Economies of You - Skill to Scale
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title: 'Economies of You - Skill to Scale'
subtitle: 'The Art of Using Economies of Scale to Empower Your Career Choices"
date: '2024-01-16'
author: rupi
slug: economies-of-you
category: Essay
tags: [career]
image:
description: 'Harnessing Economies of Scale to Empower Your Career Choices'
Intro
We all know the common trope: a giant corporation leveraging economies of scale to achieve cost efficiency and dominate markets. It's a classic business strategy. But what if we apply this simple principle to our careers? Imagine turbocharging your personal growth and financial success with the same smart tactic.
Understanding economies of scale
Economies of scale – a term that sounds more complicated than it is. At its core, it's about doing more with less. In the business world, it's about bulk – the more you produce, the cheaper it gets. For example, the first iPhone built by Apple cost them a lot more money than the one millionth iPhone they built because they had more skilled workers, better supplier relationships, better pricing because of volume, better logistic etc.
In our careers, it's about leveraging what we know to achieve more with less effort. Think of it as upgrading your personal operating system to handle more complex tasks with ease.
Case study
John's story
Let us look at a couple of real world examples. Meet 'John'. John is a software developer who loves baking. He quits his job and opens a bakery. But reality soon hit, and hit hard. Employees keep quitting as they find other jobs that pay even a few cents more. Margins are small. He has to wake up at 2 a.m. everyday to start baking. John is struggling.
Matt's story
Now meet 'Matt'. Matt is also a software developer. He works for a startup and works closely with the founders. Soon he takes on product management responsibilities learning what it takes to go to market, not just build. He also gets to know his other colleagues. Some of Matt's colleagues leave to start another company. Matt believes in them and makes a small investment and helps them with his expertise. From his reading, he knows that he should get pro-rata rights and he does. That company does really well and soon is raising a seed round from a tier 1 VC. Matt can also invest in the round but he doesn't have the cash. So he reaches out to his friends and they give him the cash allowing Matt to take a small amount (carry) out if any profits.
Now Matt is known for being a good investor. His other friends are reaching out to him to invest while the founders he invested in are telling their friends about how helpful Matt is. Soon Matt is running a successful investing syndicate that is about to raise its first actual VC fund.
Matt slowly built his economies of scale while John jumped in without any expertise call on.
Allure of new ventures
We all love new things. New skills, new ventures, new ideas. We get a dopamine hit by talking about them and doing them. More novel the concept, the bigger the dopamine hit. This is why people enjoy gambling more than working; the expectation of a random win gives more dopamine than an expected paycheck. The key is to not confuse this dopamine rush with sound economic strategy and recognize when we are chasing a hobby for fun and when we are making a calculated career move.
Risks of Diverging from Core Competencies:
Just like a company, we also have core competencies. We are good at certain things and bad at others. As we get more experience, we develop our core competencies. Too bold a jump puts us back at square one where we need to build our skill set all over again. That is ok early on in our career but as time passes, it starts becoming more and more difficult.
A better path?
We should expand within our own field like Matt does in the example above. Being intentional with the skills we need to develop and the experiences we want to have can do wonders for our careers. But what about passion and hobbies? Should we abandon them altogether? It is about balance. Enjoy your hobby but remember, not every hobby needs to become a career. Over time, you can keep building a skill set that is complementary to your hobby but sometimes joy is the best ROI.
Conclusion
In a nutshell, economies of scale in personal career and investment decisions are about playing smart, not just hard. It's about recognizing where your strengths lie and expanding them strategically. So, before you leap into the next shiny opportunity, ask yourself: is this building on my existing foundation, or am I digging a new hole?