In this post, I will be going over my kindle highlights for Zero To One by Peter Thiel. At the time of writing, Peter Thiel has an estimated net worth of $2.7 billion, he was one of the co-founders of PayPal as well as the first outside investor in Facebook and he is currently the chairman of Palantir Technologies valued at over $20 billion!
The book is essentially his personal notes on his various start-ups as well as his tips on how to build the perfect start up team to increase your chance of success. This is the first book I have ever read that I literally couldn’t put down and used all of my free time to read it as quick as possible. It is currently one of only four books that I consider to be a tier one book in my reading list and I highly reccomend it. So, without further ado lets get on with some book highlights.
“If you take one typewriter and build 100, you have made horizontal progress. If you have a typewriter and build a word processor, you have made vertical progress.”
Although horizontal progress has its place, the real money is to be made in vertical progress. Innovation, improving a product drastically or creating something totally new to make the users life easier will always trump a cheaper version of the existing product.
Imagine you are wanting to start a search engine optimization service, rather than being a carbon copy of what is already out there focus on quicker and safer rankings for the client. Then put yourself in the client’s shoes and ask yourself, if you were the client what service would you choose.
“the most “successful” companies seemed to embrace a sort of anti-business model where they lost money as they grew.”
“A great business is defined by its ability to generate cash flows in the future.”
“Most of a tech company’s value will come at least 10 to 15 years in the future.”
I am going to group these three highlights togeather as they all serve the same point. Amongst hundreds of examples, let’s look at Facebook, Twitter and Amazon. All three companies were losing money for quite some time when they first started, yet their valuations kept growing.
Although different sources quoted different numbers, some people argue that even to this day Amazon should not be classed as a profitable company due Jeff Bezos funneling as much profit back into the company as possible to increase the future potential value of the company.
One example of this tactic is Amazons kindle. It has been widely reported that some of the kindle models are sold at a loss to meet attractive price points for consumers, Amazon have confirmed that a Kindle Fire costs around $210 to produce yet Amazon sell the product for a loss at $199 because they know they will make their money back from users purchasing apps and books for the device.
I purchased my first Kindle in October 2016, at the time of writing it has been three months one week since I made this purchase and to date, I have purchased around forty ebooks. I read and rate these books on my reading list post and have no plans to stop reading so the number of books I have bought is only going to increase along with Amazons profits from me.
Although I am only one user I would imagine that most people who purchase a kindle are avid readers and will buy many books meaning that Amazons stratergy is paying off.
“We gave new customers $10 for joining, and we gave them $10 more every time they referred a friend. This got us hundreds of thousands of new customers and an exponential growth rate.”
Although this is a far from sustainable marketing tactic it allowed the initial exponential growth spout PayPal required to force investors to pay attention to them. People love getting free money and although this may not be a practical tactic for all companies even initial discount coupons can help create the initial surge of growth for a new service.
“Apple’s monopoly profits from designing, producing, and marketing the iPhone were the reward for creating greater abundance, not artificial scarcity: customers were happy to finally have the choice of paying high prices to get a smartphone that actually works.”
Even to this day it is common place to limit the initial number of units available on the release of a product. I believe this is an attempt to prey on people’s fear of missing out on getting the item and increase the chances of getting them to actually preorder the product. When Apple released the first iPhone they flipped this strategy on its head completely, they understood that the Nokia N96 was probably their closest competitor and that the iPhone blew it out the water.
Rather than limiting the number of units available they increased supply to ensure anyone who wanted an iPhone could get one and the iPhone quickly became the handset of choice. It took some time for the rest of the industry to get in gear and provide any real competition but by this time Apple had established the iPhone as a market leader.
“If only I got the clerkship, I thought, I would be set for life. But I didn’t. At the time, I was devastated.”
Off the top of my head I can’t remember exactly what company this clerkship position was with but imagine if Peter had been successful in his application, I doubt he would have ended up with the multi-billion dollar fortune he has today.
Just because one route in your life closes does not mean that the alternative routes do not lead to prosperity. I see it time and time again, people make a single site, put all of their hopes and dreams into it before giving up when it fails to take off.
“Just as war cost the Montagues and Capulets their children, it cost Microsoft and Google their dominance: Apple came along and overtook them all. In January 2013, Apple’s market capitalization was $500 billion, while Google and Microsoft combined were worth $467 billion. Just three years before, Microsoft and Google were each more valuable than Apple.”
“If you can’t beat a rival, it may be better to merge.”
I am grouping these two highlights togeather as they represent the same important lesson not only in business but also in life. Rather than focusing on your differences and trying to out do each other try and work togeather to strengthen both parties. As you can see from the highlight Microsoft and Google competing with each other allowed Apple to gain market share and take over.
An example of putting differences aside to prosper togeather comes from Andrew Carnegie. Off the top of my head, I can’t remember his competitors name but Andrew was fully aware that both parties were destined to lose vast amounts of money if they could not find a common ground and work togeather.
He came up with the solution of merging the two companies togeather and by preying on his competitors ego suggesting the merged company be named solely after his competitor. This tactic worked, the competitor liked the idea of having the leading steel company in the united states named after him and the merger went ahead. Andrew Carnegie went on to become one of the wealthiest men ever to live.
“If you focus on near-term growth above all else, you miss the most important question you should be asking: will this business still be around a decade from now?”
This is one mistake I am currently guilty of making with the majority of my sites, in fact, this blog is the only site I am taking the time and effort with to potentially grow into a lasting brandable domain. Due to suffering from a recent hit from the Penguin 4 update that I talk about in this post I have been thinking of new ways to adapt my strategy to allow for sites that are more long term.
“Proprietary technology is the most substantive advantage a company can have because it makes your product difficult or impossible to replicate.”
“As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage.”
“The clearest way to make a 10x improvement is to invent something completely new.”
I have grouped these three highlights togeather as they are all referring to the same point. The beauty with search engine optimization is that it is relatively easy to hide exactly what you are doing to rank sites or generate traffic. This means your unique method can be kept as secret as possible making it difficult for your competition and other service providers to replicate.
If you look around the various market places it is not hard to work out that the majority of service providers don’t have a clue what they are doing making it easy for you to reach the x 10 multiplier.
“Network effects can be powerful, but you’ll never reap them unless your product is valuable to its very first users when the network is necessarily small.”
This is one of the exact reasons I have not yet begun to promote this blog, at the time of writing it has almost 70,000 words of content spread out over some of the best tutorials and case studies publically available. Yet I still chose to hold off on promotion because I want the very first users who visit the site to see the massive amount of value my blog offers them to increase the chance of them becoming a regular reader.
You can see the reverse effect of this time and time again with people releasing tools, services and blogs that offer little value resulting in low revenue and forcing them to go offline.
“Facebook started with just Harvard students—Mark Zuckerberg’s first product was designed to get all his classmates signed up, not to attract all people of Earth.”
“A good startup should have the potential for great scale built into its first design.”
“Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore, every startup should start with a very small market.”
“it’s easier to dominate a small market than a large one. If you think your initial market might be too big, it almost certainly is.”
“The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors.”
“Once you create and dominate a niche market, then you should gradually expand into related and slightly broader markets.”
I will group the next six highlights togeather as they are all based around the same point of starting small and growing from there. As I have explained in a few posts the majority of my content is based around the GSA toolset. This is because I have a positive reputation amongst the tools community as well as a vast range of knowledge to share on the toolset providing its user base with value from the get go.
Although the blog is picking up random traffic from longtails in Google when I do begin to promote the blog my first stop will be the GSA forum as I know it is a micro community that are crying out for a source of usable information on the toolset.
I then plan to move onto the wider black hat search engine optimization community and build my reader base. I then plan to expand promotion into the productivity and book niches, essentially starting small and growing a solid reader foundation over time as I grow the blog.
“People then products then traffic then revenue.”
With this blog, I have put the people first by putting them second. My products are my article and blog layout, by taking the time to get them to a stage I am happy with I have improved the experience of my users, when I do begin promotion they will hopefully enjoy my content enough to become regular readers. Revenue generated from the blog is in last place as I want to grow this blog into a solid asset for users to fast track their skill sets from the content I share.
“You’ve probably heard about “first mover advantage”: if you’re the first entrant into a market, you can capture significant market share while competitors scramble to get started.”
“Moving first is a tactic, not a goal. What really matters is generating cash flows in the future, so being the first mover doesn’t do you any good if someone else comes along and unseats you.”
“It’s much better to be the last mover—that is, to make the last great development in a specific market and enjoy years or even decades of monopoly profits. The way to do that is to dominate a small niche and scale up from there, toward your ambitious long-term vision.”
I have grouped these next three highlights togeather as they are all based around the same point. Although there are plenty of other blogs out there in the niche who are essentially the first movers they have little to no actionable up to date content for their readers, black hat search engine optimization changes at such a fast pace that most of their content is now irrelevant.
On top of that, there are so many of these “first mover” blogs that are essentially hit and run marketers. As I mentioned earlier this blog currently has just under 70,000 words of content on it and I haven’t begun to promote it yet. Some of these hit and run blogs have been online for years and have less content that I have after produced in my first three weeks.
I have been over many of the blogs in this niche and as one of the last movers I have been able to learn from their mistakes, see gaps in their content that I can fill and I have had time develop my knowledge on the toolset to make sure my content is second to none.
“Success is never accidental.”
One of the few things I truly hate is lazy people who think successful people are just lucky. A recent example is Pokemon Go, many people though it was an overnight success and just got lucky to be making over a million dollars per day after its initial launch. What they don’t realize is the games creator has actually been on the path to “overnight success” for 20 years! This article over on inc.com breaks it down perfectly so I won’t spend anymore time on the subject.
Another more personal example is if I share a screenshot of one of my sites analytics or rank trackers on a forum to help get a point across. To this day I still receive inboxes from people asking me to share my method, what they don’t realize is to develop that method I had hundreds if not thousands of pages fail on me, probably destroyed a hand full of domains and invested countless hours into it.
Ralph Waldo Emerson captured this ethos when he wrote: “Shallow men believe in luck or circumstances…. Strong men believe in cause and effect.”
Similar to my point above, it is important to try and shift your mentality from thinking luck or personal circumstances lead to being successful, although to some degree these do some into it taking practical action and analyzing cause and effect will always be a better route to go.
Take the rich kids of Hollywood for example, their families had money and were able to offer them the world but how many of them have thrown it all away and now suffer from substance abuse? Then we look at people who has less privileged upbringings, there are countless stories of people like this one on BBC.com who do great things while having the odds stacked against them.
“Every other country is afraid that China is going to take over the world; China is the only country afraid that it won’t.”
Although I initially started this blog as a way to link people to content and remove the need for me to keep repeating myself on the various forums the more time I spend developing it the more I enjoy it and want it to succeed and take over the niche. I am under no illusions that I am even on the radar of any other bloggers in the niche but the idea of becoming the go to black hat guy is something I may aim for.
“EVERY ONE OF today’s most famous and familiar ideas was once unknown and unsuspected.”
The difference between “The next big thing” and “The current big thing” is not only that someone thought of the idea but that they took action. It’s all well and good thinking of an idea you believe in but taking the required action to make your idea come to life is something different all togeather.
“Whenever an entrepreneur asks me to invest in his company, I ask him how much he intends to pay himself.”
If you aren’t willing to put your own money into your idea then why should anyone else? Time and time again you see people posting on the various forums asking how best to invest $100 into internet marketing, if you fall into this category get realistic. You are trying to start a business! Yes, digital business’ can require less initial investment that a traditional bricks and mortar business but $100 is nowhere near enough!
“A company does better the less it pays the CEO—that’s one of the single clearest patterns I’ve noticed from investing in hundreds of startups.”
“A cash-poor executive, by contrast, will focus on increasing the value of the company as a whole.
Aaron Levie, the CEO of Box, was always careful to pay himself less than everyone else in the company—four years after he started Box, he was still living two blocks away from HQ in a one-bedroom apartment with no furniture except a mattress.”
“Startups don’t need to pay high salaries because they can offer something better: part ownership of the company itself.”
“The graffiti artist who painted Facebook’s office walls in 2005 got stock that turned out to be worth $200 million.“
I am grouping these next few highlights togeather. I believe that Peter is referring to CEO’s becoming too comfortable in their positions with a cushy wage and letting things slide. Giving a CEO part ownership in the company rather than a salary may keep them motivated to keep pushing the company to new levels.
You can also apply this directly to your own internet marketing business. Rather than wasting the money you earn online one useless crap, reinvest as much as humanly possible back into the business. I have already touched on how Amazon do this and they are one of the most successful businesses going right now!
Think of yourself as the graffiti artist of Facebook, rather than taking an initial low wage you are taking an investment in your own business for the future.
“Talented people don’t need to work for you; they have plenty of options.”
A little something for you to apply when you receive random emails touting for search engine optimization business or forums offering these services where every review posted comes from a suspicious new account with a very low post count.
“The only good answers are specific to your company, so you won’t find them in this book.”
This applies to the content on this blog too, it can help you tweak your tools as well as a few other things but it will not fit your website one hundred percent and you will have to test and adapt accordingly.
“If you can get just one distribution channel to work, you have a great business. If you try for several but don’t nail one, you’re finished.”
This reminds me of when I first started in internet marketing, I was trying to do SEO, PPC, YouTube marketing and social media marketing. As you can expect I could not dedicate enough time to any single task and saw no real improvement so I decided to focus all of my energy into just one.
Last update on 2017-04-30 / Affiliate links / Images from Amazon Product Advertising API