The business & startup world likes to borrow terms & concepts from different fields and use them analogously to simplify communication. For example, social proof, a term from the field of psychology, is often used in businesses & startups to explain the importance of authentic testimonials from people who used your product. I could give more examples but I hope you get the drift.
Just like social proof, ‘Table stakes’, an idea that has its roots in the game of poker, is another frequently used term used in the startup world. In the world of poker, ‘Table stakes’ basically signifies the minimum amount of chips one needs to buy for a seat at the poker table. The ‘Table stakes’ for different tables are obviously different. For example, if you are playing a game of poker with a group of friends, the ‘Table Stakes’ might be small, but the stakes might be relatively more if you are playing at a casino.
In the business & startup world, ‘Table Stakes’ simply means the minimum requirements your product or service needs to meet to be considered a competitive player in the market. To give an example, cameras in phones are now considered ‘Table stakes’, but the older phones didn’t have any cameras. Now, phones with cameras have become so ubiquitous that one would even feel odd looking at a phone without a camera. Buying such a phone is totally out of the question.
‘Table stakes’ would differ for different businesses, but the underlying concept is universally applicable. To give another example, when people buy something online today, home delivery in a day or two is considered ‘Table stakes’. In the case of grocery, startups are even going as far as fulfilling delivery within a few hours of placing the order. If a new startup entering the grocery market were to take more time for delivery than existing players, it would fail before even taking off because of the existing table stakes of the industry.
However, it is important to differentiate ‘Table stakes’ from differentiators. Let’s understand the same using an example. Customers these days expect restaurants to be able to deliver food as quickly as possible, with many expecting the food to be delivered within 30-45 minutes. These expectations are ‘Table stakes’ today but Domino’s takes it a step further with the promise to give food for free if it isn’t delivered within 30 minutes, making this marketing tactic a differentiator. Until other restaurants don’t offer free food in case of a delay in delivery, Domino’s strategy is a differentiator. But if other restaurants were to run the same offer as Domino’s, what was once a differentiator would gradually become ‘Table stakes’ and all restaurants would be forced to innovate and look to other differentiators.
While we looked at ‘table stakes’ purely in the context of product offerings & features until now, the business and startup world also used in other contexts like the minimum amount of skills a potential hire should have, or the minimum employment perks startups should provide, or the minimum amount of internal data analysis a startup ought to do. While the context changes, the concept of being able to fulfill a minimum expectation or be doomed to fail remains the same.
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