After cofounding PayPal and then selling it for billions to eBay, Peter is on a mission to find and invest in companies that have the potential to become really big. He also wants to understand what forces are responsible for the growth of some companies from nothing to billions of dollars.
He asks two questions throughout the book: why do some companies create value and grow so rapidly? And how do you build more of these kinds of companies?
Many of us take for granted companies like PayPal, eBay or Airbnb. But even with all their faults, they became mega-successful because they allowed us to do things that we couldn’t do before.
Before eBay, it wasn’t easy to sell something you owned to someone who wanted to buy it at a discount. Before PayPal, sending money to another person was a tedious and confusing task. Today, selling anything to anyone and securely collecting money for it is done with a few mouse clicks.
eBay, PayPal, Airbnb and similar companies became “overnight” successes for one reason only: they built a marketplace that enabled many people around the world to connect and transact things in ways they couldn’t do before.
When a company transforms from essentially nothing to a service that people can’t imagine living without, that company goes from “zero to one.”
One day, booking an apartment in Moscow from your San Francisco house is a tedious and confusing process, the next day it’s as easy as ordering from your local Domino’s Pizza.
One day, you’re dreading a trip to Bogota, Colombia because you’re afraid of taking a random taxi from the airport to your hotel. The next day, hailing a taxi in a foreign country is as simple and secure as as ordering a Big Mac at your local McDonalds.
I remember how nervous I was ten years ago when I was boarding a flight from Mexico City to Bogota, Colombia. Back then Colombia wasn’t a country many people visited so I was nervous about the visit. But the most frightful thing was needing to trust some random taxi driver to deliver me safely to my hostel.
That’s no longer an issue thanks to companies like Uber. Taking a taxi in Bogota, Bali or Kuala Lumpur is as simple as taking one to your home in San Francisco or New York.
As a result of commoditizing taxi services around the world and instilling trust with it, Uber grew from zero to one of the most valuable private companies in the world.
Going from zero to infinity
This “zero to one” is one of the most powerful forces in the universe. It’s also not just applicable to a few lucky startups. It automatically comes into play the moment you begin interacting with lots and lots of people, like selling a products or services to a large market.
This law is also one of the biggest—if not the biggest—perks of being an entrepreneur and doesn’t apply when you’re creating fixed value for someone else as an employee.
As many of you know, I was a software developer in my former life. I spent around a decade in Silicon Valley, where I worked for all kinds of companies, big and small.
My daily routine was to come into an office, sit at my desk and punch different symbols on the keyboard. These instructions were later interpreted and processed by the computer to hopefully do meaningful things.
Sure, I built all kinds of apps that were used by millions of people. It felt great being able to affect so many people’s lives.
The problem was that I wasn’t compensated in direct proportion to how many people were using this software. I was only compensated by the number of hours I was working — and not by how many people were getting value from my work.
I was not going from “zero to one.” I was simply stuck at “zero.”
All of that changed when began building businesses. While I enjoy wearing lots of hats, one of the most enjoyable parts of my work is marketing. I run different campaigns on a daily basis. These campaigns promote different products and services. Each campaign also has a clearly defined objective.
Although each campaign has lots of different numbers associated with it, I only pay attention to one number in one column. It’s the only number that signifies whether this particular campaign will make me rich or will bankrupt me if I don’t turn it off quickly.
It’s a number that has a direct influence on my happiness and well-being. If the number is high, it means I’m making good money and life is good. If the number is low, it means I’m doing something wrong and would need to fix it before I go completely broke.
It’s a number that forced me to become a numbers guy for the first time in my life—and I’ve always hated and sucked at math. It’s the first number that I look at in the morning and the last number that I check before going to sleep.
It’s the only number that really matters because it’s the only number that signifies if I’m on track to go from zero to one.
That number is called ROI, which stands for return on investment.
ROI is everything. If it’s reasonably high, it means I’m making more money than I’m putting in. If it’s low, it means I’m making less money than I’m putting in. It’s a simple process of money in, money out.
Life is a series of campaigns
In many ways, this little number is above and beyond money or campaigns or marketing. At the core, it’s a representation of value.
First, it immediately tells you the relationship between the value you’re putting in and the value you’re getting back in return. It quantifies your time and energy.
Second—and this is very important—it’s a number that can be controlled and optimized. It’s not a variable that’s edged in stone; you can tweak and improve it. Imagine having the ability to fine-tune your own engine for maximum performance. If you properly tune it, you will create wealth and enjoy a much higher standard of living. If you neglect it, then all of your time and energy on that particular endeavor is wasted.
Not everyone has access to this powerful number. In fact, most people don’t even know it exists. For the 99% of the people on this planet who have regular 9-5 jobs, there’s a 1:1 relationship between their work and compensation, between their input and output. Their ROI is fixed and will remain fixed for the rest of their lives.
A typical person goes to work, does a bunch of tasks and then goes home. In exchange, they receive a compensation in the form of money. This compensation is static; it’s the same regardless if they shuffled a bunch of papers for three hours or built a product or service that improved the lives of billions of people.
When I worked at a software company, I worked for eight hours (usually more during product launches) and received a fix compensation. It didn’t matter that the software I built was used by hundreds of people in one city or millions of people in over 100+ countries, the salary that was deposited into my bank account was always the same.
That’s because a job has a static return on your time invested: hours worked = money made.
On the other hand, a business has variable returns on your time invested: hours worked = money made x variable (ROI).
A jobs have a direct relationship with value. A business have an exponential relationship with value.
Risk and reward
Entrepreneurship is not without risk. Most businesses fail. That’s a fact of life. It happens because the world is always busy optimizing for maximum returns.
Can you imagine living in a world if everything everyone did automatically resulted in exponential growth? If you started selling a product tomorrow and immediately began making $100 for every $10 spent? If you started an online business and made $100,000 in the first hour? Regardless if your product sucked and you had no idea how to build a business?
That’s precisely why it’s completely normal to fail when you first start. When you start, you don’t know what you’re doing. You’re entering an uncharted terrain and you don’t have the data and knowledge to know what works and what doesn’t. And without this data and knowledge, you can’t optimize that special number for anything, much less for exponential, life-changing returns.
After you do things for a while, you obtain valuable data that tells you what’s working and what isn’t. That allows you can make proper adjustments and just focus on what’s working. That’s how you isolate, optimize and ultimately figure out what truly works and what doesn’t.
That’s also why starting a business comes with a steep learning curve. The steep part represents the time spent learning when you have zero previous knowledge and experience. It’s there because when you’re starting out, you’re operating blind and learning what works and what doesn’t. It’s very painful and frustrating.
Then, once you climb it, the process reverses: you’re putting in increasingly less effort and enjoying more and more positive returns. In fact, the steeper the learning curve, the greater the potential for amazing returns.
That explains why people who can make $100/mo can easily make $1,000/mo and beyond. They’ve already gone through the frustrating period of learning what works and doesn’t. Once there, they threw out what didn’t work. The rest is about careful optimizing and scaling.
Choosing the right path
Entrepreneurship is a fancy word, but what it really boils down to is choosing a path in life that has the greatest potential to give you life-changing returns. It’s a contract you make with yourself where you give up a bit of stability and comfort for risk and unknown and possible high returns down the road.
Companies like eBay, PayPal, Uber, Dropbox just to name a few didn’t start out successful. In the initial stages, they underwent periods of experimentation where they learned what worked and didn’t. Then, once they figured out what kind of services people needed, they built and sold them and the rest is history.
The same applies to regular entrepreneurs and hustlers. Once you embark on the path of building and selling your own products and services, you will have a new arsenal of tools at your disposal. One of these will be ROI. It will be like a pulse, representing the how your value is affecting the people you’re trying to reach. Congrats, you now have a lever that you can ruthlessly optimize and get many times more output than you’re putting in.
The only other alternative is having a stable drip of income deposited into your bank account on a set schedule. There’s no experimentation, no optimization and no hustle. Indeed, that’s a preferred path for the overwhelming majority of the population.
But for those who want a bit more out of life and don’t mind tinkering with how their value is created, consumed and leveraged, there exists a different path. This is the path where large fortunes are made every hour of every day. That is, if one is willing to take their own life into their hands and ruthlessly optimize it for maximum performance instead of mindlessly cruising their entire lives on meaningless autopilot.
Call me a masochist but I’ve always seemed to choose the hard way when embarking on any mission, whether it’s building a new business, learning a new language or completing some other ambitious task. Although I’ve heard of others finding an easy way or shortcut, I’ve rarely experienced this myself. Today, I want to teach you my mindset of approaching, embarking and conquering even the most difficult challenges.
First, let’s define the word “success.” I define success as a point in your endeavor where each addition (marginal) effort you make results in a much greater output. For instance, if you’re running a successful business, you no longer need to frantically hustle 24-7 trying different things, you simply need to work several hours per day and the business will not only continue working on autopilot but will keep growing. This is very different when you’re just starting the business because all your efforts and energy is employed on figuring out what works and finding traction.
This concept is applicable to any endeavor. If you’re learning a foreign language, the first few weeks (and months) must be spent on merely learning how to read (if the alphabet is different) and memorizing very simple words and phrases. After you’ve built the base, things get a lot easier because you can leverage what you’ve learned to absorb more and more stuff.
Thus, if I’m learning Japanese, and I’ve learned enough where I’m at a point where I can have a very basic conversation with a local, it’ll be a lot easier to learn more phrases and expressions. That’s not the case when I’m starting at zero and must spend all my time memorizing Japanese characters before I can even learn the words such as “Hello” or “Thank you.”
In other words, regardless of the endeavor, there are startup costs that must be factored in before you start seeing any return on your effort.
This stage is the toughest mentally. Most people quit here. More people usually quit before their new business gains their first customers compared to the number of people who quit while trying to scale their business from $5,000/mo to $50,000/mo.
More people quit learning Russian before they could string basic phrases together compared to people who’ve quit after they were able to have a conversation but got discouraged because they couldn’t read Leo Tolstoy’s War and Piece.
The first rule of overcoming this hurdle is to have realistic expectations. From my experience, I’ve noticed that many people have very unrealistic expectations. A few years ago, a student applied to my mentoring program. When I asked him what he wanted to achieve, he replied that he wants to make $500/day within a month and move to Bali. Oh, and he also had zero business experience.
Here’s a perfect example of unrealistic expectations. Of course, people do make that much online (I have good friends that make much more), but they certainly didn’t get to those numbers overnight. It took them months/years of trial and error to get there.
When learning a foreign language, an unrealistic expectation is becoming super fluent in a week or a month. While you can certainly become conversational in a month or two (or less, depending on the language), becoming fluent will take much longer because fluency means knowing everything in the language and you simply can’t learn all aspects of a foreign language is a month. There aren’t enough hours to do it. Unless you completely suspend any notion of reality, you simply can’t learn what took someone 20 or 30 years to learn in a space of just few months.
Having unrealistic expectations dooms from you the start. You give up much quicker because you feel that anything short of making $500/day or learning fluent Chinese in a month means you’re an utter failure. That’s absolutely the wrong mindset.
The key is to start with healthy realistic expectations. When it comes to building an online biz, a realistic expectation would be to make something like $30-50/day. That’s absolutely doable and you can build a game plan for achieving that.
If your objective is to learn a foreign language, a good milestone would be to hold a 3-minute conversation with a native speaker. That doesn’t require advanced knowledge so you can achieve this level fairly quickly.
When I moved to Brazil years ago, my goal was to learn Portuguese. I actually couldn’t care less about was fluency; I just wanted to have conversations with locals. I achieved that objective in a couple of months. Sure, my Portuguese is not “fluent”; but it’s a lot easier to become “fluent” now that I’m conversational than if my goal was “fluency or bust” from the start.
The base belief
Although there are people who have unrealistic goals and the blind confidence that they will achieve these goals tomorrow morning, there are also people who don’t believe that something is possible because of low-esteem or other factors.
Let’s clear the air here. It’s 2018. The Internet is over 20 years old, and people still ask questions like “Is it possible to make online?” to “Do Google Ads work?” to “I heard Facebook Advertising doesn’t work” to “Do blogs make money?”
I used to entertain these questions. No longer. The way I see it, these questions are philosophical in nature. If you’re a philosopher and you want to discuss the meaning of life or existentialism, that’s great, but I’m not a philosopher—I’m here to help you build a business.
Before you start any endeavor, you need a certain amount of base belief. If you move to Japan, you must believe that you will be able to learn conversational Japanese. If you move to the Middle East, you must believe that you’ll be able to learn conversational Arabic.
Similarly, if you’re starting a business or learning online marketing, you must believe that you’ll eventually build that business and learn marketing. You must believe that you’ll eventually get the hang of Facebook advertising, Google Adwords or something else, and start to make $30-50/day consistently—at least at the start.
This is an absolute must. It’s not negotiable. I don’t care who you are or your past failures, but you must absolutely know in your gut that with enough time and perseverance, you’ll get to a point where you’ll achieve a certain level of success. You don’t need to become a millionaire overnight, but you must know that you will at least make something online.
Now, if you’re someone who read the above and immediately countered, “But James! I don’t know about that—9/10 businesses fail,” I’m sorry but you’ve failed the test. You need to do some introspection and fix your mindset (or find another website).
Let’s imagine you’re building an online store. You know nothing about building an online store. You know nothing about marketing. You know nothing about websites or tools or WordPress plugins. You know nothing about sales funnels. That’s fine. All of that is secondary. At the very least, you must at least know that someone out there will give you some money for your product one way or another. That’s your base belief.
Or, let’s say you had to pack up everything and move to China tomorrow (I’ve actually been thinking about visiting China for a while). You also know that you would need to learn Chinese. Well, you must absolutely know that you will at least become somewhat conversational in Chinese. It might be the crappiest Chinese in the world, but you must know deep in your gut that will string some Chinese words together and the other person will at least understand you. Remember, we’re not talking about fluency in any way, shape or form.
This is one of the most important things to internalize. Everything starts from here. If you don’t have this minimal level of this base belief, don’t even bother starting.
One of my first businesses was selling physical products on eBay back in 2005. My background was mostly in selling digital products and advertising, so I had zero experience selling physical products. But I saw a product that was selling well, imported it from China and listed it on eBay. The result: I was profitable from day one. Even before I started, I knew I would succeed one way or another. I didn’t care about making millions, I just wanted to make few bucks and grow from there.
The next rule with becoming successful is that you must be absolutely obsessive about it. This is also not negotiable. You must feel that you have to succeed at all costs (within limits, of course).
Forget motivation. Forget some fuzzy feeling of happiness or whatever the hell that even means. None of that matters. What matters is your absolute determination to crack the puzzle. And to crack the puzzle, it’s not enough to treat it as some hobby that you do in your spare time like that 200-page book you’ve been “reading” for a year.
It needs to become a central focus in your life. I don’t want to say it must consume your life, but that’s a good way of putting it. The more obsessed you are, the faster you will succeed. I will go a step further and say that if you’re truly obsessed with succeeding, it’s not really a question of “if”—it’s a question of “when.”
One way to become obsessed is to want it bad enough. You must be in such state of pain that you simply must do something—anything—to change it. Ten years ago, I wanted desperately to leave the Bay Area and move to Brazil. The only way to do that was to build a side business to finance that lifestyle. Casey Neistat, in one of his videos, mentioned that his drive to succeed came from hating his life (he was living in a trailer park and working two jobs).
One of the guys I’m currently mentoring hates his current country and wants to move abroad. It’s this rebellion against his current situation that will eventually propel him to succeed. Nobody has ever succeeded by reading a business book while being completely comfortable with everything in their life.
Brute forcing success
There are several ways to speed up this grind. Money is one way. Money buys time. When you have money at your disposal, you’re able to buy experts, buy data, buy people and pretty much anything else. This will allow you get results quicker.
Of course, if you had a million dollars at your disposal, you wouldn’t be reading this article and following this path because you most likely have a competitive advantage that you can exploit.
If you’re starting from scratch, you really can’t buy time and expertise, so your only option is to grind it out. And to do that you must “brute force” success.
If you’re not familiar with this term, it means trying everything until you get the outcome you want. Brute forcing a combination lock means trying to open the lock by trying every possible combination. It’s the complete opposite of finding shortcuts or tips. It’s also the complete opposite of having a certain view of the world and believing certain things work while others do not.
Optimizing your efforts
The problem with brute force is that you can’t brute force everything simultaneously. Unlike a simple combination lock, your endeavor probably has many moving pieces and many “combinations” to get right. You must pick your battles. Thus, it’s important to focus on one objective at a time and only move to the next objective once the previous one has been solved. This forces you to focus on what’s important and remove everything else.
For instance, let’s say you just moved to Brazil and started learning Portuguese. The primary objective here is to become conversational. This main objective can be broken down into various phases. The first phase might be to learn conversational words and understand at least 10-20% of daily conversations.
In order to get to the 20% point, you write down every word that you don’t understand. Then, at the end of each day, you look all of them up and memorize their translations. You keep doing that every day until you understand about 20% of the spoken language.
Once you reach that phase, the next phase becomes understanding 50% of spoken speech. Daisy chaining these phases helps you to get from zero to your main objective in a controlled and predictable manner.
When it comes to making money, your objective could be to make $100/mo. But if you break it down into various phases, you can attack this problem in a predictable and sequential matter. The first phase might be to pick a good product. The second phase might be to get engagement from the audience. The third phase might be to market to that audience more efficiently. And so on.
The currency of hustle
When you’re grinding it out and brute forcing success, it’s very difficult to know whether what you’re doing is moving you closer to your goals or not. You need metrics. You need data. You need an effective feedback loop.
There’s a currency at play here. This currency informs you whether you’re on the right path or just wasting time. It’s not money. It’s also not time. It’s shipping. The faster you create, the faster you make things, and the faster you put them out into the world to see, the faster you learn what works or doesn’t work.
The opposite of shipping is perfection. At this stage, perfection is your worst enemy. I’m not saying that perfection is necessarily a bad thing. It’s good practice to create high-quality products, but you have to know what the product or service is first. When you’re trying to find your beachhead in a crowded market, your job is to make something; perfection can wait until later.
If you’re brute forcing success, forget perfection. Nobody cares about it. I’m more than certain that your customers don’t. All they care about is whether what you’re creating solves their problems and makes their lives a little bit more comfortable and better off.
Hustle dream team
Last but not least, even if you internalize everything above, it’s important to surround yourself with people who can push you. Surrounding yourself with people who make shit happen helps exponentially. After all, it’s true what they say: you’re really the average of the five people you interact with. This has been an integral part of my success.
I’ve been fortunate because back during my college years I accidentally became involved with very successful guys who got a lot done. They worked hard, build lots of products and essentially printed money. Although we don’t really keep in touch anymore, merely seeing them work so hard and achieve so much in such a short period of time truly opened my eyes to what’s really possible.
I can certainly tell you that it’s one thing to talk about making some “bucket list,” writing down your goals, or saying that you’ll launch this or that “this year,” but it’s entirely a different thing to witness a bunch of guys accomplishes a month’s worth of tasks in one day with your own eyes. That’s what I call compressing time.
If you can’t physically surround yourself with winners, the next best step is to join an online community where people are making moves. Although I’m part of several online communities, there’s only one (a paid mastermind community) that comes somewhat close to being physically surrounded by hustlers.
Most importantly, you must enjoy the ride. There’s hardly a point of suffering through what might seem an endless tunnel when all you’re looking forward is the tropical ending. Whenever I embark on a new venture or project, I view it as a puzzle that must be cracked—at all costs. I actually enjoy the ride.
I also know that if I keep tinkering with the moving pieces, I’ll eventually stumble on the right combination that will pay exponential dividends for the rest of my life and also serve as a jumping point for the next challenge.
Humans tend to overcomplicate things and making money is certainly on top of the list. But it’s not rocket science. Generally, you have two options: build your business or work for someone else’s business. Either you create value or help someone else create value. Those two paths summarize my early years. When I was in my teens and twenties, I alternated between running my own businesses and helping someone else run theirs.
Blogging is a different beast. I started mine completely by accident. Mostly out of sheer curiosity and boredom. It was sometime in 2009, and I was living in a small apartment in Rio de Janeiro’s colorful Copacabana neighborhood. I was living alone. I was lonely and bored. Naturally, I figured sharing my thoughts on the Internet would help me connect who were in a similar situation. Making money with my blog was the absolute last thing on my mind.
Over the years, I kept working on these two interests in parallel. I kept writing about my experiences in Brazil. I also kept building different businesses. Gradually, both things started to grow. My blog started to attract more and more readership. My businesses started to generate more money.
Then, one day, something unexpected happened. I had just returned back to my apartment after a morning swim in the Atlantic Ocean. I opened my laptop and loaded my favorite email client. There was an email waiting for me from an unrecognized sender.
The email was short and straight to the point.
“Hi James, I really enjoy your blog. I’d love to schedule a call with you over Skype. I will pay you for your time.”
I thought it over and agreed. Moments later, I received the payment. Few days later, I advised him on a specific issue he was having. (We quickly became good friends and still keep in regular contact after all these years.)
“That was interesting,” I remember thinking myself. “Someone agreed to pay me for my words and thoughts, for my bits and zeroes that I had plastered all over the Internet.”
“I finally monetized my blog,” I thought to myself.
I was wrong. There was no moment. There was no epiphany. Nothing really happened.
What I didn’t realize is that I didn’t just start ”monetizing” my blog the moment someone paid for my services. I was ”monetizing” my blog the entire time. While I wasn’t being paid directly, I was being paid in another commodity: attention. People discovered my content and found it useful enough to continue reading instead of doing something else with their time.
Attention is a much more important commodity than money. If you can capture someone’s attention, money will soon follow.
The whole notion of monetizing anything is misguided. You don’t “monetize” anything—you either provide value or you don’t. A table that I’m typing this article on right now provides me with value. So is the laptop that helps me craft my thoughts and convert them into zeroes and ones so that I can shuttle them onto the Internet for all of you to see. Then there’s my apartment that’s keeping me warm and safe from all the predators so that I can live long enough to hit the “Publish” button.
All of these things provide value. That’s why I purchased them and own them. That’s why the person or company who created these products or services are duly rewarded with my money.
Of course, the things I mentioned above are all physical products. Blogs are not. They are digital products. And, as it happens to be, words and thoughts are much more powerful than the chair, the table or even my apartment.
Blogs are personal communication mediums. And communication mediums are an extremely powerful way to connect with people. Instead of having some end product that you can touch and feel, words and thoughts are the atoms, the building blocks of life. They can influence emotions and get people to think in a radically different way.
That’s because humans are irrational and emotional beings so thoughts, feelings and ideas always come first. Physical products evolve later.
Writing is like having your own virtual factory from which you can produce anything in the world. If you write about travel, you take the reader on a journey to some distant and mysterious land. If you write about productivity, you help the reader master their time and achieve more. If you write about different tables and how each can help become more creative or more productive, you help the reader choose the right one for their unique situation.
Before I went to Bali for the first time last year, I had no idea where it even was (pretty embarrassing for a geography nut like myself). I had no idea that it was a true tropical paradise on earth. I had no idea that it would be one of the most amazing places in the world to visit and live.
So, I immediately did what I always do when I don’t understand something: I began educating myself. I found a couple of good Bali blogs. I started learning more about this region of the world.
Most importantly, I studied how this region of the world can benefit me, and what I was looking for in a vacation destination. There are plenty of amazing places in the world. But that doesn’t mean I’d like to go to Siberia, Tierra del Fuego or the Galapagos Islands. While all of them are interesting in their own right, I had just spent a freezing winter in Eastern Europe and the only thing on my mind was sun and relaxation. Siberia was out. Tierra del Fuego was out. Galapagos islands, maybe next year. Bali was the overwhelming winner.
Two days later, I bought a one-way ticket to Bali. Two weeks later, I had rented a scooter and was busy exploring this amazing island. I stayed for an entire three months and can’t wait to go back. None of that would’ve happened if someone didn’t educate me on this amazing country by helping me see how it was the perfect solution to the winter dread I was experiencing through the use of their crafty use of words on their blog.
David Ogilvy, one of the most successful copyrighters and advertisers, once said that if you can write a good copy, you can print money. I couldn’t agree more. I would even take it a step further and say that if you can write anything well, you’re monetizing your very own words.
Naturally, when people think about “monetizing” their blog, they start thinking about all the products they can create, whether it’s some eBook, a course, or something else. That’s the obvious path because people just want answers handed to them on a silver platter.
Unfortunately, they’re missing the forest from the trees. It doesn’t matter what “premium” product you create, whether it takes the form of a book, video or a workshop. Everyone can do that. You can outsource book publishing and course creation to some guy in Bangladesh or Jakarta. You can outsource software creation to some guy in Kiev or Minsk. You can outsource article writing on any topic under the sun to anyone in the world who can stitch two English words together. The problem is that if everyone can do it—and they can—the end result becomes a commodity. Commodities aren’t worth much.
But you can’t outsource thoughts and ideas. You can’t outsource original value. You can’t outsource your experience of living in another country while struggling to learn the local language in order to integrate yourself into the confusing culture. You can’t outsource failing for the twelfth time and finally succeeding on the thirteenth with a business that finally gets traction. You can’t outsource helping someone overcome procrastination and laziness so they can finish their first book, the one they’ve been putting off for twenty years. You can’t outsource helping someone quit their shitty 9-5 job and allow them to discover true freedom. You can’t source the pain, the suffering, the triumph, the jubilation. You can’t outsource making a person feel one way one moment and then something completely different another moment.
Monetizing products is about demonstrating how they will benefit someone. Monetizing words is about making someone feel something. Whether it’s getting someone to buy a one-way ticket to Bali, or getting someone off Facebook so they can finish an important task first. The person must impact someone. They must be able to connect to those words in a profound and meaningful way. They must want to take action.
If you can’t do that, then none of that matters. In that case, you might as well sell me a finished product that serves a specific purpose like a nice table or a comfortable chair, and let someone else’s words, thoughts and ideas inspire, motivate and ultimately affect me in ways I didn’t think were possible.
I recently decided to expand the way I spread my message by creating various videos on YouTube. After all, if a picture is worth a thousand words, a video must be worth a million words. So far, I’m enjoying the journey and plan on creating different content and different channels.
Spending lots of time on YouTube while viewing all kinds of interesting content has allowed me to discover creators that I wouldn’t have discovered any other way. The majority of these creators don’t have their own blog or any other channel (or at least don’t market them on their channels), so their main presence is exclusively on YouTube. Many of them aren’t selling their own products either; they’re creating videos for fun. Nevertheless, one nice thing about a huge platform such as YouTube is that there’s an automatic way of making money: become a YouTube partner.
Earning money with YouTube is simple. Make a video, toggle the setting so the ads appear and wait for the money to come in. Advertisers pay Google/YouTube for the ads to be shown, Google keeps a portion and the rest goes back to the video creator.
It’s a win/win for everyone, especially for people who’re starting from scratch. That means you don’t need to spend years building out the brand and then creating products; advertisers simply pay per video views, regardless if the channel has 1,000 subscribers or 1 million. Naturally, the more people see your videos, the more money you make. (Although, because advertising is based on supply and demand, the amount you per view is largely dependent on what kind of content you have.)
Of course, that doesn’t mean you’ll become automatically rich. First of all, if you don’t have a large following, the amount of money you’ll make will be very little. It takes a relatively decent audience (typically, more than 5-10k subscribers) to see a steady income that can cover your cable bill.
The second problem is much bigger and negates the benefits provided above. It’s the fact that you’re using YouTube’s platform for your content instead of building on your own platform.
When you create your own content and then host it on another platform, your content is governed by the platform’s rules. This forces you to abide by the platform’s rules. The first issue is that you give up some of those rights to the content. The second issue is that you’re dictated a certain way to make money and no other way.
you have to blog on your own domain. medium, facebook, linkedin, huffpo will do what are in their interests, not yours. i have been doing it every day for 15 years this year. feels great to own my archive, my brand, my content, myself.
So, if you create the best videos in the world and put them on YouTube, you can no longer charge whatever you want for them.
Last week, YouTube introduced a new monetization policy. Starting next month, people with less than 1,000 subscribers and 4,000 hours of views will no longer be able to monetize their videos. Once you reach those thresholds, you can reapply to the program for a chance to be able to show ads on your videos and get a portion of the profits.
This announcement affected thousands and even millions of creators out there. Although creators that don’t meet those thresholds weren’t making much money to begin with, it still signaled that YouTube was becoming more picky about the videos it wanted to be associated with.
But, mostly, this was a signal of something much more important: YouTube is now more concerned with its advertisers than with its up-and-coming creators. YouTube had grown up. Not everyone was automatically welcomed to its gated garden. And if you want to be part of the club, you need to go through strict checks. It’s like going through face control at a posh club instead of a cozy coffee shop that’s open to everyone.
This underlines something I’ve been talking for a long: it’s very risky to build important things on someone else’s platform. You’re building a dream house on a land you don’t own. Thus, you could have the most amazing content, but you’ll always be rewarded according to the most common denominator: in this case, specific ad rates that advertisers negotiate with Google, YouTube’s parent company.
Own the platform
Building your dream house on a land you don’t own is always a poor business strategy unless you make a little tweak: build that dream house on a land you do own. That means owning the platform.
Creating your own platform should be the cornerstone of any business, especially online businesses. I’m no exception. My own platform is Maverick Traveler (and some of the other sites I own). This is where all my content resides. This way I’m in absolute full control of the content I create, how I choose to present it to my readers, and how I monetize my products and services.
When you create content on another platform or channel, you’re powerless to do anything if those platform’s owners deem it unsatisfactory for their audience. If they don’t like you or your channel, they can flick a switch and make you disappear. That will destroy years of hard work and eliminate any revenue.
But when you own that platform, nothing like that can happen. Unless you screw up technically and delete your own site (and there’s backup for that), your site and your brand (along with your products and services) will always be online, 24/7, 365 days per year.
One of the side-effects of building on your own platform is that you’re forced to think through difficult problems. First of all, you need to decide what your brand is all about. If you’re just creating random stuff on YouTube or Instagram, you don’t really need a specific strategy; you can create random videos or post random pictures, but when you create your own platform, there needs to be a unified theme that generates serves a specific objective.
Creating and uploading a video to huge platforms like YouTube is straightforward because YouTube is an already establishment video platform, a problem that was solved when the company was being built. There’s also no discovery problem because your video is simply a search away from the site’s visitors.
On the other hand, when you create a brand tomorrow on your own server, nobody will know about it. Thus, you need to worry about how others will discover it and why what you do will be relevant to them. It’s much better to solve these problems in the beginning than after five years of fruitless labor where you’ve created lots of videos or written many articles but nobody knows who you are.
Leveraging other platforms
While it’s critically important to build your own platform, don’t simply discount other platforms. They have their uses as well. In fact, the best strategy is a hybrid one where you cultivate your own platform and leverage the other platforms to spread your message.
For instance, you can have a main authority site or a personal brand that hosts your articles and other types of content. And then you can use other platforms for spreading that message. It’s a strategy I’ve been using for more than a decade for great results. My main site is hosted here along with all the articles I’ve ever written. But, I also leverage other platforms, like YouTube for reaching new types of audiences.
To be sure, building your own platform requires an initial investment. You must provision a server to host your own content. You must design and build a site. Build products and services. Do marketing and customer acquisition.
But, all of this is something must do anyway in order to be successful. It’s not a question of “if” these questions need to be addressed—it’s a question of “when.” And, it’s much better to address those issues now while your brand is evolving, and you have an array of options than in some distant future when your brand has matured and your options are much more limited.
Disclaimer: this article is not financial or tax-based advice and should not be taken as such. I’m just sharing with you things I learned while researching taxes and other financial matters.
For most of my life, taxes were a complete mystery. That was fine because I never needed to worry about them. I was either employed by others or made too little on my own, so doing them myself or using a piece of software usually sufficed. Then, as my income rose over time, I simply hired an accountant to solve this problem. In both cases, I was successfully shielded from needing to understand this important part of any business.
Until now. Late last year, I partnered with another entrepreneur on a new business. For this company, we decided to incorporate it not in US—where we’re both from—but in another country, mostly because of better legal protection and lower taxes. This was a wise decision. This decision also prompted me to finally understand taxes on a much higher level.
In the simplest sense, taxes are a way for governments to take a cut of the action. It’s a form of exchange. Governments provide basic services such as police and paved roads so that you can get to work and build businesses and, in exchange, you give them a percentage of your salary or profits.
There are all kinds of different taxes, and to complicate things even further, the specific cut the government will get depends on the entity that’s being taxed.
Individuals are taxed differently from corporations. Different corporate structures are also taxed differently. So, if you’re operating as an individual, you will pay taxes at a particular rate, and if you’re a corporation, you will pay taxes under a different rate.
To complicate things further, each country, state, and other jurisdictions have specific tax rates. In America, individuals are taxed on a sliding rate that varies anywhere from as little as 10% to as high as 39%. The American tax rate for corporations is a fixed 39.1%, making it one of the highest in the world.
Most companies typically don’t pay those rates because as a business you have perks like deductions and credits, which allow you to lower your taxable income by “deducing” things like business expenses and other items, things that aren’t available to individuals or employees.
Taxes get more interesting (and complicated) when you become a global citizen. Usually, moving overseas exempts you from paying taxes in your former country. For example, if you’re a Canadian citizen and move to China, you no longer need to pay Canadian authorities a part of your income, regardless where that income is coming from. (Although depending on your status in China, you may be liable to pay taxes there.)
If a country stops taxing you when you move out, the country implements something called a “residence-based taxation.” Only the residents of the country are taxed. Germany is an example of a country with residence-based taxation. Anyone who’s a resident of Germany—regardless whether they’re a citizen or not—is liable to pay taxes in Germany. This means if you move abroad, you no longer need to pay taxes there.
Many countries around the world are like this. Canadian residents citizens only need to pay taxes if they live in Canada. Danish residents and citizens only need to pay taxes if they live in Denmark. If they move abroad—or remain abroad for the majority of the year (usually more than six months, but depends on the country), they’re essentially exempt from paying taxes in that country while still remaining to be the country’s citizens.
Another type of taxation is called “territorial-based taxation.” In countries that implement this system, you have to pay taxes only on the income that originates from inside the country. So, if you’re living in a country like Georgia (Republic of Georgia, not the US state)—a country with territorial-based taxation—you’ll only have to pay taxes if the source of your income is inside Georgia.
Territorial-based taxation is great because you can leave a country with residence-based taxation that taxes everyone who lives there and move to a country that only taxes local income. It’s specifically advantageous to nomadic entrepreneurs who most of their income from customers in other countries and, thus, don’t need to pay taxes on this income.
Finally, there are also countries that don’t have any income taxes whatsoever like Dubai or Bahamas. It doesn’t matter if you’re a citizen or a resident. It also doesn’t matter whether your income comes from inside the country or outside. No taxes means no taxes.
Unfortunately, the only people that can’t take advantage of the different tax systems abroad are American citizens. America is the only country in the world which taxes its citizens (and permanent residents) on their worldwide income—regardless if they reside in America or somewhere else. Americans must file their taxes every year even if they’ve been living abroad for the last decade (or more). That’s because American tax system is based on something called “citizenship-based taxation.” As long as you’re an American citizen, you must file your taxes yearly.
Fortunately, being nomadic offers many advantages even to American citizens. The first is the double-taxation treaties. American tax authorities (like most other countries) perfectly understand the fact that other countries may tax you because you’re living and work there. Thus, the amount that you pay elsewhere is used to offset your tax obligation in America. For example, if you’re living and working in Denmark (a country with resident-based taxation) and paying taxes there, that money you pay to Denmark’s tax authorities is used to offset the money may need to pay American tax authorities. That makes sense, otherwise, you’d be paying taxes twice on the same income.
For American citizens, the other nice perk of living abroad is that you’re granted with huge exemption that reduces your taxable income. As an American taxpayer, you’re granted an exclusion (the first $100,000+, it’s adjusted yearly for inflation) if you’re not living in America. So, if you’re not present in the US for around eleven months out of the year, you can use this exclusion to reduce your overall tax bill.
While it’s certainly not the same as not needing to pay any taxes when you move out, it greatly reduces your tax bill if you’re traveling around the world and not really living in America. There’s little reason to pay for things like government services when you’re not in the country to take advantage of them. That partly explains why lots of American location-independent nomads limit how much time they spend in America to less than a month per year.
All of these different taxation systems are options that you can leverage once you unchain yourself and embrace the freedom to live and work anywhere in the world. Once you’re not tied to a particular country, you’re free to live in a low tax country or even in a country without any taxes.
The holy grail of legally lowering your taxes is by mixing and matching the right countries and their requirements for becoming a tax resident. Although American citizens must file (and possibly pay) their taxes regardless where in the world they are, living outside the country can significantly reduce your the amount of taxes you’ll need to pay to Uncle Sam.
Things get really interesting when you get into more advanced stuff such as forming a foreign company and becoming an employee of that company. This allows you to do even more interesting tax and legal optimizations.
What was once a boring and mundane topic, taxes and legal planning are gradually becoming an integral part of my overall nomadic strategy as I’m traveling around the world and looking at countries with not only a pleasant quality of living but also ones that aren’t burdened with high taxes and ineffective legal frameworks. After all, taxes are important. And while you don’t need to become a tax attorney, having a basic understanding of different tax systems will help a great deal. Or, as one wise man once eloquently said: “In this world, nothing can be said to be certain, except death and taxes.”
For a good portion of the past year, I’ve been busy working on a new book. Unlike my previous books which were mostly about mindset and self-improvement, this one will be primarily about travel, location-independence and entrepreneurship.
The objective of the book is to show you how to travel and build businesses around your passions and interests. The first part of the book is all about travel: where to go, where to not go, how to meet like-minded people, how to establish a productive routine (super important on the road), and how to pickup foreign languages very quickly. Plus a lot of my cool travel hacks that I’ve picked up over the years. You’ll find these applicable regardless if you’re looking to backpack around the world or simply move to another country for several months.
The other part of the book is about my passion, which is building agile businesses in areas that I’m interested in. In the book, I spent time talking about background story behind my business ideas and very quick ways of testing and implementing them. I talk about some of the motivations behind each idea, expectations for the project and how it all went happened.
While I’ve written several books before, this should’ve been my first book because it perfectly captures the essence of the brand and everything I stand for: a junction of entrepreneurship and freedom.
Although I feel like I’ve included everything that I wanted to cover in the book so far, I would like to ask you what kind of information you’d find valuable.
For instance, the other day, I was chatting with a long-term reader and he mentioned he’d like to see more travel stories.
What about you? What kind of things do you want to see in the new book? What kind of things do you want me to cover? What kind of things should I omit?
Travel stories? Living experiences? Business building? Mindset?