Beware the Scalable
In scalable work, a small number of people can receive a large share of the rewards. Taleb warns that effort and skill may translate into income less predictably than in work whose output is limited by time and capacity.
THE IDEA
BEWARE THE SCALABLE
Classifying work by scalability helped me think about uncertainty. But choosing a scalable profession paid off for me only because I was lucky and happened to be “in the right place at the right time,” as the saying goes. If I myself had to give advice, I would recommend someone 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.
When to use it
Choosing a career path by weighing the potential for extreme success against the risk of failure.
Evaluating how a business’s capacity to serve more customers changes its costs, competition, and distribution of possible rewards.
Examining how scalability can contribute to concentrated earnings within an industry.
Risk management for entrepreneurs: diversifying across scalable and non-scalable ventures.
FROM THEORY TO EVERYDAY LIFE
In practice
The Author's Lucky Break
The author received advice that was useful for creating a classification yet was misleading for career choices. It only paid off because of being in the right place at the right time.
Acting vs. Teaching
An actor in widely distributed films can reach audiences far beyond the capacity of a live classroom. A few actors may earn very large rewards, while many struggle. Classroom teaching has a tighter link between working time and the number of students served, though pay still depends on institutions and circumstances.
A MOMENT TO REFLECT
Put it to work.
Is your chosen or current career scalable or non-scalable? What does that imply for your potential success and risk?
How much of your past successes were due to luck versus your own actions?
If you were advising a friend, would you recommend a scalable or non-scalable path? Why?
Often confused with
CONTINUE THE CONVERSATION
Source texts
- The Black Swan The Impact of the Highly Improbable With a new section On Robustness and Fragility (Nassim Nicholas Taleb)