June 26, 2018
Specialization is for insects - Heinlein
Chicago is the consummate generalist: #2 in finance to NY, #2 in academia to Boston/Cambridge, #2 in medical science. Whereas the Bay Area is #1 in technology and not even on the map in most other things. This leads to some important differences in day-to-day life.
I think there's a more general insight here: the Midwest is a bit suspicious of specialization. They really admire self-sufficiency: growing your own food, shoveling your own driveway, fixing your own stuff. The Midwest also hates risk, and specialization entails a lot of it; the world changes, specialists can get left behind. I think that ethos seeped into my thinking about work; I always saw myself as more of a generalist than a deep specialist.
Economically speaking, however, the jury is in and it's not even close: specialist regions operate at a whole different level than generalist ones. Industry clusters like Hollywood, oil and gas in Houston, finance in New York, and high tech in Silicon Valley, produce jobs, profits, and wealth in a whole different league than their generalist counterparts. Economic life in these places is different: the labor markets reward specialization to a degree that's hard to comprehend if you're used to generalist economics. The best people and companies doing something important earn multiples—5x, even 10x—of median. You can build an entire law firm around being the best in a narrow niche like real estate bankruptcy in places like New York. Likewise, law firms in San Francisco like WSGR have made entire businesses off of doing venture deals and intellectual property; the rewards for being the best are just way, way higher than in a place like Chicago.
I think this is why I never wanted to do a PhD: I grew up in a place where the wage/career premium for deep specialization wasn't what it is in a place like Silicon Valley. But now that I'm here, I realize the winning strategy isn't to go broad; it's better to pick something and be the best at it.
The most important thing is to identify — and it may take days, weeks, months, sometimes years; hopefully, not too many years — to figure out what you can be exceptional at. I don’t think you want to be one of many people, you want to be the best at what you do even if it’s defined very narrowly..”You want to be the only that does what you do to,” to borrow a line from Jerry Garcia. Figuring out where your competitive advantage could be and where you want it to be and then developing that so that you are the best at what you do, and the only one who does what you do. - Keith Rabois