How does your career measure up?
Updated: Mar 9, 2019
No investor would want to pour their money into non-scalable ideas and businesses. Then why do many of us invest a significant portion of our lives to learn a specific skill set which we build a non-scalable career on. Isn’t time our greatest asset and we should strive to gain control over it by achieving financial independence at the earliest possible?
The recent and still ongoing crypto fever hints that there is no shortage of people desperately attempting to break out of the stable, non-scalable path and change their lives for better (or worse). Many attempted to ride the waves and create or multiply wealth at the end of 2017 only to witness the collapse in early 2018. Trading is one example of scalable careers.
Having a non-scalable profession means that you are paid by the unit of time (hour, week, month) for your skills and expertise. Since your time is limited, there is only so much you can earn since you need to be present to do your job. Your salary will increase over time to keep up with inflation and adjust for promotions. However, you will not be able to increase it by orders of magnitude, especially not within a short period of time. Your income over your career can be imagined as an increasing curve that flattens out once you reach the peak. Slow, steady and fairly predictable. This is where most of us fall - employees and freelancers of all kinds: software developers, teachers, journalists, consultants and numerous other professions.
There is another side of the story that is open to all. Scalable professions evolve around ownership and independence of your effort from the number of your customers. For example,
the software developer can create a game with add-ons for purchase. The development effort is the same regardless of whether the number of players is one or one million.
the teacher can record learning material in which she/he is a subject matter expert and offer this online for a fee. The effort is driven by the number of courses and hours of recording rather than the number of students.
the journalist can write a book and strive to hit the bestseller list so they can quickly scale their return on this investment. The effort is determined by the number of pages rather than by the number of readers.
the consultant can be an entrepreneur and run their own company instead of helping others do that. The drivers of success are the quality of decisions, creativity, luck, perseverance and various other ingredients.
You get the idea. Writers, musicians, athletes, movie stars, entrepreneurs, influencers represent highly admired scalable careers. The trick is that the effort and the revenue are not driven by the same factors. Now that we understand the difference, let's look into a specific example that will shed some light on the full and - spoiler alert - not so glamorous picture.
Imagine that you have graduated in journalism from a prominent school. You have some internship and full-time experience under your belt, explored the world through traveling and some international gigs and now you are deciding on your next move: should you write your book(s) that you always dreamed of or should you accept the dream job at the well-known New York magazine publisher that just gave you an offer letter.
Given that you are a rational human being, you decide to calculate and compare the estimated payoff of both options before you commit.
Your estimated payoff depends on the probability of the event and on the outcome of the event.
First, let's imagine the scenario where you follow your heart and become a writer. You know this is hard work and you probably need to write several books before one hits that magic list but hey, this is all you ever wanted to do and you feel talented enough to succeed. When you finally publish that best seller book (lucky you!), you learn that you earn 10% of the sales price on each copy. The average sale price of a book is $25. You read in the Publisher's Weekly that average book sells about 3000 copies over its lifetime but you know you'll sell 100K copies with this hype around yours. That's a check for $250K!
Now, let’s talk about the odds. First, you need to be published. The digital world is on your side and you can leverage various electronic and traditional channels so you think your chances of getting a publisher's support is around 30%. You also read that there are around 400K books published every year in the US alone. Huge competition! You think there is a 1 to 2% chance that you will sell 100K copies (which is over 30X of the average 3000 copies), so your estimated payoff is: $250K x 30% x 1.5% = $1,125
That's it? You think to yourself that there are some very exceptional writers that sell millions of copies. What if you are holding hostage the next blockbuster story in your mind. You could even sell 2 million copies! Although, your chances of doing so are significantly lower. You revise your expected payoff and it comes out at $5M x 30% x 0.1% = $1500.
Your enthusiasm lowers as you move onto the other option. Your offer letter confirms that can expect to earn $100K a year which translates into $70K after tax and other deductions. The odds? You studied hard to get into this great school and sacrificed some time to gain valuable experience in journalism at the cost of taking a higher paying though less relevant job as a consultant but you had great odds at landing this job.
Without launching into further simulations, you clearly see that it is all driven by the odds. A scalable career path can potentially lead to extremely high payoffs but the distribution of possible outcomes has a long tail where only a selected few (very few!) can make it to the hall of fame.
Lighten up! What if you don’t have to choose between the two options? Accept the job which offers the highest payoff and set aside one or two hours every day for writing a paragraph and networking with publishers and industry influencers that can help you advance in this journey. Seek out objective feedback about your talent and gaps, and do your best to build a scalable career knowing that if you don't make it to the crème de la crème your non-scalable career will still enable you to live a comfortable and prosperous life.