The Parable of the Pipeline: How Anyone Can Build a Pipeline of Ongoing Residual Income in the New Economy By Burke Hedges Book Summary

 “The Parable Of The Pipeline” by Burke Hedges, who is an International bestseller author, speaker, and Entrepreneur. His books have been translated into many languages around the globe. This book teaches the importance of building a pipeline for ongoing residual income. With residual income, we work once and get paid repeatedly. This is why the pipeline keeps pumping daily, year after year, whether you are there to do the work.

The Parable of the Pipeline: How Anyone Can Build a Pipeline of Ongoing Residual Income in the New Economy By Burke Hedges Book Summary

Burke Hedges says that becoming a millionaire is a matter of choice, not a chance. Our pipelines are our lifelines. If we have one pipeline, we have got only one lifeline. So the more pipelines we got, the better for us. Pipelines are designed to give people personal and financial freedom and lifelong security (The Parable of the Pipeline).

Bucket carrying world

Burk shares a story of a village where two cousins used to live named Pablo and Bruno. They were very hard-working, and all they needed was an opportunity. And one day, they got it. The village hired them to carry water from a nearby river in the town square. It was like a dream for Bruno, but Pablo was not so sure. Pablo wanted to build the pipeline from the river to the village. Bruno did not support Pablo in his idea, and also the whole village mocked Pablo, but he was not very discouraged.

While Bruno used to take a rest in the evenings, Pablo kept digging his pipeline. He kept reminding himself that to fulfill the dreams of tomorrow, sacrifices have to be made today. Inch by inch is a cinch because short-term pain equals long-term gain. He kept working hard, constantly repeating to himself-keep your eyes on the prize. But after a few months, the tables were turned. Once the pipeline was complete, Pablo didn’t have to carry buckets anymore. The water flowed whether he worked or not (The Parable of the Pipeline).

\Pablo, the Pipeline Man, became the Miracle Maker. Pablo planned to build pipelines worldwide by teaching his cousin Bruno and others how to make pipelines. They tried teaching the same to many young people in the village, but they refused. Bruno and Pablo understood that only a small percentage of people dared to dream pipeline dreams in the bucket-carrying world (The Parable of the Pipeline).

Burk says the problem with the bucket carrying is that the money stops when the bucket carrying stops. This means the concept of a ”secure job” or ”dream job” is an illusion. The most dangerous thing about bucket carrying is the income is temporary instead of ongoing. 

We need to ask ourselves a few questions: What would we do if our income stopped tomorrow? What would happen if we got laid off? What would happen if we got sick or disabled and could not carry those buckets anymore? What if a medical emergency ate up our savings?

If our income stopped tomorrow, how long could we pay the mortgage, make the car payments, or pay for the kid’s schooling for six months? Three months? Three weeks? If disaster strikes, do we have a lifeline to protect our families and us? Or are we gambling that bucket carrying will continue uninterrupted for as long as we need the income?

If the answer is no, then there must be a better way. It is called pipeline or ongoing residual income – income that keeps coming in whether you put in the time. Pipelines are open 24/7/365. Which means pipelines can pay you while we sleep. Or while we play. Or while we retired. Or while you are sick or disabled and can’t work. Or during emergencies. That is why pipelines are lifelines because they can give residual income (The Parable of the Pipeline).

Most people mistake bucket carrying for pipeline building. We observe that 99% of the people carry buckets. So we naturally assume that bucket-carrying is the only way to get what we want in life. 99% population is living paycheck to paycheck, not ongoing residual income.

Bucket carrying model goes like this – go to school and learn how to carry buckets. Work really hard. Earn the right to carry bigger buckets. Resign from company A to company B, which lets you carry even bigger buckets. Dream of the day you can retire from bucket carrying. Until then, carry those buckets (The Parable of the Pipeline).

The fallacy of carrying Bigger Bucket –

Bucket carriers reason that bigger buckets mean bigger paychecks. Bucket carriers keep comforting themselves that if they get a job in which they get a chance to lift big buckets, then everything will be fine.

Bucket carriers keep always wondering how much other bucket carriers earn. Some people think that professionals make more money and they want to earn like them (The Parable of the Pipeline).

For example, a physician is almost ten times bigger than a cook. Professionals definitely make more money than an average man, but they spend more. The truth is that doctors and lawyers making six figures a year are spending most of their income to support their lavish lifestyles. People envy doctors and lawyers, and accountants because they get to carry huge buckets. But they all end up in the same predicament- living paycheck to paycheck (The Parable of the Pipeline). 

It is an observation that carrying big buckets is different from creating wealth. People who drove expensive cars and lived in expensive homes were not wealthy because if you make a good income each year and spend it all, you are not getting wealthier. You are just living high.

Wealth is more the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline. In other words, buckets, no matter how big they are, will eventually dry up. Pipelines, on the other hand, are self-sustaining. But pipelines don’t build themselves. We have to take the time and make an effort to build them.

Your pipelines are your lifelines

Burk tells the story of a big-time basketball player, Darryl Strawberry, and a small-town elementary school teacher called Margaret. One was paid millions a year, and the other never earned more than $10,000. One lived his life in the spotlight, and the other lived her life in a small town. Strawberry has made a fortune during his career-somewhere between $2 and $5 million a year, and he earned $50 to $100 million before his 40th birthday (The Parable of the Pipeline).

But Strawberry has no income or savings to support his wife and children because he spent it all. He was suspended from basketball which means he has no income coming in, but the bills were regularly coming in. On the other hand, Margaret taught school for more than 50 years. When she retired in her 70s, she was making around $8500 a year. When she died at the age of 100, she left almost $2 million to 10 different charities (The Parable of the Pipeline). 

She built a long-term investment pipeline by making regular monthly investments in quality stocks and allowing them to compound over time. She is a classic example of a long-term pipeline builder. The key to financial freedom is to adopt a pipeline-building mentality and implement your pipeline plan.

Strawberry has had 20 years to build pipelines. If he had taken just 10% of his earnings and put the money to work by creating an investment pipeline, he could have had a lifeline worth between $20 million to $100 million by now. Strawberry assumed his big bucket would never dry up. Wrong assumptions (The Parable of the Pipeline).

Buckets don’t automatically replenish themselves, no matter how big they are. That’s because the bucket carrier must lug the bucket to refill it. On the other hand, Margaret had the wisdom to build pipelines while still carrying buckets. When her bucket-carrying days ended, her pipelines kept pumping, and the cash flowed.

The root word for leverage – LEVER -comes from an old French word meaning ”to make lighter”, which is a correct description of the power of leverage. Leverage is of two types – Time and Money. 

In leveraging time, a one-hour effort can result in 100 hours of production. One week’s work can result in one year’s production. In the case of leveraging money, each dollar invested over time can compound until it grows to many times the initial investment. Hiring employees is a classic example of how people can leverage their time. Let’s say you want to open a restaurant. It would be impossible for you to act as the host, waiter, chef, dishwasher, and bookkeeper and still run a profitable business.

You can only be in one place at a time. So you hire people to perform specific tasks. If you pay your 10-person staff an average of $10 per hour, you are paying out $100 in wages. If your restaurant takes in an average of $1000 per hour in revenue, the difference after expenses goes into your pocket.

Money Leverage – how average people become millionaires

The vast majority of millionaires don’t inherit their fortunes. Statistics show that four out of five millionaires never inherited their wealth. Self-made millionaire leveraged their money to build their palm beach pipeline. They put aside a big chunk in the “Investment jar” and let it compound year after year. Typically millionaires save 15% to 20% of their gross income and invest it wisely in asset-building pipelines such as stocks, bonds, closely held businesses, rental property, commercial real estate, pension funds, etc. 

A classic example of leveraging money is investing in the stock market. No doubt you have heard of Warren Buffet. He is a living legend of wall street and the second or third richest man in the world. He built his fortune the old-fashioned way. He leveraged other people’s money and made himself and his investors rich in the process (The Parable of the Pipeline).

The key to leveraging your money as rich people do is to ”pay yourself first” by making regular monthly contributors into investment accounts and then leaving the money to compound. The best way to fund your investment pipelines is to take some money out of your income bucket each month and deposit it into your pipelines.

The Doubling Concept – One of the ancient emperors of China fell in love with a new game called ‘Chess’. The emperor decided to reward the Game’s creator. He summoned the inventor to the royal palace and announced to the court that the inventor would be granted one wish. The inventor asked for one grain of rice. Just one grain for the first square of the chessboard and then doubling to two grainier for the second square. Four grains for the third square. And so on until the single grain has been doubled for the entire chessboard. First, the emperor thought it was a simple wish.

The inventor started putting the grains of rice on the board, doubling the number of grains. By the end of the second row, the emperor knew he had made a huge mistake. The grains owed to the inventor totaled 32,768- and there were 48 squares remaining. A grain of rice doubled for every square on the 64 square chessboards would calculate 18 million trillion grains of rice. 

This story teaches us the power of the doubling concept or known as the power of compounding. The famous mathematician Albert Einstein recognized the awesome power of duplication or compounding as the Eighth Wonder of The World. The magic of compounding is the reason that thousands of heirs named Kennedy, DuPont, Firestone, Ford, Rockefeller, and Getty can continue to live a life of luxury without their fortunes drying up. In effect, their bucket never runs dry because the pipeline keeps pumping yearly for decades (The Parable of the Pipeline).

The Rule of 72: The Rule of the Rich – To better understand how rich people get richer, let’s take a look at “The Rule of 72”, a mind-boggling wealth-building concept that the world’s top investments brokers teach their rich clients. The rule of 72 is a simple formula for calculating how many years it would take for an investment to double. 

Doubling Concept or Rule of 72 –

1 – Determine the annual interest rate on your investment.

2 – Divide the interest rate into 72.

3 – The result is the number of years it takes for your investment to double.

In today’s time even an average person can join the millionaire club.

It is open to anyone with the discipline to invest a regular portion of their income and let it compound over the years.

Only some people have the patience to spend 40 or 50 years building their retirement pipeline. Well, the best part is there is a 5-year pipeline plan available. Best of all, you don’t need lots of money to build this pipeline. Because instead of building this pipeline. Because instead of leveraging your money, you leverage your time.

Time Leverage – There are two ways to get to the top of Oak Tree. First either you keep sitting on the tree and as the tree grows, you will also grow higher or else the second way is to climb and reach the top of the tree.

When people leverage their money over decades to build pipelines, they are choosing to sit on an acorn and wait. This is 50-year Pipeline Plan. But 5 year pipeline plan is like climbing oak trees. It accomplishes the same goal as the 50-year pipeline plan-financial independence and security. But it only takes 10% of the time. 

The beauty of time leverage is that we have all been given the same amount of time. This means time levels the playing field between rich people and average-income earners. Time is available in equal amounts to everyone. Whether they are rich or poor, man or woman, black or white, college-educated or high school dropout, young or old. But this is different with money. Some people are born with a silver spoon in their mouth – some with a plastic spoon and some with nothing.

We all have 1440 minutes every day in out time account. We all have the same time, but the only difference between those people who work for a paycheck every month and those who are financially free is how they use their 1440 minutes a day, it is very important.

Some people say it is a bad time for me to start building the pipeline, but the fact is right now is a bad time for everybody. We are all stressed. We are all busy. We are all dealing with emergencies. There is a word for bad times. It is called life. Some people waste their lives waiting for the perfect time to do x, y, or z, and they will die waiting because there is no such thing as a perfect time (The Parable of the Pipeline). 

Just think for a moment about what we could accomplish in our lives if we used a couple of hours each evening and on the weekends to do something purposeful, like building the pipeline. If you set aside 2 hours each workday and three more hours on both Saturday and Sunday, you could add 16 hours of productive time a week to your schedule. Sixteen hours a week over 50 weeks a year comes to 800 extra hours a year. Successful people in every line of work value their time, and they seek every opportunity to leverage their time (The Parable of the Pipeline).

People often ask why they should take the time and effort to build pipelines when things are going so right at the moment, but according to Burk, there is no better time to build your pipeline than when things are going great because when they can not put in the time due to illness or layoffs, their paychecks will stop. For bucket carriers, no paychecks mean no security.

What goes up, also comes down. And when people start coming down, some of them are going to crash into some hard realities. Layoffs, carrier changes, credit card debt, medical emergencies, and nursing home care for elderly parents. Smart people understand that the best time to feather their nest is while business is blooming or in good times. Smart people erect safety nets before a recession starts, not during. That is why today is the best time to build their pipelines, not when the economy hits the skids (The Parable of the Pipeline).

For building our pipelines today, we can pay little now by investing some of your time and money. Or we can pay a lot later by struggling to survive on small money when we are in our 60s and 70s. Always remember that we have different amounts of money to leverage, but we do have the same amount of time. Today pipelines are no longer the province of the rich. Anyone with a little time and a lot of drive can leverage their time to build a pipeline in 2-5 years that will flow for years or even decades (The Parable of the Pipeline).

These days we have right at our fingertips the greatest time leveraging tools in the history of the world. This tool has created more millionaires in less time than any other single invention in history. This is called E-Pipeline or known as the Internet.

E-compounding: the ultimate pipeline

The Internet is the most potent and productive pipeline in the new economy. The Internet is the future, and the future is now. The advantage of the Internet is that the pipeline of ongoing residual income can be created that we can build in two to five years instead of 50 years. It is so powerful because it is millions of people over the globe, each connected via a computer or cell phone, able to communicate with each other 24/7/365 instantly (The Parable of the Pipeline).

 But on most sites, shoppers have no incentive to make weekly and monthly purchases. Internet users have no loyalty because most e-commerce sites are more concerned about offering the lowest price than they are about building long-term relationships. E-Commerce sites need loyal customers. There is a secret to creating customer loyalty in the internet age, and that is Relationships.

The Internet needs the Hi-touch of person-to-person relationships. The truth is word-of-mouth recommendations have always been the most effective form of advertisement. We recommend products and services all day, every day, for free. And people shop and buy based on our recommendations. It would be great to get paid for it. By leveraging our time and relationships, we can create loyal customers for relationship-driven e-commerce sites while creating a pipeline of ongoing residual income. 

The e-commerce company’s role is to Tech.- they provide the website, take the online orders, ship the products, process the payments, and handle the accounting. In return for paying referral fees, the company gets loyal customers who return to the site again and again. It’s a win-win situation. The company solves its biggest problem-lack of loyal customers, and you build a pipeline of ongoing residual income (The Parable of the Pipeline).

Just imagine what would happen if you took the concept of compounding and somehow combined it with e-commerce. The result would be E-compounding. The exponential growth of compounding, combined with the reach and speed of the Internet, is the potential of e-compounding.

This is why it is the ultimate pipeline you get paid to compound your time and relationships via the Internet. This pipeline not only pumps out profits, but like Pablo, you grow your pipeline by levering your time instead of money. That is why hundreds of thousands of ordinary people all over the world are busy building ultimate pipelines, and instead of having to wait for 50 years to receive the benefits of their pipeline, they can start enjoying profits in months.

The beauty of e-compounding is that you don’t need a lot of money to get started. It only takes months or a few years to build, and you don’t need any special skills, well. Rich people leverage their money, and ordinary people leverage their time. E-compounding offers a new and improved way for e-commerce to sprout its wings and fulfill its potential. As a result, referral-based internet companies are flourishing while hundreds of deep discount e-tailers are drowning in debt (The Parable of the Pipeline).

E-compounding is a pipeline for every purpose and purse. Your purpose may be to afford the festivals, or your purpose may be to escape the dead-end job and build pipelines that will circle the globe. And your purpose may earn some extra money in a month, or your purse may be to become a millionaire many times over. E-compounding is the ultimate pipeline.


It is fantastic to learn that it is easy to become a millionaire if you start building your long-term pipeline early enough. The five-year pipeline plan can diversify your portfolio of pipelines, and you can dream big dreams and start living them right away instead of in your 60s or 70s. You can have your cake and eat it too.

We would rather be financially free for five years instead of 50 years. Internet is the ultimate pipeline because it is our business. We own it. We can work from home. There is no overhead, no boss, security, freedom, independence, No employees, No payroll, No inventory to speak of; it is lean, It is web-based, And it offers a way to create ongoing residual income. So, at last, Burk gives the finest advice from his dad: Live for today, plan for tomorrow.

Hemant Singh

Hello friends, my name is Hemant Singh. I am the writer and founder of this blog, talking about education, I am a student of BBA. I love learning information related to technology and teaching it to others. Through this website, I share information about News, Educational Post.

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