by Varun Mayya
Freelancing allowed us to work on exciting projects and make enough money to not just live our lives well, but also do things on the side we that were passionate about. Freelancing gave us means to an end. It gave us the freedom and money to work on the things we wanted and the confidence and exposure to take on bigger tasks. We know that whatever we do in the future, freelancing will always be a backup that will keep us afloat.
Tomorrow, if you put me in a strange country without any resources, all I need is a laptop and an internet connection and I know I’ll build myself an awesome life fairly quick. I probably won’t continue to freelance after I accumulate enough money because at that point my passions will drive my next project. This book is about how you can make the same kind of money and build the same kind of confidence. It’s our best attempt at condensing all we’ve learnt into as small a book as possible.
Chapter 2
The Freelance Economy
“My favorite things in life don’t cost any money. It’s really clear the most precious resource we all have is time.”
—STEVE JOBS
Freelancing is the future
Today an increasing number of workers are leaving the traditional career path of joining an employer, grinding through the ranks and staying in one company for years. Surprisingly, these workers are driven less by the monetary reward and more by the ability to set their own schedules and pace. The average full-time freelancer works 5 to 10 hours less per week than the average employed worker and chooses when to take a break. Not only do they decide how much they want to work and when, but can also take full control of their income and lifestyle to do the things that matter to them.
Freelancers currently make up 35% of the American workforce. India has the second largest freelance economy, with over 15 million freelancers. The freelance workforce is the fastest-growing component of the current economy and this rise in the sheer number of freelancers compared to your parents’ time can be attributed to the introduction of the internet. Before the internet, there was very little scope to learn skills by yourself and source opportunities from anywhere in the world. You were limited to your location and your current skill set. You could of course learn new skills, but you often had to be in the right place at the right time and have access to people who knew what you wanted to learn.
The number of freelance jobs online is only expected to increase
Today, you can find anything you want to learn online. Knowledge is available more freely than before. You can find the best teachers online, learn from the best universities. Several Ivy League colleges now host courses online—there’s very little you can’t learn on the internet! More importantly, the internet gives you visibility into a wide variety of options that you might not have known were available to you.
The only reason you’d need to join a college today is to meet interesting, smart people and get access to high-tech laboratories and equipment. When people ask me whether they should do a Master’s degree, my answer is typically “depends on what you’re majoring in”. For example, if you wanted to major in genetics, you’d need a high quality laboratory to conduct experiments and this is a solid case to actually go out and do a Master’s in genetics. However, if you were learning marketing or sales, it makes more sense to learn online.
With a boom in online upskilling, there’s also been a boom in the online freelance industry.
There are hundreds of websites you can sign up for and land freelance gigs. To give you an example, Upwork (formerly oDesk) is the world’s biggest freelance platform, with projects worth $1B posted every year. Upwork gets somewhere between 30–40 million visitors on their site every month from every single country in the world. Only about 20% of this traffic is from the US, the rest is a long tail of countries with India, Philippines, Pakistan and Bangladesh at the top. The distribution is only natural, as supply follows demand. The most developed economies have a need for talent, and countries with this talent fill up the need.
The websites you will have most success with can depend on a bunch of factors, including your industry and skill level. We’ll talk more about finding the right platform later in this book.
Why freelance works, regardless of your country
Conversion Rate
The simplest way to explain the benefits of the conversion rate is through something called the Big Mac Index. What it does is that it compares the prices of McDonald’s Big Mac burger in different countries to get an idea for what the same item costs worldwide.
To give you an example, a Big Mac costs $1.6 in India, $4.2 in the US and $6.8 in Switzerland. It’s a direct reflection of the purchasing power parity, i.e., $1 is not equal to $1 worldwide.
The Indian rupee is undervalued by 61%, which means we can buy goods for 61% less than Americans. This implies that $1 is worth around $0.4 in America. So for doing equal work and getting equivalent pay given to an American worker, an Indian freelancer is actually earning 61% more.
Let’s take another example. In the US, a haircut costs, say, $20. In Uganda, it perhaps costs $2. In both cases, the same service is being provided but in the US it costs 10 times more. A loaf of bread costs $5 in America but just $0.5 in India. Living in certain countries gives you better mileage per dollar, put pure and simple.
As such, it’s cheaper to hire a freelancer from a country where your money’s worth more. Many companies look to outsource to freelancers to save money.
The Best Talent Isn’t Always Local
Freelance allows companies access to a global market of talent. As a business owner, you might not have the talent you require in your local area. Hiring a freelancer prevents you from settling for a lower quality employee and reduces the overhead of relocating a person from another area to your locality.
Hiring freelancers also allows you to address specific needs with an expert. For example, you’re planning to shift your website from one server to another but don’t know how to do this. You can hire a freelance consultant who’s an expert in this area specifically for this engagement and get their help without having to hire someone full time. Remember, hiring someone full time means to potentially pay the person for 12 months of work! For something that takes as little time as transferring some files from one server to the other, it makes no sense.
We’re strong believers of the fact that full-time roles are dying – fewer small-to medium-sized businesses will have full-time roles. And even though hiring someone for an hour or two might be expensive, in the long run not having someone on the payroll can save an employer money, time and migraines.
The Pyjama Economy
To be honest, I’ve always loved the word “pyjama”—there’s something so comforting in that word. On the other hand, I’ve always hated the word “economy”. Even after starting multiple businesses, I’m still confused by the way it changes every few months. And it’s not just me who can’t pinpoint how the economy works – in fact, a blindfolded monkey was able to throw darts at a stock board and pick stocks that performed better than top ranked Wall Street brokers. In my own experience, I’ve met and hung out with guys who handle millions of dollars, but very few people know what is actually going on. If venture capitalists (VC) were that smart, every VC-backed start-up would make billions. The reality isn’t that simple, and there are several factors that influence the success of a company.
When it comes to the online digital services economy, things are much more predictable. We have a reasonable understanding of what’s working right now and we’ve seen it work over the years for ourselves and for several of our friends who’ve gone on to have successful freelance careers. Businesses will always want to hire the best people at a cost-effective rate, and the internet has enabled that at scale. The success of online platforms reflect that it’s proven to work for a lot more people across the world.
Our experience with the freelance economy is a function of two things. First is having failed so many times that we can comfortably tell you what doesn’t work.
The second is having had enough successes in different projects to “guesstimate” what the best course of action in a given situation is.
Ten years ago, freelancing online was looked at as a way to make pocket money on the side. If you take a deep dive into the stats (Jobspire helps us keep up to date with what everyone’s salary expectations are), you’ll see that the average freelancer in India makes more money in the same time period than a salaried employee for the same role. In fact, the ability to make more money means you work harder, which is an added benefit because this means that you can save up for a rainy day and take a break whenever you want. And if a project is really stressing you out, you can just drop it! In the corporate world, dropping a project isn’t a very smart thing to do if you want to keep your job. In the freelance world, dropping your project is common practice. While you can quit in a real world corporate job, finding a new one is often a tiresome process.
The perception about online freelancing in India has usually been sweatshops and people in cyber cafes hurriedly writing codes before 8PM IST (when America begins its day) for meager hourly wages.
The venn diagram of what Pyjama Profit represents
Today, it represents the intersection of the things that drive you, the lifestyle you want to live and financial independence—a fantastic income, flexibility to work whenever and wherever and the ability to take a break at any time.
Online, there is no difference between you and someone from a different location. There are several freelancers from America, Spain and other first-world countries living comfortable lives with freelance income. Because there’s no difference online, this means you can also make the same kind of money—dollar for dollar—as anybody else. If you wanted a job in New York, you’d need a visa, you’d need to find accommodation there, which is expensive, and your cost of living would shoot up. Imagine making the same kind of salary sitting at home with your loved ones.
Let’s not forget the start-up boom that’s been happening lately. With more smart individuals vying to build businesses online, there’s more opportunity than ever for you to contribute.
Adding to these green pastures of opportunity is the ability to add your own creativity. Simply doing what you’re told will make you money, but adding value and helping your clients with experience you’ve gained over your tenure as a freelancer is something they want today. Instead of just following orders, if you can tell your clients that some idea might not work because you’ve tried it before and it hasn’t, it gives them more incentive to have you onboard for your experience.
So why is it easy for someone to make money online when everyone is complaining about not finding a job?
The answer is small-to medium-sized businesses and business owners. Let’s take the example of a big company like Nestlé. They employ over 328,000 people across the world in different roles like management, production, finance, etc. Assuming most of these people work full time, they receive a fixed salary every month regardless of whether they work less or more. Of course, Nestlé, as a global conglomerate, has systems in place to make sure everybody works an even eight hours a day.
Now take the case of a business owner who sells something— say, lamp shades. Suppose they want to explore the option of finding customers online and selling directly to consumer through their website. What options do they have?
One option would be to hire a web developer full time. Depending on what part of the world they’re in, this could cost thousands of dollars a year.
Another option would be to find someone with the skill needed and bring them onboard for one or two months and get it done.
How it would normally work is that they would ask their friends and network for recommendations and maybe also use an online platform like Upwork to post a job. They’d receive one or two recommendations from friends and maybe 40 to 60 applications online.
On Upwork, they’re armed with detailed profiles, work history and samples of previous work to figure out who the best person for the job might be. They can make an informed decision, taking into consideration the level of quality they expect, the timeline, and their budget.
On successful completion, they leave a review online and let their friends know that they’ve worked with an amazing web developer. As a freelancer, this level of trust gets you more work, and over time also lets you increase your price, which lets you work toward the kind of projects that you are truly passionate about. The credibility you build allows you to gauge your own impact as a professional. This, in turn, leads to more clients interested in working with you, and the knowledge that you’re going to have steady work allows you to really pick the kind of projects that interest you and charge accordingly for it.
The Economy and You
The economy seems like an abstract idea, but we’ll try and simplify it for you.
Imagine you’re sitting at a café. Every 10 minutes, somebody goes to the counter to pay for their coffee. There’s lighting and air conditioning in this cafe, which costs them a certain amount of money every second. You’re browsing Facebook on your phone and coming across ads that cost advertisers money for every view. Outside, there are cars waiting at a red light, burning fuel just by idling. There are vendors on the street selling snacks to passers-by.
The idea I’m trying to put in your head is that there is a flow of money around you every single day, every single second, wherever you are. It’s like an invisible river flowing just above you. That’s the economy.
Whenever you pay for something, you are adding to that flowing river. When you pay $4 for a coffee, you are saying that the coffee is worth $4 to you. The café that brewed the coffee gets the $4 in exchange for providing that value to you. They then pay maybe $1 to their suppliers, $0.5 to their barista and $0.3 towards their utility bill. They keep the profit and continue to run month after month. And so, the river flows.
That’s how it works in real life, and that’s exactly how it works on the internet. Businesses are spending money to make more money. They are spending on goods, suppliers, utilities, tools, labour, etc., which, in turn, is helping their businesses grow and make more money.
The amount of money you can take from this flowing river is the amount of value you can add to it. You’re free to take as much money as you want from this river; no limits. The only rule is that you have to put in value that is equal to or more than the money you take.
When you understand and internalize this concept, you will start to see this pattern everywhere. The differences between a freelancer and full-time employee will also become clear to you. As a full-time employee, you have a certain value to your company and the salary they’re paying you reflects that. This value might change on a monthly basis but the money you make stays the same until you’re promoted once every two years or so.
As a freelancer, there’s no cap on the amount of money you can make, except maybe the number of hours you work in a day. If your work for a company can generate them an extra $X in revenue, they’d be glad to pay you to help them get there. The challenge then becomes figuring out what you can do for companies (finding your value), finding companies that need your skills (communicating your value) and how you do it with maximum impact (delivering your value). Those are the three things you need to figure out to have a successful freelance career.
Finding your value
Communicating your value
Delivering your value
A full-time employee and a freelancer both have 24 hours in a day. They both find something they’re good at doing and provide that value to help a business make more money. The difference is that a freelancer can do as much or as little of it as they want, while a full-time employee is usually bound by the arbitrary limits their job imposes on them.
Chapter 3
Learning Your Core Skill
“It is so necessary to get the basic skills, because by the time you undergraduate or graduate, that field would have totally changed from your first day of school.”
&nbs
p; —LEIGH STEINBERG
Finding your value
In order for you to start making money freelancing, you need to have a skill set that is worth selling. The freelance market works the same way markets in real life work—there is a supply and demand ratio that is always in fragile balance. There’s a demand for skills and professionals online, and finding your value comes down to meeting that demand.
Additionally, skills that are harder to learn will be scarcer in supply. This means that someone possessing them will be able to charge more.
I’m a huge believer of learning by doing. If you’re starting out, you could take three to six months to get good at a skill, build up confidence, and then take up your first project. Or you could learn the basics of your skill in a week and start bidding for a project after that. You are paid to learn if you choose the latter.
You might wonder why would someone hire a newbie with questionable skills? Well, most people won’t. But there are businesses out there that can’t afford high prices, or simply can’t justify a big investment on a freelancer. All that matters is that you have more skill than an average person, and boom, you’ve found your value. If you can design even a mediocre event poster for a business owner who doesn’t have the skills to do it on their own and has only $20 to experiment with, you’re delivering real value to them. Why not find that business owner and help them out? They get a better looking poster than they’re used to, and you get your first project and a chance to apply your skills to something real. It’s a win-win situation.
