This month I read a flamboyant book named Millionaire Fastlane by MJ DeMarco. The book was mind-blowing. It slapped me out of the slumber several times. It embarrassed me and shamed my thought process throughout its pages.
This book is unlike other get-rich-quick guides. Although it carries the same currents of acting as the cursor to success, it differs from other books on many levels. Firstly, it negates the popular belief of Getting Rich slowly. The most accepted belief of saving and investing hard-earned money in mutual funds or stock markets. Secondly, it busts the myth of Getting Rich by "Doing what one loves the most". It gives a convincing argument as to why such ventures fail and leave the entrepreneur fumed over his passion or what he or she loved to do.
The book gives anecdotes from the personal experience of the author and also the subscribers of his forum where the users discuss ideas and beliefs about Getting Rich fast. The book is not preachy but gets home the point of what is not going to work. This part of 'don'ts' stands out in the book as compared to other books which merely give signposts as to what is the best way to create wealth.
The book starts off by introducing the Sidelane of wealth creation. The Sidelane is actually a lane of wealth destruction and incurring debt and bankruptcy. The author says that most people go on this Lane oblivious to reality. They incur debts for education, lifestyle, and luxuries only to find themselves with zero net worth or huge debts.
The book also challenges the conventional belief of education, taking up a job, saving for 40 years, and then retiring. The author is rather critical of this model that the masses follow for their livelihood. He shows how this model is fundamentally flawed as it fails to make a person rich and takes more than 40 years for a person to get remotely close to being a millionaire. The author calls this route of wealth creation Slowlane.
The author thrashes the wealth creation gurus who profess the idea that compound interest will make you rich. He goes on to say that this idea is a joke as even an 8% return on the money invested in mutual funds will take innumerable years to get you even close to financial success. His idea of compound interest is that the yield should serve as a tool to pay your monthly expenses and not as a wealth creation tool. The author says that compound interest is useful only when you have a grand lumpsum invested and not pennies accumulated every month.
The central idea of the book is to earn a lot of money, then save it in appropriate instruments, and not to think too much about controlling expenses to the point of trading one's soul.
The author impresses upon the idea that it is through a business and accelerating wealth by accelerating assets that one can get rich. He says that one needs to be a successful entertainer who has a reach in millions so that one can earn millions or one can be an innovator, inventing new products or services and getting them into the market. If you have none of the above, the option you have is to engage in a Fastlane business that has the potential for leverage or high-speed limits.
The book lists five commandments one should follow while starting an entrepreneurial journey. These Fastlane commandments are Control, Entry, Need, Time, and Scale (CENTS).
It elaborates on each commandment to highlight how the majority of businesses eventually fail as they disqualify on either of these commandments. For e.g., A business fails on the commandment of need that does not fulfill a need or a gap in the market. The author quotes an anecdote of a Hip-Hop apparel store opening in his neighborhood where there were no hip-hop takers. The area housed a famous elderly care home. The owner opened the business for his own selfish reasons to earn money without evaluating if he was actually catering to a need.
Similarly, the Commandment of Entry highlights the businesses that have low entry barriers. These tend to have the highest competition and lowest margins. In such businesses, one needs to be exceptional to make a mark. So, one should choose a field that has high barriers to entry. If one is able to break this barrier then they have a road paved with little competition and high profits. On this road, there is no requirement to be exceptional.
The other main idea of the book is demonstrating the dangers of "Doing what you love". Most people are inclined towards getting a business started in what they know the best or love doing. Business gurus also push the idea that one should pursue one's love and passion and think of a profit out of it.
The author rebuts this idea. He says that the fields of "Doing what you love" are saturated. Many gym lovers think of becoming trainers, photography lovers start their business of photography, art lovers start selling their work, etc. When a monetary component is added to the area of your interest it becomes a responsibility. Sooner or later people get bound by the requirements of the business and lose the passion that they initially had. Gym trainers start hating their work as the field is already saturated and the only option to operate is to cut margins to stay competitive. The only respite to doing what you love is to be exceptional in your field.
This is an eye-opening revelation for me. I have always thought that if I were to have a side gig, it would either be in fitness or nutrition. I did not realize that these fields are already saturated. What exceptional work would I be able to present here? To become exceptional, I would have to struggle hard. This struggle would demotivate me quickly.
Also, the easiest idea to start a business is to open a restaurant, a coffee shop, or Homestay. Markets in these fields are again saturated. Unless you are a MasterChef or a skilled person the odds that your product would outshine other places are minimal. People who love traveling, and living in the countryside or mountains also have a common place idea to start a Homestay and live happily in the place of their choice and still earn money out of it. However, running a homestay successfully without being physically present is hard. If you need to be always present for your business to run smoothly you fail on the commandment of Time and Scale. You are bound to a place and can't leave it unless you don't care about your clients or your property. Assigning a manager to handle your property depends on the margins of your business. So, the prospect of Living in the mountains and getting paid may look to be a great idea but the execution of it may lead to substandard results.
The author provides a list of methods to get rich which he calls "Potent Fastlanes"- the ways and means to a potential business.
1. The Internet:
The internet is an open world, accessible to billions, and the best Marketplace. The audience is worldwide. It qualifies all the commandments- entry barriers, scale, and need are plenty. The business models fall into multiple categories and include subscription, content generation, lead generation, social networking, advertising, etc.
2. Innovation:
If you are a genius, invent something and patent it. If you are not so genius, you can still invent a product, service, or piece of information. You can then manufacture it (in the case of a product) and distribute it. But how to choose a product? It can be anything- beer, sauce, health products, accessories, a game, or a book. The only aspect worth noticing is, it should solve a need. Inventing is not finding a product that revolutionizes the world. It can be just a product or service that is slightly better than the already existing product or service. It should also full fill a gap or a void that was left by the previous one. This could be Vodka re-packaged in an exciting bottle. The success then depends on how well it is distributed.
3. Intentional Iteration:
This is the act of repeating a process. Franchising your store is an example of II. As a real estate investor II would be trading multiple houses and not just one or two.
An important lesson from the book is the ability to spot opportunities. The author says that the opportunity is not necessarily a breakthrough. It can be just a solution to an unmet need, an improvement of an existing service. He urges one to use one's creativity, wisdom, knowledge, education, and resources to do better than the competition. He says that one should not ponder too much about the business idea, one should rather go for the big execution. Old ideas are enough, just take them and make them better.
These opportunities and ideas are present in our lives. We need to pay attention to what pisses us off. It could be a potential idea that needs to be corrected. A deficiency in service or product that upsets you could be a field where you can put your creativity and improve for the rest of the world.
I really liked the book for its openness. It hit home the truth in a brutal manner. It opened my eyes to the set of preconceived notions and beliefs. It changed my perspective on the accumulation of wealth. Even if I do not practice what it taught, it at least made me aware that the path I have decided for myself was not the fast lane path.
What I disliked about the book was that it looked down upon the job culture. The message of the author was well received but the narration went in repeat mode. It surely would unsettle a few people with its sharp tone. The belief of the author that everyone would like to drive the Lamborghini or Ferrari was misplaced. The author assumes that one really needs forty thousand dollars per month for a lifestyle. Sure, more money is welcome but it also propagates needless consumerism. Compulsive buying to just get rid of extra money solves little purpose but cumulatively places stress on the ecosystem. The sense of responsibility that comes with money was not part of the book. Maybe the book was not intended to show that side of wealth.
Overall, I would highly rate this book. It is a book that puts a spotlight on ‘What not to do’ while thinking of starting a business. It reminds me of Charlie Munger’s famous quote “Tell me where I am going to die and I would never go there”. I would recommend this book to anyone who thinks of attaining financial freedom and is eager to have a business of their own.
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