Playing Video Games Can Help You Level Up in Business and Investing
Why So Many Successful Investors and CEOs Play Video Games
What do Elon Musk, Mark Zuckerberg and Tobi Lutke have in common besides being insanely successful, brilliant, billionaire CEOs of Tesla, Facebook and Shopify? Besides dominating the business world, they all attribute some or all of their business success to playing video games.
“Part of the reason, maybe the reason, I got interested in tech was video games,” Musk said. “I probably wouldn’t have started programming if it wasn’t for video games.”
Mark Zuckerberg programmed his own snowball video game to play with his sisters since they did not want to go outside to have a real snowball fight. Zuckerberg’s love of video games may be why he is investing so heavily in VR (virtual reality).
But it is Tobi Lutke the CEO of Shopify (which is now a $190 billion market cap company) who makes the best explanation for why anyone should play video games, highlighting his own experience playing the game Starcraft.
“So, here's the wonderful thing about Starcraft—it’s been around since 1998, so I was 18 years old when it came out. I spent a good part of my formative years playing that game. There’s a couple of amazing things about it. Every decision you make is a balancing act between the needs of right now and the long-term benefits. In this way, everything is a deferred decision, and I think a lot of success in life is how good you are at making long term choices.
When you just watch the game, it looks like you make decisions between extracting resources, investing in expansion, et cetera. By the way, that alone is a lesson that I think Starcraft players are already better at than a lot of people who end up getting MBAs. Both give you the same kind of decision matrix, except in an MBA it’s through business case analysis. You just get a more intuitive feel for this through video games.”
And it’s not just brilliant CEOs who are unabashed cheerleaders or highlight their love of video games, it is also top investors as well. Gavin Baker who runs Atreides Management on his own personal site says he enjoys playing video games in addition to reading science fiction and fantasy novels. Patrick O’Shaughennesy, CEO of OSAM Capital Management, which has over $5 billion under management, also host of the amazing Invest Like the Best podcast, has talked about in interviews how much he played video games as a kid and still plays.
Stepping back from just video games, legendary investors have always loved and played games. While you might be skeptical of the value of video games, please consider that the older generation of great investors all play games. Warren Buffett plays bridge (and Bill Gates often plays with him). Howard Marks wrote a whole memo of how he loves to play games. A more contemporary example is David Einhorn and his love of playing poker and participating in major poker tournaments.
But why do the current crop of top business leaders and investors play video games instead of card games? Great video games that ask you to build a character, city, a world, a business, a galactic fleet or fight against enemies can teach you strategy, long term decision making, and resource management. All are critical functions of the modern business world.
In the investment world, alpha, or outperformance, used to be based upon calculating probabilities and informational superiority. But with the advent of quantitative investing, computerized trading and an overall increase in the competition in well known strategies, most of those old-school advantages have been arbitraged away. While of course it is valuable to understand probabilities and to make sure you have all of the facts, those alone won’t help you and this is where video games, especially those that are complex, open ended games become training grounds for outperformance.
Video games are uniquely able to help you practice decision making and strategic thinking and most importantly with little or no cost of failure. They encourage you to try and repeat different strategies with little or no cost and with the ability to try and try again.
These games also show you that multiple strategies can win, which is as true in the investment and business world as it is in life. While I try to find value in undiscovered areas, I fully realize and appreciate that growth and venture investors can succeed just as well or even better with completely different strategies.
What games do I play? Games that line up well with my personality and how I run my portfolio: turn based strategy games. I still remember staying up all night the first time I played Civilization. While I’ve played Halo and real time strategy games like Command and Conquer and Starcraft, I’ve really loved the games that let me think and plan and not rush my decisions. One of my favorite games ever was Advance Wars.
A recent game I’ve played is the card-based strategy game Faeria. I love thinking about resource management, planning moves and playing a game based upon the luck of the cards and resources I’m dealt. Puzzles, pattern recognition in these games are very fun, and I know this helps my day job of managing money and investing capital.
And I’m actively working on converting my kids to gamers. I firmly believe that it will serve them well no matter what career they choose. How could practicing strategy and decision making not help them later in life?
Like most of life, the stock market is really one big game. This doesn’t mean the stock market game isn’t important. But the best players, err, I mean investors play it like a game. And there is no better way to practice than playing video games. So, excuse me as I go check out this strategy game that Tobi Lutke recommended that I’ve never played before called Into the Breach.
Besides being fun to play, this latest game may just help me level up.