This week in F*ck You: Pyramid Schemes and Multi-Level Marketing

08.22.13 4 years ago 105 Comments



Really the worst part about multi-level marketing isn’t being an employee, it’s knowing someone who works for one. It’s the exact opposite of having a friend with a boat.

Here’s how multi-level marketing schemes work: Someone with shorts and a chinstrap meets another stupid person at a bus station cigarette outpost and brags that they make $7,500 per month selling Herbalife cat condoms or something stupid, and recruits them to sign up for their very own business selling the exact same products. They tell you that for every product you sell, you get a small percentage of commission, but for every other additional person that you recruit to be a consultant/representative/brand ambassador/soul-lessitor, you get a share of their commission as well. See how easy that is? Your new “boss” takes a bunch of money as an upfront investment (marketing materials/starter kits) to get the ball rolling, and then they invite their new downstream employee to a series of seminars designed to brainwash their new salesperson into believing in an impossible sales-model and keep them away from friends, family, and any sentient being with a functional central nervous system who might tell them that the company you’re working for is a pile of shit. Here’s a hint: if you have been working for a company for a month and you’ve paid them more than they’ve paid you- you’re in a MLM scheme and you’ve already ruined 60% of all the friendships you’ll ever have and you don’t have a passport. Companies like this are known for bragging that being an IBO (Independent Business Owner, obviously) is a great way to smash your alarm clock and never work a 9-5 again. But according to literature that the FTC has forced companies like Amway to disclose, the average income of an Amway salesperson is much less than their representatives will tell you. It’s $1,400 per year.

Maybe the only thing worse than spending a year of your life making just over a thousand dollars is sitting next to someone who works for someone who makes a thousand dollars per year for Quixtar, Amway, Zodburn or whatever they’ve changed their name to most recently. If you are ever dumb enough to give a “network marketing professional” your phone number get ready for an endless series of calls begging you to come out to informative meeting after informative meeting, even if you have said “no” many times before. They are Ned Ryerson selling a product that might give you botulism.

If you do get involved with a company like this, they will force you to use your existing “networks” which is simply trying to convince you to squeeze money out of your friends while you still have them. It’s a simple proposition really: sell an expensive product, then recruit other people to compete with you in a similar market selling the same product. That’s why Steve Jobs told Bill Gates about all the cool inventions he was making and asked him to sell them too at the same time so they could both get rich.

MLM companies have been getting more and more visible in the sports world as well, seeking to legitimize their products and salesforce. Contrary to popular opinion, the Green Bay Packers are not a pyramid scheme although most of their fans are involved in one, but MLM supplement company Herbalife just executed a 10-year extension to be the main sponsor of the MLS’ L.A. Galaxy. Herbalife is a publicly traded company that you can wager against, as billionaire investors have taken advantage of recently despite the stock’s big recent gains. It’s not every day that you can bet against a company that has been found to be an illegal scam by the nation of Belgium, so I’m hoping to initiate a short position in Herbalife right after I figure out the ending to “Trading Spaces.” “Trading Places.”

Amway has been even more visible in the sports world, purchasing naming rights to the Orlando Magic’s Amway Center (or as I call it, “The Pyramid”.) And The NBA playoffs have been filled with Amway commercials featuring businesspeople (ostensibly Amway representatives) hopping international flights and conducting business meetings in highrises as opposed to showing a rep asking their friend for a ride and meeting a prospect in the smoking section of a county library.

I’m fascinated with the care that MLM companies go through to brainwash their employees. Their IBOs (Independent Business Owners, obviously) dedicate long hours to attending seminars and reading company literature, and they dismiss anyone who questions the sales process as someone with a negative outlook who can never be successful selling off-brand energy drinks to their grandparents. Recent studies have even shown that these companies make the lion’s share of their profits through selling motivational tapes and books to their own salespeople to encourage them to keep at it with their failing independent businesses and not from their overall sales themselves. THEY MAKE MORE MONEY SELLING TO THEIR SALESPEOPLE THAN THEY DO FROM THEIR SALESPEOPLE’S SALES. As if their strong-armed methods and high-pressure seminars weren’t bad enough, the products themselves are usually second-rate garbage with an inflated price-tag to pay commissions to the 6 people upstream from every sale that’s made.

Companies like Amway are no different than many other Fortune 500 organizations in that they prey on people’s insecurities and dreams of success while selling them a product and a model that they know to be stacked against them. The only difference is you don’t have to pass a background check, drug test, or 8th grade to get involved with one, which makes for a very ineffective and annoying sales force.

I love your passion multi-level marketers, but fuck you.

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