[INTERVIEW]
Brad Johnson: Welcome to this episode of the
Elite Advisor Blueprint Podcast.
I have special guest, Maria Konnikova, with
us here today.
Welcome to the show, Maria.
Maria Konnikova: Thanks so much for having
me, Brad.
Brad Johnson: Well, this is really fun, Maria,
because as we were talking before we went
live here, I had a college phase where I could
quite honestly be considered a poker junkie.
It was during the phase of I think it was
probably poker’s height, the World Series
of Poker on ESPN.
There was I remember Chris Moneymaker who
had a name made for poker and then Greg Raymer,
Fossil Man, the guy with the weird glasses
that got a lot of facetime on ESPN.
So, I played a lot of hold'em.
I played a lot of tournament poker all through
college.
And here you are with your new book, The Biggest
Bluff, and it really breaks down psychology
which you have a Ph.D. in and then you went
on this little mission like a one-year research
project with Erik Seidel and then the next
thing you know, you get pulled into this kind
of professional poker world which poker tends
to do.
So, as we dive in and who knows where this
conversation is going to go.
I just know it's going to be really interesting.
So, let's just start.
You're a New York Times bestselling author,
your two previous books, Mastermind, which
was a book around kind of Sherlock Holmes
and you'd grown up on those stories and then
The Confidence Game which we'll probably get
into which deals with con artists like Bernie
Madoff that our audience will be very familiar
with.
Out of the gates, which is the most interesting
poker story you have from your two, three,
four-year journey?
I'm not sure how long you were sitting around
the poker table.
Just give us a good one.
It'll be fun to start the conversation.
Maria Konnikova: You know, some of the most
fun stories I've had have nothing to do with
poker, and everything to do with the fact
that a lot of poker players love to do other
types of gambling.
And so, there are lots of things that happen
at poker tables that are unrelated.
So, my coach, Erik Seidel, is someone who
plays high stakes poker and by high stakes
poker, I mean, the highest of stakes poker,
like he's a tournament player but the buy-ins
we’re talking about the low-end is about
$25,000 and it goes up to a million.
So, these are huge events and I often observed
him playing.
Brad Johnson: What’s the highest game you
just sat there and watch people just throwing
money around?
Maria Konnikova: Well, so I would watch a
lot of the high roller tournaments.
I was never physically present at the million-dollar
ones because I think that's a little too distracting
but the biggest ones that I've ever seen in-person
were 250,000 buy-ins.
And so, that's tournament poker, obviously,
not cash games so it's a little bit different.
So, there’s not actually money sitting on
the table.
There are chips that are worthless and they
have no cash value.
But it's interesting.
So, one of the craziest stories was in Monte
Carlo at one of these high roller events,
and I was also there to play, but I came a
little bit early because Erik was playing
in a $100,000 event, which is known as 100K.
So, all the events are referred to if it's
1K or above, that's how you refer to it.
So, the 100K, the 250K, the 25K.
So, he’s playing on 100K and I wanted to
come and visit him and just kind of see, wow,
this is the highest buying event I've ever
witnessed.
I want to see all of these geniuses at work,
all of these people just concentrating.
So, I come into the casino and this is the
most beautiful casino in the world.
It's in Monte Carlo and it's called the Room
of Stars, Salle des Etoiles, and the ceiling
actually retracts and you can see the sky.
So, at the beginning of the tournament…
Brad Johnson: A real poker room with a retractable
ceiling?
Maria Konnikova: Yeah.
And it's all glass all around and it's right
on the water.
I mean, it's just stunning.
Normally, I mean, you don't actually get to
play with the roof open.
They'll do it at the beginning of the tournament
and then they'll close the roof but it's really
beautiful.
So, I walk into this place and I've never
been there before.
This is my first tournament.
This is my first big poker trip.
I don't know what to expect and I find the
area with the high roller and I walk up and
I'm going to be really, really quiet and not
break anyone's concentration.
All of a sudden, I see that there's just this
crowd of players, all of these guys I've come
to know who are all these high roller players,
and they're crowding around the floor and
there's a guy on the floor wearing a bathrobe,
and it looks like he's doing push-ups.
And then I noticed that Kevin Hart is standing
there and Kevin Hart is obviously a comedian,
but also likes poker, and he's playing in
this event, and he's staying there and he's
just screaming.
He's going, "Motherfucker!”
And I'm just thinking, "What in the world
is going on?
Did I come to the wrong places?
Is the 100K not happening right now?”
No, no, the 100K is happening and all these
guys are playing.
They're also in the middle of something known
as a prop bet, which is a bet on a proposition.
Prop is short for a proposition.
And in this particular case, so I soon recognize
that the guy on the floor in the bathrobe
is Dan Coleman, who is one of the highest-ranked
players at that time, top five all-time money
list in the world.
He has retired since then but this is a guy
who's won a lot of money.
And he's the one on the floor and apparently,
he's made a bet with Kevin Hart about the
number of pushups he can do in a certain amount
of time, and people have placed money, thousands
of dollars, on every side of this bet, and
they're just seeing is he going to be able
to pull it off?
And this is happening in the middle of a $100,000
tournament.
Maria Konnikova: And so, I'm just standing
there and everyone's swearing and everyone's
screaming, and this is the end of the bet,
and we don't know if Dan is going to actually
make it or not.
He pushes it right until the end and he ends
up winning but that was just such a quintessential
poker moment, where you think that it's all
about poker and it's all about mathematics
and all these guys.
There are people there who have PhDs and statistics
and they're so brilliant and here's this guy
in a bathrobe betting thousands of dollars
on the number of pushups he can do, and everyone
is just kind of letting their cards set while
they look at this and see is he going to pull
it off or not.
Brad Johnson: For some reason, that does not
surprise me.
Do you remember how many pushups he actually
had to do to win the bet?
Maria Konnikova: I don't.
It's in the book.
So, I actually just don't remember off the
top of my head.
It was a lot and I'm happy to look it up for
you right now.
Brad Johnson: I have a better reason.
Just go buy the book, everyone.
Maria Konnikova: But it's in the book.
It's in the Monte Carlo chapter, which is
called The Gambler and the Nerd.
Brad Johnson: Yeah.
And as I was admitting to you before we went
live here, I have not had the chance to get
all the way through the book but your publishing
team was kind enough to send me out an early
copy a few days ago.
But I did dive in and I can tell you, there's
a lot of books I get to read for being a podcaster.
This one will get read all the way through
because I can already tell it's drawing me
in from the poker and the psychology.
I think it's cliché to say poker is a good
like it's a good example of everyday life,
all of the decisions that get made out on
the poker table.
But you went into this as a student of the
game and then you became a participant.
What did you learn?
Was there one or two lessons that you learn
around the poker table that just like were
just kind of as wow?
Maria Konnikova: I’m just laughing because
it's just lesson after lesson after lesson.
And the whole book is one big lesson.
I mean, I learned how little I knew about
myself, about the world, about decision making.
And my Ph.D. is in psychology and not just
any psychology.
I actually studied decision making under risk
and uncertainty, under hot emotional conditions.
I actually looked at people making decisions
in this exact environment that's really applicable
to the poker table.
So, I had people play stock market games and
make stock market decisions, make investment
allocation decisions, and see how they would
learn and see how they would grow.
So, this is my area.
And so, I thought that I actually knew a lot
about it.
But it's very different studying it in the
abstract and then poker forces you to live
it.
I mean, you have to confront so much about
yourself.
It's therapy.
I learned so much about my hang-ups, the issues
that I have, the things I need to work through
at the poker table because, at one point or
another, it's going to come out there, who
you are, what you're afraid of, what makes
you tick.
It's going to come out because you're playing
for hour after hour after hour.
Especially during a tournament, you can't
get up and leave.
It's not a cash game.
You can't just suddenly decide, “I need
a break.”
You have to keep playing if you don't want
to blind out.
And so, you're sitting there for 12, 13, 14
hours.
Sometimes I've had 16-hour days.
You get tired, you get exhausted, you get
depleted.
So, everything at some point is going to come
out when you're in that sort of depleted state
and it forces you to come face-to-face with
yourself in a way that you're not often forced
to do.
And that to me was just absolutely fascinating
and eye-opening and not always in a good way.
I learned there were lots of things about
myself.
I didn't like that I didn't think that I suffered
from.
I didn't think that I had confidence issues.
I didn't think that I was the kind of person
who would be passive and let myself be bullied.
But I am, it turns out.
Maria Konnikova: It turns out that I've actually
internalized a lot of sexism from my environment
that I've internalized a lot of these lessons,
that I don't want to antagonize people, that
I don't want to confront people.
In poker, that's a death sentence.
You're just going to bleed chips and I had
to learn that about myself.
And I think that if you're going to become
a good player, you have to deal with your
emotional issues.
You have to deal with all of your psychological
hang-ups because otherwise they'll show up
in your game and you're going to make mistakes.
So, that's one area of it.
And the other thing that I am just eternally
grateful to poker for is the fact that it
actually taught me what probability feels
like.
It taught me to think probabilistically and
to recognize just what it means to make decisions
with incomplete information, and to have to
act even though you don't know everything,
and you're never going to know everything
unless you're cheating and you're looking
at other people's cards.
Then you have to act and you have to act to
the best of your knowledge and you start learning.
Okay.
This is what 10% feels like.
This is what 25% feels like.
This is what 98% feels like.
I got my money and as a 98% favorite, hurrah,
I'm going to win.
Oh, no, 2% just happened and I lost and I'm
out of the tournament.
And you realize 2% happens.
2% is a lot.
2% is not nothing.
That's actually huge.
And you start learning that and as a psychologist,
one of the things I know about our minds is
how limited we are in our ability to learn
probability, and our ability to think statistically,
to think in those terms in those types of
percentages, to figure out what they mean
because, in life, you don't normally get to
sample probabilities correctly.
You have these one-off events that have an
outsized impact in how you evaluate risks,
how you think about things.
Because that's how we learn, we learn from
experience.
Maria Konnikova: And poker, I didn't realize
just what a good laboratory it was going to
be for teaching me to think through these
things correctly because you keep sampling
in hand after hand after hand hundreds of
times, thousands of times, and so you learn
correctly.
And then you transfer that knowledge away
from the table and all of a sudden, you find
yourself better able to think through complicated
situations to make decisions in risky environments
without all of the factors so that you can
just focus on the process and get your money
on as a favorite, and not worry about the
outcome.
Because the outcome doesn't matter.
If I got my money in as a 65% favorite, I
should keep doing that over and over and over
and over, even if I'm losing money 35% of
the time because I'm going to make money over
the long term.
If I hadn't played poker and you make that
decision and you lose right away, maybe you
could become gun shy.
Maybe you think, "Oh, I shouldn't have done
that.”
Poker teaches you, no, you have to keep doing
it over and over.
Don't worry about whether or not it worked
out this time because in the long term it
will work out.
Brad Johnson: Okay.
So much there.
So, it's beautiful how much of this applies
to financial services and financial advisors.
I go back to the 98% favorite and so I do
want to get…
Maria Konnikova: I can tell you that story.
Brad Johnson: I want to hear it.
Yeah.
Let’s get into that because you do a really
good job.
I knew poker.
I knew hold'em.
I've watched hours probably World Series poker
just over my lifetime, but you do a really
good job of introducing the game to novices.
So, you don't have to be a poker fan to actually
really enjoy the book.
But for those that are a little bit just for
the context of the game, hold'em, two cards,
you draw out five, the whole table plays the
best handoff of the two cards in their hand
and the cards on the table.
So, there's a lot of variants and so what
all can be going on depending on how many
players you have.
And I believe the bulk of your experience,
Maria, was in tournament play.
Is that correct?
Maria Konnikova: Yes.
Brad Johnson: Okay.
So, tournament play, you start with 100 players
and you whittle it down until there's one
winner.
Everybody starts with the same chip.
So, really, tournament plays survival of the
fittest, right?
So, it's a lot of limiting the downside risk.
Would you say that's fair, as far as strategy?
Maria Konnikova: No.
So, something really interesting, one of the
reasons that I've come to prefer a tournament
play over just, in general, any form of poker
is how dynamic tournaments are, and how much
your strategy has to change depending on the
stage of the tournament and the structure
of the tournament.
So, one of the things you realize is that
at the beginning you oftentimes do want to
protect against the downside because you're
very deep-stacked, and people make a lot of
mistakes, and people will give you chips if
you wait for them.
So, there's no need to take a lot of risks,
especially if you're at a good table with
weak players.
But then as players start being eliminated,
what you're trying to do is build up a chip
stack.
So, you actually want to put yourself in a
position to win, not just in a position to
cash.
And in order to do that, you need to have
chips.
You can't just try to sneak your way into
the money and sneak your way through the bubble.
So, then you have to start taking risks.
You have to start being more aggressive.
You have to start pushing your edge because
otherwise you're not going to accumulate and
you're going to end up with no chips and then
you'll be forced into a risk you don't want
to take or that might be better not to take.
And so, but then there are times when you
get to the final table.
Now, you have considerations called ICM, which
is the independent chip model.
So, now if there are big pay jumps, right
away you have to be more conservative again.
If you're someone with a few chips, if you're
the last one, you can be really aggressive
because you don't care.
You're going to be the first one out anyways.
But if you're one of the medium stacks, all
of a sudden, you have to be really, really
careful because there's someone who has fewer
chips than you.
If you just wait for them to bust, then you're
going to be able to ladder up and get much
more money just by being patient.
Maria Konnikova: So, you have to think about
all of these things.
How many chips do I have relative to everyone
at my table?
Where are we in the tournament?
What's the pay structure like?
What am I trying to accomplish?
And it's constantly changing and it's dynamic.
That's why I find tournaments so fascinating.
Brad Johnson: So, I'm going to apply that
in financial services.
So, that's kind of a good analogy for market
cycles.
But you look at, well, pre-COVID-19 everybody
thought, "Hey, this economy is great.
We're on the longest bull market run in the
history of the United States of America.
Let's throw some more money in the market
and life is good.”
And then I feel like it was a little bit that
you’re a 98% favorite with your money in
the market, and then 2% just hit and it was
called COVID-19.
So, maybe you tell the story of your 98% odds
and how that played out, and then let's apply
that to how financial advisors might be feeling
and maybe lessons learned from that.
Maria Konnikova: Sure.
Well, there are times when I was a lock on
the hand with varying percentages.
The 98% was actually when I was on the stone
cold bubble of one of the World Series of
Poker events so bracelet event.
And the stone bubble for people who don't
play poker means the next person out gets
zero dollars and then the person after that
gets paid, gets their money back, a return
on investment.
Brad Johnson: And how many players was that
down to then?
Is it 10?
Maria Konnikova: No.
It depends.
Their world series events are huge.
This started off with over 10,000 people.
So, this is down to 12% of the field, something
like that.
So, we're still talking over 100 players,
yeah.
But usually, anywhere between 10% and 15%
of the field is paid.
So, one more person has to bust and I will
make money but I actually don't have a lot
of chips.
I'm very short stack so I can't wait that
long.
And so, I end up getting my money in with
ace-jack and I'm called by ace-jack.
Wonderful.
I'm now going to bust and we're going to get
to split the blinds and the antes, which is
a huge win for me because those are chips
I really, really need.
And so, we’re at 98% to tie the hand and
we're both suited and we have differences.
And then he hits his flush, and I'm out.
That was the 2%.
And that's what it feels like.
You have identical hands.
You're already counting the money because
you're going to get a little more, even though
you're not going to double, but you're not
going to be out.
This is great.
Statistically speaking, it's the best hand
you can find yourself against, the identical
hand.
And yet, there we are.
Brad Johnson: So, what did you learn from
that?
Maria Konnikova: 2% is a lot.
It's not happy.
It doesn't feel good.
But you know what, it is what it is.
You just have to keep playing and keep making
the right decisions.
Brad Johnson: So, a lot of advisors would
have what I would call an investment philosophy
like that sounds to me like your poker philosophy
of, obviously, 98-2’s a no brainer but the
harder ones are the 55-45s.
I mean, are you always going to put your money
in if you're anything greater than a 50-50
favorite or how does that work?
Maria Konnikova: No.
Because I'm a tournament player, I'm not.
In cash games, sure.
In a tournament, no because there are other
considerations because of the tournament dynamics.
So, I'm going to have to figure out where
are my chips relative to everyone at my table,
relative to everyone in the tournament.
How am I doing?
What am I risking?
What am I risking to gain what?
How many chips am I going to be gaining?
Where are we?
Are we close to the money?
Are we in the money?
Are we close to the final table?
What's going on there?
How's my table?
Sometimes you're still in a rebuy period and
you can actually enter again if you bust and
a lot of people would say, “Oh, well, then
you should always take the gamble.”
No.
What if I'm at a dream table?
There's not a single pro at it and it's a
really weak table and I can just completely
pick my spots and wait for them to make mistakes.
Do I really want to bust out of that table
and risk getting put back at the table next
door that has five pros at it and an empty
seat, and I could easily go there?
No, that risk is actually much worse.
I'm much better off here.
So, there are so many things that are going
through my head when I think is this the time
to take a flip, which is what that situation
is like, or not?
And oftentimes the answer is yes but sometimes
the answer is no because you can't just think
of expected value as expected value in this
moment, my expected value of winning this
hand.
You have to think about it over the long term
because your EV isn't just right now.
Something that's plus EV right now might actually
be minus EV for the whole tournament because
you're going to be losing if you're going
to be switched to another table.
Or if you go from chip lead to one of the
shortest stacks if you lose this flip.
So, there's so many things that you have to
calculate, you have to think over a longer
time horizon.
Brad Johnson: So, I'm in a dangerous position
where I could just nerd out on poker this
whole conversation.
I want to serve my audience.
Here's my last kind of poker nerd question
and then we'll dive into the book a bit more.
What's the easiest way to spot the difference
between a pro and an amateur without knowing,
"Hey, this guy's a professional because I
see him playing on TV?”
What's your easiest way to spot it?
Maria Konnikova: Just the way, you know, their
demeanor, the way that how comfortable they
are, how the types of how they're playing.
So, a lot of times, amateurs are going to
have different bet sizings before the flop,
so they're going to raise different amounts.
Actually, most amateurs do that.
You shouldn't.
You should have one standard raise size that
you use with 100% of your range and usually,
it's smaller.
So, in tournament poker right now, people
would normally raise between two and two-and-a-half
times the big blind.
Amateurs raise much bigger.
They love raising three times, four times,
five times, 10 times, 20 times, some random
times.
And you can spot it that way and sometimes
they'll go three, sometimes they'll go five.
There's no consistency in how they bet.
Their bet sizings are off.
They don't actually understand how much they're
supposed to bet on different boards.
They continuation bet too much.
They play their cards face up sometimes or
they bluff too much.
You can just start seeing patterns of play
that will show you a difference between someone
who really studies and takes this seriously
and someone who is potentially more of a novice.
Brad Johnson: So, I love Erik Seidel’s I
think it was two-word advice to you, the poker
players.
Do you mind sharing that with the audience?
Maria Konnikova: Pay attention.
It's the best two words ever.
Brad Johnson: Which speaks 100% to exactly
what you were just talking about, just all
of those different tells or trends that you
see from different players.
So, let's get into this because I know one
thing that is very common in financial services
is a lot of advisors get in and they're a
bit like those amateurs that they feel like
they're in over their heads at the pro table.
Did you originally was the Erik Seidel as
a mentor, was that just because, "Hey, I want
a one year where I want an interesting story
to write a book on,” or was it truly like,
“I want to mentor under you to be the absolute
best poker player I can be?”
Where did that story start?
Maria Konnikova: So, I had always wanted to
work with Erik Seidel once I conceived of
the project.
He was the only person I approached.
He was my first and only choice.
So, I'm glad he agreed eventually to take
me on.
And it was going to be, you know, "Let's just
see how far you can take me.
I'm going to work my hardest.
I'm going to work my ass off for you.
I'm going to take this seriously and let's
see what we can do.
Let's see whether you can teach me to be a
good player.”
Brad Johnson: For those not familiar with
Erik Seidel, do you want to just high-level
overview of his, I mean, legend in poker?
Maria Konnikova: Yeah, absolutely.
I mean, he’s absolutely legendary.
I mean, some people would consider him the
greatest of all time.
He certainly is in contention for it.
He has, I think, the third-highest number
of World Series of Poker bracelets.
He's won World Poker Tour titles.
He's won multiple high rollers.
He’s been around since the 80s and has been
winning things since then.
And he's someone who's consistently been at
the top of the game from his first foray into
it.
His first major tournament was the main event
of the World Series of Poker and he came in
second to Johnny Chan, which was then memorialized
in the movie rounders.
That was his first major tournament, and only
got better.
At some point, he was for a long time number
one in all-time earnings.
He's no longer number one.
I think he's number three or four right now.
The list keeps changing so I'm not quite sure
but he's just an absolute legend in every
single metric.
Brad Johnson: So, for those seeking out a
mentor, I feel like a lot of times people
are scared to ask.
So, how did you go about like, "Hey, Erik
Seidel is the guy.
I want him to mentor me in poker.”
I know it's in the book but just if you don't
mind sharing a little piece of that.
Maria Konnikova: Sure.
Well, I mean, I'm a journalist and I've been
a journalist for a while.
So, my whole career is cold calling people
and approaching people who aren't normally
approached and getting people who don't want
to talk to me to talk to me.
So, it never gets easier by the way.
I hate cold calling.
I dread it every single time.
I hate writing that email.
I hate writing that message, however you're
approaching the cold call, hey, tracking down
that number and dialing it.
It's never easy.
I don't like asking people to give me their
time.
It's a big imposition on their life, especially
if you're not there for a nice reason.
It's always a good reason but sometimes I
spent time with con artists.
Sometimes I wasn't exactly looking for a friendly
conversation.
It was much more of an investigative type
of thing.
So, I have that experience and I've gotten
used to the fact that it's uncomfortable but
you have to do it.
And so, I cold-called him, I tracked him down,
and just approached him, sent him a message
on Twitter.
Brad Johnson: Twitter?
Nice.
Maria Konnikova: On Twitter.
Brad Johnson: There we go.
Maria Konnikova: He's a very private person.
I could not find any other way to reach out.
So, I approached him on Twitter and said,
“Hey, I'm a writer for The New Yorker.
I'm working on a new project.
I'd love to talk to you about it.
I think that it might be something that you
might be interested in.”
And he got back to me and said, “Sure, I
love The New Yorker, fan of your writing,”
so I got lucky there.
I mean, Erik Seidel reads The New Yorker and
loves it.
And that's not true of many poker players
so I was very lucky about that.
And so, then he said, “Actually, I'm in
New York right now if you wanted to meet in
person,” so I got lucky again.
He wasn't in Las Vegas.
He happened to be in New York.
And so, I prepared a lot for that meeting.
I did my homework and I think that that's
really important.
I think if you're going to approach someone
and ask them for your time, you damn well
better do your homework and not be like, “Oh,
I actually don't know anything about you but
I hear you're pretty cool.
So, why don't you give me an hour of your
time?”
No.
I mean, I'd done as much as I could.
I mean, for someone who didn't know poker
and who couldn't play poker, I tried to research
him as much as I could.
I knew exactly what I wanted to accomplish.
I knew what my pitch was.
I knew why I might be an interesting choice
for him to mentor.
I knew what I could give, what I could offer,
which was my psychology, my journalistic background,
the fact that I wasn't from the poker world
that I was aiming to write something that
was much more broad.
And I listened.
That's something I actually learned from con
artists that the most successful thing you
can do if you want to get someone to agree
with you, this can be used for good or for
evil, I hope I've used it for good, is to
be a good listener because most people don't
listen well.
Maria Konnikova: Most people ask a question
and then they're already thinking of the next
thing they're going to say.
They're not actually listening for the answer.
Most people aren't paying attention to the
cues that the people around them are giving
off.
And it's so important to do that if you're
going to be successful, if you're going to
get people to agree to do something for you,
or if you're going to figure out how is this
going to work.
So, I really tried to pick up on this as much
as I could and be willing to change direction
and be willing to change my pitch depending
on how Erik was reacting.
And I came prepared with printouts, the psychological
work that I could bring to the table.
I've tracked down all these studies about
the psychology of poker and all this stuff
to show him to give him to say, "Look I've
got all this primary literature that I can
give you.”
So, I’ll help share anything that I find.
So, I really did my best to show him that
I'd be a good student that I'd listen, that
I'd pay attention, and that I would work hard
that I wasn't going to take anything for granted.
Brad Johnson: Okay.
So, that's awesome.
Thanks for sharing that.
There's so many lessons there.
I'm curious, because you took this journey
that started as a yearlong project and turned
into, I mean, are you still professionally
playing poker or playing in a bunch of these
big games?
Or have you taken time off now?
Maria Konnikova: I mean, time off was taken
for me.
The book was going to be coming out in the
middle of the World Series, but there's no
more live poker.
The last live tournament in the US happened
the first week of March.
That’s done.
Brad Johnson: So, you were [inaudible – 31:19]
that point?
Maria Konnikova: No.
Actually, I was on my way to LAPC which is
one of the biggest World Poker Tour stops
which was the second to last major tournament
that happened and I was in New Orleans.
I was in New Orleans to accept a writing award.
This was the week of Mardi Gras and I was
already a little nervous because I really
have been paying attention to the news.
My sister's a doctor, my brother-in-law's
a doctor.
They didn't want me to go even to New Orleans.
And so, I'm someone who really takes this
seriously and knew that we were going to have
a problem.
So, basically, I stayed away from New Orleans,
stayed away from the crowds.
Everyone at the conference looked at me like
I was an alien because I refused to shake
hands with anyone very luckily.
Sorry, there are some noises.
Brad Johnson: That was kind of the second
hotbed in the US right around Mardi Gras.
Maria Konnikova: Yeah.
So, I didn't see much of New Orleans at the
end of the day, which was sad.
I was really looking forward to it.
And I was going to fly straight from New Orleans
to LA and the tournament was starting next
day and I canceled.
I changed my tickets and came back to New
York because that was right when the first
cases were coming out in LA.
And it became clear that it was already in
LA.
It became clear that it was already in the
US.
And I thought you know what, risk-reward equation
is off and I came back and I haven't played
poker since February.
So, I didn't end up playing up until the end.
I was I think probably one of the first players
to say, "This is not okay and poker is not
a safe thing to be doing right now.”
Brad Johnson: Well, yeah, poker and trading
cards is not a good activity to be playing.
That's for sure.
You think as much as online poker is everywhere
else in the world, you'd think they probably
would have flipped that switch for the World
Series yet, but maybe they haven't.
Maria Konnikova: Well, they actually.
So, they canceled the World Series, but they
just announced yesterday that they were going
to do some online bracelet events.
Unfortunately, you're only going to be able
to play them if you're physically in Nevada
or New Jersey because online poker is otherwise
not legal.
I mean, it's legal in some other states, but
the World Series isn't there yet and then
they're going to do it internationally as
well.
I have mixed feelings about that.
Brad Johnson: Yeah.
It's the purest form of poker.
I mean, unless everybody's on a Zoom feed,
it doesn't feel like the same thing.
Well, I want to hit something you said a while
ago and we just kind of went all over the
place and this has been a really fun conversation.
You mentioned you learned a lot about yourself
at the poker table.
And I want to speak to the females in finance
right now because I'm not sure where the ratio
is today as far as females to males playing
poker, but…
Maria Konnikova: It’s 97% male, 3% female.
Brad Johnson: Okay.
Thank you.
Maria Konnikova: You’re welcome.
Brad Johnson: It's not quite that bad in finance,
but it's pretty one-sided where it's basically
middle-aged white guys are your typical financial
advisor.
So, if you’re speaking to the women financial
advisors, and what you learned playing at
a high-level in a game that was dominated
by males, what would you tell the ladies in
finance right now?
[00:34:41] Maria Konnikova: First, don't get
intimidated early on.
Find someone who is a good mentor and who
will provide a good support system and make
sure you have that.
I think I would have quit pro poker probably
in the early days had I not had not just Erik
Seidel, but had he not introduced me to all
of his friends who are some of the best players
in the game and just brilliant guys and nice
guys and good people who took me under their
wing, who protected me, who showed me what
was possible in the game.
Because I understand why it's 97-3.
If you're a female and you walk into a casino
and you sit down at a low stakes game, not
only are you going to be the only female,
but you're going to experience some uncomfortable
situations because people are there to have
fun.
They're not taking it seriously.
They're drinking.
There's a lot of sexism.
There's a lot of casual sexism, whether they
don't realize it, but I've had a lot of bad
things happen to me at the poker table.
I've been called everything under the sun.
I've been propositioned like actually propositioned,
told how much money I would be paid to go
up to someone's room.
And all of these things happened.
And you know what, in another world had I
not been writing a book, had I not been able
to have kind of a journalistic removed from
what was happening, had I not had Erik and
all of these other guys in my corner backing
me up and I knew what was possible, I probably
would have quit.
So, I think knowing what's out there and kind
of knowing what's possible is really important.
And also, it actually, rather than let it
get to me, I used it as a challenge.
You know what, let me get better.
Let me learn this game so well that I can
kick all of those guys’ asses.
And you know what I did?
I ended up becoming an international champion.
I ended up becoming a professional player
sponsored team pro for PokerStars.
And yeah, I ended up kicking their asses and
that feels really good.
Brad Johnson: That's awesome.
Which by the way, we didn't get into that.
Can you share some of your highlights like
what were the biggest tourneys you played
in that you either placed in or won just for
perspective on that journey?
Maria Konnikova: Well, the biggest tournament
I ever won was the PCA National Championship,
which is the PokerStars Caribbean Adventure,
which is a huge, one of the oldest poker stops
on the tour and one of the most prestigious.
It ended actually last year.
Last year was the last PCA.
So, that was the biggest thing I ever won.
And then I had some second places in some
big tournaments as well but that was my biggest
win.
The biggest tournament I ever played in terms
of buy-in was a $25,000 tournament and I actually
won.
So, when I won the PCA National, I won something
that PokerStars was giving away at the time
called the Platinum Pass.
I was actually one of the first people to
win it and the first female to win it.
And they were doing this Big Players Championship
which was a $25,000 buy-in tournament the
next year.
And so, in addition to the money I won, I
won a free entry into that tournament plus
an extra $5,000 for airfare, transportation,
food, etcetera.
And so, I was able to play in that tournament
which was pretty amazing.
And I didn't play in that tournament.
I actually had a bad first day and made one
really bad decision and busted on day one,
but it was quite a rush to be able to play
that.
Brad Johnson: I'm sure this is public on a
poker website out there, but what were your
total winnings as far as your poker career?
Maria Konnikova: I think right now I don't
remember what the exact number is but it's
a little over 300,000.
Brad Johnson: Wow.
Hey, not bad for somebody just learning the
game a few years ago, right?
Maria Konnikova: Yeah.
No, that's over two years.
Brad Johnson: Yeah.
That's awesome.
If you look back to that circle, one of the
common themes I see in financial services
that we kind of preach on, we coach advisors
all over the country it's kind of you're the
average of the five people you surround yourself
with, kind of the old Jim Rohn saying, if
you’re familiar.
Maria Konnikova: Sure.
Brad Johnson: You said Erik Seidel had just
good people, professional players, and just
people that took you under their wing.
Who were the people he surrounded himself
with?
If you don't mind sharing names, I don't want
you to share anything…
Maria Konnikova: No, absolutely.
Absolutely.
I mean, this is such an amazing group of guys
and some of them became good friends and also
coaches.
So, the person I worked with most extensively
other than Erik was Phil Galfond, who's a
brilliant player, brilliant guy, brilliant
businessman actually speaking of financial
advisors, so he runs a business called Run
It Once Poker.
And in the US, it's just a training site,
which is amazing.
So, for people listening who want to become
better at poker, I couldn't recommend anything
more.
It's the single best resource out there seriously.
Brad Johnson: Run It Once Poker?
Maria Konnikova: Yeah.
Run It Once is the name.
And then if you're out of the US, he actually
just last year launched his own poker site
called Run It Once.
And so, now it's poker only which I actually
love because people who are just looking for
the bottom line, they put casino in there
right away.
And Phil is a purist and he loves the game
and he's like me.
I mean, actually, I get very upset when I
think that operators are using poker as a
gateway to casino games because I hate casino
games and I don't like that element of the
world at all.
And I think that fine if someone is having
fun at the craps table in a casino, so be
it but playing slots on your computer, playing
craps, roulette in front of a screen, to me,
that's just terrible.
And there's only one reason it exists which
is for the operator to make money.
So, Run It Once Poker is actually one of the
only sites that's poker only.
But unfortunately, you can't play it in the
US but if you're in Canada or Mexico or in
Europe, you can play.
So, that's Phil Galfond and he's a brilliant
coach, just amazing and such a great guy.
So, Erik surrounded himself with Phil and
shared Phil with me and has a great family.
I love his wife and they have a new kid whose
name is Spencer who is wonderful and very
cute.
There are a few other people who I would single
out, Jason Koon, another phenomenal player,
phenomenal guy, very smart, someone who came
from nothing.
He's very actually public about his story.
He came from rural Virginia, was homeless
sometimes, totally broken home, and ended
up playing with the best of the best of the
best and becoming one of the best players
in the world.
And imagine that.
Imagine that that's possible.
Maria Konnikova: Poker is one of the only
worlds I've ever seen that's meritocratic
at the end of the day.
Sure, like, we're not talking about accident
of birth and all of these things.
You have to have the means to even play poker,
to begin with, but you can start with nothing.
And if you're good, no one's going to stop
you from playing.
And no one's going to stop you from getting
better.
And so, it's one of the only places where
you find PhDs and Harvard professors sitting
next to someone who grew up homeless and I
think that that's pretty great.
Ike Haxton is on the other end of the spectrum.
He has multiple professors in the family.
He went to Brown and studied philosophy.
Another just brilliant guy, hilarious, and
so giving.
All of these people helped me, coached me,
went through hands with me, helped me set
up solvers, and figure out how solvers worked.
Solvers are these mathematical programs that
run simulations and tell you how to play different
spots.
Just spent hours with me that they didn't
have to spend.
Brad Johnson: So, hold up here.
So, solvers, I mean, are they creating a computer
program and just running through probability?
Maria Konnikova: They’re running thousands
and thousands of Monte Carlo simulations based
on the inputs that you put in.
So, they're building out game trees, so you
specify this is the range of hands.
They can only go heads up, so one-on-one.
But you'll say, “Okay, this is my range,”
so all the range of hands that I would play.
This is my opponent's range.
And these, you have to actually build what
the game tree looks like.
I want these bet sizings here, I want these
to be the options, I want these to be the
possible responses, and then the solver will
actually run.
And sometimes if it's a complicated game tree,
it could take 24 hours, but it will spit out
kind of ways to do it.
It will say, okay, with this combination of
cards, you're going to be raising to this
sizing 12% of the time, to this sizing 18%
of the time, folding 20% of the time, and
it actually solves your game tree for you,
approximates a solution.
Poker hasn't been solved yet so it's impossible
to solve.
Brad Johnson: Was there any pro poker player
that had been on a pro for a while that drank
while they played?
Maria Konnikova: No.
Brad Johnson: Okay, I had a feeling you were
going to say that but when you're thinking
about all the math loop that you're running
right there, it has to be impossible.
Maria Konnikova: No.
I've never met a single serious player who
drinks while they play.
That doesn't mean they never drink.
So, sometimes in a major tournament like not
a high roller but big field event like a World
Poker main event, it’s the end of the day,
there's 10 minutes left, we'll order drinks
for the table.
That's very different.
Brad Johnson: Yeah.
Interesting.
Okay, so with our time left, we don't have
much time here.
So, I would be remiss if I don't at least
hit some of The Confidence Game.
You mentioned you brought up a piece of that
earlier with.
And so, this was a book on con artists.
You studied Bernie Madoff, Lance Armstrong.
So, let's maybe focus on Bernie.
He's obviously a very well-known name everywhere,
but especially in finance.
What did you learn from that if there were
high-level takeaways that financial advisors
could find useful?
Maria Konnikova: Sure.
Yeah.
So, in the book, I actually don't really touch
on Bernie because there were so many books
written about him and I wanted to do original
work, but I did touch on a lot of Ponzi schemes,
and even the Ponzi schemes before Bernie.
And there was a bit of an exploration of Bernie
because Bernie is important and it would have
been an omission not to mention him entirely.
But I think that there were a few things I
learned that I think are very pertinent to
anyone listening, to anyone working as a financial
advisor.
One, it's so easy to be objective when you're
not actually in the situation.
And it's so easy to judge his victims and
to say, "Look at all of these red flags.
You guys were greedy.
You were complicit.
You should have done your due diligence.
You should have known you didn't know.”
And when it's happening to you, that's actually
completely not true.
What I mean by that is if you're someone who
thinks you're very savvy, and I actually found
that people who fall for financial fraud are
much more likely to be financially sophisticated
and good investors and people who understand
the world.
People who are naive about it know how much
they don't know and they ask other people,
they ask for input, they ask questions, they
realize that they're limited.
Those people probably didn't fall for Bernie
nearly as much because they had other people
do some work for them and they stepped away.
But other people who think that they're very
good will often not realize when they're being
taken advantage of and they'll say, “Oh,
look at these amazing returns.”
They won't say these returns are too high.
What am I doing?
They'll say, "Pat myself on the back.
Look what a good place I found to invest money.
I'm so good.
I knew he was good.
And look, now I see that he's good.”
When it's happening to you, it is never too
good to be true.
Maria Konnikova: People are always saying
if it seems too good to be true, it is.
When it's happening to you, it's never too
good.
It's just right because you deserve it and
you're good, and you're smart, and you have
this coming, and you've been making investments
your whole life so you know a good deal when
you see one, and you've earned this.
It's too good for the other guy.
So, that's really important.
Brad Johnson: So, when it comes to numbers
on that because too good to be true, I mean,
it's relative.
Maria Konnikova: Exactly.
Brad Johnson: So, on these Ponzi schemes,
was there a set return amount that you saw
the trend of like we'll guarantee you 50%
interest per year?
Maria Konnikova: No.
No one ever did that.
It was never 50%.
50% is egregious.
50% would set off anyone's red flags, but
it was something like 10% a month, and no
one realized that that's actually much higher
than 50%.
Brad Johnson: So, 10% a month?
Yeah.
Maria Konnikova: You have to scale down, right?
You have to all 5% a month.
Amazing, right?
They offer you returns but on a smaller scale,
and they initially target people who trust
them for some other reason.
Oftentimes, these Ponzi schemes work within
a community.
So, oftentimes they'll use a religious community
because you trust people who go to your church
or in Bernie Madoff's case who go to your
temple.
He did that.
He actually did the exact same thing.
So, you go to people who trust you and who
will give you money because they think you're
a good guy and you're good at what you do.
And then you use those referrals and you build
on that circle of trust because I'm much more
likely to trust you if the guy I trust, trust
you.
And so, you actually go that way and it's
so powerful because then people won't do as
much due diligence and won't look at you in
the same way because you're a friend.
You're someone who's part of that circle of
trust.
And Bernie did that.
And I think that was one of the reasons he
was so successful.
The other thing he did, which I always tell
people, one of the things I learned from all
con artists, not just him, is whenever anyone
is saying something is scarce, run.
So, a lot he was saying he never took anyone's
money after a while.
He would say, "Sorry, sorry, I don't have
the capacity to take on any more investments.
I'm really sorry.
I'm not going to be able to take you as a
client.”
They would have to beg for years and finally,
he’d be like, "Okay, I'll do you the favor.
I'll take you in.”
And that made people want it.
I mean, they couldn't wait to give him their
money.
The first time he said, “I'm sorry, I can't.
I don't have the capacity to take this right
now,” walk away.
Say, “Okay, fine.
I'll look for someone else.”
Because you want someone who's focused on
you.
You want someone who has time for you and
what he was trying to do is create this demand
and it succeeded.
And this happened to one of the people I wrote
about had fake wines and sold fake wines,
and you couldn't get his wines because he
was saying, “I'm sorry.
I only sell to discerning collectors and I'm
out of stock.”
So, he had waitlists.
Brad Johnson: So, it wasn’t the Rudy guy?
Maria Konnikova: It was Rudy.
Brad Johnson: Really?
Maria Konnikova: Yep.
Rudy Kurniawan.
Yeah.
So, actually, he's a big character in the
book.
Brad Johnson: Is he in jail right now?
Maria Konnikova: He is.
Yes.
At least he was last I was on the story.
I haven't been on the story for years.
Brad Johnson: Did you interview him in the
book?
I'm curious.
Maria Konnikova: I interviewed a lot of his
victims in the book.
Brad Johnson: Got it.
Yeah.
Sour Grapes.
For those that have not seen that documentary,
it’s mind-blowing.
Maria Konnikova: So, there are certain red
flags that you can spot ahead of time but
once you're in it, you're not going to see
them anymore.
Brad Johnson: Were all Ponzi scams from your
experience built on a referral only network?
Are there other ways to get the message?
Maria Konnikova: No.
It was just originally the referral network
was a very strong way to get it off the ground.
Then people start hearing about it.
And some of them would advertise in newspapers
afterwards say, "Look, we've offered hundreds
of investors in these returns,” and there'd
be testimonials from the investors, and people
would read it and say, “Oh, I want to be
part of that business.”
And so, advertising and kind of strategic
opportunities that way.
That's the other thing that I would say, a
good investment if it's really good and limited,
they're not going to advertise in a newspaper.
They're not going to call you and say, “I've
got a great investment for you.”
You're going to have to find them.
Brad Johnson: Awesome stuff.
Well, I feel like this could be the podcast
that could go into like three or four episodes
because there's just so much that applies
to our industry but I want to be respectful
of your time, Maria.
I know you're jammed.
The book is officially coming out June 23.
We're recording prior but hopefully, this
episode will be dropping before the book comes
out.
So, I'm holding it up for the camera for those
watching out on YouTube.
Go check out Maria's book.
I will be getting through the whole thing.
So, you’ll hear more feedback from me in
our private Facebook group on the book.
So, Maria, first off, thank you.
Maria Konnikova: Thank you.
Brad Johnson: This has been an awesome conversation.
Any parting thoughts, either as it applies
to poker, as it applies to The Confidence
Game, just for financial advisors out there
as we wrap here?
Maria Konnikova: I can't believe I'm about
to do this because I get so mad when anyone
does it to me, but I'm going to do it anyway
just because I feel like it.
Know when to hold them and know when to fold
them.
You're welcome.
You will now all have that song stuck in your
head.
Brad Johnson: Now, I have to queue it up in
the post-show.
You know what, that's what we're going to
do.
Charlie, you're listening to this.
We're queuing up the song and it's just going
to ride this episode out.
So, Kenny Rogers, right?
Maria Konnikova: Indeed.
Indeed.
Brad Johnson: Well, Maria, it's been awesome.
Eventually, New York will get back to normal.
Maria Konnikova: I hope so.
Brad Johnson: I hope that happens soon for
all of us.
It's a little different in Kansas.
When I look out my window and look at open
pasture.
So, if things get too rough there, come on
out to Kansas.
There are so many open spaces.
Maria Konnikova: Thank you.
I appreciate that.
This has been so much fun.
Thank you for having me.
Brad Johnson: Thanks for your time.
We'll see you.
[END]
