The Best and Worst Attributes About MLMs

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The Best and Worst Attributes About MLMs

I have this buddy who is deep into the Multi-Level Marketing (MLM) world.   It feels like he keeps bouncing from the next big thing to the thing that is going to make the “next big thing” look horrible and scammy.  He has attempted to recruit me to a few of these ventures and much to the surprise of no one, but him, I have always rejected.  Every time, he contacts me about the next amazing opportunity I always have two thoughts about the very nature of MLMs and they are what makes the opportunity amazing for some and horrid to me at the exact same time.

Between make up, leggings, herbal supplements, water, etc., there is an MLM for everything and anything.  Interestingly, you do not see a lot for online casinos but I wonder if that has to do with their status here in the US.  They are all pretty much the same thing.  Regardless of the product the underlying idea is almost always the same in the end.  You sell a product (and some of the more heinous schemes just a dream) that person makes a commission…then they make a commission for every person they recruited who then also make a sale.

There are a ton of things to hate about MLMs – a ton of things, but nonetheless, there are two constant thoughts I have so since this is my blog I get to share them with the tens of people reading.

The only Good Thing about Some Multi-Level Marketing Opportunities

In my opinion most are terrible, but there is one good thing about some of them (a damn good portion of them are just ridiculously terrible) that has to be at least acknowledged.  Multi-level marketing allows people a (hopefully) low cost entry into the idea that they may be able to start their their own business or side hustle.  This self actualization comes at a cost which is discussed below, but nonetheless, that is a very valuable to so many people who may have thought that starting their own business or side hustle was not attainable.

Are they great businesses? Usually not.  There isn’t much more than that – they just aren’t.  Most of the time they are peddling something that is over-priced, but it is the consumer’s choice not to buy something because it is inherently overpriced.  These products have to be overpriced, since you have to pay a down-line, the actual company and the seller him or herself.  Most of the time you are spending a ton of time either online and/or at parties trying to promote your brand even if you claim it is passive. Notwithstanding, it is giving someone the opportunity to know what it is like to operate a semi-business and/or side hustle and that does provide some value.

The Worst Thing to Me About ALL Multi-Level Marketing Opportunities

As I stated/linked above, there are a ton of things to dislike about MLMs.  Most have to do with the inherently overpriced items to provide for a top down compensation scheduule where most people do not make money.  There is also the cult like mentality I have seen people take.  Those selling the shakes really believe they are going change the world and it is fucking crazy.  But to me, there is something worse than both those things when I look at it as a pure business opportunity…the recruiting.

The inspiration for this post was when that buddy came to me about a pyra…errr multi-level marketing wine delivery service.  I thought to myself at that exact moment, I have zero interest in signing up other people to do what I am doing…and even if I did why would I create competitors?! If I am the best ever at selling a home wine delivery service why would I want to train someone who could be better than me? Sure, that makes sense if I own the business, but in a MLM you don’t own shit! Everything can be taken away from you by the home company.  It is ridiculous.

The only reason you care about hiring and training your competitors is because you believe that one day you can sit on the beach and collect a check.  This is such a ridiculous dream considering the guy selling you the dream is still working to recruit you!

Other Thoughts on MLMs

Again, there are a ton of other problems with MLMs, and I have a lot of other thoughts about the topic but they are no different than the other hundred thousand people who think 99.9% of MLMs are ridiculous so why go deeper?  I just felt like recording my immediate 2 thoughts when someone comes to me with one of these ideas.

 

By | 2017-05-18T08:59:53+00:00 May 10th, 2017|Business, Personal Finance|11 Comments

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Evan is the owner of My Journey to Millions which was started to track his journey from a broke debt ridden law school graduate to building a positive balance. Need more Evan? Follow him on Twitter, Contact him or get new posts directly to your email

11 Comments

  1. Buy, Hold Long May 10, 2017 at 6:25 am - Reply

    MLM are ok if you are at the group level. If you get in early you can get almost “dividends” from people selling their own. It is a pyramid scheme. I hope you don’t get involved with this junk. All the best,

    • Evan May 10, 2017 at 11:06 am - Reply

      I have no interest in getting involved! I just have these 2 thoughts every time I am approached (which is once every 3 to 5 months)

  2. Lazy Man and Money May 10, 2017 at 9:33 am - Reply

    The “why would I create competitors” is a huge mental leap that most people involved in MLM don’t take. That’s one of the half-dozen or more reasons why MLM is not a business. It’s a wolf in sheep’s clothing pretending to be a business.

    Creating an entrepreneurial spark can be valuable. However, since nearly everyone loses money, that spark is extinguished, most likely never to return. I’d call it a neutral thing at best.

    Whenever I try to come up with something good about MLM, I lean towards, “Well the person paid a price to learn that they should have done more research. Maybe he/she improved his/her critical thinking skills.” It seems like it isn’t working with your buddy, but that’s probably because the cult-like mentality has a stronger hold on him.

    • Evan May 10, 2017 at 11:08 am - Reply

      His latest garbage venture is Digital Alliance which is absolutely crazy! It is an online course to teach the person how to sell products online….within an MLM! So what does that mean you are selling a course that will teach your future competitors how to sell the same course better than you? It is so frustrating.

      The critical thinking is a pretty good lesson learned too. I guess that is sort of related to mine.

      • Lazy Man and Money May 10, 2017 at 12:21 pm - Reply

        I can’t seem to keep them all straight. I thought you were referring to Digital Altitude (which is covered well here: https://www.truthinadvertising.org/digital-altitude/).

        MLMs selling teaching as an MLM goes back decades. Since people are failing (as mathematically designed by such schemes), the idea became, “Well let’s sell them an additional product to help them succeed!”

        If you don’t buy the “tools” then the failure is your fault for failing to educate yourself. So the victim is caught in a catch-22. Throw more money down the drain or get shamed for being a failure who isn’t willing to do the work.

        • Evan May 10, 2017 at 12:36 pm - Reply

          You are right! It is Digital Altitude

          • Evan May 10, 2017 at 12:50 pm - Reply

            Holy shit! Check out the income distribution statement of Digital Altitude – http://www.digitalaltitude.co/income/ If I am reading it correctly, looks like 87% earn less than $1,000 a month!!!!!!!!!!!!

            • Lazy Man and Money May 10, 2017 at 1:30 pm - Reply

              I’d defer to the Truth in Advertising (TINA) point in the article that I linked to. I can’t really decipher the first column of “8.4% (34% $100+).” Is it 8.4% or 34% who are in the $100-$249 range?

              The only thing that seems clear to me is that 64.9% gross an average of $23.50 and according to TINA article “…you need to pay a minimum of $37 a month for Aspire products…”

              Have fun reading their earnings disclaimer which seems to say that you can’t trust any of these numbers: http://www.digitalaltitude.co/disclaimer/

              “Any and all claims or representations as to income earnings made on our web sites or in our materials or information are not to be considered as average earnings.”

              So, if I’m understanding this correctly, the “monthly average earnings” in the income disclosure page should not be considered average earnings.

              That earnings disclaimer is perhaps the best attempt of Cover Your Ass / Please Don’t Sue us I’ve ever seen. They even include a copyright warning on their own earnings disclaimer: “COPYRIGHT WARNING: This material may not be reproduced in any way for any reason.”

  3. Tara May 10, 2017 at 10:36 am - Reply

    Considering most people don’t make any money but lose money on MLMs, they are scams. But even in the blogging side, I see affiliate income as almost MLM-esque, especially the links for services like web hosting, survey websites, credit cards, and shopping portals. They may not have the same buy-in costs as many MLMs, but they act in the same fashion–recommending a product that may or may not be good for the sole reason of getting a commission. But then people gotta make money I suppose.

    • Evan May 10, 2017 at 11:16 am - Reply

      Tara, I 100% agree that most MLMs are at worse a scam and at best a terrible opportunity. I couldn’t disagree more with the blogging analogy though. Not just because I have blogged here for 8 years, but because that is the direct selling method. I don’t use affiliates (I use adsense) but that is my “shelf space” so to speak.

      • Lazy Man and Money May 10, 2017 at 12:32 pm - Reply

        Tara,

        I can understand why you’d draw the connection. The difference is that bloggers make a sales commission by recommending a product or service. There’s no recruitment where the blogger underneath gives a percentage of all future earnings in perpetuity. And it certainly doesn’t have multiple levels (the “ML” of MLM).

        Amazon and Ebay are companies with affiliate programs. I don’t know anyone that would consider them pyramid schemes.

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