H’Shem had made a complete mockery of Egypt. This was demonstrated in its entirety by the culmination of the judgment upon Egypt: “Pharaoh’s chariots and his host hath He cast into the sea” (Exodus 15:4, JPS 1917 Tanach). Measure for measure, H’Shem enacted judgment upon Egypt. Turning the Nile River into blood, reminded Pharaoh of his guilt, concerning his decree against male infants, that they be drowned in the Nile. The perishing of Pharaoh and his army at the Sea of Reeds was an expression of H’Shem’s judgment against Pharaoh.
Yisro, Moshe’s father-in-law, an ex-priest of Midian, “heard of all that G-d had done for Moses, and for Israel his people” (Exodus 18:1, JPS). He journeyed from Midian to the encampment at Sinai, and brought with him Zipporah, the wife of Moses, and also Gershon and Eliezer, the two sons of Moses. He proclaimed, “Now I know that the L-RD is greater than all gods” (Exodus 18:11, JPS). He continued, by implying that in the same manner that the Egyptians conspired against the Children of Israel, so was Pharaoh and his army destroyed. I.e., measure for measure, by means of water.
Yisro had worshipped many gods; and, according to Tanchuma, he had renounced idolatry many years ago. Yet, it was not until he heard of H’Shem’s plagues against Egypt – each one symbolizing H’Shem’s superiority over an Egyptian god – and the splitting of the Sea of Reeds, when Pharaoh was defeated, that he recognized H’Shem as “greater than all gods.”
Up until then, his belief was predicated upon rational inquiry; he had his doubts about the efficacy of the many deities that he used to worship. Yet, when he heard of H’Shem’s greatness being demonstrated in a tangible way through the plagues, and the splitting the sea, his belief was upgraded to the level of knowledge, because of H’Shem’s miraculous intervention for the sake of Israel’s Redemption. In other words, “seeing is believing;” although, in this case, it was enough for Yisro to “hear” “of all that G-d had done,” for his belief to become manifest.