Lessons From A Dorm Room Startup That Worked.

Many entrepreneurs are considered control freaks, and frankly I’m not surprised. When you’re running a business, exercising some control can provide a sense of stability during otherwise chaotic times.

But the cold, hard truth is that luck often matters just as much as execution. In fact, a few strokes of luck can sometimes make up for shortcomings in talent and experience. This was definitely the case with my first business: a Texas Hold ‘Em poker odds calculator that I built and sold successfully from my dorm room.

Only now do I appreciate how unlikely it was for this business to achieve any degree of success. I had no visionary insights or raw entrepreneurial talent. The truth is, all I had was elbow grease and great timing. Here’s how it happened.

Part Of Something Bigger

In 2004, as a Sophomore at Princeton, I couldn’t turn on ESPN without seeing replays of the 2003 World Series of Poker, an event at which relative unknown Chris Moneymaker (yes that’s his real name) took home the grand prize of $2.5 Million. Coincidentally, the poker-themed movie Rounders was enjoying cult status on campus, and real-money online poker was flourishing in an environment that US legislators wouldn’t regulate heavily until 2006.

Chris Moneymaker, the 2004 World Series of Poker champion (Photo by Ethan Miller/Getty Images)

Meanwhile, poker was taking campus by storm. It seemed like all of my friends were constantly playing poker, online and offline. From the back row of any lecture hall, you could spot online poker rooms on laptop screens throughout the crowd.

To me, this was merely an interesting phenomenon among my classmates. Somehow, everyone I knew was obsessed with the same thing at once, kind of like when Pogs became popular in grade school. What I didn’t realize about poker (and Pogs for that matter), was that my friends and I were not the trendsetters– poker had infiltrated popular culture, and we were among the millions who were participating in a worldwide craze.

I Was The Market

That class year, I had taken courses in Computer Science, Probability, and Operations Research. As summer rolled around, I had the urge to build some software of my own that put these new skills to work. Something related to poker seemed like a natural fit, because I knew at least a few people who would care about the software and potentially use it.

I knew that some of my more ambitious (read: nerdy) friends had set out to memorize poker probability tables. These tables provide rough approximations of the likelihood of winning poker hands in different situations. In addition to being extremely boring, this seemed to me like a job that could be better done by a computer– especially if you were playing in an online environment.

I decided to build a piece of software that would tell you an exact likelihood of winning based on your play circumstances. Ironically, I didn’t set out to make money by selling the software; if I was going to make any money from this project, I assumed it would be due to improvements to my poker skills.

I didn’t need focus groups, market research, or user stories because my friends and I were the ideal users. And I was able to move extremely fast because the product was so tightly scoped. As a result, a working first version was completed in about two weeks.

My friends loved the product, and soon I had requests from people I barely knew asking if they could buy a copy. My brother’s friend dubbed it “The Mooraculator,” a name that stuck. I decided to create a website for the software and sell it for $30.

First to Market

Thanks to early-adopter status and extremely fast production time, The Mooraculator was the first software of its kind on the market.

In another stroke of good timing, that summer Google launched a new offering called AdWords Express, which was designed to help small businesses promote their products and services online via Google GOOGL -0.03% Ads. I got a coupon for $50 worth of free ads in the mail and decided to try it out.

Since there were no competing products, it turned out that I was able to buy terms like “poker odds” and “how to win at poker” for as little as 10 cents per click. Visitors ended up buying the software at a conversion rate that provided a huge return on investment for these clicks, so I steadily grew my budget and sales.

For this brief, beautiful window of time, the sales poured in around the clock. I would wake up every morning to an inbox full of transaction receipts. Best of all, I didn’t have to do any incremental work, even when it came to delivery. I used a service called RegNow (now known as MyCommerce) to handle credit card processing and downloads. I had a built money making machine. Unfortunately, its days were numbered.

Winding Down and Lessons Learned

By the time I graduated in 2006, the poker craze had died down and the competitive landscape was saturated with products that made my odds calculator look like amateur hour. I hadn’t invested in keeping up with the competition, and my ride quickly came to an end.

While this product didn’t make me a millionaire (or anything close), it was quite lucrative for a college student. Far more important than the money, however, was what I had learned about entrepreneurship, markets, timing, and luck.

All at once, I had stumbled onto an emerging market, reaped the benefits of agile software development, found a scalable source of new leads, and deployed a cost-effective distribution platform. Then I got too comfortable, took my eye off the ball, and was taken down by my own hubris. These lessons stay with me to this day while running RJMetrics, even as we’ve grown to over 100 employees.

Perhaps the most important result of this experience, however, was getting the rare opportunity to see entrepreneurship actually work. It’s often said that entrepreneurs must be either stupid or delusional when launching a new business, because any rational person would run screaming from that huge quantity of work and low chances of success.

I probably would have been among the “running and screaming” if not for this experience. It was all I needed to talk myself into pursuing something bigger the next time around. I just needed a little luck.

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