrupt.
Now there’s no question that the Peter Principle is unduly pessimistic. People do not have fixed skills. In the case of poker it’s unquestionably possible to become a better player - that’s what this site is about after all. That leads to my thesis for this article:
Any plan for your poker career must insure that your skills increase at a rate adequate to keep up with the stakes you are playing. If your plan doesn’t account for this, it is doomed to failure.
Conservative Bankroll Management
I’ve chosen to call the process of managing your career such that you stay in games you can beat “Conservative Bankroll Management” but it could just as easily be “Conservative Poker Career Management” - that’s just not as catchy. In any case, here’s what I believe you have to know and do to avoid the Peter Principle trap:
1. Realize you are not special, at least not in the way you think.
Even if you are intrinsically extremely well suited to being a poker pro, you still have to put in your due diligence. Everyone takes time to learn the game. There’s a massive trap in believing that because you are good at one specific game at some specific stakes that you are good at poker in general. This is a trap that I think frequently snares intelligent people. My own experiences might serve as an example, as I think of myself as being fairly intelligent and having pretty good card sense and I fell into the trap big time.
I started playing poker for meaningful money in a pot limit draw game (this was pre-boom) with about $50 buyins. My opponents were college kids who were completely ignorant about poker, and it wasn’t long before I was beating the game with innovations such as “starting hands matter” and “don’t bet into someone who drew one card when you hold a pair of aces”. Trivial stuff. Anyways, I won good money in that game, and figured I was good at poker. That’s right, poker in general. I couldn’t have been more wrong. It took nine years of fairly regular poker play to get to the point where I could sit at a 30/60 limit holdem table and be fairly confident I was the best player at the table. NINE YEARS! Now I didn’t spend all my time at poker during those years by any means. If I had been doing nothing but playing and studying poker, I would have gotten there faster. If I had known who’s advice to take (or just been lest trusting of printed advice in general) I would have gotten there faster. But it took me almost 2 years per doubling of the stakes to learn the game. Point being, the skill comes. But it doesn’t come as fast as you might like.
2. Realize that when you have the skill, the bankroll will quickly be there.
If you’re winning at a solid rate, it just doesn’t take that long to build a bankroll. Imagine that a really skilled player high stakes player who could crush low to mid stakes limit holdem for 2 big bets an hour moved down from his usual 100/200 game to 4/8 with an appropriate bankroll for 4/8 - say $3200 or 400 big bets to start. His bankroll management rule is simple - buy in for 20 big bets, and never buy into a game for more than 5% of the bankroll (exception: don’t move down from 4/8 if you lose a bit initially). How long would you expect it would take this player, given his win rate, to be back playing 100/200? Try slightly less than 6 months. If he started on January 1st,.he’d be playing 100/200, on average, starting some time in late June. He’s got to move up roughly 5 times, and has to earn about 400 big blinds to move up. At 2 big blinds per hour, that’s 200 hours or about 5 weeks of play to move up each time.
What’s the point of this? If you’re good enough to crush the games, you’ll make the big time in no time (at least compared to how long it usually takes to develop a career). Even if you’re only winning a more reasonable 1 big bet per hour, it would take only a year to move up from 4/8 to 100/200 The idea that you need to speed the process up by playing bigger on a smaller roll is rather absurd. The gating factor in how fast you move up is going to be acquiring the required skill, not bankroll. It wouldn’t be an exaggeration to say that it takes a year to learn to play one level higher, whereas it take a couple of months to build a roll to play one level higher.
3. Realize that you bankroll is a hedge against being cocky as well as a hedge against bad luck.
It WILL happen to you - if you start winning at low stakes against easy opponents, your bankroll will get out ahead of your skills. You will move up to a game you can’t beat. And when you do, you will lose. This is not a good thing - if you could avoid it, you could save some money. But anyone with enough drive to be a good player is going to be too driven to avoid the trap. Having a solid bankroll policy, and the ability to move down and thereby get out of the trap, is what will save your career.
4. Acknowledge your desire to gamble.
Face it - the reason you want to play bigger on a short roll is that you want to gamble bigger. Moving up is NOT an invitation to riches, at least initially. I suspect the vast majority of players cut their win rate at least in half (in terms of blinds/bets per hour) when they move up, if they’re a winner at all at the higher stakes. So it can’t be for money in the short term. In the long term, if and when you learn to solidly beat the new game, you’ll make more money at higher stakes obviously. But the initial motivation to move up is almost always the thrill of a bigger gamble. Admitting this to yourself is just being honest.
5. Actually implemet a sound bankroll managment strategy.
I’ve already posted about what sound bankroll management looks like. Set your “max on the table” percentage discussed in that article at 5% or less and then hit the tables. The trick is actually following the system. Remember how you like to gamble?
6. Be ready to move down, especially right after you move up
Since you’re not going to be able to totally avoid the Peter Principle trap, you have to be able to recover. The way to do that is to move down QUICKLY when you move up and lose. It’s not fun, but it’s the only way to keep your roll intact. If you actually follow my bankroll management system, you’ll get moved down automatically when you move up to higher stakes and lose. Don’t cheat yourself and stay up there.
7. Grind it out
The key to getting anywhere in poker is to actually play the game a lot. That may sound trite, but you’ve got to get in the right game, and then you’ve got to put in hours. This is key both for learning and for growing your bankroll.
8. Study the game
Since your bankroll will grow faster than your skills, you have to do everything in your power to help your skills catch up. Study the game. Read. Think about it. Read some more. Learn another form of poker.
9. Watch your win rate.
While short term results aren’t always indicative of long term ones, pay close attention to your win rate. If you’re winning big (greater than 1 big blind per hour) at the current stakes, moving up may not be so bad. If you’re barely making any progress at the current stakes you might make more money moving down.
10. Watch for opportunities at the higher stakes
Every once in a while, you’ll see a bunch of 30/60 players playing 60/120. I’m not sure quite how why happens, but it does. When the game one level up is pretty much your normal game, just for more money, that’s a good time to think about moving up if you have the bankroll. The same goes for when a massive fish shows up one level higher than you usually play. This is mostly a mid-high stakes phenomenon. Low stakes games are generally consistently good.
The 15/30 Trap & The Advantages of Being an Amateur
If you follow the 10 steps above, you’ll more or less dodge the Peter Principle trap. But I do need to come clean about one thing. In my example above about the player moving up from 4/8 to 100/200, I left out his cost of living. That’s a huge issue if you’re a pro. Here’s my thoughts on the subject: it’s very hard to move up while covering your costs unless you’re playing at least 30/60. If you’re willing to live in relative poverty maybe 15/30 is doable. But I really think all players would be better off to keep their day job up until they can solidly beat 30/60. Playing too small as a pro is a trap - every dollar you earn goes to your rent. The only real solution is to remain an amateur until you get past that point.
It’s tricky - playing too big too fast is a trap, and playing too small is a trap. There is a middle ground, and if you want to be successful, you’ve got to find it.
Like this article? Subscribe to the CardSharp RSS Feed