Navigating and “illiquid” career path

Brynne Hobart’s always-excellent newsletter recently mentioned a post by Vaishnav Sunil about the difference between “liquid and illiquid careers.” Here’s Brynne’s summary that caught my attention:

There are some job paths that make someone's value to a prospective employer incredibly legible (if you went to HYPS and then spent two years at MBB, employers know roughly what you can do and almost exactly what you can accomplish). And if you taught yourself TypeScript while pursuing a career in jazz performance before getting into longevity research, there's a wider range. Compressing away that career volatility is convenient, and it's a defensible choice, but one of the upsides to an illiquid career is that you get a lot more input into the rubric used to evaluate your own abilities. The analogy immediately made sense to me, given my own career path. The post is worth your time in full but below are some quotes that stuck with me as I nodded my way through it all.

Overall: I agreed with much of Sunil’s evaluation of the positives and negatives of this kind of career development. For me, the breadth of impact across industries (presidential elections, small business marketplaces, journalism, population health and now education technology) has been very satisfying. And the setbacks along the way have been, thankfully, quickly followed by steps forward. There may be some selection biases at work (immigrating across the world at 10 years old is perhaps the most risky event of my life and probably shaped my risk profile in ways that I’ll never fully appreciate) I’m glad I’ve ended up on an illiquid trajectory. When I talk to peers or folks now deciding on their own trajectories, I often sing the praises of this approach.

On higher uncertainty in illiquid careers:

Illiquid career paths typically yield a wider distribution of outcomes. For those aiming at the extreme positive tail, leveraging unique strengths and actively managing one's career become crucial. This approach can potentially lead to outsized returns in terms of impact, personal satisfaction, and financial rewards. However, these paths aren't suitable for everyone. They demand higher tolerance for uncertainty, proactive career management, and often rely more heavily on social capital and personal initiative. So if you’re looking for a nice job that pays the bills and can fund your lifestyle, you should probably chase liquidity at the expense of expected return.

On talent-stacking:

More generally, avoiding linear paths means the ability to choose roles based on the skills that you want to work on and develop at any given point in time. This flexibility aligns well with Scott Adams' concept of a talent stack. In non-traditional paths, you can strategically select roles and experiences that allow you to build a unique skill set based on your situation or their future value when stacked together, which might be larger than the sum of the parts. On the importance of organization and attention to detail, or, generally, shoring up weak spots:

Communication skills and strategic instincts are probably both incredibly important to a business leader’s success. However, a young person who clearly outperforms his or her peers on these abilities probably won’t make it up the corporate hierarchy to become CEO if as an entry level executives, they fail to excel in a role that tests their attention to detail and ability to process high volumes of routine tasks to perfection . As someone who struggled with this early on, I’m convinced that cultivating a minimum amount of organization and attention to detail is important no matter what one wants to do, but the degree to which this can be emphasized to the exclusion of almost everything else may not predict future success. Be that as it may, your boss probably won’t care that he’s failing to see the flashes of brilliance in you that could transform the company 15 years from now.

On the characteristics of illiquid careers:

1. Industry growth and activity: Skills that can be deployed in high-growth industries or sectors with high levels of activity tend to be more liquid. The increased "trading volume" of human capital in these areas enhances liquidity. 2. Skill specificity: Counterintuitively, more specific skills often enjoy higher liquidity. A carpenter's abilities are well-defined and easily understood, whereas "project management" can vary widely based on context. This clarity makes it easier for a carpenter to market their skills, even in a new location. 3. Testability: Skills that can be easily and quickly assessed tend to be more liquid. For instance, a software developer's competence can often be gauged through a brief coding test. In contrast, evaluating leadership or managerial skills typically requires more time and varied assessment methods, resulting in lower liquidity. 4. Context dependency: If your value primarily stems from familiarity with a specific organization or geographically limited social capital, your skills may be less liquid. However, this can sometimes correlate with skill specificity, so the net effect on liquidity isn't always straightforward. 5.Institutional brand: Larger, more established brands often provide greater liquidity to their employees' human capital. This is due to their well-known screening processes and the larger sample size of previous employees, allowing potential employers to better estimate the value typically generated by individuals from these institutions.