The Foolishness of Chasing the Quick Buck
How often have you thought to yourself how great would it be to make a lot of money without a lot of work? To have a passive income stream? To build the next Instagram?
Do you think you’re the only one who wants to do that?
The marketplace of people who want to make a quick buck is huge. The competition is enormous fighting for the obvious low hanging fruit… people trying to build the next hit web app, write a quick e-book that becomes a bestseller, or get a quick pay day. A whole cottage industry has grown up that preys on people’s desire for a quick buck (think of everything from Nigerian scams to Tim Ferriss’s 4 hour workweek to real estate & stock seminars).
Here’s my breakdown of the different types of get-rich-quick schemes ranging from low brow to high end:
- Nigerian scams – “Just send your bank account details and I will wire you $9.6 million”
- Multi-level marketing - “We have an amazing Sham-Wow product and if you can sell it to your friends and family and they sign up and sell it to their friends and family…”
- Investment Seminar - “Sign up for our $999 weekend seminar and learn how to be a millionaire like me!”
- Tim Ferriss – “Work only four hours per week and have an income stream forever” (forget to mention Tim works 70 hours a week)
- Copycat Businesses - “X person is making $200k a year doing Y business. I would be happy to make $50k a year and work 1/4 as much!”
The elderly and infirm fall for the Nigerian scams, the uneducated fall for multi-level marketing schemes, low to mid level employees fall for the investment seminars, and the young and smart fall for Tim Ferriss’s ideas (some of which are quite good, but the concept as a whole is unrealistic).
Key principle undermining the quick buck: If it is so easy to make money in a certain specific area then why wouldn’t someone work just a little harder than you to make that money? If you can make $100 selling a crappy e-book, what is to stop a competitor from offering an e-book for $20 that is slightly better written? If you can build a web application in 200 hours of work, what’s the barrier of entry to someone else doing the same thing but better? Competition will always make it more difficult to make money in an area. The first guy might have an advantage, but unless he works his butt off to defend it competitors will come eat your lunch.
Why competitors will eat you alive if you just want a quick buck: So you want to start a business that doesn’t take a you a lot of time but provides some nice extra income? Let me give an example of why this doesn’t work. You see that I have been successful at web design and think “Hey, I would be happy with 1/3 of Joel’s success and only working 1/3 as much, I’m going to start a web design company!” So you go out and get a couple of books on web design, or try to hire a web designer. You put up a website selling your services. You incorporate and set everything up. Nothing happens. Why? There are one thousand and one competitors working overtime to be successful and fight for the potential clients out there. You need to develop a competitive advantage (better looking websites, lower costs, white paper directory, major partnerships, better programming, etc). If you aren’t outworking your competitors you will have no competitive advantage and you will get no business. Competitive advantages are not easy to develop – each one of your competitors are focused on being the best in a certain way and many times have spent years honing their edge. You think you will just laze about and customers will choose you? Rarely.
The Bottom Line: Yes, occasionally people get lucky and win the lotto or build a web app in little time that goes viral or have some other piece of good fortune with little effort. However, this happens far more rarely than you might think. Most successful people spent years and years working hard at it. There is no quick buck – usually just scams. If you focus on being the best at something and developing a competitive advantage you will be very successful and make a lot of money. If you focus on making money fast with little work, you will never get anywhere.