The Elo Principle
You cannot measure what you cannot see
I was listening to Jack Altman’s podcast with Shaun Maguire, a Partner at Sequoia Capital today. Shaun articulated a concept that I’ve found to be quite useful in evaluating talent in my life as an investor and entrepreneur. It’s the concept that at any given domain (and especially in an intellectual domain), a person with skill level “A” cannot accurately judge a person with skill level “B » A” (e.g. B = 10*A), whereas someone with skill level “B » A” can accurately judge someone at any level below “B”.
Shaun laid out the concept with a more specific concept (I am going to paraphrase here using my own words): in chess, someone with an Elo score of 2600 can very quickly and accurately tell apart players with Elo scores of 1000 and 1500 watching a few moves of a game, but someone with an Elo score of 1000 cannot tell the difference between scores of 1500 or 2600. Or any score sufficiently above their own score. Since I’ve never been able to find a name for this principle, I am going to call it the Elo Principle.
I’ve seen this play out in both hiring for talent, and being evaluated by venture capitalists. Former employees who were not able to see the brilliance in a brilliant individual (in their own domain) consistently ranked low on our evaluations, and were most often let go. In fundraising, the very best investors moved with urgency, latching onto our unique strengths as founders while average investors tried to look for proxies for greatness (and to be clear, we had the best proxies - Harvard, MIT, Ph.D., research papers, etc). The very best see very clearly, because their “Elo scores are sufficiently high compared to even 2 or 3 standard deviations against the average”. Game recognizes game.
A corollary to this principle is that if you are truly world class - the top 10 or 1 basis point in your field, you are doing yourself a disservice to listen to the opinions of almost everyone in the entire world (especially about your field). Society calls this arrogance, but arrogance is unfounded, outwardly displays of confidence. This is rational filtering of noise based on a real physical principle, especially in intellectual domains.
Perhaps the “disagreeable autist” archetype of a truly exceptional founder should not be labeled “disagreeable”. After all, disagreeable implies that the counterpart has something worthwhile to say. Perhaps he is agreeable, it’s just that you are too stupid.
so good