The Penny Stakes of Business

I was 20 when I started playing poker. I didn’t even have a credit card, so I gave my college roommate $50 and he transferred it into a poker account for me. You obviously can’t wager very much with just $50, and I didn’t want to. I wanted to learn the game and try and win. So, I played the penny stakes. Winning or losing a couple dollars was a big swing, or at least it seemed it at the time.

I tracked my wins and losses every day in a notebook. I was supposed to be using it for taking notes in class but tracking poker pennies seemed like a much better use for it.

I remember the account got down to like $35 at one point as I was learning.

Slowly I got better and better. I got back up past my initial $50 deposit. Then I got to $100. Man! Was exciting.

I was reading anything I could get my hands on related to poker. I was talking poker with anyone who’d talk about it. I watched Rounders half a dozen times. I was hooked.

I couldn’t believe you could actually make money at this. $100 turned into $200.

$200 turned into $500.

Then $1,000.

“Is this real? Am I really going to be able to take this money out?”, I wondered.

Seemed unreal that you could profit from doing something so fun.

“Take it out man, you’re going to lose it!” I’d hear from people once they heard I was making money from it.

That’s the thought process for most people. Eliminate possibility of losses, instead of maximizing the possibility of winnings.

Luckily I didn’t listen. I kept learning the game, and kept playing.

Since I was still playing such low stakes, there wasn’t many swings. Obviously I’d still lose some games, but overall my graph went up pretty consistently.

I can remember thinking, “it’s so easy, why would I move up?”.

The easy money I was making down at the penny stakes was too good to be true. Why give that up and risk losing all my profits?

All the other penny players advised me to keep playing for pennies- “it’s so easy man!” 

Well, being ever curious and inquisitive, I wanted to find out what higher level players thought. I didn’t know any at the time. I was a 20 year old kid at a tiny college learning to play in his dorm room.

I’d occasionally see a player online at higher stakes games sitting by himself with a lot of money. So, I sat down at his virtual table, and started a conversation with him.

I’m sure I asked a lot of intrusive, newbie questions like,

“Do you make a lot of money?”, but he was pretty open with me. He was around the same age I was, and supposedly making $1,000/week.

“$1,000/week!”. I was initially skeptical. I mean, I might have made around $1,000 or so off of my initial $50 deposit after a few months. But $1,000/week? Seemed too good to be true.

He gave me some advice for certain forums and books to read, and so I did.

“Woahhh.” It was like I found gold.

There was what at the time was a relatively small community of players. They were openly sharing stories about their adventures, and many were sharing about their wins and losses.

And they weren’t sharing them in an effort to sell coaching or some other ulterior motive, they were all just genuinely interested in exchanging ideas and figuring out the most optimal way to play.

It seemed like a number of people were making good money.

I found a few people who seemed like they were smart, and knew what they were talking about. Then I read as many posts as I could find from them.

(note: It’s the same strategy I used when I was beginning in business, and the same strategy I still use today when I want to quickly learn about a subject.

Find 1-3 people who seem like they really know what they’re talking about. Read EVERYTHING they say. Ignore EVERYONE else.)

There were plenty of people making money at the time, so even if someone was making money it didn’t mean they were any good. Sometimes it just meant they sucked less than the players who really had no idea what they were doing. That’s usually how growing, or hot markets work. It’s easy to confuse someone making money with someone who really knows what they’re doing.

After absorbing as much as I could, I moved out of the penny stakes and started playing higher.

Long story short, after a short learning curve I was making significantly more money playing at higher stakes. Over time I moved up again. Then again. Then again.

If I had stayed at the penny stakes so that I could protect my money and because it was “easiest”, I would have limited my results. It’s true that it would have been “easiest”, but in going with the easy route it would also mean I would not have reaped the rewards I did from poker.


(the only graph of mine we could find- 1 week of winnings while running hot)

Not only was I was able to make a very significant amount of money for someone in my early 20s, but the challenge of trying to beat the next level kept it interesting, and it was much more fulfilling than if I’d just played for pennies in an “easy game.”

If I’d stayed where it was easy, it would have lacked a challenge, been unfulfilling, and only made me a small amount of money.

I think my path to poker success was made easier because of the fact that I’m a logical thinker, so I only followed other logical people who could explain their thought process behind why they were doing what they were doing in a way that justified their reasoning. It kept me away from following people who may have had decent results, but didn’t actually think very optimally. Incorrectly following the ‘temporary earners’ who make temporary money only because of market conditions means you’ll be following suboptimal advice. It’ll be proven over time as their results fluctuate and often drop hard once the market corrects itself, and becomes more efficient.

Another reason I was able to steer clear of bad advice… there weren’t people selling all sorts of courses on how to extract more money from penny stakes games! 


I wasn’t distracted at possibly doing better at the penny stakes. I followed the more optimal route of playing a different level of game entirely.

In the business world, and in life, most people don’t have these luxuries so there’s constantly barriers and distractions to getting to an optimal path.

There’s all sorts of illogical thinkers telling you to join them at the penny stakes of life.


Plenty of penny stakers in business want to make more money, so instead of going to the next level of the game, they teach others how to play the penny stakes. They want the “easy” road of the penny stakes, but they want the profits of the big stakes. So, they sell the penny stake dream.

People who might be the same hungry kid at the poker tables as I was looking for a good path to follow will be bombarded with advice.

“Start a blog!”

“Write a book!”

“It’s easy, click on my link!”

“Just buy this course, ‘blogging the penny stakes’!”

If you follow that illogical path you obviously won’t find a pile of money waiting for you, but the penny stakes salesman might.

If the salesman succeeds, then they’ll be a “success story”, and they’ll market that success even further as if it justifies the path they’re selling. If people thought about the logic, they’d realize the penny stakes dream they’re selling people isn’t even the same way they’re getting paid.

I remember the early days of poker. The community of players I mentioned who really knew what was going on with the games had a secret code. If you were at a table and someone seemed like they knew what they were doing, you’d ask a question with the secret code in it, and based on their response you’d know if they were in the ‘know’, and part of the ‘secret club’(I know it’s super dorky but whatever).

Well, in the current online business space, it seems like very few people are in the know. Everyone’s buying and selling ‘penny stakes dreams’, and no one seems the wiser for it. Behind closed doors there’s a small group of people ‘in the know’ who are frustrated at how many people are being bamboozled into going down a suboptimal path, but no ones saying anything about it.

Like in poker as the games progressed, many of the suboptimal thinkers teach, not because that is their calling, but because it’s more profitable for them to do so. Most of the optimal thinkers continue to actually play the game.

You must recognize what game you’re playing, and who’s profiting from that game. Like they say in poker, if you don’t know who the sucker is at the table… you’re the sucker.

It’s okay to play the penny stakes to learn the game, but at some point you’ve got to start playing the real game, or you’ll be stuck with penny stakes returns forever.


Don’t let the gurus convince you to play for pennies, as they collect dollars for telling you to play the wrong game.

“Thinking is the hardest work there is, which is probably the reason why so few engage in it.” – Henry Ford



21 Responses to “The Penny Stakes of Business”

  1. WeeMike

    Another great post! So glad I found your blog a few weeks back. I’ve been searching for something to give me idea’s and every post I read of yours gets me thinking differently!

    I’ve struggled with business ideas I’ve had and I’ve not seen them through because I want them to mean something other than providing me money or ‘just’ providing a service.

    I started an eco bamboo t-shirt company a few years back, based on eco materials, recycled packaging etc, but I ran out of money before I realised it wasn’t money I needed to make the business a success.

    I think I’ve learnt from that experience, but I haven’t found the next thing I want to do.

    Reading your stuff is getting me thinking again and I’m sure an idea will come to me soon!

  2. Ace Tully

    I played poker back in college and was “decent.” Isolated the people that had no clue and stayed away from everyone else. Took the easy money BUT something inside my head didn’t want myself to make a lot of money from this. Didn’t feel “right” Self sabotage has definitely ruled my life. In basketball, in my job/business, poker, and everything else. Seems like I have a governor on myself because I fear success breads confidence. If you get too much too fast and do not know how to handle it then it CRIPPLES you and CORRUPTS you. How would you get get rid of this limiting belief?

  3. David

    Great post. Usually always relates to my thoughts of the day or something I been thinking about. Great!

  4. Jonate Govan

    Another great story (or post) Billy.

  5. Chris Sacchetti

    Hey Billy !

    Another great article here. I’ve just launched a home security niche business and I’ve been caught up in the “penny stakes” of “easy money”. What would you say is the first step toward playing “high stakes” for a business just starting out? Any specific game plan, or just providing real value for your visitors?

  6. David

    Cool article Billy. I feel like I’m still at the early stages of business, maybe not quite the penny stage but definitely on that side of the playing field.

    What’s the secret password for successful business owners? 🙂

    And how do you best determine who you should be listening to when you’re trying to find those 1 – 3 people to listen to while ignoring everyone else?

  7. Costa

    I’ve been thinking about the “penny stakes -> dollar stakes” a lot in the last few months.

    “Starting a blog” has always been penny stakes in my eyes. With it’s low barrier-to-entry, I quickly dismissed it as a long term +EV. “Barrier-to-entry” (or “moats” in tech startup circles) is my first question with any new business idea I come across.

    Blogs? Anyone can start one and then put up a post of “How I was able to quit my job by blogging” full of affiliate links to Bluehost. (even Pat Flynn does this)

    Youtubing? All you need is smartphone. Way too saturated nowadays.

    Mobile apps/games: Barrier to entry is a little higher, but lots of 3rd world developers are happy to clone the fuck out of you game/app. A week after Crossy Road announced they had made millions the iOS & Google stores were flooded with clones. (The platform holders don’t really care because the app stores makes them very little direct income and are simply their for retention which indirectly subsidizes their hardware or OS platforms.) And nowadays the top charts of filled with companies spending 7 figures (yes, 7) per day on acquisition.

    “Dollar stakes” — to expand your metaphor — are courses like “Double Your Blog Traffic” or “Double Your Freelance Clients”. These courses may help you do better at those tables, but for me the bigger question was “Do I even want to be sitting at dollar tables?”. I’ve done consulting / freelancing for a long time, but more clients is not the answer. The answer is moving up to a higher stakes table i.e. move beyond “find clients to do work for” to something that doesn’t require finding contracts at all — something passive.

    When evaluating a new business op / idea, my questions are:

    1) What’s the barrier to entry? Is this barrier high enough to allow a me time to make substantial profits before the market commoditizes the value I’m providing?

    2) If yes, am I in a position to exploit this high barrier efficiently and quickly enough?

    3) Would I enjoy the day-to-day? If I’m not jumping out of bed to work on it, it’s going to go nowhere. If this course/advice makes me successful as promised, will that be a house I want to live in? For example, “Become an Authority” courses. I have no interest in writing books, public speaking, podcasting, etc, so I wouldn’t want to be an “authority” even if I were successful at it.

    Sorry for the essay… thought-provoking stuff as usual Billy 🙂

    • Austin

      Wow Costa your reply was just as insightful and thought provoking as Billy’s article. Thanks for the brain food guys! Those are excellent parameters/ questions and they apply very well with a business idea that I am trying to manifest.

  8. Tuomas

    Good stuff man I appreciate what you do and share. You are one of the few persons what I keep subscribed. Have been following you since 2013. Big thumbs up!

  9. Costa

    One other mindset I’ve been tinkering with is how do I become that guy at the table you asked for advice?

    That is, “in” before the masses. If there are courses for it, it’s too late.

    There are tons of guys out there banking millions that are doing something that there are no courses on. That he hasn’t told anyone about because he knows it would get copied and he would get squeezed out.

    Viralnova is a good example. He figured out how to drive tons of Facebook traffic to his site via those Buzzfeed-style headlines. Lasted a couple years before he got copied, users got fatigued, and FB closed some loopholes. Sold the site for $100M. ( )

    He figured out the revenue model by trial and error, not from an online guru he bought a course from. He did it via observation and experimentation.

    That’s the best position to be in on the timeline. Before the courses, “How to” blog posts, and press profiles.

    It’s also the most difficult to attain and codify because it’s hard to sell a course titled “The Secret Recipe is ‘Think outside the box’ “. But this blog comes pretty close – thanks Billy.

    • Marius

      Thanks for the post about Delong, perfect example of attention arbitrage and out of the box thinking. He looks for the next big thing that grabs attention of the masses, jumps on it and manipulates it to his favor until all the sheep’s come in and it gets overcrowded. Mostly he is also currently doing something with snapchat.

      Funny is, that he basically never created any unique content, everything produced by someone else and gathered on his websites, very inspiring.

  10. Arthur

    Man, I’m loving your content like nothing else. Definitively you’re one of my “1-3 guys that seem to know what they’re talking about.”

    I think I just found the puzzle piece that was missing reading a post of yours that I skipped about the business idea. I’m so hyped to hit the ground running on an idea that I have! I’m confident that I can help people’s businesses thrive with it. Nothing spectacular, just ol’ hard work and implementing things you learned from good sources, exactly like you wrote.

    Funny thing is I’m excited as fuck to earn even those $3.75/hour because it means people would pay me for my results. It doesn’t bother me. I’m doing this shit for the long-term.

    Now, putting you in a more uncomfortable position… (hope you don’t get offended or some shit though)

    Seeing that I’m the hungry kid at the poker table and I’m trying to be somewhat aware of the penny gurus, it’s somewhat hard to differentiate them since 99% of we learn nowadays is on the Internet and virtually everyone sells some kind of course. Even those who supposedly “are playing the highest level instead of selling products.”

    Some examples that comes to mind: Noah Kagan and monthly1k, Neville and his copywriting courses and even yourself and the IG course.

    There is no way to know if the main moneymaker from someone is the course or not, Pat Flynn possibly being the exception. But he doesn’t sells courses and his book is on Amazon for no more than $10 I believe so there’s that.

    So, I ask you: how we do know what’s legit and what isn’t?

    Just so we are on the same page, I don’t doubt any of these guys, yourself included. I’m just asking because you obviously know your reasons (and by extension, theirs) more than I do and you’d be able to provide some light to the matter.

    • Omar Elbaga

      I’m not going to lie. I’d love to hear Billy’s take on this, but perhaps the answer is that it’s something you have to decide.

      I think the idea is not to call one thing out, but just pay attention to what’s going so you’re not bamboozled and also learn to discern. It’s ok to participate in penny stakes, but understand the game is probably the point.

    • Kelly

      I know I’m not Billy, but I felt that I might be able to give a decent answer.

      I think the thing that we have to do is “due diligence.” What I found from being in this space is that if there are individuals who are constantly releasing courses, constantly promoting, etc, they are usually the “penny stake players.” Of course there are some guys in the space that do have good intentions, but like Billy said, most likely if you continue to play at that level you won’t make or do as well as you could if you “leveled up” so to speak.

      The best thing to do would be to find out how said person makes their money. If they spend most of their time promoting and making “how to sell shirts on Facebook” type courses, then you probably would have to look elsewhere.

      Focus on figuring out if your business pursuit will solve a need and if you can market it successfully, it’ll make doing due diligence a lot easier. There’s so much noise out here and it is so easy to get deceived.

  11. Timothy Durgin

    “When the masses are mining for gold, sell shovels.” I wish I could take credit for that quite, but I can’t.

    Like you talked about in your last post, people who have critical thinking ability will wake up to this and actually work their way into the “big leagues” of business.

    On the other hand, people incapable of critical thinking will always be the “sucker at the table,” so to speak.

    It’s a twisted version of survival of the fittest. Instead of trying to physically kill and eat each other like wild animals, we try to outsmart each other politically, legally and financially for our own gain. The question readers must ask themselves is: do you realize when someone is trying to do this to YOU?

    If not, I’d suggest reading up on economics and philosophy (along with Forever Jobless, of course) to expand your thinking — and this will be the first step out of the penny stakes.

  12. Dan Broderick

    great article, but where is now the secret you speaking about? did i miss something? if not where can i get the secret behind internet business? iam sick of Infoproduct and self-help guru blogs, i think that is what you mean with selling the penny stake business dream right? What is your opinion? Where can i make the real money with real business, still ecommerce?

    Best Reagards


  13. Victor Silva

    Hi Billy,

    This post really got me thinking about the rat race brazilian kids are being sold.

    First, I should mention that in Brazil we have a culture of going to university even when there’s no need to. People with no degrees have real low social status here.

    The rule around here is like that: private schools are usually much better than public schools, but public universities are usually better than the private ones. There are some pretty good private universities too, but the public ones are, if not better, just as good and free of charge. Of course, there is no room for everybody at public universities, so all students done with high school take a national exam to qualify for the available spots and the best grades get the best spots.

    So most middle and upper classes families’ plan is: pay expensive high schools so their kids get prepared to achieve good results in the national exams so they can go to public universities. The value of private high schools, therefore, is measured almost only by their data on the national exams. So such schools are very boring and they’ll skin their students alive so they can learn how to score at the theoretical test. Other than that, schools won’t teach many useful things: as a rule, kids leave school having no idea what they want to do with their life, but they will very rarely even consider not going to the university at all, as this doesn’t seem like a real option.

    Therefore, all our best private schools will market themselves as a big path to success and all that, but it’s quite curious that their owners are gettting really rich selling a pathway that won’t lead to the same success they had, because they’re owners, entrepreneurs, not 9-5 workers, as most university graduates will become if they follow the route being sold.

  14. Rakesh

    Excellent article man…. Could relate every sentence of it to my current situation. I am trying to learn Java to become a programmer initially I was bombarded with blogs books… Etc about the basic concepts no one said how to actually write codes “on the go” I am trying to figure that out myself… So I could relate to this article thanks again dude

    • Omar Elbaga

      Rakesh. I taught myself how to code and now it’s my full time job. My advice is stay away from learning how to code from quick online tutorials and these superficial code academy type courses.

      You really need to understand a language from beginning to end.

      I would go to Barnes &Noble and pick up a fairly large -real- book. Perhaps something called “Java for beginners” published by Wrox. There are publishers known for putting out educational books on code. Wrox, Apress, ore illy, Sams.

      Read the reviews to research. Look for people saying wow I new nothing and this book taught me how to x,y,z.

      Then go through this book from beginning to end. Rinse and repeat and go through as much as you can.

  15. Sam

    Great advice Billy, as always. I love the idea of finding several mentors to hone in on and learn from. I’ve been using this myself to great success, by the way you’re one of them!



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