Rich Dad, Poor Dad Book Review

There are a lot of critics that dislike Robert Kiyosaki, some of them quite vehemently. So before I begin my (overall positive) review, let me address some of the most common concerns.

He’s a bad writer
He’s a terrible writer. To his credit, he recognizes and admits it. I can think of dozens of ways his writing could be improved. But the fact that his message is jumbled, poorly explained and obscure does not make his message less valuable.

He just says the same thing over and over
This is also true, and it relates to objection #1. He couldn’t really figure out how to say what he wanted to say, so he kept reshaping his words and trying again. Subsequent books in the series, rather than reading like sequels, read like second drafts. So, if you get to the end of the book and think you’ve really understood his message, don’t feel obliged to read the rest. BUT, if you find his message intriguing yet elusive (very possible, since he’s a terrible writer), reading the other books will help you “get it”. The local library is a great resource for this.

He doesn’t give you enough information to actually do anything
He doesn’t. But he also never claimed that he did. He specifically said that if you were interested in doing the things he described, you should go check out books, do some research, or find a mentor. The point of the book is not to teach you how to become an investor or business owner, it’s to explain to you why to become an investor or business owner. It’s to let you know that being an investor or business owner is a possibility.

He ruins people by encouraging them to try investments that they’re not qualified for
Please see above. When you finish Rich Dad, Poor Dad, you’ll hopefully be excited about learning how to develop passive income. But you do still need to learn it. The book contains nowhere near the level of detail you would need to actually get into this stuff and be successful. So don’t do anything stupid, ‘kay?

He has no idea what the definition of an asset is
Mmm… it would be more accurate to say that he uses a different definition than most people. What he calls an asset is what accountants call an “appreciating asset” or an “income-producing asset”.

On the one hand, it is kind of obnoxious to make up your own definition and then insist that everyone else use it. But on the other hand, I think we can all agree that accounting jargon is complex and confusing, and we’d rather have a simpler terminology. Kiyosaki’s definition cuts through the clutter and jargon, and leaves just the heart of what an asset means to you.: an asset is something that puts money in your pocket.

If you’re filling out your tax return, use the government’s definition of asset
If you’re filing for a bank loan, use your bank’s definition of asset
If you’re trying to develop passive income and get out of the rat race, use Kiyosaki’s definition of asset.

On to the good stuff

In my first post I said that the idea of not having a job had begun to enter my consciousness about 10 years ago. I can actually peg that to a specific event: when my mother gave me Rich Dad, Poor Dad and said I should read it. I had not much interest in finance at the time, but we were on a road trip to California, and I was grateful for the distraction (I’d finished my fantasy novel by the time we got to Vegas).

The title of the book comes from Robert Kiyosaki’s experience growing up in Hawaii. When, at the age of 9, Robert asked his dad how to be rich, his dad admitted that he had no idea. But he suggested that Robert ask his best friend, Mike, whose dad was going to be rich someday. So he and Mike went to Mike’s dad, who agreed to teach them how to be rich. And so Kiyosaki got money advice from two sources thereafter — his “rich dad” and his “poor dad.” This gives Kiyosaki a unique opportunity to see exactly what the rich teach their kids about money that the poor and middle class do not — the subtitle of the book. And one of the things they teach their kids is how not to have a job.

As I said, there’s not a lot of technical detail in the book. In fact, that lack of technical detail is one of the reasons I’m writing this blog. But Rich Dad, Poor Dad does provide one thing that no other book I’ve found can offer to you:

He explains the concept of being rich. The necessary requirements for not having a job, and the attitudes required to achieve that state. What passive income is, and that it’s possible for you to get some of it.

My upbringing focused entirely on getting a job. What I wanted to be when I grew up. Getting good grades so I could go to college so I could get a good job instead of flipping burgers. Determining my strengths so I could pick a career that fits me. That I would have a job was never in doubt; the only question was whether I would have a “good” job or a “bad” job. The only problem was… they all seemed like bad jobs to me.

What this book said to me, for the first time ever, was “You’re right. They are all bad jobs. Jobs suck. And there is an alternative. Here’s another option.”

The you-need-a-job mentality is hard to break; it’s so pervasive in our culture. My mother keeps asking me when I’m going to get a real job, and she’s the one who made me read Rich Dad, Poor Dad! But nothing on this blog will help you until you understand and believe.. until you grok.. that money without a job is possible. Not easy. Not quick. But possible.

If that concept seems too strange for you to wrap your mind around, then read Rich Dad, Poor Dad. It’s worth the terrible writing.

Resources for Further Reading
Rich Dad, Poor Dad
10 Reasons You Should Never Get A Job
The Cashflow Quadrant
Outliers

Forget the Lexus – Buy an Olive Tree

Book Review of Thomas Friedman’s The Lexus and the Olive Tree

The Lexus and the Olive Tree was perhaps the first book to look at the phenomenon of Globalization from a cultural, economic, and political perspective. Friedman argues that you can no longer examine cultures, economics and politics separately: they are all inter-related, and examining one without the others will give you an incomplete (and confusing) picture.

The book covers a wide range of examples of what globalization is, how it compares to the Cold War system of the previous generation, and what it means to Americans and to the rest of the world. As a net-gen born in 1981, I found the contrasts to the Cold War system particularly enlightening, not for their explanation of Globalization, but for their explanation of why my parents’ generation thought the world would behave differently.

The Lexus
Friedman uses “The Lexus” to represent everything a Lexus represents to Americans — status, affluence, freedom of choice, access to material benefits. For the first time in history, these things are available to almost anyone in the world, if they and their government do what is necessary to plug into the globalization system. And, he points out, people are amazingly willing to forego luxury, buckle down, work hard, and sacrifice in order to get access to the Lexus. A government can ask their populace to do almost anything if it means they’ll have a chance of getting to Disney World in the next few decades.

The Olive Tree
But there’s another side to globalization: the lack of Olive Trees. Friedman uses the Olive Tree to represent everything an olive grove represents to residents of the Middle East: cultural ties, tradition, historical roots, a feeling of knowing where you come from, and where you belong. Globalization requires cutting down some Olive Trees, and (since the US has the best government for globalization, and globalization is therefore often confused with Americanization) many countries are losing their Olive Trees faster than they know or can control. The book explores the dynamic between people’s desire for Olive Trees and their desire for a Lexus.

The book is an excellent introduction to how the world works, and outlines some cautions for those considering entering into it. I recommend it highly for anyone who would like to get ahead any time in the next decade. But I’d like to discuss something that I think Friedman overlooks:

What Globalization Means To You

Ethnocide actually didn’t start with globalization… or rather, it started with the first globalization movement, back when Europeans set out to conquer the world for God, gold and glory; if you wanted to name a symbolic historic event, you could peg the beginning at 1492, when Columbus went out and got himself amazingly lost. The 1500s were when the world first saw a global-scale cultural export process, when Europeans went to the other continents and said to its residents (directly or indirectly) “We have guns, germs and steel; and you will live our way or you won’t live at all.”

Even now, when ethnocide is not a condoned practice, and we allegedly allow others to live the way they wish, the world is still ruled by a European viewpoint. The Hopi Indians of Arizona were lucky enough to get their reservation on their traditional tribal homelands, and within the bounds of the reservation they may run their tribe under their own laws. But still they struggle. They can’t grow corn as they used to – Peabody Coal is taking the water from their aquifer to slurry coal from its mine. They can’t hold their spiritual dances as they used to – too many of the participants work all week, and ceremonies can only be held on the weekend. They could cut themselves off entirely, but they want access to medical care for their children and supplementary food sources in case of drought. But… to tie into the European system at all means taking all of it: a 40-hour-a-week job, struggling to pay the bills, and living a life of quiet desperation.

This is the choice that many people have faced over the past 500 years, and are still facing today: give up your Olive Tree, become a white man, and your people won’t starve to death; keep your Olive Tree, hold to your traditions, and you have to face the infant mortality rate that you faced before modern medicine. And time after time, people have sacrificed their Olive Trees in order to protect themselves and their children. It’s the correct choice, but the results are tragic.

What To Do Instead
Globalization does require some Americanization. You must have a democracy (anything else is too slow to change). You must have a free-market economy (anything else is too likely to harbor inefficiencies). But you don’t have to import American materialism, American obesity, or American quiet desperation. Globalization allows — within its specified constraints — anyone from almost any culture to earn a decent living wage while living life the way they want to.

And that’s the real power of globalization: it can’t make your Olive Tree provide you a living, but it can make you rich enough that you can afford to keep an Olive Tree anyway. Buy a Lexus if that’s what you really want…. but what if you put some of your new-found wealth towards maintaining what matters to you?

You Don’t Have To Be A Rock Star

I just finished Chris Anderson’s book,  The Long Tail.

The long tail talks about the alternative to top 10 hits.  We are so used to thinking in terms of mega-hits — multi-billion dollar Hollywood movies, gold and platinum albums, #1 on the New York Times Bestseller list — that we forget how many works of art are NOT great #1 hits.  This hit-oriented culture is the result of distribution channels that make it hard to find niche market works — the movie theatre can only show 20 movies, and needs at least 10,000 people to go see each of them; the music store can only carry 5,000 CDs and the bookstore can only carry 100,000 books.  It seems like a lot, but they’re each a tiny percentage of the art works created each year.

But now we have the internet.  If you’re interested in lime-green bowler hats, or websites about lime-green bowler hats, or discussion groups about lime-green bowler hats, or books about lime-green bowler hats…. It’s out there.  You can get it.  And the person who makes it can sell it to you.

The long tail is best explained with his graph of Rhapsody Music Downloads.  The number 1 downloaded track was downloaded 180,000 times this month.  This is a LOT.  But it trails off quickly — the #5000 ranked track is only downloaded a few thousand times / month.

Now get WAY out there into the tail of the graph.  The #400000 ranked track was only downloaded 20 times this month.  The #800000 song was downloaded only 5 times.

BUT… say the average in that range was 10 downloads/month.  That’s 800,000 – 400,000 = 400,000 songs, downloaded 10 times/month, at $1/download.  In other words, $4,000,000 in this month.  That’s pretty good money for a bunch of pathetic non-hits, eh?

A lot of people are intimidated out of starting a business, or selling their photographs, or writing a novel, because they’re thinking in terms of #1 hits.  They think that any project not getting 180,000/month is a failure, and they see no way to get 180,000 downloads in a month, so why bother trying?

What the long tail says is that there’s a lot of room for non-hits to still be successful.  Maybe you won’t ever make $100,000/year from your novels or your website.  But if you could make $25,000/year doing something you love, wouldn’t that be pretty awesome, also?  Even if you had to get a part-time job to cover the difference, it’s still an improvement on 40 hours/week doing something you hate.

You don’t need to find something that 100,000 people will love.  You only need to find something that 1 six-millionth of the world’s population will love.

Resources for Further Reading

The Long Tail

Wikipedia: The Long Tail

1,000 True Fans