From solo to micro
Are microstudios the new black?
I’m starting to see an interesting trend - which perhaps flies in the face of the personal branding concept for independent workers.
More and more indies are setting themselves up as “microstudios”, over working as individuals, investing in commercial brand over personal positioning.
To me, this makes sense:
1) microstudios can easily scale to offer a team, not just an individual. individuals can also do this, but there's a huge perception difference.
2) many want to get away from the concept of "freelancer" as it holds much baggage, and microstudios are positioned as "delivery based" rather than "time based"
3) a microstudio is buyable, it has IP, process, products - a person is not. thinking about exit strategies is worthwhile, even if you don't want to
4) it's a mindset shift - not all freelancers feel like they run a business. but most microstudios do. they have a roadmap, a vision, values and an agenda.
5) client perception - there's still some negative vibes towards freelancers, and risk averse clients may avoid hiring a freelancer, but be more open to a microstudio, feeling liability is lower. there are also some tax liability benefits, if not providing an individual, but a service offering.
It'll be interesting to see how this plays out, and whether we see additional infrastructure to support microstudios do bigger things.
Of course, personal brand and microentity brand aren't mutually exclusive, in fact to create credibility, they often need work hand in hand, but they are distinct and play different roles.
It’s also important to say, I recognise that 'freelancers' and 'microstudios' are not interchangable concepts. Microstudios are absolutely not just a freelancer with a brand-name. They're SO much more than that, they're a clear idea, value proposition and service offering. Freelancers could also have that, but operating as a person vs operating as an entity are not the same mindset. There's probably a very interesting venn diagram to be drawn.
In fact, it might be useful to be clear on my definitions:
Freelancer - individual working under their own name or limited company name, but you're generally hiring the named individual. May collaborate with other freelancers at times, but dominant model is working solo, or as part of a client/agency team. Can work with agencies or clients. Might also be called a contractor, especially if it's longer term work. Could be 'embedded' inside a client, time based models or delivery based models.
Microstudio - individual or small partnership (1-3 people) working formally or informally together, but consistently. providing services and deliverables, rather than time based or on-site work. may often have a wider network of less frequent collaborators. Generally the partnership is made up of practitioners - ie. the people actually doing and delivering the work, not admin/machinery/bizdev, etc. More commonly working directly with clients, but can provide services to agencies too.
Collective - a business providing services delivered by it's curated network or community of individuals (generally freelancers), acting similarly to an agency model, but generally very few 'employed' members of the team. some expectation from the collective a flow of work or opportunities. might have some form of equity and support. Most commonly working directly, most likely competing against agencies. Often the central function might be more bizdev/pm, and the network are the practioners, but often collectives might have a specialism at its heart, which the collective founders might be specialists in.
Communities - an organisation providing support and peer-connection between individuals. May have a jobs board, but delivering work as an entity is unlikely to be their primary purpose. May have revenue streams by charging their members, rather than clients.
There is often a blurred line between collectives and communities (i.e. collectives often have thriving communities), but the 'purpose' is the definitive aspect.
Communities exist to support and connect members (and may also provide work).
Collectives exist to provide work to clients (and may also support members).
I posted this observation, and had a few useful builds:
1/ The importance of having a team - having a consistent group of people you can work with, build with, lean upon - it’s transformative. It’s probably the biggest challenge in self-employment, the over-reliance upon building a business all on your own. It’s exhausting. Having others to do this with, is powerful.
Allyson Carroll - an independent strategist commented: “Adding expertise from other areas has given me new energy and helped me remember that I'm strongest and most creative within a team, even a tiny one.”
The point around energy is so so crucial to understand as a small business owner, and when the self-employed are more likely to face issues around burnout and exhaustion, as well as isolation and mental health challenges, others having your back on the days where you’re not feeling it - is critical.
2/ Self-promotion sucks - not everyone enjoys marketing, and finds self-promotion a little cringy. Promoting a product, service or brand just feels easier. Joe Daniels, positioning-specialist-supremo commented: “A lot of freelancers HATE the idea of self-promotion. Promoting a brand that isn't just you feels a little less icky.”
3/ Commercial Clout - acting as a business can also unlock mindset shifts, and prevent clients setting day rates. Tash Peshkin, founder of multiple agency model businesses, explains “For most I imagine it’s driven by a desire to leap frog the crazy competition for agency work. And set your own prices (ie consume some of the end agency margins).”.
4/ Clients with Benefits - Matthew Mottola, leading voice in the world of independent work, points out there are benefits for clients too: “I love this concept because it’s easy to scale outcomes up/down. Makes things like classification, guest access (the boring stuff) complicated, but we’ve seen them be really powerful!’
President of collective Model b Chris Perkins, explains the opportunity in the models: “With clients facing enormous financial performance pressures, they are increasingly receptive to these newer talent access models. As long as clients don’t have to supervise or direct different teams and the NDA/operating agreement/contract is managed by the lead agency, they love it once they give it a shot.”
I think collectives and microstudios offer different benefits, but there is undoubtedly more choice today than ever before for clients hiring talent.
However, does it make things more complex or simpler?
Clients are already confused by IR35, who they can and cannot hire, the risks around taxation and classification. Does working with a microstudio make it even harder?
In lots of ways microstudios as business entity, rather than individual (or PSC) removes so much of the complexity, as it’s a simple B2B relationship. No individuals, deliverables based and even supports substitution.
And beyond that, they have a single point of contact, over managing multiple freelancers in a team, and perhaps most importantly - the cost of working with a microstudio working directly with practitioners, compared to a large agency, with overheads, layers of management and inflated costs - the ROI is high.
There will, undoubtedly still be some concerns around working with a smaller business. Reputation, reliability, risk. So it’s on the microstudio to ensure they can solve the trust hurdle.
But with the portfolio of work from some recently launched studios I’ve seen, as talented freelancers combine with very impressive lists of brands and work already done directly - that should be a small challenge to tackle.
They’re the supergroups of the 1970s, in the context of the independent landscape of the 2020s.
Perhaps more businesses will wake up to the benefits of partnering with microstudios.