Do you agree with the statement that Robert Kiyosaki’s network is a form of fraud? Why or why not?
Robert Kiyosaki was born in 1947 in Hawaii and is known as an investor, businessman, motivational speaker, self-help author, and public personality. He sold millions of books pertaining to the motivational and financial education genre. He is a promoter of the network marketing model, also known as multi-level marketing.
Kiyosaki made investments in both successful and failed companies. A part of his wealth originates from his activity as a public speaker and financial educator. His critics (CBC News, 2010) point to the cost of his courses. Thus, a three-day seminar was priced at $500, while the cost of a longer course was between $12,000 and $45,000. The philosophy that Kiyosaki was sharing was to find businesses to invest in, which in turn promised passive profits later on.
In his book on “The Business of The 21st Century”, Kiyosaki characterizes corporations as an element of the past and praises multi-level marketing as the business of the future (Vanderbuilt, 2014). In reality, between 2009 and 2014, the revenue of direct selling companies such as Amway saw a constant total growth of only 2 to 3% per year (Statista, 2015), totaling sales of only about $47 billion. Vanderbuilt quotes a three-fold GDP growth for the United States between 1974 and 2012, while the average revenue of the companies with a multi-level marketing model remained stagnant.
It is very difficult to draw a definitive conclusion about Kiyosaki’s work. He filed for bankruptcy but was never convicted for scamming. We cannot tell whether or not he was a fraud by intention. However, based on the financial data showing the performance of his business proposals, it is safe to say that his marketing scheme does not work.
- CBC News (2010) ‘Rich Dad’ seminars deceptive: Marketplace, Retrieved from https://web.archive.org/web/20100202044525/http://www.cbc.ca:80/consumer/story/2010/01/28/consumer-rich-dad-poor-dad-marketplace.html
- Statista (2015), Revenue of direct selling companies (NAICS 45439) in the United States from 2009 to 2014 (in billion U.S. dollars), Retrieved from http://www.statista.com/statistics/293352/revenue-of-direct-selling-companies-in-the-us/
- Vanderbuilt, E. (2014), Network Marketing Is NOT The Business For The 21st Century, Retrieved from http://ethanvanderbuilt.com/2014/12/08/network-marketing-not-for-21st-century/
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