Pyramid Schemes

The Inside story

 
THE INSIDE STORY
Saturation reached yrs ago  The "opportunity" to build a big organization in Amway/Quixtar was saturated three decades ago. This you are never told. The result is that very, very few people will see any meaningful success in the business, which would explain Quixtar's dismal numbers like the fact that:
A) even as far back as the early 70's (according to FTC), 50% of the whole distributor force would quit every year.
B) Since Yr 2000, only 6 of 6,000 recruits have achieved Emerald status (approx $ 80k per yr)... this according to sworn affidavit from TEAM's CEO Orren Woodward
C) Approx  99 % loss rate (net of expenses, travel, gas, cost of unneeded product purchases, the value of one's time... including one's valuable free time and family time)
Recruiting friends/family... worth it?  One is asked to create a list of friends/family to recruit. Of course, in the case of family and friendship relationships, using one's position of trust to further a network business opportunity is selfish and abusive and if seen clearly... is a cruel statement about the value the IBO places on the relationship. Such tactics enhance the isolation of the IBO by alienating his/her friends and family who refuse to join.  Soon the world is divided into two: those who are "in" and those who are "out." This in turn deepens the dependency on the "upline" and MLM's motivational system itself. A vicious circle begins. Affinity towards those who are "in" and the reinforcement received begins to delude one's thinking and is in fact part of a cult initiation processs.
Scamology 101: Introduction to Pyramid Scheme Math
    Take a look at the following numbers. They represent the breakdown of levels in the 6x matrix shown in many MLM plans - such as Quixtar. At the end of the bottom line of each pyramid, I have included the number of persons that make up the bottom level and (in parentheses) the percentage that the bottom of the pyramid makes up. Once the pyramid stalls, as Quixtar's has for years, there is always the same approx % - around 83% - at the bottom.
    These folks have no chance of making money (just look at Quixtar's numbers last 7 years). Thus there is "churn" at the bottom as one recruit quits while another naively takes his place. Quixtar and nearly all MLM companies stagnate (seemingly) forever as they "churn" the bottom extracting what they can out of newly duped recruits.

                                                                                     1
1 1 1 1 1 1 = 6  (85.7%)

1
1 1 1 1 1 1
6 6 6 6 6 6 = 36  (83.7%)

1
1 1 1 1 1 1
6 6 6 6 6 6
36 36 36 36 36 36 = 216  (83.4%)

1
1 1 1 1 1 1
6 6 6 6 6 6
36 36 36 36 36 36
216 216 216 216 216 216 = 1,296  (83.3%)

1
1 1 1 1 1 1
6 6 6 6 6 6
36 36 36 36 36 36
216 216 216 216 216 216
1296 1296 1296 1296 1296 1296 = 7,776  (83.3%)

1
1 1 1 1 1 1
6 6 6 6 6 6
36 36 36 36 36 36
216 216 216 216 216 216
1296 1296 1296 1296 1296 1296
7776 7776 7776 7776 7776 7776 = 46,656  (83.3%)
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      An MLM system in which the bottom line distributors do not show a net profit for a consistent period of time is unethical and a cover for a pyramid scheme because participants can only recoup their investment through recruiting and the vast majority of participants will lose money.
 Retail sales vs Self consumption  
      An ethical and legitimate MLM always places the emphasis of its plan on the retail sales of products to persons who are not participants in the pyramid. These are sales made to those outside the pyramid - not sales made within the pyramid for self-consumption. 
                   Only by selling products to legitimate, demand driven                     
retail customers can the bottom line (and hence the bottom
rung of the pyramid) show a net profit.
     Without revenue coming primarily from retail sales, recruits will only be able to recoup their investment through recruiting. That is why retail sales are absolutely necessary for an MLM to be considered legitimate under the law. 
 Sketchy Products
     It's not just the "business opportunity" that turns out to be sketchy. With most multilevel marketing companies - the products tend to fall around the fringes of legitimate as well. Typically the products are pills, potions, and lotions. Such are products have qualities that are hard to quantify and are thus subject to outlandish claims.

    Despite it's name, MLM often doesn't involve much "marketing" at all. The products often simply serve as shill for a recruiting scheme. The product could be "chocolate bars filled with whipped collared greens" at $30 a piece and it wouldn't matter because the participants aren't buying for the products in the first place. Second, the MLM approach allows individual "distributors" to make outlandish claims about the benefits of such dubious products as exotic juices, magnets, weight loss pills and cremes and whatnot without serious fear of reprisal because regulating the MLM industry is like herding cats. Life Force touts a juice made from Asian sea vegetables!!
So how does anyone make money?
Aha. Good question.
To answer, let's compare...  
say, a Legit Sales co...  to TEAM/Quixtar.
Profitability 
A legit sales co. invests in their sales force realizing that there are costs associated
with training and costs associated with attrition and replacement.
TEAM/Quixtar abuses its largest sales force - those on the bottom rung -
through deception, false hope, and ultimate disillusionment.  
Thus there is incredible turnover and churn.
Salary/Commission
A legit sales co's representatives know their salary and their potential. They see   others succeed and know that they can attain the same success.
TEAM/Quixtar keeps IBO's in the dark. They are lied to. They are not equipped with realistic odds at achieving a liveable salary. The "real" salaries of those above them are shielded. The incredible success stories they do hear are from those at the top of the pyramid. The IBO's can never assume their positions.         Subterfuge prevails.
Products 
A legit sales co's rep's are given detailed information as to the efficacy
of their products for which there is a real world demand.
TEAM/Quixtar IBO's are given hazy anecdotal information on the products they are to move. In the end, the products become shills for a self consumption pyramid. The only "product" to be moved is the next gullible recruit.
THE TRUE EXPLOITATION 
    A legit sales co. would train its sales staff. They would fly them to seminars and equip them with as much training as possible. They'd do this at company expense!  
           Quixar/Amway, however, coerces its recruits to pay for their own training. Worse, they are coerced to pay for training in an unwinnable business - a scam. Worse yet, it is through these trainining costs (the "tools" business) that the upline makes approx 75 % of their money! They train (via books,CD's, events) an IBO to "dream big" about a business they'll never be successful at. And when the botton rung of the pyramid begins to churn... then they just sell to the next sucker coming through the door. They then bleed him while he is on the hamster wheel. This is why I call the "tools" business the "hype the scam" business. It literally hypes a scam and in so doing... becomes a scam itself!
THE EXPENSE OF THE "DOWNLINE" BECOMES THE
PRIMARY REVENUE OF THE "UPLINE." 
Not a Pretty business, is it?
 The upline depends on this "sucker revenue" 
for its continued existence.
It is from these "motivational scam" tools that the kingpins (heads of groups like TEAM) make most of their money under the guise of promoting a network marketing business... one that pretends to sell legitimate products to customers who actually want them.
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