Read The Millionaire Fastlane Online
Authors: M.J. DeMarco
Tags: #Business & Economics, #Entrepreneurship, #Motivational, #New Business Enterprises, #Personal Finance, #General
So I was faced with a choice that could be either treasonous or accelerative. Was this a road I wanted to take? Did I want to pass on this great “no money down” opportunity and forgo Phoenix? What did I do? I compiled my weighted average decision matrix (WADM) to give me clarity. Yes, I really use the stuff in this book! Obviously, Phoenix won and I didn't buy the limousine company. But what was in that decision matrix that helped me identify the right road and the right course of action?
I knew the five Fastlane commandments and which roads of business had “Fastlane Purity” … and I knew the odds of implementation of both.
Fastlane Purity: Five Commandments
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.
When I analyzed the limousine service as a potential business, it wasn't a pure Fastlane. The operation had satisfied the control and entry criterion, but it didn't have scale; it served the northwest suburbs of Chicago. The operation didn't have time detachment; I would have had to log long hours, and the margins weren't thick enough to deploy human resources. And it certainly didn't solve an unmet need; in Chicago, limo companies were a dime a dozen.
To “Fastlane” the business, it would have required a lot of time, effort, and money. Deep down, I knew that I wanted to be involved in a business that was pure Fastlane from the start, not one that needed to be molded. The purest Fastlanes have the best wealth potential, and I knew it. When you grace the Law of Effection, money moves your way. What are the purest Fastlanes roads that possess super-fast speeds? Which roads can tap into the Law of Effection and start Fastlane?
The Three Fastlane Interstates
I call the most potent Fastlane roads “The Three I's,” or “The Three Interstates,” because they possess the fastest upper speed limits and meet, or can meet, all five Fastlane commandments. The three Interstates are:
Each interstate road is an umbrella for dozens of other roads. Put all three together and you have hundreds of roads available for your travel.
Potent Fastlane #1: The Internet
The most potent interstate is an Internet business. The Internet has made more millionaires in the last decade than any other medium out there. The Internet has, and is, destroying old hard-line industries such as travel agents, stockbrokers, newspapers, and magazines. The Internet is the shark of the Fastlane.
The Internet is where I found my fortune and it is one reason why I declined my opportunity to own a limousine company. The Internet is the best Fastlane available, because it immediately obeys the Five Commandments to the Fastlane, assuming a need-based premise. It naturally scales to a worldwide audience, it systematizes to automation via computer systems, it is a medium you can control (unfortunately, most don't), and its barriers are still strong enough to prevent “everyone” from entry.
Internet business models (roads) fall into seven broad categories:
1) Subscription-based
Offer users access to data, information, or software, and charge a monthly fee. Data can be leads, sales information, a proprietary database, or good old fashioned pornography. When 10,000 people pay you $9.95 per month for your information, you're balling the Fastlane!
When I owned my company, I paid for many Web services, all subscription based. From data analytics (who is visiting my site?) to affiliate management (who wants to offer my service?).
One particular company ran a Web-site monitoring service that kept track of Web site uptime. On its home page it advertised how many clients it monitored. At the time, it listed “20,000 clients served,” and I was paying $50 per month for service. Assuming my fee was average, 20,000 X $50 = $1,000,000 in gross revenue-PER MONTH. This is a perfect example of an Internet business system in which the business is the system. No products. No shipping. No headaches. I'd speculate that this Website enjoys margins of 75% and nets in the $750,000 range, per month. How quickly would you become a millionaire earning $750,000/month? Or, would you rather save $200/month from your $45K/year salary? The disparaging field of play is laughable.
Examples of subscription sites are RealtyTrac.com and LoopNet.com.
2) Content-based
Content-based models are online news magazines and blogs that disseminate information to a particular niche or industry. These services provide content for free consumption and sell advertising to parties who want to reach those eyeballs. My Fastlane Forum can be considered a content-based revenue model. I consider content-based revenue models the most difficult for success because entry barriers have significantly declined and its success is predicated on high traffic. Also, content systems heavily engage in affiliate programs, which is a hitchhiking structure.
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 wouldn't work while lead generation for plastic surgeons would. Lead generation solves two needs: 1) The consumer's desire to save time and money and 2) The business owner's need to find new customers inexpensively.
4) Social Networks
Social networks are spin-offs of content systems. Instead of pooling content for eyeballs, people are pulled into groups, or tribes. Facebook started off as a pool for college-aged students and evolved into a generic social network for all ages. MySpace targets the high school crowd. LinkedIn hits the upwardly mobile professional. Social networks are mere aggregators of like-minded communities, from mystery novel writers to gear heads who like to rebuild engines on the weekend.
5) Brokerage Systems
Brokers bring buyers and sellers together and facilitate transactions. They are market-makers for a particular industry and earn money typically on each transaction. Examples of known brokers are PayPal, Elance, CarsDirect, and Travelocity.com.
6) Advertising
Similar to brokerages, advertisers merge buyers and sellers together and accept advertising fees in lieu of transaction fees. For example, I owned a Web site that listed limousines for sale. The site accepted advertising fees for each limousine placed for sale. I introduced buyers and sellers. Some services leverage both brokerage and advertising together, such as eBay. Search engines like Google and Yahoo operate both advertising and brokerage models.
7) E -Commerce
E-commerce is the act of selling goods, services, and information over the Internet. Amazon.com, CSNStores.com are examples of large-scale e-commerce providers. However, many small local stores have expanded and created scale with the e-commerce model. In my backyard, I have 24 solar lights that I bought online from a small retailer in Minnesota that operates an e-commerce store.
Just years ago, that store was local with no scale-now with an e-commerce presence, they are worldwide and are selling products to retired farts in Phoenix. E-commerce also can be information. E-books are the most popular form of information distribution on the Internet. When I sell my book in e-book form on the Internet, I'm engaged in e-commerce. I can sell books out of my trunk by sitting in the parking lot at Arizona State University, or I can set up a Web site and sell books to folks in Europe.
When you look at the Internet as a Fastlane road, it is immensely powerful when examined against our Fastlane Wealth Equation.
Wealth = Net Profit + Asset Value
Within the units sold variable (within net income), the world becomes your upper limit when dealing on the Internet. Additionally, asset value, a component of the Fastlane wealth equation, is not only determined by net income, but by traffic metrics. Many Web sites are sold for billions and don't have a penny of profit. Traffic, or visitors to a Web site, also has a boundless upside scale. The Fastlane variables of net profit and asset value have a virtually limitless upside.
Potent Fastlane #2: Innovation
Innovation is another broad stroke of Fastlane purity and encompasses many roads. It is the good old-fashioned way to get rich: Invent a product, service, or piece of information, manufacture it, and then distribute it.
Innovation covers any act of creation followed by distribution. Let me repeat that: Innovation involves two acts: 1) Manufacture and 2) Distribution.
Invent a product, then sell it by infomercial, sell it on the Internet, sell it on QVC, sell through 10,000 network marketing distributors, or sell it to 20 wholesalers that then sell it to 20,000 retailers. What is the product of innovation? Virtually anything that solves a need or fulfills a desire.
Inventing is still recognized as the default get-rich-quick method out there, and yes, it is alive and well. However, don't be fooled. Inventing isn't really about inventing the vehicle, the telephone, or the goofy Segway-
the core activity of inventors is just taking something and improving or modifying it
. Take something old and stale and make it better. Take an underexposed product, make it your own, and reintroduce it to the world. Take something unconventional and make it conventional.
On TV, I watched a successful entrepreneur interview in which the inventor simply repackaged vodka from boring old clear bottles to colorful bottles with razzle-dazzle. In fact, for my birthday I received a skull-shaped bottle of vodka. Vodka has been around for centuries, yet an entrepreneur took a stale product and added an element of uniqueness and differentiation. Sometimes it's that simple.
My favorite example is the Snuggie, an oversized mass-marketed blanket with arms. The product concept has been around for years, but they took the concept, repackaged it, remarketed it, and wham, 40 million sold later, they had a blockbuster.
Innovation is a dual challenged process:
manufacture
and
distribution
. Inventing a product that solves a need is half the battle; the other half is getting your invention into the hands of millions, which involves a variety of distribution channels: infomercial (sell via mass media), retail (sell to distributors and wholesalers), and direct marketing (sell via print media, postal mail, Internet).
For example, when I wrote this book, I was the means of manufacture. I wrote it, put it together, edited it, and had it physically published. I manufactured it. I engaged in innovation. However, like all innovation roads, manufacture is one tiny battle in a larger war.
Distribution is where the war is won
. A great product is worthless if it doesn't get into the hands of people, and that requires distribution. For my book, I will need to leverage Amazon (a distribution system), book distributors (wholesalers), and the Internet (another distribution system) if I am to succeed.
Yes, your product invention can be something you invent yet is manufactured in China, or an e-book you write in a weekend. Innovation-from books to products-is Fastlane. Have you ever wondered why people sell get-rich-quick books and yet the content is just regurgitated blather from 30 prior books? The authors know that authoring is a potent Fastlane.
The challenge of any authoring Fastlane is never the book or the words themselves. Some of the greatest books in the world go unread, while the mediocre stuff sells millions. The difference lies in marketing, public relations, and just good old-fashioned business know-how.
Writing a book is not a business; selling the book is
. If I'm obsessively intent on selling this book to millions, I have to manufacture, then distribute. I have to sell, market, promote, appear, speak, interview, and write; I have to invest in the business of distribution. To leverage the Fastlane wealth equation and get near the Law of Effection, I have to strap on my commitment helmet and get this product out in front of millions.
Potent Fastlane #3: Intentional Iteration (II)
The final Fastlane Interstate is “Intentional Iteration” (II). Iteration is: “the means or act of repeating a process, usually with the aim of approaching a desired goal or target or result.”
Intentional iteration is a potent Fastlane but it offers the greatest challenge because it really doesn't satisfy all five commandments, but four. The process of intentional iteration is the act of satisfying the final commandment, scale. Scale is achieved either through human resource systems or repeated successes.
For example, when a real estate investor buys a single-family home at a bank auction and later rents it out, there is no scale, and with that one act, nothing can create scale. The investor has little wiggle room in his Fastlane wealth equation: Net income is derived from rent and asset value is derived by the home's market value.
To solve that challenge, the investor engages in II and repeats the process. Instead of buying one home, he buys 50. Yes, easier said than done, and it can be incredibly slow. In effect, the investor has chosen to play on a field of “singles,” and to hit the home run, II needs to become the strategy.
Iteration is a profitable, singles-based business scaled to home runs
. Franchising is another example of II.