Millionaire Fastlane Summary
Get an expensive education, find a corporate job, work hard for forty years, retire. This path to wealth is flawed; DeMarco shows us a better, faster way to become wealthy and escape lifelong servitude.
A book by M.J. DeMarco
MJ DeMarco is the founder of Limo.com and became a multimillionaire by the age of 33. In his book The Millionaire Fastlane he debunks the false claims of the traditional path to wealth. The author shows what you need to do to enhance your chances to get rich. The conventional way of going to school, attending university and then get a well-paid job in the corporate world will not get you there. There is a better way, and DeMarco shows us what it is.
These are the things I learned by reading the Blinks:
- Switch from the consumer to the producer team
- The traditional way to wealth is not working
- Follow your passion is bad advice
This post is based on the Blinks I listened to while walking to work. I learn from Blinkist's content each and every day. So if you enjoy this post, you will like their content even more.
Break free from consumption, switch sides, and reorient to the world as a producer.
Study the products you purchased. Why did you buy it? What features made the product attractive to you? How did the producer introduce you to the product? Where did you find out about the existence of the product?
Most people think that getting rich is fate. If you too believe this, you lessen your chances of getting rich yourself. You are responsible for shaping your future. And you are the only person who should map out the rest of your life.
You need to plan ahead to be able to face life’s challenges. What if your boss decides to fire you? Or what if you get ill and cannot work anymore? Have a plan.
Avoid instant gratifications. One way to do this is to make a plan. If you are in control, you are less likely to spend your money on useless stuff. You should build a pile of cash because this will put you in control and adds safety. Expensive cars won’t.
We all know the path our caring parents envisioned for us. Go to school and work hard to please your teacher. Then go to college and please the professor. Then get a well-paid job, put some money on the side and invest in a diversified portfolio. After 40 years of pleasing others, it is your time to reap the benefits.
While this path to wealth might work for a few of us, we should ask ourselves if this the best approach to living one's life. The author’s opinion is that this approach to life is probably the worst you can have; at least when you want to become wealthy.
Incidental Remark: Watch this video. Southpark makers meet Alan Watts
What is a better approach to living one's life?
A good education costs a lot of money and will probably put you in debt. You will learn a lot, but most of the knowledge you acquire in college will not be useful.
When you get a job, you will not be able to get a 100% pay raise when you work more efficiently. There is a natural barrier for your income when you sell your time. You will not be able to work 1000 hours each week.
Another problem with the traditional way of the life plan is that inflation will probably eat our savings. $2 million might give you only the buying power of $200,000 by the time you retire.
The author calls this approach a flawed life plan. He recommends retiring while you are young.
The traditional education adds a lot of knowledge and prestige to your life. It also opens the doors to some professions. For example, you will not be able to become a surgeon without a degree in medicine.
But getting a degree is not the best way to make you wealthy. If you attend a college, it will set you back more or less $60,000, without even taking a student loan into account.
Employees with a college degree earn on average $54,000 per year.
Bill Gates and Michael Dell are great examples that it is possible to get wealthy without having a degree.
The above notes leave us with the question, what is wealth anyway?
Many people make the mistake that they confuse money with wealth. But what is wealth? It is easier to become wealthy if you understand what it means to you.
For the author, wealth is a mixture of health, relevant relationships, and freedom.
Think about it. Would you consider a person who is in bad shape, lonely and rolling in money a wealthy person?
Having money will not help you in finding good relationships, nor will it help you to get fit.
You can utilize money to gain more freedom because you do not have to sell your time anymore. If you have money, you own your time. And owning your time will allow you to exercise and go to parties to find a life partner.
So, money is a means to an end. If you have enough of it, you will have location independence and are free to use your time to your heart’s content.
Now that we defined more clearly what wealth is, how can we get on easy street?
We need to understand that becoming affluent is not a single point in time. Becoming prosperous is a process which takes years of hard work and careful planning.
You should not gamble, or put your money at risk by investing in the latest financial instrument. Hustle instead. Work out a plan and follow it.
To get rich quickly, you only have one option, and that is to build a business that offers a product or service. Try to find a market niche, create a plan, and learn to execute the plan.
At some point, when your company is self-sustaining, it will generate income for you, even if you do not work in it anymore.
This business will decouple your time from your income.
Most of us have been raised as consumers. This began when we learned to write wish lists for Christmas. We all have a never-ending desire for new products. DeMarco calls this, being on the consumer team.
But there is another team: the producer team
To get on the road to riches, we need to change the team. We want to be part of the producer team. Being in the creator group will free us from thinking like a consumer.
If you are a member of the producer team, you will start to think like a producer. For example, thinking like a maker allows you to see the advertisements around you from a different perspective. You will learn which features of a product are important and how to market it to your prospects.
Changing teams might also spur your interest to find out where companies produce, how the fulfillment is done, and how you can set up a similar process for your business.
As an employee it will be nearly impossible to get rich; starting a business is the only way to become prosperous fast. Seeing the world through the lens of a producer will make it easier for you to run a business, as it will give you the knowledge and the strategies of a producer.
Do what you love. We all heard this advice before. Unfortunately, it is not good counsel. Building a business is not about addressing your passion. You need to create a service or product which satisfies a need of your customers. Your clients will not care about your passion unless it is coincidental their own.
Sadly, we humans are more motivated to address our interests than to make other people happy. But if you want to get paid you need to give your customers something they require or desire.
If you insist that, Do what you love, is the advice you want to follow, you better be one of the best in your domain. How many people desire to be a famous actress? How many can make a living from being an actress? How many of those will be rich? There is more supply than demand in nearly all of the domains people are passionate about. May that be acting, dancing, or singing.
You better find a niche where the competition is minimal. You still will need to hustle, but your success will probably more predictable.
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 a producer.
I love the idea to switch one's view to the producer view because it is so applicable and eye-opening. Try it now. Find the next ad; it should not be too far away. Analyze the advertisement. What memories, desires, and emotions get triggered in your brain?
Why do people pay more money for a MacBook than for a regular laptop? Why do ladies love their Louis Vuitton handbags, even though the bags look rather dull?
Another interesting question is to ask what companies are really selling. Often it is not the product itself, but a feeling or lifestyle behind the product. Louis Vuitton is not merely selling bags; they are giving people the feeling to belong to the rich. By carrying an LV bag, you show that you have enough money to buy it.
Thinking about those questions will put you on the other side; try it.
I spent five years in college just to sit in a 6x6 cubicle and cold-call elderly people out of a damn telephone book? Are you freaking kidding me? I could have done this out of middle school, and I didn’t need to spend thousands on a college degree.
DeMarco is saying that getting a college degree is a waste of time and money. My spontaneous reaction would be to agree with him.
To what degree are we a product of the education we received? Although I thought about this question a lot, I have not come to a conclusion yet. What I know for sure is that I learned a lot of unnecessary stuff in school.
I earned a degree in computer science. Some subjects were not that easy for me to master. I think the real value I got out of this education was not to give up that easily.
There was not a single teacher who taught me how to learn. That would have been a big lesson for me back then. But I had to figure it out later in my work life.
Today, I am still making my living by selling my time and knowledge to companies. My degree opened many doors, but besides that, I think the value I got from the university is rather negligible. For example, I learned Pascal, Cobol, and Fortran. I never earned a dime from those skills. It was a big waste of time.
Wouldn’t it be more clever to pick up the skills when you need them? For example, I did not learn Spanish in school, but I learned basic Spanish while traveling through Spain and South America.
There’s a profound difference between interest and commitment. Interest reads a book; commitment applies the book 50 times.
Yes, I would agree that just following your passion will not bring you riches. And all the advice the authors gives us is sound. There are so many things which are more important than your passion.
Then again, I think being passionate about the niche you are building your business in, is important. If you are not passionate about the niche, how will you be able to persevere?
Perseverance is a big part of building a successful business. If you have a passion for something, it will be much easier for you to do stick to it for a long time.
So I would say that follow your passion is flawed advice if this is the only mantra you are singing, but you should not totally ignore it either.
Getting a good, expensive education and working hard for forty years will not make you a wealthy person, nor will playing the lottery. Build a business by taking the following steps:
- give your customers what they need or desire
- find a market niche
- work out a plan
- take a few years of effort to build a process that generates income without you working in the system
- Do not go into debt to get a college degree
- Switch from the consumer to the producer team
- Study the products you buy
- Execute a plan
- Avoid instant gratification
- Build a pile of cash
- Do not confuse money and wealth
- Do not gamble
- Build a system that works without you
- Don’t be an employee
- Do not sell your time
- Decouple your income from your time
- Own your time
- Give value to people and charge for it