In 1998, on a riverboat casino on the Red River in Shreveport, Louisiana, the MIT Blackjack Team took the house for $80,000 in just a few hours. It was just one of many such big nights for Jeff Ma, who was a member from 1993 through 2001. Ma says he won about $2 million during that period, and his story was adapted into Ben Mezrich's book Bringing Down the House and the film 21.
Eventually, the casinos refused to let the team--which won so frequently by using sophisticated (and perfectly legal) card-counting techniques--play anymore. But Ma's story was far from over. He used his skills at blackjack to launch, build, and sell three different startups. After selling the first two to Yahoo and Virgin, earlier this month he sold developer-management tool tenXer to Twitter for close to $50 million. Inc. caught up with Ma to talk about the skills he transferred from the casino table to the boardroom table.
Blackjack and entrepreneurship
Like many startups, the MIT Blackjack Team was funded by investors. New players were constantly being recruited, and they honed their card-counting skills for months before they were allowed to go to a casino and bet with the team's money. After four months of practice, Ma began going to Las Vegas, Chicago, and Louisiana with the team on the weekends. Eventually, thanks to his card-counting acumen and calm under pressure, he was designated as a big bettor--he was one of the members who only bet big, while others made small bets or acted as spotters to alert the bettors to which decks on the floor were the most favorable.
"When people ask me what I miss the most from those days, it's not the rush or gambling, it's really the camaraderie," he says. "I miss the feeling of when the team went into a casino and tried to beat the house. That is why I love working in startups. It's the same feeling--you get a group of people together and try to tackle a big problem. You're trying to work together to build something, make money, and win. That's essentially what blackjack is."
Use data and analytics to drive decisions
Ma says the MIT team was centered on data and analytics. "You need to look at situations and understand what you need to be remembering and capturing from the experience," he says. "During blackjack, we collected everything we could." Similarly, he says, when running a startup, you need to be collecting, tracking, and analyzing as much data as you can.
While under pressure in a casino, he adds, the worst thing you can do is to become emotional or rely on superstition. While running a startup, the same is true. "You need to overcome emotional biases through data and analytics. One thing is to not be myopic, do not be loss-averse. Do not think about what you can lose, but what you can gain," he says. "Evaluate the data that is all around you, don't just use the data that you think will work for you--this is confirmation bias. Cognitive biases influence our decision making, so focus on data and analytics to overcome these biases and think more objectively and dispassionately."
Recruit, hire, and trust talent
To keep the blackjack team profitable, Ma says, members were taught to work in teams and constantly recruit new talent. It's crucial that you're able to rely on and trust your teammates. "In blackjack, there's a notion that you can do this on your own: 'I'm the best at counting cards and I'm good at the math,'" he says. "But to be effective, you need to bring in talented people to act as spotters or smaller bettors. The more talent working, the more effective and efficient you'll be."
As a startup founder, Ma delegates responsibilities in the same way. As your company grows, you need to hire employees and then trust them with important jobs. "Your natural inclination is to do everything yourself, but you need to trust your employees and give them responsibility, or else you can't grow as an operation," he says.
The three pillars
Whether Ma is betting on a new startup or gambling, he says there are three pillars that you need to have in your organization: vision, opportunity, and team. "The company's vision needs to be something you can get behind and believe in," he says. The blackjack team's vision was to beat the house.
The second pillar, opportunity, relates to how big the market is. If the company is successful, is the market big enough to provide billions of dollars from customer demand? And finally, team. "Ultimately, the team is the biggest one. You need to believe in the team and believe that the team can execute," he says. "Are these people you want to work with?"