“…as anyone who regularly plays poker tournaments will tell you, it is first and foremost a grind. Even if you assume a player has a significant skill edge, the odds of winning a tournament with hundreds of players is very small.
…As much as I like playing poker, the variance can be brutal and it is a blessing to be able to not rely on it as my primary source of income and treat it as a hobby.”
He then establishes how in some fields luck plays a bigger role than skill:
“The results for most competitive disciplines that we encounter in life are primarily skill driven. Take the following examples:
- A professional athlete will win the vast majority of the time against an amateur athlete in most sports.
- A chess.com player who has an ELO 200 points higher than a competitor will have a ~75% chance of winning.
- Someone who studies more for an exam is likely to score higher than someone who is less studied.
- Founding and/or joining an early stage company / startup
- Trading individual stocks / options / crypto
- Poker
…A common fallacy when assessing skill in luck dominated disciplines is thinking “well if the odds were so against them then they must have been skilled to achieve a successful result!” This misses the fact that, statistically, over a large enough sample someone is almost guaranteed to get very lucky. Mechanically, someone has to win the poker tournament. If you flip a coin enough times, you will eventually flip heads ten times in a row. Is this evidence that you’re good at flipping heads? Probably not!”
If results aren’t an indicator of skill, what is?
“For these high variance, high luck factor activities, the process itself becomes the primary signal for whether or not a player is skilled. Anyone can win a hand of blackjack, but not very many people can describe the ins and outs of a correct card counting strategy. Anyone can win a poker tournament, but only a skilled player can describe a comprehensive strategy for a particular scenario. Once you have identified an activity as being more luck than skill driven, a person’s process for the activity starts to become a much stronger signal for whether or not they are actually any good.”
However, it is not always easy to assess whether a process is good or not:
“Even for poker, which is a structured game that has well defined rules and outcomes, it can be challenging to separate poor thought processes and good thought processes that generate a particular strategy. I have certainly received my fair share of bad poker advice and the only way that I have been able to see through the garbage is to build a strong foundation for understanding how no limit Texas Hold’em works and to have a trusted poker study group that is passionate about understanding the game.
This is probably the single most important and generalizable observation that I have had from participating in the poker ecosystem. If a party claims to be skilled at an activity because they have had good results in that activity the first questions you should ask yourself are:
- How much does luck factor into the results? Is this an activity where you can be wrong and still succeed?
- What is their process, can the process plausibly explain their positive results, and is it repeatable?”
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