In Defense of (Initial) Generalist Freelancing
As I’ve dripped out this series I’m doing on the business of freelancing, I’ve staked out a pretty aggressive position. In the very first post, I argued that freelancing is an interim, and not end state. And I’ve doubled down since then.
Today, however, I’d like to add a little nuance.
If you’ll recall the diagram from that first post, I pointed out that freelancers either figure out business ownership, or else they wind up employees. (Whether someone else’s employees, or just employees of their own, dead-end freelancing ‘business.’) Because of this, you might assume that the ideal would be to minimize, or even skip, the freelancing state.
But today I’m going to argue that, no, that’s not necessarily ideal. The interim freelancing state serves an important risk reduction purpose that a lot of folks (past me included) need.
So yes, you should definitely enter freelancing with an exit, business-owner state in mind. But no, I wouldn’t advise skipping it until or unless you thoroughly understand it.
The Thousand Day Rule
I’m pretty sure I’ve talked about this on the blog before, but there’s an idea that I heard about from the Tropical MBA podcast, called the Thousand Day Rule. Here’s the tl;dr concept from their article:
Our basic hypothesis: you’ll be doing worse than you were at your job for 1,000 days after you start your muse business.
Don’t worry about what a “muse” business is — that’s a specific Tim Ferrisism that isn’t relevant to the discussion here.
But the point remains. When you leave the corporate world and go out on your own as an info product entrepreneur, or a SaaS founder or whatever, it’ll take you about 1,000 days, give-or-take, to get back to what you’d been previously earning.
They go on:
I’ve seen it happen a bunch of times. For many of us it’s been almost exactly those 1000 days it took for us to get back to the level of income we enjoyed in our corporate days.
For what it’s worth, I’ve observed this as well. (Conceding that this may be subject to confirmation bias.)
With Hit Subscribe, for instance, we had authors that earned more than I did in salary from the business ($25K a year when I first took one) in the earlier going. It took about 3 years — 1,000-ish days — to build this business to the point where it looks like my previous, stable consulting income.
The Idea Behind the 1,000 Day Rule
Inasmuch as I ever gave this any thought, I guess I assumed it was some mysterious and immutable law of capitalist physics or something. But then I heard a recent episode of the TMBA where they discussed the origin.
It was one of those, “ah, of course!” moments for me.
I’m going to paraphrase here because I was jogging when I listened, rather than making careful notes for accuracy. But the gist of it is that, in the corporate world, you should generally either move up or move on after 3 years. It takes you 3 years before you’re ready to assume the position above you in the org chart.
This makes a general amount of sense.
If you’re a newly minted senior software engineer with eyes on a dev manager position, you’ll need to spend some time observing your boss. What works? What doesn’t? And what skills does she have that you lack?
But you’re also (at first) newly minted in your role. So you’ve got your hands pretty full adjusting to and performing your current day-to-day. You’re not exactly spending a ton of time crash coursing in dev manager.
Take this idea to the world of entrepreneurship, and the same kind of reasoning applies. You’re leaving your corporate role to take on a new one. Let’s call it “business operator.”
But as you’re learning and adjusting to “business operator,” you’re also trying to learn to be CEO. And, while you’ll pick up “business operator” in trial-by-fire fashion, you’re going to spend 3 years being a badly under-qualified CEO.
But then somewhere around 1,000 days in, you figure it out.
Freelancing Bridges the Gap with Low Risk
So with a more concrete understanding of the 1,000 Day Rule, you can start to plan as an aspiring business owner. If you’re a salaried employee with aspirations to build info products or SaaS, you can assume a 3 year clock of poverty until you get back to where you are now.
This gives you some levers to pull, depending on your risk appetite and financial situation. You can start building your business as a side hustle, figuring things out while you retain your stable income as long as possible.
Or… you can freelance.
The Potential Upside of Pseudo-Employment
I’ve talked at length about how generalist freelancing is basically staff augmentation/pseudo-employment. Companies interview you, plug you into teams as a resource, and generally cast you as an employee with slightly different paperwork.
But you know what you will have? You will have stable income that likely rivals, or even exceeds, your last salary. Freelancing represents a way to thumb your nose at the 1,000 Day Rule.
And, while freelancing may look a lot like job-hoppy employment, it is a slight step away from employment and a slight step toward business ownership. After all, you do need to learn a series of things to freelance (usually):
- Creating a corporate entity, like an LLC.
- Invoicing and billing basics.
- Dealing with contracts and legal constructs.
- Handling business taxes.
I could go on, but hopefully you get the gist.
Freelancing as a Tactical “Job”
In this light, I’d ask you to look at freelancing as the equivalent of making a job hop. You still have a job and look a lot like an employee. BUT, you’re deliberately taking a job that will teach you a number of things about running a business that you wouldn’t otherwise learn.
There are ways to avoid the income dip predicted by the 1,000 Day Rule. One of them is building your business in a moonlighting capacity for as long as possible. Another is, of course, trying to raise funding as a Silicon Valley-style startup.
But a third, longer-tail hedge is treating freelancing as not a form of business ownership, per se, but as one last job, with training wheels, ahead of taking the plunge. You might have a gentler curve or an earlier exit from the 1,000 day gulf if your last job was one specifically designed to teach you a bit about business ownership.
Winning with the Freelancer To Business Owner Transition
There is one last, important thing about freelancing.
Even though generalist freelancing looks more like employment than true business ownership, it does give you the freedom to iterate toward business ownership in a way that traditional salaried employment does not (or at least not as easily). You can make plays like scaling your hours up or down, pausing between gigs, or juggling clients.
This is important because it allows you to make mini business plays earlier, and with lower stakes. You can try value pricing for your next client instead of hourly rates. Or you can throw up a productized service landing page, try to sell that, and see what happens.
Put another way, your day-job as a freelancer has infinite flexibility to scale back gradually as you build and nurse a nascent, real business.
And that is so important, because it lets you suck as a business owner for 1,000 days, while still paying the bills.
So absolutely look at freelancing as an interim state between salaried work and actual business ownership. And absolutely have an exit strategy from freelancing.
But don’t sell that interim job as a freelancer short. It’s a way to keep paying your bills while teaching yourself what it really means to own a successful business.