There are exactly 2 kinds of businesses in this world. Businesses that are perfectly competitive and businesses that are monopolies.
Peter Thiel
The work of a specialist can usually be measured and rated on a single metric, or something close to a single metric. A mechanic can be graded on how fast they fix cars, and how long those fixes last. A surgeon can be graded on how many successful surgeries they’ve performed and how many had complications. Having clear performance metrics is very good for, well, performance. But in the broader picture of your life and career it can be a bad thing.
We’re all competing in markets—either against other employees in the job market, or against other businesses in the market for a particular product. The most fit competitors tend to survive, but that’s not the whole story.
Legible markets
When your fitness as a competitor is legible—when it can be easily seen and measured—, that makes competition more efficient. That means if your neighbor is ever-so-slightly more competent than you are, they’ll be chosen for the job before you, every time. Efficient competition leaves less room for the “soft values” like personality and culture fit. And it leaves no room for creativity.
In a perfectly efficient market, competitors would have to dedicate 100% of their efforts to that one metric of competence, or else they’d be outcompeted by others who did so. This basically destroys the “work/life balance,” encouraging overworking at the expense of all the other things that make life worth living. It’s an undesirable outcome, but it’s how efficient markets naturally work.
On the other end is illegible fitness. Some jobs are very hard to measure competency in. For example, which composer should be hired to score a movie? There’s no easy way to rank people by “competence at composing the kind of music that’s right for my movie,” so there’s no clear way to choose the best value per cost. How does the film producer make that hiring decision? He uses a set of soft factors, like “I know the guy” or “I really like that one piece she did” or “He has experience with the subject matter of my movie.” It’s an illegible process—it doesn’t lend itself to any kind of simple formula.
Efficiency increases by default
Real-life markets tend to get more efficient over time if they’re left alone. As information propagates to buyers and sellers, they make more economical decisions and find opportunities to capture any extra value from all the options available. Every stock market tick is an adjustment toward efficiency. So is every trade deal, every firing of a low performer or hiring of a high performer—really any informed decision made to increase economic value. It all increases efficiency.
That trend gets somewhat reset whenever innovation drops new value into the market. A brand new product has one seller at first; then others learn how to make it, and they offer a cheaper version, or a premium version, or an international version, and so on. All the potential value of the innovation is gradually captured by competition.
There are also some broader trends toward efficiency that won’t reset unless there’s a catastrophic change in the world order:
-
The globalization of products: The economies of the world are generally getting more interconnected. Countries find arbitrage in trading overseas. For any given export, there are at least a handful of countries that can offer it; they’re now competing with each other.
-
The globalization of labor: Global companies use the Visa program to get more talent from overseas, growing the supply of labor and in turn lowering the cost of that labor. They also use partnerships and subsidiary companies to outsource some of their labor to cheaper local markets.
-
Remote work is a similar trend—companies can attract employees from anywhere in the world, rather than just from the region where their building is. After the initial remote-work leap triggered by COVID, this trend is just beginning to take hold. Many businesses still aren’t ready to fully exploit it—they’re locked into their facility costs/rent, or they don’t believe their employees can work as well from home—but those hang-ups will eventually be resolved. Leases will expire, buildings will be sold, and new technologies and protocols will be instated to make remote work more effective and put managers at ease. An arbitrage opportunity of this size won’t be ignored.
The world is opening up, markets are constantly expanding, and it would take a truly apocalyptic event to stop it. Efficient competition is getting more efficient; this is the way the world is going.
Be unmeasurable
Generalists are well suited to find illegible markets to work in.
For example, I’m a technical writer in big tech, and it’s a narrow niche. When I got hired, my background was in physics, not computer science. Others in my role have backgrounds in English, business, and even music. We’re a weird group of people with a weird set of skills. We understand software well, have decent coding skills, are very good at English writing, and can model the experience of both engineers and managers who read our docs.
It’s hard to measure the performance of a technical writer. Do you count docs written per month? But that depends on how many docs our partner teams need written. And what if the docs aren’t helpful enough? How do you measure the comprehensibility of a doc? We certainly try to measure the quality of our work, but it’s imprecise. Compare that to many engineering roles, where your performance can be completely measured by a combination of 1) how many lines of code you write per month, and 2) does the code run without bugs?
The end result is a very good work/life balance. There’s no “on-call”; there’s no “we have to push through the weekend”; there’s no “we’ll extract as much value from you as possible in the first two years because we fear you’ll pivot to another company after that.” The company just needs us to do this one particular job. In eight years I’ve seen one person in my role get laid off.
Generalists shouldn’t need to outcompete the masses in standard jobs with legible performance measurements. They’d do well to look for the weird jobs at a company, the ones that only a handful of people have the right mix of qualifications to do.
True Monopolists
The step beyond landing a niche job is, of course, going out on your own and inventing a product or process that no one has ever thought of—a testament to the uniqueness of your skillset and knowledge base. The more narrow your niche, the closer you are to occupying a monopoly, where you (or your product) can’t be replaced by an alternative.
If you’re the founder…entrepreneur starting a company, you always want to aim for monopoly and you always want to avoid competition.
Peter Thiel