Are You Building a Pipeline or Hauling Buckets?

One of my favorite all-time business books is The Cashflow Quadrant by Robert Kiyosaki.  If you haven't read it yet, then after you read this email, RUN (don't walk) to your nearest bookstore or library and pick up a copy.

Anyway, I usually read over it once a year and was looking through it the other day.  Here's a story that Kiyosaki uses to illustrate the difference between rich and poor, employees and business owners, etc. 

Once upon a time (nope, not in a galaxy far, far away)…

There was a quaint little village.  This little village was a great place to live except for the fact that there was no water unless it rained.

The village elders decided to solve the problem by announcing that they'd be taking bids for contracts to have water delivered to the village on a daily basis.

Only two people volunteered to take on the challenge and the village elders awarded the contract to both of them.  They figured that a little competition would keep the prices low and ensure that a backup water supply was available just in case.

The first of the two winners, Ed, immediately got to work.  He bought two steel buckets and began running water back and forth along the trail that ran between the village and the lake which was a mile away.

He was immediately making money as he worked hard, dawn to dusk, hauling water from the lake with his two buckets.  He emptied the buckets into a large storage tank that the village had built.

So every morning he had to get up before all the other villagers (to make sure there was enough water available during the day whenever the villagers wanted it).  It was tough, tough work but Ed was ecstatic to be making so much money and for having one of the only two contracts to provide water to the village.

But what about the second winning bidder?

Well, the second winner, Bill, took off for awhile - completely disappeared.  That was fine for Ed since he had no competition.  Ed was making all the money.

Instead of buying a couple of buckets to compete with Ed, Bill had written up a business plan, created a company, found four investors and hired a president to do the work. 

(STOP!: Don't give in to unpowerful thoughts like "I don't know how to start a company" or "I don't know how to hire a president"…in fact, "I don't know" is a bad excuse in general.  Back to the story…)

Bill returned to the village six months later with a construction crew ready to get to work.

Within a year, his team had built a large volume, stainless steel pipeline connecting the village to the lake.

At the grand opening, Bill announced that his water was cleaner than Ed's (people had complained about Ed's water being dirty).  On top of that, Bill also announced that he would supply the village with water 24 hours a day, 7 days a week, 365 days a year.  On the other hand, Ed could only deliver water on the weekdays since he didn't work weekends.

Then, to add insult to injury, Bill announced that he would charge 75% less than Ed did.  So higher quality, always available, cheaper water!  The village cheered and immediately ran to the faucet at the end of Bill's pipeline.

In order to compete, Ed lowered his prices by 75%, purchased 2 more buckets (and added covers to them this time).  So now he was able to haul 4 covered buckets each trip.  He also hired his two sons to work the "business", giving him extra help for the night shift and on weekends.

When the kids left for college, he told them to hurry back because one day, that business would be theirs.  For some strange reason, they never came back.  Hmmm….

On top of that, Ed started having problems with his employees and the union.  They wanted higher pay, better benefits, and only wanted to haul one bucket at a time.

Bill, on the other hand, saw that if one village needed water, then other villages probably did too.  So he went from village to village selling his super-clean water delivery system around the world.

Granted, Bill only makes about a penny per bucket of water that's delivered, but he delivers billions of buckets of water and all that money pours right into his bank account.  (Sidenote: $0.01 x 1 Billion = $10 million…not bad huh?)

Bill lived happily ever after and Ed worked hard for the rest of his life.

The End.

So what's Kiyosaki's point in all this?  In short, work smarter not harder but I think it goes a little deeper than that.

One of the key points in this story is the idea of leverege…recognizing that very few people achieve true success on their own and that more often than not, you'll need to duplicate yourself through other people, technology or some other type of "system".  After all, there's only so much time in a day, right?

Anyway, enough of the philosophy.  I just think that's a powerful story and had to share it.

So what about you?
Are you building a pipeline or are you hauling buckets?
How's that working out for you?

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