Is it a Pyramid?

If it looks like a duck, swims like a duck, and quacks like a duck, it‘s probably a duck. But what if it’s not?

2020 has been one crazy so far. I don’t think any of us could have imagined that we’d be hunkering down, or, to use the new phrases, “sheltering in place”, practicing “social distancing” (which, in my opinion, is misnamed and should be called physical distancing) and learning new technologies en masse for working from home and distance learning for school.  

Pandemics tend to change things, especially your perspective. 

I’ve always been quite the procrastinator, and no doubt that is something I can blog about another time. I bring it up now because I’ve been mulling writing this blog post for more than two years. It’s time for me to say my piece. 

Here’s what put a fire under my ass. 

I recently put a short post up on my Facebook profile and story to alert people to the fact that I had learned about a way one could earn income online and that there were generous payouts that could be earned on a daily basis.  

Everything I said is true. There is not a single hyperbole in the post. I did not make exaggerated income claims, in fact I didn’t mention any particular amount of money at all. Nor did I imply that there was no work involved, that anyone could do it, or that when this was all over that we could all quit our jobs and retire to Bora Bora. Nevertheless, there were people who read my post and found it unrealistic, misleading and too good to be true.

Then someone popped in with the dreaded question: Is it a pyramid? 

I clicked like on her comment. I asked her if I could message her privately. That conversation has yet to take place. 

The next comment was “sounds like a pyramid.” That’s when I said to myself, ‘Oh, shit. Now what?’ I had the urge to release my sarcastic side and ask the person ‘What does a solid figure with a polygonal base and triangular faces that meet at a common point sound like, exactly?’ I resisted the urge, but I guess I indulged it here. A pyramid, for what it’s worth, is a very stable structure.

Regardless, the question and everything it brings up for me (and, no doubt, many others in and out of the network marketing industry) pushed me to get this blog post up. 

Network marketing and pyramid schemes are not the same thing. 

Most people, when making the comparison of multi-level marketing to a pyramid scheme, don’t realize that they are, at best, perpetuating a misunderstanding and, at worst, repeating a lie they heard somewhere.

Maybe they heard it from John Oliver.

There’s an episode of Last Week Tonight with John Oliver on YouTube titled “Multilevel Marketing.” That episode got under my skin a while back and it started me on the path to writing this. In the video, Oliver gives examples of specious explanations, misleading tactics and points to bad actors to make his case that the whole MLM industry is a scam. (Don’t get me wrong; Oliver can be very entertaining and persuasive…after all, he is basically an entertainer and an actor.) His YouTube video has garnered 21 million views to date, and that’s just the English language version. 

In the duck test, it should first look like a duck. Oliver makes the comparison of MLM to a Pyramid Scheme because it’s “pyramid shaped.” Just because something is shaped like a pyramid, doesn’t make it illegal. 

One obvious example would be any and every company that has at its head a president or chief executive officer. That one person is at the top and everyone else is on some lower level of responsibility, authority, compensation…you name it. Many more folks are slogging away at the bottom, a few are in the middle, most likely managing it, still fewer are at the higher levels and is one at the top. Supposedly, that’s where the buck stops, but not always. 

Pyramid schemes, on the other hand, are illegal. In a pyramid scheme, you are basically buying an opportunity. Sometimes there is a thing that you’re buying, but the real purchase is the opportunity to make a windfall return on investment. The schemer promises this to people after some time has passed and others have been brought into the scheme. In very simple terms, new people joining are paying the older people who joined before. Eventually, the whole thing collapses. You may have heard of that as a Ponzi scheme, and that is also illegal. 

As John Oliver points out, network marketing companies have hired spokespersons like Jenny McCarthy, Drew Brees, Chuck Norris. You can definitely find fault with those choices and poke holes in the industry. This is especially so in wellness-related MLMs. The nutritional supplement industry is crowded with bad actors. I’d need a whole other blog post to even scratch the surface. Unfortunately, it is very easy to be unethical in an industry with so little oversight and so much questionable science. 

Oliver featured a CEO and MLM company founder JR Ridinger in his show. Oy vey. Where the hell did they get this guy? Who on God’s green earth thinks that guy is a role model of a businessman who operates from a place of integrity? No. He’s a f*cking rodeo clown. Even saying that is an insult to rodeo clowns. I apologize to all those who put on a greasepaint smile and run from angry cows.

If I were to continue the duck test here, maybe some ducks have different markings. Maybe some seem like ducks, but they are Canada geese or swans for that matter.

There are some MLM companies that are owned and operated by people of high moral character. Unfortunately, I don’t really have any hard data on this, only my experience. I think that the law of averages would support me.

It’s getting harder to draw the analogy, but I’ll try. Say, for example, that mostly bad ducks are swimming in a line, following others of questionable integrity. In the old Waltz of the Geese cartoon, there was one duck swimming around trying his best to be a swan.

Another common criticism is MLMers dangling the bait of lifestyle improvements. Correct me if I’m wrong, but isn’t that what every single, solitary television commercial offers? I will freely admit, there are too many people out there in the industry who would entice you with the notion of vast upward mobility if you join them, along with wildly unrealistic income claims. Those people truly disgust me.

Don’t quit your job.

If you decide to take the plunge and give network marketing a try, if you have the choice, don’t quit your job. If someone tells you that in less than two years you’ll be firing your boss and moving on to your fifty-foot yacht…run away! I’m not saying that it isn’t possible for you to replace a career income in two to five years. I’m saying that it isn’t very likely.

So if I were to continue the duck test here, maybe some ducks quack differently. Maybe different ducks have a different sounding call. Maybe some ducks lie through their damn bills.

If Multi-level Marketing is not a pyramid scheme, what is it?

Network marketing or MLM is a product distribution model. It is a business model in which the sales force of a given company is made up of independent people, entrepreneurs if you will. I call them that (and I count myself among them) because they do not work for the company whose products they offer. They work for themselves and for the benefit of their own families.

Those people and the supplier company have a symbiotic relationship that is mutually beneficial.  

In this case, the entrepreneur does not do scientific research or develop products. They don’t design packaging. They don’t set up large shipping and distribution centers to get the products to the people, though they might deliver or ship on a small scale for the sake of exceptional customer service.

Nor do they get involved in legal concerns such as whether or not the products meet certain standards of quality or of the market that is being entered. They don’t design or build websites or do company-wide accounting; not as a rule, anyway. Some will choose to do some of that, but in my opinion, it’s not an efficient use of their time and effort.

What do the people who partner with a network marketing company do?

What they do is they become raving fans of the products that their supplier creates. What they do is find customers. And what they also do (and this seems to be why everybody starts to freak out) is find other people who will, through their own social networks, find other customers, too.

There are so many books on how the industry works, but the definitive rule book for how the job is done has yet to be written. There are good actors and bad actors in this world, in every aspect of business across the board. Multi-level marketing is no different. Caveat emptor if you’re going to join the many millions of people who call themselves network marketers.

Do your research.

It is a changing market, especially as the last couple of years have proven. The strength of the brick-and-mortar world is being tested mightily once again. I can’t predict what will happen next week, never mind over the next couple of years or decades.

Here is something I do know. Network marketing, multi-level marketing, whatever you want to call it* when worked properly and with integrity is NOT an illegal pyramid scheme. 

That is definitive. 

There has never been a better time to get involved and take your future into your own hands to start building something for yourself instead of working toward someone else’s dream.

If anything I’ve said here in the post has resonated with you, I’d love it if you’d comment below. You can also reach out to me to find out more about my supplier and how to make the most of what they offer to help us go forward into a brighter future. 

Cheers!

Maura 

 *I haven’t talked about Direct Sales in this blog post because it’s not the same thing as MLM.