Similarly, at FreshAddress, employees receive thorough training in the company's industry, competitors, services, and internal processes, and then undergo oral and written examinations before they can start work. In addition, the company conducts weekly sessions to refresh salespeople's knowledge of subjects such as countering customer objections and legislation regarding electronic messaging. At staff Jeopardy! games, employees respond to questions about FreshAddress trivia. (Who coded the company's first website? What does "CPM" mean?) Kaplan has also retained the audience-participation aspect of training. New employees practice leaving voice-mail messages with prospective clients, and their colleagues critique them. "Everyone sits around and says, 'Honestly, I would never return that message. It was way too gruff or way too long. You didn't mention I visited your booth at a trade show; you made it sound like a cold call," Kaplan explains. "Like in blackjack, we not only grade what they know but also how they perform."
Require the contribution of skin
Perfect play was necessary to join one of Kaplan's blackjack teams, but it was not sufficient. Players also had to invest their own money. Even students squeezing by on a loan and a job swabbing dining-hall tables kicked in at least $1,000. They were paid using a complicated formula based on hours of play plus a share of profits. (Big winners often received bonuses, but no players were docked for losing.) Those who brought in fresh blood trained the recruits themselves and earned proceeds from their first 12 hours at the tables. Having skin in the game kept everyone motivated and honest, essential in an operation that trusted players to walk around with thousands of dollars in their pockets. "All eyes were on the same goal," says Kaplan. "Each player was as concerned about his teammates' performance as his own."
Starting with his Vegas team, Kaplan raised more than a million dollars from friends, classmates, and their families. As a leader and manager, he always put up capital on the same terms as other investors and took his compensation at the back end like everyone else. Each investment was structured as a "bank," generally defined as about three to six months of play. (See "Infographic: Know When to Hold 'Em") For each bank, Kaplan would write a business plan, including information on the number of active players, how many hours each would play, the team's strategy, and the projected return on investment. He constantly revised those projections based on new information. The Venetian might have changed its shuffling methods, for example. Or perhaps the Griffin Detective Agency, which published photos of counters, had spotted a player, rendering him persona non grata in the agency's client casinos. When the allotted time had passed or the teams had achieved the desired return, Kaplan would break the bank, pay everyone off, and start again. "Investors could decide whether to reinvest and how much," he says. "And players who made money could put it into the next venture."
The compensation system at FreshAddress echoes that of the blackjack teams, paying employees slightly below-market wages but offering a monthly share of net revenue, which adds from 10 percent to 50 percent to their compensation. That motivates workers to operate more like a team than a company, Kaplan says. "If people are rewarded based on the success of the whole, it keeps everyone focused on the same goal."
Analyze everything
Face cards and aces weren't all the blackjack teams tracked. Kaplan is so enamored of numbers that he makes Gary Loveman, the famously analytic CEO of Harrah's Entertainment, look like a from-the-gut leader by comparison. At the casinos, players carried Excel spreadsheets folded in their pockets. Periodically, they would slip into a bathroom and fill in 30 rows of data on every aspect of the game: what time they started play, how many chips they cashed in for, how much they varied their bets, how much they won and lost every hour. After each weekend, those sheets would be fed into a computer to determine how much each player had earned. Then Kaplan would calculate the standard deviation of players' won-lost records as a check against his computer-generated projections for the group's overall performance. (That data also tipped him off if someone wasn't following prescribed strategy or was stealing.) Investors received weekly summaries of performance data as well as a final report at bank's breaking.
In addition, all data were shared with all players. "Players could see what every other player was doing, what they had earned, what stakes they were playing, how many hours they got in," says Kaplan. "And someone would say, 'Wow, you got in six hours at the Mirage playing those kinds of stakes? That's where I'm going to be playing.' And the other guy would be like, 'Yeah, it was great. No one bothered me. I played over in this corner. All the pit boss ever does is talk on the phone to his girlfriend."
The teams also conducted qualitative intelligence. "We tracked casino openings religiously," says Kaplan. "We paid one person to do the research, and whenever one opened, we would hit it really hard before they figured out what was going on." Kaplan would send scouts to check out casinos' soft openings, essentially dress rehearsals in which management assessed whether dealers, cashiers, and other employees were up to snuff. "They'd come back and say, 'It's full stakes and an eight-deck shoe, and they are cutting cards all the way back," says Kaplan. "The scout might show up at a riverboat casino and realize that the manager who threw us out of Caesars is now there. So he'd say, 'Don't send six people down to play, because they will get kicked out in a second."
