The runway effect: how to make more money by working less

Just like a startup, you need a roadmap and a career runway if you expect your career to fly high.

Who this article is for

This article is for recent college graduates entering the job market or people changing careers and entering a new field.

The “runway effect” is a phenomena in business where the longer a business can avoid making money, the more money it makes long term.

Most of us are familiar with this concept from the Facebook movie. Remember when Zuckerburg cut Eduardo out of the picture for insisting that they start taking ad money? This is the perfect example of the runway effect.

Zuckerburg believed that by delaying the use of ads on Facebook, they would get more users and dominate the market long term. He was absolutely right — and networks like Myspace that failed to heed this wisdom faded quickly.

How do you delay “cashing in” when it comes to your career path? Just like a startup, you need a runway. Here’s what that looks like.

What is a career runway?

Your career runway is the distance between where you are now and the type of life you want.

No runway: getting an entry level job and going into debt to pay rent. This is what life looks like if you take off before you’re ready.

Career Runway: Reducing expenses, freelancing and taking trade-oriented courses, working jobs with upside rather than jobs that pay well, and networking relentlesly. This is what a runway looks like.

You probably don’t realize it, but you’re burning money. Most people in the US are. Don’t take a crap job that barely pays rent — find a way to reduce your rent, and take a job that has more upside (hint hint, these jobs tend to pay less short-term).

You need to design your life so that you:

  1. Spend as little as possible.
  2. Learn and experience as much as possible.

That’s what a runway looks like.

How to extend your runway

Luckily, having wealthy parents isn’t the only way to extend your runway. However, most of the strategies for extending your runway require a major mindshift change. Simply put, it’s not going to be comfortable.

Identify the milestones you need to achieve for your chosen career path

Runways aren’t worth much if they aren’t going anywhere.

Before you look at lifestyle changes, identify the requirements for your chosen career path. For a designer, this might mean doing freelance work with a particular brand, interning with a particular company, etc. For a programmer, maybe it means taking a boot camp for six months.

Either way, these milestones will set the structure for your runway.

Even if you don’t know what you want to do, stop spending so much money

This is the first and most important step to building a career runway. Audit your daily spending and look for nasty patterns. Starbucks habit? Make it at home, or better yet stop drinking it. Speaking of drinking, you should only be drinking when it’s free, and limit yourself. There are few people who can responsibly handle alchohol in their twenties, and the health consequences will cost you money when you’re forty.

A person who makes $80,000 per year and lives off $30,000 is richer than a person who makes $120,000 and spends $90,000.

Get rid of rent, at all costs

This doesn’t have to mean living with your parents. It can mean moving to a smaller, cheaper city. It can mean piling on more roommates. It can mean any number of things. Reduce your rent at all costs.

If you don’t know what to do, look for structured learning opportunities

Americorps. Internships. Even the military. All of these are ways to gain skills and explore a career direction without spending money.

Public service programs like Americorps NCCC will pay for your living expenses for a year, pay you (not much, but still) every day you serve, and then pay off part of your student debt if you have any when you finish. Did I mention they have job placement programs? Americorps is awesome. Twenty-two is not old. Take a serious look at Americorps.

I’ll update this with a post on structured learning opportunities. It’s a big subject and there are lots of opportunities out there.

Consider strategically moving outside the country

Here’s an underapriciated way to cut expenses: move somewhere cheaper that’s outside the US. There are beautiful cities like Chiang Mai, Berlin, Taipei, that cost a fraction of what even a small US city costs.

In my personal story, this move was the key. Moving to Taiwan allowed me to cut my living expenses to less than $600/month. (That includes rent, food, everything.) Since I was ineterested in building a tech career, where I lived was to some degree irrelevent, since I could work remotely doing freelance contracts.

This gives you two benefits. First, obviously, it’s a great way to save money. I was originally attracted to Asia because I saw several friends move to China and pay down debt while teaching English. It’s a bit of a trope, but it works.

Stop buying bullshit

This doesn’t mean you have to be cheap. Buying a $200 pair of shoes is smart if they last longer than four pairs of $50 shoes.

It does mean you need to stop spending as an emotional remedy. Shopping is like drinking — it’s something everyone knows is bad for them, but everyone needs that little dopamine rush, and so they do it. Even though they don’t need new shit any more than they “need” to get drunk.

And the worst part is, American culture currently accepts and even glorifies this self-sabotaging behavior!

Starting a career is like starting a company

The runway effect applies to your career because in the context of the job market, you are a product. Products that spend more time in development usually are more successful than those that are rushed to market.

College is a runway. But if it’s the end of your runway, you’re likely to have some problems.

Back to the startup metaphor: when investors are deciding which startup to give money to, they don’t look at current profits. They look at indicators of future profit — things like number of users, speed of growth, etc.

You want to be that promising company. And the best way to do that is not to work hard… but don’t rush.

It’s unpopular to discuss, but this is why the children of wealthy people tend to get better, higher-paying jobs. Since they don’t have to borrow money for school or make money during their first few years of adulthood, they can afford to take more risks, which results in more rewards.

Working an unpaid internship in New York for a couple years isn’t an option for most people. However, internship experiences undeniably expose you to more opportunity than “settling” for an entry-level job outside your favored industry. If you’re reading this, I’m assuming you’re in a situation similar to mine at that age — in debt, with no financial safety net or well-positioned family friends who can pull strings for you.

Creator of Afield, a publisher of insightful guides about the future of work and navigating the tech industry.