# Archive > Open content archive > MLM Industry Forum > [Question] Robert Kiyosaki

## IanF

I need some information here, I was given a cd "The perfect business?" It is an interview with the Rich Dad, Poor Dad guy. In it he states network marketing is the perfect business, and he has never done it. This sounds like a spin doctor who is paid to be a spokesman. 
Anyway the person who gave me this will be speaking to me today about the "consumption model".
Now 2 questions:
Robert Kiyosaki,is he credible or is he just spinning all of this to sell his books?What is a consumption model? (I may be able to answer this later)
 :Confused:

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## Marq

My current business is based on Rich Dad Poor Dad and I think that is one book that every aspiring entrepeneur should read and take note of. There are quite a few basic business lessons that work and I also like the idea of going against the norm.

Network marketing for me, just does not work. For some reason my gut feel tells me this is not really the way to go. Obviously there are a whole lot of shiny presentation type folk out there who will tell a different story. Thats also ok - its a question of going with your gut feel and making that work for you.

Consumption model - I have not heard of......didn't read that part. It sounds like the opposite of the networking model, but please let us know.

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## IanF

Marq
I am still waiting for the call on the consumption model, I just had a call looking for Ian Null, they spelt the surname for me, so who knows if I will find out.  :Crazy: 
Anyway I read the summary on Rich Dad here is this reasonable summary?

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## Marq

Here is another take on Kiyosaki.

I think he is somewhere in between. After the Rich Dad scenario (the wiki summary is correct) he seems to be into just selling more books and overselling the concepts. 

Whether he is a pathetic hack telling us what we want to hear, I don't know. Like I said, I agree with his initial concepts and think they are fairly useful in our fight to survive this world. They made sense to me then and still do now. 

I did matric twice - once as a b streamer and a second time to get a university exemption. Sometime during my part time varsity days I questioned the purpose of education after watching quite a few of the guys from my first year in matric, go forth and create wealth fairly easily and quickly They had no need for a matic or a degree, while I was just an articled clerk and was not going to produce wealth for many a year (and I still wonder about that part now?). I can identify with both of these dad scenarios having being the first type of dad for most of my business life and trying the second one on, in later life. Sure I have some education now, but I believe having street smarts, a basic education and a mentor will get one a lot further. 

The mentor part is one that I have seen with a few friends and their children and I realised that had my dad or one of his business friends or anybody out there just been a bit more helpful and passed some of their business knowledge, guidance and life skills and thoughts onto me, I would have had a huge advantage in this world. We are all scared to come forward and tell people stuff, cause most of us are still 'feeling' our own way in life and allowing the kids to get out there and fend for themselves without giving them much in the way of decent advice. Most older kids will not take it anyway now, but that is a factor of them growing up without this mentoring stuff. 

Fine tuning the education should come later on, as one realises what and where you want to be in life. I do not see the point of leaving school, not knowing what you would really want to be or achieve (the majority of kids who have matriculated do not have a clue as to what they would like to do with themselves) and then waste three/four years at varsity learning about something which you are not sure about. Whats the point of learning to be an accountant like your father, when after four years you realise you would rather be a plumber or an engineer.

Rather go and work in the trenches and try a few things out and then make up your mind. Fine tune the world around you, rather than wait for the world to fine tune you as you heave from one situation to the next allowing the latest scenario to shape your existence.

Ok enough ramblings for now - have to go and shape my world.... :Big Grin:

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Dave A (13-Jul-09), Graeme (13-Jul-09)

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## Dave A

I've yet to get a reasonable explanation or understanding of why/how "pay yourself first" works. And funnily enough it is the "pay yourself first" notion that makes Robert Kiyosaki's endorsement of network marketing so odd. Network marketing tends to be the ultimate "delayed gratification" way of making money where you'll end up paying yourself last.

Consumption model - I don't know if this is in any way related to what was termed the distribution model. But in case it is:

Generally we buy our consumables from retailers (other companies). The suggestion is probably going to be we should buy from our own business which in turn is buying directly from the producer.

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## IanF

Marq
Thanks for the link I followed through it and came up with this. It is by John T. Reed "Summary
Rich Dad, Poor Dad is one of the dumbest financial advice books I have ever read. It contains many factual errors and numerous extremely unlikely accounts of events that supposedly occurred.

Kiyosaki is a salesman and a motivational speaker. He has no financial expertise and wonât disclose his supposed real estate or other investment success.

Rich Dad, Poor Dad contains much wrong advice, much bad advice, some dangerous advice, and virtually no good advice."
The link is http://www.johntreed.com/Kiyosaki.html he really climbs in boots and all one claim is Robert was made famous by Amway. Anyway still waiting to find out about the consumption model the little I was told it was getting rebates on "everyday purchases" like airtime etc.

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## Marq

For me, the 'pay yourself first' concept is not necessarily a direct financial benefit  like taking 10% of your turnover and putting that into a savings account as if you are a supplier/creditor of the business. It is more a constant reminder as to why you are doing what you do. If we work to pay everybody else and make the economy turn and yet have nothing for ourselves at the end of the month.....whats the point? We may as well do nothing and save ourselves the pain.

I also think that it brings into focus what we all think anyway. That is - whats in it for me? The network marketing crew all seem to believe that this is a business opportunity designed to turn a quick buck so I dont think there is any expectation of a delayed gratification. Possibly most starting their own business are told not to expect any return for the first year, type of thing, so I would think that is the delayed gratification factor. 

Pay your self first is a concept to focus in on yourself and your reason for being in the commercial world. Something which is all too soon forgotten about when we are fighting in the trenches and staving off creditors and parasites - which is why it works for me.

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Dave A (13-Jul-09)

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## Marq

Ian - it looks like like all these property guys have had a go at each other at sometime or other. Guys like this John Reed for me just come across as BS artists themselves with long winded never ending words on why the other guy is so bad and why they are so good. With a 'buy my book' icon on each point, one is left with no doubts as to what he is up to.

I see he even has a go at Donald Trump because Trump did some stuff with Kiyosaki. It seems to be similar to the links theory on websites - just hook to the other guy with better ratings somehow...it does not matter how...and then align yourself (positive, negative or indifferently) with all his marketing and work and your own ratings will improve. 

One can analyse all these so called 'guru's' and probably find that not one predicted the current economic scenario and what to do about it. I do know however that Kiyosaki's idea about ensuring the property you own is an asset and not a liability was probably the best advice amongst them all.

I think our own common sense has to come into play and we must take what we can from the various sources. Each country, the way we do business, property laws and the taxes involved will determine a different scenario. What makes sense over in the excited states may not work over here and vica versa.

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## Dave A

Thanks Marq, and that makes sense (on the "pay yourself first" issue).

I'd got the book a while ago, but unfortunately I went to a seminar shortly thereafter where some business recovery "expert" claimed this as the reason why business owners should draw their salary (pay themselves what they are worth) *before* paying any of their accounts. When I questioned this, I got some mumble about you not ending up in trouble in the first place because you worked more efficiently this way. Now I'm a believer that the priority is nurturing the tree that produces the fruit, which is something substantially different. 

But then I also believe a business owner isn't paid a salary for his/her efforts in the first place - you're paid a return on investment, financial or otherwise. The claimed salary is due either to tax efficiency or breaking the reward into regular payments (or both  :Wink:  ), but ultimately the quantum is never constant or assured. 

Now how do you set and claim this in advance? To my mind the business owner is always paid in arrears.

Anyhow, it put me off reading the book. Maybe I should dust it down and read it now. In fact, just plucked it off the shelf to take home now!

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## Marq

> To my mind the business owner is always paid in arrears.


This is how we are taught to think and our expectations probably go there.

I think we have to try and get out of that logic box, think laterally and get ourselves into advance payment mode. We may start off in arrears but must get into a payment in advance mode.

Right now having thought all of that...makes note to self.......Get payment in advance. 
I guess the eventual idea would be to get so far into advance we dont have to work anymore...mmmm.

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## Dave A

> Right now having thought all of that...makes note to self.......Get payment in advance.


Aha! Now that, I believe, is where the wheels come off. You will stunt the tree and end up with less fruit in the medium term.

Being paid in arrears isn't that bad. It's not as if you are being paid for one year's effort. As a business owner you're being paid not only for the effort of one year, but also the residual benefit from all the years that have gone before.

Of course that doesn't help much if you aren't building a company with a residual benefit. But if you're not building that residual you're basically self-employed, not building a business.

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## IanF

Here it is. I finally went to a meeting last night. And this is a Network21/ Amway sales pitch. When I was invited to a 7PM meeting I could not make it so instead I met with Miranda Henderson earlier. I will point out this thread to the person who is trying to get me join so if she wants she can chip in here. 
 :EEK!:  I was just surprised that they are not upfront with who they are, and the lack of facts given to a prospect. A more honest approach in which I was told it is MLM network 21 approach would have got more brownie points from me.
 :Cool:  Anyway I will ask questions on the network 21 thread.

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## Dave A

> I was just surprised that they are not upfront with who they are, and the lack of facts given to a prospect.


Sorry, I thought you'd figured that out already. The theory is to avoid you making a decision based on preconceived ideas and without all the facts. To some extent it is a valid concern, but incredibly frustrating. At least once you've been through it before, you can generally see it coming if this turns out not to be your bag.

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## Marq

I would have thought that they would change tactics by now and realised that a more open honest approach should get in more prospects. Attending a covert meeting gives me more preconceived ideas than the the ones they would like me to believe in. At least with experience now I now know that this type of clandestine hush hush invitation could only be for an introduction to a freemason, mafia gang, drug buy or mlm meeting. Having done these things, I still ask the question as to what the difference is?

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## Dave A

After a multitude of distractions, I'm finally getting into the book. Just finished the "Why teach financial literacy?" section.

I've got to say Robert makes a telling point about confusing assets and liabilities. It really explains why the middle class gets stuck; buying liabilities that they consider assets.

I also like the point on making more money not being the solution. It's something that I've noticed whenever someone tells me they need to make more money - whenever I look a little closer they don't have an income problem, they have an *expense* problem.

It really struck home the other day. I was out visiting and this person is always crying poverty. But a little glance around the home at the new leather lounge suite and other luxury modern conveniences really told the truth of the matter. Overspending  :Roll Eyes (Sarcastic): 

No matter what you earn, you need to spend less than you earn so that you can start channeling the extra money into assets. *Real* assets - the ones that produce income.

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## Marq

It is strange how the over expenditure scenario is practiced by many whom one would think are smart people...but there you go.

The assets vs liabilities section however is the powerhouse of your financial future. I believe if there is one lesson to take away from Robert Kiyosaki its this one on understanding that the asset you just bought to secure your future could be a liability.

We are taught the profit and loss game in accounting & business school classes but few teach the balance sheet game. One sees it indirectly when the subject of financial ratios comes up but the only time I have really seen it operating is in the treasury banking world.

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