PRO-SUMER POWER!
BY BILL QUAIN, PH.D.
PART ONE
THE PRO-SUMER MENTALITY
When you buy at discount, you subtract from your bank account. When you pro-sume, you add to your bank account.
Buying a home is a classic example of how smart pro-sumers can spend money and make money at the same time.
WHY YOU SHOULD ENLIST IN THE PRO-SUMER REVOLUTION
Benjamin Franklin may have discovered electricity – but
It was the man who invented the meter who made money.
- Earl Wilson
Syndicated newspaper columnist
The word pro-sumer is a combination of the words producer and consumer. Producers make money. Consumers spend money. Pro-sumers make money while they spend.
Pro-suming is a proven concept that’s been around for years, and a growing legion of people who understand this concept and are teaching it to others are making fortunes.
If You Own Your Home, You’re A Pro-Sumer
A classic example of pro-suming is owning your own home. When you buy a home, you’re buying a product, like a car or a couch. Unlike cars and couches, however, well-maintained homes in good neighborhoods gain in value over the years. In other words, a home appreciates instead of depreciates over time. In addition, homeowners build equity in their homes with each monthly mortgage payment they make.
The combination of appreciation coupled with the equity in a home (not to mention the fact that homeowners can write off the mortgage interest on their yearly income taxes) adds to the homeowner’s net worth. That’s why homes are far and away the single biggest source of wealth for the vast majority of North Americans. Government statistics show that 67% of the average American’s net worth it tied up in their home, proving that owning your own home is
A terrific investment!
Home ownership is the classic example of the power of pro-suming!
When you buy a home, you’re making money while you’re spending money. In the long run, you’re creating more wealth for yourself and your family. That’s why owning a home is referred to as an investment instead of an expense.
The money we spend buying the home increases, rather than decreases, out net worth. What a concept – and what a great deal for everyone involved! The homeowners create more wealth each time they make their monthly mortgage payment. And the mortgage companies create wealth by earning interest on the loan. As I said, home ownership is a classic example of pro-suming – homeowners produce wealth as they consumer. It’s a win/win for everyone!
Pro-Suming Every Time You Buy
The best news of all is that pro-suming isn’t limited to home ownership. The same pro-suming principles that work to create wealth for homeowners – equity, appreciation, and tax advantages – can be applied to create wealth for you and your family virtually every time you buy a product or service. The key is to think LONG TERM like a homeowner, instead of thinking SHORT TERM like a renter. In the long run, it’s better to pay an extra $100 a month for a mortgage and build equity than to “save” $100 a month renting and build nothing in return. In brief, the keys to pro-suming are to buy smarter, not cheaper…to thinks long term, not short term…and to think like an owner, not a customer.
Virtually anyone who understands the basic principles behind pro-suming can learn to create wealth by changing their daily buying habits. You don’t have to earn a Ph.D. in economics to understand these principles. They’re so simple and basic that even elementary-age kids running the neighborhood lemonade stand can learn them in a few minutes.
I’m always amazed when I run into people who refuse to acknowledge the power of pro-suming. Most of these people own their homes, and they’d never be caught dead renting.
“Why throw your money away on rent when you can own,” they’ll say. Yet these same people will fold their arms and close their minds when I talk about extending the concept of home ownership to all of their buying. Go figure.
It reminds me of Oscar Wilde’s great line, “Don’t confuse me with the facts!” The fact is pro-suming, like owning your own home, just makes good sense. And if some closed-minded people can’t accept that, then it’s their loss, not mine. Next.
Pro-suming: How the Rich Get Richer
Rich people have always understood the power of pro-suming. In the best-selling book The Millionaire Next Door, the authors list the key strategies most millionaires us to accumulate their wealth. Amazingly, these strategies are so simple and powerful that anyone can dramatically increase their wealth by putting them into practice.
According to The Millionaire Next Door, millionaires understand the difference between investing (money grows) and spending (money goes). Millionaires purchase assets that increase in value, such as quality stocks, instead of liabilities that lose their value over time, such as expensive furniture. Millionaires own their own businesses or are equity partners in the companies they work for. Millionaires own their own homes. Millionaires delay short-term gratification for long-term financial security. In short, millionaires look for opportunities to make money when they spend money.
In a word, millionaires are pro-sumers!
The Road to Financial Freedom Allows U-Turns
Billionaire J. Paul Getty once observed that “If you want to get rich, just find someone making lots of money and do what he’s doing.” Well, rich people are pro-sumers. They have more because they think like the store – they think like the owner rather than the customer and then act accordingly. So if you want what millionaires have, you have to do what millionaires do. And millionaires pro-sume rather than consume. It’s that simple.
What about you? Are you a “millionaire next door”? Or are you working harder just to stay even? If you’re working harder, you’re not alone. According to a United Nations study, Americans work more hours today than any other industrialized country – including the work-obsessed Japanese!
Unfortunately, working longer hours doesn’t necessarily equate to creating more wealth. A recent USA Today survey reported that half of Americans have less than $2,500 in savings, and when workers were asked how long it would take to fall behind in bill payments if they lost their jobs, 54% replied “three months or less”.
The good news is that it’s never too late for people to adopt strategies that can turn their lives around. It’s like The Family Circus cartoon by Bill Keane titled “Grandma’s Advice.” Grandma is surrounded by her four little grandchildren who are hanging on her every word. Her advice is timeless: “If you’re ever headed the wrong way in life, remember the road to Heaven allows U-turns.”
Grandma’s advice is right on the mark—it’s never too late to change our behavior. Her sage advice applies to finances just as surely as it applies to salvation: The Road to financial freedom allows U-turns.
What Direction Are You Headed In?
If you’ve been heading in the wrong financial direction because you’ve been thinking and acting like a consumer instead of a pro-sumer, it’s not too late to make a U-turn.
If you’re headed in the wrong direction on the financial road to freedom, most likely it’s because you didn’t know any better! You were just following the crowd! Like most people, you bought into the wrong plan – the consumer plan. And the only ones getting rich from the consumer plan are the stores.
That’s why I say if you want to have more, you have to think like a store. Hey, there’s no law that says only stores can sell products and create wealth. If they can do it, you can do it, too! All it takes is an understanding of how pro-suming works.
The first step to making your U-turn from a consumer to a pro-sumer is to open your mind to some new concepts. As a wise person once said, “Your mind is like a parachute. It only works when it’s open.”
You have to open your mind so that you can replace your old consumer thinking with new pro-sumer thinking. When you do that, you’ll start heading in a different financial direction – the same direction the millionaires next door are headed in.
It may not be the most popular direction.
But it’s the direction I want to go in.
What about you?
CHANGE YOUR THINKING
AND YOU CHANGE
YOUR LIFE
To think is to act.
-Ralph Waldo Emerson
In the mid 1990s, Apple Computer was on the brink of bankruptcy. Steven Jobs revitalized the company in the late ‘90s by introducing a breakthrough computer he called the “iMac.”
The ad campaign for the iMac was a creative and provocative as the computer itself. The ads featured black and white photographs of the century’s greatest thinkers and innovators, such as Albert Einstein, Mohandas Gandhi, and Amelia Earhart, to name a few. This simple slogan anchored each photo:
THINK DIFFERENT.
Why “Think Different’?
“Think Different.” That hasn’t always been great advice. In Galileo’s time, thinking different could have gotten you burned at the stake.
But today it’s imperative that people learn to challenge conventional wisdom and think different. Relying on conventional wisdom won’t get you anything but conventional results. (Given the fact that almost half of the conventional workers with conventional jobs earn less that $25,000 a year and carry $2,000 or more in monthly credit card debt, well, who needs that kind of conventional results!)?
Great thinkers are different thinkers. They don’t fall into the trap of thinking and acting like the herd. They’re mavericks. They break away from the herd mentality. It’s the mavericks who blaze new trails and open new frontiers. Henry Ford was a maverick. The late Same Walton, founder of Wal-Mart, was a maverick. Jeff Bezos, the founder of Amazon.com, and a dozen other Internet billionaires are mavericks.
It pays, literally, to THINK DIFFERENT.
Job and Discounts: THINKING THE SAME
What about the vast majority of people…those people who THINK THE SAME… instead of THINK DIFFERENT? How do they go about producing wealth?
Most people who THINK THE SAME about producing wealth get a job. That’s the obvious way to produce wealth, isn’t it? When people with jobs want to produce more wealth, they seek a promotion. Or they look for a better-paying job. Or they work over-time. Or they get a second or even third job.
They may change their jobs, but they don’t change their thinking. They THINK THE SAME. That’s why today, Americans work longer hours than any other nation.
Most people THINK THE SAMW when it comes to shopping, too. We’ve been taught to “save” money by buying stuff at discount or on sale. Shopping at discount stores has become a national obsession as more and more shoppers seek to “save” by buying cheaper, not smarter. Witness the dramatic growth of huge discount superstores such as Wal-Mart…K-Mart…The Home Depot… Costco… and the like.
Consumers are lining up at discount stores and surfing the latest discount website trying to “save” money by buying things cheaper. But they’re only kidding themselves. You can’t “save” money by consuming, no matter what price you pay, because the money is going out, not coming in.
You Can’t ‘Save’ By Buying at Discount
People who THINK THE SAME and try to produce wealth in a job or “save” money by buying stuff at discount are like the guy who lost his car keys late one night. The man paced frantically back and forth under a bright street lamp searching for his keys.
Several strangers stopped to help. Before long there were 10 people combing every inch under the streetlight. Still no keys.
“Are you sure you dropped them under the street light?” one of the strangers asked.
“No,” replied the man, “I actually dropped them in that dark alley behind us. But I decided to look under the street lamp because the light is so much better.”
People are the same way – they search to produce more wealth where they can see better, that is, in the same old familiar places – in their jobs and by “saving” money buying at discount.
HELLO-O-! If you’re looking to produce significantly more wealth by working harder at your job or by buying products and services at discount, you’re looking in the wrong place! Nothing wrong with jobs, you understand. I love my job as a college professor. But I don’t count solely on my job to make me financially free!
Likewise, I don’t count on “saving” money by buying at discount. Truth is, deep discounts weren’t designed to create wealth for consumers by “saving” them money. Deep discounts were designed to create wealth for store owners by taking money from consumers.
Now, don’t get me wrong – I’m not saying you should always pay full retail prices when you could buy the same thing at a discount. That would be silly. Discounts are great for consumers, there’s no question about that. And everybody, even billionaires, love a bargain.
But don’t kid yourself that you’re “saving” money when you buy at a discount. When you consume products, you’re subtracting from your bank account, not adding to your bank account. You’re spending, not saving.
As I’ve said before, buying cheaper isn’t designed to create income. People who try to focus on building more assets by buying cheaper are looking under the street lamp because the light is better, not because it’s the best place to look. They’re focusing their attention and basing their actions on the wrong set of assumptions. They’re focusing their attention on the wrong thing- they’re focusing on “out-go” rather than income.
The Danger of Focusing on the Wrong Thing
It’s easier to focus on the wrong thing than you might think. It happens to us all the time. Here’s a little test to see if you’re focusing on the right thing:
Instructions: Using a pencil, draw the quickest path from the start of the maze to the finish. Time yourself to see how long it takes.
Are you done? How long did it take you to solve this problem? If you were like most people, it took you 30 seconds to two minutes to draw a line through the twisting maze.
Would you be surprised to learn that some people can solve this same puzzle in less than a second? How? They draw a curved line around the maze from start to finish.
“That’s against the rules!” You may shout.
But look at the directions again. Nothing says you have to stay within the lines…or even within the maze itself. But most people draw a twisting line through the maze because they fall victim to conventional thinking. They’ve drawn lines through mazes before, so they assume they should draw a twisting line through this one. As a result, conventional thinkers spend a lot of extra time and effort solving the puzzle because they’re focusing on the wrong thing – they’re focusing on the twists and turns in the maze, not the directions.
If you fell into the trap of conventional thinking, you’re, too, focused on the wrong thing and missed the shortest route from start to finish. Unconventional thinkers, on the other hand, program themselves to change their focus. They look for shortcuts. They look for creative solutions. They seek out new…and better…and unconventional ways of solving problems. In other words, they force themselves to THINK DIFFERENT! And when we think different, we position ourselves to get different results.
Think Like a Store
Folks, if you’re like most people, you’re following conventional thinking when you shop. You’re thinking like a consumer. Conventional wisdom tells us that stores produce wealth by selling stuff. Conventional wisdom tells us that we consume our wealth by buying stuff from stores. Conventional wisdom tells us that stores get richer. We get poorer. And that’s just the way things are.
Hold it right there! Take off your conventional wisdom glasses and look at the direction again! Where is it written that you have to think and act like a consumer? Where is it written that you have to work your way through the store maze, buying as you go? (By the way, ever notice how the aisles in supermarkets are set up like mazes? Coincidence? Think about it…)
“THINK DIFFERENT!”, I say.
You can crash through the store maze. Or you can go around the store maze. You can stop thinking like a consumer and start thinking like a producer. You can start thinking like an employee. You can think like the store and position yourself to produce wealth, just as easily as you can think like a customer and consume wealth. In other words, you can start thinking like a pro-sumer, instead of thinking like a consumer.
The first step to THINKING DIFFERENT is to take off your consumer’s hat… and put on a producer’s hat instead. That simple shift in thinking is what separates the haves from the have nots. The rich from the poor. The wishful thinkers from the “goal getters.” That’s way I say, “If you want to have more, you have to think like the store.”
Are You a Rich Dad?…Or a Poor Dad?
Rich Dad, Poor Dad is a wonderful book that clearly illustrates what I’m getting at. The author, Robert Kiyosaki, grew up with “two dads.” His biological father was his “poor dad”, an educated professional who taught his son that conventional thinking was the way to wealth: “Go to college…work hard…earn money… and climb the corporate ladder” was the poor dad’s advice.
Kiyosaki’s “rich dad” was the father of a friend who encouraged his own son and Kiyosaki not to work for money, but to let money work for them! The philosophy of the rich dad was surprisingly simple: The key to getting rich is to understand the difference between a liability and an asset.
“An asset puts money in your pocket,” the rich dad taught them. “A liability takes money out. Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets.”
In other words, most people might think they’re “saving” money when they buy at discount, but all they’re really doing is acquiring another liability. THINK DIFFERENT!
What Do You See When You Shop?
There’s an old Spanish expression that sums up how our thinking affects our outlook on life: “When a pickpocket meets a priest, all he sees are pockets.”
Isn’t that a great expression? It illustrates how our thoughts color the way we see the world. Pickpockets think of only one thing – stealing valuables out of people’s pockets. Before pickpockets can change their behavior, they have to change their thinking. What do you think would happen if the pickpocket would “think different” and view the world from the priest’s point of view? His life would take a 180 degree turn, wouldn’t it?
The same phenomenon applies to consumers – they see the world as a place to spend money rather than produce money. When consumers visit a deep discount store or website, all they see are products to spend money on. But what happens when consumers look at those products from the store’s point of view? They begin to see assets, instead of liabilities. And they begin making the transition from poor dad (and moms)…to rich dad (and moms).
If you keep thinking like a consumer, looking to “save” money by buying everything at discount, then the only thing you’ll end up discounting is your dreams! When you focus on buying at discount, you end up with a garage full of stuff you bought for 40% off. Two years later, when you decide to get rid of all the clutter, you’re lucky to get a penny on the dollar at a garage sale. You may have “saved” 40% in the short run, but in the long run you’ve discounted your dreams 100% because you can’t afford them anymore!
Folks, it’s time for YOU to think different, too! It’s time to think like the store…so that YOU can have more!
PART TWO
PRO-SUMING IN THE NEW MILLENNIUM
The Internet makes it easier than ever for consumers to spend money.
That’s why it’s imperative that people start thinking like producers, instead
Consumers.
By buying on-line from themselves, pro-sumers can leverage the power of the
Internet to create more income, instead of “out-go.”
E-FERRAL COMMERCE:
PRO-SUMER POWER ON
THE INTERNET
Everybody doing business directly –
To me that’s the power of the Internet.
--Michael Dell
Founder & CEO of Dell Computer
From day one, Referral Commerce has welcomed technology with open arms.
Unlike traditional companies that avoid change at all cost, Referral Commerce has always invited innovation and change. Industry pioneers understood from the beginning that without technological advances, Referral Commerce would never reach its full potential.
The advent of affordable computers, for example, enabled referral-based companies to keep track of ever-changing and ever-expanding referral networks.
Cheap long distance rates allowed people to refer products and expand their businesses across continents and around the globe.
Innovative communication devises such as fax machines…cell phones…and audio and video machines made it easier and more cost effective for average people to build big, profitable referral organizations.
Each time an innovative, timesaving device hit the market, referral-based partners snapped it up and put it to use. As technology grew, so did the Referral Commerce industry.
The Internet Explodes onto the Scene
And then, seemingly out of nowhere, the most amazing technological breakthrough in history exploded onto the world scene-BOOM! THE INTERNET!
At first, traditional companies didn’t know what to do with this thing called the Internet. It was so, well, unconventional. So loosely structured. So open. So massive. So unruly.
Traditional companies were besieged by hard-to answer questions: How do we harness the Internet’s speed and reach? How can the Internet make our business more efficient? And most of all, how do we keep the Internet from “cannibalizing” out brick-and-mortar operations?
Forward-looking Referral Commerce companies, on the other hand, immediately recognized that the explosion of the Internet wasn’t something to be feared – it was something to be embraced! If cell phones and fax machines could dramatically grow the Referral Commerce industry, just think what the Internet could do! The potential for referral-based companies to grow their business on the Internet was not just exciting – it was mind-boggling!
CLICK AND GROW RICH:
THE E-FUTURE IS NOW!
The Internet is not an ad-on business
It is a way to build an enormous new business.
--Sumner Redstone
CEO of Viacom
The DotComGuy-I suppose he was inevitable. The movies EdTV and The Truman Show cam first, which isn’t surprising given the fact that today reality imitates the movies, as opposed to the movies imitating reality. So it was only a matter of time before a “real” DotComGuy stepped into the spotlight.
On
DotComGuy can have visitors, but they aren’t allowed to bring him any supplies or gifts, and he can venture no further away from his house than the backyard.
His sponsors hope to create awareness of their websites by broadcasting a 24-hour live video feed of DotComGuy’s new on-line life. Dozens of digital cameras have been set up throughout the rented house.
“Out vision is that new on-line shoppers will go to our site to learn how to utilize e-commerce,” said Maddox. Among his first on-line buys were shampoo, toilet paper, cleaning supplies, groceries, and carry-out food.
“We certainly don’t recommend that people lock themselves away from the world,” said Len Critcher, president of DotComGuy, Inc.,” “but we will prove that it can be done”.
So how does DotComGuy expect to make money to pay his e-commerce bills? His sponsors are paying hm $24 a month, but the fee will double every month as na incentive to stay in the house. Doesn’t sound like much, does it? But remember – DotComGuy’s pay of $24 a month grows exponentially. Near the end of this chapter we’ll do the math – and you’ll see why the DotComGuy isn’t so wacky after all…
It’s a Wired, Wired World, After All
Like I said, it was inevitable that the Internet would give birth to a DotComGuy or Gal. Nowadays people will do almost anything to attract attention to themselves. But the story of DotComGuy teaches us two important lessons as we enter the 21st century.