This is the sixth post in my series on the future of work and labor. Here are the earlier posts:
- Macro Trends
- Increasing Productivity Opens New Opportunities
- Commoditization of Labor
- New Forms of Organizing
- Advice for Companies
The last post looked at the future of work and labor from an organization’s perspective; this post will focus on the implications for individuals. There are major macro shifts happening in the economy and in labor markets. Lower costs and increased productivity are enabling a new wave of entrepreneurship; it is increasingly easy to create something meaningful and deliver it to a rabid audience. At the same time, commoditization of labor will leave many people without stable careers, becoming freelancers in competitive labor markets.
I’m going to cover tactics both freelancers and micro-entrepreneurs can use but there is one element that is essential for both: reputation.
It All Starts With Reputation
As work becomes more fluid and entrepreneurship becomes more accessible, reputation can be your biggest asset. When companies select contractors, or teams choose collaborators, or consumers support makers, reputation is the clearest way to differentiate yourself. A stellar reputation can overcome other objections and fears; it can serve as a strong signal even with a limited portfolio or ambiguous skills.
There is no shortcut to building a great reputation but it helps to work publicly, communicate effectively, and go above and beyond to do the right thing. Over time you’ll earn legions of loyal supporters and allies.
Conversely - a bad reputation will spread faster than ever. Technology is making the world ever more transparent and it is easier than ever to check references, find past collaborators, and identify shirking or other poor behavior.
Reputation is the foundation of the future of work and labor - make sure yours is phenomenal.
The Rise of Micro-entrepreneurship
If you have an idea and the motivation, it’s incredibly easy to create something new. Production costs are low, educational resources are abundant, and audiences are congregating across the web. The low costs mean that you can make a profit, even when targeting small audience. As I discussed in my second post, fast moving teams can seize opportunities that involve niche interests, limited geographies, and short periods of time - markets that established organizations avoid.
Entrepreneurship has a lot of allure - you can experience high independence, alignment of work and passion, an incredibly fun creative process, serious upside if the market proves large, and you can enjoy high status if you’re successful. Entrepreneurship also has it’s risks - income is unreliable, there’s no guarantee of successfully building a product or reaching an audience, there are endless obstacles to overcome, and one has to manage all parts of the business including accounting, finance, operations, marketing, etc.
The metaphor of startup as rollercoaster is accurate - every founder I know has gone through incredible highs and lows, emotionally and often financially. This includes teams on Kickstarter and Etsy in addition to traditional, venture backed startups. It takes grit and resilience to power through the tough parts.
For those with a high tolerance for risk and ambiguity, startups can be incredibly fun. As the costs of starting and making something decline, the amount of risk decreases and more individuals can dabble in entrepreneurship. Here are some tips for those looking to jump from consumer to maker to entrepreneur:
Get An Audience
Aspiring micro-entrepreneurs must focus on acquiring an audience. Building a community or an audience of fans is essential because is it is a source of feedback on your product, a pool of potential customers / backers, a channel for direct marketing, and a place to find collaborators. Kickstarter projects get the vast majority of funding from backers they already know. Having an audience or fan base is the best way to de-risk a new venture and ensure profitability.
There are myriad ways to build an audience. Sometimes it is a matter of entering an existing community, forum, or sub-reddit and getting to know the members. Other options are building a large Twitter or YouTube following or blogging. It can also be valuable to earn the respect of influencers that your audience trusts and have them promote you.
Hone your Storytelling
There is already a tremendous amount of content in the world, vying for our attention. Storytelling skills are essential to rise above the noise, build an audience, and attract collaborators. While an amazing product or vision is great, there’s no substitute for solid communications skills.
Like with any other skill, you can practice storytelling and improve at it. As you craft your message, you should iterate on it with your target audience - use their feedback to refine it. Over time you’ll figure out how to tell the best story for your customers.
Build a Team
One of the best accelerants to entrepreneurship is to build a stellar team. You need to find people with shared values but complementary skills who have similar work styles and buy into the same vision. While it is possible to succeed on your own, it is often easier, faster, and more fun with a team.
Rather than start with an audacious goal, it’s best to test out collaborators with fun, small projects. This will let you understand how you’ll work together and how you manage disagreements.
Most startups fail and many side projects lose money; you need to take steps to protect yourself from the risks of entrepreneurship. The best way to start any venture is to thoroughly validate the opportunity. Often this means a ton of time spent with prospective customers and showing them early prototypes (even just sketches); other times this means meeting with experts to understand technical or regulatory risks. Avoid spending any money until you know that you’re on to something. This validation and de-risking is essential for avoiding projects that would be doomed from the start.
There are many other ways to minimize downside, depending on the project. Kickstarter is great for customer financing and eliminating market risk. Angel investors can eliminate personal financial risk but outside funding limits exit options (investors need liquidity). Sometimes the best option is to keep your day job while you work on side projects; if one takes off then you can quit but until then you have a safety net.
Perhaps the best way to limit downside is to choose projects that are fun to work on and through which you can learn - that way even a failed project is a good use of time.
Get Good at Learning
Micro-entrepreneurs need to play a lot of roles, even in a small team. You’ll need to quickly pick up different skills and you can often get an advantage by harnessing new technology that isn’t widely understood.
It’s best to cultivate a love of learning - to enjoy the early stages where quick improvement is around every corner and appreciate the process of mastery. You also need to cultivate the meta-skills of quickly identifying good educational resources and knowing when to ask for help.
Outsource Almost Everything
The final bit of advice overlaps with the last post - focus on your core skills and outsource everything else. You are better off being amazing at one or two things and finding collaborators or contractors to fill in the gaps. This isn’t always feasible for small projects but every hour spent on a weak area (e.g. accounting) is a lost opportunity to focus on a strength (e.g. coding). The one caveat is that you should know at least a little about most things - enough to have an effective conversation with a collaborator or contractor and to understand major tradeoffs in that area.
Navigating the New Labor Markets
In my third post, I discussed how labor is becoming increasingly commoditized. More work is switching from full-time to freelance and there will be fierce competition for those gigs. As more high-skilled work is outsourced, companies will rely on reputation signals for when skills are hard to judge. I already talked about the importance of reputation - here are some other tactics for workers in the new economy.
In the earlier post, I described how the commoditization of labor can reduce wages and alienate freelancers from their work. To escape this fate, independent workers must strive to differentiate themselves from the homogenous masses. Reputation helps, as does building a great portfolio. Learning new skills might help in the short run but even high skill work will eventually be commoditized.
Personal brand can be a strong differentiator - if you can build a reputation as an expert in an area then you can get high quality gigs without needing to fight as hard. As technology evolves faster and education becomes more accessible, it is easier than ever to become an expert and demonstrate your mastery.
Another way of framing the situation is to try to monopolize something. This might be owning the discourse on a topic, as in the expert example above, or monopolizing a relationship or channel. If you can gain the trust of an organization - or an employee with an outsourcing budget - then you have a huge advantage over other freelancers with weak reputation signals.
As an individual, the best thing you can do is build a strong reputation and establish an audience - this is true whether you are dabbling in entrepreneurship or just freelancing. You’ll also need strong storytelling skills and the ability to collaborate effectively. If you can master these things then you’ll be able to excel in the emerging economy and control your future.