Sam introduces Ed Thorp — math prodigy, card counter, roulette beater, and pioneer quant investor — as a launching pad for a wide-ranging conversation about following curiosity for its own sake, the pickup artist book The Game, and why knowing a solution exists is enough to unlock breakthrough. The episode ends with Sam’s own failed college card-counting scheme, which escalates from a South Carolina riverboat to an underground dorm-room casino.
Speakers: Sam Parr (host), Shaan Puri (host)
Ed Thorp: The Math Prodigy Who Beat the House [00:00:00]
Sam: All right, we’re live. Shaan, I’ve got a story for you, and I’m going to take a weird take on this. I’m going to appeal to all the young single men out there.
Shaan: All right, this is your specialty — young single men. Let’s go.
Sam: The story is about Ed Thorp. Have you ever heard that name? Ed Thorp.
Shaan: Sounds like a swimmer.
Sam: It does sound like a swimmer, but he’s not. I’m reading his biography — it’s called A Man for All Markets. Ed Thorp is 91 today, so he was born in the 1930s. He grew up as a math whiz kid — a prodigy. Grew up in a very poor household, didn’t have a lot of money. But as a young kid, when he was 12 or 13 years old, he got moved up a bunch of grades. He took a bunch of standardized tests, and at the time, living in California, he scored something like the highest scores in the state for high schoolers when he was 13 years old. They didn’t have calculators back then — they had little counting devices — and he took these tests without those devices because he couldn’t afford them, and he still crushed it.
Eventually Ed Thorp gets a scholarship to Berkeley, then goes to UCLA where he gets his PhD in mathematics, becomes a professor. He’s in his 30s, he’s this brilliant professor doing his thing — but then he does something interesting. He gets interested in applying his theories to real-life situations. He’s reading academic papers and thinking, this is cool and all, but we have to apply this stuff. His specialty was probability and statistics, and he got super interested in how he could use his theories to beat blackjack.
Shaan: Oh — this is the gambling guy. I saw this guy on Tim Ferriss. This guy’s interesting.
Sam: Because he’s done so much more than just the few little stories I’m going to tell. Basically — and you can actually verify this — blackjack is what, 51% chance the house is going to win?
Shaan: It’s like 51-49, 51-52, something like that. Yeah, a small margin.
Sam: Right. So back in the 60s when he was getting going, he had this theory that if he could see the cards on the table, he could have a higher probability of getting 21 — basically by counting cards, changing the ratio so he had 51% odds and the house had 49%. He creates this paper explaining the whole system, and inevitably people say, “Man, this is just some academic theory. There’s no way you’re going to be able to do this in real life.”
So Thorp’s a fun guy, and he’s like: we have to prove it. He builds out a blackjack table at his house, gets his wife to smoke cigarettes and blow smoke in his face while she’s talking to him, and has friends come over drinking alcohol — basically simulating casino conditions — and he still cleans up.
Beating Roulette and the World’s First Wearable [00:07:00]
Sam: Then he says: Blackjack was cool, let’s see if I can do this with roulette. Now, roulette — unlike blackjack — it doesn’t even appear there’s that much skill involved because it’s all about where the ball lands on this spinning wheel. But he has this weird theory: if he can quickly calculate how fast the wheel is going, where the ball starts, where it hits — somehow he can calculate 51% odds on where the ball is going to land.
Shaan: That sounds impossible. When the ball hits it bounces in a random direction based on the spin and speed. For somebody to do that in their head — I’d have to see it to believe it.
Sam: That’s exactly what interested him. He was a math nerd fascinated with proving his theories. So what he does is assemble a small computer — a two-person team system. He’s at the table placing the bet, and he has people on the side with these little computers. They have little buttons in their shoes, they tap their feet to keep the cadence of the wheel, and it helps predict where the ball is going to roll. That signal goes into his earpiece and he makes his bet.
This was actually the world’s first wearable — like an iPhone or an Apple Watch. The world’s first wearable. And it worked. He killed it. He made a lot of money. Eventually these techniques — the card counting, the roulette system — became banned in casinos. Because of him.
From the Casino to Wall Street — Meeting Warren Buffett [00:14:00]
Sam: Now we’re going to fast-forward ten years. He’s got something like $100,000 at the time — a lot of money for a professor — and he needs to invest it. He spends a few months just reading books, learning everything he can about investing. He wants to understand the math behind all of it.
He starts investing in publicly traded companies and loses a lot of money at first. He said, “I had to pay my tuition to Mr. Market” — he got a lot of it wrong. But then he discovers options. This part is a bit out of my expertise to explain exactly how he does it, but it involves shorting a company while also buying the stock. He’s not looking at what the company actually sells — no value investing, none of that “I think this brand is undervalued” stuff. It’s all just a math game. And after a year or two it starts working.
Now we’re in the 70s. There’s another professor at his university who’s been investing his own money in this small fund called Buffett Associates — run by this guy Warren Buffett out of Omaha. And this professor comes to Ed and says, “Hey, this guy Warren is winding down his fund. He wrote a letter saying he can’t find any more good deals.” Buffett actually paused investing for about five years — he couldn’t find anything he liked and just sat and did nothing. So the professor says, “I’m friendly with him, why don’t I invite you both over to my house, you can shoot the shit, maybe you’ll have a new friend in the investing industry.”
Buffett comes over for dinner, and he and Ed Thorp get along beautifully — like pots and pans, really close, they become great friends. Then a few weeks later the professor comes back and says, “Look, Ed, I was kind of testing you. Warren gave you a thumbs up — he said you’re really smart and your ideas are good. Can I take this money I got back from Warren Buffett and give it to you to invest?”
Ed’s like, “Taking other people’s money? I’ve just been doing this for myself. I guess I’ll try it.” He teams up with another guy, they raise something like $5 million over six months — with Buffett’s stamp of approval — and they start what was basically one of the very first hedge funds ever.
The First Quant: 20-25% Annually for 30 Years [00:21:00]
Sam: Ed Thorp was the first quant — where you don’t really look at the companies, you just look at the numbers. And he killed it. Over the course of 30 years he made something like 20 to 25% per year.
Shaan: What has Buffett made? Probably something like that.
Sam: Yeah, like 20, but over the course of like 60 years.
Shaan: For a lot longer — right.
Sam: So Ed Thorp basically invented counting cards in blackjack, wrote a book on it, invented a roulette system, built the world’s first wearable — all things that eventually got banned in casinos because of him — and parlays all that learning and experience into creating the world’s first hedge fund. The guy kills it. I think he made something like $800 million. And then around 2005 he shuts the fund down. He says, “I have enough. I don’t need any more. This was fun while it lasted.” One of the few guys who was winning and just said, “That’s enough, I’m done.”
Now he’s 91 — he still does push-ups and pull-ups, really into fitness. He doesn’t look 90. I saw him on the Tim Ferriss podcast and he honestly looks like someone in their early 60s.
The Game, Pickup Artistry, and the Art of Being Interesting [00:25:30]
Sam: And here’s the part where I promised I’d weave this into advice for the young man. Ed Thorp is so fascinating to me, and the reason is — did you ever read that book The Game? Did you ever read books on how to meet women?
Shaan: Not only did I read The Game — not only did my girlfriend in high school buy it for me before I went to college as a goodbye gift—
Sam: Was that her breakup gift? Like, “It’s over between us, but let me help you out”?
Shaan: Not only did those two things happen, but two nights ago I reread The Game. And I’m a married man. I reread it because I was like, that book was amazing — what was actually great about it? So I went back two nights ago.
Sam: So it’s crazy you brought it up. That book was like the Bible for a lot of guys in their 30s now — we read it at 14 because all us nerds were like, “I desperately want to be loved, how do I be loved?” There was a lot of nonsense in that book. The number of times I used the cube test — there was not a woman on Duke’s campus that didn’t get the cube test from me.
Shaan: Which one was the cube test?
Sam: It’s like a cold read where you say, “I want you to close your eyes. Imagine a cube. It’s floating in the desert. How big is the cube?” If they say it’s big, they’re self-confident. If they say it’s small, they have no ego. “Is the cube see-through? Is it colored?” “Oh, it’s kind of see-through.” “Well — you don’t let people in easily, but when you do, you really connect with people at a deep level.” “That’s so me.” And so on and so forth about their relationships and how they view the world. And by the end of it they’re like, “This guy’s going to be in the friend zone.” Which is really what happened to me. For better-looking people it probably worked better.
Shaan: They were like a cat and you were just holding a string trying to entertain them.
Sam: That’s another thing from the book — Cat String Theory. That’s actually a principle.
Shaan: It gets really nerdy. But one of the parts of that book — one of the parts I always took to heart — was that the best way to attract others is to be an interesting person. That means being an ambitious, passionate person. And I remember as a kid loving that, because I thought: wait, you’re telling me I can just work on myself and I’ll attract others? That sounds like the greatest thing ever. And I believe it to be true.
As I’ve gotten older, I’ve gotten less interesting. The first reason is I’ve developed higher expectations for most things that I do. As a kid you do something just because you’re intrigued, you don’t know where it’s going to go, you just follow it. Now there are expectations for everything, and I’m more interested in the outcome. The other thing is I’ve been distracted by social media — like you’re typing right now as I’m talking to you. It’s so much easier to be distracted with Twitter and Slack and email and text. I find myself getting distracted constantly and I don’t have significant amounts of deep thought. I’m on defense, reacting to information thrown at me, rather than spending time pursuing something that interests me just because it interests me.
Ed Thorp’s Real Lesson: Follow Curiosity Like a Kid [00:33:00]
Sam: The reason I like reading about Ed Thorp — and particularly for young men listening — is he’s inspired me to just pursue more hobbies for the sake of learning. When he was developing his roulette game, he basically bought an old roulette table at an auction for like $500 and just sat at home in the evening with his wife and they were like, “Hey, let’s see if we can figure out this game.” It was almost like Settlers of Catan — people just get into that random stuff and are like, “Let’s just see if we can master this game. It sounds fun.” That’s exactly how it started with Thorp. A lot of the things that became massive outcomes for him started as interesting little hobbies. They started very rudimentary.
Have you ever read about Richard Feynman?
Shaan: Of course.
Sam: Feynman was important for a variety of reasons, including helping make the atomic bomb, and he had these little weird things where he’d ask himself, “Why can dogs smell so good?” And he’d just put his head close to the floor and notice he could smell things differently down there. Really simple ways to prove or disprove a theory. Start at very basic principles and say, “Let’s see if this works.”
Justin Khan used to call himself “your favorite founder’s favorite founder.” And Feynman is kind of that — it’s your favorite guru’s favorite guru, your favorite thinker’s favorite thinker. Everybody you respect respects Feynman. I think Tim Ferriss’s holding company is called Feynman Inc or something like that.
Shaan: That’s actually genius — to just be like, “Yes, Feynman and Ferriss Associates, how can I help you?” Just borrow from their credibility.
Sam: Exactly. And guys like Feynman — and Ed Thorp is now in that sphere — they just get interested in things that seem so silly, they do it at a very rudimentary level, and it goes from level to level to level. But it starts at level one.
Jack Smith and the Curiosity-Driven Life [00:40:00]
Sam: You know who’s exactly like this? Jack Smith. Jack is a buddy of ours — you’ve known him longer than I have. He built a company called Vungle. His whole origin story was one of the very first podcasts on this feed — he talked about flipping things on eBay in high school, how he hacked his way into an accelerator, and once he was in, how he figured out this ad-tech company.
The whole ad industry at the time was CPM-based — impressions, like a billboard. How many people are going to see this billboard, that’s how you get charged. And Jack said, “Well, that’s kind of stupid. If I’m advertising, I don’t want people to see it — I want people to buy from me, download my app. I want the action.” So they did CPA instead of CPM. He and his co-founder created Vungle, sold it for $750 million when he was 29 years old.
And for example, where everyone else did video ads — you’re playing a game, it interrupts with a commercial, and you’re just waiting to click the X to get back to the game — Jack realized: the best way to advertise a game is to just play the game for a second. Let them try to shoot a couple times, they miss, they make it, they got a sample. So they created an ad unit that was a mini version of the game. It worked way better. Again, just thinking from first principles.
Now, since selling the company, he had his “Thorp enough” moment. He’s done. He gets really into other things. He needed to buy an office chair, got kind of uninspired by the options, so he goes and reads research papers on the best way to sit, tests chairs — and ultimately builds his own crazy ergonomic chair in his garage over six or eight months.
Shaan: Did you see the chair? It looks like a dentist chair. He’s laying in this position and it’s like a work chair.
Sam: Any time you ask Jack what he’s up to nowadays, he felt zero pressure to have some important-sounding answer. He’d just say, “You know, just messing around.” You’d say, “No, what do you do every day, Jack?” He’d say, “Well, I’m really working on building a chair. I got really interested in chairs. I sit for six hours a day and I thought, why don’t I sit in a better chair? So I started researching chairs. I’ve bought 52 chairs. I’ve been testing them. And then I decided to build my own — the best of each of these.” That’s what he’ll do for one year, and then the next year he’ll do something completely different. Off of pure curiosity.
The cake one year for his birthday — the cake his wife made for him — was shaped like an Amazon box, because he orders so many things. He had a room in his home dedicated to all the boxes.
Shaan: He had a small FBA facility in his pantry, basically, to test out every single product. At one point Amazon banned him for returning too much stuff.
Sam: But does this resonate with you — where you’re like, I need to just pursue more things without a big outcome in mind?
Shaan’s Framework: The Act of Doing It Is the Payoff [00:47:00]
Shaan: That’s actually become the theme of the last 12 to 15 months for me. I heard this quote — Naval said this on some podcast — he goes, “Too many of us are doing things today for some future reward, some future payoff. I’m not doing what I want to be doing now, but I’m putting in the time, putting in the work for some future payoff.” And he says, “That’s understandable, we all start there. But the day you start doing things where the thing you’re doing in and of itself is the reward — that’s the day you’ve retired.” People think retirement is when you stop working. It’s not that you do nothing — it’s that you do the things you want to do because the act of doing them itself is the payoff.
When I heard that I thought: okay, that’s what I need to be doing. And I’ve had little detours where I start doing something opportunistic because it’s going to pay off in the future. But I’ve continued to bring myself back to that: I want this next chapter of my life to be all about doing things where the only criteria is — the act of doing it has to be rewarding enough for it to have been worth it. That criteria eliminates like 98% of the possible things I want to do. If I’m honest and I say, “Why do I want to do this?” and the answer is “because it might make a lot of money,” or “it might pay off later” — no. I’m only going to this event if the event itself is the payoff. I’m only hanging out with this person if the hangout is the payoff, not because it’s going to lead to something else.
Sam: Can you determine what that is? That’s actually really hard — figuring out what the play is.
Shaan: What I realized is it’s less of a thing. I thought I had to find my thing — my new thing that I just love to do and I’m doing for the sake of doing it. But I realized it’s fundamentally different. It’s not a thing, it’s an approach. It’s a filter. It’s a question I ask at the beginning of anything I’m going to do that day: am I doing this for some deferred payoff, or am I doing this because I actually enjoy doing this?
It changed the way I do everything. With my workouts, for example — there was a version where I was just biting the bullet: do this and it’ll pay off later when you’re fit. Versus: why don’t I just do workouts where the workout itself is so satisfying? Of course if I do that, I’m going to do it more often, with full effort, and I’m still going to get the result. So I started working with a boxing coach, playing basketball — things I wasn’t doing before because I was willing to settle for something that sucked now but would pay off later. I realized it’s a false choice. You can filter every activity on one question: is the act of doing this the reward, or am I doing this only for some future payoff?
I told you I was reading The Game the other day. Why was I reading a book in the middle of the day — an old book I’d already read that had no relevance to me now? Because it was the thing I was most interested in at that moment. And I did it because the act of doing it was the reward. I’ve picked up piano, started other things — and I’ve never been so switched on after making this kind of shift in how I chose what to work on.
Sam: That is a very privileged way to go about it — and I mean that as a compliment.
Shaan: That’s a compliment. When people call you privileged they mean it as an insult. I want my life to be described as one of privilege — that is the goal. And I say that because most people treat it as a negative and then they try to make themselves smaller. If you have the freedom to do something and you’re not doing it because you’re worried about how it looks, you’re wasting your privilege. That’s a bad thing.
Let me answer the other part. The most successful project I’ve ever done — more than any of the companies I’ve ever built or any job I ever had — has been this podcast. From a usage standpoint, people listen and like it. Financially it’s a very lucrative product that affords a good lifestyle. But also just the enjoyment of it — I don’t do this episode for some future payoff. I do it because it’s going to be fun. I enjoy this conversation enough that by the time we click stop I’ve got my payoff.
When I started the podcast I literally wrote down: I’m going to lose money doing this. I expect nobody will listen. And I’m going to do it anyway because it’ll be so fun to record these episodes talking to interesting people and learning. I have this Google doc — I’ll share it — that says, “My forecast is I will lose $10,000 a year doing this. My forecast is that really nobody but my mom is going to listen.” And it was still worth doing.
Do You Have to Eat Shit First? [00:58:00]
Sam: I got into this position because I made a choice like that four years ago. But I also thought: you have to eat shit for a while before you get to do the fun things.
Shaan: I don’t believe that’s actually true.
Sam: That’s 100% true. Think about it — let’s say you’re a 40-year-old landscaper with three kids.
Shaan: I know a bunch of engineers who work on projects they’re personally interested in. They build personal projects. One goes kind of nowhere, two goes kind of nowhere, but it doesn’t matter — they’re building up skills, they’re having fun. By the third or fourth or fifth project, either they’ve built up skills where they’re a highly valuable person who gets brought into a project that’s already working and gets paid handsomely, or one of their projects takes off. But the whole time they were just doing the thing they really like to do.
I think there is one way to win which is grind and eat shit and pay your dues — pick whichever cliché you want. And that is a way to win. But I know people who from the beginning were driven by working on things that were interesting to them. And when they work on things that are interesting they work longer, harder, they get better at it. And when you get really good at something that’s when the payoffs tend to come.
Sam: I believe that can be true. And I also believe it can be true that it’s more challenging logistically for certain people. A blue-collar laborer with three kids at 40, working 6 a.m. to 7 p.m. — there’s just no time, just paying the bills. I think it’s just more challenging for many of the people listening right now.
Shaan: You’re right. We probably have a lot of college-educated, particularly college-age kids who don’t have too much responsibility and should lean into this. And I also believe that as you grow, this type of mindset gets stamped out of you — the world wants you to be vanilla.
Sam: Let me ask you a different question. Of the people we know who are successful, roughly what percentage do you think got there through the grind — doing shit they didn’t like that paid off in an unsexy way — versus people who made it by following things they were curious about?
Shaan: If I had to guess — 60 to 70% of the people we know who we’d consider wealthy enough that money doesn’t really matter probably made money in a way that looking back they were like, “That was really hard and miserable and I don’t think I can do that again.” And then of that group, only about 50% go on and pursue something that truly interests them. The other 50% just run the playbook again and are miserable while earning a great living. So roughly 20 to 25% are in the bucket where they were doing what was interesting to them and that happened to become very successful.
Sam: And that’s actually why Y Combinator is the stereotypical Silicon Valley story — you go in with one idea, you only have 12 weeks, by week six they tell you, “Dude, this isn’t working, pivot to credit card processing or whatever.” And they just say, “Okay, fine, I gotta get a win.” But that path is a 10-year journey or more. And so there wasn’t much thought put into it.
Shaan: I think that’s a little unfair to YC, though. One of the things Paul Graham advises heavily against is what he calls “playing startup” — just manufacturing an idea you think might work. He says the best way to find a startup idea is to scratch your own itch. What’s a problem you’ve already discovered in your own life? What’s a pain point from the way you already live? And the biggest YC successes have typically been that. The Airbnb guys renting out their apartment to make rent. Brian Armstrong doing Coinbase because he lived in Argentina and dealt with currency issues and was interested in Bitcoin. Those are not ideas that fundamentally sounded good on a slide.
Sam: The biggest successes are done that way. But not the average success. I think that’s the true statement. The most successful people work that way, but the majority don’t.
One confounding factor: for a lot of the people in our circle, the thing they were interested in was the game itself. The game of business. That was the passion — not the industry. Can I give you two related things that came up for me?
The Claude Shannon Hint Effect and the Four-Minute Mile [01:12:00]
Shaan: Do you remember when the OpenAI drama was going on — when they fired Sam Altman? One of the things that came out was speculation that they might have achieved some kind of internal breakthrough. Sam Altman had gone to a conference and said, “There are these moments at OpenAI where you’re sitting in a room and you get to see a demo and your mind gets blown. You’ve seen the future. The world is not the same because of what you just saw.” And then these leaks happened. People started talking about this thing called Q*. Do you remember?
Sam: I remember Q* — I don’t know what it actually is.
Shaan: I’m not an AI PhD researcher either, so I can’t fully explain it. But the idea was there’s a certain technique that people started speculating about — the Q technique, the star technique — and suddenly a bunch of smart people started sniffing around it. Just recently a bunch of research papers got published showing amazing performance using this technique. This led someone to tweet a little story I liked.
A guy named Robert Kwanzi tweeted: “Claude Shannon once told me that as a kid he remembered being stuck on a jigsaw puzzle, and his brother was passing by and said, ‘You know, I could tell you something that would help you with this puzzle, but I’m not going to do it.’ That’s all the brother said. But that was enough of a hint for Claude to solve the puzzle. The great thing about the hint is that you can always give this to yourself.”
So there’s this phenomenon in human behavior: if you knew there might be a win out there — you don’t even need to know what the thing is — that alone will increase your probability of success.
Sam: And do you know what else Claude Shannon did? Ed Thorp needed a two-person team for the roulette system — the guy tapping his foot was Claude Shannon. It’s called the Thorp-Shannon principle.
Shaan: That’s kind of funny. So the second story in that same thread is about Kaggle — the online competitive platform for solving math puzzles and coding challenges. The reply said: “One of my favorite Kaggle facts is that anytime the leaderboard gets stagnant for a while, if one team suddenly makes a jump, multiple independent teams will quickly reproduce the same breakthrough with no knowledge of how the first team did it.”
Which is the four-minute mile, right? Before Roger Bannister ran a four-minute mile, people were only at like four minutes and three or four seconds — which is actually a significant distance away. But when Bannister did it, roughly four other runners also broke four minutes within about three months.
And the same thing just happened to me in one of my businesses. There was a marketing channel we’d looked at and even dabbled with, but we didn’t know how to crack it. We put it on a shelf. Then I heard a whisper that somebody else was just crushing it using that channel. I don’t know what they’re doing. I don’t know the technique. I just heard enough to know they’re crushing it. Immediately we mobilized. That same channel that looked dead to us — we still didn’t have any technique, nobody gave us a tool — just the knowledge that somebody else was making progress fired us up. And we immediately found a breakthrough and over the weekend we did about $30,000 in revenue on that one channel.
Just the knowledge that there is a solution increases your probability of getting to a solution. Just the knowledge that somebody else found it — without telling you how at all — will increase your probability.
Sam: And I think that’s one of the things about this podcast that should help people. You’re not going to do exactly what any story we tell in this podcast describes. But just hearing other people’s success, just hearing that somebody ran a four-minute mile, will make you run a four-minute mile. We’ve had this with friends too — someone said, “I’m going to try to make a million dollars in three months.” I didn’t have that question before. Just hearing it got me thinking about ways to do it. Hearing that somebody did it made me want to figure out how — even though I was not going to do any of the things they did.
Shaan: Before we started this episode you said you were feeling a little uninspired. I have to say, you win a blue ribbon today. You’ve put a beautiful bow on this. So many good interesting tidbits added to the story of Ed Thorp.
Believing a Game Can Be Beaten: The Simon Says Framework [01:24:00]
Sam: Can I leave you with one framework and one story? The framework: when Ed Thorp was beating blackjack and roulette, what’s Step Zero before he even figured out how to beat the house?
Shaan: Believing that it could be done.
Sam: Exactly. Believing it could be done. And this is cheesy — but things that are cheesy but true are underrated. Smart people write off cheesy things because they’ve heard them before. But they haven’t actually acted on them. So cheesy-but-true things are underpriced assets, ignored by other smart ambitious people.
I went to a Tony Robbins event, and on the second day there’s another guy hosting. He starts off with a game of Simon Says to warm up the audience — 6,000 people playing Simon Says. The winner gets to come on stage and win some prize. And he says: “All right, stand up.” Everybody stands up. He hadn’t said Simon Says, so half the people are immediately out.
He whittles it down within five minutes to about ten finalists. The winner comes up on stage. And then he calls on somebody: “The guy standing next to you — when did you get out?” “Like the second round.” “Did you believe you were going to win?” “No, I mean, so many people, it’s a silly game…” He asks the next person. Same thing.
Then he says: “Raise your hand if, when we started, you believed you could win.” Like 5% of the audience raises a hand. He goes: “So all of you thought you were competing with 6,000 people. The only competition was among the 50 people who actually believed there was a way to win. In life, you believe you’re competing with a much bigger pool than you actually are, because the majority of people aren’t even playing the game. And of the people who are playing, most don’t believe they can win. You’re only competing with the people who actually believe there is a way.”
Similarly — cracking roulette. I thought that game was impossible to crack. Until I read the book — I think it’s called Bringing Down the House. Immediately my mind shifted: oh, blackjack is a beatable game. We can beat this game. And suddenly I started to understand how you actually beat it. It compelled me into action.
Sam’s College Card-Counting Disaster [01:31:00]
Sam: So here’s the story. I read the book. I become convinced we can do this. I tell my buddy Trevor: “Trevor, we can bring down the house. We can count cards. We can get rich off blackjack.” He says: “Say no more.” Perfect partner trait — he’s a believer, he’s down.
We’re 21, seniors in college. Did you read the whole book?
Shaan: Read the whole book.
Sam: We have a ton of belief, so we find a way to take action. I’m living in North Carolina — no casino in North Carolina. What do I do? Fly to Vegas? No. The belief drives the action. I realize: in South Carolina there’s a riverboat. It sails out into international waters, and then you can gamble because it’s international waters. The beauty of the world — anything goes on international waters.
Before we go, we spend three weeks practicing. Same system — you have a counter, a signaler, and the whale. Trevor’s the counter; he’s got the focus. I’m the signaler. Our buddy Dan is the whale. The whale’s job: he’s a gregarious character, he comes over to place the big bet. The trick with counting cards is you wait until the deck is stacked in your favor — lots of face cards left, the count is high — then you vary your bet size. Bet more when the deck is hot, less when it’s not. But if the casino sees you varying like that, they kick you out. So Dan only comes in when the deck is hot, and he comes in already with a big bet.
We have signals for every count. Dan has to act like a drunken idiot just plunking his whole stack down. We’re practicing in our dorm room, skipping class, running simulations. Our friend — this girl who was the dealer — would deal it out and we kept cleaning up. This works!
So we drive down to South Carolina, get on the riverboat. Dan’s got his drunken tourist costume on. Trevor’s just sitting there betting the minimum, counting. I’m Trevor’s buddy, the signaler.
The count gets to 10. I signal Dan. But in real-world conditions, Dan is so busy being his character — he’s actually acting like an idiot, getting drinks — he completely misses the signal. The count starts to drop. It’s at eight. Still good enough. I signal again. Dan sees it and starts coming over. But our dorm room was small — in real life he’s farther away. By the time Dan gets to the table, the count is like six. He tries to put his bet down. They say, “We have to color up your cash to chips first.” So the hand gets dealt before he can bet.
It nukes the count back down to two. Dan’s hand is visibly shaking. He cashes in a thousand dollars worth of chips — big money for us. He’s ready to bet big. But the count is now two. Trevor’s like, “Balls, man. Balls.” Our signal for two. And Dan — he’s not drunk, but he’s got tunnel vision, completely locked into his character and the stuff he’s saying to the dealer — completely ignoring the signal. He just puts the thousand down.
Shaan: What?
Sam: We’re both going, “Balls, balls, balls, balls — what are you doing?!” And we just get wiped out in two hands.
Shaan: Lost all your money.
Sam: Lost all of our money. We were like: “The book made it seem a lot easier than it was.”
Plan B: Running an Underground Blackjack Club [01:39:00]
Sam: We go back home, licking our wounds. He’s sorry, it was harder in real life. But the belief was still high — there’s a way to use blackjack to make a lot of money. So we said: “Screw it. What if we’re the house?” We decide to create an underground blackjack club at school.
Shaan: These movies go one of two ways.
Sam: Exactly — we’re now on option B for a great movie. We tried to become the house. We start running simulations: “This is great, the house has an edge, we’re winning, it’s a no-brainer.” And our friend the whole time was just like, “You guys are idiots. You’ve already wasted a month on stupid plan number one, and now you’re on stupid plan number two. This is an even dumber plan.” We’re like, “Dude, what are you talking about? We’re the house. Have you ever heard about the house’s edge? We can’t lose.”
So two weeks into our simulations — every night running these things, typing into Excel trying to calculate how much money we’d be winning — this friend comes in and just destroys us. He bets, he loses. Bets more, loses. We’re like, “See? Told you. This can work.” He says, “Cool.” Then: “Hey, give me all my money back.” We’re like, “No, dude.” He says, “You’re going to give me all my money back right now, or I’m going to call the cops and tell them you’re running a blackjack ring in your dorm room. Which is a serious crime. You’ll get kicked out of school. Or you give me my $800 back.”
We gave him the $800 back. “Damn it.” Because he instantly pointed out the fatal flaw: this is a crime. Any player who loses money always has the ultimate leverage.
Shaan: You didn’t see the scene in Molly’s Game where she gets beat up for doing this.
Sam: Right. So that’s when I learned about leverage. Leverage is more important than an edge.
Shaan: You should have gone back to the casino. That stupid first idea might have actually worked if your buddy Dan had gotten it together.
Sam: The reality is casinos now use six decks and auto-shufflers. The ability for the deck to get really hot has been cut down dramatically. You need to get to a spot where a lot of cards have been used and there are only a small number left with a high proportion of face cards — but that just doesn’t really happen with six-deck auto-shuffle anymore. So there’s not really an edge.
Shaan: This has been a roller coaster. I feel like I’ve got my money’s worth from this episode.
Sam: I should have just been learning how to code that whole time in college. I would have made a lot more money than all of my harebrained schemes.
Shaan: Or playing League of Legends. One of the two.
Sam: This was very good. That’s the pod.
Shaan: That’s the pod.