The Airplane Game

In the late-1980s a money-making scheme called the Airplane Game was invented and the rules were quite simple. All you had to do was hand over $1,500 and the game would, in turn, give you back $12,000. What a world, right?

The reason it was called the Airplane Game is that every new player became one of eight “passengers” on a flight that also consisted of four flight attendants, two co-pilots, and a pilot. All eight passengers put in their $1,500 which went directly to the pilot as their cost of admission on the “flight.” The pilot then left the game having already put in their own initial $1,500 and working their way up the ladder. The co-pilot then started two new planes, where each passenger was required to bring on a new passenger (and thus $1,500 more per person). After each successive round, the passengers moved up to flight attendants and then became pilots themselves after a turn as co-pilot, picking up their $12,000. And the more people you brought into the game, the faster you earned your payout.^[2]

This idea spread quickly to other areas across the country. It only took four days in some cases for people to move up the ranks to become a pilot and cash out. The game worked so well for so long that many players went through the process on multiple occasions, each time picking up a cool twelve grand. One man in Florida worked his way through the “airplane” nine times, making more than $100,000 in the process.^[3]

The Airplane Game didn’t last because there was no business model. There were no profits, products, or revenue to speak of. In fact, the whole idea behind the airplane game was good vibes and positive thinking. Those participating at the outset assumed you could visualize your way to abundance, happiness, and wealth. And the game sounds like a sure thing until you realize the original eight passengers need to recruit 64 new passengers to get paid. Those 64 passengers then needed to turn around and recruit 512 new passengers to keep the house of cards from falling apart. For every $12,000, eight people had to initially “lose” $1,500. There was also the small matter of the fact that the FBI frowned upon the operation of a Ponzi scheme so this whole charade fell apart when law enforcement found out about it.^[4]

I know what you’re thinking.

THESE STORIES ARE INSANE!

A secret inheritance from a Nigerian prince?!

Handing over your life savings to a pyramid scheme because of good vibes?!

And these stories do sound insane when you’re not personally involved. But people make insane decisions with their money all the time. You may never become involved in a Ponzi scheme or hand your money over to a 14-year-old kid from Africa posing as royalty, but everyone makes mistakes when it comes to their finances. We are emotional beings, and money tends to bring out the worst in those emotions.

The world is a complex place. No one has it all figured out. We want to believe there’s an easy path to improve our finances, health, and relationships. A secret club that’s reserved only for those lucky enough to stumble across the Holy Grail that will cure us of our ills. I wish that Holy Grail existed, but there is no tried and true way to get rich overnight or fix your life through the powerful words of a guru.

Most of the stories you read in this book will make you think, “There’s no way that could ever happen to me.” The truth is, even if you never fall prey to massive fraud or a Ponzi scheme, everyone makes dumb decisions with their money. It’s in our DNA. Most business and finance books tell you how to be successful. They purport to give you the secret, the recipe, the motivational quote, or the simple steps to earn riches or emulate successful entrepreneurs, business models, investors, or CEOs. This is not one of those books. The problem with only studying successes is they’re often overflowing with survivorship bias. You never hear about all of the other failed businesses, ideas, or individuals who tried a similar route but failed. The person who won the lottery can’t teach you how to follow their path to success and riches.

There is much more to learn from failures, fraud, charlatans, shady sales practices, and scams because it gives you some idea of what to avoid. There is no formula for getting rich quickly. No top-ten list or morning routine of high-functioning CEOs will automatically make you a successful entrepreneur. But studying poor decisions, gullible individuals, hucksters, irrational human behavior, and mental errors can help you see these things in yourself. Avoiding stupidity is often more helpful than trying to emulate brilliance. Even brilliant people can make bad decisions (as you will learn throughout these chapters). Money is one of the most unifying mediums on the planet. People of all levels of wealth – the rich, the poor, and everyone in between – make dumb decisions with their money. The simple reason for this is because money decisions have nothing to do with finances and everything to do with human nature.

The goal of this book is to help you make better decisions by learning from the mistakes of others and avoid getting taken advantage of.