Rough Notes from The Millionaire Fastlane - MJ Demarco
Takeaways
Focus on one Business, instead of jumping onto whatever is shiny breaking your momentum.
Look for business opportunities, analyze them (using the commandments), then heads down implement them.
We as humans avoid process and are attracted to events. (recent example: Peter joined OpenAI in a big-big deal after his OpenClaw project went viral (event), people are focussed on this event and are forgetting what got him here.)
Highlights
The author uses the analogy of going on a long road trip to Florida from the north - unprepared. Using a very old car with no oil change, no map, no plan...etc; using this analogy the author then starts giving advice of what we need to do to the car to reach our destination. #analogy
Cost of an Item: Everything we purchase has two costs:
a time cost (how much time you spend to earn that money)
and, a money cost.
Failure to success is like sweating to exercise; if you’re not sweating while exercising, that means you have not tried hard enough. Just like if you haven't had failures until now, that means you haven't tried hard enough.
There are a five commandments to analyze a business: (need, entry, control, scale, time)
Is there a need?
Is the barrier to entry too low? If yes, it is a very crowded space.
Are you in control?
Is it scalable? Think TAM (total addressable market)
Are you able to do it exclusive of your time? if the business entirely depends on you, that means you are trapped inside the business and the business owns you, and you do not own the business
Serve millions and get millions.
Always think about scale (~How many people can you sell to?) & magnitude (~cost of your product).
Time is your most important resource and it is non-renewable. People stand in line to get a free six dollar bucket of chicken being absolutely generous with spending their time. however, we are extremely cautious when we are spending our money, which is a renewable resource.
Innovation: To get rich using an innovation (interstate) two elements are required - manufacturing and distribution.
Inventing and manufacturing something is half the battle.
For example, writing a book is not business, but the act of selling it and distributing it is the business. There are plenty of amazing books that are never read and then some mediocre stuff that sells millions.
Opportunities are all around us. We need to fine-tune our thought's frequency to catch them just like a radio signal is all around us, but if we do not tune to the right radio frequency, we will never be able to hear the sound of the radio.
- Hear when people say; I am tired of xyz, I want xyz, I wish xyz…. All those are opportunities.
Destination: Give your quest for money a destination.
Step 1: List out what you want. (eg: helping orphans, big home, nice car, kids set for life etc)
Step 2: Estimate the monthly cost for each of the items you want. in your destination.
Include the taxes insurance, and all the associated cost in this calculation.
- This is "lifestyle cost". eg: 10000$
Add other unknown expenses. eg: 4000$
Gross living cost = 14000$ (lifestyle cost + unknown allowances)
Net living cost = gross living cost / 0.6 (accounts for taxes 40%) = 23000$ / month
Step 3: Set targets:
Set business system target
Gross living cost (14000 * 5) = 70000$
- (20% expenses, 40% taxes, 40% invest in business)
Set money system target:
{Net living cost (23000* 12) / 0.05} - 5.4 Million.
- which means, accumulated cash of $5.4 million with a minimum annual return of 5% will give you $23,000 per month.
Definitions:
Money System: Total accumulated cash required to live off dividends alone.
Business System: High-monthly revenue goal from a business you own, which should eventually operate without your daily involvement.
Target:
- Now set a target create a business system that generates 70000/month.
Planned Obsolescence: The reason why the late night commercials are successful in selling the different types of strategies to make wealth over and over again, is because they know that people will NOT take action also called as planned obsolescence. Human nature is to seek "events" and not the "process". Having an idea is an event, execution is the process. Idea is the pawn, execution is the king. Ideas are useless, executions are priceless.
Chess not checkers: Unlike checkers, which is played on a single dimension, chess is a multidimensional game. Everything moves according to its role. Building a business shoul done like playing chess not checkers. Here are the roles:
King - Execution
Queen - Marketing
Bishop - Customer service
Knight - Product
Rook - People
Pawn - Ideas
Complaints by customers: Complaints are of different types:
Complain of expectation (fix): either because we did not deliver what we promised, or the customer had a malformed expectation due to our marketing strategy. Fix this by delivery or marketing better.
Complaint of void (opportunity): This is your customers asking you for a product/service. Serve them.
Complaint of Fraud (inform and ignore): Some people are just outright trying to make a few bucks off of you. Be bold in where you stand and move on. (ignore).
Owner of an idea: The owner of the ideas is he who executed it, not he who thought about it. Ideas are plenty, execution is rare and what really matters.
To beat the competition all you have to do is execute better than the competition
What is involved in execution?
- Execution takes 4 things: effort, sacrifice, discipline, and persistence.
Customer Service: Be obsessed with customer service; look big on your website but operate like a small/nimble business.
When anyone calls you, pick up, that shows that your customers are going to love you while still trust you because you’re big on your website.
Being big visually scares away competitors and Being small operationally make you win your customers.
Unique Selling Point (USP)- Learn to create a USP in these steps:
Find the problem you’re trying to solve.
Be unique to win over customers.
Be specific and give evidence.
Be short, clear and concise (eg: dominoes: your pizza delivered in "30 mins" or free)
Include your USP in ALL marketing materials (every single place) - USP is worthless if not conveyed.
Make it real!!! - Deliver on your USP
Marketing: be noisy to rise above everything around you:
Polarize: Be staunch in some views (people will hate you or be your followers)
Arouse Emotions - every person wants to feel important - make them feel it.
Be risqué
Encourage interaction - create interactive lead magnets (surveys, etc) #todo
Be unconventional
Singular focus: Give your 100% attention and time to one venture instead of focussing your attention to whatever is shiny at the moment. Some of the greatest tech entrepreneurs built impressive companies by 100% committed focus, not diverted attentions into other ventures. After successful entrepreneurs hit success, then, and only then, do they divert into other ventures that deviate from their core business. In other words, their monogamy led to polygamy in business.
Favorite Chapters
Chapter 14: Hypocrisy of Gurus - Gurus make more money selling courses than making money using the actions laid out in their course.
Chapter 26: Your primordial Fuel, time - Importance of Time
Chapter 35: Interstates - Systems that can take you to your destination fast.
Chapter 36: Burn the Biz Plan and Ignite Execution.
Todo: Learn these concepts for financial literacy #todo
Taxable and non-taxable yields
Amortization of mortgages
The balancing of a check book
Basic percentage calculations
Calculating return on investment
Why stocks rise and fall
Why a guaranteed 15% return on a bank CD is screaming, “scam!”
How stock options work, such as calls and puts
Why insurance exists
How a mutual fund works
What bonds are and how they rise and fall
Global currency
