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Entrepreneurship. The word itself sounds magical. It conjures up all sorts of wonderful images. You imagine yourself coming up with a brilliant idea, building a great product, and resting on your laurels for eternity. You can earn more income without putting in extra effort.
Employee. What does that word feel like to you? Words such as “bland”, “unimaginative”, and “restrictive” come to mind. You picture someone breathing down your neck, telling you what to do.
Not only does being an employee sound unappealing, but there’s a ceiling to your earning potential. As an employee, your salary is fixed. Yes, you get raises, but they’re fixed and ultimately decided by someone else.
And what about professions that charge hourly rates? A consultant may earn hundreds, even thousands by the hour, but the consultant is still limited by something finite: time. At some point, the person’s earnings are capped by the number of hours worked. The moment the person stops working is the moment money stops coming in.
The relationship between time and earnings is the difference between scalable and non-scalable professions.
Scalable Versus Non-Scalable Professions
In a non-scalable profession, the amount you earn is directly proportional to the amount of work you put in. A car mechanic bills according to tasks performed. A dentist charges patients for time and labor. This applies for most professions, such as therapists, teachers, and plumbers.
The more you work, the more you earn. These professions are non-scalable because they’re limited by the number of hours in a working day. The reward potential is limited.
In a scalable profession, earnings are not proportional to work. A developer can develop an app that gets downloaded by millions or by no one at all. An entrepreneur can develop a product that either has many consumers or ends up in the garbage. An artist can paint one piece of art that sells to 50 people or 5,000 people.
You can experience an increase in earnings without necessarily increasing the work. These professions are scalable because there is a nearly unlimited potential for rewards.
When you look at things that way, a scalable profession looks much more enticing than a non-scalable profession. Unlimited potential. A limited amount of work for endless returns.
In fact, we’re often encouraged to go for scalable professions. We’re told to “go big or go home” or “reach for the stars” when it comes to career decisions. Everyone loves stories about those who took a massive leap of faith… and prevailed.
A Profession of Giants and Dwarves
The reality is, for every individual who took a big risk and excelled, there are hundreds more who did the same thing but fell flat on their faces. When we experience survivorship bias, we only see the survivors and the success stories, so we’re biased to believe that we’ll end up like them too. We just don’t notice the graveyard of failures that lie further away.
In his book The Black Swan, Nassim Nicholas Taleb advises people to pick a profession that is not scalable. He writes, “A scalable profession is good only if you are successful; they are more competitive, produce monstrous inequalities, and are far more random, with huge disparities between efforts and rewards – a few can take a large share of the pie, leaving others out entirely at no fault on their own.”
Taleb argues that non-scalable professions are much safer, as they are “driven by the mediocre, the average, and the middle-of-the-road.” Scalable professions, however, have “either giants or dwarves.” And there are many more dwarves than there are giants.
Yet we only see the giants. Therefore, we never stop to think that we’ll end up dwarves.
This advice flies in the face of what most people want to believe. No one starts out thinking they’ll probably fail, despite what statistics show. Everyone believes they’ll be the exception.
We also tend to believe that nearly all work is proportional to results. Work harder and you’ll get better results. Those who don’t get results simply didn’t try hard enough.
But in a scalable profession, the competition is high. After a certain level, luck comes into play. There are numerous external factors beyond an individual’s control.
You can’t say that an actress failed to become a movie star simply due to lack of effort. A trending app isn’t necessarily better than another app ranking further down the list. The artist whose paintings go unsold isn’t necessarily less skilled than the one selling to the masses.
The top few take the lion’s share, leaving the majority with scraps.
Go Big or Go Medium?
Still, one can’t help but feel disappointed at Taleb’s advice. We don’t want to be told to pick a scalable professional for practical reasons.
We strive for things that are out of reach because we aspire. We hope. We want the chance to attain something, no matter how unlikely.
At the same time, we don’t want to end up on the short end of the stick. We don’t want to end up struggling because we took a massive risk, only for our plans to fall apart. Which route do we choose: all-or-nothing or a surefire bit of something?
It’s not easy creating something of your own. A study from American Express found that only slightly over half of business owners pay themselves a salary from their business earnings. Almost 15 percent of small business owners also needed to work a second job outside their business to make ends meet.
But there is the potential to be both scalable and non-scalable, no matter which field you’re in. An artist need not starve. They can sell scalable products such as prints and books, and non-scalable products such as lessons and consulting. A chemistry teacher I knew relied mostly in income from teaching, but earned royalties from publishing textbooks.
If you want to shoot for the stars while hedging your bets, you can be both scalable and non-scalable. You can work in a non-scalable profession while trying something scalable in your spare time. For instance, you can practice law during the day and write novels at night (that’s what author John Grisham did).
Not everything is clear cut. The odds may be against you, but you can still try. You can shoot for something risky while doing something middle-of-the-road to sustain yourself.
Along the way, you’ll likely learn new skills, knowledge, and lessons that you can apply to other aspects of your life.
Fast Forward Twenty Years
If you choose to devote your time and energy towards a scalable profession, you might end up a dwarf. Are you fine with that? Would you rather be a dwarf and know that you tried, or choose to be safely ensconced in the middle of the pack?
Now fast forward to ten years. Would you be fine with the decision you made? What about in twenty years? When you imagine yourself looking back someday, your perspective can change in an incredible way.
Only you can decide. But once you do set your mind on something, it means accepting all the rewards and challenges come your way.
The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb – The book explains the massive impact of highly rare and improbable events, and our tendency to find simplistic explanations for these phenomena.