Everyone in our industry thinks they’re strategic. We throw around words like “data-driven” and “market analysis” at conferences like confetti. But a lot of decisions I see suffer from the same fatal flaw.
They stop one step too early.
Howard Marks, the legendary investor, calls it first-level thinking versus second-order thinking. First-level thinking is simple, obvious, and what everyone else is doing. Second-order thinking asks: “And then what?”
That one extra question is the difference between looking smart in a board meeting and actually making money.
First-level thinking says: “Brazil is regulating. Let’s get in.” Second-order thinking says: “Brazil is regulating. Everyone sees this. Dozens of operators will flood in simultaneously. Acquisition costs will spike. Regulatory complexity will overwhelm underprepared teams. So what’s our actual edge, and do we have one?”
See the difference? The first is an observation. The second is a strategy.
Why Our Industry Is Addicted To First-Level Thinking
iGaming is particularly vulnerable to this because we’re trend-followers by nature. And I don’t mean that as an insult, we’ve all been guilty of it. When a market opens, we pile in. When a feature works for one operator, fifty clone it. When a marketing channel delivers, everyone maxes it out until it doesn’t.
The result? An industry full of lookalike products fighting over the same players with the same tactics. I’ve written about this before. But Marks’ framework explains it perfectly.
The root cause is that most decisions are made at the first level. “Players respond well to generous welcome bonuses, so let’s increase ours.” That’s not wrong. But it’s incomplete. The second-order thinker asks: what happens when every operator escalates their welcome offers? You attract bonus hunters, not loyal players. You train your entire customer base to expect unsustainable generosity. You compress margins while simultaneously lowering player quality. And now you’re stuck in an arms race where the “winner” is whoever can lose money the longest. The actual advantage was never in the size of the bonus; it was in building a product and brand that players choose after the bonus runs out.
Shane Parrish from Farnam Street puts it simply: “First-level thinking is fast and easy. Second-order thinking is slow and difficult. But it’s the only kind that produces genuinely superior results.”
Here’s the uncomfortable truth. If your strategy is obvious to you, it’s obvious to everyone. And if everyone is running the same play, no one has an edge. You’re just competing on execution and budget, which is fine if you’re a big player. Less fine if you’re not.
How To Actually Do This
So how do you upgrade your thinking? It’s not about being smarter. It’s about being more deliberate. Here are three ways I’m trying to practice this:
First, ask “and then what?” at least three times before committing to a strategic decision. Not once. Three times. Each layer reveals consequences that the previous one hid. “We should enter Market X.” And then what? “We’ll need to localise the product.” And then what? “We’ll need local talent, partnerships, and regulatory expertise we don’t have.” And then what? “We’ll be burning cash for 18 months before we’re competitive, while our core markets get less attention.” Now you’re making a real decision, not a reflex.
Second, look for what’s not happening. First-level thinkers follow the crowd. Second-order thinkers notice where the crowd isn’t going and ask why. Sometimes the crowd is right and the empty space is empty for good reason. But sometimes, the gap exists because everyone is chasing the same shiny object and ignoring something valuable.
Third, stress-test your assumptions with people who disagree with you. Surround yourself with people who see things differently, not people who validate your existing beliefs. Every boardroom full of nodding heads is a breeding ground for first-level thinking. The best decisions I’ve seen in this industry came from founders who actively sought out perspectives that challenged their own.
I’ll leave you with this. The market doesn’t reward you for seeing the same thing everyone else sees. It rewards you for seeing what happens next.
So next time you’re about to make a decision, pause. Ask yourself: is this first-level thinking? Is this what everyone else is doing? And if the answer is yes, go deeper. Because in a maturing industry where the easy wins are disappearing, the edge belongs to whoever thinks one step further than the room.
And then what?
