What’s been the value of The End Of Jobs so far?
Money? Authority? Connections? Recognition? The experience of writing?
That was the conclusion to an email a friend sent me last week. In truth, I’m still not sure what the full implications are, but my ego thinks it’s all been pretty cool. My hope was to sell five thousand copies by the end of the year. Thanks in large part to the support of many of you, the book eclipsed that milestone last week, only a month after release.
I’m sure hedonistic adaptation will (justly) kill most of my egotistical thrill in the weeks and months to come.
What it won’t kill, and what gets me most excited, for the months and years to come is the confirmation and the breadth and impact of the entrepreneurial revolution I talk about in The End of Jobs.
In the month that it’s been out, I’ve talked with people in dozens of different industries, different ages, and different countries that have seen the same trends in the book. Parents wondering about how smart of a decision it was to put their kids through college (or encourage them to go and take out expensive student loans), stay-at-home moms looking to start businesses to create additional income, students graduating college reconsidering their career path, venture capitalists, startup founders, local small business owners, book agents, publishers, and precious metal brokers.
I wrote the book with a relatively small, specific market in mind. The speed at which it’s moved has confirmed to me that we are even closer to reaching the “End of Jobs” than I realized.
I was listening to The Collected Works of Peter Drucker riding the subway in New York over the weekend and screamed “Yes!” when I heard the excerpt paraphrased below:
The century long period where individuals were reliant on corporations for the means of production is quickly coming to an end. You, the individual, now holds the means of production in your hands. It is the corporation which relies on the individual to create value in the market place.
I am grateful to be in the process of reorganizing my life to help push forward the message that the scales have indeed tipped.
In that vein, I put together a presentation to summarize the main points in The End of Jobs in an attempt to make it more accessible.
If you prefer audio or video to written words (or have friends that do), this should be a good introduction and/or refresher. I started recording an audiobook version of the book yesterday that I’ll have available by the end of Q3, but for the audio and video dominant among you, this will be something to listen to and watch in the meantime.
I didn’t put much polish on the presentation because I wanted to ship it sooner rather than later.
If you want a copy of the presentation or notes for any purpose, I’ve included links below to all the files (text, images, video, audio) below.
Download the presentation as an audio file. – Right click and “Save As”
Mentions from the presentation:
- Kleiner Perkins Caufield and Byers Internet Trends 2015 Report
- Portable Bar Company
- Dynamite Circle
- Seth Godin
- Cynefin Framework
- AT&T and McKinsey Study
- The Long Tail – Chris Anderson
- James Clear
- Derek Sivers
- Escape The City
- Traffic, Conversion, Economics Framework
- Self-Determination Theory – Edward Deci
- Peter Thiel interview with Zuckerberg
- Marc Andreessen (a16z podcast)
- Rob Walling
- Travis Kalanick
The End of Jobs Third Party Book Reviews
- Book review: The End of Jobs by Ray J Green
- Taylor Pearson’s The End of Jobs a Book Review – Simon on Startups
- Entrepreneurship is More Accessible Than Ever by Jeff Doehler (Analytics Sumo)
- The End of Jobs by Grey Enlightenment
- Book Review: The End of Jobs by Austin Playboys
- Entrepreneurs and Job Holders by Chuck Harrington
- MHRC Bookclub Review: End of Jobs by Taylor Pearson
- The End of Jobs [Review] by William Petruzzo
- Book Review: The End of Jobs: Money, Meaning and Freedom without the 9-5 by Marie Rocher
- Todd Review The End of Jobs
- The End of Jobs Animated Book Review
- Chris Winterhoff The End of Jobs Review
Note: To all of you who took the time to send in corrections, thank you so much! Working with the editing team at Craft Your Content, I’ve uploaded two new revisions to the book in the past month to correct any lingering typos and formatting errors. If you bought or downloaded a kindle version of The End of Jobs in July and would like to update your version, here’s how to do that. Please note that you will lose your original notes and highlights on Kindle if you do so.
The End of Jobs Presentation Notes
Slide: Population v. Jobs
This is a report from Kleiner Perkins Caufield and Byers Internet trends of 2015.
For the 21st century, jobs have been in decline relative to population growth.
The popular explanation is that we’re growing through a global economic recession and, if you just hold on, we’ll bounce back.
They tell you, “Trust that the powers that be—banks, governments and corporations—are going to turn the situation around.”
Well, that didn’t really square with my experience or the experience of a lot of people I’ve talked with. I noticed that one group of people I was hanging out with was doing better than ever: the entrepreneurs.
Slide: 2 Groups
Both of these groups are full of intelligent and hard-working individuals.
The group on the left is me and my friends and me just after college graduation. Everyone in this picture got a “good” job.
The two guys on the outside worked in accounting and finance, and were seeking out cost-of-living raises.
The gentleman to my left in the red polo went to med school and thought about becoming a family physician, but because Medicare reimbursements are plummeting, he realized he would be in his fifties before he could pay back the debt unless he became a surgeon, so he went into orthopedics.
The picture on the right is from a conference four years later in Bangkok, Thailand, and no one in this picture has a “job.” One works in the info-publishing space; another has a web dev shop and a nootropics podcast; and the other has a SaaS business.
I’m sitting at breakfast the day after this picture was taken and asking: how is this possible? Everyone at the conference could feel it in an intuitive way, but no one had really articulated it.
Slide: Portable Bar Company Trade Show and Dynamite Circle Map
That was the question I set down to answer with the book – Why is one group of smart/hard working individuals sitting at a breakfast buffet in Bangkok beset by opportunities and the other is eeking out cost of living raises? What’s going on?
I went to work with two entrepreneurs who owned a publishing business that provided a forum/events for entrepreneurs around the world, and a physical product business.
I ended up helping manage that business with the guy on the left side of the picture. I ran the front end marketing and he managed the backend. This is us at a trade show in Orlando.
During a two-year period when my friends from college couldn’t get into the medical specialty field they wanted, got bad raises, and were bouncing around looking for a job they liked, I travelled the world and that particular company grew 527%. The overall portfolio was growing in the neighborhood of 30% year over year. That’s 30% YoY vs. 3%—not a trivial difference.
Yet we weren’t working ten times harder.
What’s going on? That’s what we were discussing at the breakfast buffet. Why were we pushing just as hard, yet getting much better results?
The answer is that we found a point where effort is more highly rewarded.
I set out to articulate that in writing to post-college me, and my friends that were still in that mindset.
I’ll start with the denouement and work backwards. The central thesis of the book is:
Jobs are getting more competitive and less profitable, while entrepreneurship is more accessible, safer, and profitable than ever.
Slide: Machine as a Metaphor for Jobs vs. Entrepreneurship
When I use the terms “jobs” and “entrepreneurship,” they have a very loose correlation to something like having a LLC or firm set up. I use the term similar to how Seth Godin uses it in Linchpin:
“[ A]n individual who can walk into chaos and create order, someone who can invent, connect, create and make things happen.”
The exact definition I use in the book is:
Entrepreneurship is connecting, creating, and inventing systems— be they businesses, people, ideas, or processes. A job is the act of following the operating system someone else created.
Entrepreneurs may or may not own equity in a company. Peter Drucker, arguably the most well-known management consultant of the twentieth century, was an entrepreneur in every sense of the definition above despite not owning a majority stake in a large company.
The CEO of a company that is entirely accountable to a board or group of owners and mindlessly follows their directions is not an entrepreneur by my definition.
Slide: Have We Reached the End of Jobs?
Even as jobs were in decline, there was an alternative path, a higher point of leverage.
Let’s take a trip, first stop, at the bastion of 21st century capitalism: Vietnam
Slide: Ben Thanh Market in Ho Chi Minh City
I’m not being facetious—Vietnam may say it’s communistic, but everything about the day-to-day experience in the country is reminiscent of an almost Ayn Rand level of pure capitalism.
Maybe it’s not a stretch to imagine this in their street vendors. If you’ve ever travelled in the developing world, you’ve been hustled up by those street vendors every day.
Slide: Three Vietnamese Children at Computers
That same culture though has carried over into the 21st century, and the image of three children at a computer is a more accurate representation of Vietnam and much of SE Asia, Eastern Europe, and South America) today.
I went to an event at a University in Vietnam and met people whose grandparents had grown up in rice paddies, and they were fluent in English and Ruby on Rails.
Large multinational companies and international organizations came in 20 to 30 years ago and funded education, and that hustle went from selling fruit to selling their services as computer programmers.
In parallel, communication technology has gone from paying $5 a minute for a phone card over a terrible connection to Skype—free and approaching ubiquitous communication around the world.
This has resulted in the rise of the “micro-multinational.” Jesse, one of the guys in the photo at the beginning and who I interviewed for the book, moved to Vietnam and set up a software development shop in less than six months, where they he had access to talent equivalent to the U.S. but for a fraction of the price.
Effectively, those in the traditional knowledge economy with jobs that don’t rely on physical presence—bookkeepers, accountants, etc.—are competing with a very hungry, very motivated global workforce living in places with much lower costs of living.
The education standards have risen dramatically and those individuals are much more accessible.
Slide: Industrial Revolution Progress Charts
What’s often missed about all this is that technology drives the rate at which things are changing.
This chart on the left is world history going back for the last two thousand years.
There’s this amazing inflection point around 1800, where the Industrial Revolution and the popularization of Capitalism effectively invented wealth creation. That amazing acceleration was driven by a ~2% increase in annual wealth.
The chart on the right is a zoomed in version showing that 1-2% annual increase.
The increases we’re seeing for computers are 30-40%.
This is still in a very small segment of the economy, but is one that is chronically underestimated.
Slide: Human Progress Over Time
If this rate of change is sustained as computers take over large segments of the economy, then Marc Andreessen’s prediction that “Software is eating the world” may very well be true.
Over two billion people used broadband internet in 2014, up from around 50 million a decade earlier in 2004.
Slide: Blockbuster to Netflix
These changes are resulting in massive efficiency gains, but large losses of traditional jobs.
Block buster (60k jobs) faded into the past as Netflix (2k jobs) took over the industry.
The same phenomenon can be seen across other industries: Kodak —> Flickr and Shutterfly, for example.
Slide: 1983 Phone and Human Genome Project
We typically don’t plan for these changes because we don’t understand them. We are linear creatures living in an exponential world.
In 1980, AT&T hired McKinsey & Co—one of the most prestigious management consulting firms in the world—to predict how many cell phone users there would be in the U.S. in 2000. Based on the large study they conducted, they predicted there would be around 900,000. There were actually about 100 million. So close! Only off by ninety nine million one hundred thousand—a factor of 120.
When the human genome project began in 1990, it took seven years of costly labor and employing the smartest scientists in the field to sequence the first 1% of the human genome. Many critics fought to cancel the project, arguing it would take too long and was too expensive. But instead of taking another seven years to sequence the next 1%, it took a single year. In the next year they doubled again, from 2% to 4%. The trend continued and the project was completed in fifteen years. A project that took seven years to reach one percent completion was finished in 15 years total. 99% of the project was done in about half that time.
Again, these were some of the best educated people on Earth—world-class scientists and a highly respected consulting firm. Have you adjusted your mental model to adapt to this?
Slide: Megan Parker, Receptionist in Hallway
This image is from a NYT story published in 2015 of Megan Parker.
“I am over $100,000 in student loan debt right now,” said Megan Parker, who earns $37,000 as the firm’s receptionist.”
It took her months of working as a retail clerk while churning out job applications to get that job.
The law firm simply required everyone to have a degree because “it’s a buyers market for employers”—they needed some way to filter through applicants.
What’s going on?
Most everyone will agree with two statements:
- Degrees are getting more expensive; there’s lots of data for this.
- Degrees are getting less valuable. While a degree used to guarantee a good job, it doesn’t anymore.
Slide: Why Are We at the End of Jobs?
Slide: The Entrepreneurial Economy (2000ish-???)
I said earlier that the popular conception of what’s happening is that we’re in an economic recession.
But I argue that we are actually transitioning between two distinct economic periods and that we are in the midst of a “magical moment” for entrepreneurship.
Individuals who entered each economy in the early days were the ones that profited the most.
We are roughly at the same point the entrepreneurial economy that people were in the knowledge economy during the early 20th century . It’s relatively hard to get into entrepreneurship right now, but it’s also one of the most profitable times to do it.
Individuals who entered the knowledge economy in the first half of the 20th century are the ones that benefitted the most—IBM was the first major knowledge-based corporation, and despite decades of blunders (including giving Microsoft to Gates), are still doing well.
It’s more difficult to enter this new entrepreneurial economy than it will be in 10 or 20 years, but the rewards are probably as high as they’ll ever be.
Slide: Cynefin Framework and The Commoditization of Credentialism
Work has moved from simple, to complicated, to complex over the past 800 years.
Agricultural and Industrial work is simple, “best practice” work. It can be documented in steps like putting together an IKEA table.
Knowledge work, such as what was in demand in the 20th century, is complicated. You get a degree which gets you 80% of everything you need to know in your career. Creativity and innovation are certainly involved, but the broad strokes can still be clearly defined.
Entrepreneurial work, the kind in demand by the market now, is complex. It is an emergent practice and not something that can be effectively credentialed. It requires an iterative process of probing the market, sensing its reaction, and responding to it.
My argument is that moving from complicated to complex work is higher leverage and a better use of resources than getting better at operating in the complicated domain. AKA Start a business or get an apprenticeship instead of getting a MBA.
All the factors we just discussed that are making jobs more competitive and less profitable are a boon to entrepreneurs. They are making entrepreneurship safer, more accessible, and more profitable.
If you can move into a complex, entrepreneurial situation, suddenly “The End of Jobs” is a very optimistic prediction.
Slide: Is Entrepreneurship Safer Than Ever?
Slide: The Turkey Problem
The story of the turkey is that everything in his day-to-day experience confirms, with increasing degrees of statistical confidence, that everything is getting better.
From the day the turkey is born and going forward, the butcher comes out of the back door, feeds the turkey, and pets it.
The day on which the turkey believes with the highest degree of statistical confidence that things will continue to get better is the day before Thanksgiving.
You can see here in this image that the turkey is predicting everything improving in Q4 following Thanksgiving.
It has been fed for 1000 days by the Butcher before Thanksgiving so why would anything change?
The turkey problem as it relates to careers can be told through the story of two accountants: Max and Rand.
Typically, an accountant leaving their job would be considered leaving something safe to pursue something risky, but let’s see how true that is.
These are fictionalized names, but based on real people.
Max decides to stay in his accounting job. He’s not crazy about it, but he makes good money and it’s the safe, smart thing to do.
He gets paid every two weeks, the food hits the trough, confirming he’s doing something valuable.
This is risky, because he hasn’t adjusted at all. The longer the market goes without a correction, the larger those corrections are when they happen.
Then, one day he gets a letter from HR saying his department has been outsourced.
Now he’s got a mortgage, kids, spending habits based on the idea he was creating a lot of value—and his skill set is now gone. His professional network is useless.
This is a VERY risky position to be in.
Rand decided to bail on his accounting gig to start a company. He’s pecking for his food. But he knows what works and what doesn’t. If people aren’t buying his product or service, he’s getting feedback from the market.
Unlike Max, who only finds out that his skill set is not valuable at the last moment, Rand finds out immediately and he can adjust.
While his income is bumpier, the feedback is helping him improve. He’s developing a skill set around being an entrepreneur and operating in the complex domain.
It’s Max, who thought he was doing the safe thing, who has actually done the risky thing.
What was once risky is now safe. What was once safe is now risky.
Slide: The Long Tail (or Why Entrepreneurship is More Accessible than Ever?)
Slide: Longtail Graph and Box Office Hits
The Long Tail is a book written by Chris Anderson, one of the leading writers at WIRED Magazine. As a writer for WIRED, Chris obviously spends a lot of time thinking about and looking at technology.
And what he noticed was this trend he termed “the long tail,” which the internet was bringing to every industry.
If you examine traditional markets, there are usually a few very big, successful players that make the VAST majority of the money, and there’s not much else to remark on.
For example, there’s the top 10 movies in the box office, but if you don’t get into theaters—nada.
Anderson noticed this “long tail” section, the rest of of players not in the top 10, was getting longer, fatter, and more accessible.
Slide: The Long Tail is Getting Longer = Democratization of the Tools of Production
The tools of production are democratizing.
This is quite obvious when we look at something like digital information products. You can build something just by googling or and basing it on your experience, and then sell it.
If you wanted to do that twenty years ago, the same thing required going to a research library, putting together detailed reports, etc.
This change seems obvious with digital products, but it’s just as true with physical products.
If you were trying to start a physical product company 20 years ago, you had to go to China, You had to deal with a ton of middlemen. China was not doing short run manufacturing 20 years ago.
So a lot of time and resources were required.
Today, you can do the exact same thing over Alibaba. Instead of trekking around China looking for the factory, you can find them sitting on your computer.
This is what we normally think of when we imagine the tools of production.
Slide: Laptop and Internet
…But this is what it looks like today
Slide: Democratize the Tools of Distribution
This is all great, but building it is just the first step—you’ve also got to distribute it and market it. And the long tail is getting fatter.
Slide: Storefront and Newspapers
20 years ago, you had to get a storefront on Main St. and sign a two-year lease for tens of thousands of dollars to distribute and market anything.
This lets you reach a couple hundred thousand people. The Austin American-Statesman has a subscriber base of 120-180k people, and it takes around 100 people on staff to do that. They’ve been working since 1872.
Took a bit over a century to get to that point.
Slide: WordPress and James Clear
But not anymore. Now you can simply set up a WordPress site for free, or pay for a one professionally done by an agency—$5k and your can start writing a blog.
This lets you reach a couple hundred thousand people for a lot fewer resources and much less time. James Clear started writing three or four year ago and already has around 120-180k subscribers.
Just like Netflix taking over Blockbuster, you’re seeing massive efficiency gains.
Slide: Connect, Supply, and Demand
Now we’ve got all these products we’ve built because production is easier and it’s much simpler to reach all these people—but who are we reaching?
Going back to the movie theatre example, this is a logarithmic chart. You see a few movies make all the money, and then we drop into regional distribution. Then around movie 500, this drops to 0 because the economics of retail don’t allow it.
If you don’t at least get into regional theatres, no one sees your movie.
What should look like the long tail is cut off because of the economics of retail.
However, there’s all this latent demand the internet has released.
Some groups have always been interested in Brazilian tree frog documentaries, but that wasn’t getting into theaters. It can get onto Netflix, however, because the cost for Netflix to carry one more movie is effectively zero. They just add a show page and upload it to their database.
Suddenly, there are all these new markets available for individuals looking to get their start.
For entrepreneurs, this means their cost basis is very low—they can easily acquire a WordPress site and cheaper products—but the other aspect is that their profit potential is very high.
Slide: Sailor’s Songs and Sea Shanties
Derek Sivers, the founder of CD Baby, was one of the people I interviewed while writing the book.
He told the story of a woman who made CDs specifically for sailors.
This market can only exist post-internet. It doesn’t make sense for a record store in Columbus Ohio to carry a CD on their shelves for sailors, because there’s a real cost to that retail space. Even though there are probably a couple of people that would like the CD, it’s not enough to justify the cost. CD Baby just has to add a product page, which has almost zero marginal cost, and they can reach people around the world.
Lower cost to get started, larger potential upside exposure.
Slide: Is Entrepreneurship More Profitable than Ever?
Slide: Escape the City Ad – What is “Profit” or “Wealth”?
The next question, then, is: What is wealth? Certainly, there’s monetary wealth, which is important. But I think most people would agree that for many sections of the West, wealth has other components.
This is an ad for Escape the City, a UK-based site which connects people who are hoping to dumping their corporate salaries for entry-level positions at companies which provide work that gives them greater level of freedom and meaning.
Given a clear-cut choice between money and freedom, they are taking freedom—and meaning.
I’m going to argue we are at a point in history where work that creates freedom and meaning is also more profitable, and that, over the long run of a career, the dichotomy between freedom and meaning and money is—to a significant degree—false.
Slide: Where Do You Fall?
All these changes have dramatically increased the level of freedom we have today.
Most people are stuck in the mindset of “choice over design,” when the opportunity today is “to design.”
The least free people are those that watch Jeopardy for four hours a day. They are told to “stay tuned,” and do just that.
The middle class has a much greater level of freedom, They are more likely to structure their families and hobbies in ways they find more meaningful, and not just as the mass media may instruct them. At work they are likely to do things which require solving more complex problems and defining tasks for others.
But the most powerful are those who design their own realities and the realities of others. They write the TV shows and design the products that the masses consume. The entrepreneur defines reality, he is not defined by it. He is engaged in a dialogue with his reality asking “why?” and “why not?” instead of “how?” or “what?”
Slide: You are Freer than John D. Rockefeller Because of an Increased Ability to Define Your Reality
What most people don’t realize is the level of freedom available today is greater than ever—should they choose to seize it.
At one point while writing the book, I had a conversation with the guy in the apartment next to me and realized he was actually freer than John D. Rockefeller.
He was about to take a two week trip to Europe and stop in NYC on the way.
Rockefeller only left the country once because it was such a venture—now, boat trips are an affair, and a plane trip is an afternoon.
Broad swaths of the American middle class now have more freedom and access than the richest man on Earth did 100 years ago.
The informational advantages Rockefeller used to grow Standard Oil in its heyday could be overcome by an iPhone with a free stocks app.
People sense this increased ability to define reality in a more profitable way, but are not stepping into it.
Slide: One Penny Doubled
If you sit down and talk with a financial advisor early on in your career, they will invariably pull out a chart that looks similar to this one and talk about the power of compound interest.
They’ll say, “Start young and save up money, and after 50 years, you’ll be rich.”
Here’s a different take on that: how do we skip to the thirty-year point where it gets interesting?
We skip it by having controllable, unlimited variables.
Variables you have control over and which don’t have an upper limit.
If you’re in a job, you’ve given up control and you’ve capped your maximum potential.
Anyone that has worked in a big corporation has heard of or run into the problem where “we only do raises after two years, to be fair.”
Which is to say: even if you create a massive amount of value for the company in your first year, they can’t move you up because “it looks unfair or is demoralizing.”
The speed at which you can move is both capped and not within your control.
But if you’re selling your own product or service or working in an entrepreneurial company, that’s not the case.
This is the Traffic, Conversions, Economic triangle. If you increase any one, it will increase net profit of the business.
If you double the traffic by starting a podcast, you can double the profit. Then you can add email marketing for customers that put something in their cart but didn’t check out. So now each one of those visitors is worth more.
Then after you’ve been in the market for a few years, you see the opportunity to release a new product not already on the market, so you can charge a premium for it and have higher margins. Now you have more people converting higher at better margins.
It’s possible, albeit difficult, for a business to double its profits in a year.
I don’t know anyone who’s has doubled their job salary in a year.
Slide: Expected Value
I noticed a weird trend with entrepreneurs: many used to be poker players. I think it’s because they understand a concept known as “expected value.”
If you’re in a poker hand and you have one card left to see, and you think that the odds are 20% in favor of you winning $20k, you have an expected value of $4k (20% of $20K).
So if you can see that card for $1k, that makes a lot of sense.
Most people don’t do this in their everyday life, though. We say “this feels risky” or “this feels safe” without any regards to the payoff.
We also don’t often recognize that we can increase our odds.
Unlike poker, you can become more entrepreneurial and increase probabilities of a desired outcome.
Slide: Itunes vs. Blackberry
Choosing to exercise a greater degree of freedom is not just rewarding in and of itself, but is financially more rewarding.
Edward Deci, the founder of Self-Determination Theory, noticed in his experiments and observations that great work emerged when individuals had more freedom, and were, in a sense, allowed to be more entrepreneurial.
If we look at the individuals who have made great contribution to society, they did so by their own choice—Van Gogh, Da Vinci, and Galileo were not conscripted into their work.
Imagine someone telling Steve Jobs that he had to design a new phone. Given that sense of obligation, he likely would have just made a slightly better Blackberry.
Great work—the kind of work that will create wealth in our lives and the lives of others—is not the product of obligation. It is the product of freedom. Freedom gives us a better leverage point.
Slide: Thiel and Andreessen
Just as more freedom can create more value, so can more meaning.
Peter Thiel and Marc Andreesen, two venture captialists, have done a lot of pattern matching around what makes successful entrepreneurs, and have a very large incentive to understand what it is.
One conclusion they both seem to have reached independently is that being obsessed with the a problem is a core piece of waht allows an entrepreneur to build a successful company.
That is, finding working on the problem inherently meaningful, is a key predictor of economic success.
Andreessen tells a story where founders that come into his office asking for capital can be sorted into two groups. Early on in the meeting, Andreesen usually suggests they shift focus to a different problem.
The founders who usually don’t work out turn into yes-men, eager to get funding even if it means changing the company direction.
The most successful founders usually get incensed and sometimes storm out. In their minds, this is the problem they are meant to be working on and will not be dissuaded.
Thiel has a similar story about Mark Zuckerberg. When Facebook got an offer from Google for $250 million, Thiel wanted to sell initially. But Zuckerberg said that if he did sell it, he would just go start another social network. It was the problem he found meaningful to work on.
Facebook’s market cap is now ~270 billion. 1000x what Google offered.
Meaningful work is not only more personally rewarding; it’s more profitable.
Slide: Concave (Jobs) vs. Convex (Entrepreneurial) Risk Exposure
So taking all these factors into account, my argument is that entrepreneurship has a much better risk exposure profile.
Low potential upsides surround jobs with high potential downsides. Your earning and upward mobility is often capped. I’ve heard of many friends who were doing well in their corporate positions but got some version of “we can’t promote you so fast, because it will lower morale.”
Even though they are capping your upside, they will still be more than happy to lay off individuals when investors demand higher earnings report.
In entrepreneurship, on the other hand, there are low potential downsides, lower costs, and much higher potential upsides. Thanks to The Long Tail, you can get to market faster and at lower cost. The potential market has gone from regional to global.
There are risks in both these cases. You can end up on any point on either graph and a lot of factors are out of control.
But I think entrepreneurship is a better career risk exposure profile because you have some control over how you manage that exposure.
Slide: What are the Paths into Entrepreneurship?
Slide: Stair Step
There are a couple of new social scripts that have emerged for entrepreneurship.
College was not an accepted social script in the early 20th century—why would someone go to college when they could go straight to work? Nowadays we have statistics for the advantages, but that’s only clear in retrospect.
I think we are at a similar point. It’s hard to become an entrepreneur now, but the rewards are also probably as high as they’ll ever be.
All these small markets have made it possible to start developing an entrepreneurial skill set in less competitive environments.
Look at it from a “stair step” perspective.
This is a graph of Rob Walling’s story. He started with single sale, single channel products that let him build out his toolbelt of entrepreneurial skills and gradually “step” into bigger businesses.
His first business was selling duck boat ebooks, a market that is only possible in a world where geography is irrelevant. A bookstore would never stock that.
While it’s hard (and unlikely) to imagine becoming the next Zuckerberg, almost everyone can start doing something more entrepreneurial by stair-stepping their way up. Doing that systematically over the course of a career can lead to outstanding outcomes.
Slide: Benjamin Franklin
Apprenticeships are another route, and are based on the same idea of developing and investing in an entrepreneurial skill set.
Complex environments are better for apprenticeships. Unlike universities, going to work with an entrepreneur or entrepreneurial company lets you get your hands dirty.
It can increase trajectory by building skillets and relationships.
A lot of people look down on apprenticeships and revere business school, but look at the risk exposure.
Charlie Hoehn, who worked as an apprentice with Tim Ferriss, posted recently that he received an email from someone who started doing a free apprenticeship for a guy named Travis.
Travis turned out to be Travis Kalanick, the founder of Uber, and the guy that started as a free apprentice is now worth ~$1 billion.
Did he get lucky? Definitely. But he had a good career risk exposure to put himself in that position.
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Last Updated on July 30, 2019 by Taylor Pearson