Pyramid schemes are bad. And illegal. You won’t take part in one, right?
But guess what, every MLM is a hidden pyramid.
- 1 Is every MLM a hidden pyramid scheme?
- 2 But MLM is NOT a pyramid! You say.
- 3 The inevitable lack of new prospects
- 4 But pyramid schemes are illegal, and MLM are legal! You say.
- 5 Jobs, organizations are in pyramids shape too! you say
- 6 Why are pyramids bad
- 7 Why are MLMs bad
You know what a pyramid scheme is? You give your money to someone, usually an organization, and lure others, make them give money to you. Usually the money is not transferred directly to you – it goes to organization, the person that recruited you gets some, yu get some, your whole “upline” may get some
So basically it is – give your money to us, and find more suckers that will do the same. And if you find many of them, you eran big buks. And if you find many suckers, that in turn will find even more suckers, you will get rich
Does it resemble you something?
Yes. The MLMs work in a similar way.
But MLM is NOT a pyramid! You say.
So, lets see whether MLM is or is not a pyramid scheme.
No listen closely, this is a good story:
Imagine that someone invents a pyramid scheme. You need to pay money to get in, and then recruit others that will give money to you etc.
Imagine you need to pay $100, and get others to pay $100, so you make some cut of their money, and your upline take some part of it too.
Is it pyramid right?
Now, imagine you but pencil, for $100, and then sell pencils, each for $100, and recruit others to make it so. The pencil is just an ordinary one worth one dollar. Yet, you bought it for $100, and look for people that will sell it for $100.
Now tell me – is it a pyramid scheme, or an MLM?
Does it have product? Yes. Is the product worth it’s price? No. But, it is an MLM.
What is the difference? Just the $1 pencil?
And what if instead of pencil you would sell one potato for $100? Or a bottle of water?
But those are imaginary examples! you say.
Lets consider real examples.
What if you take fruit juice, put into fancy bottles, that resemble wine bottles and sell it in packs of four for $135?
What if you take vitamins, and sell them for ten times the usual price?
What if you take alaskan blueberries and salmon, make supplements of it and sell for high price? Does it matter that those berries do not grow at Alaska?
Of course, you need a good dose of bullshit to sell some overpriced stuff. Magic berries, rare ingredients, cancer-curing effects in anecdotal evidence. The super-concentrated washing powder.
The inevitable lack of new prospects
This quote from Wikipedia may be also applied to MLMs, doesn’t it?
As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.
But pyramid schemes are illegal, and MLM are legal! You say.
Yes, pyramids are illegal in many countries.
MLMs are legal in most countries. But, do you know, there are some othher countries that banned MLMS?
Anyway – MLMs are mostly legal – so what? Jumping from a roof on your head to and on concrete is also legal. It probably won;t make you happy though.
Jobs, organizations are in pyramids shape too! you say
Yes. They are. You have an owner, or CEO, then executives, chiefs and common workers.
But in a JOB you get paid for your work. Not the other way round.
Greed in both
In pyramids, people think: if I pay money to get in, and get many suckers to join too, I will make money. The suckers below will pay for my success.
In MLMs people think: If I buy products (even if those are overpriced or not needed by me) and get many “downlines” to join too, I will make money. Get rich. Earn passive income. Walk the beaches of the world. The downlines below will pay or work for my success.
Why are pyramids bad
On 12 November 2008, riots broke out in the municipalities of Pasto, Tumaco, Popayan and Santander de Quilichao, Colombia after the collapse of several pyramid schemes. Thousands of victims had invested their money in pyramids that promised them extraordinary interest rates.
Why are MLMs bad
If you are told, that you can earn lots of money, just by buying products and finding six (or one, or two) people that will do the same… Sound good, right?
What if you were told to put money into somebody’s else pocket until you find other people that will put money into your pocket? And you – most probably – will loose money, not earn? It would not look so good, right? But they will not tell you this – or they would recruit no one 🙂