Robert Kiyosaki’s Business Secrets

Dear reader,

Once Kim and I achieved our goal to retire I wanted to finish my quest to teach as many people as I could without teaching in the seminar format. 

So I moved into the mountains near Bisbee, Arizona, and was secluded enough to begin working on the answer to my question. For two years I worked on the question of how can I teach more people? When I left Bisbee, I had the rough draft for Rich Dad Poor Dad on my Macintosh computer and a rough sketch with computations for the CASHFLOW® board game.

When I returned to Phoenix with a draft of the book and the CASHFLOW® board game in hand, I knew I was making my move to the B quadrant. Kim and I began to design and build a company according to the B-I Triangle. The moment we put our products in  the marketplace, the heavens of abundance opened up. The product line was officially unveiled on my fiftieth birthday, April 8, 1997. 

When Rich Dad Poor Dad was first printed, we placed 24 copies of the book in our friend’s car wash/gas station in Austin, Texas. After months of not selling, one day my friend called me and said, “They’re all gone! Someone bought them all!”

Later, a man called me to tell me he had read Rich Dad Poor Dad. I asked, “Are you the one that bought them all?” He said, “No, a friend did and gave me a copy.” The man that called me was with Amway and bought the remaining 976 copies to distribute throughout the world. Within two years, the book had gained popularity. 

From the start of The Rich Dad Company, we had a few struggles to breathe life into the business. The main struggles we had were keeping up with demand, traveling the world to open new markets, and counting the money.

In June 2000, the call from The Oprah Winfrey Show came, and the heavens really opened. 

My Biggest Mistake

There is a saying that goes: “A fool and his money are soon parted.” Well, I was the fool, and my money was soon gone. My biggest mistake came during the time I launched my nylon-and-Velcro surfer wallets business.

My friend John and his CPA, Stanley, needed some money for their existing business, and since I had saved some money working at Xerox, I loaned them the money. 

Of course, when the loan was due, there wasn’t any money to pay me back. So I joined their company to try to help them raise money—and also to get my money back. Over the next three months, I raised money from friends. This is where the idea for the nylon-and-Velcro surfer wallets came into being. 

Since we were surfers and sailors, we already used nylon wallets. We sewed the wallets ourselves out of old sails from yachts. But the nylon-wallet business was not hot. We were now in more debt than before, and we were going broke faster.

I showed John and Stanley an idea for another new nylon product, this time a product I had designed. Back then, runners had a problem: Where do they put their key, an ID card, and some money while they’re running? Running shorts had no pockets and sticking all that stuff in your shoe or sock wasn’t an option either. So I came up with an idea for a small mini-wallet that attached to the shoelaces of a runner’s shoe.

Now completely broke with maxed-out credit cards, we launched our “Rippers Shoe Pocket” for runners at the New York sporting-goods show. Believe it or not, that product became one of the “Hot New Products of the Year” in the sporting-goods industry. The Rippers Shoe Pocket even made news in Runner’s World, Playboy, and Gentlemen’s Quarterly magazines.

Soon we were shipping wallets all over the world. Although we were internationally successful, our company was still going broke. We had much more cash flowing in, but even more cash was flowing out. In a last-ditch effort, John asked me to raise even more money, which I did. I still remember the day I walked into his office with a check for $100,000 from an investor. John and Stanley smiled and thanked me.

A few days later, I was in Chicago at a sporting-goods trade show, selling Ripper products. At the end of the show, I called Honolulu to report my results.

Jana, our receptionist, answered the phone. She was crying. “What’s wrong?” I asked.

“I hate to tell you this, but John and Stan closed the company today. They took what money was left, and I believe they left town. I don’t know where they are.”

I returned to my hotel room on Chicago’s Lake Shore Drive and stared out at Lake Michigan. Over and over again, I asked myself, “How could I have been so stupid?”

John and Stan were gone. Their debts were paid off but I was left holding the bag for nearly $1 million in loans, money I had raised from friends, family, and investors. 

My biggest mistake, and the biggest lesson I’ve learned in business is be careful who you trust as business partners. 

Sales = Income

As most people know, the number-one skill of an entrepreneur is the ability to sell, because sales equals income. Since I did not know how to sell, I took my rich dad’s advice and got a job working for the Xerox Corporation at the age of 26, not because I liked copiers, but because Xerox had a great sales-training program. 

Although I was not good in sales, I studied, practiced, took extra classes, and slowly but surely, after three years, was consistently one of the company’s top sales agents and actually started making some money.

From 1974 to 1976, I managed to save $27,000 (which back then was a lot of money) to start my first business.

Expand Your Business into a Brand

When you read the stories of entrepreneurs, a great number of them have gone through these periods of trials, tribulations, and a testing of faith. I believe it is through this test of faith that a brand is born.

In 2000, after appearing on Oprah’s program, I received a call from a famous company that sells mutual funds, asking me to endorse their products. I politely refused, saying that the Rich Dad brand was not compatible with mutual funds. When I refused, the company’s agent tested my faith by saying, “We are prepared to offer you $4 million over four years if you will endorse our mutual fund.”

A million dollars a year for four years was tempting, but I turned the offer down. Endorsing a mutual fund would not be true to the brand or to the people who believe in the Rich Dad message.

If I had endorsed the mutual fund company, in my mind, I would have looked like a traitor to my readers, a turn-coat, a man who would do anything for a million dollars a year.

It’s Not How Much Money You Make

My rich dad often said, “Financial intelligence is not how much money you make, but how much money you keep.” He went on to say, “Ordinary income is the income that you work the hardest for and you are allowed to keep the least of.”

What he was teaching me as a kid was the importance of understanding debt and taxes. 

From my rich dad’s point of view, it was not very smart to work hard and have the government take at least 50 percent of what you work hard for. As an investor, I pay less taxes and therefore I keep more of my money to keep investing. 

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

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