Saturday, July 9, 2016

A letter to a friend involved in multi-level marketing

Dear MLM friend:

I hope all is well with you. It has been a while since we've spoken, so I figured I’d drop you a line to let you know what’s been on my mind lately. I find I’m better writing than speaking, so I will pass along a few ideas to you you.
My reason for doing so is I can see where things are going here, and I figured I’d put some information front of you before we go any further.
Mind you, nothing I will say below is against you personally. I found you overall to be an intelligent and fun person to converse with. I don’t say this to spite you personally, I say it because I personally seen the damage that this toxic type of “business” does to friends, family members, near associates, and personal finances. It causes bankruptcies, loss of friendships, shunning by relatives, and divorces. I know the latter part of that equation all too well, having seen it personally.
We probably haven’t spoken of this before but I’ll fill you in on a little secret from my past history. Many years ago, when I was very young – aged 10 or so – my parents divorced after almost 25 years of marriage. The reason they divorced is because of multilevel marketing, or MLM from hence forward for purposes of our discussion.  This was a rather large shock to a 10-year-old, and at it was only with the passage of time I came to understand why it was they couldn’t get along.
The short story is that for about five years previous to that point, my mother had been involved with a little-known cosmetics MLM, and during said time she acquired all kinds of training, in-house certification, tools and product to sell, with the end result being exactly as my father predicted: namely, very little cash flow or business money coming in, compared to exceedingly high expenses. It was a total flop, as the creators of the pyramid intended. There are multiple reasons for this - some of which I will discuss below – but the final total was somewhere north of $100,000 pissed down the drain, all because my dear mother got roped into network marketing. To this day she blames herself.
As you might imagine this would make me a poor candidate for any sort of pitch for network marketing, direct marketing, direct selling, network selling, “deals”, “business opportunities”, cookie-cutter business plans, uplines / downlines, potions, lotions, vitamins, pyramids, or anything that looks, sounds or smells like any of the above. I thought I’d made this clear to you in earlier conversation, but apparently I had not.
I have very little patience for these things, not because I’m a prototypical “hater” as the kids would say, nor because I’m a professional cynic or critic.  That would be too easy to make such a mischaracterization here.  Those are the types that don’t investigate, don’t research, and don’t inquire about certain affairs in this world, but instead stand on the sidelines of life and say to all that will hear “that will never work!” I instead say these things because I’ve made it a point to read, research, and investigate this type of business and I’ve concluded from independent research that it is fundamentally flawed.
Is flawed, I say, because MLM is purposely structured to be dishonest and deceptive. Something like 70% of all payouts go to the top dozen or two dozen people in the entire pyramid chain. Financial losses for all involved in these schemes exceed 99%, and the average payout across the entire pyramid is something like $10 a week. The entire structure is predicated upon endless recruitment, yet 75% to 85% of the people in any MLM whatsoever do not qualify for any commissions, so “the house always wins” here, just like in Vegas. Why else would the two founders of Amway be multi billionaires while churn rates at the bottom exceed 50% to 75% per year for everyone else that gets roped in? If there was really that much money floating around in this or any MLM, they’d be killing people to keep them out of it.

[The online reader may need to click on the below image for it to display properly. Blogger is a nice platform, but I don't have the control over display that I would if this was a freestanding site.] 

The net effect of photocopying sales distributors in a MLM organization is it massively enriches the company in general and top of the pyramid in particular, but the people at the lowest levels of the organization starve.
Further references and rock-solid proof for what I speak of might be found here:
·         Pershing Square Webcast: Former Herbalife Distributors Speak Out (with Q&A): 
(This is about HerbalLife but since the structure behind all MLM’s is virtually identical this applies to MonaVie and all other MLM’s as well.) 
·         Merchants of Deception: An Insider's Chilling Look at the Worldwide, Multi Billion dollar Conspiracy of lies that is Amway and its Motivational Organizations by Eric Scheibeler.
·         The Myth of MLM Income by Robert L. FitzPatrick:
·         Multi-level Marketing Unmasked by Dr. Jon Taylor (a man with two MBAs and a PhD in business) I have attached this.
·         30 Questions for MLM distributors (excerpt from a book, also attached).
In the real world, you should be in the black on any business in about 5-6 months, according to Brian Tracy’s course on How You Can Start, Build, Manage or Turn Around Any Business. If you are not in the clear by then, either there is something wrong with your approach, your product or service, your timing, the target market or audience, or something wrong business plan you have subscribed to.
To wrap up, I will be more than pleased to entertain any “proposal” you might put in front of me, but for sake of brevity I must limit it to facts, figures, numbers, statistics, and that alone. (If I were to be purchasing a franchise, I’d need to sift through 100+ pages of business paperwork, consent decrees, statements of understanding, legal forms, business contracts, etc. Have you the same to offer here?)  I have zero interest in “Rah!- Rah!- Rah!” / “We’re the best!” / “Go team!” / religious revival-styled “business” gatherings, nor high-powered pep talks or similar mental masturbation about what a smashing opportunity awaits just around the corner for me if I hop into the right person’s downline.
My standards before I would invest in anything are as follows:
1.    Business pro forma.
2.    Two years of Schedule C filings.
3.    Two years of personal income tax filings from the person making the proposal.
These I will ponder in silence and research at my own pace, not in a high-pressure sales pitch environment.
There are many roads to success in this world, and in my opinion having investigated multiple successful people who have started and run one or more successful businesses, the proper secret of success in this world is a combination of bringing your own innovative product or service to the market combined with investments in real estate and stocks / bonds. This is what the financially well-off have done in the past, and what others will do in the future. When losses in MLM exceed 99.7%, that is none of the above, that does not meet the above requirements, and that is not an opportunity. That is what we call, in plain English, a scam.
In short, MLM behaves like a bastard child from the unholy union between a religious cult and Wal-Mart.
The real “market” served in MLM is not one where there are a bunch of “eager beavers” out there in the wide world somewhere just waiting to hear about the opportunity to peddle the opportunity, plus some juice or vitamins on the side. The real market in MLM is the pyramid selling to you, the person in the downline. Training, tools, rallies, frontloading on product, all of those ponderous expenses add up before you can even begin to make a first sale. The MLM researcher Dr. Jon Taylor (above) worked the NuSkin MLM for a year, and even with $23,000+ spent on advertising and promotion, building his downline, and so on, he was still losing $1,000 per month.  What a great deal! (For the guys up top, that is!)
In closing, I wish you the very best in your future success and future endeavors. Should you wish to discuss something else other than MLM, MonaVie, “opportunities” and so on I’ll be pleased to discuss with you further any number of subjects including but not limited to business concepts, product invention ideas, long-range investment strategies, personal development courses, inspirational books, or even certain insights I have acquired from my study of thousands of pages of human history. I will not be discussing with you or anyone else any MLM or anything of a similar or related nature or type. Life is too short for me to be going around in circles on that affair.

Yours very sincerely,
Tom Jones

P.S.: Please find some sage advice for starting your own business here:

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