Something really set me off this morning, and it’s still setting me off. It came from reading a book by James Altucher, Choosing Yourself. I picked it up because of a glowing review from someone I respect and admire, Patrick Rhone. The book has some good points, especially around health (physical and mental) and well-being as a foundation for success.
It’s bad points come as some of the examples James Altucher upholds as examples for success. When I got to this description of how a friend of his made $300,000, I came as close to closing the book and throwing it across the room:
He basically looked at about a dozen other databases keeping track of all housing data and scraped specifically the rent-to-own houses off of them… Since people could potentially spend hundreds of thousands on the right house, they were willing to spend a few hundred on a subscription to his database…
In other words, he’s scraping someone else’s data, someone else’s work, and charging for access. This is data that a prospective home owner could get free with a cursory Google, or Craigslist search. The reason I didn’t throw the book across the room because I was reading it on my Kindle, on the subway. After discussing my indignation with Patrick on App.Net, I calmed down, and then later in the day I read this about the same friend’s current business:
He just launched a rent-to-own laptop product. He bulk buys the laptops for $200 apiece and rents-to-own them out for $20 a week for a year. BAM! Huge margins. He started just a few months ago. Heâ€™s bringing in $300,000 a month now…
I went back to re-read that passage to make sure I didn’t read “$20 a month” as “$20 a week.” Upon checking, I went from merely angry to outright infuriated.
Why does this make me angry? Because James Altucher is holding up as an example someone who’s business practices are shamefully exploitive. The rent-to-own business is part of a whole industry that exploits the poor in a shameful, disgusting way. It’s in the same bins as subprime credit cards and loans, tax refund loans, “opportunity pricing,”  and the granddaddy of them all: payday loans. These are business models that prey upon the poor, exploiting their difficulty in meeting basic needs, and extracting grotesque amounts of money from it.
The exploitive nature of rent-to-own is illustrated as follows: a laptop that costs James’s friend $200, costs the poor person who is renting it $1040 dollars before they get to own it. That is an over 500% markup. A brand new, 11" MacBook Air costs $899 from Apple, and Apple doesn’t make nearly as much in margin (approx. 33%). If this were an ordinary loan, the interest rate would violate the usury laws in near every state in the entire United States. Not my idea of someone to be holding up as an ideal in a self-help book.
So, I’m angry.
I’m angry, most of all, at the implication that it’s all right to sell out your morals and ethics if it means you’re “choosing yourself” to get rich. I’m angry because it’s possible to do such a disgusting, exploitive thing, and not only get away with it, but be praised for it. This person is making money by actively causing harm to people, and that makes me angry enough to bang out 800-plus words about why.
If you have about fifty minutes, please watch Mike Monteiro’s excellent talk, “How Designers Destroyed the World.” If you do not have fifty minutes, the takeaway is this: “You are directly responsible for what you put into the world.” Mike rails against designers who actively, or passively, let things out into the world that cause harm to people. If you’re an entrepreneur, you’re putting something into the world, too. The money may be rolling in, but you’re responsible for what effect it has on far more than your bottom line.
These are things we all need to think about. Making money is great, provided the people who are giving it to you get something of equal value in return. I do not begrudge anyone who makes their money by making people’s lives better in some small way. We’re in this together, and it’s possible to “choose yourself” in a way that doesn’t put other people further in the hole.
James Altucher has an email address set up to contact him if you read the book and want your money back. I reached out to him there, while writing this. I don’t want my money back. I don’t need to quibble over a dollar for an eBook. Life is too short, and I’ve probably gotten my money’s worth from the real advice in the book. I just explained my concerns over his choices of example, and how angry it made me. I hope he responds, and if he does, expect a follow-up.
I’m a lot less angry now, having explained myself.
- In short: working backwards from a price to create a payment plan where it is actually more profitable if the buyer defaults, and the item is repossessed. ↩