How Bad Partners Almost Ruined Me (And What You Can Learn)

Dear Reader, 

One of the best pieces of business advice I ever got from my rich dad was, “You can’t do a good deal with a bad partner.” These words could be the most important words in life, not just in business. These are more than words of wisdom. These are guiding words, words to live one’s life by.

Whenever you find a struggling business, a bad marriage, or an investment that has gone bad, you will find a bad partner. This does not mean that the partner is a bad person, although they could be. It just means they are a bad partner, the wrong person for the task at hand.

The world is filled with good people, but they would not make good business partners. In the institution of marriage, the world is also filled with good people who are married to the wrong person. And if you encounter a truly bad person—a person with low legal, ethical, and moral values—no matter how good you might be, the business or marriage will go bad.

In my business career, I have had great partners and horrible partners. As rich dad said, the way to know a good partner is to experience the pain of a bad partner, and I have known some deep pain when it comes to partners.

It happened in my Rippers business, then the rock-and-roll phase of Rippers, then in my education company, and finally with a partner in The Rich Dad Company.

In two of the businesses, success revealed bad partners who could not handle success. They were not really bad or dishonest people. They had simply never been successful. When success appeared, so did their character flaws.

For example, one partner in a small education company simply started spending money like she was rich. Since she had never had money, seeing so much money coming into the business only released her pent-up desire to go shopping. When she started buying personal items using the business credit card, Kim and I ended our partnership with her. She was a good person who loved to go shopping.

In some cases, bad partners were dishonest partners. Interestingly, my bad partners in both Rippers and Rich Dad were accountants and attorneys by training, professionals I had hired to protect me from people like them.

Again, I know this makes me look like a fool, and a bad partner myself. I wish my sequence of business start-up, business success, and the unveiling of bad partners was different. I wish I were writing instead about good partner experiences so I could be more positive about it.

Like many people, I go from screw-up to screw-up and somehow do okay in between.

The problem with life is that you do not know how good or bad a partner is until things get bad. The good news is that for every bad deal or partner I have had, I have always met a great partner as a result.

We would not be wealthy entrepreneurs and investors today, had we not first had bad partners. From every bad deal and bad partnership came people who are great partners. People who are honest, trustworthy, and hard-working and who share the same mission, values, ethics, morals, and respect for study, life-long learning, and personal development that Kim and I value. 

Simply said, our wealth comes from having great partners. But first, Kim and I had to be great partners. If I had remained the same lying, cheating, lazy business person I was before meeting Kim, we would not have our current business partners because they would never have been partners with me. They would have been partners with Kim, but definitely, not me…if I had not changed. 

The Best Real Estate Partner

Our real estate partner, Ken McElroy is a multi-family real estate investor, entrepreneur, writer, and personal friend. 

I met Ken out of a horrible investment with a bad partner. Since that broken deal, my wife, Kim, and I have made the most money with Ken. He’s one of the best partners Kim and I have. There are several reasons why:

  • We share the same investment philosophy.
  • We buy, improve, hold, and refinance. We generally don’t like selling our properties.
  • His expertise makes up for gaps in mine.
  • Ken owns the largest property management company in the Southwest and has nearly 20 years of experience in his field.
  • Because of Ken’s years as a property manager, he has the experience and skill to evaluate the value of an existing property.
  • We adhere to the same strategy.

Ken, Kim, and I like to put our money in improving a property, to bring in better tenants at increased rents, reappraise the property, and then borrow our money out and move the equity on to the next property. We then repeat the process.

Finding a great partner like Ken is similar to finding a great husband or wife—you have to kiss a lot of frogs before you find the prince or princess of your dreams. I don’t know of a magic formula other than to keep kissing.

My rich dad often said to me, “You need to be a good partner if you want to find a good partner.” Obviously, this is as true in business as it is in love. In my opinion, the best way to begin is by looking in the mirror and asking yourself, “What do I bring to the table? Am I the kind of person I would want to do business with?” It’s important to evaluate your strengths and weaknesses honestly.

One of the reasons Ken, Kim, and I do so well together is because we all love real estate; we complement each other in terms of our individual strengths and weakness, and we’re all adept at raising money. We make a good team because there’s a synergy between us, and synergy is money. 

We trust each other. There is unity. We live by Dr. Fuller’s generalized principle of unity, that it takes at least two (two mindsets or two people) to be unified. And in my case, when it comes to partnerships, that includes trust.  

A Lesson from Ken

One of the lessons I learned from Ken is that there are three parts to a great deal. They are:

  1. Partners
  2. Financing
  3. Management

This is true for any investment or business. When you invest your money you are becoming a partner in that investment enterprise, even if you may not personally know anyone else involved. For example, when a person invests in a mutual fund, he or she becomes an equity partner of that mutual fund.

So the first component of an investment is to choose your partner carefully before you give him or her your money.

Ken’s second component, financing, focuses on how well-structured the investment is and, as a partner, what your chances are of winning financially.

Ken’s third component to a great deal is management. A good partner must be a great manager. A poorly managed business or real estate property is an investment that is not maximizing investor returns and may fail. The main reason so many small businesses fail and real estate properties do not perform is the mismanagement of the enterprise.

Today, I can quickly analyze most investments by simply asking myself, Who are the partners, and do I want to be a partner with them? What is the financing structure and is it favorable? And, how competent is the management? If those questions are satisfied, I may look further into the investment.

You Get Offered A Lot Of Good Deals When You Are A Good Partner

This is the positive side of rich dad’s lesson. Rich dad taught me that I would never be successful if I remained a bad partner by hanging out with bad partners. He inspired me to be a student of human nature and business, work diligently, and take life one day at a time. He assured me that if I became a good partner, good people and good deals would find me.

So far, rich dad’s promise has come true. Between 2007 and 2010, during my trials with my former partner and a crashing economy, more good deals came to Kim and me than at any time previously. 

We made a lot of money with good people. If we were bad people with bad reputations, I am certain we would never have been invited to invest with one of the more prominent investment groups in America.

Rich dad often said, “Business is easy. People are difficult.” I would say this is true for me. Over the years I have met some horrible people, as well as many wonderful people. I have met great people like Donald Trump, the Dalai Lama, Steve Forbes, and Oprah Winfrey—people I would never have met had I not started my first business and continued on, learning from my mistakes after the business failed.


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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