Business Models for Autonomy
This is essay 5 of 7 for The Tech Progressive. Join the conversation in the build_ Discord.
Many of us have experienced living paycheck to paycheck. People in many parts of the world experience living day to day, not knowing where tomorrow’s provision will come from. And even in the west, we may live beyond our means through debt, borrowing from tomorrow to have more today.
With savings people create a margin in their lives. With enough savings, they can quit one job and search for another creating more autonomy and less dependence on any one employer.
A margin of safety in personal finances is part of the freedom and sovereignty equation, but is the full equation?
Creating Long Term Margin
Earlier in the series, Jim Collins came up as an aspirational example of someone that uses their time well. Jim, the author of “Good to Great”, allocates 50% of his time towards creative endeavors. We might call Jim time rich.
Image from: Kevin Moloney for The New York Times
Jim has a huge margin in his life to go after deep pursuits. He can make long-term bets with his time, similar to Venture Capitalist who make bets with money, and is able to wait a long time to see which pursuits pay off.
Are authors the only vocation with the ability to create margin in their lives?
Musicians understand the power of creating margin in their lives. Record an album once, and sell it digitally over and over again. They can still opt to trade time for money by performing live at concerts, those events help to market album sales and create a compounding effect on the time they do spend working.
Start with First Principles
Naval Ravikant, founder of Angel List, shares the first principle that unlocks our ability to create margin.
“Pick a business model with leverage. An ideal business model has network effects, low marginal costs and scale economies.”
Musicians and authors have stumbled on a business model that captures all 3 of those factors. But what if you are not very creative, are there other opportunities?
Easlo sells Notion templates online and has also found a business model that taps into all 3 of Naval’s leverage areas.
He can create a template once, and sell it an infinite amount of times for zero marginal cost. Building online and sharing his work via Twitter means he can tap into a global audience of potential customers.
You can see how he taps into network effects with the launch of each new product. He offers a discount for anyone that comments on a tweet asking for the discount code. Using that approach he reaches the social graph of each person commenting, and not just the people he is already connected to on Twitter.
As for scale of economies, Easlo’s templates only require his knowledge and expertise to create. The subscription he pays to Gumroad for hosting and selling temples is minimal and a fixed cost.
Easlo is on the path to becoming a Sovereign Individual at the age of 20 thanks to his business model and product offering.
Conclusion
Musicians, authors, and many digital goods creators have business models that create leverage in their time and ability. Through network effects, scale of economies, and low to no marginal cost, they are able to work once and reap the benefits again and again.
In the next essay we will cover some of the other areas that unlock higher degrees of autonomy and freedom.