"The Law of Effection states that the more lives you affect in an entity of scale and/or magnitude, the richer you will be." — MJ DeMarco
Why do teachers earn peanuts while athletes earn millions?
Is it because athletes work harder? No. A teacher works incredibly hard.
Is it because athletes are smarter? No.
It is because of the Law of Effection.
In Part 5 of The Millionaire Fastlane series, we decode the absolute law of wealth. The market does not care about your "passion" or "hard work." It only cares about Impact. If you want to make millions, you must serve millions.
1. Detailed Analysis: Scale vs. Magnitude
To enter the Fastlane (Wealth), you must hit one of two variables in your business equation. You cannot be low on both.
Variable A: Scale (Reach)
This means affecting Millions of people a little bit.
Example: Coca-Cola. They sell a ₹20 bottle. But they sell it to 1 Billion people.
Example: PhysicsWallah. Alakh Pandey sells a course for ₹4,000. But he sells it to 5 Lakh students.
Math: Low Price x High Volume = Massive Wealth.
Variable B: Magnitude (Importance)
This means affecting a Few people a LOT.
Example: Brain Surgeon. He saves a life. That is high magnitude. He charges ₹5 Lakhs per surgery.
Example: Lamborghini. They don't sell millions of cars. They sell a few cars for ₹5 Crores each.
Math: High Price x Low Volume = Massive Wealth.
2. The Trap of the Middle
Why are most people poor or middle class?
Because they have Low Scale AND Low Magnitude.
Example: The Local Barber
• Scale: He can only cut hair for people in his neighborhood (maybe 1000 people). He cannot cut hair for someone in another city.
• Magnitude: A haircut costs ₹100. It doesn't save a life (Low impact).
Result: He violates the Law of Effection. He will never be rich unless he opens a chain of salons (Scale) or invents a hair-growth serum (Magnitude).
3. Break the Prison of Geography
If your business depends on your "Pin Code," you are in trouble.
• A restaurant is limited to its city.
• A shop is limited to its street.
• An internet business is limited only by the World.
The Strategy: To get Scale, you must digitize.
If you teach Yoga in a studio, you are limited to 20 students (Slowlane).
If you record a Yoga Course and sell it online, you can have 20,000 students (Fastlane).
Same skill, different vessel. One follows the Law of Effection; the other breaks it.
4. Real-Life Examples (Indian Context)
PhysicsWallah (The Power of Scale)
Alakh Pandey started as a local tuition teacher (High Magnitude for 20 kids, but Zero Scale). He was making a living, but not wealth.
Then he moved to YouTube. Suddenly, his teaching reached millions (Infinite Scale).
He didn't change his subject; he changed his Reach. He engaged the Law of Effection and built a Unicorn ($1 Billion Company).
The Real Estate Developer (The Power of Magnitude)
A builder in Mumbai doesn't sell to millions. He sells 50 luxury flats.
But each flat costs ₹10 Crores.
Because the Magnitude (Price/Value) is so high, he doesn't need millions of customers. He only needs 50 to become ultra-rich.
Lesson: Either serve the masses (Scale) or serve the classes (Magnitude).
5. Passion vs. Problem
People say: "Follow your passion."
DeMarco says: "Follow the Problem."
Your passion might be "Knitting socks for cats."
• Does the world need this? No.
• Does it have scale? No.
• Does it have magnitude? No.
If you follow this passion, you will be poor.
Instead, find a problem that affects Millions of people (e.g., "Finding a cab is hard" -> Uber). Solve that, and you will have the money to pursue any passion you want later.
Key Takeaways
- Impact = Income: If you want more income, increase your impact. Affect more people or affect them more deeply.
- The "Scale" Route: Low Price x High Volume (Software, FMCG, Content).
- The "Magnitude" Route: High Price x Low Volume (Luxury, Real Estate, Specialized B2B).
- Avoid the Middle: Low Price x Low Volume = Poverty. (Local Mom & Pop Shop).
Frequently Asked Questions (FAQ)
Q1: Can I scale a service business?
A: It's hard. You trade time for money. To scale, you must "Productize" the service (turn it into a course, an app, or a franchise) so it can be sold without your direct involvement.
Q2: What if I don't want to be famous?
A: Scale doesn't mean you have to be famous. Your product needs to be famous. The owner of Colgate is not famous, but Colgate is in every house.
Q3: Which is easier: Scale or Magnitude?
A: Scale is generally more accessible today due to the Internet. You can reach 1 million people on Instagram for free. Magnitude usually requires high skills (Surgeon) or high capital (Real Estate).
Up next: Part 6 – The 5 Commandments (CENTS): Control & Entry.
📚 Credit & Disclaimer:
This post is a summary based on the bestseller "The Millionaire Fastlane" by MJ DeMarco. Content is for educational purposes only.
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