The New World of Work is Here: A Guide to What You Need to Know and How to Survive.

25 Jan

How to thrive in this future world of work

In the future, we are all going to work for ourselves.

Not magically, but through simple economics.

The formula is:

Cost of having services provided in-house
versus
Cost of having services provided out of house.

Once it becomes easier and cheaper to have services contracted out, the size of organizations will shrink. And the number of individual providers will rise.

Look at individual Airbnb providers hollowing out the short-term accommodation market or Uber transforming the food delivery service and destroying the outdated and over-regulated taxi industry.

Look behind the curtains and you can see that the largest accommodation site owns no property, and the largest transportation company owns no vehicles.

Airbnb and Uber have created platforms for individuals or groups to sell and buy their trades and services. Future companies will operate under this model in the creator economy.

So will all big organizations suddenly shrink?

It won’t happen overnight, but the tides are slowly shifting.

We need to understand that there is no universal decree of why organizations are the size that they are.

Huge organizations were a result of economic evolution. The selective pressures of the 20th-century widget economy made organizations successful by leveraging economies of scale.

You got rewarded for creating monopolies (only seller) and monopsonies (only buyer).

The motto was: get bigger and use your scale to drive down costs, prices and eventually beat the competition.

Innovations came in the form of price and quantity rather than creativity and quality.

In the 21st century, innovations in information technology have massively reduced the transactional cost and friction of contracting out services and producing high-quality work on demand.

For both buyers and sellers, it is becoming easier and cheaper to be a freelancer in the creator economy.

The Great Acceleration

The trend towards working for ourselves was already happening. It was building momentum prior to the pandemic but broke down the technological wall during the pandemic.

A study in 2019, predicted that:

By 2027, freelancers will account for the majority of the American workforce.

This was already trending in 2019, which seems like a world away.

The spread of COVID-19 was not the only thing that went viral in 2020. New ideas about how we could live and work gained traction. People had more time to reflect and think about how they could do things differently.

Lara Vandenberg, founder of Publicist, an online marketplace for marketing and communications work observes:

“We’ve just seen this trend completely accelerated. What we thought was going to happen in three years happened in three months.”

Once people were forced to work from home, set up their office and reconsider how much transiting 1–2 hours a day was impacting their health, energy and relationships, they decided enough is enough.

Once Pandora’s box was opened, there was no going back to “normal”. A silent revolution for a new social contract for how we work is being fought and won by employees rather than employers.

The BBC reported that many are reluctant to go back into the office full-time and 72% of workers are negotiating for a hybrid model of working.

Companies that refuse to accommodate these work arrangements will bleed talent and be left behind.

Marc Benioff, the Salesforce CEO, appeared on CNBC’s “Mad Money” with Jim Cramer, said:

“The phenomenon that I see happening globally is not as many employees are coming back into their offices locally as any CEO expected. You’re really starting see some very low attendance numbers in offices because employees are so productive at home.”

The great shift is here.

Employees, especially those in white-collar jobs, are starting to have more power.

They are beginning to understand how they can make the best use of their time and make their jobs fit their schedule.

The Rise of Freelancers and Part-time Entrepreneurs

2020 not only ushered in a new decade but also saw a black swan event that created the perfect storm for freelancers and entrepreneurs engaging in the creator economy:

Firstly, COVID-19 validated the work from the home experiment. We were all unwitting guinea pigs. The pandemic proved that you could work productively from home.
Secondly, digital communication tools such as Zoom, Slack and Discord have flourished during the pandemic and created even more flexibility in the workplace. You don’t have to even be in the same country to join a meeting or complete your work.

NPR’s Uri Berliner observes that:

“White-collar jobs can be done anytime, anyplace, by any capable person with a phone and a laptop. Such jobs are untethered from the office.”

We have crossed the invisible chasm of freelancing becoming more normalized in society. Many people realized that traditional work arrangements were a relic of the past and no longer suited their lifestyle.

Some were pushed into freelancing by necessity due to job losses, some warmly embraced the change as a way to supplement their income.

Hayden Brown, the president and CEO of Upwork, said,

“It’s no surprise that freelancing is on the rise, especially now that we have fully disentangled where we work from what we work on. The data shows that independent professionals are benefiting from income diversification, schedule flexibility and increased productivity.”

Additional highlights of a study conducted by Upwork includes:

59 million U.S. workers performed freelance work in the past 12 months, an increase of 2 million people year over year.
The top two occupations for new freelancers are technology and finance/business operations.
96 percent of new freelancers say they will do more freelancing in the future.
58 percent of workers who are not freelancers and are new to remote work due to the pandemic are now considering freelancing in the future.

The trend towards freelancing is here and growing.

We will look back on this period as an inflection point in our working history. Much like the industrial revolution or the rise of the internet.

My future grandchildren will be forced to study 2020–2021 has a prompt in their English essays.

My prediction is that we will move to work as high-skilled, knowledge-based contractors working for ourselves. Similar to how actors in Hollywood organize for a project for a few months and then get paid and disband until the next project.

But unlike Uber and Airbnb, we will be able to order high-quality work on demand. Similar to how Netflix now produces some of the best movies and TV series in the world and makes them readily available for our consumption.

But as with any new change, there will be teething issues. Agricultural farming made our ancestor’s diet worst before it got better. Living in large cities caused the rampant spread of disease before it got glamorous.

Will there be hurdles to cross? Definitely. Our legal, health and employment systems are only now starting to catch up. Freelancers can face ongoing insecurity, a feast or famine income cycle and few work benefits.

Employees Are Changing How They Work

Even those who kept their jobs are now working remotely and are rethinking the way they are living and working.

For instance:

Many have taken advantage of the geo-arbitrage. Earning a big city salary but living 1–2 hours outside the city or even moving to a cheaper state or country. There is now an ongoing fight between employees and employers to come back or risk getting a pay cut.
Forbes reported that many people have started working two full-time jobs. Without the oppressive panopticon of an open-plan office and a boss breathing down your neck, some people have successfully balanced working two jobs at the same time.
HR professional and Medium writer Jessie Vee details how many people now have more time for a side-hustle alongside their 9–5. We are seeing the rise of part-time entrepreneurs and freelancers flooding the market.

My experience working from home has meant I am able to save much more money. I barely use my car to travel and the lack of commute time gives me 1–2 hours back for my hobbies and health.

When I am tired or hit that afternoon dip, I can also do a quick exercise or strategic nap to get me back into gear. My health and quality of work have improved as a result.

While these trends may wax and wane, they are all leading to one thing: working for ourselves in some form or another.

Anthony Klotz, a Texas A&M professor, coined the “Great Resignation” term and explained how the change to remote work was the catalyst to this resignation phenomenon.

Klotz describes, “How we spent our time before the pandemic may not be how we want to spend our time after.”

According to U.S. Department of Labor Statistics, the share of U.S. workers leaving jobs in April was 2.7 percent, a jump from 1.6 percent a year earlier and the highest level in more than 20 years.

There are fewer barriers to becoming a freelancer and gatekeepers to winning work. The internet has democratized the availability of jobs and businesses and provided enormous leverage for those who can sell their services online.

I saw an explosion of small businesses from candle-making, grazing boxes and mask-making start during the pandemic. Almost all these businesses are not scalable but it demonstrates the entrepreneurial spirit latent in many office workers.

I jumped into this space myself. I dedicate my peak flow hours in the morning to writing online and building an audience on Medium. I’ve 10x my income over 2020 and 2021 and almost tripled my audience base.

I launched a podcast with a friend and quickly received grant money and recognition. We’ve been nominated for an award and received sponsorship. I also engage in freelance work.

Making money through your hobbies compared to your salaried job feels different, especially if you’ve built something from the ground up.

Once you make your first $20 via your hobbies, you’ll be hooked. You’ll become addicted to scaling your income or thinking of new ventures to experiment with.

Whilst the money I make is nowhere near the amount I make at my six-figure job, I can rest easy knowing that I can rapidly scale these sources of income if I had more time. If I lost my job or was forced to quit, I would happily dive into making money on the internet.

3 Ways To Thrive In This New Economy:

Love it or hate it, the change to how we work is here.

The best thing you can do is understand what the trend is and adapt.

Here are some ideas:

1. Build Your Brand.

Love it or hate it, your personal brand is going to be the new digital currency.

Unlike cryptocurrency, you want to make your brand to be stable and reliable over time. A form of accountability that will reward you over the long term.

Whether you’ve never published a single piece of content or not, you’ve already got a brand. The choice is whether you’ve got a conscious or unconscious brand.

I don’t know about you but the first thing I do whenever I hear a new name is to look them up on social media. If it is professional, I’ll use LinkedIn. If it is personal, Instagram.

First impressions matter.

Invest in your brand.

Consumers have never had more choices than before.

People will stop doing business with faceless companies anymore. People want to do business with people they can identify with and a brand that aligns with their values.

There may be many people offering the same services as you but don’t neglect the power of context. There is no one like you providing these services.

For instance, there are so many middle-aged white men from middle-class backgrounds giving financial advice on YouTube. You can carve out a niche in an oversaturated market just by being yourself.

Escape your competition through authenticity.

2. Build Your Leverage

The internet provides a new business model few people know about: permissionless leverage.

In the past, if I wanted to create a podcast, I would have had to record and burn my content onto a disc and hand it out to people. Or worse, try to convince a local radio station to give me a chance.

Nowadays, you don’t need permission to write a blog post, create an online product or start a podcast. Don’t ask anyone. Just do it.

The opportunities and means to build leverage are abundant. There are so many platforms you can choose from. Medium, Tik Tok, YouTube. It is the desire and knowledge to build leverage that is scarce.

Building leverage works on an exponential scale. There will be huge upfront costs and investments with little return in the beginning. It might feel like you’re throwing yourself into the abyss. Don’t be discouraged.

If you keep going, the leverage you build will compound. You will get to a point where small inputs will yield disproportionate outputs because of your leverage.

Joe Rogan probably lost money on his first 100 podcast episodes. Now he makes close to $30,000 per show doing the same or less amount of work.

That’s the power of leverage.

3. Build Your Iterations

Working hard quickly hits a diminishing return. Once you cross a threshold, working hard will not be the defining factor for your success.

Just like how height stops being a factor in the NBA because it has already been controlled for once you reach this elite level.

So how do you beat the competition?

Iteration.

Lebron James is the best not because he works the hardest but because he is always improving his game and willing to take risks publicly.

Dan Western writes:

In 2010, he made ‘The Decision’ to leave the Cleveland Cavaliers to join Miami Heat. The fans were outraged, and his decision became one of the most publicized interviews in NBA, receiving a lot of hate from Cleveland.
This decision was such a crucial pivoting point in his career. It shows that he wasn’t afraid of making decisions, upsetting people and potentially making mistakes.
He was willing to find out for himself whether playing for Miami was a better option for him.”

You need to be constantly taking action, experimenting, failing and trying again. Once you validate your learning. Start a new iteration cycle.

If you don’t look back at the person you were last year and think:

“Wow, I was a complete moron.”

You haven’t grown enough.

Iterations could look like trying a new writing style, running A/B experiments on your website or branching out to a new platform entirely.

Spending 10,000 hours on one domain won’t make you an expert.

But spending 10,000 iterations on one domain will make you unstoppable.

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Michael Lim