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The Millionaire Fastlane by MJ DeMarco
đ The Book in 3 Sentences
- The traditional "Slowlane" to wealth is investing 20% of each paycheck into your retirement account and working 30-50 years in order to retire, whereas the "Fastlane" focuses on rapid wealth creation in 10 years or less.
- The key to the "Fastlane" is having "Controllable Unlimited Leverage" (CUL) where you can create exploding income through assets you own (e.g., a business).
- "Fastlane" millionaires use compound interest to stay rich not to become rich.
đ¨ Impressions
- Yes, the author (DeMarco) is brash and pretentious but if you can see past that, this book has an incredible amount of wisdom per page.
- This is a big wake up call to anyone (I include an earlier version of myself here) who has bought into the traditional advice that saving 20% of your paycheck and investing in retirement accounts will make you rich. Not that this is wrong, but the math is pretty clear that it will take 30-40 years to materialize.
- DeMarco dismantles most of the "traditional" personal finance advice with math. And it makes sense.
- You most definitely have to selectively take DeMarco's advice based on your situation, but the fundamentals are solid.
- The section regarding building a business (Part 8) is probably one of the best summaries of the key advice on market positioning, sales & marketing, and delivery that I've seen. It's a great primer for anyone just starting out.
How I Discovered It
Through Nat Eliason's book list.
Who Should Read It?
Anyone who has read the "traditional" personal finance books like "Rich Dad, Poor Dad" or "The Millionaire Next Door" should read this book to contrast that advice.
Anyone who is looking to retire early or "Get Rich Quick" in a feasible way.
âď¸ How the Book Changed Me
How my life / behavior / thoughts / ideas have changed as a result of reading the book.
- Compound Interest does not create millionaires, it preserves them - Probably my biggest takeaway and realization from the book that the math just doesn't work for compound interest and early retirement. If you want to "retire early" your focus should be on building a valuable business that you can liquidate (or passively draw from).
- 1 "incredible" business is better than 10 "good" ones - Focus your energy on building 1 business at a time. If you spread out your energy and time across businesses you are going to see mediocre results across the board. Focus on building one thing and once you gain your freedom then you can experiment with others.
- Putting a Number on "Success" - Through DeMarco's formula in Chapter 37, I was able to create realistic targets for what profit per month my business would need to generate to meet my targets for lifestyle and financial freedom. This made everything real and I now know what I'm shooting for.
âď¸ My Top 3 Quotes
- "The Law of Effection states that the more lives you affect in an entity you control, in scale and/or magnitude, the richer you will become. The shortened, sanitized version is simply: Affect millions and make millions."
- "The reality is that time is deathly scarce, while money is richly abundant."
- "Wealth eludes most people because they are preoccupied with events while disregarding process. Without process, there is no event."
đ Summary, Highlights, and Notes
Kindle Highlights
Normal is not something to aspire to, itâs something to get away from. ~ Jodie Foster
Wealth eludes most people because they are preoccupied with events while disregarding process. Without process, there is no event.
Wealth is not authored by material possessions, money, or âstuff,â but by what I call the three fundamental âFâsâ: family (relationships), fitness (health), and freedom (choice).
Affordability is when you donât have to think about it. If you have to think about âaffordability,â you canât afford
luck is a product of process, action, work, and being âout there.â And when you are âout thereâ you stand a chance at being in the right place at the right time.
The Slowlane as a total plan is the problem, not the Slowlane being a piece of the plan. This distinction is critical because financial discipline must accompany any wealth campaign.
A friend recently berated me because I declined to go out on a Saturday night. âAre you crazy? Itâs Saturday night!â he wailed. I told him something a Slowlaner doesnât understand: For me, every day is a Saturday because I havenât sold off Monday through Friday.
By working faithfully 8 hours a day, you may eventually get to be the boss and work 12 hours a day. ~ Robert Frost
I learned more as an entrepreneur in two months than I did working 10 years at dozens of dead-end jobs.
Used correctly, âcompound interestâ is a powerful ally to wealth; used for Slowlane purposes and it bogs the wealth road trip to a crawl. Why? Again, the puzzle is solved if you exploit the mathâthe answer plays sibling to why a job wonât make you rich: time.
the rich use the markets for income and wealth preservationânot to create it!
Take advice from people with a proven, successful track record of their espoused discipline.
Many money gurus often suffer from a Paradox of Practice; they teach one wealth equation while getting rich in another. Theyâre not rich from their own teachings.
Exploding income and controlling expenses creates wealth.
Yes, become a producer first and a consumer second. Applied, this means instead of buying products on TV, sell products. Instead of digging for gold, sell shovels. Instead of taking a class, offer a class. Instead of borrowing money, lend it. Instead of taking a job, hire for jobs. Instead of taking a mortgage, hold a mortgage. Break free from consumption, switch sides, and reorient to the world as producer.
To switch teams and become a producer, you need to be an entrepreneur and an innovator. You need to be a visionary and a creator. You need to give birth to a business and offer the world value.
Only those who will risk going too far can possibly find out how far one can go. ~ TS Eliot
The power of this example is to illustrate why I got rich and most others donât. I changed my universe because my wealth equation was unlimited and controllable.
Money trees are business systems that survive on their own. They require periodic support and nurturing but survive on their own, creating a surrogate for your time-for-money trade.
Change creates millionaires. Those who see the changes and take advantage of it will become the new millionaires and billionaires. And because change is constant, millionaire opportunities also remain constant.
Instead of trading my time for dollars, I invested my time into an autonomous system simultaneously capable of passivity and capable of funding my money system.
Compound interest pays me a lot of money. Itâs a tool I use. Itâs a great passive income source. Yet, compound interest is not responsible for my wealth. This is critical. Fastlaners arenât using compound interest to build wealth, because itâs not in their wealth equation. The heavy lifting of wealth creation is left to their Fastlane business.
The rich arenât using the markets to create wealth; theyâre increasing their existing wealth with leveraged business assets
Like a tidal wave at the seashore, compound interest rears excruciating force when pitted against large sums of money. This is where money transforms into a fully passive income stream.
The Law of Effection states that the more lives you affect in an entity you control, in scale and/or magnitude, the richer you will become. The shortened, sanitized version is simply: Affect millions and make millions.
Scale creates millionaires. Magnitude creates millionaires. Scale and magnitude creates billionaires.
The Law of Effectionâs absoluteness comes from direct access and control (you are the athlete) versus indirect access (you are the athleteâs agent).
To make millions you must serve millions in scale or a few in magnitude.
Events and circumstances have their origin in ourselves. They spring from seeds which we have sown. ~ Henry David Thoreau
You canât pay yourself first if you donât own yourself. Your vehicle (you) must be free and clear. When you have a job, someone owns you. And when someone owns you, you arenât paid first, but last. The first step to controlling your vehicleâyouâis to own yourself so youâre paid first and the government last. That is accomplished by forming your business into a corporation that you control.
Your life is the sum result of all the choices you make, both consciously and unconsciously. If you can control the process of choosing, You can take control of all aspects of your life. You can find the freedom that comes from being in charge of yourself. ~ Robert F. Bennett
If you arenât where you want to be, the problem is your choices.
It isnât one choice but hundreds. And when you line a string of choices together, they create your process, and your process will create your lifestyle. Lifestyle choices will make you a millionaire.
You start making better choices using two strategies dependent on the decisionâs gravity. 1)Worse Case Consequence Analysis (WCCA) 2)Weighted Average Decision Matrix (WADM)
Worst Case Consequence Analysis (WCCA), which requires you to become forward-thinking and an analyzer of potential consequences. WCCA asks you to answer three questions about every decision of consequence: 1)What is the worst-case consequence of this choice? 2)What is the probability of this outcome? 3)Is this an acceptable risk?
SA Note: See my "Why I Shouldnât Blog" article for my personal interpretation of this idea.
For WADM, you need paper and a pencil. Or, you can visit HelpMyDecision.com and let the web work the calculation for you. Keep in mind, WADM is for big decisions, so you might use this a few times a year whereas WCCA can be used daily.
With WADM, decision-making is easy as it isolates and prioritizes factors relevant to your decisions and then quantifies each decision with a value. The higher value reflects the better decision.
When I reflect on my own failures, they serve me to effect future change. Itâs a part of the responsibility/accountability process. What did I learn? What can I change in the future? What should I forget?
The reality is that time is deathly scarce, while money is richly abundant.
âIndentured timeâ is the opposite: Itâs the total time spent earning money and the consequences of that spent time.
Money buys free time and eliminates indentured time.
The leading cause of indentured time is parasitic debt.
The ultimate wealth is having the free time to live how you want to live.
Fastlaners are frugal with time, while Slowlaners are frugal with money.
What you know today is not enough to get you where you need to be tomorrow. You must constantly reinvent yourself, and reinvention is education.
Ask any successful entrepreneur and they will validate this truth: You learn from engagement, from doing, and from getting out and taking repeated action, more so than from any book or professor.
In todayâs information society, there is absolutely no excuse not to find out how.
Skills and expertise are waiting just for you. No one drops a book on your lap and gifts knowledge. You have to seek it, process it, and then use it. The acquisition and application of knowledge will make you rich.
If things seem under control, you are just not going fast enough. ~ Mario Andretti
What causes fear of failure? Answer: an overestimated worst-case consequence analysis.
it is easier to live in regret of failure than in regret of never trying.
The best roads and the purest Fastlanes satisfy the CENTS Framework; the Five Fastlane Commandments: Control, Entry, Need, Time, and Scale.
There is a difference between âgoodâ money and âbigâ money. Hitchhikers can make good money while Fastlaners make big money. Sometimes legendary money.
In a driver/hitchhiker relationship, the driver retains control and the hitchhiker is at the driverâs mercy. Hitchhikers are subordinated to someone elseâs Fastlane plan.
The Commandment of Entry states that as entry barriers to any business road fall, or lessen, the effectiveness of that road declines while competition in that field subsequently strengthens.
Higher entry barriers equate to stronger, more powerful roads with less competition and need for exceptionality.
Want to know if your business violates entry? The answer is simple: Is getting into business an event or a process? Real business startups are processes, not events.
If you want to live unlike everyone, you canât be like everyone.
What do we live for, if not to make life less difficult for each other? ~ George Eliot
Businesses that solve needs and provide value win.
People care about what your business can do for them. How will it help them? Whatâs in it for them? Will it solve their problem? Make their life easier? Provide them with shelter? Save them money? Educate them? Make them feel something? Tell me, why on Godâs green Earth should I give your business money? What value are you adding to my life? Reflect back to our producer/consumer dichotomy. Consumers are selfish. They demand to know is âwhatâs in it for me!â To succeed as a producer, surrender your own selfishness and address the selfishness of others.
Stop thinking about business in terms of your selfish desires, whether itâs money, dreams or âdo what you love.â Instead, chase needs, problems, pain points, service deficiencies, and emotions.
Every boom attracts money chasers who hop aboard the trend train to solely serve themselves.
Money isnât attracted to selfish people. It is attracted to businesses that solve problems. Itâs attracted to people who fill needs and add value. Solve needs massively and money massively attracts. The amount of money in your life is merely a reflection to the amount of value you have given to others.
For âdo what you loveâ to work, you need two things: 1) Your love must solve a need and 2) You must be exceptional at it.
The motivational fuel for the Fastlane is not love, but passionâpassion for your future vision and passion from personal growth. If you have a passion for a specific goal, youâll do anything for it.
The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run. ~ HENRY DAVID THOREAU
The Commandment of Time requires that your business and its income detach from your time.
Billionaire Mark Cuban recently wrote on his blog that it doesnât matter how many times you strike out in business because you only have to be right once, and that âonceâ can set you up for life. In other words, be in the business of home runs.
To achieve scale, magnitude or reach must increase. Magnitude is naturally increased with price or cost.
Reach, exclusive of magnitude, also achieves scale. Reach is massive numbers. The more people you reach, the greater scale potential.
Your total pool of customers determines your habitat. The larger the habitat, the greater the potential for wealth.
Thou shalt not invest in a needless business. Thou shalt not trade time for money. Thou shalt not operate on a limited scale. Thou shalt not relinquish control. Thou shalt not let a business startup be an event over process.
3)Lead generation Lead generation services often provide a service to consumers while simultaneously aggregating a non-homogeneous industry. This is what I did for the limousine industry. I pooled a highly fragmented industry into one centralized source, brought consumers into the mix, and sold that consumer information to limo companies. Lead generation is popular with fragmented industries, where the industry players consist of mostly small to medium-sized businesses. Lead generation in the airline business probably wouldnât work while lead generation for plastic surgeons would. Lead generation solves two needs: 1) The consumerâs desire to save time and money and 2) The business ownerâs need to find new customers inexpensively.
However, like all innovation roads, manufacture is one tiny battle in a larger war. Distribution is where the war is won.
At first, people refuse to believe that a strange new thing can be done, then they begin to hope it can be done, then they see it can be doneâ then it is done, and all the world wonders why it was not done centuries ago. ~ Frances Hodgson Burnett
Many entrepreneurs misinterpret opportunity because they associate opportunity with breakthrough, legendary ideas. They seek virgin ideas, perfect and new; ones that would be unveiled to the world in grandiose events. Rarely does that happen.
Opportunity is rarely about some blockbuster breakthrough like the light bulb or the car, but as simple as an unmet need, or a need not met adequately. Opportunity is a solution to an inconvenience. Opportunity is simplification. Opportunity is a feeling. Opportunity is comfort. Opportunity is better service. Opportunity is fixing pain. Opportunity is putting weak companies out of business.
Skip the big idea and go for the big execution
Moral: Solve other peopleâs problems and you will solve your own money problems!
If your business system generates passive income, you can use it to fund your lifestyle and your money system simultaneously.
Slowlaners seek to minimize expenses while the Fastlaner seeks to maximize income and asset values.
Literacy gives you the power to evaluate your adviserâs advice.
An idea is the event, the execution is the process.
No, I wonât sign your NDA, nor do I care about your idea. In the world of wealth, ideas are worthless yet treated like gold. I love how idea conjurers protect their ideas with great stewardship, careful they donât get into the hands of would be thieves, not knowing their ideas are already shared by hundreds of others. The owner of an idea is not he who imagines it, but he who executes it.
Why is execution so difficult, while ideas are so routine? Once again, we return to our wealth dichotomy: Event versus process. Execution takes process: effort, sacrifice, discipline, and persistence. Ideas are just events.
Having the worldâs best idea will do you no good unless you act on it. People who want milk shouldnât sit on a stool in the middle of the field in hopes that a cow will back up to them. ~ Curtis Grant
the world tells you which direction you should be going at all times. Heed the signs.
How do you get the world to tell you? Put your executed ideas and concepts out into the world and let it tell you.
Business plans are useless.
Business plans are useless because theyâre ideas jacked-up on steroids.
Business plans are useless until they are married to execution.
Figure out what needs figuring and just go do it.
The best business plan in the world will always be a track record of execution.
Complaints are a beautiful thing. They represent free feedback and expose unmet needs in your business. They represent the journeyâs road noise.
Complaints are the worldâs whispers hinting the direction you should be moving.
There are four types of complaints: 1) Complaints of change 2) Complaints of expectation 3) Complaints of void and 4) Complaints of fraud.
Complaints of change are the least informative and therefore are the ones most difficult to decipher.
When you change, there will be complaints. Guaranteed.
Complaints of expectation occur when you negatively violate customer expectations. You convince them to do business with you, they expect something, and what you provide doesnât meet that expectation.
Advertisers who complained, âYour service sucks,â didnât use my service as designed. Their expectations were malformed. I owned a lead generation service that sent email leads to clients. The thing about leads is they must be followed. You donât book leads after they sit in your email box for three weeks and then answer them like a first-grader. You donât book leads when you log in to your account once every millennium. Yes indeed, my service sucks when it isnât used properly. Instead of targeting my customer, I sought to better manage expectations.
I made it abundantly clear that leads are only as good as the person following them. Unfollowed leads go unbooked.
Complaints of void are when your customer continually requests something and you donât have it.
Complaints of void are extremely valuable, as they expose unmet needs.
Complaints of void are gold mines of opportunity. People freely tell you exactly what they want and you donât have to pay for it! Unmet needs are served up on a silver platter.
Where customer service lacks unearths great opportunity.
You can explode your business into the stratosphere by deploying a customer service strategy that exceeds expectations: I call it SUCS, or âSuperior Unexpected Customer Service.â
Customer service that SUCS, service that violates your customerâs low-expectation profile positively, turns customers into lifelong clients.
SA Note: For Lead Beacon this is knowing our client's business and ideal client profile inside and out. Better than any other lead generation company out there.
To create raving customers, you must exceed satisfaction.
When your clients love your business, they become disciples and advertise for you. They become unpaid human resource systems, evangelists who drop your name wherever necessary.
My repeated, and often preached, motto to my employees was, âThe customer pays your paycheck, not meâkeep them happy.â
I wanted to look big but act small.
All the intangibles in the world canât change a poor customer service experience.
Your employees drive the publicâs perception of your company
A customer centered policy is irrelevant if employees donât translate that policy into frontline action.
A good accountant and attorney will save you thousands, perhaps millions.
Accountants and attorneys have the keys to your castle; make sure you trust them fully because they have the power to right or wrong you.
Disregarding market needs leads to commoditization where your soul is sold to the buyer who wants the cheapest price.
I learned fast that most business owners paid more attention to their competition than to their own business.
If your preoccupation is with every single thing your competition does, youâre cheating your business and your customers.
On the rare occasions you peek in at your competition, do so for exploitation. Mine their weaknesses and add value where they arenât.
Everyone has an invisible sign hanging from their neck saying, âMake me feel important.â Never forget that message when working with people. ~ Mary Kay Ash
Build a Brand, Not a Business Businesses survive. Brands thrive. A brand is the best defense to commoditization. When your business just pays the bills for the month, youâre playing checkers and being one-dimensional. People are loyal to brands and relationships, not corporations or businesses.
If our friend wants to excel in an industry saturated with me-toos, heâs going to have to brand and differentiate himself. He needs to be a Lamborghini in a traffic jam of Chevys. What will make his carpet cleaning business different from the rest? Why should people hire him even though his prices might be 20% higher?
SA Note: What is Lead Beacon's brand? What differentiates it from other lead generation companies???
The first step at building a brand is to have a Unique Selling Proposition or a USP.
Your USP is your brand anchor and is typically your lead value skew. What makes your company different from the rest? What will compel a customer to buy from you over someone else?
How do you develop a solid USP for your company? There are five steps.
Step 1: Uncover the Benefit(s)
If you are already in business, find your greatest product benefit, one that sets it apart from the competition.
Step 2: Be Unique
The objective of a USP is to be unique when compared to the alternatives.
âGrow your businessâ should be dropped in favor of âExplode revenuesâ or âShatter sales records.â
Step 3: Be Specific and Give Evidence
WEB SITE: âYour car sold in 20 days or less or itâs free.â PRODUCT: âDrop 20 pounds or you donât pay a dime.â SERVICE:âYour home sold in 30 days or I own it.â
In my case, the onus was on me to send my advertisers leads. If I didnât, I didnât get paid. âWe send you business or you donât pay a dime.â
Step 4: Keep it Short, Clear, and Concise The best USPs are short, clear, and powerful. Long phrases get skipped over.
Step 5: Integrate Your USP into ALL Marketing Materials A USP is worthless if it isnât conveyed throughout every aspect of your business. Include your USP on all your public communications:
Step 6: Make It Real A USP has to be convincing, enough so that people buy or, even better, switch brands. If it doesnât capture your audienceâs attention, or the benefit/hook is too weak, it wonât work. And then make your USP real. You must deliver on what you say.
There are five ways to get your message above the noise: 1) Polarize 2) Arouse emotions 3) Be risquĂŠ 4) Encourage interaction and 5) Be unconventional
Arouse Emotion Most consumer buying decisions are driven by emotions. You and I buy stuff because we want to feel something.
The first human behavior you can count on is selfishness. People want what they want. People donât care about you, your business, your product or your dreams; they want to help themselves and their family. Itâs human nature. Therefore, our marketing messages must focus on benefits, not features. People need to be told exactly whatâs in it for them. How will your product or service help them? Whatâs the benefit? In marketing speak, itâs called the âWhatâs In It For Me?â (WIIFM) principle.
Translating Features into Benefits If you want to sell anything, translate features to benefits. A four-step process accomplishes this. 1)Switch places. 2)Identify features. 3)Identify advantages. 4)Translate advantages into benefits.
Each feature transcribed to a specific benefit that would compel my buyer to join. I didnât let them fill in the blanks; I filled in the blanks for them.
price implies value.
Ten businesses earning $10,000 cumulatively are not better than one business that does it single-handedly. When you segregate your effort among assets, you build weak assets. Weak assets donât do heavy lifting, and they donât build strong pyramids.
Some of the greatest tech entrepreneurs built impressive companies by 100% committed focus, not diverted attentions into other ventures. After successful entrepreneurs hit the mother lode of wealth, then, and only then, do they divert into other ventures that deviate from their core business. In other words, their monogamy led to polygamy.