#AIS: FiveThirtyEight's Nate Silver on how gamblers think

**Chamath Palihapitiya** (0:00)
We're really excited to have our next speaker here. Nate Silver is the editor-in-chief of FiveThirtyEight, and he came to our poker game recently.

**Jason Calacanis** (0:09)
Nate came to our game.

**Chamath Palihapitiya** (0:11)
Come on out, Nate, ran the game over.

**David Friedberg** (0:19)
Good morning. Who was the big loser that night?

**Jason Calacanis** (0:21)
I think, wait, who was the big loser?

**David Friedberg** (0:23)
Because Nate was the big winner, right?

**Jason Calacanis** (0:25)
Well, he was the big winner. I was basically trying to-

**David Friedberg** (0:28)
I think Jason was the big loser that night.

**Chamath Palihapitiya** (0:30)
I think I donated a little bit to Nate Silver's new Model S plaid.

**Jason Calacanis** (0:34)
Model Y, Model S plaid.

**Chamath Palihapitiya** (0:36)
I think you got the Model S plaid coming to the game. This was the largest poker win you've had in your life.

**Nate Silver** (0:42)
Largest cash game win, yeah.

**Chamath Palihapitiya** (0:44)
By a factor of five?

**Nate Silver** (0:47)
Two.

**Chamath Palihapitiya** (0:47)
Two, okay. Well, we're happy to donate. By the way, your speaker fee, I just canceled it.
But ladies and gentlemen, Nate Silver on The Mind of a Gambler.

**Nate Silver** (1:17)
I'm really excited to talk to y'all today. I'm working on a book about gambling, risk, and rationality, for the term critical thinking to rationality.
It's partly involved talking to people about global societal risks, so talking to people about the risk of nuclear war, which is like not very cheery conversations, by the way.
But also people who take risk for a living or at the very least, manage risk and have real skin in the game, and not just some actuary getting a salary. They're assessing risk and making big decisions financially, mostly based on that assessment. So I've started out talking to poker players and sports bettors. I'm a former poker player myself. I still play recreationally a lot. I'm currently, I think, number 301 in the global poker rankings. Not that I look that up every morning.
But mostly it's the examples of talking to other fantastic poker players and sports bettors about their process. And I'm also talking now more to VCs, to founders, to hedge fund managers, for example. There are a lot of similarities. There's a certain type of person. That's what I'm talking about today. Personality traits, modes of thinking, it even affects maybe their political views a little bit, and you see a lot of things in common.
So I gave you some of this context already. This is a work in progress. I mean, the book is kind of halfway, zero percent written, about fifty percent researched, so things may change. I'm evolving and learning and correcting things.
But it's fun to write a book. It's fun to have great conversations with the besties and other people and really kind of experience this firsthand. So I'm going to start with some things that I think are relatively straightforward and obvious and then get into things that are maybe less so toward the end. But one really obvious one is that successful gamblers think probabilistically. It's not just a matter of understanding probability, but comfortable with uncertainty, being willing to take bets on an uncertain basis. That's kind of table six for even getting into any field involving risk.
In poker, at least, you probably also need a fair amount of mathematical ability. There are now these things called solvers in poker that come up with a game theory optimal strategy for every situation. It's a very complex situation. It's way too hard to memorize. You have to kind of develop a mathematical intuition behind it. But even players with rare exception, Phil Helmuth might be the one exception, actually, right? But even players who are known as being field players or exploitive players, people who rely on math and psychology and table talk. I talked to Daniel Nagranou, for example, one of the probably five best poker players of all time. And he told me that about four years ago, he realized that these solver kids, as he calls them, the math wizards were better than him, at least at certain forms of poker, and he totally remade his game to look at computer solutions, to be more studious and mathematical, and it's improved his results quite a bit.
In the VC field, I don't know if you're necessarily doing as much modeling as I might in an election model, for example, but at the very least people understand the intuition, and the intuition is, you need both, but I think the intuition is more important than the application.
Number two, this one ought to be really obvious, but it needs to be said, successful gamblers are highly competitive. Things that you hear from people over and over again is, I want to kind of prove people wrong. I want to outsmart the competition. I want to show who's best. It's almost more of this motivation than financial motivation, I think. It's partly a matter of, you can't settle for being average as a gambler. The average poker player loses money to the house, so does the average sports better, so therefore you have to deviate from average in some ways. But kind of one conclusion I've come to talking to people for this book is that human beings are a competitive species, right? To get people to get along in society is pretty hard. You know, one good thing about capitalism is that you have some managed type of competition. Democracy is kind of a type of competition, and that's probably a better way to kind of challenge these conflicting urges we have than things that are too centrally planned. But certainly people in this room, people I talk to, are on the high end of the competitive scale.