Scalable vs. Non-Scalable Careers

Professions where you are paid by the hour are not scalable. A prostitute who charges $100 an hour only has 24 hours in a day. At some point, she will hit a ceiling on her earnings. Similarly, dentists, lawyers, contractors, bakers, and consultants can see only so many clients at a time.

By contrast, scalable professions allow you to make more money without an equivalent increase in labor / time. An author writes a book one time and his effort is the (basically) the same whether he sells 500 or 500,000 copies. A Hollywood actress need not show up at every screening of her movie to make money off it.

Career experts generally favor scalable professions.

Nassim Taleb, in The Black Swan: The Impact of the Highly Improbable, offers the opposite advice: pick a profession that is not scalable.

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 of their own.

One category of profession is driven by the mediocre, the average, and the middle-of-the-road. In it, the mediocre is collectively consequential. The other has either giants or dwarves — more precisely, a very small number of giants and a huge number of dwarves.

In other words, the scalable professions tend to be winner-take-all-markets. J.K. Rowling makes a ton of money, but most authors make a pittance, whereas almost all dentists can etch out a good living that’s similar to most other dentists.

Put yet another way, scalable careers produce extreme outcomes (fat tails both left and right), whereas non-scalable professions tend to have a higher expected value with lower variance.

Taleb advises non-scalable careers because he attributes so much of one’s success in scalable careers to randomness and luck, much more so than your typical career advisor who will talk endlessly about how hard work and persistence can make any dream come true.

So what’s your risk tolerance? Are you looking for massive professional and financial success or would you be happy with a surer small slice of the total pie? Do you see huge success as significantly dependent on circumstances out of your control?

This is related to my old post on parenting styles. If you want to guarantee your kid is not a fuck up and leads a productive and “successful” life, be totally overbearing and induce lots of stress early on. If you want to give your kid a chance to end up in the history books, give him a long leash and excessive freedom to explore, but be aware that with freedom comes risk — he could more easily get into drugs and alcohol, for example.

Bottom Line: If you swing for the fences, you’ll either hit a home run or strike out. If you swing for a single or double, you’ll probably get there, but no farther.

23 Responses to Scalable vs. Non-Scalable Careers

  1. JU says:

    Great post. Also, typo. In the Nassim Taleb quote, third line. Feel free to delete this comment after you’ve fixed it.

  2. Florian says:

    Great Post! It’s like always in life the higher the profit, the higher the risk. It would be nice to find a combination of both as (software) consultant for instance you maybe can sell software in addition to your consulting and thereby achieve the scale.

  3. Glenn says:

    As others have said, very interesting and thought-provoking post.

    Florian brings up a great question – what sort of careers exist that have aspects that are both scalable and non-scalable? A more technical field that lends itself to consulting is also the first that I think of, but could involvement in academia work as well?

    One might pursue a background in city and regional planning, and while possessing a professional graduate degree, they could follow a more professional track by performing research and writing on their own… or is that off the mark?

  4. Matt Stimson says:

    Nice post Ben :)

    With regard to Non-scalable careers, don’t forget the option to transition to business-owner. In that way, any job can lead to scale.

    Yes the car mechanic is non-scalable in the beginning, but passive income follows later as he takes on employees or elects to open a second plant.

    For Glenn and Florian, here are some hybrid careers I can think of:
    - Software Engineer
    - Multi-level Marketer
    - Inventor
    - Venture Capitalist
    - Financial Planner
    - Photographer
    - Property Developer

    Cheers,
    Matt Stimson
    http://www.almostmodest.com

  5. Susan says:

    Most people especially at the beginning of their careers do not understand their options or limitations. I think this is less true of people under 35 than over. This absence of understanding is both a blessing and a curse.

    It would have been great to think of all that earlier in my own life, but I think the second and third chapters (see Sarah Lawrence Lightfoot) has lots of promise yet.

    Your piece is great and very Thoreau-like!

  6. You make a very good point about the limitations of non-scalable careers.

    One thing I recently encountered: A dentist’s office where business was obviously down. For me, they recommended a very expensive tooth cleaning procedure. “Too rich for my blood,” I said, and I left without making another appointment.

    Next thing I did was to make an appointment at the local community college’s training program for dental hygienists. Since this program trains many of the dental hygienists practicing in southern Arizona, I figured that they could give me an honest opinion on whether this procedure was necessary.

    According to the student who examined me, and his instructor, this procedure wasn’t needed. And the training program didn’t charge me for its exam — how ’bout that!

    So, long story short, the non-scalability of some careers can lead to the sales of unnecessary services, just to keep the business rolling in.

  7. GeekMBA360 says:

    Thought-provoking post. A few comments:
    1) I think for some people, they enjoy what they do. So, it doesn’t matter if their profession is ‘scalable’ — e.g. an artist’s job is not scalable at all, but he loves what he does. I think the notion of “Scalable career” assumes that financial success is one’s primary goal.

    2) Given the randomness of a scalable career, it seems to me that one should expose himself/herself to the randomness as early as possible. Let’s say you’re in your 40s with kids, it’d be much harder to pursue the scalable career.

    3) Is Problogger a scalable career? I think it’s one of those hybrid careers. In fact, I think you could argue that one could turn most unscalable careers into scalable if you start hiring people to do things for you.

    Here is a great quote from Andrew Carnigie: “You must be a lazy man if it takes you ten hours to do a day’s work” (see my blog post on this at http://www.geekmba360.com/?p=601).

    cheers,
    GeekMBA360

  8. Ben Casnocha says:

    Right — if the baker starts a bakery but hires other bakers to do the baking and can become a “business owner,” his career becomes scalable.

  9. Ben Casnocha says:

    Agreed on #1 – this distinction really only applies in terms of financial upside.

  10. Shefaly says:

    Ben:

    The prostitute’s business could look like it is not scalable but it depends on the ‘value’ on offer. Some obviously make more money than others and know their value and know how to extract it.

    Scalability is not about the hours; it is probably a bit about the rate and that is about the value.

    So anyone who is creating real value can see their income scaling up in a manner that is not proportionate with the hours in the day. Of course, there is a limit when Ponzi and Mr Multi Million Selling Author and a Value Creating Consultant hit the ceiling. But that is a philosophical debate as much as an economic one. No?

  11. Ben Casnocha says:

    Agreed that some prostitutes can charge $3,000/hr whereas some charge
    $20/hr, but still, even the super pricey prostitutes have a ceiling. They
    can get their rate up only so much — they still have to physically be
    somewhere and there’s a limit on their hours in a day.

  12. Chiao says:

    There are also many jobs which are highly pyramidal in nature, where making partner means ownership and much higher pay. In that case, however, I’m less sure if the scaling is due to value creation or value capture (i.e. a pyramid scheme).

    For a non-monetary case, consider tenure in academia.

  13. Chris says:

    Thanks for this post; it is quite thought provoking.

    One additional argument against scalable careers is that the culture in these professions almost always encourages longer hours. This makes it hard to achieve time affluence.

    Sidenote – It is interesting that Taleb recommends taking the opposite path to what he has chosen.

  14. As a 30 year free lance consultant I’m shocked to see in your post that consultants work by the hour. Never did, never will.

    http://www.danerwin.com

  15. Remarkable. Currently, I have a non-scalable career, but that’s pretty much against my will, and I see it as a passing phase of my life. I’ve always thought I should strive for a scalable career, and I’m currently planning my transition.

    Also, my parenting style is definitely the “long leash” one.

    But here’s the thing: I’ve never thought about any possible connection between the two. Reading this article was illuminating. Thanks!

  16. Surely this depends upon how you define your ‘pie’?

    Is it the music industry or a niche genre? If you want to be the top children’s author, competition is ferocious. You can dodge all of it by picking a sub-genre and scaling within that.

    I believe Nassim has really overlooked the power of the niches here. You can earn much more with less effort if you can define your pie.

  17. SheiWah-TAN says:

    I think we can all still be in a non-scalable career but begin to engage in Scalable activities. A baker who loves baking might not necessarily knows how to run a bakery.

  18. This is fascinating. And as someone who works from time to time on an hourly rate, I think about this issue all the time. I often think about how to leverage/become more scaleable and many of the ways one can control (sell all kinds of ancillary online “products”) appeals to me.

    This reasoning is reassuring, and gives me a rest from that worry about scalability.

  19. Oops — I had a typo in that prior comment..I meant to say that many of the ways one can get to scalability in my field (selling all kinds of online “products”) DO NOT appeal to me.

  20. Jeff Perlman says:

    Great post, which I agree with, only to a degree: non-scalable careers can be more scalable with a bit of creativity in how you approach the scale you are locked to, as I do in my consulting business:
    1. Shared risk-reward consulting: I offer a reduced consulting rate (hourly, daily, weekly) in exchange for a % of the positive results of my consulting work on the business I am consulting with – if I have 3 such clients and only one is successful, I break-even on my cut-rates for two and I have enormous upside in the third that can bring in residual passive income for an extended period of time.
    2. Productize the tasks: break out what I do in an hour of consulting into tasks and price the deliverables from thos tasks as products — then my ability to work more efficiently produces more out of a single hour and the client gets exactly what they pay for – a lot of clients I work with love this model because they feel there is a disconnect between the time they are paying for and the actual value of deliverables they get from that time, e.g. one consultant can get twice as much done in the same amount of time as another, but both charge the same rate…

    My personal conclusion: I much prefer the non-scalable path, but have found success in creating scalable outcomes from traditionally non-scalable pursuits.

  21. Great thread. Most careers fall somewhere on a continuum of scalability, few are truly non-scalable. A sub-component of scalability is passive income, referred to by the actress example. Passive income is not the only component of career scalability, however it characteristic of true wealth-generating careers. Perhaps the most important attribute of career scalability is true passion. It seems to me the most “successful” people invest their time in what they’re passionate about (e.g. writing operating software – a viable career choice) and subsequently create and capitalize on opportunities that grow from those roots (e.g. building the most profitable technology company history – a result, not a career choice). It’s a combination of finding and following one’s passion, building momentum, and creating and capitalizing on opportunities that is most scalable. Back to Ben’s connection to parenting, people most likely to follow such a path tend to have had long leash, etc.

  22. Corinne Nanik says:

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