A founder explains how the poker concept of being pot-committed mirrors a dangerous startup trap: continuing with a failing strategy because you've already invested so much. The fix is to ignore sunk costs and decide based only on what you know now and what's actually possible ahead.
Don't get pot committed. There's an idea in poker about how as the pot gets bigger and bigger and bigger, and especially big relative to the number of chips that you've got on the table, that maybe you're just going to keep on putting things in because even if you have a relatively low probability of success, your winnings from the pot are going to be much larger. And often what happens is because you put so many of your chips into the pot already, the thing is this leads to pretty bad decision making. You wind up making decisions based on what you've already invested rather than like what's right with the resources that you have now today and what to do I find a lot of startups get into the position where they've done some stuff, they've learned some things about the market, they're not in the same position they were before, but they keep on doing what they were doing based on the idea they had in the beginning. You need to get out of that trap. Start deciding what makes sense based on today's information.
