Freelancers Are Not All The Same

A useful distinction between platformers, contractors, and consultants.

Last week I wrote about how lifestyle boutique consultancies offer an alternative career path for independent consultants, and presented the high-level difference between a micro consultancy and freelancing. But in reality, things are more nuanced than that.

Labeling different paths of the journey - "freelancing", "micro boutique", "lifestyle boutique", "scale up boutique", etc. - is helpful to understand the big picture. But simplifications can also make you miss important insights. Putting freelancers in one big group is one of them.

Freelancers are not all the same. The best framework I've found so far to better understand the different groups that make up this big mix is Venkatesh Rao's triangle of gig economy workers. Here's an image of it.

Credits to Venkatesh Rao, image from "The Art Of Gig".

The main idea here is that each of those groups takes more or less risk to increase their return and independence. There are, of course, pros and cons to each one of them. Some comments on each one of those groups:

  • Platformers: These freelancers get work mostly from demand-aggregation platforms such as Upwork or Catalant. They are paid far less than contractors and consultants since they must compete with platform prices, which also leads them to charge by the hour. Business development comes down to sending proposals, since they serve existing demand (don't need marketing to create interest) and need no sales process or skills.
  • Independent Contractors: Venkatesh says you can be considered a contractor if the purchasing department can vet you out of your projects. You can sell yourself or use agencies to find work, but business development strategy usually comes down to responding to RFPs. Deals are competitive, which forces contractors to price based on market rates and provide fee discounts.
  • Independent Consultants: Freelance consultants still might need to complete purchasing paperwork. The difference is that, since they have a direct and trusted relationship with leadership or senior executives, you get to bypass gatekeepers. The decision-makers are those driving the business and have enough authority to fast-track sales or approve above-market fees. To earn these benefits consultants need to create their own demand, sell themselves, and build a strong personal brand.

These are very distinct business models and strategies, so those groups are mutually exclusive. Freelance platformers, contractors, and consultants come from different backgrounds and value different things from work. The path to earning more, increasing flexibility and independence, and making work more fulfilling will also be a different one.

In the next few days, I'll explore how each one of them can benefit from and start a lifestyle consultancy.

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