Control vs Ownership ...

[johnj34]

Hello MJ,

I've been reading over your materials (great by the way) and had a question. QUESTIONS: You mention that we need to own and control which is kind of where I'm a little held up One of the famous sayings I've always went by was to "Own nothing, control everything" I'm also a fan of the saying "Id rather have 1% of 100 mens efforts than 100% of my own" and a famous dealmaker said to spend "No money, No Risk, Little time" in business deals. If we OWN whats being sold, there is a lot of liability on our heads, especially in the current economy where everyone is starting to get sue happy for ridiculous reasons.

Plus if your focusing on that one thing that you own, aren't you putting all your eggs in one basket? If that income dries up, your done and the chances of someone coming along and buying your business for millions is very rare which would be my only valid reason for building one business with full ownership and control?

Therefore isn't one better off to obtain control of other companies access, assets, opportunities, etc (buyers, inactive buyers, distribution channels, etc) and then monetize them via others selling it - leverage? To have multiple deals going instead of one company their running? Then one wouldn't have the liabilities of being the owner of that product/service but they'd still have control plus they'd be in numerous businesses without liability. You mentioned inventing, but even with inventing, the company that licenses it from the inventor takes on all liability when promoting and selling it while the inventor sits back and collects the royalties without running a business and can sleep at night. Interested in hearing your advice on this. PS: Most of my thinking comes from the well known dealmaker/author Jay Abraham, I've read mostly his stuff over the years.

 

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[MJ DeMarco]

I'm also a fan of the saying "Id rather have 1% of 100 mens efforts than 100% of my own"

I agree with this -- you want to be the top of the pyramid -- the structure is the details. This is why I say don't join MLMs, create them, Don't join affiliate programs, offer them. Don't wholesale/retail, manufacturer. In business, there is a food chain and you should always strive to be on the top of that chain wherever possible.

If we OWN whats being sold, there is a lot of liability on our heads, especially in the current economy where everyone is starting to get sue happy for ridiculous reasons.

If you don't want to get into business due to risk, then business isn't for you. Risk is in everything, including investments. Risk is in a job. Risk is hoping the markets return 10% for 40 years.

When I owned my company, there were substantial risks which is why I had paid significant $$ toward liability insurance. Risk management comes with the territory.

Plus if your focusing on that one thing that you own, aren't you putting all your eggs in one basket?

Yes. I believe that monogamy will lead to polygamist interests. To give you an example, I put all my eggs in one basket (my company was the monogamous effort) and then when I sold it now I own multiple companies (via investing, stocks, etc.) polygamy. If you follow the stories of tech entrepreneurs who make $$ in one company, they often "sprout" out into multiple companies thereafter -- monogamy makes polygamy possible.

The ultimate dealmakers seem to have a similar pattern -- make millions in one company and then after they sell it, they go off and become serial -- invest in multiple deals, companies, partnerships.

This is my opinion and of course, there is no absolute answer.

Therefore isn't one better off to obtain control of other companies access, assets, opportunities, etc (buyers, inactive buyers, distribution channels, etc) and then monetize them via others selling it - leverage?

Without knowing the numbers or the control structures I can't say -- at the root of any Fastlane transaction will be scalable mathematics and value -- if it exists, Fastlane events are possible.

Great post, I'd be interested in hearing what the community has to add.

 

[johnj34]

MJ

MJ,

Thank you for your reply. I just thought I'd clarify my previous post using a few examples.

Example 1: In real estate, you can get an Option to buy a home and then turn around and do a double closing and make a huge markup. No risk, little time, no money invested, full control without ownership.

Example 2: In business, you can get exclusive rights to sell a product/service thats unique and then turn around and license it to a company to sell. If for example you tied up the rights to some store windows in a city for advertising and then licensed those rights to a local advertising agency, you could make a % of the advertising without owning those stores/windows. No risk, little time, No money invested. Full control without ownership.

Example 3: You could connect company A with company B that markets to the same crowd and since they don't compete they could piggyback off of each others advertising/traffic with you getting a % of all the sales that result. No money, no risk, little time but no control on this one.

All 3 of these examples wouldn't require you to run a traditional business but could make you millions. In all 3 examples you would not own the product and you would have no liability at all. I hope this clarifies my question a little better. Thank you for being honest and straight forward, its much appreciated by everyone.

 

[GlobalWealth]

monogamy makes polygamy possible.

MJ,
I have been telling my wife that for years, but she still isn't buying it for some reason...

 

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[MJ DeMarco]

Example 1: In real estate, you can get an Option to buy a home and then turn around and do a double closing and make a huge markup. No risk, little time, no money invested, full control without ownership.

Example 2: In business, you can get exclusive rights to sell a product/service thats unique and then turn around and license it to a company to sell. If for example you tied up the rights to some store windows in a city for advertising and then licensed those rights to a local advertising agency, you could make a % of the advertising without owning those stores/windows. No risk, little time, No money invested. Full control without ownership.

Example 3: You could connect company A with company B that markets to the same crowd and since they don't compete they could piggyback off of each others advertising/traffic with you getting a % of all the sales that result. No money, no risk, little time but no control on this one.

What you are describing is more like arbitrage, opportunity sniping, and middle-man brokering. Fastlane? Sure if you conquer scale (That means II becomes the strategy) -- also, these strategies satisfy the TIME constraint very nicely. I mentioned this in my book briefly, but if something doesn't meet all 5 Commandments, that doesn't mean it isn't Fastlane, or that you can't make a lot of $$ doing it. I try to look at things in terms of probabilities, not in absolutes.

If there are value (or need) in these strategies and you can do it repeatedly with profits (II) AND control the deal, then by all means go for it -- sounds like a favorable road to me. After all, there is a commandment called the Commandment of Control -- not the Commandment of Ownership. :smxB:

 

[GlobalWealth]

"Own nothing, control everything"

This is a JD Rockefeller quote and the one at the top of my website's homepage. I agree completely with that statement, but maybe from a slightly different perspective.

I like the idea of minimizing my risk and segregating assets giving me diversification and peace of mind. For example, I use LLC's and trusts to own various assets. I am not the owner of the asset, but through my entities I am in control.

Rockefeller used similar tactics in his heyday as well, albeit on an enormous scale.

I was just having a conversation with my 11 yr old son last week about business. Being raised in an entrepreneurial family (me) as well as my father and grandfather and various siblings, he is very in tune with the business world for an 11 yr old. He is constantly asking questions about business which gives me hope that he can take care of me when I'm old.

The discussion was about making real money. I told him the only way to make real money is through the use of leverage. You can either leverage people, or you can leverage money.

Most of us early in our careers didn't have any money, so we leveraged people. In line with your statement above "Id rather have 1% of 100 mens efforts than 100% of my own", I built a business that made a little bit of money off a lot of people.

I then took this monogamous endeavor and invested in other assets like real estate and other businesses. This is now leveraging money. Once I sold that company I took funds and invested it in various assets further expanding my income producing base and leveraging money.

My investments all flow through other entities which means I now own virtually nothing, but control everything (at least within my tiny sphere). And now I leverage money as opposed to people.

 

[Rickson9]

"'Id rather have 1% of 100 mens efforts than 100% of my own"

Therefore isn't one better off to obtain control of other companies access, assets, opportunities, etc (buyers, inactive buyers, distribution channels, etc) and then monetize them via others selling it - leverage? To have multiple deals going instead of one company their running? Then one wouldn't have the liabilities of being the owner of that product/service but they'd still have control plus they'd be in numerous businesses without liability.

In my opinion, this is the cornerstone of my stock investing. In addition to having a small percentage of the efforts of thousands of workers, I have a kick-a$$ entrepreneur owner operator CEO running the show, and no liability.

Best regards.

 

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[johnj34]

Does anyone else here in the forum put together deals for a living from their home office instead of running traditional companies and make millions doing it? I do deals from home via the Internet and phone and do 6 figures a year and have a ton of free time but am anxious to hear if anyone makes millions doing deals (putting companies together, licensing, inventing, etc)?

 

[MJ DeMarco]

Some interesting links...

Twenty two (22) simple inventions that made Inventors or Companies Residual Wealth! | andrew.spriegel's blog

 

[andviv]

I do deals from home via the Internet and phone and do 6 figures a year and have a ton of free time

John, please do tell us more about this... it is very interesting.

About your question about millions, have you spend some time thinking of ways to scale what you do so it can be faster, easier to replicate, so it can generate millions?

[I am loving this thread....]

 

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[alainn]

how does someone go about becoming an inventor...

also, another question:

MJ, you always are completely against trying to sell your idea and get rich through this.. you encourage others to execute and go through a process to turn that idea into a real product. My question is: what's wrong with licensing? licensing your idea to others and having them do all the work. You make royalties in the end and can end up in the fastlane too. Lots of people have done this.

I want to understand your point of view MJ.

 

[johnj34]

I'd also like to hear MJs reply on this.

 

[MJ DeMarco]

MJ, you always are completely against trying to sell your idea and get rich through this.

Not sure how you came to this conclusion as it isn't correct. An idea that is executed into a patent or a license ceases to become an idea because it has been implemented.

My question is: what's wrong with licensing? licensing your idea to others and having them do all the work. You make royalties in the end and can end up in the fastlane too. Lots of people have done this.

Absolutely nothing - I never said there was anything wrong with it or that it wasn't Fastlane. In general, Fastlaners will sell licenses (driver) vs buying them (hitchhiker) -- licensing is another Fastlane road and is strong several commandments, TIME, being one of them. Licensing is similar to rental real estate with higher potentials for scale.

 

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[365]

"Own nothing, control everything"

GlobalWealth pointed out that this relates to personal ownership. I think the statement is frequently being misinterpreted.

Ownership is (almost) everything. Whether I own an asset personally or through an infinite number of legal entities has significant implications. But not as many implications as whether I actually own (directly or indirectly) the asset or whether I am serving the person who owns the asset.

We're living in capitalism. You can earn a return on two things: manual/intellectual labor and capital. If you don't focus on building up capital you will have to earn your living with labor. "Dealmaking" is labor. It can be quite profitable but it is not scalable. Unless you put your own capital at risk in either the deal or by building a business around it.

Stop chasing a quick buck and easy solutions. Don't be the consultant, be the person who has consultants working for him. Don't try to "could connect company A with company B". Own the damn company A and buy company B!