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Robert Kiyosaki and Multi-Level Marketing Exposed!

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As some regular readers know, I wrote about MonaVie, a multi-level marketing company (MLM), a few years ago and the post has received 6000 comments. Over that time, I've come to learn quite a bit about the multi-level marketing industry - none of them good.

Today, I'd like to share some thoughts on the business of MLM and pair that with well-known personality Robert Kiyosaki, co-author of Rich Dad, Poor Dad. As you can tell from the title, this is going to be a little harsh on Kiyosaki, but keep in mind that Rich Dad, Poor Dad was major motivation for me to begin this blog.

Why Robert Kiyosaki and MLM?

In my MLM articles like the aforementioned MonaVie one and my Nerium one, many MLM supporters say that Robert Kiyosaki is a big supporter of MLM and that justifies getting involved in MLM as a distributor as being a sound business choice.

It does not.

Most people don't know much about Kiyosaki. They hear him say that he has millions of dollars from various complex business ventures and it makes him sound credible. They'll read Rich Dad, Poor Dad and become greatly motivated to find their financial freedom.

It isn't that simple. There are a few things that people should know, starting with:

Robert Kiyosaki's History with MLM

One of things that many people don't realize about Robert Kiyosaki is that he got his big break due to MLM. This letter relates the story in detail. Short version is that a top person at the MLM company Amway, Bill Galvin, found Kiyosaki's book, Rich Dad, Poor Dad, at a car wash before it was published. In fact, Kiyosaki had trouble getting published. It was Bill Gavin of Amway who was able to pull the strings and use the MLM culture to get the book its best seller rating. Kiyosaki also sold tapes at $6 to tens of thousands of distributors. It is fair to say that Kiyosaki's owes the MLM industry a great deal by embracing his products.

In addition to the above, Kiyosaki joined Amway under Bill Gavin, but it appears he was a failure at it. You'll never hear him talk about his Amway rank or the money he's made from it. If Kiyosaki believes that being an MLM distributor is a good business opportunity why isn't he active in the business?

Finally, if you read Rich Dad, Poor Dad, you'll see that there is no mention of MLM at all. This makes sense it was written before MLM played a major role in Kiyosaki's life. In fact, you'll find that the philosophy of the book is to avoid liabilities, which would include most MLMs due to their required autoship policy. It is clear that Rich Dad's advice would be to avoid MLMs for this very reason.

It seems to be that Kiyosaki and MLM have a symbiotic relationship. The MLM industry provides Kiyosaki with a steady set of customers for his products; Kiyosaki provides the MLM companies his support that it is a good business venture.

Robert Kiyosaki and the Cash Flow Quadrant

Many distributors don't know that above history. Instead they have just watched a video from Kiyosaki talking about his Cash Flow Quadrant. Here's one version of the video:

The video is big on marketing and it tells people what they want to hear: "Here's a way out of the rat race." That's powerful motivation. A lot of people are apt to believe Kiyosaki. Who wouldn't want a solution their money problems? The promise of passive income is appealing to just about everyone. However, let's examine the Cash Flow Quadrant in more detail. You might want to jump to 2:45 in the video where he draws it out and follow along:

Kiyosaki describes the Cash Flow Quandrant as having four areas: E, S, B, and I. These are the four types of ways people earn income. E is for employees. S is for small business owners or specialists (doctors for example). B is for big businesses. I is for investors.

Kiyosaki seems to claim that being an MLM distributor is a "B" in the quadrant. It is not. It is on the line between the "E" and "S"... with the major disadvantages of both. Let me dig a little deeper and explain why.

Why being an MLM distributor is an "E" in the Cash Flow Quadrant

Though it doesn’t seem it, an MLM distributor is really an employee of the MLM company. In most MLMs, the company can fire the distributor by terminating their business at any time, for any reason... just like any employee. If you look at "S", "B", and "I", none of those people can be fired by anyone. Also, if the MLM company goes out of business, the MLM distributor has lost his job through no fault of his own. Employees have that same risk, but the other quadrants do not.

With MLM, distributors get all the disadvantages of being able to be fired at the drop of the hat without the benefits of a steady income and or benefits such as health care and disability. In addition, the distributors are required to pay for their own training by buying various tools and going to conferences.

Why being an MLM distributor is an "S" in the Cash Flow Quadrant

MLM has some of the characteristics of being a small business. Distributors work their own hours doing as much or as little as they want.

However, the MLM company strictly dictates how MLM distributors run their businesses. The MLM company restricts the avenues of selling the product as most won’t permit sales on Ebay. The MLM company control the products that you have at your disposal to sell as most prohibit you from selling a product from another MLM company - even if the products don't compete in any way. The MLM may even prevent you from having your own website to promote your business - instead forcing you to use a cookie-cutter website. This prevents the distributor from differentiating their business from their competitors - other distributors of the same product.

In some ways, the distributor is able to determine his income, but this is greatly limited to the mathematics of the compensation plan that in almost every case dictates that 99% of people will lose money.

One of the reasons why people choose a small business is because they want to call the shots and be in control of their destiny. The MLM distributor doesn't get to call the shots and the MLM company controls their destiny.

Why being an MLM distributor is NOT an "B" or "I" in the Cash Flow Quadrant

The video explains that B’s are big businesses like Microsoft and companies with 500+ employees. Clearly that’s not an MLM distributor. No MLM distributor has had an IPO. MLM distributors don't generally have employees. Maybe a few of the ones at the top of the pyramid have a couple of employees, but that is the exception and mathematically this is limited to something like .0001% of MLM distributors since they have to have thousands of people below them to make the money to necessary to pay an employee.

The MLM company itself could be considered a B. Some have gone public. If you were the CEO of MonaVie, instead of a distributor, you’d be in that B quadrant. They are "looking for the good system and good network" in the words of Kiyosaki. For them, this system is to get a bunch of distributors, to work as employees ("E"s), but use the small business ("S"s) categorization to avoid paying them like employees. Instead they pay a very small number at the top well and use that as a carrot stick to lead the ass to motivate the distributor.

There's really is no "I" in this of MLM discussion because it is about investing in businesses that make money and that's not done in MLM. You can pay money to get started in an MLM business, but it is paying an application fee to start from scratch with no customers and no sales. That is not an investment in businesses.

Kiyosaki tries to make the point that "the [networking marketing] company will work with you to get the business skills that make you rich." This line is bunch of half-truths. The network marketing company will charge you money for the tools and training to sell its products. During this time you are also paying them by spending hundreds of dollars on overpriced products. The "business skills" that you learn are quite vague, but whatever you learn only applies to working in other MLM businesses. You can't cash those "business skills" in for a job as a VP at Microsoft the way you could an MBA.

Kiyosaki mentions the low start up costs to MLM (under $500), but he neglects to mention that over 99% of people lose money. Of the one percent that doesn't lose, some 90 percent of those barely make a few hundred a month. It doesn't sound enticing to explain that for a stadium full of 50,000 people, each paying $500 to get into MLM, only about 50 will make a small supplementary income.

Where do you think the MLM companies make their money? It's from the distributor. That theoretical stadium of 50,000 distributors each paying $500 in amounts to $25 million for the network marketing company, of which they'll at best pay half of it back to the distributors (but in many cases pay less). No wonder they are trying to pitch distributors on "the opportunity."

Kiyosaki goes on to say that if you were trying to build "a Microsoft it would take hundreds of millions of dollars" and then explains that a network marketing company will help you transition to the "B" and "I" side of the quadrant. Since we know that no network marketing distributors are in the "B" and "I" side of the quadrant, this is a very misleading and erroneous statement for Kiyosaki to make.

As we learned before, this is Kiyosaki working his own “S” business - it gets MLM companies to market him as an expert and MLM distributors to buy his books and in return he makes a strong, but critically flawed case for MLM.

Kiyosaki Gives Vague and Bad Business Advice

ABC’s 20/20 put his advice to the test by giving three people $1000 and giving them the goal of making a return on it in 20 days. Kiyosaki coached them personally. It was a resounding failure with all contestants saying, Kiyosaki never gave concrete advice. "All [Kiyosaki] does is, I guess, is open your mind to the possibility. He doesn’t tell you how to do it."

This continues in Kiyosaki's and Trump's book, We Want to Teach You To Be Rich. Read the reviews from Kiplinger's Magazine and the Wall Street Journal. It's not surprising that these two well-known business authorities trash the book citing vague advice and calling it an infomercial for the duo's other products.

When it comes to his businesses it seems that Kiyosaki is scamming people himself. This investigative report shows that Kiyosaki has free seminars designed to get people pay more for expensive training (classes that cost up to $45,000). Part of that training included asking people to raise their credit card limits, which Kiyosaki admitted was poor advice.

Finally, when it comes to Rich Dad, Poor Dad, Kiyosaki admits that the book is a work of fiction. He admits that it is short on practical advice and that it more about motivating someone to take control of their financial future. I admit that it has value in that sense, but let's not confuse a motivational speaker for the purveyor of fine business advice.

Kiyosaki's Company Files for Bankruptcy

If Kiyosaki was a truly great businessman, his company wouldn't file for bankruptcy, right? Isn't that the definition of a failed company. I think it's Business 101: Don't File for Bankruptcy. It's almost like Living 101: Keep Breathing.

Conclusion and Further Reading

Bottom Line on Kiyosaki regarding MLM: Becoming an MLM distributor is not great business advice from a great businessman, it is extremely biased advice that doesn't make sense from someone with known business failures and a history of fraud.

Further Reading (as if this wasn't enough, right?)

Last updated on October 13, 2015.

This post deals with:

... and focuses on:

MLM

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72 Responses to “Robert Kiyosaki and Multi-Level Marketing Exposed!”

  1. Alex says:

    I attended one of Robert’s seminars and was almost hoodwinked into spending up to $60,000 for real estate classes. Man I would have gone bankrupt if I followed his advice.

  2. Matt G says:

    Great in-depth article! I’m constantly surprised at how many people are ignorant to how MLM really works. Got some great insight to Kiyosaki’s marketing as well-

  3. […] This topic has been covered brilliantly in great detail at Robert Kiyosaki and Multi-Level Marketing Exposed! […]

  4. Bobk says:

    Saw him on a PBS Pledge “special”.

    First, couldn’t believe that PBS gave him airtime for what was a 90 minute infomercial.

    Second, couldn’t believe that anyone would fall for such drivel.

    Unfortunately, I continue to be amazed at the gullibility of large segments of the human race.

    bobk.

  5. humiliated says:

    Excellent article.

    Another thing that jumped out at me was when he stated how your goal as a “business owner” was to hire the smartest people to “run your company”. He uses Bill Gates as an example of a good business. Bill hired smart people and actually pays them, so isn’t Kiyosaki really endorsing a company structure where employees earn actual salaries?

    Alternatively, by Lazyman’s (and the rest of the world) true definition of a business owner in this scenario, the owner of Monavie has hired some employees and have the rest of the “employees” (distributors) paying THEM. The only way that you could be a true “business” owner in this sense is to “train” to open your own MLM scam company. Aha. Once you have the capital, then you start paying people off from OTHER companies (like that pesky lawsuit that Amway brought against Monavie) to bring their “paying employees” to your company. Sounds like a sound business plan to me, I think the drug dealers use the same one.

    Further to this, he says you “hire the smartest people”. I think a question that a potential distributor should be asking themselves is “would the CEO hire me and pay me $60,000” a year? Distributors get so much sunshine pumped up their backsides that they over estimate their own value and skill level in the “business” world. Seriously, would Monavie or Protandim HIRE you and PAY you to sell their product? Come on. Think about it people.

    I will also venture to say that a lot of distributors don’t fall under the “smart” category (or let’s at least say under the “product smart”) category because they don’t know the product at all (Lazy has shown this time and time again)and don’t bother to do their own independant research on it. In addition, a lot of them have the nerve to come off as nutritional experts and even doctors when they barely graduated from high school. Not smart.

    Finally, I love the comment that he makes about your goal being to build more businesses and paying less taxes. That comment gave me the most insight into this man’s character, or lack thereof.

    I have to say, this man truly belongs in the world of MLM as he is too sleazy to be taken seriously anywhere else.

    I have one thing to say…Kiyosuckit (top that one Vogel).

  6. Well doen – this guy deserves to be repeatedly exposed, because he most definitely is a fraud.

  7. switch says:

    Maybe teamers or LIEfers can explain this one?

    Better cut that part of showing the plan, LIEFERS!!!!!

  8. Brent Hansen says:

    Humiliated, “sunshine pumped up their backsides” hahaha…now that’s funny. I couldn’t agree with all of your comments more, thank’s Lazy Man.

  9. […] in Focus – I got a lot of great emails from readers about my article on Robert Kiyosaki. I had almost posted it on MLM Myth instead of Lazy Man and Money. Glad that I went with Lazy Man. […]

  10. […] Robert Kiyosaki and Multi-Level Marketing Exposed! […]

  11. So Lazy Man, are you throwing out the baby with the bathwater? I agree about the issues with MLM, the story itself, and other issues. I guess what I’m saying as someone who reread the book ten years later I still think it’s worthy reading:

    http://investorjunkie.com/11194/rich-dad-poor-dad-review/

    It’s flawed definitely but I don’t think (the book itself that is) is completely inaccurate. This is someone who’s owned a business for over 10 years now, so I think I have some frame of reference.

    • Lazy Man says:

      I think you might be reading more into the article than I wrote. I didn’t really say that much about the book specifically. In fact, I have written about Rich Dad in the past: Three Things that I Learned From the “Worst” Personal Finance Book

      The point of this article was more to explain to those who have been lied to by MLM organizations that MLM is a good idea because Kiyosaki supports it. Most of those people don’t know Kiyosaki’s background biases with MLM, his failures in MLMs, how he’s paid by MLMs to present misleading information to consumers.

      So again, I’d look elsewhere for Rich Dad, Poor Dad Reviews. There are plenty of them out there.

  12. Ah then we agree 100% then :-)

  13. DTM says:

    Guess what I recently got in the mail? An invite to Robert Kiyosaki’s FREE “learn to be rich” workshop!

    The cover of the invite has a cute picture of a toaster with burnt pieces of toast cut to the shapes of a family popping out the top. The heading is “Today’s financial turmoil tells me one thing… the middle class will be toast”. But he’s got your survival plan inside.

    To quote the brouchure futher, it states “Don’t believe these sacred cows about money. What the so-called experts teach you about money IS WRONG! It’s old – it’s out of date – and it could lead you over a cliff and into poverty”

    He then goes on to advise against the following bullet points in some detail
    -Get a job
    -Work hard
    -Save money
    -Live below your means
    -Get out of debt

    These all seem like reasonable ideas to me.

    He talks about how debt can make you rich. Is this perhaps so he may encourage you to go into debt to take part in his FREE learn to be rich workshop? While the first workshop being offered is free, when we read the very fine print at the bottom of the brouchure regarding quotes from previous students it reads “Students have taken various advanted trainings, each at a cost of approximately $5,000”

    WOW! Various training at $5,000 EACH? So, go into debt to learn potentially harmful financial advice? Seems like he’s still up to his old tricks which he tries to distant himself from in this CBC video
    http://www.cbc.ca/marketplace/2010/road_to_rich_dad/main.html

  14. DTM says:

    I decided I’m going to pop in and see what Kiyosaki’s folks has to say. I’ll report back afterwards with notes if it’s interesting enough.

    In the mean time, I was searching around the internet and found an article pointing out many of the issues you bring up. I was reading through a few comments and ran across a defense of Kiyosaki from Lazy Man and Money (comment #18).
    http://www.thesimpledollar.com/2007/01/26/deconstructing-robert-kiyosaki/

    Now, I know you have mentioned in the past, most likely before you were aware of MLM scams, that you had read and been influenced by Rich Dad. My point isn’t to call you out for having previously endorsed him, but rather just the opposite and something that could be learned from by those in MLM.

    I think most of us at some point have read or learned or experienced something that had a profound effect upon us, only to later find out it just wasn’t true. It’s a very difficult, frustrating thing to admit. I can only imagine how angry and humiliated I would be if I were one of those decieved by MLM only to later find out the truth that what I had so enthusiastically dedicated so much time toward was in reality a scam.

    While I’m sure the effect of Rich Dad on you was nowhere near as all encompassing as the effect of MLM involvement is for many, I just wanted to commend you on realizing when things aren’t as they seemed, and working to do your part to right it.

    • Lazy Man says:

      I’d be interested in your report from the seminar.

      Yep, that was me commenting on The Simple Dollar. It was about 15 months before my wife’s charity meeting was interrupted by someone pushing a $45 bottle of juice called MonaVie.

      At the time, I didn’t know the cult culture that went into pushing the book, which is why I said that Amway were essentially affiliates. I now know that affiliate marketing is much different than MLM (no recruiting is involved).

      There’s a silver lining with Kiyosaki is that he gets people interested in financial freedom and actively thinking about how to get there. Before reading Rich Dad, Poor Dad, I was more content to just make my salary, do a good job, and repeat the next day.

      It should also be noted that I also wrote this article, Three things I learned from he worst personal finance book.

      I recently finished The Millionaire Fastlane and it does a similar motivating job, while actually giving real practical examples. It’s a little long at 300 pages, but it’s worth it. There are around ten pages scattered throughout the book where he explains why MLM is not a way to become a millionaire. One thing that sticks out in my mind is that you don’t have control of the business (they set the compensation plan). Also since everyone can do it and it is easy to enter it isn’t a good business. (He has a much bigger explanation about why if everyone can do it and if there aren’t barriers to entry the business isn’t a good one.)

  15. Beth says:

    I really appreciate this article about Robert Kiyosaki. I’ve never read about this or heard about it anywhere. Thank you! :)

    I worked for two years, trying to get rich in MLM. (And believe me, Robert Kiyosaki is one of the “Sacred Cows” of MLM, ha).

    I only made a few hundred dollars compared to MANY more dollars that I spent on all the get rich quick products, advertising and everything else.

    MLM success rates are LOW and I didn’t want to perpetuate the MLM model. The percentage of people who make (and will make) money with MLM is low compared to the percentage of people who won’t make money. The MLM model of a company cannot remain sustainable otherwise.

    I did not want to scam anyone else so I stopped immediately. And I was setting up an Online sales funnel that had the potential for me to bring a lot of people into my company (which has a very high start up price). It makes me sick to think about how many people could have been scammed. :/

    If I had not gotten started in MLM, my family and I would be much more comfortable financially.

    I was NOT involved in trying to recruit family and friends. I was Online and Online MLM is a totally different ballgame that is much more lucrative to the “leaders” and very addicting and frustrating to the (many more) “followers.”

    Thank you again!

    • Lazy Man says:

      Thanks Beth,

      I wrote this article because Robert Kiyosaki is a “Sacred Cow” of MLM. Those holding that belief are either not intelligent enough to see what Robert Kiyosaki is saying or are intentionally invoking his name in an attempt to trick others.

  16. Paul says:

    Great article!
    I actually love the cashflow quadrant… but understanding it should drive people away from MLM.
    It says that 95% of E/S people share 5% of wealth, while 5% of B/I people share 95% of wealth….
    MLM is even worse! 99% of MLMers LOSE MONEY while 1% share 99% of wealth… It’s mathematically guaranteed by MLM compensation structures.
    Thanks for the article!

  17. macoy says:

    Guys,I donnt kw how u guys are looking these issues,1)Kiyosaki says in his book business of the 21st century that u should investigate the MlM company b4 joining,(2)investigate their compensation plan,(3)Building a network marketing business is not a get rich quick scheme,(4)It is a cash buildig platform.Now the question is are you aware that some companies that are not MlM companies claim they are,do u also kw that ur earnings is a function of the number of active people in ur team vis-à-vis earning a residual passive income,the Guy did not say leave ur job or don’t do any other legitimate thing that brings income, he adovocates in a sense being aware that u need to develop a plan B,a plan that will help u develop ur financial IQ so that u don’t become a liabilty to the society,remember he says u can be Rich in any of the 4 quqdrants,the key is how you Strategize. The aim I believe is quicken ur intelligence so that u also realize that u can be Finanacially Free n pursue ur life’s purpose and for me it means doing all that is legit to acquire assets that will produces sufficient passive income to take care of ur budgeted and unbudgeted expenditure for life.

    • Lazy Man says:

      Macoy, I lost track of what you are saying towards the middle of your comment. You put together a lot of unrelated phrases there. Note that Kiyosaki is in the business of selling books to participants in MLM. Of course he’s going to say that is the business to be in.

      Use your own brain and don’t just buy into what Kiyosaki is saying.

  18. HealthWealth says:

    Robert sure does a figure-8 trail of talks around the world. For sure he’s in the business of globally selling seminar seats, and sharing the proceeds with the events organizer of that country.

    Not that I mind he peddles advice … but he’s got a tendency to go into segmented loves and hates. It’s black and white, yin and yang.

    At one seminar in an Asian country, he said he didn’t believe in mutual funds. Stay away, he foghorned. That sure pissed a few hundred people who were agents of that industry – they promptly left the hall.

    Every form of business is viable, and has its cycles and timings. A business is only as bad as its implementor.

    • Lazy Man says:

      It’s worth noting that he’s generally just a motivational speaker. There are extremely small nuggets of wisdom mixed, but it is left to the listener to extract them from the mounds of completely wrong and terrible advice that he gives.

      This article was intended to show some of that bad advice and illustrate that he gives it because he’s paid to.

  19. James R. Henry says:

    I believe that MLM is a business as much as a franchise owner is a business owner. When you purchase a Burger King franchise for, let’s say, $500,000, you are tied to their terms. If the Burger King Corporation closes, so does your franchise. You buy products & you sell those products, just like the burger, fries, soda, coffee, etc. at Burger King. What Robert Kiyosaki says is that in an MLM company you pay a lot less than if you did own a franchise. I mean, you actually save hundreds of thousands of start-up costs. I would ask if any of the naysayers have ever ventured into the network marketing business opportunities (MLM)? They would probably answer with a strong “NO” or that if they had, probably were very unsuccessful. MLM income determines your determination & motivation. I would highly recommend the books, Sell or Be Sold & The 10X Rule, both by Grant Cardone, which detail what you should do in order to be GREAT salespeople. In our everyday lives, we are all salespeople. We sell the products & services we use, whether we are paid or not. I’m a business owner, and have been since the age of 9, enjoying my freedom from the employee quadrant. Yes, there are the E, S, B, and I. You can only lose your business in a MLM company the same way you can in any franchise operation, McDonald’s, Burger King, Subway, etc. If you stopped paying your royalties, your business would close. If you had horrible customer service or cleanliness issues, you are in breach of contract. If you stopped marketing your products and services, eventually your business would close. If the corporation closes, so does your business. An employee is fired, however, if he is late to work (unless he is an independent contractor), argues with a co-worker or management, etc. Don’t speak negatively about such things if you’ve never been a part of it. My education to many is to seek the financial advice of those who practice what they preach. The writer of this article does not seem to have ever been affiliated with a network marketing company. Only seek the advice from those who practice what they preach!

    • Lazy Man says:

      James,

      A comparison of MLM to franchising is one of those MLM Mind Games… a poor irrelevant analogies. Burger King franchises don’t make money recruiting other Burger King franchises and thus are not similar to MLMs at all. If commissions were paid at a single level and not a multiple-level, you might have a comparison. That MLM aspect puts the it on the FTC’s radar for being pyramid schemes.

      The low start-up costs are a great disadvantage. It means that the “opportunity” is available to anyone and each of these people are potential competitors. This is a very bad business to be in. See more: The Business of MLM (or What Gives Freddy Krueger Nightmares)

      By the way, one of Kiyosaki filed for bankruptcy for one of this companies recently: Rich Dad, Poor Dad, Bankrupt Dad? – Forbes

      McDonalds, Burger King, Subway, are not ever going to be deemed pyramid schemes by the FTC as MLMs have. MLMs have a much greater risk of being shut down. If you read the SEC filings about the risks of just about any MLM company they state this risk quite clearly. You won’t see Subway stating that there’s a risk that the FTC will shut them down for being a pyramid scheme.

      As for your logic about not speaking negatively about something you’ve never a part of, it is complete hogwash. Here’s why:

      “There are many, many real world cases where we rely on external perspective instead of real life experience. If someone were say that the ramifications of jumping off a bridge generally involve serious injury or death, would you ask that person if they have real life experience of jumping off a bridge? No, you would use common sense from an external perspective and evaluate the ramifications before being a part of it.

      MLM distributors dismiss those with external perspective to limit any opposing views to people who have real life experience in MLM. Those with real life experience in MLM either were successful in making some money (the less than 1%) or lost money (greater than 99%). The MLM proponents will then say that you shouldn’t listen to those who “failed” to make money, because they didn’t know what they were doing. This leaves only one set of people that the MLM proponents deem as having the right experience to listen to… the very few people who happened to make money in MLM because they were in early and at the top of the structure. Of course, these people are going to say great things about MLM, especially because they stand to benefit if more people are recruited into MLM.

      The reality is that the people who aren’t in the MLM are the ones with the most valid opinion. They are the ones who are not biased. They don’t stand to gain or lose any money if you decide to join or not. It is the MLM proponent that wants you to join – they stand to make money if you do.”

      Read more from that: » MLM Mind Game: Real Life Experience vs. External Perspective

  20. Rolf Bogner says:

    You want to have understood about MonaVie MLM?
    Your article proves that you have not MLM itself (business model, business law) nor the practical reality of the MLM industry understood nor the approach of Kiyosaki.
    Only the completely false statement that contractors are employees of MLM businesses is absolutely wrong and absurd. And so there are many more with misrepresentations. A poorly researched, journalistic miserable article without value

  21. Rolf Bogner says:

    You operate with censorship?

    Why do you delete my comment from to day?

    • Lazy Man says:

      Rolf,

      I approve all comments before they are published.

      You don’t seem to have MonaVie, MLM, or English. I have written extensively about MonaVie and MLM uncovering dozens of incidents of fraud with both.

      I never said that distributors are employees of MLM businesses. That’s part of the problem, they don’t get any of the benefits that employees get (health care for example) and all the negatives (no minimum wage).

      Before you criticize journalism, you might want to educate yourself on how to construct a grammatical sentence. After you have that down, look into putting forth a more substantial argument than, “You don’t understand [x].”

  22. Rand says:

    Very interesting article. Can’t say That I learned very much positive info from it. I hear a lot of negitive comment from probably I would call a bunch of losers. Sorry you did’nt have much success in you’re lives. James R Henry was probably the best comment here, and that is including the article. I have had a construction business, a fabricating business, been in the mortgage business and the realestate business and I might add an MLM business. Made and lost money in all of them but that goes with the territory of being in business. One thing I noticed, in the MLM business, I did’nt have any employee’s to baby sitt,or hold taxes out on or pay insurance premiums on or come and ask to get paid before pay day or wonder why they were’nt there the day after pay day or have to deal with “i’m sick, i have a hang nail, my dog’s having puppies so i can’t be at work today. Did’nt have any of that in MLM. Sounds to me like you people would be a big babysitting job. You probably need to go get a job with the post office. Oh, forgot to mention, I’m 69 years old, retired and still haveing fun working in an MLM business and realestate. If you want to be in business, dry your eyes quit sniveling, roll up your sleeves and go to work. Bye.

    • Lazy Man says:

      Thanks Rand, I run a business. It was pretty clear that you were an MLM guy when you said that you didn’t learn anything positive from the article. Yes, there’s nothing positive about Kiyosaki telling lies to scam people, but you could have pointed out that the article is positive in that it helps expose those lies so that people don’t defrauded out of their money.

      None of your commentary is related to Kiyosaki who was the focus of the article. The general stuff about MLM “business” (it’s falsely pitched as a business as the article covered in detail) and employees makes you sound like you should dry your eyes and quit sniveling. MLM doesn’t have employees because MLM “distributors” don’t produce anything. They provide no value. Most of the time the product is shipped to people just like Amazon does. You know that the MLM companies actually have employees, right? Without employees no MLM products would get made. None would be shipped. Yep, it’s important to have people actually do useful work rather than MLM people.

  23. CGC says:

    Rand,

    So you are saying you sucked as an employer — couldn’t recruit and select decent employees, had trouble keeping them motivated and couldn’t be bothered with basic bookkeeping?

    Well then I guess MLM is perfect for you! All you need to do is lie to a few people and hope they do the same. Simple business for simple minds.

  24. Claudio says:

    Anyone here are making more money than Robert? I think he is a pretty good example, while we are here spending a lot of time discussing about him he’s selling a bunch of books and making money while he’s sleeping. I’m not lazy man and i’m making a lot of money in MLM. The problem is that lazy people will never earn a lot of money in MLM or anywere. Sorry about capitalism, that’s how the things are. Think outside the box. PS: Sorry about my english, i’m not a native english speaker.

    • Lazy Man says:

      I don’t know anyone making more than Bernie Madoff or Michael Vick (sorry, can’t get past the dog thing) either. I’m not sure I’d take either of their advice.

      I think you’ve set up a pretty poor metric there.

      Kiyosaki is a great story teller, which is why he sells books. It’s really no different than J. K. Rowling selling a lot of Harry Potter books. It doesn’t mean you should go run head first into the wall at platform 9 3/4 to get into Hogwarts.

      I do quite well for being Lazy. Being smart can often trump working hard. If I can succeed by being Lazy, imagine what you could do if you combined your work ethic and making smart decisions (not getting involved in MLM which associated with pyramid schemes in which 99% of people lose money).

  25. abbey says:

    Ok, interesting article, actually nice article in a sense. Here’s what I get…which I think a lot of people should also get from it:-

    1)DON’T GO INTO MLMarketing JUST BECAUSE ROBERT KIYOSAKI SAID SO!!

    2)A LOT LESS people make money from MLM than Most other business venture.

    3)’Rich dad Poor Dad’ is a good motivational book and eye opener!

    Anybody else say different is just exercising the right to use up byte space.
    Ps -@ claudo: Pretty gud English.

  26. Simon says:

    You said he never mentioned mlm in his book ? Funny that because he gave it a big mention on page 168

    • Lazy Man says:

      I’m looking at Rich Dad, Poor Dad now and there’s no mention of MLM on page 168. He says to invest in education. He then tells of how he spent $385 on a 3-day seminar on how to buy real estate with no money down. He claims it made it $2 million. Reminds me of all those late night infomercials in the 1980s (aka Tom Vu) that were too good to be true. Interestingly Kiyosaki uses these seminars to scam people out of thousands now (see the news story that I cited in the article).

      The page closes off with a pitch to listen to audio tapes, specifically Peter Lynch.

      No mention of MLM. In other books, after Rich Dad, Poor Dad took off in the MLM community he’s been mentioning MLM pretty heavily. It’s an easy sell. Worth noting that all those books that mention MLM didn’t really do that well.

  27. Rashad Shivers says:

    Network Marketing is a 29 billion dollar industry just in the US alone, that creates the most millionaires than any other industry, hands down!! THE REAL value of this industry is becoming that person it takes to build wealth & having the mindset is of a true entrepreneur. Roberts book “Business of the 21st century” is ALL about network marketing & has changed my life forever. Is there pros & cons….. YES……. just like everything in life (even are spouses lol) but you a choice to focus on the negative or positive and which ever you decide that’s what you’ll get. The tax savings ALONE is worth having a home base business!!! Studies have shown you can never be wealthy working a job when uncle Sam is taking his first before you get a penny, making 50 cents on the dollar and you spend it like you have two you only get you in debt, that’s why and America is where is at right now!! there’s 24 hours in a day, when you subtract your working time, commuting time, sleep time & things you have to do time most people don’t have the time what that really want, and don’t have the money. Networking marketing allows you OWN your life, most people work a job now past the age of 65 and still end up broke with nothing, then get a job as Wal-Mart greeter. You can listen to millionaires or opinionaires I’ll choose Robert Kiyosaki all day over lazy opinions. GOD BLES

    • Lazy Man says:

      Rashad,

      That 29 billion dollar industry is largely people overpaying a huge amount for a business opportunity that only exists for 1 person in a thousand. You might as well just quote some kind of statistic as to how big the loan shark industry is or the tobacco industry. A big industry doesn’t necessarily mean it’s a good one to get involved in.

      MLM doesn’t make more millionaires than any other industry. It’s a ridiculous thing that MLMers quote, but have nothing to back it with. The technology industry in Silicon Valley dwarfs it and it does it without being compared to pyramid schemes by the FTC and SEC.

      As this article showed, Robert has extensively pandered his products to the MLM industry because he’s found it is better to sell shovels for those digging for gold than to dig for gold himself. It doesn’t matter that there’s virtually no gold to be found, he still makes his money.

      No one has really come up with a “Pro” for MLM, and I’ve come up with at least 30 cons, so, no it isn’t like everything in life with “pros and cons.” It would be almost like focusing on the positives of an assault in that the local hospital gets some business. Let’s use the silly argument of “pros and cons” and make assault legal… just tell people to focus on the positives and not the negatives. Stupid.

      There are really no tax savings with MLM. Some 99% of people lose money. Sure you may be able to write off a portion of this lost money, but it’s better to not lose it in the first place. We could make a small dent in the national debt if we put this 29 billion to good use.

      Studies have shown that many, many people have become wealthy working a job. Take a look around at your local doctor, lawyer, even plumber. What studies are you citing, specifically?

      MLM does not allow you to OWN your life. If you look at the income disclosure statements for companies like MonaVie, the average person makes less than minimum wage.

      I’m not going to listen to opinionaires like yourself, I’ll listen to millionaires who are preaching what got them there. Kiyosaki should be telling people to write books to sell to other MLMers.

  28. Kim says:

    I am often asked if Network Marketing is a Pyramid Scheme. My reply is that corporations really are pyramid schemes. A corporation has only one person at the top, genrally the CEO, and everyone else below. [Editor’s Response: Please stop trying to scam people by confusing illegal pyramid schemes, that rely on recruiting with legal hierarchical organizations. People who are uninformed or simply trying to scam others are why MLMs get bad names. Corporate America is Not a Pyramid Scheme.]

    To find out business opportunity, contact [Editor’s note: email removed].

  29. Mischa says:

    Great article! I have always used the logic that this mans greatest source of wealth is selling advice promising it will bring you wealth. I’ve also noticed that whenever someone critiques mlm along comes its defenders who either 1) are currently caught up in it 2) could be trying to scam others with it or 3) can’t admit they’re being ripped off. The latter being the most likely. In fact I’d say that the only reason these scams still exist is because it’s very hard for people to admit they’ve been had. To those attacking this mans article, get over it. It is a SCAM!!!! Why not just sell products on your own without having to pay someone above you?! I have heard such horror stories related to these scams such as people ruining relationships with their friends and family because of it. I work in people’s houses and trust me the wealthiest people are doctors, lawyers and business owners NOT MLMers! Every time you see someone defending this it’s always the same pitch. “You’re lazy” “you didn’t do it right” “you get what you put into it” well I’ve seen people put literally everything they had into it and came away with almost nothing! The fact that Robert kiyosaki supports these lets me know he is a fraud. The responses from its supporters are always so similar it makes me think there is some type of brainwashing going on at these meetings. Once again great article and keep on exposing these scam artists for what they are. Anyone who’s made millions off of an MLM has done it from hurting thousands of innocent people and most likely deserves to be in jail! I grew up with cons and dope dealers with more integrity than these slime bags!

  30. Vogel says:

    That sums it up nicely Mischa. Couldn’t agree more.

  31. ben says:

    MLM is just simple marketing. They just tell you that you are an investor where infact you are a customer. The people who make money in mlm are the top most and the supplier. Because every member (recruit) is a customer.
    Don’t fall for mlm just invest in real investment vehicle like stocks , bonds or put up your own business, or in est in friend or family business.

    I read rich dad poor dad also and I believe its quite a good book. Its not really a formula.on how to invest or how to make money, the book will just give you a generL idea about financial management.

    • Lazy Man says:

      MLM isn’t simple marketing. It is a merger of an commission-based sales program (those selling product to others) and an illegal pyramid scheme (those recruiting others).

      You aren’t really an investor because you aren’t getting ownership in the company.

  32. kb says:

    Here is what I get from MLM: Distribution of products, marketing, sales, flexibility, hard work and the zeal to work on my own business outside of MLM. I see it as another way to do business if individuals in the industry are just upfront with how these businesses operate.

    Many MLM companies state that we are business owners. However, I believe that consultants buy in to companies where the one to the top makes money off the ones to the bottom just like all other organizations out there.

    Independent consultants are marketers, distributors, sales people, customers and recruiters all in one.

    MLM is hard work, but I don’t want to work hard if I don’t have to, I want to work smart and show others how to do it also.

    Sorry, I hope that doesn’t constitute me as lazy.

    • Lazy Man says:

      The individuals in the industry are not upfront with how MLM businesses operate. If they were, the industry wouldn’t exist.

      It’s a cop out to say that MLM is hard work. It is, but it also like saying beating Labron James one-on-one is hard work. You’ve got a good point that it isn’t smart work.

  33. kb says:

    I don’t know Robert Kiyosaki except for what I read about him in Rich Dad, Poor Dad.

    I enjoyed the book, because I like freedom in working for myself and not being caught up in the rat race. My 18 year old son said to me that not everyone who goes to school and work hard on 9-5 is in the rat race. We actually know people who work hard and live really well.

    But I was actually amazed to see MLM companies having regular employees. Well, duh.

    So we just have to know how to extract information from what we read and know how to apply it so we don’t get duped or fall for schemes.

    I see Robert’s book Rich Dad Poor Dad as a motivational tool to get up off my butt and make something happen with the brain the powers that God has given to me.

    I may never be a millionaire, but my goals for a business to help change the lives of others, well I am now on my way to pursue it even more since I’ve read his book.

  34. Calvin says:

    [QUOTE]

    Simon says:
    August 11, 2013 at 7:35 pm

    You said he never mentioned mlm in his book ? Funny that because he gave it a big mention on page 168

    Lazy Man says:
    August 11, 2013 at 8:03 pm

    I’m looking at Rich Dad, Poor Dad now and there’s no mention of MLM on page 168. He says to invest in education. He then tells of how he spent $385 on a 3-day seminar on how to buy real estate with no money down. He claims it made it $2 million. Reminds me of all those late night infomercials in the 1980s (aka Tom Vu) that were too good to be true. Interestingly Kiyosaki uses these seminars to scam people out of thousands now (see the news story that I cited in the article).

    The page closes off with a pitch to listen to audio tapes, specifically Peter Lynch.

    No mention of MLM. In other books, after Rich Dad, Poor Dad took off in the MLM community he’s been mentioning MLM pretty heavily. It’s an easy sell. Worth noting that all those books that mention MLM didn’t really do that well.
    – See more at: http://www.lazymanandmoney.com/robert-kiyosaki-and-multi-level-marketing-exposed/#sthash.rwYLGzXz.dpuf

    [/QUOTE]

    Hi Lazy Man,

    I just wanted to say, having checked it out, that Simon is actually right about this. Kiyosaki did mention MLM marketing in Rich Dad, Poor Dad.

    It’s in Chapter 6, page 138 of the earlier editions of Rich Dad, Poor Dad (Lesson 6 – Work to Learn, Don’t Work for Money) or page 168 of the more recent editions of the book, as Simon stated.

    It would seem that you have an earlier edition of the book as that mentions “Invest in Education” on page 168.

    Nevertheless, MLM marketing is indeed mentioned by Kiyosaki in Rich Dad, Poor Dad during “Lesson 6 – Work to Learn, Don’t Work for Money” where recommends MLM marketing as a second job specifically in order to learn sales skills, rather than to make money.

    This fits in with his constant reminders in the book that financial intelligence is a combination of the following skills: accounting, investing, marketing, and law.

    Regards.

    • Lazy Man says:

      As this article points out, Kiyosaki made his money by selling this book to Amway distributors. It wouldn’t surprise me if he edited later versions of his book to include that for his audience, but it wasn’t in mine in the place that Simon specified. Maybe Simon had a version of the book that was more recent than mine, but he didn’t specify his edition (according to my memory, I’m just remembering back 6 months, not going to review the comment in detail a second time since I already did it).

      It should be noted that there seems to be evidence that Kiyosaki himself tried Amway and quit it. This would seem to further expose his dishonesty.

    • Lazy Man says:

      Pretty cool kid. Kiyosaki can be motivational, which is great. Rich Dad, Poor Dad was even partially responsible for me starting this blog. However, once you learn a little more, you realize that he simply gives terrible advice as it has been well-covered in the media.

      I kind of wonder if the media would fawn over a crack dealer if he gave 90% of his profits to charity. They could tell the story about all the people the money has helped. You simply have to ignore all the damage of getting everyone hooked on cracked. Obviously it is a little harsh to say the same about Kiyosaki, but to some degree it is a similar situation. There’s both a lot of good and a lot of bad.

      Personally, I’ll stick with the people who do good and work to prevent fraud, not spread it.

  35. Ha ha… deary me.
    I’m glad I never got round to reading RDPD yet. And it is recommended on so many “PF Guru” websites…!
    Fair enough there may be some motivating pages in there but I don’t really need that right now, I’d rather get some solid, financial advice, there are plenty of peddlers of waffly motivational stuff out there… aka people who talk the talk but do not walk the walk!
    I find myself just getting wound up when I read stuff from people like this as my bulls**t detector is pretty well honed and I end up just getting annoyed that so many people are reading it and buying into it, or at the best getting mildly hoodwinked.
    Cheers for the article, found it very eye opening and saved me reading the book!

  36. Apart from the fact that RDPD is unvarnisch BS, still MLM does not belong anywhere on the diagram, it is not something that holds a middleground, or even combines the worst of both E and S categories. Unfortunately, it is simply a financial fraud (pyramid scheme) disguised as a direct sales business. It does not even belong in a discussion about business. Hilarious that he got his popularity via Amway.

  37. Gus says:

    Hi Lazy Man:
    First of all I want to congratulate you for your article. I can see that you took the time to investigate a couple of things, but you missed the most important. Rich Dad Poor Dad is the Genesis of any entrepreneur. It is not the only book about how to become financially free, but it explains it so simple. In the book, when Kiyosaky was 12 years old, he asked rich dad how to become rich, and rich dad that says: Well Robert, what you must have to do is to spend your live investing in assets, because assets put money in your pocket, and liabilities take money from your pocket. In MLM people are assets, in your organization they put money in your pocket, and this is called leverage, leverage in MLM is you enrolling a few people that enroll a few people than enroll a few people that each has a few customers and the combined volume creates your residual income. MLM gave me the opportunity to create a residual income without the drama of a traditional business. MLM is not perfect, it is simply better! Now I have free time, and when you have free time you can initiate other projects. MLM is not my only source of incomes, but it was the beginning to become financially free. The beauty of MLM is that you can start part-time, and eventually that income will replace your current income. Give it a chance, you can work in your business for 3, 5, 7 years, I don’t know how long it is going to take you, you are becoming older anyways, and it is better to become older with money.

    • Lazy Man says:

      Gus, I didn’t miss that Rich Dad, Poor Dad is often the Genesis for entrepreneurs. Did you not read the part at the beginning that of the article that said, “As you can tell from the title, this is going to be a little harsh on Kiyosaki, but keep in mind that Rich Dad, Poor Dad was major motivation for me to begin this blog.”

      Kiyosaki has admitted that he made up Rich Dad and Poor Dad. The two didn’t exist. Don’t go too heavy on quoting what they said. Kiyosaki uses them as a literary device.

      If people are your assets in MLM, you are running an illegal pyramid scheme. Here’s what the FTC says:

      “Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”

      The people in your downline are not assets or leverage… if you making significant money from them it is a pyramid scheme… and you have to make legitimate sales. It isn’t a path for passive income unless you want to break the law.

  38. Timmy says:

    There are many mlm companies out there, and to say in general that mlm is bad is a matter of opinion. Now I assume you tried the mlm business’s before for at least 6 months. 6 months of hard work and actually trying to be successful. I’ve been in the mlm business for about 7 months now and I do like the benefits and the new skills I acquired. It actually improved my life incredibly. I use to be shy and didn’t really had a lot of friends now I can talk on stage and make friends with anyone, no problems at all. And the new positive outlook on life is also a great plus. But I understand why people can think mlm is not a great choice, I use to be one of them, but I it’s like I write the number 6 and you’re sitting across from me. From my side I see a 6, but for your side you see a 9. We both have different views. You look at mlm from the outside you see one thing, while I look at it from the inside and I see the other. What I’m trying to say is, maybe try jumping to the other side and combine the knowledge you already have right now to form your opinion might make this article more credible. There are real opportunity in mlm and I’m just afraid for the people who read this article that they will be missing out on some great experiences in life without even testing it out themselves yet. Oh and P.S. I never had to be pay much for my training in this business. 70cent per CD and some books at the bookstore. Weekly seminars are free and the monthly one only cost 5 dollars to get in. If that’s too much for someone to invest, then I don’t think they can succeed in doing much, let alone life.

    • Lazy Man says:

      I’ve covered the financial fraud and lies from companies (and individuals) that go with MLM. I’d say that given the information available having the opinion that MLM is like having the opinion that pickpocketing someone is bad. Sure it is an opinion, but it is backed by facts and everyone, except the pickpockets seem to agree.

      So yes, the pickpockets are going to think that laws are bad. It’s a different perspective than what I’d have as someone who doesn’t steal.

      You make a point about joining MLM and reporting from there. It’s like suggesting that someone jumps off a bridge and reports the results of that. Thanks, I know how that works.

      Plus from a scientific perspective External Perspective is better than Real Life Experience. This is particularly true when it comes to recruiting cults such as MLM.

  39. Grace says:

    YES! GREAT article. Thank you.
    He has a CD called “Rich Plan, Poor Plan” and a book called “Business of the 21st Century” that Amway/WWDB people use. BEWARE! That’s one of their greatest tactic of manipulating you into their cult.

  40. Miguel John Doherty says:

    First of all, great article!

    I’ve just started reading RDPD and from start I noticed that the story was a work of fiction made to help people understand a few basics about personal finances(which so far, I believe it is doing great, though I’m pretty sure it is an understatement to say that the key to being rich is “SIMPLY” knowing the difference between assets vs liability), and only recently I found out the book was sold as a nonfiction, did anyone really believe that story was real?

    Now, for some things that weren’t clear and/or I disagree:

    1) You said that all MLM are a scam, which may be true for most of them, it is not for ALL of them, there a few of those that actually work through the idea of sales, which starts my next topic;

    2) There are MLM where the initial fee is actually paying for a product or a service(again, the real MLM, not the scamming ones), and all you get comes both from sales you make (and I have some insight on that, which I’d really like your opinion on, but I’ll cover that on topic 3), and the recruiting, which is just another way of selling, only you are selling a “pack” of a service/product.

    3) For the ones that are actually selling and getting their revenue from something that makes sense, here’s what I think: in most cases you’re getting a good product with a certain discount(then again, that’s not true for all MLM, probably not for most real ones), so the sales are actually worth something(think of department stores where they get their income from reselling their products), and the recruiting is more like creating a consumers base than recruiting salesmen, which might be ok if the product is good enough with a better price then in the market and if the recruited is aware that he is just basically consuming the product not “getting into a business that will make all his dreams come true”;

    4) If it wasn’t clear so far, yes I’m into MLM, got into one and been in it for the past year, no I haven’t made a fortune, yes it made a lot of difference in my life, no I don’t think it will be THE business of my life, but it is helping me in a few topics which will surely help, such as:
    a) I’m getting a lot better in conversations, as a salesman and lot better in dealing with people, which gets me to b;
    b) It helped me realize that working for others is not what I want to do for the rest of my life, which made me open my own business company which has nothing to do with MLM, but as any company, requires me to deal with all sorts of people such as investors, employees, and many other partners;
    c) It made me look into a lot of financial advice(which by the way, I’d love to know a few good books about financial advice, technical or not);
    d) You get to know people from all sorts of segments, which by default, is extremely helpful when doing anything, networking is key regardless of what you want to do in life;

    5) I totally agree that Kiyosaki should be always read with a grain of salt(or maybe a whole rock of it), but like you mentioned in a comment, it is absolutely great for those looking into having their own business and/or knowing a bit of financial advice, but SHOULD NOT BY ANY MEANS be the middle point or the end point of your financial education, only your starting point(which from what I’ve seen is the best one on doing that);

    6) In the cashflow diagram example you cited, I’m really divided by a few things you said, I wouldn’t say that it is an E as in “the company controls what you get and what you don’t”, well, that also goes for your main client(s) and/or partner as in B, so that really is a grey area(might have got what you said wrong though), being an S might make more sense as in small business, but that’s only at start, you might eventually grow into a B(which is not exactly a B as you stated, because you are still being “controlled” by the business in a few more ways than the actual, traditional market B) because you might eventually grow salesmen teams, which would almost be the equivalent of having a company working for you because you built it, but I do agree it’s not 100% the same thing.

    7) I love that you describe MLM as a cult, that seems to be so true about all of them (the one I’m in included), it gets a little weird from time to time and that’s why I’m trying a more serious approach towards what I’m doing, which I believe I’m actually doing right, given that now I know that Kiyosaki is mostly a fraud in many aspects, which most people in any MLM don’t seem to know, so hey, I’m one step ahead on that, yay!

    8) Not all MLM sell training CDs/book/whatever and get money out of it, in a few cases the training is free of charge, because we actually want people that are interested in making sales to succeed(of course this absolutely depends on the way you get income from the MLM) because that would make them succeed as well (I’m talking about my MLM here and a few others I know, like MonaVie);

    9) There are MANY people in MLM that are just a bunch of a**holes that just want to get rich through others and that happens in ANY MLM, scam or real ones, which pretty much makes people that actually understands a bit about economy and ethics to criticise the market, in most cases, please be aware that it must be studied the people and the system together to find out if it’s a problem with people and/or the system. In most cases I’ve heard of it’s actually a bit of both or, mostly, the system, but that isn’t true for ALL of them, just as there a terrible things in the technology industry (which is praised as the best thing to invest today), there are great things in the MLM, just be aware of what’s going on and why a given thing could or couldn’t work.

    In short I do believe the right MLM (and by right I mean, legal and ethical) can open a few doors for you, but it is not by any means THE way to get rich and or financially independent, but done right, it can be really helpful both for you and anyone you recruit.

    Sorry for the long comment, but I had a lot to comment, and I’ve been looking for a smarter and more open approach than most bloggers that just say “KIYOSAKI BOOKS ARE BAD, BURN THEM” which you seemed to balance quite alright when talking about kiyosaki.

    • Lazy Man says:

      Long comment there…

      1) I respectfully disagree. If a company was legitimate they wouldn’t try to straddle a line with pyramid schemes. It would simply go to commission scales and elimate recruiting. Thousands of companies have these affiliate sales programs.

      2) Recruiting may be a different kind of selling, but if you want to say that, you can selling a pyramid scheme is a different kind of selling as well. Prostitution is a kind of selling. Snake oil is a kind of selling. Drugs is a kind of selling. I think you get the idea that a “kind of selling” isn’t necessarily on the up and up.

      3) I have yet to see a discounted product in MLM. Usually the product is a lotion or potion choosen purposely because it is of subjective quality. The pricing is 5, 10, even 20 times MORE than something else of similiar quality. The person joining the MLM may save 25% off that higher price, but then is still paying 3,6, or 15 times more than they should.

      3b) If an MLM gives a person a discount for becoming a distributor and that person acts like a customer, it is essentially fraud. It would not make sense to be a true distributor, because you can’t competitively price your products to sell at a profit. Very, very few people are going to buy your product for $120/mo. when they can sign-up and get it for $90/mo. It doesn’t even make sense to suggest to distributors that they should attempt to sell at the $120 price point unless they like ripping people off. With no true distributors selling product, you are left with a recruiting, illegal pyramid scheme.

      4a) You don’t need to get into a pyramid scheme to have conversations with people.
      4b) You probably should have gotten from RDPD, the topic of this blog post. You don’t need MLM for that either. Most people in MLM actually believe it is a real business because that’s what they are told. This puts people on the track in starting a real business.
      4c) The first financial advice you should take is to quit MLM, because the monthly qualifying purchase is a liability. If you want more financial information, I suggest you read this post
      4d) Actually, MLM tends to expose you to the “sucker born every minute” instead of the smart business people that you’d want to associate yourself with. Not saying that different people is bad, but you are surrounding yourself with the wrong types.

      5) I’ve changed my mind on Kiyosaki. He should not even be the starting point anymore. There are better starting points (Millionaire Next Door, Your Money or Your Life) without the scam. So let’s vote with our wallet for them.

      6) Let’s keep in mind that Kiyosaki created this thing. I pointed out some problems with it. It looks like you are finding different faults with it. I think we can agree that he makes it sound simple, but it isn’t. Not everything sits in a nice quadrant. There are some aspects of the environment controling your success in almost areas of life… whether you are a E, B or anything else. The point is to recognize that MLM actually carries more risk because you are beholden to the corporation staying in business (MonaVie is getting foreclosed upon as one example in the news), and you are beholden to your downline not leaving… but the churn rate in MLM is 60-90%. Your pyramid shrink every month. You have less control in MLM that in any other business I can think of.

      7) I’m not the first, nor am I alone in describing MLM as a cult.

      8) I’m not saying all training is bad, but in almost every case it is an MLM Tool Scam.

      9) I usually write about the systems. Plus a good system polices itself to eliminate the problem people. If that isn’t happening, the system if flawed as well. In 8 years of studying/writing about MLM, I have not found a single good thing happening in the MLM industry. I have shown it to be fraud at its very core. The best thing you can possibly say about fraud is that maybe in getting duped, the people learn not to get duped a second time… though they often are.

  41. shekhar says:

    Dear lazy man,
    I will thank you for giving such time for creating such a wonderful note.I don’t knew any one who made money out of Roberts ideas or not but i knew one person named SHEKHAR SINGH RAJPUT in india, I was serving in army of India,when i red that book.After reading the book i realize to do something for my own finances and i started looking, Now i am free from my job and also having very good finances by adopting the ideas of robert.
    And i request you, everyone knows that we have different mindset for different things, any thing depends on us because same ideas implemented by me are working for me and for some one else might be not.
    So please justify your great note.Next time i will give some info about MLM
    Re grads
    Shekhar

  42. […] Marketing. The MLM people say, "Kiyosaki and Trump say it is it the future." They don't know about Robert Kiyosaki and MLM. Kiyosaki is a failed Amway distributor who got on the best seller list because the organization […]

  43. SuccessStory says:

    What can I say… I read Kiyosaki’s book Rich Dad Poor Dad around 15 years ago and can honestly say it has helped alter my thinking completely when it comes to business. I’ve been in business just about all my life and have employed up to 25 people at times with turnover back in the early 80’s in excess of two million dollars per year. So I know what it is like to build a business and how to treat employees so they are loyal and are rewarded for their work. I can tell you building a business is not easy to do and it is fraught with difficulties. Due to a serious downturn in the economy and too much borrowed money with rising interest rates the business was forced to close and bankruptcy declared. Lost everything, house included. You know I was just another statistic of small business failure. At least 80% of small businesses eventually go broke. Most of them within two years and the hapless owners lose the shirts off their backs as I did. Kiyosaki’s book helped to change my thinking and made me realise there is a way to provide for my future outside of being Just Over Broke in a JOB. I’m amazed at how many people don’t understand the power of network marketing and how dedicated work in your own MLM business tied into a good company with good products can set you up with an ongoing income for life. Actually I feel sorry for the people who fail in conventional business and haven’t ever been exposed to a good network marketing opportunity. Often they never recover from the trauma of going through bankruptcy and resign themselves to a life of misery and will never take a risk again. I must say when I started in mlm 15 years ago I took a HUGE risk. LOL. I spent at that time over $3,000 buying product so I had stock on hand that I could sell to my customers. Within 2 months I was making over $4,000 in retail profit alone. I subsequently went on to other MLM’s good and bad ones but have consistently made money in all of them. What’s wrong with you people that say MLM doesn’t work? Of course it works provided you have a bit of go in you and a just a little bit of business sense. Nothing is easy in life and being successful in MLM is no easier than being successful in any small business. In fact it is perhaps more difficult because you do a lot of work that you don’t appear to get paid for in the early days. The long term benefits more than make up for it however. I’m now in my late sixties and earn a residual income many, many times more than the average person could ever hope to earn on the government pension or the pathetic superannuation payouts that people are expected to live on for the remaining twenty years of their lives. Seems to me the only people that knock MLM are the ones that would never succeed in any business anyway. I guess I could go onto websites everywhere and start knocking small business because of the huge failure and bankruptcy rate associated with small business. But I know just like MLM people will always fail in business. At least in MLM you don’t lose the shirt off your back when you do fail. LOL. I find it hard to believe that people who are ignorant of the facts spend so much time knocking MLM when it obviously works so successfully for those that are dedicated to making it work.

    • Lazy Man says:

      I started this blog nearly 10 years ago after reading Rich Dad, Poor Dad. I realized later that it only had about 3 pages of substance, the ones talking about assets and liabilities and putting your money into assets to buy freedom. I think it 60-62 in my version of the book.

      While 80% of small businesses go broke over a 20 year span, 99% of MLMs go broke in the first year. If you were to compare a billion small businesses, you’d have millions of surviving small business and a single MLM left after just a few years. It’s a staggering difference when you run the math.

      MLM related to good products doesn’t matter. Recruiting creates competition for your own sales, which by the very business definition is a dumb idea. Every person has the same product and price, there’s no business differentiator. It doesn’t matter how much “go” you have in you because there is nothing to “go” to. The MLM marketplace has been saturated for years. That’s why MonaVie and ViSalus can’t maintain their distributor growth and have collapsed.

      If MLM isn’t easier than small businesses, you might as well go with the option that is MUCH more successful (small business) right?

      MLM doesn’t really have residual income. That’s a myth. People at the bottom are leaving all the time as they lose money. The churn has to be replaced. Also, if you get high up the pyramid and are earning commissions on sales you aren’t making from down below… well that’s fundamentally broken – the people making the sales deserve the commission, not the pyramid-toppers.

      It is quite possible to lose your shirt in MLM. The industry goes after people who have had bad luck (got laid off), not well-earning doctors and lawyers. These people with bad luck can’t afford to waste their last nickel on something with a 99% annual failure rate. It’s often a lot more than a nickel too… typically around $3000 in the first year. It’s $7,000-$10,000 if you want to play the “dedicated to making it work” card… as MLMers will squeeze them to buy more tools, go to more pep-rallies, and buy bigger initial product kits and monthly subscriptions.

      It’s a lot of money to the people who don’t have it.

  44. Vogel says:

    SuccessStory said: “At least 80% of small businesses eventually go broke. Most of them within two years and the hapless owners lose the shirts off their backs as I did.”

    It’s very illuminating that you try to make a case in support of MLM by citing bogus statistics. There is no reputable source in the country claiming that 80% of small businesses go broke or that they do so mostly within 2 years. Firstly, the statistics that do exist do not track whether businesses “go broke” per se; they only track whether the businesses remain open or closed. Businesses can close for a variety of reasons unrelated to going broke: e.g., a successful company may close because it’s merging with another company; successful business owners may retire or start new ventures, etc. So what you are really referring to is closures, not bankruptcies, and that sheds no light on profitability whatsoever. In fact, The Small Business administration estimates that one-third of businesses that close were actually profitable when they closed.
    http://www.washingtonpost.com/blogs/fact-checker/wp/2014/01/27/do-9-out-of-10-new-businesses-fail-as-rand-paul-claims/

    Secondly, the actual rate of closures is far lower than what you claimed – 10% to 12% close per year and somewhere around 50% close after 5 years according to most reliable sources; about one-third survive after a decade.
    http://www.washingtonpost.com/blogs/fact-checker/wp/2014/01/27/do-9-out-of-10-new-businesses-fail-as-rand-paul-claims/
    https://www.sba.gov/sites/default/files/FAQ_March_2014_0.pdf

    And let’s consider that every employee that worked for a small business that eventually closed got paid (at least minimum wage if not a whole lot more), which is far more than can be said about those who distribute for an MLM.

    So the facts destroy your core argument in favor of MLM. Hopefully you’ll be honorable enough to come back here and admit that you were very wrong and that you made no attempt to research your claims; perhaps you’ll even apologize for misleading readers of this blog – you certainly should.

    SuccessStory said: “What’s wrong with you people that say MLM doesn’t work? “

    The people who say it “doesn’t’ work” are the MLMs themselves. The failure rates are evident from the income disclosure statements published by MLM companies, and they all show staggeringly high failure rates of around 90% or more. And by “failure” I mean inability to earn any profit at all. The majority of those lucky ones that do end up in the black earn less than minimum wage.

    I’ll flip the question back at you now. What’s wrong with people who claim that MLM “works” when it so clearly doesn’t for the vast majority of participants?

    SuccessStory said: “Of course it works provided you have a bit of go in you and a just a little bit of business sense.”

    MLMs don’t couch their claims like that and they don’t limit recruiting to those who have get-up-and-go and business sense. They portray it as a one-size-fits-all opportunity that anyone can do, and they seek money from anyone with a checkbook and a pulse.

    Rather than requiring get-up-and-go and business sense, what’s needed to succeed in MLM is a sweetheart insider deal with the company that places you at or near the top of the pyramid (which is how the kingpins got where they are) and a willingness to lie and swindle people; as you have done here; for example with your erroneous statistical comparisons between MLM failures and small business closures.

    In fact even comparing MLM to small business in any way is erroneous because an MLM distributor owns precisely nothing. The MLM can close; revoke a distributorship arbitrarily; or simply change the terms of the deal at will. The MLM participant has zero control.

    SuccessStory said: “Nothing is easy in life and being successful in MLM is no easier than being successful in any small business.”

    I have proven that to be BS already. Next!

    SuccessStory said: “In fact it is perhaps more difficult because you do a lot of work that you don’t appear to get paid for in the early days. The long term benefits more than make up for it however.”

    For the vast majority of participants there are no long term benefits, in part because the failure rates are so astonishingly high for individual distributors and because there’s no guarantee that a particular MLM will even exist a few years after opening. There are certainly none that the benefits that one could get from full-time employment, like medical benefits, stock options, paid sick time and vacations, bonuses, workplace protections, and the ability to claim UI if laid off.

    SuccessStory said: “I’m now in my late sixties and earn a residual income many, many times more than the average person could ever hope to earn.”

    You’d have to provide some proof for that claim to carry any weight. My educated guess is that it is either pure BS, or you’re a kingpin (a very statistically remote possibility) who’s using a variety of nefarious tactics to feather your own nest at the expense of many others in your downline.

    And just for the record, let’s dispel that myth about residual income right now. We know that the distributor and customer attrition rates in MLM are astonishingly high (50% or more per year); and therefore one has to constantly work to replace the customers and distributors that are lost. Furthermore, I have never seen a top level distributor who wasn’t constantly on the road peddling the scheme to recruit new participants. In other words, the notion of “passive” or “residual” income in MLM is a myth (well, really, a blatant lie – let’s call a spade a spade).

    SuccessStory said: “Seems to me the only people that knock MLM are the ones that would never succeed in any business anyway.”

    I don’ think it really seems that way to you. I think that’s just some BS you tell people because you’re an MLM con artist. Most people despise MLM and criticize it for good reason. MLM is so universally reviled that most MLM companies won’t even call themselves MLMs because they know that the industry has a badly tarnished reputation, so instead they seek camouflage by calling themselves “network marketing”, “direct selling” or some other equally misleading term.

    SuccessStory said: “I guess I could go onto websites everywhere and start knocking small business because of the huge failure and bankruptcy rate associated with small business.”

    I sure wish you would. It would be downright comical to watch and it would be much better than having you waste whitespace with your BS on this forum. Since you don’t even have any statistics at your disposal about “failure” and “bankruptcy” rates, your effort would be doomed to fail and you’d look just as foolish as you do here.

    SuccessStory said: “At least in MLM you don’t lose the shirt off your back when you do fail. LOL.”

    Most of the participants in MLM barely have a shirt to spare – since they prey on those who are most desperate and least educated among us – and of those, most fail to earn a profit. But even if we look at the so-called kingpins in MLM — those who are allegedly the success stories — bankruptcies abound. We found that out first hand when we investigated Monavie and found that many of the people who were strutting on stage as MLM success stories were either bankrupt at the time or went bankrupt soon after. They simply lied to cover it up and continued to swindle people under false pretenses.

    SuccessStory said: “I find it hard to believe that people who are ignorant of the facts spend so much time knocking MLM when it obviously works so successfully for those that are dedicated to making it work.”

    Could anyone be more ignorant of the facts than you? I find that hard to believe.

  45. […] Fortunately, Forbes did… and their article was a lot more scolding than mine would have been. With an "F" from the Better Business Bureau, he's raking in $50 million selling house flipping kits. The Forbes article is a great read at how dangerous the advice can be in flipping houses (such as taking on a large amount of high-interest debt). That seems to be a theme with seminars costing tens of thousands of dollars. Robert Kiyosaki's seminars were caught doing the same thing. […]

  46. Kaloyan says:

    I didn’t know anything about MLM or Ronert Kyosaki when I first went to one of their lectures. A friend of mine envited me without saying much about it an emphasized on our friendship to make me come. So I went an listened to almost an hour of nonsensical stuff where he repeated that there are rich people and poor people in the world and he is from the rich amd we are from the poor ones and if we go to his lectures(and pay him 5euro every time) we will get a chance to be rich, joining MLM ofcourse. I went out before the end of the lecture because I couldn’t send it anymore, and I’m glad I did it, cause afterword I found out that at the end of the lecture they chant some weird songs. One thing the lecture did though, is to make me see how many desperate for sucess without any real effort people are. Anyway, since then I no longer consider this person which got me into this my friend, and I really considered that peron a friend before that

  47. Chetan Lad says:

    That’s why we are here…
    We have to think about second source of income
    like Lazy Man doing with this Website.

    I think all of you commented are avg people in terms of income.

    This is defiantly do with you people with your small thinking

    And every where Network Marketing in there, check your self you are also working in anybody network

    Please Lazy man if you are real man please post this comment

  48. Chetan Lad says:

    hi Lazy man,
    Have you ever hear the name ‘john sastina’ he have research 20,000 bussiness and preffered MLM.

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