Poker pro and investor Daniel Cates on finding new business opportunities
We spoke to Cates about his process of investing and some key takeaways that other aspiring investors or entrepreneurs could apply in their lives.
In a recent interview, famed investor and poker enthusiast Jason Calcanis explained that poker was a great metaphor for angel investing. Implied odds determine decision making for both investors and poker players who take big chances for big payouts. The earlier an investment is, the larger the potential payout.
For poker pro Daniel Cates, diversification of assets and income streams has been an important part of his financial game plan and one that has led him to invest in upcoming technologies and businesses. These opportunities include tech, real estate, cryptocurrencies, and more. Out of sheer necessity, Cates has had to develop a system to filter these opportunities and decide which are worth pursuing in greater detail.
In this interview, we spoke to Cates about his process of investing and some key takeaways that other aspiring investors or entrepreneurs could apply in their lives.
- How do you usually source new opportunities?
I have been lucky to have a consistent stream of inbound opportunities from friends, associates, and even random people who have seen me play poker. Once you establish a reputation in the poker world, opportunities naturally start to come your way. Sometimes this can be problematic as people assume you are like a lottery winner and have a bunch of spare money to throw at random ideas. Overall, it’s a good problem to have and one that many people do not have the luxury of complaining about.
- What do you look for in a potential investment?
I love challenges but tend to really like businesses that I understand and would actually use, whether a product or service. There is no better way of understanding a business model than directly experiencing its benefits, particularly when it helps solve a problem that you might have. For opportunities that are beyond my scope of knowledge, I have a few people I trust that help evaluate deals and provide due diligence support.
In my experience, the best business ideas often tend to be the most simple in the way they are structured and presented. I think many entrepreneurs fall into the trap of overcomplicating what they are building, causing them to bite off more than they can chew initially. With time, even the most basic business models can become extremely advanced. I always am reminded by this when thinking back on that picture of Jeff Bezos in a modest office with a hand-written Amazon banner in the background.
- What technology excites you these days?
On a personal level, I am really into creative pursuits at the moment and various social projects. From a tech perspective, I still think blockchain is fascinating and has the potential to revolutionize the way people hold, manage, and exchange currency. We are witnessing this at the moment with the recent news announcements about Paypal and Visa both starting initiatives to help promote the mass adoption of digital currencies.
- Are there any overlaps between poker and investing?
Absolutely. Both are very people-centric. You learn to understand human nature and psychology which both provide actionable data points to leverage, whether on the poker table or in a meeting. This is very valuable to help avoid common pitfalls investors make when dealing with founders that might be inexperienced or even worse, unreliable, and not authentic in what they are looking for in the relationship.
- What is one tip you would give aspiring entrepreneurs or investors?
Do not be intimidated by the learning curve involved. Rather, attack it head on and go learn from the best investors you can get access to. Go straight to the top and absorb as much information as possible from the people doing what you aspire to be doing. This was my approach with poker. I was initially a losing player and I decided to find the most challenging tables and consistently play there in order to level up my experience with people that had much greater experience. This helped cut down the learning curve significantly.
- What tools or technologies do you use in your day to day life?
I am a big advocate of community-driven products and sites like Product Hunt, Reddit, Substack, and platforms like Teachable. We are witnessing the boom of the creator economy, where people can find ways to replace a full-time income by teaching, selling courses, and writing about very niche ideas. This is extremely valuable, especially when the content is strong. This goes back to the last question in the sense that people can now learn from the best of the best by subscribing to their newsletters, listening to their podcasts, and watching their content on Youtube.
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