The Future of Indie Consulting & Life - Venkatesh Rao

[00:59] Paul: Welcome to The Pathless Path. I'm Paul Millerd, and in this podcast, we examine the invisible scripts that run our lives and dare to imagine new stories for work and life. Today I'm talking to Venkatesh Rao, indie consultant and writer. Just released a two-part series, The Art of Gig, which was based on a newsletter series he published on Substack a couple years ago. I just reread the books. Uh, they're awesome.

They bring alive a lot of indie and freelance experiences. Literally made me laugh out loud several times because I resonated so much with some of the experiences. Um, also writes on Ribbonfarm for several years about emerging tech and the internet and is experimenting with what the future of indie work looks like with Yak Collective. Welcome to the podcast, Venkatesh Rao.

[01:56] Venkatesh Rao: Pleasure to be here, Paul.

[01:58] Paul: Wanted to start with a quote which sort of aligns with a question I kick off with, with many people, which is what are the scripts and stories you grew up with around work? You said this in the book, did I really leave the paycheck world I was factory manufactured to inhabit and learn a whole new set of workways, ways new to humanity over the course of the last 10 years? Uh, so it seems like this book was a way to sort of reflect on that journey. Seems like it's kind of crazy looking back. Why did you leave the world you were factory manufactured to inhabit?

[02:34] Venkatesh Rao: Yeah, it surprised me because I don't think of myself as the kind of like rebellious chip on the shoulder personality that's always chafing against scripts or, you know, particularly hostile to these scripts my parents lived out. So my dad was, a classic organization man. He worked for Tata Steel all his life. And then towards the end of his career, he spent a few years running a smaller company and then he retired to like a traditional retirement. And that seemed like a pretty good plan to me. Like there was nothing about that plan that struck me as like, I don't know, awful and unbearable.

And the factory manufactured part, I guess I'm referring to school and college. As the factory. And I think that's a common metaphor. But again, I was not one of the kids that hated school or particularly chafed against the controls. I was not on Ritalin. I'm not particularly ADHD, unable to sit still and listen and do homework.

So I was a good student. And not only did I do well in school, I actually enjoyed my schooling. It was like fun. I liked studying. And I ended up, as you might expect, getting like 3 degrees. So I clearly must have enjoyed it enough to like stay in school all the way through a PhD, right?

And I enjoyed my job too. Like again, I don't have the usual reasons for quitting, which is like hating your job. I was like appreciated and enjoying my work at Xerox 2006 to 2011. So not only was I factory manufactured for this world, I actually enjoyed being in that world as well. And I think when I reflect back, what made me quit it is It's one of those things that it's like Nassim Taleb's turkey example. It's like 99% of the days are great.

You're enjoying yourself and sort of you fit the script and the world and the context and the environment and it's fun. But when it breaks, it breaks really badly. So the crisis moments in the factory-manufactured world and path, they are really bad. And I had a couple of like crisis moments. One was breaking up with my first PhD advisor. That's also part of the factory world.

And then I quit and went off to work for a startup for a year. This was in 2000 and came back to a different advisor. So my processing of that crisis of relationship with my PhD advisor was one. And at Xerox, I guess enough time has passed that I can talk about it. Yeah, I enjoyed my projects. I had good executive support, but at some point I had an irreconcilable run-in with corporate marketing.

They wanted to market my projects a certain way. I did not want them marketed that way. And push come to shove, the CMO basically outranked me and it was like, this is not a crisis I can solve sticking around and it's basically not an option to stick around. So, and then the option to just go off into the gig economy via the blog that was Ribbonfarm was there. So I just took it and it worked. So that's kind of what I mean by, yeah, factory manufactured and then exiting because it was surprising to me that I ended up here.

[05:49] Paul: Yeah, it seems especially like as the years go on, more people are more aware of it. So I see more people more intentionally going into it. And I sense like your book will be part of a more intentional movement as well. What were some of the models you had in your head about this world? Like, had you read Dan Pink's book before taking the leap?

[06:11] Venkatesh Rao: Oh yeah, absolutely. So I read and reviewed several of Dan Pink's books early on in my blog. If you go like 2007 to '09, There might be a couple of reviews, Free Agent Nation and others. And I actually met Dan once at a book reading and I got to know him a little bit personally. But yeah, I actually studied this quite deeply. Like at Xerox, one of my projects was future of work because if you remember between like 1999 to around 2009, the middle of the recession, the future of work was like always in the top 3 of like trend topics.

Everybody talked about it, all conferences and things, right? And Xerox had a project, I was leading it. We even built a marketplace type product to like manage freelance labor at Xerox. So like, you know, graphic designers and stuff. I was leading that project. So studying the future of work theoretically from the comfort of a paycheck position for several years before I made the leap myself.

And looking back, that was a little bit of a luxury because I got to like read, you know, Dan Pink and then I actually collaborated with the oDesk people, what became Upwork a few years later. So I got to study it and come for it. And when I made the leap, I was like possibly overprepared for like unrelated reasons.

[07:28] Paul: Yeah, that's, that's a point you make in the book, which is maybe it's better not to know what you're getting into and especially the inner game side of it. So maybe break down like we have like you frame it as like the outer game and the inner game. The outer game is like, all right, get your taxes right, get your LLC set up. But the inner game is like knowing what to expect in terms of like how how bad you might actually feel. Maybe say a bit more about prepping or not prepping.

[07:58] Venkatesh Rao: Yeah, I go back and forth because it's of course hard to break out of the context of your own journey, and I'm sure you have the same experience. It's like you get excited about reflecting back, learning all the lessons and think, hey, I could convey this and people who come after me might have an easier time or at least make more interesting newer mistakes than I did, right? So, I think it comes down a little bit to temperament and personalities. There are people who like to over-prepare and see what came before. What Balaji called the idea maze. You want to learn the idea maze that has come before.

But then there are also people who kind of want to roll the dice and go in with a fresh mind. And the upside there is you might discover really novel and interesting new patterns. Instead of getting trapped in the idea mazes of people who came before. So it's kind of like a risk trade-off. And depending on your temperament, I would suggest, I don't know, trying a little bit of both paths and seeing what fits. But I think on balance, I am not that creative or imaginative personally, and I benefited from learning about what had come before, like Dan Pink and others.

So that's the part I think I'm more comfortable with. But the inner game part, that's kind of interesting. I think there's two things there. One is if you know too much about the risks and how hard it's going to be, you might get scared off on like day -10, right? And I think a good article about this, which I don't think I mentioned this in any of the book essays, but it's, I think it's called "How Karate Kid Ruined the World." And it's an article, I forget the author's name. I think it's on Cracked.

But the article talks about this notion of effort shock, which is movies like The Karate Kid take a very difficult journey and compress the hardest part down into like a training montage. And therefore you walk in thinking it's going to be easy. And by the time you figure out that it's really, really hard, you don't know anybody and you've already done most of the work and it's sunk cost and you power through and do it, right? So that's one side of it. So I think in this case, the effort shock is actually not that bad. A lot of the difficulty is in your head.

The other side of the inner game is this principle from storytelling that when you're writing like a fictional story, possibly don't wanna work out the whole plot ahead of time because if you figure out the ending yourself, you're gonna be too bored to write the story. Like to take a simple example of a murder mystery, murders are like kind of interesting because you do have to like logically plot out the puzzle with the twists and turns and you kind of have to know who the murderer is before you start writing the story, right? But you don't wanna know too much like the motivations and the surprises and the twists and turns and things like that. Because otherwise your writing will kind of bore you and it'll show. Even if you power through and finish the writing, it'll show that you were bored while writing it.

So I think that's another reason to basically not over-prepare or learn too much. So I don't know about how to balance these two things. Maybe the trick is to sample and learn. If anybody reads my books, maybe the thing to do is read the chapters since they're pretty standalone, read the chapters that sort of that seem interesting and intriguing to read, but skip the ones you kind of don't want to know about. Like maybe you don't want to know about the methods of managing personal finances and want to find out the hard way. So I think you want to like pick your battles though.

You don't want to like leave too many like time bombs littered around the landscape, or one can do.

[11:47] Paul: Yeah, do you think, I mean, do you think indie consulting just on the margin attracts kind of people that sort of just want to find out how the story goes. Like, in the career world, more than ever, I sense like, you can at least map a story of how your life is supposed to go in your head, and you can like sort of match up to that. And I've— I talked to people, especially in tech, like they've solved their money problem. And then they'll talk to me and be like, well, don't you worry about like not making a predictable income? And it's literally impossible to convey to them that like, well, there is some like, it's kind of fun to like put your life on the edge a little bit. And then like that you realize over time, the longer you're on this path, like going a couple months without an income might actually end up in somewhere more interesting.

[12:43] Venkatesh Rao: Yeah. And I think there's almost a false sense of security about the predictability of paycheck life anyway. Like, you know, some like, I don't know, ceremonial formal things. Like I know if I had stayed at Xerox, I was a senior researcher there and the next step up the ladder was something called area manager. Then I would either be a program manager or a lab manager. And if my career went on, I would be a center manager.

And that's the track that leads to CTO of Xerox, right? So the formal structure of the path is visible. But who the hell knows what layoffs are coming, what ups and downs the company's gonna go through? Like Xerox has been through a couple of existential crises since I left just in a decade. And I don't know if I would've survived that or whatever I was up to would've survived. So there's the false sense of security part.

And I think actually the predictability and assurance of a free agent life once you've kind of like found your footing is much higher because the short-term uncertainty is higher. But long-term, since you get into the habit of maintaining a portfolio of clients, a couple of like non-consulting things going on like book publishing or like a Substack or whatever, your short-term volatility actually buys you kind of long-term insurance from like, you know, all the people going through layoffs right now in the tech industry. That's like, for people who've always been in like paycheck careers, it's a kind of shock they've never dealt with. Whereas for me, I have a couple of big gigs, a couple of smaller gigs, a Substack and so forth. And if I lose any one of them, I'll make a couple of little adjustments, but fundamentally it's not gonna kill me. And yes, there are correlations.

It's not a completely uncorrelated portfolio. It could be like, there'll be like a black swan event that wipes out all the things in the portfolio at once. But I think fundamentally it's, it's a safer path. And to your point about it's actually fun to not know some things, I think personally I have like areas where I like to not know. For example, I like to not know the content of what I'll be working on. Like, you know, one gig to the next, whether I'm going to be working on like semiconductor stuff or, you know, climate technology or energy transitions.

Or a big software or cloud company, whatever, it's kind of fun not to know. Whereas if you're in a single company or even a single sector, you kind of know what the big challenges of the sector are, how you're going to work on them through different stints in different companies. So I like not knowing as much about the content. Like every year is at least one interesting new surprising gig where I learn fun things. But I do like knowing something equivalent to having a sense of the career progression of like, all right, I'm going to level up in this particular way roughly. And I think I tried to get at that in one of the essays.

I think I called it leverage curves or something like that, where there is something that's kind of equivalent to a career path in a traditional career where you get the equivalent of promotion. For example, if you've done just gig after gig of consulting for a while, Maybe you want to start writing. Maybe if you've done writing and gig work for a while, maybe you want to create an online course. And these things can be sort of structured to provide a personally created promotions ladder, so to speak. And it's not that you want to give yourself silly titles like I'm now VP instead of manager. It's that you want a sense of narrative progression in your life, but it feels like there are chapters and ends to chapters and interesting new chapters.

[16:25] Paul: Yeah. Do you, do you sense that, um, do you have like a reserve of like ideas, like break in case of emergency of like, I sort of have this idea of like, okay, I can do like sort of like big consulting type projects. I could probably plug into one of those projects, but that's kind of like the break in case of emergency. Um, and that kind of gives me the comfort. To then like do the other stuff. But the whole point of like my freelance work is to never do that stuff and sort of like to create, to create my own path.

Do you have similar things or do you sort of have the inner confidence now that what you're doing on the freelance side, you could probably sustain for at least the next 5, 10 years?

[17:11] Venkatesh Rao: No, I definitely don't have the confidence, but I do have more money though. So my savings situation and like just sheer cash liquidity has improved. Like when I first quit in 2011, it was kind of tough to create like a 6-month runway of savings. And then my wife quit her job around the same time. And so for a while there, things were dicey. And then for the first few years, it was hard to maintain the cash runway.

And then it's become easier due to various reasons. So that's one thing. So I can't claim any increase in like, you know, courage or like raw confidence, though the raw confidence has also increased. I mean, I'm better known now. I'm kind of like, I have my email lists and stuff. So, I do have like ways to like start or try new things in extremely leveraged ways.

Like any idea I'd get on making money, no matter how dumb, I have a 12,000-person email list I can blast it out to and sink or swim. I have like that steroid that it can work with. But for the first few years before my savings situation improved, I think I was relying on the idea that I can easily do courses. So I've done like a couple of online courses, but that's like a very quick inorganic ramp up in revenue. I've done one writing course. I turned my Breaking Smart Essays into another course.

And I think I have like 5 or 6 themes in my writing where I could like, you know, pull like a dozen articles. Create a couple of slide decks around them and like launch a course in relatively short order. And that would like probably be enough to patch over like, you know, short-term cash flow crunches. But I have to say, ever since Substack became like a good option, that's changed. That has now become my backup. It's become my stabilizing revenue stream, and it's significant enough now that it's not just a backup, it's actually a live cash flow that's less volatile.

So to a certain extent, I'm like not thinking that much about things like courses anymore because, well, I do like teaching and courses a little bit, but not enough that I appreciate the thought of being forced into it under the gun to make money. Like if I do a course, I want to like get into it because I want to and enjoy the material. So that's kind of my backup plan. Your backup plan of like getting into the big consulting gigs, I think That works for you because you came from the big consulting world, which I have never worked in. So I would not have the first clue about how to go around plugging myself into that kind of project. I have friends in that world like yourself, but I wouldn't actually know how to do it.

So that's not my plan B at all.

[19:56] Paul: Yeah, I think that is like an extreme plan. Now, I definitely don't want to go back and work at the firms. I could plug into one of these projects for 3 months maybe. They're like PMO projects. They're like, you don't want to be doing these projects. This would make you quit consulting forever.

But, um, uh, it, there is a certain amount of confidence you can get by just like, even if you're like not even launching a course, just like building something and making like $100 from it, it's like, oh, this is a possible, um, way to make money. Um, is that sort of how you've thought about things too in terms of just experimenting online?

[20:36] Venkatesh Rao: I think to a much lesser extent than most people think that way. And I think that's mostly a function of my age because remember I did a PhD and a postdoc. So, my first real job was at age, what was it, 32. And most people who kind of like start dabbling like this do start doing so like in their early 20s. So, when you're like 32, 33 and married and used to like a decent paycheck lifestyle, $100 is not enough to build confidence. And I had that, like I started my blog in 2007 and I quit in 2011 and I got my first Google AdSense checks for like, you know, $100 in like 2008 or something.

I got, by 2011, I was getting Amazon affiliate income that was like several hundred bucks worth. I was writing a few guest posts at a couple of other industry blogs for like $200 a pop. It was fun and it was kind of like minor validation, but I wouldn't say it inspired a great deal of confidence in my path. I would say if I had to put a number on it, for me, confidence building cannot start until it's like $1,000 a month level cash flow. So if I could look at it and very trivially flip a switch, turn a knob, and start bringing in $1,000 a month, then I'll take it seriously as a confidence builder. 100, 200, maybe the inflation talking, it's pocket change.

It's not enough to take serious risks on.

[22:10] Paul: Pre-pandemic, maybe. You have a really good understanding of the big consulting firms, probably better than like most of my former colleagues. Why do you think understanding big consulting is so important for indies, which I think you're spot on on this.

[22:32] Venkatesh Rao: You have to give the devil their due. They pioneered this whole thing, right? I really love this book, Lords of Strategy, which I cite like a couple of points in the book by Walter Kitchell. And he talks about the history of how strategy consulting in particular came out of like the 1970s Japanese competition oil shocks era and companies have to get out from being like dull, unimaginative, just plow along in a straight line type of like old school managed companies to companies that actually think strategically and steer. And yeah, I think BCG, Bain, McKinsey, Harvard Business School, for about 15, 20 years, they were doing like some serious real hard thinking and actually injecting some really solid intellectual DNA into kind of a stupid business sector. Like, I like to think of like the overall IQ of the business world as going through cycles.

Like the business world used to be kind of dumb before the robber baron era. And then it had a period of like rapid IQ increase in like 1870s to maybe 1920s. Then after the New Deal and the Roosevelt era in the US, it kind of got stupid for a few decades. You could actually go back when you see the Reagan-Thatcher era start, and this was, I think, I forget where I read it, but in the Thatcher UK, industrial leaders were actually scared of the free market. They were so used to like a protectionist world that many of them complained to Margaret Thatcher about like, how are we going to survive, blah, blah, blah. And today we are at the other end of the extreme on the pendulum swing where they're extremely overconfident about their ability to survive and do good in the Hobbesian marketplace, right?

So you can think of this as IQ and confidence sort of cycling through. And I kind of went off on a bunny trail here, but the point is the reason big consulting was valuable during its heyday was It really leveled up the IQ of the business world by about, I would say, 20 to 30 IQ points. Like people were starting to think critically and so forth. Then of course it got institutionalized, captured, cronies, all the problems you and I have talked about. And it's also in both our books. I think it's like the end of a cycle and the business world I think is honestly getting stupider again.

So it needs a fresh injection of intelligence and yeah, we have to plumb new sources of intelligence. But yeah, for a while there, the consulting world was worth learning from and yeah, I constantly tried to learn from how they operate.

[25:25] Paul: Yeah, one thing that stood out in Lords of Strategy was how BCG, Bruce Henderson is like, let's split our team into competing tribes and we're just going to like see who can create the best firm. And it's a crazy experiment. Like, no big firm would do this now. And Bill— I think Bill Bain was basically like, we came up with a better model. Now we're taking all the consultants and starting our own firm. And yeah, it's just hard to imagine that kind of boldness in today's world.

And yeah, I dug into this, the explosion of ideas in the late '60s to the early '80s was just really impressive. Like you probably would have been someone that would have been in that world in that time period.

[26:14] Venkatesh Rao: Oh yeah.

[26:15] Paul: They had a lot of weirdos.

[26:18] Venkatesh Rao: And also there was no other option for people like us. If you think about it, it wasn't the internet. There wasn't this option to like just create a random independent thing. Like if you read advice on starting your own small business from the '80s or '90s, like the E-Myth, Michael Gerber's book, you get this sense that this is fundamentally mental models from an era where the environment was way more hostile to this kind of path. But just to point on your Bruce Anderson internal competition, I actually thought about that and it strikes me that that kind of like competitive boldness, like create a Darwinian subculture. It's kind of more common in companies now, but it's always been the preserve of one level of abstraction higher.

Government procurement works that way. Fighter aircraft are usually, you order one prototype from Boeing, one from Lockheed, you call them X and Y, there's a fly-off and then the winner gets the big contract. But it's interesting to reflect on what happens to such apparently honest competitions like DARPA Grand Challenges are similar. They tend to get captured by the competitors. Like what happens is at some point Boeing and Lockheed get big enough that they can basically rig the competition. So even though it looks like an X versus Y fly-off, everybody knows that the Joint Strike Fighter contract is going to like unfold a certain way based on like who knows which senators and where the jobs are being built.

And I think the DARPA Grand Challenges are, better, but they're also sort of vulnerable to this kind of capture. So I think actually the best kind of like positive Darwinism, so to speak, I don't want to like condone social Darwinism, but the indie consulting sector really is like a healthy kind of like trial, like 1,000 people trying out 1,000 different experiments and learning from each other. So I like this kind of Darwinism.

[28:17] Paul: Yeah, the— an interesting connection here. You point out this divide between like the positioning school and the people school and these. I think a big problem with the big consulting firms now is they are just so ingrained in that positioning school of how you put it is basically you're starting with like these models, these frameworks, these big ideas that were really part of the industrial 20th century economy and then working downstream of like, okay, how can we optimize around those. When I took the leap, I was sort of surprised that like, oh, as an indie consultant, you don't do any of that, right? You're— it's so different. You're really just— you're an individual person basically just trying to help either one other person or like a small team.

And that was a big lesson. For me. Was that something hard for you to learn at the beginning? And maybe say a little bit about like the positioning versus people school.

[29:22] Venkatesh Rao: Yeah. So the positioning versus people, of course, is also from Walter Kijil's book. And he makes the point that, yeah, the people school has always been around, but until very recently it was the minority tradition. Like, you know, University of Toronto has several academics who work in it. Carl Weick, a couple of others. I think for me it was always the more natural school because I came from academic research lab-like settings where you always work in this sort of small, intimate, relatively unstructured context.

And I think the Big 3 consulting world is positioning school for a reason. One is, of course, path dependency and its initial conditions. But the other is the, the way they deliver the work product is you've got these senior engagement managers who are kind of doing the slightly personalized relationships with the senior leaders of the client organization. But then you also have this like massive army of rank and file junior associates going and like doing interviews, collecting data, massaging them into Excel spreadsheets. And then even though, even when firms like McKinsey don't do participation and execution, just deploying the advice itself, it breaks down into, yes, you have to like be in the boardroom, maybe advising the board and CEO with the high-level presentation, but you also have to like create like the operating process where for the middle management to use at scale.

Like if you're suggesting a huge restructuring with layoffs here and growth there and so forth, you kind of have to give the middle management ranks a lot of an operating system crudware, honestly, which may or may not work depending on how good the engagement turned out. With individuals, we can't scale. Like at most you might subcontract to one or two other people, so you literally can't do this. So you're forced to be much more of a strategy player in a very real organic sense. And I think this goes back to Like, you know, Clausewitz and Sun Tzu, which is part of the reason I titled my books Art of Gig because I kind of like want to like gesture at the tradition that comes from like the softer Taoist notion of strategy that then goes through Clausewitz.

The reason I'm mentioning Clausewitz is I think that's the origin of the positioning versus people divide because in the time of Napoleon, the sort of dominant sort of understanding of like why Napoleon was a great leader, blah, blah, blah, was this guy named Jomini. I don't know if I'm pronouncing his name right, but Jomini had kind of like a very, what we would today call a spreadsheet approach to analyzing strategy. It's like, you're at point A, you want to go to point B, here's the map, get the shortest path from A to B. And of course, that's not how you do strategy because everybody can, guess that you might do the shortest path and wait to ambush you on the shortest path. The point of strategy is to do this thing, think how the opponent might think and get inside their heads, get inside their OODA loop, maybe go through an unexpected side flanking maneuver, things like that.

And this was what Clausewitz sort of saw as the essence of Napoleon's genius, which Jomini completely missed. Jomini kind of analyzed Napoleon like he was a spreadsheet guy. Clausewitz saw that the true genius of Napoleon was his ability to spot these unusual intuitive strategy paths that nobody else would expect and then would surprise the hell out of the opponent. And I think of this as kind of like a storytelling soft strategy art of gig. And the way it plays out in consulting gigs is you're still going to have the same kind of impact, Like, you know, you want the CEO to be influenced. You want the board to steer the company a certain way.

You want middle management to start doing things differently, but you don't go hit it on the nose. You ask, what's the subtle thing I can do in terms of suggestions to my senior executive client, plus like maybe a couple of seeds of process scaffolding for the middle managers that allows the whole company to steer with like far less input from me, right? So it's trying to have very leveraged impact by actually doing strategy because you have no choice but to do strategy because you're in this asymmetrically weaker gorilla position. You do not have the option of throwing like a dozen junior associates armed with spreadsheets into the organization, right? So you have to be more strategic.

[33:59] Paul: Yeah, I was in like people school functions inside the big firms and we would just force create so much structured frameworks on top of our stuff, which is just like, that's the stuff that kills you. Do that long enough. But I love at the beginning of your book, you have these 42 maxims and you kind of score, okay, if you agree with these or disagree, you should have a strong view. If you don't have any view, you probably Um, don't know what's going on, but, uh, one of them was no, uh, avoid polished deliverables. Uh, so this kind of relates, um, and is something I learned pretty quick, which is like, oh, I should just like send work in progress notes and half-baked frameworks to the client and get, um, reactions because I don't have an engagement manager anymore.

[34:56] Venkatesh Rao: Yeah. This I think is an idea I came to intuitively as well as like just temperamentally because I'm honestly lazy and I figured out the logic—

[35:10] Paul: It could be me too.

[35:12] Venkatesh Rao: Yeah, but I figured out the logic after I saw it working actually better than the polished deliverables. Like it struck me that working really hard to produce a polished deliverable, if that's what the client wants, it means you're talking to middle managers with no real agency or authority and the PowerPoint or whatever is going to percolate up to somebody else. And then the highest paid person's opinion in the room will prevail. And it's like you're playing games at the wrong level. Whereas if you just have sparring meetings, as I call them, and send quick email notes later, which is in my case, just bullet lists of points with links to things we talked about. You're actually seriously in their head and they're in your head.

You're like properly having an entangled conversation. And the rationalization and justification and logic of this I've discovered later. I quote this a lot. It's on my main webpage as well. The Carl Weick, "What Theory Is Not, Theorizing Is" paper. So it's a classic and it's actually an example of its own theory because It's not actually an original paper.

It's like a comment in response to somebody else's paper. And it's kind of confusing to read this paper because the preamble is like, we are responding to this other paper by these people who don't know what they're talking about. But the main point there, and it's on my website, venkateshrao.com, the quote that I'll just read out the highlighted part. The products of laziness and intense struggles may look the same, and consist of references, data, lists, diagrams, and hypotheses. And to label these as not theory makes sense if the problem is laziness and incompetence, but ruling out the same sci-fi slow inquiry if the problem is theoretical development still in its early stages. So I just literally read out the quote from the paper.

So that's the point. I later sort of realized that even though I thought of myself as lazy, I'm not actually lazy. And funnily enough, the first boss who really kind of like gave me executive power, Steve Hoover at Xerox, I remember when I started at Xerox and he kind of like picked me up to basically champion my projects, I kind of like made this self-deprecating remark then that I'm kind of lazy and he kind of like corrected me and said, you're not lazy. Most people are intellectually lazy and you're not intellectually lazy. And I was like, yeah, that's actually valid. Even though I'm not willing to put a lot of work into polishing stuff, I'm actually completely willing to do hard thinking because I enjoy it.

If you give me a hard problem to think about, I will actually sit down for 6 hours and literally just think about it. And what comes out may be this, what Carl Weik describes, messy set of anecdotes, mind maps, a couple of memes. And it might look like it's just shitposting and indistinguishable from the products of laziness, like Carl Weik says. But it's different because those who know, know. Like if you look at the output and talk about it with the person who generated it, it very quickly becomes clear who has depth of thought behind what looks like a shitpost and who has it just as a shitpost and they have nothing more to say about it than the one meme they came up with. So there's like, think of it as shitposting with depth where it's like you throw out a shitpost that might be a tweet length thing, but you can talk about it for hours.

If you can't talk about it for hours, it really is just a shallow shitpost.

[38:50] Paul: Yeah, I think Trunk Fan does this really well on Twitter. Like he shitposts about business stuff, but there's always like, oh, he's understanding the lower level context here. And then you often like find these people and they're like, have these long form essays and you're like, oh wow, a lot of depth here. But it sounds like the basic trade-off you're making is instead of spending 10 hours on slides, you might spend 10 hours just reading other books, which I think if you've come from a traditional workplace for a long time, feels wrong and feels like you shouldn't be doing that. Because if I used to read books at my desk and people would be like, why are you not working? Because that's the default mindset.

So, did you consciously make that or you just kind of let your natural impulses take you there?

[39:46] Venkatesh Rao: I would broaden what you said to like you use the time, like if you're saying 10 hours, which you might do on slides and spreadsheets, you use the 10 hours in a much more tasteful way. In some cases, that might end up being like reading a book for 9 of those hours and then 1 hour you just like have scribbled notes. In other cases, it might be reviewing a dozen articles. It might be no reading at all. You might use all 10 hours for just sitting with a notebook in front of you or a whiteboard and thinking through ideas. But the point is taste.

And by taste, I mean something like when you look at a problem or a situation, there's an obvious scope and a lot of stuff within that scope. And if you have no taste, you kind of distribute your attention relatively randomly. Often based on like very lazy habits of thought and execution. So if you look at any random problem and your response is, I should do 30% discovery, 40% spreadsheet, 30% PowerPoint, that's not being tasteful. But if you're doing that because that's your muscle memory and that's how you've handled every other project in the past, you will not ever do like interesting strategic work. Whereas if you look at, get a problem and say, hey, this calls for a very different approach.

And maybe really this is such an ambiguous and weird problem that what I should do is pick up a poetry book from the 17th century and read a few poems and then go maybe try to write a poem and do a little painting to understand my mental model of this situation. That can often be a huge and much bigger breakthrough So I think taste is two things. One is simply courage, courage to think about things in sort of the priority suggested by your intuitive response to the realities. As in you're looking at this confusing chaos of inputs you're supposed to do something with, and your intuition tells you this is more important than that, that's less important, that can be ignored. And of course, you kind of need some experience to trust your intuition.

But once you have that experience, actually trusting your intuitions and running with them as opposed to second-guessing yourself and saying, hey, my intuition tells me that this one paper is far more important than the other 99 papers I've collected and I should spend all my time understanding this one paper in depth. Trusting that intuition and being bold enough to actually do that as opposed to saying, no, my boss will be mad if I don't write two-sentence summaries of all 100 papers, including the 80 bullshit ones. That's not having the boldness. And the taste comes in with you could be wrong about picking the one paper that matters, so you better be right a lot, which is an Amazon leadership principle. So it's like experience, taste, boldness allows you to almost give yourself permission to be creative in how you approach a problem.

I think a lot of people get almost all the way to the end where they have the experience, they have the taste, they have the judgment, they have the intuitive sense of what's right and wrong, but they fail to make that last leap of giving themselves permission to actually act on that and say, hey, the right answer here is not 30-30-30 discovery PowerPoint, whatever, but the right answer is 90% poetry, 10% paintings.

[43:16] Paul: And I think people underestimate how valuable this is to executives. Executives are sort of in like a fog of war of their own company at all times and don't have a lot of opportunities to like get that context and step back. It seems like what you're sort of doing with the sparring sort of approach to consulting you're doing is helping people like take that step back with you and sort of see the broader landscape, see how their decisions fit in and like actually pressure test them. Whereas like inside the company, I think a lot of people don't understand this either, that like executives rarely get like pushback or like a lot of challenge. A lot of people are just saying things to further their careers or just go along with things. So it can be pretty valuable.

Did you sort of understand this from the beginning or did you know this Through trial and error, essentially.

[44:11] Venkatesh Rao: I think I sort of like unlocked this ability in myself the first time I quit my initial PhD advisor where it was like, I really have to push back in this direction he's pushing me in. If I don't, I will be miserable for years and maybe and maybe not get a degree I hate. So, I had to push back as a sort of existential crisis. But it's like, it's not so much a skill. Again, I keep going back to boldness. Like, once you unlock that, like, and a streak of courage in yourself to simply push back, it becomes like something you use in all situations and pretty soon you cannot operate in any other way.

But I think you hit on the right concept there a minute ago when you said executives are in their own fog of war. And this is critical because their fog of war consists of the standard operating models that they're forced to operate in 90% of the time for routine stuff, right? Their reports come up with them with routine presentations on how routine things are going, and that's important. You kind of need that bread and butter bulk of what they're monitoring, inspecting, sort of making decisions on. But it also, it's the fog of war in the sense of it's their own mental models trapping them, and it's what competitors and adversaries will exploit, right?

If you're constantly caught in 100-hour weeks, wall-to-wall meetings with never breathing room to even think creatively about what you're doing, then your competitor can say, hey, I'm watching this guy with complete tunnel vision barrel down this path with enormous energy and they're not even paying attention to what's slightly in peripheral vision. And I can just take them out with this disruptive move that looks so easy. And it often works, right? And I think the job of people like us, whether or not people use my particular playbook of sparring conversations, it's part of your job to get inside your client's head and help them break out of their FUD.

And this is why I think of sparring as partly an adversarial pattern, as in you're using the same get inside the OODA loop of the adversary mentality, as in these are their mental models, this is the tempo of how they're making decisions, and I can actually sneak in and hack it and take over and hijack it and make it do other things. And if I were hostile, if I were a competitor, if I was working for somebody else wanting to derail them and you developed a skill, you can actually use the same skill to undermine what they're doing. It's sort of a double-edged sword. Once you learn how to penetrate the fog of war and actually start influencing how a person is thinking, you can always use it in two ways. One is to undermine what they're doing.

Subvert them, cause them to self-destruct in more painful ways, or you can get inside their head to actually make them better, reinforce the things they're doing well, plug some of their blind spots with some awareness. And most of us are used to doing both. A baby, if you're taking care of a baby, which you'll soon be doing, I hear, a baby's a helpless being that completely relies on you and cannot speak initially. And you kind of have to get inside its head to understand its needs and get ahead of them and create a nurturing environment, right? And then in an adult world, I use this example in my older book, Temple, an attentive waiter at a fine dining restaurant has to be the same way. If you keep interrupting the diners to refill their water glasses too often, you're just going to annoy them.

But if you don't show up when they expect to be served, you're going to annoy them in a different way. So you kind of have to be, inside their head and just like slightly subtly acting to make their dining experience much better. And I like this sort of service conceptualization of supporting senior executives because this is— people may not like the notion of being in service and sort of the servant leader mindset here. But yes, you are being paid, you are serving another person and helping them do better.

And you kind of have to have this mentality that somewhere between Nurturing a child that may not always know what it wants, being a waiter that is serving a diner, and in some cases, somebody who's in many ways far more talented and smarter than you and knowledgeable than you in like 99% of ways, but you can be the person who helps them sort of be much better, where you can kind of get past their flood shield. So yeah, it's a skill and it's part of your job description to actually operate this way.

[48:53] Paul: You talked about the, the two sides of exploring systematic doubt and systematic confidence. Do you think this sort of maps to like temperament too? I found when reading this, I tend to explore the systematic confidence side more, and I wonder if this is like my natural, like, optimism. I think it probably depends on the industry too. Like a niche I've sort of fallen into is advising small and medium-sized advisory firms and basically helping them under— I guess some exploring systematic doubt as well, because I'm helping them explore their blind spots as well as like helping them build confidence on what they don't know. How do you think about these two poles?

[49:41] Venkatesh Rao: I think there's a 2x2. This was part of— I forget now what the other axis of the 2x2 was, But yeah, the systematic doubt versus systematic confidence, it's of course a function of both your own temperament and the client's temperament. But to the extent you're able to sort of do it, the trick is to suspend your own preferences and give the client what the situation demands they need, right? Some clients, even if you prefer to give systematic confidence, some clients are actually in desperate need of systematic doubt and vice versa. And sometimes what they want, what they say they want, what they think they want are not all the same thing.

So for example, I don't really like working with early-stage startup and very small companies too often because often they have extremely fragile psyches and they have to do a lot of self-talk, positive motivational self-talk, hustle porn, like keep derping that like, you know, ignore the haters kind of memes on Twitter. And it's like, yeah, maybe you need to do that to manage your psyche, but if so, it's not an interesting sort of problem I want to help you with. I want to help people who are like already strong enough to be past that, and I want to help you actually think about the world rather than your own psyche. So I think my personal bias is away from boosting systematic confidence, partly because those roles tend to more easily blur with and flip into therapy. And I don't like doing therapy.

And this is part of the reason why I very carefully distinguish what I do as not executive coaching, but executive sparring, because executive coaching often is code for therapy, but I'm not willing to call it that and get an actual therapist. So, uh, it has a, yeah, temperament, but yeah.

[51:41] Paul: That's a good distinction. I, I think as we were talking about, I think I'm probably in the same, um, side of it exploring the systematic doubt. I, I'm not wired to deal with the early stage startup, um, mindset.

[51:56] Venkatesh Rao: And it's not just early stage, like, uh, big company CEOs often have the same kind of like security and need for validation. So. It occurs all over, but it's more likely in younger, smaller companies that have not yet proven themselves in the market because then all your insecurities about the business turn into like self-doubt. So your problems in the marketplace and the org turn into problems in your head. Whereas a company that has found product-market fit, and that tends to be where I can be helpful, they have a— the company has established a certain level of confidence in itself, so it doesn't all have to be like, you projecting your own mental problems onto the company's fortunes.

[52:39] Paul: A great, uh, perspective I thought you had, and I— this was one of my favorite, uh, posts you had when you were writing the newsletters, this idea of the clutch class. Um, a very bizarre thing for me when I shifted from employee to independent contractor, it was like seeing how policymakers talk about, um, self-employed people and Basically, like, they are full-time employees, so they're coming up with these policies and they think like independent people, portable benefits, and we'll just solve this. This will be great. We'll give them employee— it's like we're— you're not even like in the same territory as like how people are thinking about it. So like, I love this idea of the clutch class. It's not capital class, it's not labor class.

It's certainly not the professional managerial class. Like, what is the clutch class and why does it matter?

[53:34] Venkatesh Rao: So I think I've had a couple of chapters on this, and I'm pretty blunt about this. The clutch class is the scabs, like literally people who apply old school collective action and labor solidarity kind of things and think in terms of like unions for gig workers, especially above what I call the platform layer. Like maybe unions make sense for Uber drivers and people delivering for Amazon. I don't know, I'm not in that class, but anybody who's offering a slightly differentiated information-based consulting or contracting product, there's almost no chance that solidarity and collective sentiment-based class consciousness is going to be useful for you. Now, you might still have like a political sort of set of beliefs that that make it worth your while to invest a lot of your surplus, your time, attention, financial capital in supporting the labor class, that's fine.

But don't lie to yourself that you somehow naturally fit into the, I don't know, 1920s-style labor union mold. You don't. Which means, this is why I think one of my more unpopular threads of thought in the newsletter and the books, which is, I think free agent unions are bullshit. I think you should basically be out for yourself. If there's like situations where you think there's like the ethics of employment involved, you kind of have to think through those ethics problems yourself. Sometimes it might make sense to like side with others and not work with companies that have really bad practices.

But fundamentally, you kind of have to own your moral agency in the work in the world of work. And this is a clutch class. And yeah, for those who are not familiar with the word, it's kind of an Americanism. I don't think outside of America it's used, but the clutch class is in the sense of like people who deliver in the clutch in sort of the sports world. It's down to the last point. I know you follow basketball, and if you can actually deliver and score that final point, you're like a good clutch player.

That's one connotation I wanted. And the other connotation I wanted was a clutch in the sense of automotive drivetrain, as in between the engine and the wheels, you've got this whole transmission chain and the clutch actually engages or disengages. And you need that when you're shifting gears or like changing gradients or things like that. So we are the class that help businesses like change gears and so forth.

[56:09] Paul: Yeah, it's a weird sort of perspective because I mean, I know what I'm getting into. And you sort of decide that you're okay with being this sort of like invisible layer in the world, right? I think you, you write in the book, you say we are members of the clutch class who largely own our means of production, have too high a degree of agency in shaping our own lives to be part of labor and too little wealth to be part of capital. And I think this is something I think a lot of people underestimate. People are like, I mean, I've explored the healthcare, but at the end of the day, I don't waste too much time thinking about it or complaining about it. I mostly just explore it to like try and highlight these things, but I don't really expect to be saved.

Like, I, I know the downsides of what I'm opting into. Maybe over the long term. I think you wrote this like speculative fiction looking back like a few hundred years ago and sort of poking fun at like our current healthcare will probably be seen as like a human rights violation. But yeah, you're, you're sort of like you're giving up your identity, your status, your like the opportunity of being this like sort of middle upper class professional life and you have to find the reasons why it's worth it. Like, I don't think you can come into this world expecting you're going to get all the things you had in a paycheck-type life.

[57:41] Venkatesh Rao: Yeah. And I do want to say, though, that for one, the ACA actually did make a big difference in my life. Oh, yeah. Right after Xerox. And then we were on my wife's Cobra after she quit. So ACA made a big difference in my life, but it would not have changed my decision either way.

I would have found some, like, messy private insurance or something else. Yeah, and in other parts of the world it's not even an issue. But I do want to acknowledge that, yeah, it's a certain amount of privilege to be able to think like this. Like ACA is not cheap. I pay over $1,000 here in California for myself and my wife, and it used to be a couple of hundred dollars copay when I was a paycheck employee. And for a lot of people, especially those with like, you know, chronic conditions, at least in the US, healthcare alone is a deal breaker.

Like if you're in Europe, maybe, but in the US, I mean, you just might not have the kinds of skills where paying $1,000 a month for insurance is an option. But yes, I think your broader point is right that fundamentally we are talking about a class of people whose agency is high enough that if this is what's stopping you, your mental models and attitudes are probably more at fault. And I think the best example of this is the adjunct class in universities. So all these people with like PhDs in obscure subjects who are like basically exploited by universities. I think NYU is facing like a big strike with its adjunct staff. They're paid like ridiculously low amounts for New York and something similar is happening in the University of California system right now.

And my reaction is yes, this is an obviously exploitative system. You're like screwing yourself badly with your, you know, advanced information knowledge, and yes, it might be a slightly self-indulgent degree you found for yourself, but your options are certainly better than teaching English literature at really low pay as an adjunct somewhere versus flipping burgers at McDonald's. That's not the only two options. There's a whole bunch of like creative options in between where you don't have to be underpaid, you can afford health insurance, and you can have a better life. So it's almost like a sense of learned helplessness for a lot of people to slot themselves into the unionized labor class when they really are not. So it's a mental trap.

[59:58] Paul: Yeah, I've seen this as a feature on this kind of path because any minute I spend whining or complaining about my situation is like minutes I can actually make my life better. So I went from like complaining about like situations at a big company to zero minutes a year. Focusing on like whining or complaining about my conditions, which is— it's a pretty powerful shift for a certain like temperament that likes that uncertainty, but was a huge upside, I realized. You, you also said about the clutch class, paraphrasing Chris Dixon, what the clutch class does on evenings and weekends, everyone will be doing in 10 years. What does that mean?

[01:00:45] Venkatesh Rao: So I think this actually relates to your comment just now that you spend 0% of your time thinking about like all the corporate bullshit that employees tend to spend, I don't know, a third of their time whining about. The flip side of that is we do have to spend a third of our time tracking upcoming changes in like just the infrastructure of how we live, right? Substack is coming up, Teachable came up a while, Substack is already out there and Teachable came up a little before. You kind of have to watch like what are the options for money making coming along? What are the options for money making that I thought were secure that are vanishing under my feet, right? So it's like you're living in this world of creative destruction.

So for example, the whole drama at Twitter that's going on right now as we speak, for a lot of people who are inexperienced in free agency and the creative economy who may have put all their distribution eggs in the Twitter basket, this is a moment of panic and crisis. And for me, while it's interesting to track as somebody who's on the scene and a very online user of Twitter, it's fundamentally kind of irrelevant to me what happens to Twitter because of precisely this, because of my evenings and weekends habits of kind of living partly in the future. I mostly rely on an infrastructure that's like 30% past, 30% present, 40% future. So I have like enough things going on that any one of them like failing on me, I don't have to whine or moan about it. I could just let it go and make something else up.

So yeah, if Twitter goes down, I will lose a big distribution channel and I'll have promotional problems, but I have 3 other live things. And then, you know, Web3 is coming up. I'm experimenting with NFTs. None of those really are like viable options at the moment. They're like fun play money. But yeah, I have those options and that's what my evenings and weekends comment is about.

You have to be doing this. You have to be exploring the emerging landscape and like tracking which parts of your current landscape are fragile and possibly crumbling and like constantly keep, I don't know, dancing on this shifting landscape.

[01:02:54] Paul: Yeah. Does this relate to your idea of keeping a 10-foot pole between your public identity and your freelance or gig identity?

[01:03:05] Venkatesh Rao: Hmm, I'll have to think about that. I'm not sure it does. I think it's partly just sort of a pragmatic decision as in a lot of the details of like how people like us make money is actually extraordinarily boring to talk about. Yes, I could like talk for an hour about how I run Spotify.

[01:03:30] Paul: That's very true.

[01:03:31] Venkatesh Rao: Yeah, yeah. I mean, I have my habits for how to respond to clients, how to write emails. If ever somebody asks me to write a document, how to negotiate that, how to talk about like, you know, hourly versus project-based billing. And I touch on some of that in the books, but even in the books it's like, yeah, this boring stuff, if you're not smart enough to just think it through and figure it out, all this other stuff is not going to help you. So partly the distance between my social media as a public persona and sort of the day-to-day of my working life as a money-making independent consultant, it's just leave out the stuff that's both boring and unimportant because it's not fun to talk about. And if you're smart enough to figure that out, you'll get to the rest.

But if you're not smart enough to figure that out, you're going to get killed on other fronts anyway. So there's not much point talking about it. Yeah, I guess it's a little bit of a, to the extent I'm here doling out advice in these books, a little bit of a tough love posture. I'm not giving out any of the basic advice because if you can't figure that out, you have bigger trouble ahead of you.

[01:04:37] Paul: Yeah, agreed. Tom Critchlow wanted me to ask, what can you tell us about some of these projects you're working on? Like what are you working on? How are you working with some of these clients if you can talk about them? Yeah, because— People would be curious just to hear a little more.

[01:04:56] Venkatesh Rao: Most of my work is NDA'd, so I can't talk about most of them, but I can sort of like talk, maybe mention a few. So one client I've worked with for over a decade is Jim Keller. He's kind of a legendary figure in the semiconductor world, and he was one of my earliest clients. He had just left Apple where he had been building the key Apple mobile chips. And he joined AMD leading their engineering org. So he brought me on to like help him like in his role there.

And then I followed him from AMD to a few years at Tesla where he was building like the early generations of compute at Tesla. Then he moved on to Intel for a few years. Yeah. And then now he's at a company called Tenstorrent and he's CEO of Tenstorrent and builds AI hardware as well as RISC-V chips. So through working with Jim across 4 or 5 companies, 4 companies, I've basically become sort of like a soft specialist in the semiconductor industry. And it's one of my favorite lines of work.

And again, I don't talk about this much on Twitter because the percentage of people on Twitter or anywhere else who can kind of like keep up with the high-end conversations of the semiconductor industry is like vanishingly small. I have more fun just talking about it with people who know semiconductors. And this is kind of generally true. Like besides NDAs, another reason I don't, I keep this arm's length distance between social media and my work is honestly there's a, there's sort of like a competence bar to talk about any industry at a depth where you're doing like at least technologically informed consulting. If you're consulting on like purely managerial side, things like, you know, our structure or marketing or sales, maybe there's a lot to talk about in public, but most of what I do is supporting technology leaders. So there's not as much to talk about.

So yeah, semiconductors is one. I just wrapped up like a 5-year gig with Amazon. I was supporting Dara O'Rourke, who was leading their sustainability work. He's back at Berkeley now. He's a professor there. So that was really rewarding.

It helped me pivot from 90% tech industry work to much more work in like sustainability stuff. So I learned a lot about like, you know, net zero, sustainable manufacturing and supply chain, all those things. It was my big, huge learning project for 5 years with Amazon. And in the same department, I also learned a lot about this at Tesla, which in some ways is a climate company. And another client I think I can mention is Origin Materials. It's a Sacramento-based company that turns like ag waste and agricultural products into negative carbon plastics.

And this was another amazing gig. It's all these, this one's ongoing as well. Like I keep working with them occasionally, but what I like about all my favorite gigs is since I am an engineer myself and tend to be hired by people who come up through the technology side of businesses, one of the things I have that I can share with all my clients is sort of like a shared ability to be nerd flight by interesting technology things, like whether or not it's in my wheelhouse. Like I'm an aerospace engineer with a specialization in control theory and things like chemical engineering manufacturing are part of my wheelhouse, but I'm still enough of an engineer that I can go much deeper than most like generalist consultants. And it's really fun to like be nerd-styped and go deep into these subjects with people who really know their stuff in the industry.

Like a 4-hour conversation with the CEO of like a deep organic chemistry company is like a rare experience in modernity. Very few people have that kind of opportunity. So yeah, that's the kind of gig I have and really enjoy where I can learn a lot about nerd-styped sectors in technology.

[01:08:52] Paul: Yeah, and I think that's one of the best upsides to working in this field is you can sort of design and reach out to gigs that might be 80% beyond what you know, but you can learn more than you, your client learns in a way. What does the future of indie consulting look like? I was part of an initial experiment as part of like Yak Collective, and I found that really rewarding. Although I kind of like flowed out of that. But, um, it was really fascinating how we had a bunch of different people come around to kind of collaborate on this report. And I was lucky enough to like help project manage some of the like presentation we were pulling together.

And it was one of the first times I had experienced that team environment again that I definitely miss, but it's not worth working full-time for. What What have you learned from Yak Collective and where do you think things are headed in terms of that?

[01:09:56] Venkatesh Rao: Yeah, the Yak Collective has been fascinating. Like, I think I have several chapters in the books about the future of consulting, coming at it from different angles. And I think the Yak Collective fits into a broader trend, which I called, I think, fourth generation consulting, or was it fifth? I don't know, I think fourth. But the idea that—

[01:10:15] Paul: Fourth wave, I think.

[01:10:16] Venkatesh Rao: Yeah, fourth wave. Yeah. It's about moving on from this first era of like largely individual solo people to more like squad-like approaches to consulting where you team up with several people. And there's a nice article called Squad Wealth by Toby Shore and a bunch of others at The Other Internet that gets at this. So yeah, the Yak Collective has been like really fascinating. We've only done one big project I don't think you were part of that.

Were you, Neo Futurama? No. Okay.

[01:10:48] Paul: No.

[01:10:48] Venkatesh Rao: We did a bunch of like just spec projects which we put out there. We did one paid project as it happens with a client of mine, Brian Johnson, who founded Kernel. It's a neurotech company. So we did a project for them. We're talking about another project with a client of one of our other members right now. But I think So I think the soft social side of how to coordinate groups of people to do interesting projects, the YAC Collective and other places, we are learning a lot very rapidly.

We know how to do them better now. We know how to coordinate better. You really got us off to a really good start. I wasn't even expecting the YAC Collective to go down that route, but when you came up with that idea of just pulling together the deck rapidly, that was kind of what got us down this path. And I think we figured out a lot of the procedural pieces, cost management pieces, and other pieces. But honestly, the biggest sticking point now is the hard financial logistics plumbing.

Like literally who's going to be the counterparty of the client and take on the risks? Who's going to like recognize the revenue on their books and then subcontract out the money? Like I did that with the one paid project I had, and it was annoying because I was doing things like, all right, $600 is the level at which you have to issue a 1099 to a subcontractor. So I literally ended up structuring the project so that very few individual pieces went above the $600 line. So only 3 of us did enough of that project to be paid more than $600. So it's kind of stupid that these kinds of like logistical constraints limit how well you can do this kind of like future of consulting type work.

But I think there's promising signs there. Like, you know, if you use Web3 tools like a multisig safe and you're paying each other in cryptocurrency, If you're working with a crypto client who is willing to pay in crypto, this is not a problem at all. You just put in like a split contract or a multisig safe and nobody, no single person has to be a counterparty. A literal hive mind can come together in a split contract. The client can pay and the money just flows automatically. And I think this is a beautiful thing.

And hopefully in the future this will get a lot better. A lot more clients will be able to like operate in this mode. So we have a lot of these infrastructure things to figure out. And of course, yeah, there's a maturation capability maturity model here. Like I think we are all at the lowest level of the pyramid in knowing how to make this work, but it's only gonna get better. So I think that's a really important thread in the future of consulting.

And there's other things I think like another big one is maintaining a portfolio of things that look like consulting gigs, things that look like events, things that look like publishing. So yeah, there's a lot of interesting stuff brewing.

[01:13:34] Paul: You said that you think the gig economy will outgrow the paycheck economy. Is that— we're two decades into the gig economy. What do you mean by that? Is it a numbers thing or is it that people will just be working a job and other things on the side? What does it look like?

[01:13:55] Venkatesh Rao: It is a numbers thing and it is a portfolio thing. And the numbers thing, is one of my favorite statistical factoids. I don't think I actually mentioned this anywhere in the book. It's an older article of mine, actually in my review of Dan Pink's Free Agent Nation, which is on RubinFarm. But I found this factoid, I think in Gareth Morgan's Images of Organization, that sometime in the 1780s, about 80% of the US was not paycheck employed. So only about 20% was paycheck employed.

Everybody else was basically in what was then the gig economy. So like informal farm labor, town labor, artisans, all that kind of stuff that we would today call the gig economy. Then over nearly 200 years of like industrial organization, the peak was around 1980 when something like 85 to 90% of the workforce was organized in standardized paycheck world. And then Dan Pink has a couple of data points, so I put those two together. But the trend line I would say is that if you count correctly, I would say something like 40% of today's workforce is probably in the gig economy, though it doesn't look like that in BLS statistics in the US because they count wrong. Because you should count things like, you know, Manpower Inc.

is the biggest employer in the US, but it's fundamentally like a contract placement house. If you're working for Manpower Inc., you're not a paycheck employee, you're a gig employee in a particularly weak situation, but you're a gig worker. But so yeah, it's a numbers thing. And I think the trend, the reason I believe it'll continue this way is partly just the shape of the graph. It went steadily from like 20% employment to 80% employment between 1780 to 1980, two centuries. And then there's enough data points since then to show that it's coming down.

So of course you're like factoring things like workforce participation rate, which is interesting by the way, that after the, recession, that actually plummeted from I think about 67, 68% to about 62%. So a lot of these people being counted in the official employment stats, they're like tagged as out of the workforce or not looking or something like that and simply like eliminated. And that's not true. These people are like doing Etsy businesses, they're taking little gigs, they're simply not showing up on the radar at all. So yeah, I think this is a huge trend and I liken it to how industrial labor organization replaced agricultural labor organization. Like at one point, more than 80% of the world's workforce was ag.

Now it's less than 5%. Transportation was huge at one point and it's now again, last I checked, it was like less than 15%, maybe 20 to 15%. Like at one point I would assume like double-digit percentages of people were involved in like just moving stuff around. Now 6% of the workforce is truck drivers and that looks like a lot, but 6% is about the same as like structural frictional unemployment of like just work, labor force churn every month. So, and truck drivers move like massive numbers of tons of goods, very large distances. And this would've employed hundreds of like horse-drawn cart drivers a few centuries ago, right?

So I think an equally massive displacement is happening, but just as the ag economy went from like 85+ percent to like 5%, the industrially organized workforce in paycheck form is going to shrink down to like, you know, low teens maybe. Like, yes, there'll of course still be people with like standard paycheck jobs and that kind of structure around their work. but it's not going to be 80%. It's going to be more like, I don't know, 20%. And the rest, it doesn't need to be that way, so it won't be. It'll be much more fluid.

[01:17:41] Paul: Something I read about is how this like default script has such a hold on our minds. And you sort of gave me the language that I was like deprogramming a success cult, which I really liked. But I do wonder if like we're going to be in a free agent world and we're going to have these, like, last survivors of World War II, like, in the jungle, like, we must still have full-time jobs. But yeah, I think— I imagine we're still, like, 10 years away from, like, a true, like, shift in consciousness and how we're thinking about work. But it's fun to watch it shift and change and have learned a ton from your writing.

[01:18:25] Venkatesh Rao: Thank you. As have I from yours. I really loved your book. Yeah, The Pathless Path is kind of a wonderful phrase for getting off this sort of like set of like scripts that trap you and having to make up your own script on like a pathless landscape.