The last time I played poker was about 35 years ago. I have only played poker less than 5 times in my life, and never for actual money. I never watch poker tournaments. So why was I recently reading a book by a former World Series of Poker Champion who earned more than $4 million in competitions?
Annie Duke’s best-selling book Thinking in Bets: Making Smarter Decisions When You Don’t Have All The Facts is not about poker, but rather about using concepts of good bets in poker to make smarter decisions in business, investing, and life.
I ended up reading this book after, a few months ago, TonyNames, @blogspotter on NamePros, highly recommended the book for domain investors. Tony is one of the people who most impresses me in domain investing: super active, positive, successful, and insightful, so his recommendation was enough for me to go out and read the book. I am definitely glad that I did.
About The Author
Annie Duke started out on an academic path, and has returned to that now, but in between, due to life circumstances, ended up in professional poker. By the time she retired from active poker competitions in 2012, she had won the World Series of Poker Tournament of Champions, and amassed about 4 million dollars in prize money over an almost 20 year career.
Halfway through her poker career, she was asked to speak to a financial investors’ group. That was the first of many appearances before various business groups. Annie Duke took ideas developed in competitive poker, and applied them to making the best decisions in business, investment and life.
A few years ago, Annie Duke returned to complete university graduate work, earning a PhD in cognitive psychology in 2022. Therefore, she is now Dr. Annie Duke. She has part-time adjunct faculty positions with both the University of Pennsylvania Wharton School of Executive Education and with the Harvard Kennedy School. Read more about Annie Duke here.
My Short Review of Thinking in Bets
Prof. Cass Sunstein, himself an author of more than 50 books, writes this about Thinking in Bets
I learned a lot from this book. But more than that, I was surprised at how much I enjoyed reading the book. The book is accessible, interesting, engaging, and fun.
Annie is a superb storyteller, who seamlessly weaves interesting human stories with insightful observations. Without being repetitive, she returns to core ideas sufficiently to reinforce key concepts.
The 288 page book is divided into 6 chapters, as well as extensive end notes and a long bibliography. To give a taste of the book, here are the chapter titles:
The Core Idea
In the preface, Annie Duke nicely summarizes the key idea of Thinking In Bets:
Domain Investing, Chance, and Calculated Odds
Let’s say a domain investor is creating or acquiring distinctive names to be used as a company brand. One should only acquire high-quality names that a startup owner would feel worthy to start a business on – I believe it was @Kate Buckley of Defining who expressed it this way: ‘Would you feel proud having this company name on your sweatshirt?’
But different names that all pass the quality test, can still carry very different probabilities of selling within a certain time period, and a set of probabilities of selling at different price levels. The sell-through rate is a calculation of the sales rate looking backward, but investors need to estimate it looking forward.
Each domain name is unique, so we don’t really know the probabilities in an exact way. That does not mean that we can’t estimate them, and without doing that, explicitly or implicitly, we can’t really say if a domain name acquisition is a good bet or not.
Even for the same name, there are different probabilities of it selling at different price points. Perhaps a finely created brandable name could sell for $25,000 or much more if a well-funded startup CEO came along who had thought up exactly this name, and was attached to it. That is the best case scenario of a well-funded, ready-to-buy, client who wants this exact name.
Where the luck comes in, that sale might happen on the first day you list the domain name, and it might not sell after 15 years or more. But it’s not all luck, and the better your name choices, the higher the probability the name will sell in a year. So it’s both about using estimated odds to make better decisions, and having a little luck..
The probability of sale will also depend, in a way we don’t know precisely, on the asking price. The same name mentioned above might be more likely to sell at a lower price, say $5000, at a marketplace where it competed with other names. There are probably more buyers with a budget at that level – they still want a good name, but are not tied to one particular name. Price it at $1900, and the probability of selling goes up still more, perhaps. The domain investor must, as rationally as possible, keep in mind the quality of the name, the probability that it will sell in some anticipated holding period, and the appropriate pricing range for this specific name.
Differentiating Good Results from Good Decisions
What was your best decision as a domain name investor? Please think about that and formulate an answer in your mind before continuing.
Did you pick a name that sold for a high amount? Or one that was acquired for a modest amount, and sold almost immediately a good ratio? Those are positive results, but were they your best decisions?
Annie Duke asks executives the corresponding question, and reports that almost always they relate a decision with a positive result. But note the question asked about the best decision. The question asked about the best decision, not the one that happened to, perhaps partly with good luck, produce the best result once.
We can sometimes fool ourselves by equating the best results with the best decisions. She stresses frequently in the book the danger of equating things that turned out well, results, with great decision making.
A good decision does not depend on the results in one particular instance. Rather, if done many times, would it have produced more positive results, statistically speaking, than some other choice.
Fortunately, as domain investors we hold many names, so in a sense can directly see how many instances turn out, at least if we keep good records, use a consistent approach, and in domain investing for a sufficiently long period of time.
We want to have good results in domain name investing, of course. The odds are better of having good results if we make good decisions, reasoned, evidence-based, smart, and disciplined decisions. A good single result in domaining might simply be an outlier, so focus on good decisions, and eventually, most of the time, that will result in good results.
Everything Can Be Viewed As A Bet
Decisions, whether in poker, business, life or domain investing, involve making choices, and considering the probability of different outcomes associated with those possible choices.
Every time you acquire a domain name, it is like making a bet on that name. Yes, based on your intuition, metrics and data for the name and sector, and other considerations, but it is still a bet.
In domain investing and in life, we probably don’t have all of the information that we would ideally want. NameBio provides access to more than 5.7 million domain name sales, but once we are in one particular niche in one extension, looking for retail sales from the last few years, we might not have much, or any, data. Even when we do have sales data, we don’t know all factors about how the sale came about.
Learning From Others
Much of Chapter 4 The Buddy System is relevant to domain name investing. On page 125 of Thinking In Bets, Annie Duke writes
Conflicts of Interest that We Create for Ourselves
Annie Duke points out that conflicts of interest are not always done by others, or for financial motives. As she writes on page 165:
Final Thoughts
Even though Thinking In Bets is not directly about domain names, I think reading the book, and taking some of the themes to heart, can help us become better domain name investors. It can also help with the emotional ups and downs that come with domain name investing.
As noted, the book is not mathematical in treatment, and not about domain names. In 2022, I covered in the NamePros Blog ideas of probability and statistics for domain investors in the article What Are The Odds? Applied Probability For Domain Investing. That article may complement your reading of Thinking In Bets.
Thinking in Bets: Making Smarter Decisions When You Don’t Have All The Facts is written by Annie Duke and published in 2018-2019 by Penguin. The book comes in hard cover, paperback, Kindle ebook, and audio book formats. For the 288 page paperback version, the ISBN-13 is 978-0735216372. The book is widely available, here is the Amazon link to the paperback version. The book has almost 5000 reviews on Amazon, with a positive 4.3 out of 5.0 rating. Odds are your local public library may have a copy – mine had two copies, but I had to go on a wait list, as the book is still popular.
Annie Duke has written several other books, including the 2022 book Quit: The Power of Knowing When to Walk Away, that I have not yet had the chance to read, but plan to.
Football fans, especially from Seattle, will remember the ending of the 2015 Super Bowl game. She uses that situation to start Chapter 1, and returns to it multiple times later in the book. It perfectly explains confusion between how a play turns out, with whether it was a good decision. You will need to read the book to learn more!
Thanks to Annie Duke for this wonderful book, and to TonyNames, @blogspotter, for recommending the book to domain investors.
Annie Duke’s best-selling book Thinking in Bets: Making Smarter Decisions When You Don’t Have All The Facts is not about poker, but rather about using concepts of good bets in poker to make smarter decisions in business, investing, and life.
I ended up reading this book after, a few months ago, TonyNames, @blogspotter on NamePros, highly recommended the book for domain investors. Tony is one of the people who most impresses me in domain investing: super active, positive, successful, and insightful, so his recommendation was enough for me to go out and read the book. I am definitely glad that I did.
About The Author
Annie Duke started out on an academic path, and has returned to that now, but in between, due to life circumstances, ended up in professional poker. By the time she retired from active poker competitions in 2012, she had won the World Series of Poker Tournament of Champions, and amassed about 4 million dollars in prize money over an almost 20 year career.
Halfway through her poker career, she was asked to speak to a financial investors’ group. That was the first of many appearances before various business groups. Annie Duke took ideas developed in competitive poker, and applied them to making the best decisions in business, investment and life.
A few years ago, Annie Duke returned to complete university graduate work, earning a PhD in cognitive psychology in 2022. Therefore, she is now Dr. Annie Duke. She has part-time adjunct faculty positions with both the University of Pennsylvania Wharton School of Executive Education and with the Harvard Kennedy School. Read more about Annie Duke here.
My Short Review of Thinking in Bets
Prof. Cass Sunstein, himself an author of more than 50 books, writes this about Thinking in Bets
That, in a single sentence, perfectly captures my own opinion of this delightful book.
I learned a lot from this book. But more than that, I was surprised at how much I enjoyed reading the book. The book is accessible, interesting, engaging, and fun.
Annie is a superb storyteller, who seamlessly weaves interesting human stories with insightful observations. Without being repetitive, she returns to core ideas sufficiently to reinforce key concepts.
The 288 page book is divided into 6 chapters, as well as extensive end notes and a long bibliography. To give a taste of the book, here are the chapter titles:
- Life is Poker, Not Chess
- Wanna Bet!
- Bet to Learn: Fielding the Unfolding Future
- The Buddy System
- Dissent to Win
- Adventures in Mental Time Travel
- Outcomes are feedback
- Luck vs. skill: fielding outcomes
- Working backward is hard: the SnackWell’s Phenomenon
- All-or-nothing thinking rears its head again
- Other people’s outcomes reflect on us
- Reshaping habit
The Core Idea
In the preface, Annie Duke nicely summarizes the key idea of Thinking In Bets:
Domain Investing, Chance, and Calculated Odds
Let’s say a domain investor is creating or acquiring distinctive names to be used as a company brand. One should only acquire high-quality names that a startup owner would feel worthy to start a business on – I believe it was @Kate Buckley of Defining who expressed it this way: ‘Would you feel proud having this company name on your sweatshirt?’
But different names that all pass the quality test, can still carry very different probabilities of selling within a certain time period, and a set of probabilities of selling at different price levels. The sell-through rate is a calculation of the sales rate looking backward, but investors need to estimate it looking forward.
Each domain name is unique, so we don’t really know the probabilities in an exact way. That does not mean that we can’t estimate them, and without doing that, explicitly or implicitly, we can’t really say if a domain name acquisition is a good bet or not.
Even for the same name, there are different probabilities of it selling at different price points. Perhaps a finely created brandable name could sell for $25,000 or much more if a well-funded startup CEO came along who had thought up exactly this name, and was attached to it. That is the best case scenario of a well-funded, ready-to-buy, client who wants this exact name.
Where the luck comes in, that sale might happen on the first day you list the domain name, and it might not sell after 15 years or more. But it’s not all luck, and the better your name choices, the higher the probability the name will sell in a year. So it’s both about using estimated odds to make better decisions, and having a little luck..
The probability of sale will also depend, in a way we don’t know precisely, on the asking price. The same name mentioned above might be more likely to sell at a lower price, say $5000, at a marketplace where it competed with other names. There are probably more buyers with a budget at that level – they still want a good name, but are not tied to one particular name. Price it at $1900, and the probability of selling goes up still more, perhaps. The domain investor must, as rationally as possible, keep in mind the quality of the name, the probability that it will sell in some anticipated holding period, and the appropriate pricing range for this specific name.
Differentiating Good Results from Good Decisions
What was your best decision as a domain name investor? Please think about that and formulate an answer in your mind before continuing.
Did you pick a name that sold for a high amount? Or one that was acquired for a modest amount, and sold almost immediately a good ratio? Those are positive results, but were they your best decisions?
Annie Duke asks executives the corresponding question, and reports that almost always they relate a decision with a positive result. But note the question asked about the best decision. The question asked about the best decision, not the one that happened to, perhaps partly with good luck, produce the best result once.
We can sometimes fool ourselves by equating the best results with the best decisions. She stresses frequently in the book the danger of equating things that turned out well, results, with great decision making.
A good decision does not depend on the results in one particular instance. Rather, if done many times, would it have produced more positive results, statistically speaking, than some other choice.
Fortunately, as domain investors we hold many names, so in a sense can directly see how many instances turn out, at least if we keep good records, use a consistent approach, and in domain investing for a sufficiently long period of time.
We want to have good results in domain name investing, of course. The odds are better of having good results if we make good decisions, reasoned, evidence-based, smart, and disciplined decisions. A good single result in domaining might simply be an outlier, so focus on good decisions, and eventually, most of the time, that will result in good results.
Everything Can Be Viewed As A Bet
Decisions, whether in poker, business, life or domain investing, involve making choices, and considering the probability of different outcomes associated with those possible choices.
Every time you acquire a domain name, it is like making a bet on that name. Yes, based on your intuition, metrics and data for the name and sector, and other considerations, but it is still a bet.
In domain investing and in life, we probably don’t have all of the information that we would ideally want. NameBio provides access to more than 5.7 million domain name sales, but once we are in one particular niche in one extension, looking for retail sales from the last few years, we might not have much, or any, data. Even when we do have sales data, we don’t know all factors about how the sale came about.
Learning From Others
Much of Chapter 4 The Buddy System is relevant to domain name investing. On page 125 of Thinking In Bets, Annie Duke writes
That is why a forum like NamePros is one of the most valuable resources for making better decisions as a domain name investor.
Conflicts of Interest that We Create for Ourselves
Annie Duke points out that conflicts of interest are not always done by others, or for financial motives. As she writes on page 165:
When I read that it resonated strongly for me as I thought about pitfalls of thinking about domains, and viewing our own performance. While it is not surprising that we let ourselves think that way, it is important to realize that such thinking can stand in the way of an unbiased assessment to optimally guide future decisions.
Final Thoughts
Even though Thinking In Bets is not directly about domain names, I think reading the book, and taking some of the themes to heart, can help us become better domain name investors. It can also help with the emotional ups and downs that come with domain name investing.
As noted, the book is not mathematical in treatment, and not about domain names. In 2022, I covered in the NamePros Blog ideas of probability and statistics for domain investors in the article What Are The Odds? Applied Probability For Domain Investing. That article may complement your reading of Thinking In Bets.
Thinking in Bets: Making Smarter Decisions When You Don’t Have All The Facts is written by Annie Duke and published in 2018-2019 by Penguin. The book comes in hard cover, paperback, Kindle ebook, and audio book formats. For the 288 page paperback version, the ISBN-13 is 978-0735216372. The book is widely available, here is the Amazon link to the paperback version. The book has almost 5000 reviews on Amazon, with a positive 4.3 out of 5.0 rating. Odds are your local public library may have a copy – mine had two copies, but I had to go on a wait list, as the book is still popular.
Annie Duke has written several other books, including the 2022 book Quit: The Power of Knowing When to Walk Away, that I have not yet had the chance to read, but plan to.
Football fans, especially from Seattle, will remember the ending of the 2015 Super Bowl game. She uses that situation to start Chapter 1, and returns to it multiple times later in the book. It perfectly explains confusion between how a play turns out, with whether it was a good decision. You will need to read the book to learn more!
Thanks to Annie Duke for this wonderful book, and to TonyNames, @blogspotter, for recommending the book to domain investors.
