Making Vertical Progress in your Work

Horizontal Progress: is the act of copying things that already work

For example: if you take a typewriter and build 100 typewriters to sell because they are popular, this is making horizontal progress in business

• Mass Competition

• Prices are set and competitive

• No real potential for a creative monopoly

Vertical Progress: is the act of creating or doing new things ( typically in a business format )

For Example: If you take the same popular typewriters and make a word processor for them, you have now created something new and innovative

• No competition

• The innovator sets prices

• Potential for a creative monopoly

These forms of progress are important in the startup world but provide value in other aspects of work.

For example: being a day trader there isn’t much vertical progress it seems to make as it is not a business, yet you can turn it into one.

Vertical Progress in this example:

• Creating new and interesting forms of content on how to trade

• Creating an AI tool that can trade for you/give trade insights etc.

• Creating a coaching program with your creative methods for trading

Horizontal Progress in this example:

• Posting your creative content 100 times over a month on 10 different platforms

• Mass-producing coaching videos/programs to sell to your audience

• Implementing the AI tool in the market and finding stock apps to integrate the tool with

The point is we can take the aspects of vertical and horizontal progress with our skill sets, not just startups.

These ideologies come from the book Zero to One by Peter Thiel.

Let’s continue with the idea of creating a business out of your skillset as this book pertains primarily to startups, but gives valuables on improving your own business.

Capturing Value: 

Your business could create value without becoming valuable itself.

Creating value is not enough - you must also capture some of the value you create.

For example: 

U.S. airline companies serve millions of passengers and create hundreds of billions of dollars of value each year. But in 2012, when the average airfare each way was $178, the airlines made only 37 cents per passenger trip.

Compare them to Google, which creates less value but captures more. Google brought in $50 billion in 2012 ( versus $160 billion for the airlines ) but it kept 21% of those revenues as profits. This is more than 100X the airline industry’s profit margin that year.

Key Points:

• If you want to create and capture lasting value, don’t build an undifferentiated commodity business

• Learn to capture value, providing it will not turn into a profitable business

• You can run a small client-based business and generate high revenue if you capture value

How do we Capture Value:

Consider this article from Iowa State University that explains capturing v.s. creating value in the agriculture business:

This is a direct block quote from the article:

Key Points: 

Direct Marketing:

• Joining communities and making your value widespread will ultimately capture more value.

• This means scaling ( in terms of work or product produced ) by 10X

• Making known the value of your product or service

Vertical Integration: 

• Forming cooperatives such as joint relations in business

• creating new technology or methods

• finding pain points in your audience and delivering

Where to Start?

To properly capture value we must first create it. This relies on starting small and being amazing in your sector.

It’s easier to dominate a small market than a large one.

We can look at the example of Amazon and how they implemented this.

They started as an online book store, selling any book possible because they didn’t need a warehouse like Barnes and Noble to store the books they had.

Amazon was able to sell any book as they could order it as demanded. Amazon didn’t have to keep a storage of books that wouldn’t sell, so it quickly became profitable!

Amazon dominated online bookselling and moved to adjacent markets such as CDs and movies. Now Amazon is one of the biggest general stores in the world that started as dominating the book niche.

What does this look like in your world?

Taking Action: 

Journaling:

Start your everyday work by journaling your learnings, your progress, and your failures.

Change Accordingly:

From this “progress sheet” I call it we can take away a couple of things.

• I have been lacking on the side of learning and should increase my research every day

• I need to act upon holding myself accountable and up how much I work the next day based upon my results of 1 hour the previous day

• The progress I have made so far is minuscule as I have only been working for under a month

• So I should: stay consistent with my reading, journaling, and social media content, but scale my efforts by 2

In many cases doing just double of your current efforts will output 10x the result.

This quote highlights the slow momentum that occurs with every business, or personal skill set.

Like the J curve of compounding, there will be heavy resistance until you have been in the game long enough for the tide to turn in your direction.

Foundation:

The foundation of a startup, a skill set, and a business all have the same structure. You build brick by brick, and you never skip.

According to “Thiels Law”: a startup messed up at its foundation cannot be fixed

When determining your foundational bricks to any worthwhile journey it is important to identify key points that a startup goes through in their foundation.

Identify your:

Ownership: the theoretical percentage of accountability you hold over your growth in your skillset/business

Possession: The tools you have acquired that will boost your production in your skillset/business

Control: The factors you can change easily over the factors that take more effort to change

Take a look at an article from Columbia Business School on founder personality traits:

How to Sell Value: 

Now that we have learned how to create and capture value, the last step is learning to sell it.

To understand selling value we need to get a basis on distribution.

Two Metrics for Effective Distribution: 

Customer Lifetime Value: 

• the total net profit you earn on average throughout your relationship with the customer

Customer Acquisition Cost:

• CLV must exceed the value you spend on average to acquire a new customer

Technical Video going further into these two metrics….

Using these metrics you should analyze your business and acquire the math behind your current distribution metrics.

If you are new and don’t have any variables to work with it is important to start with selling organically.

Pay for a network!!!

You can start with your current network and providing value over time will eventually sell, but if you want to maximize your efforts I recommend paying into networks.

Get rid of the stigma that people will tell you investing in your business is worthless because it will go nowhere, meanwhile, those same people are spending their money at the bar.

Invest as much as you can in the beginning because as your numbers grow it will compound.

Resources used in this Article: