Power of Folding
Recently, I listened to an episode of ReThinking, Adam Grant's podcast on the science that makes us tick, in which he interviewed World Poker Champion Annie Duke. In it, Duke shares that one of the most essential skills that sets a professional poker player apart from an amateur is that the professional knows when to quit.
In Texas Hold 'em, players get two cards (hole cards) before the five community cards are dealt face up. The goal is to make the best hand of five cards using your private two cards and the community cards (for instance, straight, flush, etc). After the initial two cards are dealt, players must decide whether to stay in the game and bet or to fold before the first three community cards are dealt (the flop). Amateurs fold about 50% of the time. Professional poker players fold 75% to 85% of the time before the flop. Professionals know what a good hand looks like and the probabilities of what they are (whereas I'd go all-in on an ace high), and their goal is to maximize their earnings. Amateurs frequently don't fold enough in poker because they fall for the sunk-cost fallacy. They have already invested money in the game and feel they must win it back or see it through.
A sunk cost is any cost that has already occurred, and you cannot recover. It could be money, time, or energy. People fall for the sunk cost fallacy all the time. We finish watching a movie or reading a book we dislike because we already started it. We continue to pour money into a car that isn't worth the repairs. In the case of product owners, we continue to invest in a product that isn't working. Stopping the investment feels like a failure – but it's also necessary to stop investing to avoid wasting resources. In my post, Dealing with Failure, I discuss the need to kill a standalone app we had already invested a lot of resources into. It was far from the only feature we killed.
myYearbook was an aggressively busy site with so many features. There were over 20 items in the navbar at one point. Some of the features included Games, TV (powered by Hulu), Battles (one-on-one image contest between two friends), Match (Tinder-like queue of people, but before Tinder), myMag (magazine), and Causes (donating to different charities using a virtual currency). As we grew, we would stop investing in the features that weren't working or had stopped working. Some of the features that would end up on the chopping block had been important features when we first launched them. Many of them were responsible for a huge chunk of growth in our history.
Killing features is hard. It can mean admitting to failure or the end of an era. We killed many features when we started developing our mobile apps, and all our resources needed to go to mobile. We had to invest in the company's future, killing some tried and true features that could no longer compete. A lot of the features had somewhat silent deaths – they had been deprioritized and hidden for so long that by the time it was time to officially remove them entirely, only a very small percentage of members still used them (and those members vehemently wanted those features back, RIP autographs and myMag). As a team, I think we were pretty good about deprioritizing features that weren't working.
There is a balance between quitting and trying to make it work. Here are some tips that I think can help with knowing "when to hold 'em, know when to fold 'em, know when to walk away":
1. Collect the data
In making decisions, you should arm yourself with data. You can't know if a feature is working if you don't track the KPIs. What is the time spent? What percent of users are using it daily and returning to it? What do users like and not like about it – can those things be fixed?
Similarly, in your personal life, when engaging in a new hobby or activity, it's essential to know what you want to get out of it in the first place and then measure your sentiment. In college, I attempted to join a dance troop. After the first meeting, I promptly quit. My rhythm is so abysmal I can't even clap to a song on the beat. My rhythm would have improved slightly if I stuck with the dance team, but there are many other ways to exercise and have fun. There was no reason to put more resources into one I was highly ill-suited for.
2. Have a limit
If you want to improve something, you should know how long or how much you are willing to invest in something to turn it around. This may be a timetable like "if this product hasn't increased its retention by 20% in the next six months, then it's deprioritized."
When Lenny Rachitsky, who began Lenny's Newsletter, now the #1 business newsletter on Substack, took time off to figure out what he wanted to do, he gave himself a budget and a runway of six months. There was an acceptance that he could burn through the time and the money with nothing to show for it, but he was betting that it could lead somewhere great (and it did).
Duke spoke about this method as well. Having a "kill criteria" is a bias reduction strategy that can improve decision-making. If you know how much you are willing to lose, you know exactly when to stop. You just need to stick to it.
3. Reevaluate your defaults
In Texas Hold 'em, there are clear points when you need to make a decision. After the hole, the flop, the fourth card, and the fifth card, you have to decide whether to fold or stay in the game. Most decisions don't have that — you're locked into your default until you take an action to change course.
Doing something because you're already doing it is not a good reason to continue.
When I was running the TMG marketing budget, every quarter, I would analyze to set how much of the overall budget would go to each individual app. The apps' performances relative to each other were generally stable, but by checking in and analyzing each app's performance and trends, I could adjust budgets accordingly.
It's helpful to set up a time to "check-in" on some of your major decisions at some cadence. Perhaps you should look at the job market annually to evaluate if you like your role and think about what you may want to do differently. Or, every five years, ask yourself if you genuinely like where you are living.
The amount of time or money you have invested into your present course is entirely independent of what you should do next. The power of folding is realizing when you are wasting resources so that you can devote your time, energy, and money to a more promising future.