Unexpected Success

Shopify CEO and co-founder Tobias Lutke. Shopify is worth $48 billion.

World-renowned entrepreneur Tobi

Tobi never expected his first online snowboard business to become a multimillion-dollar software corporation.

Tobi founded Shopify to establish a 20-person company.

The publicly traded corporation employs over 10,000 people.

Here's Tobi Lutke's incredible story.

Elon Musk tweeted his admiration for the Shopify creator.

30-October-2019.

Musk praised Shopify founder Tobi Lutke on Twitter.

Happened:

Explore this programmer's journey.

What difficulties did Tobi experience as a young child?

Germany raised Tobi.

Tobi's parents realized he was smart but had trouble learning as a toddler.

Tobi was learning disabled.

Tobi struggled with school tests.

Tobi's learning impairments were undiagnosed.

Tobi struggled to read as a dyslexic.

Tobi also found school boring.

Germany's curriculum didn't inspire Tobi's curiosity.

“The curriculum in Germany was taught like here are all the solutions you might find useful later in life, spending very little time talking about the problem…If I don’t understand the problem I’m trying to solve, it’s very hard for me to learn about a solution to a problem.”

Studying computer programming

After tenth grade, Tobi decided school wasn't for him and joined a German apprenticeship program.

This curriculum taught Tobi software engineering.

He was an apprentice in a small Siemens subsidiary team.

Tobi worked with rebellious Siemens employees.

Team members impressed Tobi.

Tobi joined the team for this reason.

Tobi was pleased to get paid to write programming all day.

His life could not have been better.

Devoted to snowboarding

Tobi loved snowboarding.

He drove 5 hours to ski at his folks' house.

His friends traveled to the US to snowboard when he was older.

However, the cheap dollar conversion rate led them to Canada.

2000.

Tobi originally decided to snowboard instead than ski.

Snowboarding captivated him in Canada.

On the trip to Canada, Tobi encounters his wife.

Tobi meets his wife Fiona McKean on his first Canadian ski trip.

They maintained in touch after the trip.

Fiona moved to Germany after graduating.

Tobi was a startup coder.

Fiona found work in Germany.

Her work included editing, writing, and academics.

“We lived together for 10 months and then she told me that she need to go back for the master's program.”

With Fiona, Tobi immigrated to Canada.

Fiona invites Tobi.

Tobi agreed to move to Canada.

Programming helped Tobi move in with his girlfriend.

Tobi was an excellent programmer, therefore what he did in Germany could be done anywhere.

He worked remotely for his German employer in Canada.

Tobi struggled with remote work.

Due to poor communication.

No slack, so he used email.

Programmers had trouble emailing.

Tobi's startup was developing a browser.

After the dot-com crash, individuals left that startup.

It ended.

Tobi didn't intend to work for any major corporations.

Tobi left his startup.

He believed he had important skills for any huge corporation.

He refused to join a huge corporation.

Because of Siemens.

Tobi learned to write professional code and about himself while working at Siemens in Germany.

Siemens culture was odd.

Employees were distrustful.

Siemens' rigorous dress code implies that the corporation doesn't trust employees' attire.

It wasn't Tobi's place.

“There was so much bad with it that it just felt wrong…20-year-old Tobi would not have a career there.”

Focused only on snowboarding

Tobi lived in Ottawa with his girlfriend.

Canada is frigid in winter.

Ottawa's winters last.

Almost half a year.

Tobi wanted to do something worthwhile now.

So he snowboarded.

Tobi began snowboarding seriously.

He sought every snowboarding knowledge.

He researched the greatest snowboarding gear first.

He created big spreadsheets for snowboard-making technologies.

Tobi grew interested in selling snowboards while researching.

He intended to sell snowboards online.

He had no choice but to start his own company.

A small local company offered Tobi a job.

Interested.

He must sign papers to join the local company.

He needed a work permit when he signed the documents.

Tobi had no work permit.

He was allowed to stay in Canada while applying for permanent residency.

“I wasn’t illegal in the country, but my state didn’t give me a work permit. I talked to a lawyer and he told me it’s going to take a while until I get a permanent residency.”

Tobi's lawyer told him he cannot get a work visa without permanent residence.

His lawyer said something else intriguing.

Tobis lawyer advised him to start a business.

Tobi declined this local company's job offer because of this.

Tobi considered opening an internet store with his technical skills.

He sold snowboards online.

“I was thinking of setting up an online store software because I figured that would exist and use it as a way to sell snowboards…make money while snowboarding and hopefully have a good life.”

What brought Tobi and his co-founder together, and how did he support Tobi?

Tobi lived with his girlfriend's parents.

In Ottawa, Tobi encounters Scott Lake.

Scott was Tobis girlfriend's family friend and worked for Tobi's future employer.

Scott and Tobi snowboarded.

Tobi pitched Scott his snowboard sales software idea.

Scott liked the idea.

They planned a business together.

“I was looking after the technology and Scott was dealing with the business side…It was Scott who ended up developing relationships with vendors and doing all the business set-up.”

Issues they ran into when attempting to launch their business online

Neither could afford a long-term lease.

That prompted their online business idea.

They would open a store.

Tobi anticipated opening an internet store in a week.

Tobi seeks open-source software.

Most existing software was pricey.

Tobi and Scott couldn't afford pricey software.

“In 2004, I was sitting in front of my computer absolutely stunned realising that we hadn’t figured out how to create software for online stores.”

They required software to:

• to upload snowboard images to the website.

• people to look up the types of snowboards that were offered on the website. There must be a search feature in the software.

• Online users transmit payments, and the merchant must receive them.

• notifying vendors of the recently received order.

No online selling software existed at the time.

Online credit card payments were difficult.

How did they advance the software while keeping expenses down?

Tobi and Scott needed money to start selling snowboards.

Tobi and Scott funded their firm with savings.

“We both put money into the company…I think the capital we had was around CAD 20,000(Canadian Dollars).”

Despite investing their savings.

They minimized costs.

They tried to conserve.

No office rental.

They worked in several coffee shops.

Tobi lived rent-free at his girlfriend's parents.

He installed software in coffee cafes.

How were the software issues handled?

Tobi found no online snowboard sales software.

Two choices remained:

1. Change your mind and try something else.

2. Use his programming expertise to produce something that will aid in the expansion of this company.

Tobi knew he was the sole programmer working on such a project from the start.

“I had this realisation that I’m going to be the only programmer who has ever worked on this, so I don’t have to choose something that lots of people know. I can choose just the best tool for the job…There is been this programming language called Ruby which I just absolutely loved ”

Ruby was open-source and only had Japanese documentation.

Latin is the source code.

Tobi used Ruby twice.

He assumed he could pick the tool this time.

Why not build with Ruby?

How did they find their first time operating a business?

Tobi writes applications in Ruby.

He wrote the initial software version in 2.5 months.

Tobi and Scott founded Snowdevil to sell snowboards.

Tobi coded for 16 hours a day.

His lifestyle was unhealthy.

He enjoyed pizza and coke.

“I would never recommend this to anyone, but at the time there was nothing more interesting to me in the world.”

Their initial purchase and encounter with it

Tobi worked in cafes then.

“I was working in a coffee shop at this time and I remember everything about that day…At some time, while I was writing the software, I had to type the email that the software would send to tell me about the order.”

Tobi recalls everything.

He checked the order on his laptop at the coffee shop.

Pennsylvanian ordered snowboard.

Tobi walked home and called Scott. Tobi told Scott their first order.

They loved the order.

How were people made aware about Snowdevil?

2004 was very different.

Tobi and Scott attempted simple website advertising.

Google AdWords was new.

Ad clicks cost 20 cents.

Online snowboard stores were scarce at the time.

Google ads propelled the snowdevil brand.

Snowdevil prospered.

They swiftly recouped their original investment in the snowboard business because to its high profit margin.

Tobi and Scott struggled with inventories.

“Snowboards had really good profit margins…Our biggest problem was keeping inventory and getting it back…We were out of stock all the time.”

Selling snowboards returned their investment and saved them money.

They did not appoint a business manager.

They accomplished everything alone.

Sales dipped in the spring, but something magical happened.

Spring sales plummeted.

They considered stocking different boards.

They naturally wanted to add boards and grow the business.

However, magic occurred.

Tobi coded and improved software while running Snowdevil.

He modified software constantly. He wanted speedier software.

He experimented to make the software more resilient.

Tobi received emails requesting the Snowdevil license.

They intended to create something similar.

“I didn’t stop programming, I was just like Ok now let me try things, let me make it faster and try different approaches…Increasingly I got people sending me emails and asking me If I would like to licence snowdevil to them. People wanted to start something similar.”

Software or skateboards, your choice

Scott and Tobi had to choose a hobby in 2005.

They might sell alternative boards or use software.

The software was a no-brainer from demand.

Daniel Weinand is invited to join Tobi's business.

Tobis German best friend is Daniel.

Tobi and Scott chose to use the software.

Tobi and Scott kept the software service.

Tobi called Daniel to invite him to Canada to collaborate.

Scott and Tobi had quit snowboarding until then.

How was Shopify launched, and whence did the name come from?

The three chose Shopify.

Named from two words.

First:

• Shop

Final part:

• Simplify

Shopify

Shopify's crew has always had one goal:

• creating software that would make it simple and easy for people to launch online storefronts.

Launched Shopify after raising money for the first time.

Shopify began fundraising in 2005.

First, they borrowed from family and friends.

They needed roughly $200k to run the company efficiently.

$200k was a lot then.

When questioned why they require so much money. Tobi told them to trust him with their goals. The team raised seed money from family and friends.

Shopify.com has a landing page. A demo of their goal was on the landing page.

In 2006, Shopify had about 4,000 emails.

Shopify rented an Ottawa office.

“We sent a blast of emails…Some people signed up just to try it out, which was exciting.”

How things developed after Scott left the company

Shopify co-founder Scott Lake left in 2008.

Scott was CEO.

“He(Scott) realized at some point that where the software industry was going, most of the people who were the CEOs were actually the highly technical person on the founding team.”

Scott leaving the company worried Tobi.

Tobis worried about finding a new CEO.

To Tobi:

A great VC will have the network to identify the perfect CEO for your firm.

Tobi started visiting Silicon Valley to meet with venture capitalists to recruit a CEO.

Initially visiting Silicon Valley

Tobi came to Silicon Valley to start a 20-person company.

This company creates eCommerce store software.

Tobi never wanted a big corporation. He desired a fulfilling existence.

“I stayed in a hostel in the Bay Area. I had one roommate who was also a computer programmer. I bought a bicycle on Craiglist. I was there for a week, but ended up staying two and a half weeks.”

Tobi arrived unprepared.

When venture capitalists asked him business questions.

He answered few queries.

Tobi didn't comprehend VC meetings' terminology.

He wrote the terms down and looked them up.

Some were fascinated after he couldn't answer all these queries.

“I ended up getting the kind of term sheets people dream about…All the offers were conditional on moving our company to Silicon Valley.”

Canada received Tobi.

He wanted to consult his team before deciding. Shopify had five employees at the time.

2008.

A global recession greeted Tobi in Canada. The recession hurt the market.

His term sheets were useless.

The economic downturn in the world provided Shopify with a fantastic opportunity.

The global recession caused significant job losses.

Fired employees had several ideas.

They wanted online stores.

Entrepreneurship was desired. They wanted to quit work.

People took risks and tried new things during the global slump.

Shopify subscribers skyrocketed during the recession.

“In 2009, the company reached neutral cash flow for the first time…We were in a position to think about long-term investments, such as infrastructure projects.”

Then, Tobi Lutke became CEO.

How did Tobi perform as the company's CEO?

“I wasn’t good. My team was very patient with me, but I had a lot to learn…It’s a very subtle job.”

2009–2010.

Tobi limited the company's potential.

He deliberately restrained company growth.

Tobi had one costly problem:

• Whether Shopify is a venture or a lifestyle business.

The company's annual revenue approached $1 million.

Tobi battled with the firm and himself despite good revenue.

His wife was supportive, but the responsibility was crushing him.

“It’s a crushing responsibility…People had families and kids…I just couldn’t believe what was going on…My father-in-law gave me money to cover the payroll and it was his life-saving.”

Throughout this trip, everyone supported Tobi.

They believed it.

$7 million in donations received

Tobi couldn't decide if this was a lifestyle or a business.

Shopify struggled with marketing then.

Later, Tobi tried 5 marketing methods.

He told himself that if any marketing method greatly increased their growth, he would call it a venture, otherwise a lifestyle.

The Shopify crew brainstormed and voted on marketing concepts.

Tested.

“Every single idea worked…We did Adwords, published a book on the concept, sponsored a podcast and all the ones we tracked worked.”

To Silicon Valley once more

Shopify marketing concepts worked once.

Tobi returned to Silicon Valley to pitch investors.

He raised $7 million, valuing Shopify at $25 million.

All investors had board seats.

“I find it very helpful…I always had a fantastic relationship with everyone who’s invested in my company…I told them straight that I am not going to pretend I know things, I want you to help me.”

Tobi developed skills via running Shopify.

Shopify had 20 employees.

Leaving his wife's parents' home

Tobi left his wife's parents in 2014.

Tobi had a child.

Shopify has 80,000 customers and 300 staff in 2013.

Public offering in 2015

Shopify investors went public in 2015.

Shopify powers 4.1 million e-Commerce sites.

Shopify stores are 65% US-based.

It is currently valued at $48 billion.

This is for young entrepreneurs, especially in tech.

People give useless success advice on TikTok and Reddit. Early risers, bookworms, etc. Entrepreneurship courses. Work hard and hustle.

False. These aren't successful traits.

I mean, organization is good. As someone who founded several businesses and now works at a VC firm, I find these tips to be clichés.

Based on founding four successful businesses and working with other successful firms, here's my best actionable advice:

1. Choose a sector or a niche and become an expert in it.

This is more generic than my next tip, but it's a must-do that's often overlooked. Become an expert in the industry or niche you want to enter. Discover everything.

Buy (future) competitors' products. Understand consumers' pain points. Market-test. Target keyword combos. Learn technical details.

The most successful businesses I've worked with were all formed by 9-5 employees. They knew the industry's pain points. They started a business targeting these pain points.

2. Choose a niche or industry crossroads to target.

How do you choose an industry or niche? What if your industry is too competitive?

List your skills and hobbies. Randomness is fine. Find an intersection between two interests or skills.

Say you build websites well. You like cars.

Web design is a *very* competitive industry. Cars and web design?

Instead of web design, target car dealers and mechanics. Build a few fake demo auto mechanic websites, then cold call shops with poor websites. Verticalize.

I've noticed a pattern:

• Person works in a particular industry for a corporation.

• Person gains expertise in the relevant industry.

• Person quits their job and launches a small business to address a problem that their former employer was unwilling to address.

I originally posted this on Reddit and it seemed to have taken off so I decided to share it with you all.

Focus on the product. When someone buys from you, you convince them the product's value exceeds the price. It's not fair and favors the buyer.

Creating a superior product or service will win. Narrowing this helps you outcompete others.

You may be their only (lucky) option.

40 years pass. After 14 years of retirement, you die. Am I the only one who sees the problem?

I’m the Jedi master of escaping the rat race.

Not to impress. I know this works since I've tried it. Quitting a job to make money online is worse than Kim Kardashian's internet-burning advice.

Let me help you rethink the move from a career to online income to f*ck you money.

To understand why a job is a joke, do some life math.

Without a solid why, nothing makes sense.

The retirement age is 65. Our processed food consumption could shorten our 79-year average lifespan.

You spend 40 years working.

After 14 years of retirement, you die.

Am I alone in seeing the problem?

Life is too short to work a job forever, especially since most people hate theirs. After-hours skills are vital.

Money equals unrestricted power, f*ck you.

F*ck you money is the answer.

Jack Raines said it first. He says we can do anything with the money. Jack, a young rebel straight out of college, can travel and try new foods.

F*ck you money signifies not checking your bank account before buying.

F*ck you” money is pure, unadulterated freedom with no strings attached.

Jack claims you're rich when you rarely think about money.

Avoid confusion.

This doesn't imply you can buy a Lamborghini. It indicates your costs, income, lifestyle, and bank account are balanced.

Jack established an online portfolio while working for UPS in Atlanta, Georgia. So he gained boundless power.

The portion that many erroneously believe

Yes, you need internet abilities to make money, but they're not different from 9-5 talents.

Sahil Lavingia, Gumroad's creator, explains.

A job is a way to get paid to learn.

Mistreat your boss 9-5. Drain his skills. Defuse him. Love and leave him (eventually).

Find another employment if yours is hazardous. Pick an easy job. Make sure nothing sneaks into your 6-12 time slot.

The dumb game that makes you a sheep

A 9-5 job requires many job interviews throughout life.

You email your résumé to employers and apply for jobs through advertisements. This game makes you a sheep.

You're competing globally. Work-from-home makes the competition tougher. If you're not the cheapest, employers won't hire you.

After-hours online talents (say, 6 pm-12 pm) change the game. This graphic explains it better:

Online talents boost after-hours opportunities.

You go from wanting to be picked to picking yourself. More chances equal more money. Your f*ck you fund gets the extra cash.

A novel method of learning is essential.

College costs six figures and takes a lifetime to repay.

Informal learning is distinct. 6-12pm:

• Observe the carefully controlled Twitter newsfeed.

• Make use of Teachable and Gumroad's online courses.

• Watch instructional YouTube videos

• Look through the top Substack newsletters.

Informal learning is more effective because it's not obvious. It's fun to follow your curiosity and hobbies.

The majority of people lack one attitude. It's simple to learn.

One big impediment stands in the way of f*ck you money and time independence. So often.

Too many people plan after 6-12 hours. Dreaming. Big-thinkers. Strategically. They fill their calendar with meetings.

This is after-hours masturb*tion.

Sahil Bloom reminded me that a bias towards action will determine if this approach works for you.

The key isn't knowing what to do from 6-12 a.m. Trust yourself and develop abilities as you go. It's for building the parachute after you jump.

Sounds risky. We've eliminated the risk by finishing this process after hours while you work 9-5.

With no risk, you can have an I-don't-care attitude and still be successful.

When you choose to move forward, this occurs.

Once you try 9-5/6-12, you'll tell someone.

It's bad.

Few of us hang out with problem-solvers.

It's how much of society operates. So they make reasons so they can feel better about not giving you money.

Matthew Kobach told me chasing f*ck you money is easier with like-minded folks.

Without f*ck you money friends, loneliness will take over and you'll think you've messed up when you just need to keep going.

Steal this easy guideline

Let's act. No more fluffing and caressing.

1. Learn

If you detest your 9-5 talents or don't think they'll work online, get new ones. If you're skilled enough, continue.

Easlo recommends these skills:

• Designer for Figma

• Designer Canva

• bubble creators

• editor in Photoshop

• Automation consultant for Zapier

• Designer of Webflow

• video editor Adobe

• Ghostwriter for Twitter

• Idea consultant

• Artist in Blender Studio

2. Develop the ability

Every night from 6-12, apply the skill.

Practicing ghostwriting? Write someone's tweets for free. Do someone's website copy to learn copywriting. Get a website to the top of Google for a keyword to understand SEO.

Free practice is crucial. Your 9-5 pays the money, so work for free.

3. Take off stealthily like a badass

Another mistake. Sell to few. Don't be the best. Don't claim expertise.

Sell your new expertise to others behind you.

Two ways:

• Using a digital good

• By providing a service,

Point 1 also includes digital service examples. Digital products include eBooks, communities, courses, ad-supported podcasts, and templates. It's easy. Your 9-5 job involves one of these.

Take ideas from work.

Why? They'll steal your time for profit.

4. Iterate while feeling awful

First-time launches always fail. You'll feel terrible. Okay. Remember your 9-5?

Find improvements. Ask free and paying consumers what worked.

Multiple relaunches, each 1% better.

5. Discover more

Never stop learning. Improve your skill. Add a relevant skill. Learn copywriting if you write online.

After-hours students earn the most.

6. Continue

Repetition is key.

7. Make this one small change.

Consistently. The 6-12 momentum won't make you rich in 30 days; that's success p*rn.

Consistency helps wage slaves become f*ck you money. Most people can't switch between the two.

Putting everything together

It's easy. You're probably already doing some.

This formula explains why, how, and what to do. It's a 5th-grade-friendly blueprint. Good.

Reduce financial risk with your 9-to-5. Replace Netflix with 6-12 money-making talents.

Life is short; do whatever you want. Today.

Key Takeaways:

Another hack. This time was different. This is a doozy.

Why? Nomad got exploited for $190m. It was crypto's 5th-biggest hack. Ouch.

It wasn't hackers, but random folks. What happened:

A Nomad smart contract flaw was discovered. They couldn't drain the funds at once, so they tried numerous transactions. Rookie!

People noticed and copied the attack.

They just needed to discover a working transaction, substitute the other person's address with theirs, and run it.

In a two-and-a-half-hour attack, $190M was siphoned from Nomad Bridge.

Nomad is a novel approach to blockchain interoperability that leverages an optimistic mechanism to increase the security of cross-chain communication.  — nomad.xyz

This hack was permissionless, therefore anyone could participate.

After the fatal blow, people fought over the scraps.

Cross-chain bridges remain a DeFi weakness and exploit target. When they collapse, it's typically total.

$190M...gobbled.

Unbacked assets are hurting Nomad-dependent chains. Moonbeam, EVMOS, and Milkomeda's TVLs dropped.

This incident is every-man-for-himself, although numerous whitehats exploited the issue... 

But what triggered the feeding frenzy?

How did so many pick the bones?

After a normal upgrade in June, the bridge's Replica contract was initialized with a severe security issue. The  0x00 address was a trusted root, therefore all messages were valid by default.

After a botched first attempt (costing $350k in gas), the original attacker's exploit tx called process() without first 'proving' its validity.

The process() function executes all cross-chain messages and checks the merkle root of all messages (line 185).

The upgrade caused transactions with a'messages' value of 0 (invalid, according to old logic) to be read by default as 0x00, a trusted root, passing validation as 'proven'

Any process() calls were valid. In reality, a more sophisticated exploiter may have designed a contract to drain the whole bridge.

Copycat attackers simply copied/pasted the same process() function call using Etherscan, substituting their address.

The incident was a wild combination of crowdhacking, whitehat activities, and MEV-bot (Maximal Extractable Value) mayhem.

For example, 🍉🍉🍉. eth stole $4M from the bridge, but claims to be whitehat.

Others stood out for the wrong reasons. Repeat criminal Rari Capital (Artibrum) exploited over $3M in stablecoins, which moved to Tornado Cash.

The top three exploiters (with 95M between them) are:

$47M: 0x56D8B635A7C88Fd1104D23d632AF40c1C3Aac4e3

$40M: 0xBF293D5138a2a1BA407B43672643434C43827179

$8M: 0xB5C55f76f90Cc528B2609109Ca14d8d84593590E

Here's a list of all the exploiters:

The project conducted a Quantstamp audit in June; QSP-19 foreshadowed a similar problem.

The auditor's comments that "We feel the Nomad team misinterpreted the issue" speak to a troubling attitude towards security that the project's "Long-Term Security" plan appears to confirm:

Concerns were raised about the team's response time to a live, public exploit; the team's official acknowledgement came three hours later.

"Removing the Replica contract as owner" stopped the exploit, but it was too late to preserve the cash.

Closed blockchain systems are only as strong as their weakest link.

The Harmony network is in turmoil after its bridge was attacked and lost $100M in late June.

What's next for Nomad's ecosystems?

Moonbeam's TVL is now $135M, EVMOS's is $3M, and Milkomeda's is $20M.

Loss of confidence may do more damage than $190M.

Cross-chain infrastructure is difficult to secure in a new, experimental sector. Bridge attacks can pollute an entire ecosystem or more.

Nomadic liquidity has no permanent home, so consumers will always migrate in pursuit of the "next big thing" and get stung when attentiveness wanes.

DeFi still has easy prey...

Sources: rekt.news & The Milk Road.

"GTO" (Game Theory Optimal) has been used a lot in poker recently. To clarify its meaning and application, the aim of this article is to define what it is, when to use it when playing, what strategies to apply for how to play GTO poker, for beginner and more advanced players!

Poker GTO

In poker, you can choose between two main winning strategies:

Exploitative play maximizes expected value (EV) by countering opponents' sub-optimal plays and weaker tendencies. Yes, playing this way opens you up to being exploited, but the weaker opponents you're targeting won't change their game to counteract this, allowing you to reap maximum profits over the long run.

GTO (Game-Theory Optimal): You try to play perfect poker, which forces your opponents to make mistakes (which is where almost all of your profit will be derived from). It mixes bluffs or semi-bluffs with value bets, clarifies bet sizes, and more.

GTO vs. Exploitative: Which is Better in Poker?

Before diving into GTO poker strategy, it's important to know which of these two play styles is more profitable for beginners and advanced players. The simple answer is probably both, but usually more exploitable.

Most players don't play GTO poker and can be exploited in their gameplay and strategy, allowing for more profits to be made using an exploitative approach. In fact, it’s only in some of the largest games at the highest stakes that GTO concepts are fully utilized and seen in practice, and even then, exploitative plays are still sometimes used.

Knowing, understanding, and applying GTO poker basics will create a solid foundation for your poker game. It's also important to understand GTO so you can deviate from it to maximize profits.

GTO Poker Strategy

According to Ed Miller's book "Poker's 1%," the most fundamental concept that only elite poker players understand is frequency, which could be in relation to cbets, bluffs, folds, calls, raises, etc.

GTO poker solvers (downloadable online software) give solutions for how to play optimally in any given spot and often recommend using mixed strategies based on select frequencies.

In a river situation, a solver may tell you to call 70% of the time and fold 30%. It may also suggest calling 50% of the time, folding 35% of the time, and raising 15% of the time (with a certain range of hands).

Frequencies are a fundamental and often unrecognized part of poker, but they run through these 5 GTO concepts.

1. Preflop ranges

To compensate for positional disadvantage, out-of-position players must open tighter hand ranges.

Premium starting hands aren't enough, though. Considering GTO poker ranges and principles, you want a good, balanced starting hand range from each position with at least some hands that can make a strong poker hand regardless of the flop texture (low, mid, high, disconnected, etc).

Below is a GTO preflop beginner poker chart for online 6-max play, showing which hand ranges one should open-raise with. Table positions are color-coded (see key below).

NOTE: For GTO play, it's advisable to use a mixed strategy for opening in the small blind, combining open-limps and open-raises for various hands. This cannot be illustrated with the color system used for the chart.

Choosing which hands to play is often a math problem, as discussed below.

Other preflop GTO poker charts include which hands to play after a raise, which to 3bet, etc. Solvers can help you decide which preflop hands to play (call, raise, re-raise, etc.).

2. Pot Odds

Always make +EV decisions that profit you as a poker player. Understanding pot odds (and equity) can help.

Postflop Pot Odds

Let’s say that we have JhTh on a board of 9h8h2s4c (open-ended straight-flush draw).  We have $40 left and $50 in the pot. He has you covered and goes all-in. As calling or folding are our only options, playing GTO involves calculating whether a call is +EV or –EV. (The hand was empty.)

Any remaining heart, Queen, or 7 wins the hand. This means we can improve 15 of 46 unknown cards, or 32.6% of the time.

What if our opponent has a set? The 4h or 2h could give us a flush, but it could also give the villain a boat. If we reduce outs from 15 to 14.5, our equity would be 31.5%.

We must now calculate pot odds.

(bet/(our bet+pot)) = pot odds

= $50 / ($40 + $90)

= $40 / $130

= 30.7%

To make a profitable call, we need at least 30.7% equity. This is a profitable call as we have 31.5% equity (even if villain has a set). Yes, we will lose most of the time, but we will make a small profit in the long run, making a call correct.

Pot odds aren't just for draws, either. If an opponent bets 50% pot, you get 3 to 1 odds on a call, so you must win 25% of the time to be profitable. If your current hand has more than 25% equity against your opponent's perceived range, call.

Preflop Pot Odds

Preflop, you raise to 3bb and the button 3bets to 9bb. You must decide how to act. In situations like these, we can actually use pot odds to assist our decision-making.

This pot is:

(our open+3bet size+small blind+big blind)

(3bb+9bb+0.5bb+1bb)

= 13.5

This means we must call 6bb to win a pot of 13.5bb, which requires 30.7% equity against the 3bettor's range.

Three additional factors must be considered:

Being out of position on our opponent makes it harder to realize our hand's equity, as he can use his position to put us in tough spots. To profitably continue against villain's hand range, we should add 7% to our equity.

Implied Odds / Reverse Implied Odds: The ability to win or lose significantly more post-flop (than pre-flop) based on our remaining stack.

While statistics on 3bet stats can be gained with a large enough sample size (i.e. 8% 3bet stat from button), the numbers don't tell us which 8% of hands villain could be 3betting with. Both polarized and depolarized charts below show 8% of possible hands.

7.4% of hands are depolarized.

Polarized Hand range (7.54%):

Each hand range has different contents. We don't know if he 3bets some hands and calls or folds others.

Using an exploitable strategy can help you play a hand range correctly. The next GTO concept will make things easier.

3. Minimum Defense Frequency:

This concept refers to the % of our range we must continue with (by calling or raising) to avoid being exploited by our opponents. This concept is most often used off-table and is difficult to apply in-game.

These beginner GTO concepts will help your decision-making during a hand, especially against aggressive opponents.

MDF formula:

MDF = POT SIZE/(POT SIZE+BET SIZE)

Here's a poker GTO chart of common bet sizes and minimum defense frequency.

Take the number of hand combos in your starting hand range and use the MDF to determine which hands to continue with. Choose hands with the most playability and equity against your opponent's betting range.

Say you open-raise HJ and BB calls. Qh9h6c flop. Your opponent leads you for a half-pot bet. MDF suggests keeping 67% of our range.

Using the above starting hand chart, we can determine that the HJ opens 254 combos:

We must defend 67% of these hands, or 170 combos, according to MDF. Hands we should keep include:

Flush draws

Open-Ended Straight Draws

Gut-Shot Straight Draws

Overcards

Any Pair or better

So, our flop continuing range could be:

Some highlights:

Fours and fives have little chance of improving on the turn or river.

We only continue with AX hearts (with a flush draw) without a pair or better.

We'll also include 4 AJo combos, all of which have the Ace of hearts, and AcJh, which can block a backdoor nut flush combo.

Let's assume all these hands are called and the turn is blank (2 of spades). Opponent bets full-pot. MDF says we must defend 50% of our flop continuing range, or 85 of 170 combos, to be unexploitable. This strategy includes our best flush draws, straight draws, and made hands.

Here, we keep combining:

Nut flush draws

Pair + flush draws

GS + flush draws

Second Pair, Top Kicker+

One combo of JJ that doesn’t block the flush draw or backdoor flush draw.

On the river, we can fold our missed draws and keep our best made hands. When calling with weaker hands, consider blocker effects and card removal to avoid overcalling and decide which combos to continue.

4. Poker GTO Bet Sizing

To avoid being exploited, balance your bluffs and value bets. Your betting range depends on how much you bet (in relation to the pot). This concept only applies on the river, as draws (bluffs) on the flop and turn still have equity (and are therefore total bluffs).

On the flop, you want a 2:1 bluff-to-value-bet ratio. On the flop, there won't be as many made hands as on the river, and your bluffs will usually contain equity. The turn should have a "bluffing" ratio of 1:1. Use the chart below to determine GTO river bluff frequencies (relative to your bet size):

This chart relates to your opponent's pot odds. If you bet 50% pot, your opponent gets 3:1 odds and must win 25% of the time to call. Poker GTO theory suggests including 25% bluff combinations in your betting range so you're indifferent to your opponent calling or folding.

Best river bluffs don't block hands you want your opponent to have (or not have). For example, betting with missed Ace-high flush draws is often a mistake because you block a missed flush draw you want your opponent to have when bluffing on the river (meaning that it would subsequently be less likely he would have it, if you held two of the flush draw cards). Ace-high usually has some river showdown value.

If you had a 3-flush on the river and wanted to raise, you could bluff raise with AX combos holding the bluff suit Ace. Blocking the nut flush prevents your opponent from using that combo.

5. Bet Sizes and Frequency

GTO beginner strategies aren't just bluffs and value bets. They show how often and how much to bet in certain spots. Top players have benefited greatly from poker solvers, which we'll discuss next.

GTO Poker Software

In recent years, various poker GTO solvers have been released to help beginner, intermediate, and advanced players play balanced/GTO poker in various situations.

PokerSnowie and PioSolver are popular GTO and poker study programs.

While you can't compute players' hand ranges and what hands to bet or check with in real time, studying GTO play strategies with these programs will pay off. It will improve your poker thinking and understanding.

Solvers can help you balance ranges, choose optimal bet sizes, and master cbet frequencies.

GTO Poker Tournament

Late-stage tournaments have shorter stacks than cash games. In order to follow GTO poker guidelines, Nash charts have been created, tweaked, and used for many years (and also when to call, depending on what number of big blinds you have when you find yourself shortstacked).

The charts are for heads-up push/fold. In a multi-player game, the "pusher" chart can only be used if play is folded to you in the small blind. The "caller" chart can only be used if you're in the big blind and assumes a small blind "pusher" (with a much wider range than if a player in another position was open-shoving).

Divide the pusher chart's numbers by 2 to see which hand to use from the Button. Divide the original chart numbers by 4 to find the CO's pushing range. Some of the figures will be impossible to calculate accurately for the CO or positions to the right of the blinds because the chart's highest figure is "20+" big blinds, which is also used for a wide range of hands in the push chart.

Both of the GTO charts below are ideal for heads-up play, but exploitable HU shortstack strategies can lead to more +EV decisions against certain opponents. Following the charts will make your play GTO and unexploitable.

Poker pro Max Silver created the GTO push/fold software SnapShove. (It's accessible online at www.snapshove.com or as iOS or Android apps.)

Players can access GTO shove range examples in the full version. (You can customize the number of big blinds you have, your position, the size of the ante, and many other options.)

In Conclusion

Due to the constantly changing poker landscape, players are always improving their skills. Exploitable strategies often yield higher profit margins than GTO-based approaches, but knowing GTO beginner and advanced concepts can give you an edge for a few reasons.

It creates a solid gameplay base.

Having a baseline makes it easier to exploit certain villains.

You can avoid leveling wars with your opponents by making sound poker decisions based on GTO strategy.

It doesn't require assuming opponents' play styles.

Not results-oriented.

This is just the beginning of GTO and poker theory. Consider investing in the GTO poker solver software listed above to improve your game.