The Millionaire Fastlane teaches readers that the most touted way of getting rich, such as saving and investing, is a sucker’s choice. MJ DeMarco proposes instead what he dubs the “fastlane”, such as becoming entrepreneurs.
Unlike most BS self-help finance books (written by authors who got rich from selling books, rather than taking their own advice), The Millionaire Fastlane is a real no-nonsense guide that will make you rethink how you invest your time and energy (written by an author who has sold two multi-million dollar companies).
Behind The Scene
MJ DeMarco was born to a dysfunctional family in Chicago. His parents went through a messy divorce spanning years.
While his friends were talking about the latest video game, he was wondering how to help his mom put money on the table. Growing up, he wasn’t athletic, he couldn’t sing, and he couldn’t act. He was an average guy without any special skill or talent.
But one day, while heading to an ice cream store, he saw a Lamborghini Countach, and that’s a car that he was just in love with at the time. When he asked the driver about what he was doing for a living, this one said he was an inventor. As he expected him to be a baseball player or some kind of athlete, that’s what started his desire to be an entrepreneur and start looking into that as a way to create wealth, a way to control his financial future.
He went through college, got a degree in marketing and finance. Once he graduated from college, he did not interview for jobs. He was determined to be an entrepreneur.
Despite all odds, he founded Limos.com, a global ground transportation aggregator and became a multimillionaire at 33 years old, selling his company off twice, being a best-selling author of The Millionaire Fastlane which has over 80% 5-star ratings after 1400+ reviews on Amazon.
He is also known as a founder of Viperion Publishing Corporation, which sells his book, ebook, and audiobooks. MJ DeMarco also created The Fastlane Forum where you can find entrepreneur and startup discussions.
MJ DeMarco tells his personal story of how he went from being a limousine driver who was paid by the hour, to an online business owner that separated his money from his time. This is the main point of the entire book: in order to become wealthy, you need to find a way to earn money without exchanging your time. If you get paid more for working more hours and you don’t get paid when you’re not ‘clocked in’, then MJ DeMarco argues you will never really be rich.
What’s Your Road?
Wealth = Income + Debt
Sidewalkers create their lifestyle in direct proportion to their income and supplement that lifestyle with extensive use of debt.
Wealth = Job + Market Investments
Under this wealth plan, income from a job funds both lifestyle and market investments. The problem here is your wealth is tied to variables which you cannot control. In addition, you can only work so many hours in a day.
Wealth = Net Profit + Asset Value
A Fastlaner builds wealth by providing value to their customers. They can increase their wealth by selling more units, or profiting more from each individual unit sold.
This is the lane most people take and ‘the worst’ option.
It’s characterized by living paycheck to paycheck, spending whatever money is available and always being a consumer. Consuming television, movies, social media, etc with no effort made towards producing.
This person is stuck in a consumer mindset and they will borrow and spend whatever money they have. Whether they make $25k per year or $250k per year, anyone can be a ‘sidewalker’ if they are stuck in consumption mode with no regard for savings.
People in the personal finance community would identify these people as those who try to “Keep up with the Joneses”.
This lane is made up of people who follow the traditional wisdom of working a steady job for 45 years, saving 10% of their pay by putting it into their 401k, and hoping that they’ll have enough saved up by the time they turn 65 to retire.
Although this is usually considered the safe option for retirement, MJ argues that this is actually full of hidden risk that is completely outside of your control in the forms of stock market returns and your employer.
Your entire plan is built around being employable at a good wage for 40 or 50 years and banking on the stock market to match it’s historical returns.
This is the main pitch of the book and obviously the most desirable option. Amassing wealth with the fastlane strategy is about building wealth through building your own company and having more control over your destiny.
This relies on you using leverage. Not leverage in the traditional sense of debt, but in time and value. The time leveraging comes from finding ways to make money they don’t use your time.
As profits increase, the underlying business asset increases in value. You can see how it is possible to Get Rich Fast (not to be confused with Get Rich Quick). MJ DeMarco explains that the formula for wealth acceleration is:
Asset Value = (Net Profit) x (Industry Multiplier)
Asset value (also known as your company’s valuation) is multiplied by two variables — your company’s net profit, and your industry multiplier.
For example, let’s say you launch a medical device software company (the average industry multiplier is approximately 15). And for the sake of simplicity, you bootstrap the company, allowing you to retain 100% of the company’s equity.
For the sake of this example, let’s fast forward five years — your medical software company just posted a net profit of $1,000,000. When your company is sold, your $15M nest egg will also be taxed at capital gains rates (rather than ordinary income rates). This means that instead of paying 40+% of your proceeds in taxes, you’ll probably pay closer to 20%.
Why wouldn’t you play a game where the rules are written in your favor?
If you study the tax laws in the United States or in Europe, you can quickly see that the rules are written to accelerate wealth creation through asset value creation — not middle-class based approaches, like salaries (which are taxed at ordinary income rates).
The Roadmap To Wealth
When it comes to the Fastlane, it is a strategy that is not much different from the Slowlane, but the rewards from the Fastlane are far greater.
The Fastlane is all about taking a lot of work in the initial stage. You may need to spend 5 to 10 years focusing on your business before you reach the kind of success you desire. The best part is that once you have reached that level of wealth, you will have the freedom to do whatever you like for the rest of your life.
When it comes to building great wealth, the Fastlaners do not focus on the heavy lifting, instead, they learn to create a system that does the heavy lifting. This does not mean avoiding work, but it means being resourceful, optimizing, and automating relentlessly.
MJ DeMarco goes on to explain using the example of building a pyramid with heavy stones. The Slowlane approach is to carry the stones yourself, one at a time. This approach will take decades, which will eventually tire you out. The Fastlane approach is to spend the first few years designing a system such as a pulley to carry the stones. Once the system is up, your initial effort will pay and you can complete building the pyramid in a much faster, easier and automatic manner.
Become a Producer
Since the day you were born, you were conditioned to be a consumer. You want products, need products, buy products, and of course, seek out the cheapest of those products.
However, if you want to play the Fastlane game, you must be a producer and think like a producer:
If you look at the world as a producer does, a lot of useful information about marketing and product design will be revealed to you. You’ll understand which features make a product successful, and the strategy used to sell it.
The only way to get rich quickly is to start your own business, and seeing the world through a producer’s eyes will help you do just that.
Plant The Seeds
MJ DeMarco suggests readers build money trees, which are business systems that survive on their own. Money trees require periodic support and nurturing, but they are able to survive on their own, which are able to create a surrogate for your time-for-money trade.
The main thing is to divorce wealth from time. Here are some examples of money trees:
Pimp My Business
Most people make the wrong choice by following the path of the Slowlane or the Sidewalk. So make choices that will move you into the Fastlane by first changing how you think, and then how you do things. When you master your choices, you can make better use of your time.
There are two good techniques for making choices, first is the Worst Case Analysis (WCA), and the next one is the Weighted Average Decision Matrix (WADM).
The Worst Case Analysis
You just need to ask these three questions below to come to a conclusion: What is the worst case? How likely is it going to happen? Is this an acceptable risk?
The Weighted Average Decision Matrix
You need to figure out the factors that matter to you, give each of them a weight, rate on your choices on each factor, and then multiple the ratings by the weights you assigned them to get the score for each choice. You then make your decision according to the highest total score that you get for that certain choice.
In order to succeed, a Fastlane business must obey the Five Fastlane Commandments (NECST):
1. The Commandment Of Need
Choose to start a business because you want to satisfy a need and to solve a problem. While it is true that you need to do what you love, but people will not pay for your passion, they will for your solution. Thus, your passion must solve a problem.
For example, MailTag is a needed service because salespeople need to know whether or not prospects have opened their sales outreaches.
2. The Commandment Of Entry
The harder it is to enter your business, the better your business will be. When it is easy to enter your business, everyone can do it, but everyone is not wealthy.
Warren Buffett calls this the “competitive moat”. It’s essentially the things about your company that make it difficult for new competitors to intrude on your market share.
Focus every day on building your company’s barriers to entry.
3. The Commandment Of Control
The Fastlane business will give you full control. If someone can make the decision and make a change to ruin your business, you are not in the Fastlane business. For whatever business you build, make sure that you have control over every decision in your company.
For example, if you’re an affiliate for a company, you lack control. Affiliates can’t influence the things they sell, leaving them susceptible to changes in product prices, feature modifications, and anything else that can potentially threaten their income.
4. The Commandment Of Scale
The larger your business can scale, the more you can earn. If there is a limit to how much you can scale, your business may not be able to go very far. Whenever you want to enter into a business, ask if it is possible to scale and reach millions of customers.
Facebook, Twitter, Snapchat, apps, and other software-based companies, are perfect examples of scalable businesses. By definition, software businesses can scale on a worldwide basis without the need for human contact.
5. The Commandment Of Time
Finally, a real Fastlane business must be able to automate. Ask yourself if you can get the business running without spending much of your own time and effort on it. Earning a lot of money and having the time to enjoy it requires a business that can be automated.
When you are in business, you will somehow run into competition. And MJ DeMarco writes that the best way to win the competition is to build a brand that people trust, admire and love. Businesses have identity crisis, but brands do not. And the identity crisis will force you as the business owner to go into a price war.
The author explains in the book why he chose such a scammy sounding title. He says that most people are suckers and want to believe in the overnight success or the infomercial that promises to tell you the secrets of wealth for just 5 easy payments of $99.99, so he catered to that flaw in the human mind.
In reality this book is more about teaching you the mindset you need to grow a sustainable business that won’t eat up your time. By leveraging your time and building an asset you will be able to get yourself on the fastlane and start on your road to wealth.
This book is an eye opener for people who have never tried any entrepreneurial adventures before. It does a great job laying out why the fastlane path is desirable and what the rewards will be if you can accomplish the difficult task of creating a business.
The Millionaire Fastlane is a comprehensive book for prospective business owners and entrepreneurs. Starting a business which satisfies a need and can reach thousands of people are the first steps to creating massive wealth.
After you start, consistent and intentional actions will lead to massive success over time.