My poker coach, Tommy Angelo, sells me his time and experience. Either by video or email, I describe a problematic poker situation and he helps me find more profitable ways to think about it. I pay him for his time and I’m happy to do so. Each coaching session easily pays for itself the next time I play.
One of the cool features of getting coached is I can gain more value from my lessons without paying more. If I play longer or for higher stakes I make more profit. I still pay the same for the advice.
My Speaking Fee
How much should I charge when asked to speak at a company? I’ve always been frustrated by this question.
On the high end is setting the price by value. What expected additional profit is the company likely to make based on this presentation? If the answer is zero, then the talk is a waste of everyone’s time, so let’s assume the expected additional profit. If the expected additional profit is some number of dollars, then a percentage would be a “reasonable” fee. After all, I could just not speak and then they wouldn’t make that profit and we’d all be worse off (<- assumes dubious stuff about how important my talk really is and how possible it is to measure my contribution).
Prices based on expected value are, I can say from experience, not popular. Instead, companies respond with, “Hey, you’re just zooming in from your living room. You don’t even have to put on real pants. Here’s a hundred bucks.” That’s the low end.
(Well, that’s not the actual low end. The actual low end is the large, profitable companies that invite me to speak for nothing. Alas, my donation budget for large, profitable companies is, well, zero. Going to be zero next year too.)
Effort Versus Value
The two situations, getting poker coaching and giving corporate talks, are the same. In both a central party is paying for effort and getting paid for value. As a student, I buy my coach’s effort but I get to collect however much value I win for however long I play. As a speaker, the company buys my effort and gets to collect however much value they create from the ideas I present for however long they apply them.
Being paid for effort is concave, with limited upside. Being paid for value is convex, with unlimited upside. Finding a spot in between is sweet — paying fixed costs and collecting variable revenue.
Conclusion
One of my primary drives is understanding. Since childhood my world has always seemed chaotic. I feel better understanding a little more about effort and value.
Effort versus value helps me understand what’s been going on with my finances. I worked hard. I just didn’t do a specific kind of work, the kind that would make me the central party is a 3-way “buy effort/sell value” trade.
One specific change I need to make is to give up on selling effort for higher prices. I might double my income, but with the concave limits of selling effort I would soon hit diminishing returns. Being able to make a few bucks in sweatpants is great. I should relax and enjoy it, not feel resentful.
I need to think more about what conditions tend to create the broker position between effort and value. It seems like one-off transactions are likely to be paid for effort. Only when all parties trust that incentives are aligned within a relationship are you allowed to take your place as a broker. (If this isn’t clear it’s because it isn’t clear to me. I’m just thinking on paper.)
Fortunately, my regular gig as an employee at Gusto gives me some of each. I get paid for my effort but my equity gives me a slice of the value Gusto gets paid for.
I need to actively look for more chances to buy effort and sell value. I’m not even sure what that looks like, but that’s how these ideas work for me. I come up with a model. I naively ask, “What does the model predict?” I experiment if I can do so cheaply. Sometimes it works.
