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The world is moving towards hyper-specialization. No longer will we be cogs in a corporate wheel of full-time work and collecting paychecks. We need to be aware of the changes and become nodes in a global network.

This piece is supposed to raise awareness to the new order, an outline of how I see the future of the world economy, and how you fit in. It starts with a basic outline of two major principles in economics: Comparative advantage and transaction costs. If you have a firm understanding of these concepts please skip ahead. I hope you’re ready, the future is beautiful, but will require a lot of self-awareness and self-direction.

A Quick Lesson in Comparative Advantage

“Do what you do best and trade for the rest” – Dr. Thomas Rustici

Crusoe and Friday

Comparative advantage is doing the things you’re best at, creating value from doing those things, and trading with others who are doing what they’re best at.

Crusoe and Friday are stuck on an island with few resources. In order to survive they must forage and hunt for the only two food sources: coconuts and fish. In order to survive they need to find the optimal trade-off to get both coconuts and fish each day. The Crusoe/Friday example has two variations:

First Variation:

Crusoe is really good at finding coconuts and Friday is an expert fisherman. Each day on the island they go out, Crusoe collects 10 coconuts and Friday catches 10 fish. They each trade their excess haul, 5 coconuts and 5 fish respectively, and come away with enough of each. This is great in an ideal world, but what happens if Friday is better at both gathering coconuts and catching fish?

Second Variation:

Friday is really good at finding coconuts and catching fish. On any given day Friday can catch either 10 fish or forage 10 coconuts. Crusoe, on the other hand, isn’t very good at either. He can only catch 5 fish or collect 5 coconuts. In this example it’d be easy to say, “Well Friday can catch all the fish and forage coconuts better than Crusoe so there’s no value in trade.” However, they both need both fish and coconuts to survive.

Friday doesn’t want to spend all day fishing and gathering. Instead Friday catches 10 fish, eats to subsistence, and holds on to the excess while Crusoe is collecting coconuts. This allows both of them to get what they need while both do less work than if they were to do it themselves. They both are better off, even if one is a better producer than the other.

Transaction Costs – The Nature of the Firm

R.H. Coase is probably most famous for his essay on transaction costs titled “The Nature of the Firm.” If you have any interest in why companies come to be, this is one of the best pieces to read, I highly recommend it.

In short, Coase came to the conclusion that firms exist because there are costs that can only be alleviated if an organization is formed. Although an entrepreneur may be able to do a lot of work in an efficient way, eventually they will get to a point where in order to grow they’ll need to expand operations.

There are costs that go into running a business from marketing, to utilities, to paying for software/subscriptions, etc. These costs may be handled by one person, but as the business grows, the expenses also grow. Opportunity costs also grow, not allowing the sole business-owner time to focus on other things. At this point the costs of hiring someone outweigh the transaction costs of keeping it a one-person business. Once transaction costs reach a certain level, the only solution is to incorporate and become a larger business.

Comparative Advantage and Specialization

Although our example above focused on two items, coconuts and fish, the world has millions, if not billions or trillions, of items for trade. As each becomes cheaper, and easier, to hunt/gather/collect/produce, we can become more and more specialized.

Technology is transforming at a exponential pace. It used to be very inefficient to run an entire company by yourself. From the legal know-how, to accounting, to running your service or goods-based business, they all required lots of chefs in the kitchen. With comparative advantage, all of that goes away. You can outsource a lot of your small business needs and focus on your true calling. Instead of spending your time doing lots of different tasks, technology has enabled us to truly “do what we do best, and trade for the rest.”

Taylor Pearson, in a phenomenal post on “Going All In” has the following story about a digital marketing entrepreneur:

An entrepreneur that runs a businesses offering digital marketing services for dentists previously did digital marketing in Cincinnati, but decided to work exclusively with dentists.

By working with a single type of client, dentists, instead of in a geographical area, he gained a lot of efficiencies that he could pass on in value to the clients both in terms of reduced costs and improved results.

Because he understands the industry, sales is easier, they have a smaller group to work with, and word of mouth is more effective. Marketing is easier because other dentists easily identify with existing client case studies.

Fulfilling a job is also done more effectively. Instead of having to go through a period of learning a new client’s business every time, they can hit the ground running and start generating results for their clients faster. Their processes are more streamlined and efficient.

In the past, geography kept these kinds of businesses from existing, but that’s no longer the case. He can be based in Seattle and work with clients all over the country.

He can focus his time in the marketing of dentists, make more money from being more efficient, and trade his excess, in this case money, for everything else he wants in life. In essence, this entrepreneur has become a node in the network (economy).

Lower Transaction Costs, Smaller Businesses

In the past this kind of thing was impossible. We couldn’t start a business in Seattle and help people all over the country. We would also need a lot of in-house staff to focus on legality, keeping books, being secretaries to schedule in-person meetings. As of today, these are no longer needed, and cost very little to outsource. An office isn’t even necessary anymore.

In “The Nature of the Firm”, Coase theorizes that companies will only grow to the size that adding one more person is cheaper than the transaction costs that the next employee would offset. With lower transaction costs, there is a lower need for more employees, and businesses can be smaller, keeping only essential personnel.

Current State of the Economy

Full-time, collecting-paycheck, employees are having a really hard time. Even for the behemoth that is tech companies. IEEE Spectrum, a leader in engineering, technology and science news, recently posted a fear-inducing article titled “Ugly Year for Tech Layoffs, and It’s Going to Get Worse” A top analyst in tech jobs predicts there’ll be close to 400,000 unemployed tech workers by March/April of 2017, “And worse, he says, these laid-off workers are never again going to find tech jobs: ‘They will always remain unemployed,’ at least in tech, he said. ‘Their skills will be obsolete.’”

Another article, posted today on Harvard Business Review, is an MBA professor who advises her MBA students to start looking at the gig economy. (Quick aside, YOU DON’T NEED AN MBA TO JOIN THE GIG ECONOMY!) The article is written by Diane Mulcahy and is titled “Why I Tell My MBA Students to Stop Looking for a Job and Join the Gig Economy.” If that’s not reason enough to be skeptical of the current state of the economy and think about self-employment, I don’t know what is.

Imagine You’re a Glass Sphere (or a Node)

There is a great post on FEE.org by Jeffrey Tucker titled “Imagine a Floating Glass Sphere Filled with Immutable Information Bits.” It’s a post about bitcoin and the future of blockchain in our everyday life. But I love the imagery and the idea that we are all nodes with immutable capabilities.

You cannot replicate the comparative advantage I bring to the table and I cannot replicate your comparative advantage. We are both nodes, floating on the network, trying to produce something in order to pay for everything else. And we are both unique. We have our specialties and use those to improve ourselves and improve the network as a whole.

Comparative Advantage is Already Making Our Lives Great

We get so caught up in our day-to-day struggles that we fail to see the magic all around us. We are living in a marketplace where everything is at our hands. It’s all because of comparative advantage and people being nodes within the network. Donald J. Boudreaux outlines this in his FEE.org post “Spontaneous Cooperation Is Why Your Life Rocks“:

The worldwide market of which you are a part – indeed, which is responsible for your very existence – is not nirvana. It doesn’t work as perfectly as our vivid imaginations are capable of conceiving. But here’s the thing: it works so damn well that what we notice are its relatively few failures to work smoothly; we don’t notice – because it is so common – its routine, smooth, everyday marvelous successes.

Next time you’re getting gas at a gas station, coffee at a local coffeeshop or a meal at your favorite restaurant, I challenge you to think the amount of people that it took to get that product to you. The nodes it traveled through, and the network that’s been created to connect the nodes.

Self-Employment Revolution

The revolution is already underway. We millennials have realized the desk-job future isn’t for us. We crave the independence of working remote, making our own hours, and outsourcing things we aren’t spectacular at. Baylen Smith, in his post “Freelancing: The New Way of Business” said it best:

So, Gen X, Baby Boomers, if you can’t beat us, join us. You all are the ones that have the management positions. You sit in the conference rooms where these decisions are made. Instead of expanding your graphic arts department, hire all of your graphic arts designers through Fiverr (not a typo) or another freelancing site. Freelance out your labor, save time on training, save money on insurance, save office space and let the work from home. That’s the way we want to work, sure, but it helps you as well.

In my terms this was a call to action for everyone to become nodes, latch on to the network that’ll connect the nodes, and do what you do best. The world today is full of opportunities to specialize and trade your services for the things you want most. Millennials are starting to realize, but it’s going to take everyone buying into the revolution.

It Truly is a Great Time to be Alive

I have written over 60 blog posts in the past two-months. Every time I write one, whether doom and gloom, happy, or a fluff piece, I almost always want to end them with “It’s a great time to be alive.” This piece is no exception. Although it’s scary thinking that our full-time jobs may disappear, it also opens a door to endless possibilities. Instead of being fenced in by a cubicle, and an overwhelming boss, we can become our own bosses. We can become nodes in the nodular economy.

Once we understand where the future is going we can start aligning our steps with our destination. It’s cheaper than ever to start a business and become self-employed. As costs of production go down, our leisure will go up. Living in today’s world can be scary for those used to collecting a paycheck, but once we embrace the trajectory of the future, we can become a productive node creating the future we’re already living in.

It truly is a great time to be alive.

The interviewing process is whack.

I remember when I was applying to college. Most colleges requested a specific essay question, wanted to know why I’m a fit at their school, and why I chose the major I was applying for.
I was working on an application to the University of Kentucky (I’m still not sure why) and one question was “How will you add to the diversity of UK?” I’m a white boy from Maine, there were only a handful of non-white students in my small-town, and I’d never been around diversity. I said screw it and didn’t apply.

The interview process is very similar to college applications. A lot of questions about my background, why I’d be a good fit at their company, and questions about my past. I understand the hiring manager wants to check all the boxes and make sure I have a solid background (which I do) but their problem is asking questions.

An ideal interview

My ideal interview would be having a hiring manager put accounting data in front of me, creating a spreadsheet, and providing an answer to relevant accounting questions. Or something along those lines. I am confident in my capabilities. Whatever needs to get done, I will find a way.

My ideal interview is far from the current interview process. Instead it’s jumping through hoops and making sure to please the interviewer.

The apprenticeship approach

I’ve spoken with Derek Magill about putting together a value creation pitch for a future employer. Spend some time researching the company, put together an email outlining two things that you can improve for them, and offer your services for free.

This is the closest thing I’ve found to my ideal interview. I get to prove I can do the work. The employer gets their work done for free. And if they like my work then they know exactly what they’re hiring. It’s a win-win-win.

My interview takeaways

I have gotten very good at pitching myself. I know how to answer questions, research a company so I sound knowledgeable about what they’re doing, and ask relevant questions so they know I’ve done my background check on them. My problem is that every job I apply for isn’t my ideal. Most of it is day-to-day accounting, which I’m very capable at doing, but very little thought on innovation and how to improve processes.

Interviewing for so many jobs, at companies across the board (startup, high growth, small business) and across many industries (cyber-security, marketing, SaaS, etc), has taught me something extremely valuable. My ideal job doesn’t exist. To use a college metaphor, there’s no major that contains all my interests. Actually, my major doesn’t even exist yet.

Next steps

My next steps are to stop mindlessly applying/interviewing for jobs that I know won’t fit my future goals. Instead I am being proactive about finding a company I want to make an impact on. And taking a page out of the apprenticeship approach, offering my services for free.

I have also realized my long-term vision for the world of accounting, and the decentralized future of the economy, isn’t being addressed by current businesses. By interviewing I’ve realized my job doesn’t yet exist. Which means only one thing, I must create my own job.

In the past I over-analyzed everything that happened to me and attempted to package the past into a small, tidy box. I allowed an off-day, or an amazing outcome, to affect my future. My today would be ruined because in my mind my yesterday wasn’t good enough. Or my today would never live up to the successes of my yesterday. It has taken me a long time, but I always try to forget yesterday.

What Forgetting Yesterday Means

We’ve all been there. We get a new job, get accepted into college or a higher-education program, we have our blog published on a website. It’s an amazing feeling! But it’s fleeting. Focusing on an accomplishment won’t get us to our next goal. We have to give ourselves a pat on the back and move forward. For what we did yesterday doesn’t matter if we’re not propelling forward today.

The same is true when we experience unfortunate events. We’ve all been there too. We’ve experienced a family member dying, we’ve failed at a business or school, we’ve tried hard at something only to come up short. Yes, we need to take time to heal the wounds, but again, we have to move forward. Dwelling on the past won’t help accomplish dreams for the future. It will only stagnate us from becoming the person we dream of becoming.

Like Hands on a Clock

If hands on a clock were to stop to congratulate itself for keeping time, or stop to analyze the rough patch it had in the past, it would be off. Not only would the clock be off when it stopped to think, it’d be off going forward. The clock wouldn’t be able to make up the time it spent stopped.

I imagine my life in the same vein. I make bad decisions. I experience heartbreak. I have crazy euphoric highs. But if I stop to analyze them, then I am throwing myself off. As long as I teach myself to forget yesterday and focus on moving forward, I will be holding my future self accountable. Forgetting yesterday is about focusing on the next step that’ll move me forward instead of transfixing my mind on something I can’t change.

Here’s a list of big things that I’m about (within the next month) to unveil:

• Re-launch of blog (I’ve found my niche)
• Creating a better online business
• Writing a white paper on the future of accounting
• A new homepage/layout for www.philipggross.com
• Something else even bigger! (It’s a surprise for now!)

That’s all I have. Get excited for new happenings in the future!

When I first started blogging I dubbed Sundays my “day of rest” and would post a summary listing things I found interesting during the week or summarizing my thoughts. I’ve found it pretty unnecessary and not in line with my current thought process. I no longer look to summarize the past, but look to today. My focus is practicing successful habits today, which will engrain those habits in me going forward.

Forward-Looking Mindset

In order to look forward, I actually have to look right in front of me. Each day is a practice to make my future self better. Changing your daily life is the first step in looking forward.

For me, I always think about the future. Where technology is going, how to incorporate those new technologies, where the dollar will be made in 10 years, and on and on. But to actively live free you must be intentional. Looking forward, for personal development, is about looking at your next step. It’s about re-training your feet to step the direction you want to go. Breaking free from the habits that put you in a bad place and replacing them with good habits. Yes, looking forward is the goal, but it starts with your first step.

Always Forward

No matter the circumstances, and there will be hard-times, it’s important to remember you need to move forward. Although you may need to take a step-back here and there, those steps should have a purpose of eventually moving you forward.

Once you have reshaped your habits, and start taking steps in line with the direction you want to travel, you build momentum. This is what will propel you forward. The following of good habits will eventually become a snowball rolling down a mountain. You’ll start gaining a little more steam with every step. Each step with purpose will open the next step forward and it all starts with focusing on today.

Stretching with headphones in, music on full blast, high socks pulled all the way up, long sleeve shirt keeping the heat in, and shorts covering my spandex. Every race in crew I had the same pre-race ritual. I listened to the same 11 songs. The same 11 songs I used everyday to train. The same 11 songs I use today for workouts. And the same 11 songs I used to write this post. I blocked out the rest of the world, focused on the upcoming strokes, envisioned winning the race, and spread fire throughout my body.

GMU Crew Club

The best decision of my college career was joining the crew club. Throughout my childhood I always played sports. Starting in the 3rd grade I was practically a full-time basketball player. In high school I spent my extra-curriculars training for basketball. In the fall I ran cross country to build endurance. And my summers were spent at basketball camps. When I went to college I lost an outlet for my passion. Instead of spending my time watching, thinking, and playing basketball, I had a void.

My junior year of college I went out for a crew practice. I was immediately intrigued. So many fundamentals to learn. A way to release a couple years of pent up passion. Crew was my outlet for my fire. The place where I could release my passion onto an oar, into the water, and feel the result in the movement of the boat.

Chasing Fire

I will never forget the feeling of my pre-race ritual which lit my entire body on fire. The fire burning from my mind, to my heart, to my fingers and my toes. When I feel that fire I know I am going in the right direction. Every time I’m in a situation when I start feeling that fire flicker in my stomach I try to capture it. I try to figure out where that fire is coming from and chase opportunities that’ll bring me back to the whole body experience.

 

Not being an expert is your greatest advantage in anything you put your mind to. The expert, the person with years of academia or experience, is jaded. They have been in the captain’s seat for so long they have already created their biases. Someone knew, who hasn’t had years of training or education is the one who’s capable of finding new/innovative solutions to problems. Taking on the experts doesn’t require years of study or education, but getting yourself into the shipping mindset.

Shipping with minimal knowledge

From Isaac Morehouse:

My friend had a book on quantum mechanics sitting in the house, and his dad asked him what it was all about. A minute or two in to give a breakdown, his dad said, “That sounds really interesting”, then moved on to whatever he was doing next. My friend assumed his dad was just humoring him. The next Sunday during the sermon his dad worked in some profound points relating concepts of quantum mechanics to the topic at hand.

Although his dad had limited knowledge about quantum mechanics, he was able to incorporate a couple minute conversation into his sermon. This wasn’t on accident. He probably spent the week digesting the material he had learned and thought up a clever way to wrap it into his Sunday speech. What the minimal knowledge allowed him to do was ship a thought and hopefully connect with a few people who hadn’t connected those dots.

Personally, I’ve found I learn more by challenging myself to ship something. This blog is a materialization of this challenge. I had absolutely no knowledge how to blog, and my current knowledge is still limited. But it doesn’t stop me. No matter what, I try to get a blog done. I try to improve viewership with SEO optimization. And I try to connect with my readers. But it all started with minimal knowledge.

The Biggest Obstacle to Shipping

It is important to overcome your fear of shipping without expert knowledge. Nobody will ever be an expert, the world is dynamic and always changing. It’s important to remember that the only way to get wet is by jumping in. You’ll figure out how to do it once you get started.

 

“I’m taking a year off of school”, “I’m traveling Europe”, “I’m quitting my job.”

“Why?”

“To find myself.”

The Finding Yourself Reason

Finding yourself is a commonly used reason to get out of almost anything you don’t want to do. It’s almost unanimously accepted by society and looked at as a learning experience. Plus, you can post pictures of yourself doing cool stuff while everyone else is working.

I am in no way bashing this mentality. I have traveled across the country trying to find my next city to live in, thinking a new city would bring me salvation. I’ve quit jobs that didn’t make me happy thinking the next job would. I’ve traveled to other countries thinking my experiences would change how I see the world. Yes, I learned a lot from traveling and quitting, but the search didn’t result in me finding myself.

Sacrificing Happiness

When I started the job I am now quitting, I put my heart-and-soul into making it work. My motto became FILO (first-in/last-out, an accounting joke…). I spent mornings sipping coffee while watching the sunrise as a reflection on my monitor. The day would pass and I’d watch the sunset. I thought to myself “This is what hard work is!” “I’m doing it. I’m going to be successful!”

I thought I had it all figured out. Working long hours, developing new processes, coming up with innovative solutions. These were the things employers wanted and startups were supposed to do. No one talks about the other side. My personal life struggled.

I had to say no to nights out with friends, weekend hikes, and hanging out with my girlfriend. When I did hang out with people I either talked work the whole time or didn’t talk because I was too stressed out with the more pressing matters. I spent Saturdays in the coffee shop trying to get more work done, not enjoying life.

My Great Realization

A couple months ago, when I first started blogging, I came to an amazing realization. I don’t have to do things to find myself. I’m finding myself each day I’m alive. Whether at work, hanging out with friends, in the mountains on a hike, on a date with my girlfriend, or traveling. I am finding myself. I’m finding what makes me happy. What I hate. And I’m finding out what I want to do with my time. I had been so stressed out trying to be the person society wanted me to be that I forgot that I answer to myself.

Living life, and enjoying the life I’m already living, is the greatest realization I’ve ever had.

Truly Finding Yourself

The phrase “finding yourself” triggers an image of wanderlust. “If I just travel and see things, everything will fall into place.” This was my thought for the past four-years. Once I started blogging, and focusing on the things that truly make me tick, things started falling into place.

It has taken a lot of hard work getting myself into a truly happy situation. Running from my problems didn’t make them go away. The only way I started finding myself was by creating. The act of creation helped me find what makes me happy, or not-so happy, and made me acutely aware of the amazing life I already have.

Finding yourself isn’t something you can search for, it’s something that happens once you give up searching.

Last week I gave my two week notice. I didn’t have a plan. I’ve done more interviews in the past three weeks than I have ever done in my life. I have talked with tons of people on my next step. Each time I think I convinced myself on my direction. Each time I have a sense it’s the wrong step. Today during my walk home, I started assembling the pieces.

Puzzle Pieces and Songwriters

I wrote a business plan last July and put it on hold. While walking home today I revisited it. I thought of the puzzle pieces written on my moleskin and started playing the air drums while composing a business idea in my head. And then I thought, this must be how songwriters feel. They hear the tune, they see the lyrics, they’ve come up with some clever rhymes, but the pieces haven’t been assembled. The words, verses, and melodies are floating in the air as they walk. That’s how I felt today.

The pieces to my business idea were dancing as I took each step. They were jumbled. Scattered over the sidewalk, in the blue sky, bouncing off the mountains. But they were there. My business idea was right in front of me. All I needed to do was capture the notes and chords, and the how-to’s. Now, I need to dump the puzzle pieces onto the ground and start assembling.

From Jumbled to Assembled

Thinking up a business idea seems like the easy step. Acting on the idea seems much harder. But I have always had a knack for putting myself into difficult situations and finding a way to swim against the current. Although it may be easier to get a full-time job, the road to self-employment spoke to me today. The path may be jumbled but it’s right in front of me. The game (songwriting, puzzle-assembling, or whatever you want to call it) has begun.