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Posted: Thursday June 29th, 2006 03:59 |
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Robert Kiyosaki: Author of 'Rich Dad, Poor Dad' - Part 1
By: Alec Hogg
Posted: 22-JUN-06
MONEYWEB: Robert Kiyosaki is the author of Rich Dad, Poor Dad. David Shapiro, have you read that book?
DAVID SHAPIRO: Extracts. I’ve never read it from cover to cover, but in magazines and interviews, etc, I’ve kept up …. It's a hugely famous book.
MONEYWEB: Very. I think it's changed a lot of people’s lives. In the same way as Suze Orman, who was a regular visitor to South Africa. Just her down-to-earth basic “this is how finances work� has made a big difference. Robert Kiyosaki’s book has become an industry on its own. We’ll find out from him, but he’s written many books based on the same thing. Almost a franchise. Imtiaz?
IMTIAZ AHMED: I haven’t read it, Alec. But I certainly heard so much about it. And, as you say, it's changed so many people’s lives. …
MONEYWEB: It's a warm welcome now to Robert Kyosaki. I see Barbara has put up on my screen, Robert, that you’re in the Argentine at the moment.
ROBERT KIYOSAKI: No, I’m actually in Phoenix, Arizona.
MONEYWEB: Phoenix, Arizona? That’s a long way from Argentina. I think Barbara’s maybe just heard a little bit wrong but good to talk to you in Phoenix.
ROBERT KIYOSAKI: Thank you Alec. I appreciate it.
MONEYWEB: You coming to our country soon?
ROBERT KIYOSAKI: I love your country. I love your country. I’ve been down there several times for the Tri-Nations and all that. I love it.
MONEYWEB: The Tri-Nations? You a rugby fan?
ROBERT KIYOSAKI: Absolutely. Absolutely. …
MONEYWEB: Robert, you’re very well known in South Africa for the whole Rich Dad, Poor Dad series. We’ll talk about that in a moment, but where did the idea of writing that book in particular – which has been a phenomenon itself – where did it come from?
ROBERT KIYOSAKI: It's a true story. It was back in 1994. I retired, I was 47 years old, and you know that old song Is this all there is to life? I was 47, I had a great marriage, had enough money, and I had all the free time in the world, and so I had to ask myself how did I beat everybody? If you retire at, let’s say, 65, and I was 47 at the time – that’s 20 years. How did I beat everybody and give it 20 years to spare? And I sat down. I own a ranch in Arizona, and I just sat down at night and I started writing. And one night on my Apple computer I said “I had a rich dad and I had a poor dad�. And that’s how it came out. It was just a true story about my two fathers when I was nine years old. My best friend’s father was my rich dad, and my poor dad was the head of education in the State of Hawaii. Really a great man, a PHD, candidate for lieutenant governor of Hawaii, and it was just a comparison between what my rich father taught me versus my poor dad. That was where the book came from.
MONEYWEB: So it's a true story. But how did you get it published? Often people have stories like that, but battle to get a publisher interested.
ROBERT KIYOSAKI: Well, every publisher turned me down too, because first of all they said I couldn’t write. I said, “That’s true�. And secondly they said they wanted to change the book, and thirdly they said it would never sell. And so I had to self-publish the book. So back in 1997 I printed 1 000 copies and, you know, shopped it around. No publisher wanted it, no book store wanted it, so I put it in my friend’s gas station and car-wash in Austin, Texas, and I think I sold either a dozen or two dozen books, and one day they all disappeared. And that was it, that’s how it got started.
MONEYWEB: A little bit like maybe the Tipping Point story that Gladwell wrote about.
ROBERT KIYOSAKI: Yes. I think that’s very accurate. When I wrote Rich Dad, Poor Dad, most people knew something was wrong with America. A lot of people did. And now with George Bush at the helm it's getting worse. [Laughter.] So that’s why Rich Dad, Poor Dad has been almost six years on the New York Times best-seller list, and only two other books in history have ever been on that long, and one was The Joy of Sex – I might have a tough time beating that one, because sex is always in fashion, you know. But Rich Dad, Poor Dad is really a book on accounting, of all things. You know, assets and liabilities and all that. So for it to be on the best-seller list throughout the world actually for almost six years is a testament to the power of people knowing something’s wrong and they want to take better care of their lives financially.
MONEYWEB: Have you found in South Africa – and you have been here a number of times – that there’s more of a hunger possibly because of our history in this country. There’s more of a hunger for that kind of information.
ROBERT KIYOSAKI: I would say so. But also I think it's partly because you guys were part UK – and I love rugby anyway. I feel very at home in South Africa, as I do in Australia and New Zealand for some reason. In fact it's Australia where there’s the highest per capita saturation of Rich Dad and the Australian government is now instituting financial literacy as part of the Australian government educational plan. So I’m thrilled about that.
MONEYWEB: How many copies have been sold of the original book?
ROBERT KIYOSAKI: About 26 million copies now, worldwide. In Chinese, Japanese, whatever else is out there.
MONEYWEB: Now give the budding young writers who are listening to his, or even the budding old writers listening to this some indication of, if you sell 26m books, what are the royalties alone? Forget the endorsements or what comes from that, but what kind of royalties would one earn on that?
ROBERT KIYOSAKI: I think about $2 a book.
MONEYWEB: OK. Pretty cool.
ROBERT KIYOSAKI: But in China it’s maybe 20c, you see. So if it's a G7, G8 nation, a Western nation, I get the $2, and if it's a poorer country I may get 10c.
MONEYWEB: Robert, you’ve gone one step further. You almost turned Rich Dad, Poor Dad into a franchise. Taking that core principle – and I’d like to talk to that in a moment – but adding Cashflow Quadrant, Rich Kid, Smart Kid, Rich Dad’s Prophecy, I see now there’s a particular new book called Rich Woman written by your wife Kim. When did that idea come into your mind?
ROBERT KIYOSAKI: It's a long story but when you ask about how, why, about the publisher, at the time the publisher – sad story, but I’ve done 22 books in six years – the publisher was still saying that’s not enough books. Finally I broke away last week. He said, “Well, you can’t write any more Rich Dad books because I have you under agreement�. And I said, “Yes, but I’m an entrepreneur, not a writer, so I dumped the Rich Dad brand and my wife started the Rich Woman brand. So entrepreneurs can create brands on the spot, and my wife is really a self-made woman. I mean, when I met her we had nothing and today she is richer than most men in America, self-made. So she wrote Rich Woman because the biggest niche in the world is actually women, because you know men are flaking out financially so women need to take care of themselves. So she has really hit a gold mine and we didn’t give the publisher the rights to that book. There was an argument between the publisher and I, and I said “You don’t understand, you don’t get a brand like this very often� – and they wouldn’t step up to the plate, so we made a switch.
MONEYWEB: So it's an all-new direction then for the Kiyosaki family in future.
ROBERT KIYOSAKI: Yes, and my partner, Sharon Lecter, who is really the brains behind the organisation, she’s coming out with a book by a brand called Rich Family, because that’s her passion – parents educating their children, just like my Rich Dad educated me. And I’m coming out with a new book this October with my friend Donald Trump, and it's called Why We Want You To Be Rich, and it is more a political socio-economic book, because that’s really where my head is. I really do not like the way the US government is going right now, and we’re printing so much money, we’re fighting wars all over the world. The US is, in my opinion, in big financial trouble. And, as they say, you know, how does this affect South Africa? “If the US sneezes South Africa catches the cold.� So that’s why it's a very big concern for Mr Trump and I, and that’s why we’re coming out with our next book in October.
MONEYWEB: Robert, let’s just go right back though to the core concept of Rich Dad, Poor Dad, because I guess if people understand what that is they will know why you’re so concerned that the US is spending.
ROBERT KIYOSAKI: Well, the biggest problem is our school system. You know [indistinct] fundamentalist, religious quasi-idea that money is the root of all evil. For some reason our school systems do not teach us about money. They teach us to be employees who work for the rich. And when I was a little kid with my rich dad’s education, and my poor dad as head of education, my real dad, he kept saying, “Go to school and get a job�, and I said “Well, I don’t want to be an employee�. And he said “You have to be a good employee�. And I said, “That’s brainwashing, you know�. And my rich dad says, “Instead of being an employee, why don’t you be a rich man and own companies?� So the whole point is that most people are brainwashed in school to be employees of the rich. And what I decided to do was just be a rich guy. So my rich dad taught me how to be rich. And that’s all I’m doing. You know, this is how the rich do it. I don’t buy stocks. I don’t buy bonds. I don’t buy mutual funds and I don’t save money. That’s what the middle class does. I build companies and I buy real estate and I take companies public. You know, I’m on the other side of the table. I start banks, I start mining companies, oil companies. But that’s how I get rich. I would never work for $200 000 and less a year. It's ridiculous. So it's a different attitude. Completely different attitude.
MONEYWEB: How many companies have you started?
ROBERT KIYOSAKI: Oh, lots of them that didn’t make it, you know. So today I have one silver company that went public, I have one private oil company, and I have a public gold mining company out of China. The silver company’s out of South America, and my mining company of gold is in China. We did look at South Africa, but the price of your leases were too high. And my oil company is private out of Texas. So that’s where I’m at. And I have my publishing company and my wife has her real estate company, which is what Rich Woman’s about.
MONEYWEB: I was recently at the World Entrepreneur of the Year get-together in Monaco – in fact it was last week – and it was interesting to notice, there are almost two streams of thought there when we talk entrepreneurship. The American style, which is very much what you’ve described now, where there’s a serial-entrepreneur kind of approach, whereas on the other hand there are entrepreneurs in most other parts of the world who will start a business and will build that business, just the one single business, until perhaps they end up in their grave. Why do you think that the world is separated in that way?
ROBERT KIYOSAKI: I don’t know if they are separated. In every country there is a Donald Trump. You’re having Richard Branson on – he’s my hero. So there’s different models of people. You know, there’s a lot of entrepreneurs who never get beyond making $10 000 a month. They’re small-business guys. So, as Donald says, think big. And so I don’t think it's geographic. I just think it's personal – how big do you think? And, you know, South Africa, I see a lot of your guys up here – they’re big thinkers. Same as Aussies. You know, Aussies are big because they’ve got a small market, so they have to think big. Same as the Japanese –they have a limited market, so some of the entrepreneurs like Morito, who’s fathered Sony, those guys think globally. So it's not a matter of geographical. I just think it's psychological more than anything else.
MONEYWEB: Robert, why is Sir Richard Branson your hero?
ROBERT KIYOSAKI: Because he’s a wild man, he’s a rebel and he thumbs his nose up at everybody, which I like. He’s a rebel. You know, it's like if Richard drove a motor cycle it would be a Harley-Davidson. And it's like Steven Jobs of Apple – he’s my hero because he’s a rebel also, whereas a lot of people like Bill Gates, I’m more like Steven Jobs. And Trump is more like a rebel also. So you have your own people you gravitate to. It's nor right or wrong. You know, it's just where you gravitate to. Some people like George Bush, some people don’t.
MONEYWEB: We’re talking with Robert Kiyosaki from Arizona in the US. And we are now opening our lines. So, if you’d like to put a question to the author of Rich Dad, Poor Dad and, well, an entrepreneur of huge repute, give us a call. Robert, just getting back to the whole idea of entrepreneurship, it was interesting to us in here in South Africa that Bill Lynch, who arrived in the country as a penniless immigrant and took over a motor dealership, became the South African Entrepreneur of the Year and then went to Monaco and won the World Entrepreneur of the Year this year. His view was one of the problems with entrepreneurship is a lot of people talk about it, but don’t just do it.
ROBERT KIYOSAKI: Yes, that’s true. Congratulations to that guy. I’m afraid I’m not familiar with him, but I’m glad to hear that because what every country needs are role models. You know, you need role models as political leaders – and the US is doing a horrible job there. And you also need role models in religion, and role models in business and role models in education, and all this. So it's very important that South Africa has its role model.
MONEYWEB: All right, we’ve got our lines buzzing here, Robert. I’m going to go to the first of our callers, and it's Alex. I guess my namesake. How are you there, Alex?
ALEX: Good. And you guys, how you doing?
MONEYWEB: Please go ahead.
ALEX: I’d just like to ask Robert what he feels about the level of entrepreneurship in South Africa. Is it competitive on an international level?
ROBERT KIYOSAKI: I would say definitely so. I say your advantages – I’ve seen some of your guys our there. I mean, I hate to be racist or something, but you know if you live in some of those ghettos you’ve really got to be an entrepreneur. It's a natural instinct. But do they have the formal training to be within the law and take it bigger, that’s the question. Do they understand public markets, you know, to take it through an IPO? Do they understand private finance? Do they understand venture capital? Those are the things that really make you rich. The reason most entrepreneurs stay small is they’ve been trained by their parents to work hard. The real entrepreneur doesn’t work hard, the real entrepreneur knows how to leverage, either through people, through other people’s capital, or through different business associations – for example, Donald Trump and I are coming together. He and I don’t need the money, but when he and I joint venture a project we make millions, you know, but we think bigger. There are other guys who would like to do that, but they just don’t think big enough. So it really comes down to that old book, Think and Grow Rich. I really say it’s “Think big and grow rich�. So you have a lot of entrepreneurs in South Africa, but they’re not being trained the formal business leveraging systems to become richer and richer and take the South African businesses wider. Does that make sense to you?
ALEX: Very much so. Thank you very much.
ROBERT KIYOSAKI: And I do invest a lot in you guys, because I buy Krugerrands. I love Krugerrands, even though I have my own gold company, I still buy Krugerrands.
ALEX: Well I’ve got good news for you. Gold’s going past $750, so hold on to them.
ROBERT KIYOSAKI: I am a gold bug since 1972.
ALEX: Good, good, good. Thank you very much.
MONEYWEB: Thanks for the call, Alex. I’m going to ask from here onwards, because our lines really are choked up tonight, if you can just put your question to Robert and then let somebody else come onto the line, please. We are talking to Eileen now.
EILEEN: Hi, I just want to know if you still think network marketing is a good business to get into in South Africa, and if the future of network marketing in South Africa would pick up the same way it did in other countries around the world like the US.
ROBERT KIYOSAKI: Well, network marketing is only as good as you make it. … lousy network marketer, know the best network marketing business in the world won’t do any good for you. But I recommend network market – I’m not affiliated to any single one of them, and by the way so does Donald Trump. In our book coming out in October he’s going to talk about why the value he sees in network marketing has to be good. So he and I, Donald and I, are really doing our best to support he industry. But you as an individual have got to be able to step up to the plate and become a great network marketer. But the reason most people fail in network marketing is they have an employee mentality. You know, they expect to work and get paid while, if you’re an entrepreneur, you may work for years and never get paid. And I think that’s the big difference between those to make it and those who don’t make it. If you have an employee mentality or a small-business or self-employed mentality, where you’re working on “I’m going to charge you $100 an hour�, network marketing will not work for you. So the beauty of network marketing is it trains you to think like an entrepreneur does. You may have to work for two or three years before you make any money, and if you can do that you’ll be successful. But if you have the entitlement mentality or “I need to get paid today� I don’t think you’ll make it.
MONEYWEB: And a warm welcome to Mike now.
MIKE: Hi Robert. I study at University of Cape Town. I’m studying at PPU [?], Politics, Philosopy and Economics, and I was wondering – if you could choose any post-graduate degree in the world to study right now, for current business, what would it be? …
ROBERT KIYOSAKI: There’s two subjects. I don’t care … if you’re going to be an entrepreneur there’s two subjects you need to study. One is accounting and one is business law, because when you have those two subjects you can see what your eyes cannot see. So the reason most people invest in mutual funds is because they’re blind. They cannot see. A mutual fund company does not have to give you a financial statement. They give you some bogus financial statement. But most people can’t read, so they can’t see it anyway. And the reason … built this law is you need to know the rules of the game, just as when I play rugby I’ve got to know the difference between the rules of rugby and the difference between the rules of soccer. And personally I like the rules of rugby a lot better than the rules of soccer, because in soccer they don’t let you tackle and punch and kick people. That’s why I love rugby because they let you pound, kick, stomp and beat the other guy up. It's a different set of rules, and you’ve got to play by the rules.
MONEYWEB: A little bit like American football, I guess, to a degree, Robert.
ROBERT KIYOSAKI: Nah, rugby is the best sport in the world. American football – the problem with that is, let’s say, in a 60-minute game those guys are running for six minutes. With rugby in a 60-minute game you are running for 60 minutes. That’s a very bib difference. The reason South Africans are so tough is because you guys don’t have any grass. When you hit the hard dirt, you get tougher.
MONEYWEB: There are guys in Durban who’d say that we’ve got some of the best grass in the world – but let’s go to Morné now. Hi there Morné.
MORNÉ: Hello. Hi, Robert. I hope it's evening I’m not sure whether you’re online or whether you’re in South Africa. I didn’t follow the whole conversation with you tonight, so I don’t know whether this question has been asked but I’d like to know whether you believe in all your eggs in one basket, one company that you go big on, or try a lot of different companies and if a couple fail you’ve got more to back up. And I would like to add you got $2 from me as well, because I bought your book.
ROBERT KIYOSAKI: Thank you. Thank you. … What I’m saying about the average person is told to save money, which I don’t do, get out to debt, which I don’t do, invest in the long-term and mutual funds, which I don’t do, and diversify which I don’t do. So the question is diversification. Warren Buffett says diversification is for people who don’t know what they’re doing. So if you don’t know what you’re doing, then diversify. But if you know what you’re doing, you focus and F-O-C-U-S stands for “follow one course until successful�. So when I buy something I don’t buy two or three of a company, I buy one company and I focus on making that company work. Or when I buy, say, a commercial building in real estate, I’m focusing on making that business work. I’m not buying two or three, because that’s a waste of money – expect one to fail. And the other thing, too, is the higher the risk the more I use somebody else’s money. If it's low risk, it's my money; if it's high risk it's your money. So it's a different point of view .
MONEYWEB: Korus, you have the opportunity to chat with Robert Kiyosaki. Put your question, please.
KORUS: Yes. Thanks. It's Korus speaking here. I’m living in a far-away place. I just want to ask how a guy who earns R5 000 a month but has got big dreams – where do I start to live my dream? I know I’m not asking it like the big guy does, but we’re earning a little bit of money but we also have a lot of dreams. Where do we start?
MONEYWEB: I like that, Korus. Robert, that’s a good call. R5 000 – well, you know, it's less than $1 000 a month. Where do you start?
KOBUS: Yes please, where do we start, because I’ve got big dreams for my children, but where do you go with R5 000?
ROBERT KIYOSAKI: You may not like my answer, but the biggest mistake people make is they think it's how much money the earn that makes them rich or poor. It's really how smart you spend your money. So, if you spend your money on stuff that has no return on it, then there’s nothing I can do to help you. But a lot of people, especially in America, make a lot of money but they spend more than they make. What I do is I invest my money constantly. So the thing I always recommend is invest first in education. There’s only two things you can invest in – time or money. I mean, there’s only two things you can invest. Most people invest their money, but they invest no time in education, and then they lose their money and then they get upset and they say investing is risky. Investing isn’t risky – it's being a bad investor that’s risky. Like I don’t invest to lose money. I invest to win. Constantly. Rarely do I lose, but I invest in a lot of time learning how to be rich. I study it. And they don’t teach that at school, which is what my whole complaint is about, because they expect you to work for the rich, not teach to be rich. So when I was nine years old my rich dad very simply started me to be an investor, playing the game of Monopoly. And we played the game of Monopoly hour after hour after hour, because he was training my mind to think like an investor. And he said the formula for great wealth is from this board game, Monopoly. And we all know the formula, four green houses, one red hotel. Four green houses one red hotel. That’s all it takes. Now I can hear your guys say, “But I don’t have any money to buy real estate�. That’s what prevents you from being rich – because you’re already telling yourself “I don’t have any money�. That’s a poor person’s way of thinking. The beauty of real estate is if you find a great deal – there’s a lot of great deals out there – the banker will give you the money. My bankers line up. I got hundreds of millions of dollars, people waiting for me to do my next deal. And I don’t have time for the next deal, I’m doing something else. So most people are taught to use their money and stay out of debt. Well that’s a poor person’s way of thinking. That’s a school teacher’s way of thinking. I’m taught to find a great deal and then to get my banker to give me my money. That’s how I get rich. It's a different point of view.
MONEYWEB: Robert Kiyosaki, the author of Rich Dad, Poor Dad. Robert, stay with us because for the next few minutes we’re going to be linking upwith Sir Richard Branson. Of course you’ve mentioned a little earlier that he’s one of your heroes. He certainly is many other people’s hero.Last edited on Thursday June 29th, 2006 03:59 by defyfear
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