Freelancer vs. Entrepreneur

I Failed

Directly after graduating college I ran a social media management agency for a year and a half that burned me out, didn't make me much money, and made me feel like a failure. After I shifted gears away from that, I stumbled on Seth Godin's ideas about the differences between Freelancers and Entrepreneurs. They struck a chord with me. I realized that not knowing the real difference between the two was the root cause of my business' unsustainability. I'll summarize Seth's ideas below, let you in on what happened with my business, and link more work for you to check out.

Freelancer Vs. Entrepreneur

A freelancer is someone who only makes money while they're working while an entrepreneur builds something bigger than themselves, something that makes money even while they're not working.

A freelancer has a specific service that she does, like graphic design, photography, custom furniture building, whatever. Basically anything can be a freelance business if you're able to render a specific service to someone else for money. Let's take a freelancer furniture builder, for example: she builds furniture for someone and gets paid for her work. The thing to realize here, however, is the only time freelancers actually make money is when they're doing the work. This will continue to make more sense as we dive into the next definition about entrepreneurs.

Entrepreneurs build things that can accomplish what the individual couldn't on their own, that in effect, has the ability to make money while they aren't working. So the entrepreneur owns the furniture shop, she hires 4 or 5 furniture builders to work for the shop, pays them a rate and takes a cut off the top. The entrepreneur could hypothetically not even touch the furniture or know anything about how to make it. But once she sets up the systems of her furniture building shop, she can go take a vacation for 6 weeks and the shop is still making money for her. This is not the case for our freelancer friend, as the only time she does business and gets paid is when she's building the furniture. 

Value Propositions

The most common value proposition successful freelancers have is scarcity.

Anyone can make a travel video but only Sam Kolder makes a Sam Kolder travel video. Because of this, his videos are scarce, which makes the value skyrocket. Now, he likely has hundreds of brands reaching out each month asking him to partner on a video with them, and he gets to pick and choose the best clients who pay the most. Pretty sweet gig. 

The most common value proposition successful entrepreneurs have is mass appeal.

Many companies make cell phones, but only Apple makes the iPhone. Apple designs their phones to work better with other iPhones (iMessage, Airdrop, FaceTime, etc.) thus increasing the mass appeal of their phones. If my friends have one, and they're all FaceTiming, I'm going to get one too so I can FaceTime with them. Apple doesn't take the scarce approach of selling their phones for $10k, even though they probably could to a niche market. They sell them at a marked-up, but still reasonable price to increase the mass appeal and sell to a ton of people (about 1 billion in the past 10 years).

Why You Need To Choose 

When I graduated college, I started managing social media accounts for small businesses. I built a mini agency called Top Shelf (RIP) with my cousin, and our goal was to manage social media accounts for a lot of businesses, providing personalized service to each client. Here was the problem: we had an entrepreneurial business model and a freelance workflow.

We aimed to undercut prices of other social media management companies and also provide super personalized, grassroots service. If we wanted to work for a lot of businesses, we should have hired someone cheaper than ourselves, tracked down a heap of clients, and taken a cut off the top. If we wanted to bring super personalized service to our clients, we should have found 2 or 3 clients who were willing and able to pay top dollar for that handcrafted quality. We did neither, which left us with too few clients to pay us well, and too many to do really good work. We were spread too thin for a year and a half, so we threw in the towel. We didn't define if we were freelancers or entrepreneurs. 

Seth Godin describes another potential pitfall of the freelancer in this article:

"The trap is simple: Sometimes freelancers get entrepreneur-envy and start hiring other freelancers to work for them. This doesn’t scale. Managing freelancers is different from being a freelancer. Managing freelancers and saving the best projects for yourself gets you into trouble."
"If you’re a freelancer, freelance. Figure out how to do the best work in your field, the best work for the right clients."
"If you’re an entrepreneur, don’t hire yourself. Build a business that works, that thrives with or without you."

Choose Your Path

So just as Seth said it, choose your path. If you want to be an entrepreneur, serve as many people as you can and then get out of the way. If you want to be a freelancer, find a niche market and stand in the way, so people have to go to you. 

Learn More From Seth Godin

Here are the top 2 things from Seth Godin that you need to consume about this topic before going forward:

The Freelancers Episode from the Akimbo Podcast

Freelancer or Entrepreneur Episode from the Startup School Podcast