Big Heads

Illustration by Ayo Arogunmati

The word professional describes a person in a paid occupation [1].  But a person with exceptional skill is rarely described as one. They perform their craft with ease, reducing the complexity through abstraction of time and effort, yet our culture prefers to assume the person possesses an innate ability [2].

Our culture admires those with creative abilities like writing, drawing, or performing [3]. Sometimes, the same person is exceptional at more than one skill. Prince is one example, possessing all three creative skills. He exhibited these skills at such a high level that we decided to call him a genius.

While there are great examples of exceptionalism in the creative domain communicated through the media, there are less examples for the normal activities like your day job [4]. If media is a reflection of culture, then our culture has a lower bar for professionalism.

I've been thinking about the idea of what a professional is. How does a professional practice, measure and build on their skill? And how does one choose what to be professional in.

We live in a normal world, according to Jerry Neumann [5]. The biological and natural things we see and engage with daily follow a normal form. If we were asked to guess the height of each person walking into a coffee shop, our guesses will land between 5'1 and 6'2. The wider the range, the higher chance our guess has of being correct. No doubt, this is why we are surprised if someone is over 7'0ft[6].

The normal idea also assumes all measurements lead to a central point with each guess or attempt. In school, I got marked on a curve, the bell curve, so I aimed right for the middle but not below the class average. I was comfortable with being a normal student. What I didn't realize then was the implication of normal. If the bell curve was inverted, the outliers are held up by the tails and the average is clustered [7].

There is another curve I think has a greater importance on professionalism. The power law curve is less popular than the bell curve but it dictates much of how we appraise performance[8].

In a school environment, the best student gets 2x the grade level of another student with a passing grade [9]. Because we spend much of our development in this system, it distorts our sense of how performance is rewarded. In our culture, the returns to exceptionalism is often 20x, 100x or even 1000x the next best performer. This is the power law and the 80/20 rule is an example of this effect.

While not quite an accurate deduction, if we proceed with the idea that 20% of people account for 80% of the value captured, then a smaller and smaller percentage of people accounts for most of the value created and captured in our culture [10].

The power law curve is all around us. The top five recording artists will account for an outsized portion of sales relative to other artists. In professional sports, the top player under a salary cap might be paid 40% of the cap. And in venture capital, the top performing portfolio company might return the full value of the fund.

If our goal is to capture this outsized return, then we should know how to pick and measure the thing to work on?

Venture capitalists have either a diversified or concentrated portfolio. The two approaches have the same goal, to find the outliers that capture most of the value. A method to measure the potential of a potential company is to use a heuristic known as alpha. The goal is to keep the number slightly below 2 but above 1.5, a number that is a function of time and growth.

A company with a 30% continuously compounded growth rate with 3.5 years time to exit will have an alpha of 1.95. The higher the growth rate, the less time a venture capitalist needs to exit, and the lower the alpha [11].

For us normals, we can use this heuristic to guide the skill we want to be good at. Some of us will prefer the diversified approach while others will be more concentrated. How quickly we adopt this new skill will be the growth rate and time will be measured by the point we are comfortable sharing our skill or when it can be monetized. This two points of exits will then help us determine which alpha to seek. If we plan to only share the skill, then we can slow the growth rate and push out the exit time. But if the monetization path is chosen, then the growth rate should be faster to achieve a lower alpha.

The methods presented are ideas that have worked in a domain where the power law dictates who captures most of the value generated. Will it work for the same way for an individual skill? Maybe not, but it is also possible you may be the next Prince in your domain [12].

Notes

[1] Dictionary definition

[2] Abstraction is the process of removing the details

[3] I include athletics and entrepreneurs in the creative bucket

[4] Assumes you like your job and want to stand out in it. The process of becoming exceptional in a chosen field is rarely discussed for a regular job

[5]https://reactionwheel.net/2015/06/power-laws-in-venture.html

[6] The more guesses or samples we test will result in a concpet known as the central limit theorem

[7] I discovered this metaphorical meaning during the writing process.

[8] Power law curves differ from normal curves because they have fat tails or small outcomes are more likely, no central limit and no average can be calculated

[9] This assumes the perfect and average student are 100% and 50% respectively

[10] 80%/20%, 16%/4%, 3.2%/0.8%...

[11] alpha = 1/(continuously compounded growth rate x time) + 1

[12] I'm still working through how to capture the individual skill mathematically. If I find an easy way to explain the calculation, I plan to update the final points