Really short audio book of 3 CDs, but very dense on good ideas. (Well, at least they sound pretty good. Lately I often think of the survivorship fallacy when hearing someone who “made it” tell their secrets of success – are those really repeatable formulae that would work for me, or were they just lucky??)
Lots of good tips on starting/maintaining a business, but overall the biggest message I got is this: have a great product and be confident about it. Doesn’t have to be great for everyone, just enough to satisfy you and enough to secure customers to sustain your business. Never forget why you are in business: to get a better life for yourself (via providing a useful product or service to others).
There’s something of the message of Siddhartha here too – you have to make your own path in business, too; as well as in life in general.
- Learn from successes, not failures. Success rate of businesses with a founder who succeeded already at a first business is 34% vs 23% for those who already failed with a business… 23% is the same success rate for those who are starting their first business
- Start small and frugal – no need for unnecessary growth
- Your idea doesn’t need to be unique; you just need to execute better than anyone else
It’s a telling sign of how important oil is when a history of the oil industry is intricately tied to geopolitics, war, and history in general. Pretty much every major world event or crisis, at least since World War II, has been influenced or even caused by interplays within the oil business. “The Prize” is a monstrous book and took me quite a while to plow through, but it’s very good and I learned a ton. Lots of world events make a bit more sense when considered from the oil perspective.
The history of oil begins in the latter half of the 1800’s in Pennsylvania. The “energy conundrum” of the day was lighting – whale oil was prized for many reasons, but obviously hard to get in large quantities. “Rock oil,” or petroleum as it later was known, was also harvested and refined into kerosene, but supplies were limited to whatever bubbled up naturally to the surface. A newly improved kerosene lamp had just been invented, which reduced the unpleasant smell and was safer than old models. All that was missing from the puzzle was a steady, large supply of oil. Entrepeneurs tried out drilling, and despite the mocking of the initially incredulous, eventually struck a gusher. The boom was on…and it hasn’t really stopped since.
(Makes me wonder: what is there today that is just missing a single piece of the puzzle before a “boom” can happen?)
(Side note, speaking of “booms” – the Nobel family, of the Nobel Prize, made a fortune in Russian oil. Once, the world press mistakenly printed an obituary for Alfred, still living, when his brother died. Alfred, inventor of dynamite and sorta arms dealer as well as oil baron, read how he had been a money-hungry parasite and war profiteer. Alfred reconsidered his legacy, and although he didn’t change his activities much, he rewrote his will to provide for the Prizes when he eventually did pass on. Another something that Makes Me Wonder: if you read your obituary today, would you be happy with it?)
Reading this book, it seemed like it was easy to get rich on oil back in the day. But there is a fallacy in this line of thinking; many thousands tried to make it big and failed, but history only records the success stories, for the most part. Those that were successful were very successful. John D. Rockefeller of Standard Oil – “Standard” to give the impression of consistent, high quality – is the prime example. Standard’s success derived from ruthlessly undercutting competitors and then buying them out, but also from the vertical integration model – control production (getting the raw material out of the ground), refining (making something useful out of the crude oil), and marketing (selling finished products).
During the early twentieth century, oil had been pushed out of the lighting market by the electric light bulb, but conveniently sidestepped right over to the burgeoning automobile and transportation industry. By the time of World War II, oil was seen as the key component to a strong nation, and was definitely worth fighting for. Both Japan and Germany were oil-poor, and this played heavily into their strategies. Japan’s attempt at a Greater East Asia Co-prosperity Sphere was really an attempt to secure the oil supplies of the East Indies, and a main goal of Germany’s attack on the USSR was to capture Baku, heart of the Soviet oil industry.
Besides governing overall strategy, oil also played an essential role as an ingredient of armies and navies. Oil was essential to warfighting. Admiral Nimitz suggested that, if Japan had sent a planned third wave at Pearl Harbor after the oil stores, it would have prolonged war an additional two years.
Japan did capture the East Indies and the oil shortly after Pearl Harbor; but it was never able to make much use of it. The Allies had destroyed the wells before they were captured (there’s an incredible story of the heroic destruction of the Balikpapan oil complex by the Dutch) and, once the Japanese had operations up and running, the Allies had broken their naval and shipping transport codes, so most of oil tankers never made it to the Home Islands.
On the Western Front, the strategic bombing campaign, intially targeting stuff like ball bearings, was seen as a joke by the German high command …until the synthetic oil industry was targeted. Then, the Nazis recognized the end was very near. Part of the earlier Afrika campaign was to open a second path to the oil of the Middle East and Baku, but Rommel was constrained and likely defeated in North Africa due to a shortage of oil. (Hitler ordered Rommel’s suicide towards the end of the war; I never knew that for some reason.)
After D-Day, Patton’s tanks similarly were short of fuel; Eisenhower had a tough choice whether to resupply Patton, positioned way forward, or Montgomery so he could come up and guard the flank. Eisenhower probably made a wise decision given his available information and gave the oil to Montgomery, but it stalled Patton and allowed Germany the time to execute the Battle of the Bulge, probably prolonging the war by eight months.
The postwar period was marked by an increasing supply coming out of the Middle East, and increasing frictions their due to the decolonization instability and conflicts over Israel. Iran, under the slightly crazy Mossadegh, was the first to nationalize the foreign (Great Britain’s Anglo-Iranian, in this case) oil companies. The British feared that giving in to the “locals” would lead to further losses throughout the old Empire; America was concerned about communist influence spreading to Iran and the rest of the Middle East. The CIA’s Operation Ajax restored the Shah to power.
British fears of the Middle East’s new boldness were confirmed with Nasser’s nationalization of the Suez Canal in 1956. The British and French used the military option, but President Eisenhower forced them to back down – he was worried about alienating the whole Middle East and sending them straight to Soviets. The producing countries became bolder and bolder; eventually the great oil companies were relegated to mere contractor roles and most of the oil profit went to the country.
The 1973 Yom Kippur War presented another diplomatic quandary – should the US save Israel from destruction and trigger an Arab oil embargo, or allow Israel, a declared ally, to be defeated by Soviet proxies? We obviously chose the former, triggering the oil shortages of the 1970s. The rise in oil prices actually hurt the producers in the end, because Western nations could now invest in domestic sources (like Alaska and the North Sea) and alternative energy (nuclear) rather than pay inflated prices for oil. Furthermore, a consequence of domination by exporting countries in 1970s led to a “de-integration” of oil companies in 1980s – they shifted to become commodity trading companies with no particular “loyalty” to any one country as they had had back during the time of concessions and guaranteed production contracts. Thus by the 80’s plentiful, cheap oil was back.
“The Prize” was published in 1990, after Saddam’s invasion of Kuwait, but before Desert Storm. And prior to the dissolution of the USSR, obviously. It would be interesting to check out the oil industry’s continuing history since that time. I imagine that the key pieces would be the war on terror and the 2nd Iraq War, along with the increased demand due to the rise of China.
Overall impression is the cyclical nature of oil. The history goes from system shock to boom to bust and back again. Sometimes the shocks are simply a new discovery, other times they are political creations.
A final item to ponder: would the Middle East be as screwed up as it is now if it never found oil?
(Listened to on CD while commuting.)
This book has lots of good principles for doing just what the title says. I found that a lot of the aphorisms the author prescribes seemed kind of repetitive after a while. I boiled down Carnegie’s lists into just a few:
- Never criticize, complain or argue
- See things from the other person’s point of view. They’ll never be motivated by what you want, so ask yourself: what do they want?
- Make people feel important – sincerely praise and compliment others often
Although these principles are applicable to numerous aspects of life, most of the examples in the book were of business in the 1930’s or 1950’s. I guess this is my only complaint of the book, but I can’t fault it because the book was written in 1936. It seems like the world is quite a different place. A lot of Carnegie’s stories are about businessmen trying to convince other businessmen to buy their product or give them a price break or whatever … I just can’t imagine using some of the same techniques over the phone with a call center in India, for example.