Rich man, poor man, richer man, millionaire...

You’re arguably one of America’s most famous entrepreneurs. Was this a long-held dream, or was it more of an accidental career path?

Accidental! I really became one because nobody would give me a job! I’m only trained for doing two things – flying planes and driving oil tankers. My career choices were very limited.

So what were your first steps to financial literacy? Take us through how you started.

I grew up in Hawaii, where I learned a lot about business from two father figures, who eventually became the basis for my book, Rich Dad Poor Dad. Then, I went from school to the US Merchant Marine Academy, and then into the US Marine Corp for six years as a helicopter gunship pilot, during which time I went off to Vietnam. It was a rather unconventional start to adult life because at the time everyone was trying to avoid the war but I went straight into it. But as it turned out it was an incredible lesson for business. I mean, we had to prepare ourselves, mentally, to die. It’s a great thing to go through because you become stronger, in every way. Being in the military teaches you to conquer fear, which is also a great skill to have in business. I was very shy back then and the military gave me confidence. I still thrive on adversity, because it makes you stronger. It makes you a better person.

Anyhow, when I left I had to find a new career and so I in 1974 I went to work for Xerox, which was also a good training ground as selling is an essential tool for any entrepreneur. While I was there I started a business in 1977, creating nylon-and-velcro surfer wallets. It was my first business. We had success – it made me a millionaire – but we spent it all too. I lost the company, it eventually went bankrupt, but it was a lot of fun too. I learned a great deal. From there I went into business, books, and of course diversified into other investments and interests, such as property and oil.

These have all been tough environments, mentally as well as physically. How did you survive? And did it prepare you for the business landscape ahead?

I learned how to survive in any environment. In fact, I graduated above many other students who had better grades or were a lot smarter than I was because I learned to be street smart.  And yes, it was all great training for business!

Going bankrupt obviously didn’t put a damper on your dreams to achieve success, did it? If anything, it only whetted your entrepreneurial palate. But you still had some ups and downs before you achieved success, didn’t you?

Yes, I started investing in real estate and small-cap stocks, and I almost went bankrupt again at one point. I owed about $750,000. I just kept working at various things in order to find something that was successful

You eventually hit the jackpot in 1985 when you started an education company that taught business and investing students.

Yes, I did so well that in 1994, I officially ‘retired’! I had more money coming in from my investments than my job. That’s when my wife Kim and I decided to sell our education business in 1994 and retire. The ideal way to become self-sufficient, or a successful entrepreneur is to go from having a job to owning a business to having investments, and then eventually living off those investments

But that wasn’t enough success. You then started working on the Rich Dad book. You had to self-publish this though because no publisher was interested. Eventually it went on to be picked up by a publisher, and then became a #1 New York Times bestseller in 1997. How did you do it?

Rich Dad Poor Dad was turned down by most publishing houses because they said, “You can’t write”. I couldn’t. I couldn’t spell and my grammar was incorrect. I mean, I flunked out of high school twice because I couldn’t write! I failed at English at school! But I think that’s what appealed to ordinary readers, the way it was written in an ordinary voice. I think that’s one of the reasons for my success: I’m not trying to impress anyone, or the literary critics, I’m trying to communicate with the masses of people, about money. Anyhow, I printed 1,000 copies and sold the first copies at a friend’s gas station. I marketed it a lot. Eventually, the book was picked up by Warner Books, a division of Hachette Book Group USA and within two years it was on the New York Times bestseller list. [Three of Kiyosaki’s books – Rich Dad Poor Dad, Rich Dad’s CASHFLOW Quadrant, and Rich Dad’s Guide to Investing – have been on the top 10 best-seller lists simultaneously on The Wall Street Journal, USA Today and the New York Times.] I was always very shocked at how well my books sold. Not bad for a kid who couldn’t write!

Now, the Rich Dad books and associated businesses account for less than 10 per cent of your empire though? How did you springboard from writing to huge diversified wealth?

I took the money I made from royalties and I bought businesses and then real estate. Now I use a combination of business, taxes, corporate structure, banking, law and property to build my wealth. I’ve found a plan that works best for me and I’ve stuck to it. But my strategy is always the same. I start businesses and I buy real estate. That’s the formula.

You’ve always argued this – that people will only get rich if they work for themselves in their own business venture or buy a business rather than working for others in a 9-to-5 job. You’ve built an empire teaching that financial mantra to others. But the interesting thing is that you had a 9-to-5 job when you started your first business making wallets, and kept working in this secure job until you were confident enough about your business knowledge that you could leave. Is this a smart way for entrepreneurs to start a business, keeping a foot in both camps to begin with – the full-time job and the business – so there is guaranteed income/cash flow?

Oh yes! Many great businesses have started on the back of a kitchen table. It is a very smart move to keep your day job when you’re starting out because having a new business is like having a baby; you need to care for it and nurture it. You can’t expect it to carry you, just as you can’t expect a baby to carry you. Few businesses can carry their owners at the start. Cash flow is vital.

When you did finally decide to jump ship from your full-time job to your venture?

When I got sick and tired of the doing the other job! It took a while though. It took two years or so.

But you still advocate that starting a business is the best way to achieve financial success?

As an employee, the tax laws are against you. The moment you start a business the tax laws are in your favour. My strategy is always the same: I start businesses and I buy real estate.
That’s the formula for my success and I’ve never changed in 40 years. The difference between the rich and the middle classes is that the middle classes believe you’ll get by with a safe, secure job and a good education. The rich, on the other hand, are taught that it’s better, financially, to own your own businesses, invest in real estate and take companies public.

So how do you analyse a business venture or investment deal and ascertain if it’s a good buy?

The first thing I look at is the individual or management team behind it. I want to know who’s going to run the business. I interview them, check their references, look at their track record. I sometimes don’t care much for the business, such as a hotel I once looked at in Palm Springs. It’s the person who runs the business that I’m more interested in.

Once you’ve bought a business or businesses, you then buy real estate. How do you determine what to buy? Do you have a strategy?

My plan is: I build a business; then the business pays royalties to another corporation and that corporation buys the real estate. Then what I have is offsetting incomes, which allow me to own property tax-free. So it’s more than just property; it’s tax structure. tax law and corporate structure. Everybody wants a quick fix – to learn how to get rich quickly with property, but real estate alone won’t do it. Real estate is just as poor an investment as stocks; they are all bad investments. You have to educate yourself, and have a plan. You’ve got to have a strategy that far beyond just ‘location’, which a lot of people get sucked into. You have to educate yourself. A lot of times people buy property because they are trying to solve a lack of money. If you are a poor money manager and you invest in property to try and solve it you will have two problems – you and the property!

You once said: “Desire is 99 percent of the process”. You’ve always shown desire, right from when you pushed yourself to be accepted into the Kings Point Academy in New York to when you self-published your first book. You even get up at 3am to write and then do some exercise at 6am before starting your day. Do you think it’s been desire that has largely driven you to where you are today?

Absolutely. You can’t do anything without desire or tenacity. I knew I wanted to be successful and wealthy; I just had to figure out how to do it. It’s funny; my career was never done via some business plan. It just happened. I failed a lot along the way but I just kept going. As I said: tenacity.

You once said: “The world is full of   people who are smart but not successful”. What distinguishes those who ARE successful then? Is it tenacity?

Yes. A lot of people are very smart but they lack the desire to achieve, so their intelligence and talents never really manifest themselves into something bigger. Or they make a mistake, failing in some aspect and then give up their dreams. Tenacity is what distinguishes the successful entrepreneurs from all the rest.

Because you’ve failed a lot as well, haven’t you? Have the lows of business taught you just as much as the highs?

Oh yes, when I lost my company at one stage, it consumed me. But it was also the best lesson, learning how to get out of debt using no money and paying off all my investors. Most entrepreneurs will lose one or two companies in their lifetime and they’ll learn from it.

If you had to do your life all over again, what would you do differently?

My wife and I were only saying yesterday that if we knew then what we do now, we would think twice about doing it! We really went through hell. But Hell eventually led to Heaven. The start of every business is like meeting your girlfriend or boyfriend for the first time. Things are exciting. It’s new and seductive and you’re passionate about it. You don’t see the flaws. You don’t see the everyday mundanity and grind. All you see is the good. Then the reality sets in! But if you can keep the romance and excitement going somehow, that will see you through the tougher times.

Many entrepreneurs start their businesses in tough times, often because they’re pushed out the door and so suddenly they’ve got the opportunity to work on ideas. Do you think 2009 will be The Year of the Entrepreneur?

Oh yes. And there’s often another boom when amateurs get in the market.

 You are very similar to Warren Buffet in that you both started early in life – very early, in your case, at the age of 9. Do you think entrepreneurs are born or made?

Entrepreneurs can definitely be made but some people, of course, have an innate ability to see opportunities and ventures. I have friends who are natural entrepreneurs. I need to work at it. But everybody has the potential to an entrepreneur. In my neighbour there is a lady who knocks on every door and offers to polish your shoes. She’s an entrepreneur. Not a rich one, but still an entrepreneur. We all have the skills to build a business venture of some kind but many people just don’t have the drive.

You’ve had a lot of criticism over the years from people who claim that you haven’t provided concrete tools and advice for achieving success, only anecdotes and motivation. What do you say to that?

A number of people seem to get annoyed because they want the magic formula. People want to be given everything on a plate nowadays, but I and other successful entrepreneurs can only offer different kinds of recipes. People still need to create the dish themselves.

Who do you admire in business?

Steve Jobs and Donald Trump. They’re rogues and rebels. Trump is a great. He is
one of the kindest, most respectful men you will ever meet but if you mess him up, he will chew you up and spit you out without a second glance!