Millionaire Fastlane Book Review by MJ Demarco
This book is one of the best books on entrepreneurship in which the author lays out five commandments to be on the Millionaire Fastlane. According to the author, until and unless the business complies with the five commandments, it is not destined to be successful. These commandments are:
Command of Need, Input, Control, Scale and Time (NECST).
Need command:
Millionaires affect the lives of millions of people by adding some values to their lives and thus they are millionaires. If the market doesn’t care about your product or service, then it won’t add value to the market and it’s a failed business before it gets off the ground. Therefore, all companies must first determine if there is a need for the service or product that their company is going to offer or not.
So we have seen test products being sold for free to test the water. All they are doing is trying to figure out if there is demand or not.
People often start businesses for the wrong reasons. They are good at something and very skilled and open a business about it. But if the market doesn’t care, it will fail because the market is a selfish place. He doesn’t care what you want, what you have, how good you are. All he cares about is what it is for them. If it adds any value to their lives then they will buy it, otherwise they won’t buy it. So it’s a huge eye-opener for me and it could be for so many budding entrepreneurs.
Entry Command:
This is the second commandment for business success. If the barrier to entry is very easy, it means that millions will do the same and you will not have the ability to scale your business, instead you will have to reduce the price and compete with those millions. In general, the price war harms all parties. For example, if creating a website and writing a blog and generating income is your business, then there is not enough of a barrier to entry unless you are trying to add some additional value to the market that no one else has added yet. An example that the author seldom gives is when he thought of starting a limousine business. He discovered that he failed in both the first and second commandments. There was no need for one more limousine business and the barrier was very low to get into this business.
Control Command:
If you have no control over your business and have given all the authority to another party, you are doomed to fail.
Many entrepreneurs start a business and then hire a CEO or CFO to take full control of operations or finances. They know nothing of what is going on and that is the recipe for failure. Especially when entrepreneurs don’t have any basic financial knowledge, like what is a mortgage loan, how to calculate simple interest, but hire an expert to help them make decisions. Since they themselves cannot take a second look at the decisions made by their advisors, they are likely to be wrong and the entrepreneur has to bear the loss.
One of the examples given in the book on the benefit of controlling the business is as follows. If you are a doctor working in a private care facility, it is natural to think that you are in the fast lane because your magnitude (price/unit) is large and that will increase net profit and therefore wealth. But, the control of the private care facility is not in the hands of the doctors but of the owner. So it is he who is on the fast track, not the doctor, who depends on his intrinsic value to increase wealth.
Scale Commandment:
The author gives an example of a hamburger stand outside a supermarket. No matter how hard the owner tries, he can’t scale his business and reach customers outside the supermarket. So, this business violates the scale commandment. But an e-store that sells some product on the Internet has an unlimited number of customers and thus has the ability to scale its business to an unlimited level. However, if the entrepreneur can create a franchise of any hamburger shop, then he has the ability to scale and will be on the fast track.
The author gives an example of a quote from billionaire Mark Cuban who said that only a business is successful. Therefore, it is important that we undertake projects that can be scaled up. In baseball terms, swing at home runs, not singles. If you decide to play singles, you have to replicate the effort many more times.
The Fastlane wealth equation is:
Wealth = Net Income + Value of Assets
Net profit = Units sold * Unit profit
Leverage is created by units sold. If you’re selling hamburgers on the supermarket lot, you’re limiting leverage and therefore you’re at the 15mph speed limit on the highway. Also, you can’t increase the price of the hamburger, so you can’t control the unit profit either.
Therefore, you must be able to reach millions of people to increase the number of Units sold or sell at a very high price to extra wealthy customers to increase profit values per unit.
Time command:
Time is the scarcest resource we have. Most people spend money frugally and time freely. That, according to the author, is exactly the wrong path to the path of wealth. Time is limited and money is abundant. The only difference between successful and unsuccessful people is the way they spend their time. The former value every moment of their lives and dedicate it to increasing their self-esteem. The latter waste it on fulfilling their immediate desires, such as watching TV series, playing games, etc. for a long period of time, etc.
According to the author, fastlane is not an easy path, but it sure should be a quick way to gain wealth.
As a fastlaner, our goal should be to automate the ride. If you have a business that requires you to dedicate every moment of your life all the time and you always have to exchange time for money, it is a job disguised as a business. It’s a money tree that never grows.
It is normal to work more than 80 hours a week in the initial phase of a business, but it is not normal to work like this for the rest of your life, which is normal for most people who work in a normal life. One of the famous quotes from the book that is also often used abroad is about how most people define themselves as normal. The normal thing is to get up at 6 in the morning, fight traffic, work 8 hours or slave 8 hours from Monday to Friday, save 10% and repeat for 50 years. The normal thing is to believe that the stock market will make us rich and that the fastest car and the biggest house will make us happy. The definition of normal is corrupted by society and we are conditioned to believe that. In short, the author believes, the normal is modern slavery and that is why only a few have the courage and intelligence to get out of the normal and drive on the fast track of a millionaire.