Can You Still Succeed in the Multi-Level Marketing Industry?
And the genius lady who built all of this.
So I was watching Money Heist on Netflix the other day when my phone suddenly vibrated.
pzzzz…pzzzzz…
It was one of my old friends! One that I haven’t talked to in a while.
“How nice”, I thought.
Then I ignored him. Don’t blame me, Berlin was getting shot at and it was very intense. Too late for a spoiler alert.
“Hey bro! Long time no see! How are you, dude?”
“I’m good bro! I just came back from the UK lol”
“Nice! Did you get any British girls?”
“Nah, I have got no game bro… Teach me a few tricks please”
“It’s okay man, get rich and go to a strip club. Anyway, I recently joined this company, started my own business, and I would like to have you on board, what do you think?”
“Yeah, tell me about it.”
Like the 900 IQ person that I am with a boring-ass no-girlfriend life, I thought: “This is my time to shine! Mark Zuckerberg my ass! I can’t believe I have been working like a schmuck in this shithole. I’m going to give my boss the double middle finger next month!”
“Let’s go for a drink next week! 9 o’clock at *insert a typical lame bar*, you down?”
“Cool bro, see you there!”
So the day came and I met up with this long lost friend……… only to be greeted by a 3-hour-long presentation about Amway.
Really!!?? 3 fucking hours!!??
And then it hit me.
*Wait a second, this isn’t a business proposal, this is a multi-level marketing scheme.
Multi-level marketing (MLM) firms are giant businesses that operate around the world and have rightfully attracted their fair share of judgements for their questionable business model.
Quick note: Pyramid schemes are illegal.
So I’m here to answer the question of how the fuck are they still around all over the world, especially in developed countries? Hello FBI and FTC?
Let’s channel our inner Dalai Lama to drop our judgement for a few minutes and assess the fundamental economics and marketing behind Amway, Mary Kay, Avon, Herbalife, NuSkin, and thousands more around the world, shall we?
Referrals on Steroids
Most businesses today have some sort of referral programs and anybody can just sign up for it with just a few clicks.
“Refer a friend and receive $20 in credits”
It is assumed that most people don’t have a problem with this type of marketing because they are generally considered a win-win situation.
For instance, if you and your buddies enjoy a product like Dropbox or Domino’s, taking advantage of this referral program and saving some money is probably the best-case scenario.
However, MLM firms plagiarized this idea and injected it with supercharged steroids, to the point where it is a hair away from being illegal.
MLM companies function by offering customers referral incentives. Mainly seen as a form of discount to members who get other people to purchase products. And then top it off with even more cash incentives for the people that get others to sign up.
And this loop goes on and on and on. Until the hierarchy is no longer a marketing strategy but the fundamentals of the business itself.
I don’t know about you, and I am not insinuating anything here because I don’t want to get in trouble, but this type of referral scheme does kind of make a bizarre “triangular” shape, hmmmmmm……….…
The Suckers
In essence, the idea behind subscribing to an MLM firm is to buy the products of the company at a discounted rate and sell them to friends and family.
From another perspective, this simply makes someone at best, a salesperson and at worst, an individual retailer for some products that are overly inflated in prices.
And then there is also another facet to this business.
The “big money” is often found in building your own sales team. Creating your downline.
This job is to convince your friends and family to pay the membership fees and sign up to the scam company. Then get them to buy the overpriced products just so that you can make a few dollars.
From the perspective of a business, it is a way to build a workforce without wages.
But wait, actually, it is a way to build a workforce that pays the boss just so that they can work!
!!!! Fucking genius !!!!
But, can you succeed though?
It shouldn't come as news that most businesses fail. It is a hard-to-swallow pill that only 40% of new businesses ever end up making any money. And this number dips even lower for people starting a business for the first time.
Guess where this number goes for MLM members?
The top ten MLM companies disclosed that only about 30% of active members get paid anything at all. Only about 12% of these people make more than $1000 a year, 2% make more than the minimum full-time wage, and lesser than 0.1% make more than $100,000 in income.
To boot, these numbers are prior to even factoring in the cost of products that members are obligated to buy when joining. The “starter kits”, “business guides” and whatever mumbo jumbo these companies present to you.
To paint the picture, let’s talk about this pretty lady here for a second.
This is Holly Chen. She is one of the first few members of Amway when they first started in China. She was at the right place at the right time before the MLM wave spread all across the world.
Despite the fact that about $8 million of her income comes from Amway’s bonus scheme, the larger chunk of $12 million comes from selling books, courses and charging insane amounts for seminars.
You might be thinking, “$20 million is kinda alright, I wouldn't be complaining.”
But in fact, it is not really that much when compared to other individuals who are on top of their respective markets.
Here’s the breakdown.
It is estimated that about 5.5% of the population in the USA is involved with at least one MLM company. But if we grabbed these people and assumed it was a random sample of people rather than the MLM members, it would mean that the Holly Chen should have been in the top 20 richest people in America.
Furthermore, this randomly selected group of people is likely to have over 30 billionaires and 300 individuals making more than $20 million a year!
That was a complicated chunk of information, so here’s the simplified version.
Your chances of success in this business are actually lesser than 0.0003%. Flip that figure and you are statistically 3000 times more likely to make that $20 million if you didn’t join any MLM companies at all!
So lucky you!
The Cult
So why aren’t people realizing it?
You see, starting a cult is pretty easy actually. You just have to target specific points in a person and “normal people” will gladly surrender their lives to it.
Here’s my advice on how to start a successful cult:
- Give your followers a definite and absolute answer, they love that shit.
- Find low self-esteem individuals. Best if they are out of a job at the moment.
- Shower them with lots of love. Tell them that they’re amazing all the time.
- Target women, especially middle-aged housewives. Hey, I am not sexist but research shows that 70% of cult members around the world are women.
- Promote the “us vs them” mentality. “Those that try to talk you out of it are haters! They are not your friends!”
If you take these steps, it is almost certain that the members won’t even realize that they are in a cult despite it being super clear to outsiders.
Let’s take that back to the MLM companies.
The seminars and “self-help” talks organized by these companies were never meant to make you a better person. They were meant to keep you from leaving the “cult”.
Each time you attend one of these events, they try to sell you the dream that you could actually make it in this business. That you could one day stand on the stage giving that presentation and driving away in your BBC (big black car).
“I started from nothing, nothing but a dream. And if I can do it, anyone can.”
“Trust yourself no matter what anyone thinks. Don’t give up!”
“Work your ass off. If you’re not finding success, you need to work harder. No pain, no gain! Stick with it, think long-term.”
And just like that, you are once again lit up with the overwhelming enthusiasm to continue pursuing this journey with all that you’ve got, not realizing the reality that you’re stuck in this endless loop.
The Pyramid
The only difference between an MLM company and a pyramid scheme is that MLM companies have some of their own products to sell whereas pyramid schemes are based solely on new enrolments.
So the fact of the matter is:
Is this legal?”
“Eh……..”
Isn’t it actually the same thing?
“Yeah, no shit.”
To accurately judge this situation, just find out about the source of the company’s main income. Is it from selling products to organic customers? Or is it from recruiting as many people as you can?
Did I lose that old friend that messaged me?”
Probably yes. Because I didn’t join his MLM cult.
What’s the best way to make huge amounts of money?
Selling online courses and organizing overpriced seminars just to say a few words about how you made a couple of dollars.
Honestly, it is very sad to see some of my friends fall prey to these types of schemes. And eventually, they stopped being my friends because I stopped replying to their messages. How rude.
So why isn’t there some sort of enforcement on this?
The Federal Trade Commission (FTC) replied with this after inspecting Herbalife:
“It was not determined not to be a pyramid”
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