#10 Expected Value ♠

I’m Ivan Landabaso, VC at JME.vc. Startup Riders is a weekly newsletter where I go down startup rabbit holes and share actionable insights. I also love surfing 🤙


  • ♠ Expected Value: highlights from MIT’s poker analytics course.

  • 👀 Outlier Spotting: Elad Gil’s lessons on spotting unicorns.

  • 💵 Recent Deals in Spain: come join the Spanish startup scene.

  • 💭 Thinking or Reading: Breathe like a pro.

♠ Poker Tools For Startup People

tl;dr —this is a summary of the free “Poker Theory & Analytics” course by MIT. It lays out the ABC of poker, including basic concepts and important rules of thumb for n00bs.

⚠️ Geek Out Alert ⚠️: This one is going to be a little unconventional / dense. If this is not your thing, feel free to skip!

4 Main Styles

There are essentially 4 main styles:

  1. Fish (Noob, reckless, no real idea how to play)

  2. ABC / Game Theory Optimal (follow the math, positive expected value)

  3. Exploitative

  4. Mix of 2 & 3

There are a bunch of books from pros ranging from styles 2 - 4. If you decide to dig deeper, just consider Daniel Negreanu’s word of caution when consuming them.

4 Player Types

  1. Fish: Complete Fish / Calling Machine. You (should) make (lots of) money with these guys.

  2. Weak: Tight Passive / Weak. You can make money with these guys.

  3. Tight Aggressive: Often recommended for beginners.

  4. Loose Aggressive: Mostly pro terrain.


Understanding the relative strength and weaknesses of position in Poker is key. Here’s a brief overview of each position, played clockwise:

  • Button / BTN / In Position: In general, the later position is better because you get more information (people acting before you). The money tends to flow to the later position. The hand where you are the button you are set to potentially win the most money.

  • Blinds: The blinds are typically the worst position as they are at the worst point of information flow. Blinds get a discount to see flops, but are in the worst position for every round thereafter.

  • Early position: offers more opportunity for aggression.

Fundamental Concepts & Metrics

The tl;dr for n00bs like myself is to learn how to play Game Theory Optimal poker, so you can evolve from there. In order to QUICKLY perform certain calculations during the game to get the basics down, you need to understand:

  • Effective stack size

  • M Ratio

  • Expected Value (EV)

  • Pot odds

  • %Win with rules of 2 or 4

  • Hand ranges

I have not included Implied Odds and Fold Equity in this writeup. Those are important concepts - but IMO not critical for a total n00b.

Effective Stack Size

These are the chips in front of you, the most amount of chips you can lose in a hand. We are basically always talking about effective stack

M Ratio

M Ratio = Effective Stack / Sum of Blinds and Antes 

The M Ratio tells you the amount of rounds you can survive until you get blinded out. It is the ratio of your stack to the value of stealing the blinds.

It is basically a way to normalize the decision making process:

  • A high M means the player can afford to wait a high number of rounds before making a move.

  • A low M means the player should act soon or be weakened by the inability to force other players to fold with aggressive raises.

Expected Value

👇 What is Expected Value 👇

EV = Win% * WinAmount — Lose% * LoseAmount

Expected Value (EV) is the probability weighted average of possible results. If it is positive (+) you should call, if not (-) you should fold (if you are playing game theory optimal). It helps you decide what is the maximum bet size you’d be ready to call.

In general, decision rules will be made based on EV. For example, — If Win% = 25% and you are facing a $60 bet into a pot of $100 à EV = 25% * (100+60) — 75% * 30 = 17.5

Ok cool, but that sounds relatively complicated and want to do this faster.

How do I know if a decision is +EV? You need to calculate 2 things:

  • Pot Odds

  • Win%.

Pot Odds

👇 How to quickly calculate Pot Odds👇

Pot Odds = Call Amount / (PotAfterCall)

Pot Odds = Decision rule to call a bet, the relationship of the call amount to the size of the pot. By quickly calculating pot odds and win% — you get a shortcut to EV.

In general, a call will be +EV if Win% > Pot Odds [CallAmount/(PotAfterCall)]

Example: If the bet were $100 into a pot of $380. Pot Odds would be $100/$580, where $580 = (Pot + Bet + Call). Hero’s call contributes ~17% of the pot. He can profitably call if Win% > 17% of the time.

Win % & Rule of 2 or 4

👇How to quickly calculate %Win👇

Rule of 2 or 4 (Chance of Hitting Draw) This technique is supposed to help you make the %Win calculations faster during a game.

  • Win% is based on “Outs” (cards that result in a win).

  • Each Out is worth about 2% equity (additional %win points) per card.

  • If you get to see both turn and river, use 4% per card. This 4% is usually only used when you are sure to see both turn and river, such as in an “All-In” situation. Otherwise use 2%.


Hand Ranges

A range in poker is a set of hands. Ranges are useful for 2 reasons:

  1. Analysing Opponents: Estimating equity against likely opponent cards.

  2. Determining Our Plays: Developing range-based rules for our plays.

Instead of thinking of yourself holding K♣10♦, you should include several hands in a range. For example – K10s, Q10s, J10s, etc. – is part of a poker range of hands.

Thinking in ranges allows you to relate your hand to what an opponent might have.  It’s important to consider all your opponents’ possible holdings.

The best way to understand Poker ranges is by visualising it in a hand grid (table). These are all the possible hands you could be dealt in No-Limit Texas Hold’em.

  • “o” indicates it is an off-suit hand

  • “s” stands for a suited hand

Here’s an example:

There is a lot to digest on Ranges (I’m still learning a lot here), dig further if interested.

For now, you can memorise the below entries to get an intuitive sense of the % of hands that a range represents - I.e.: TT+ comes up approximately 5% of the time.


When faced with a decision, follow these calculations:

  • Pot Odds = Call Amount / (PotAfterCall)

  • %Win using rule of 2 or 4

  • If %Win > Pot Odds 👉 +EV 👉 CALL !

👏👏👏👏 🎉 🎉 🎉 Congrats on the +EV decision! 🎉 🎉 🎉 👏👏👏👏

Now, assuming you are a n00b, go beat your friends:

  • Most of your value will come from playing pre-flop close to optimally (ABC Poker), because most players will be way off in their decision-making.

  • You will enter few pots, but will generally be ahead when you play.

  • You will have easy decisions on the flop, since you will either hit or miss them completely.

  • You will win medium-size pots, but not huge ones.

  • Any hand you play should be raised by you to 3xBB + 1 per caller.

  • Use hand ranges to get an idea of your hand value.

👀 Outlier Spotting by Elad Gil

Great article on the unusual signs of a billion dollar company, and how to spot them.

Here’s the TL;DR:

💵 Recent Deals In Spain

You love startups and want to 10x your quality of life? Come join the Spanish startup ecosystem. Here’s a list of recently funded startups:

💭 Thinking or Reading

Breathing, like a pro

Firas Zahabi - a legend in Mixed Martial Arts - breaks down how mastering breathing is a great lever for controlling your physiology and emotions.

If you find this interesting, please consider sharing with your friends. I’d also love to get your thoughts and feedback on Twitter. Until the next one! 🤙

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