Technically legal ponzi schemes

[lostfan]

They're pretty easy to spot. The way it's happened for me so far is a friend will call/electronically contact me with a business idea that they say is working well for them, that they're excited about, or whatever. I come over to their house, or look at a presentation, and the presenter will spend some time preaching about financial independence. Step 2 is talking about some great product and how it's going to take off, step 3 is how I can get in early and make it work for me. Step 4: "All right, to get started, we just need 500 dollars." Step 5 is to go make this business pitch to all your friends, and once they sign up, you start making money. Riiiight. So how is this not a ponzi scheme? Since there is a product involved that actually exists, even though you never see it, or you never know anyone who's bought it, it's legit. So hurry up and get out there and make your money (while there are still people out there who haven't signed up for it and you're the last guy holding the bag)!

 

The first time someone tried to convince me to do it (Tahitian Noni) I just was leery of it because it sounded too good to be true so I just never called back. The next time (Pre-paid Legal Services) I recognized the same format, and I thought it was pretty shady that the whole thing was focused on me getting more people to sign up, and anything involving the actual product was just sort of a bonus, if it was even mentioned at all.

[G&T]

Isn't that a pyramid scheme?

[rangercal]

It's not a Ponzi Scheme. It is called MLM (google it)

 

The people who get off their ass and make it work can make some good bank off it. Unfortunately, most Americans have a strong employee state of mind and have a hard time with independent ventures. Most of us need a boss on our ass.

[lostfan]

It's not a Ponzi Scheme. It is called MLM (google it)

 

The people who get off their ass and make it work can make some good bank off it. Unfortunately, most Americans have a strong employee state of mind and have a hard time with independent ventures. Most of us need a boss on our ass.

I was going to put MLM in the title but I figured nobody would open the thread if I did.

 

Anyway, yeah, I know that MLM as an idea is legit (I'm pretty sure that's Amway's business model isn't it, Mary Kay, etc.?) and I do know people who actually make decent money doing it, but when the focus is entirely on getting new people to invest more capital, I don't trust it. You have to actually sell a product which in the presentations I mentioned was barely emphasized.

Edited March 24, 2009 by lostfan

[southsider2k5]

I was going to put MLM in the title but I figured nobody would open the thread if I did.

Anyway, yeah, I know that MLM as an idea is legit (I'm pretty sure that's Amway's business model isn't it?) and I do know people who actually make decent money doing it, but when the focus is entirely on getting new people to invest more capital, I don't trust it. You have to actually sell a product.

 

I was going to mention Amway as the biggest nationwide example... well besides the world's biggest ponzi scheme of Social Security.

[rangercal]

I was going to put MLM in the title but I figured nobody would open the thread if I did.

 

Anyway, yeah, I know that MLM as an idea is legit (I'm pretty sure that's Amway's business model isn't it?) but when the focus is entirely on getting new people to invest more capital, I don't trust it.

 

You need to invest money,time and effort. Most people do not want to invest time and effort so they end up losing their money in the end. MLM is legit and definitely takes advantage of people who are looking to get rich quick (not sure who should be at fault here) . Just like anything else, you need to throw some time and effort at it too, or it will not work.

 

Even though I am not in MLM, I would advise to take a crack at it only if you would treat it like a legitimite business. I can never see myself ever doing it because I do not want to call everyone I know with the same opportunity.

[Texsox]

Some sales guy on new car lot in Boise sells a Ford. His boss, the sales manager makes a little. The GM of the dealership makes a little. The owner makes a little. The regional manager for Ford makes a little. The area director for Ford makes a little, in fact, that sales person's sale supports everyone up to the CEO of Ford. Multilevel marketing.

[lostfan]

You need to invest money,time and effort. Most people do not want to invest time and effort so they end up losing their money in the end. MLM is legit and definitely takes advantage of people who are looking to get rich quick (not sure who should be at fault here) . Just like anything else, you need to throw some time and effort at it too, or it will not work.

 

Even though I am not in MLM, I would advise to take a crack at it only if you would treat it like a legitimite business. I can never see myself ever doing it because I do not want to call everyone I know with the same opportunity.

MLM is legit. The expectations of some, and their tactics and reasons for doing it are not though. They started losing my attention when they'd say "you don't have to sell things if you don't want to." What? Why? Everyone I know who sells or has sold stuff like Tupperware and Mary Kay tries to sell that stuff. So you're telling me I can just sit on my ass, call people, get money from them, and start raking in an extra 2K a month? The company might not be a ponzi scheme, but doing it like that is.

[rangercal]

MLM is legit. The expectations of some, and their tactics and reasons for doing it are not though. They started losing my attention when they'd say "you don't have to sell things if you don't want to." What? Why? Everyone I know who sells or has sold stuff like Tupperware and Mary Kay tries to sell that stuff. So you're telling me I can just sit on my ass, call people, get money from them, and start raking in an extra 2K a month? The company might not be a ponzi scheme, but doing it like that is.

 

I think you have things all wrong.

 

1) There are no limitations on earnings when you do MLM. What you put in is what you get out. (unlike the glass ceilings for most jobs)

The right person, with the right mindset can make it work. In my opinion, less than 5% of people in our current society have the drive to rake in 2k+ a month in MLM.

 

2) If you don't want to sell Tupperware, find a MLM company that works for you. (There are thousands of MLM companies)

 

3) They may be right when they say you don't have to sell. You can refer people and collect commissions from their sales . Of course if everyone under you uses the same tactics then you won't make anything. So in the end it is probably wise to sell. Lead by example so the people in your network follow what you do. Fact is, the company has products, so it is not a ponzi scheme.

[FlaSoxxJim]

Fact is, the company has products, so it is not a ponzi scheme.

 

I see lostfan's point here and agree with him regarding a lot of companies. Some of the products the company is built around are still under development, though they are usually touted as the Next Big Thing, likely to change the (insert field of your choice) industry forever, so the sales reps are urged to "get in on the ground floor", etc. Complete smoke and mirrors about a product that is usually very average to subpar or doesn't even really exist yet.

 

It's a logical outgrowth of good salesmanship I guess - the ability to sell someone anything, even if in some cases it's nothing at all.

[southsider2k5]

MLM is legit. The expectations of some, and their tactics and reasons for doing it are not though. They started losing my attention when they'd say "you don't have to sell things if you don't want to." What? Why? Everyone I know who sells or has sold stuff like Tupperware and Mary Kay tries to sell that stuff. So you're telling me I can just sit on my ass, call people, get money from them, and start raking in an extra 2K a month? The company might not be a ponzi scheme, but doing it like that is.

 

Send me $10, I'll tell you how it works...

[lostfan]

I see lostfan's point here and agree with him regarding a lot of companies. Some of the products the company is built around are still under development, though they are usually touted as the Next Big Thing, likely to change the (insert field of your choice) industry forever, so the sales reps are urged to "get in on the ground floor", etc. Complete smoke and mirrors about a product that is usually very average to subpar or doesn't even really exist yet.

 

It's a logical outgrowth of good salesmanship I guess - the ability to sell someone anything, even if in some cases it's nothing at all.

^^^

 

e.g. Tahitian Noni (just a google search already raises a couple of red flags)

Edited March 25, 2009 by lostfan

[Middle Buffalo]

I did this, and it was a huge pain. My product was a long distance phone provider. All I had to do was get people to change their long distance service to my provider. The cost of my long distance was half of what the typical provider (AT&T and the like) was charging, so there was actually value for the customer. No charge for changing providers, either. I'd make money when the customer used long distance, and if I could get anyone to join the sales team, I'd get a percentage of their sales. Typical MLM. The problem is that people are so skeptical, it's really hard to get them to buy into the product. I couldn't get people to change long distance providers because they thought there was a catch. Truth is, I didn't work as hard as I should have either, but with MLM products, you see people (friends/family) glaze over pretty quickly when you start pitching the idea to them.

[knightni]

Whatever happened to good old $1 chain letters?

[LosMediasBlancas]

Isn't that a pyramid scheme?

 

 

Yep and in this economy, they're picking up steam. People are desperate.

[Texsox]

but with MLM products, you see people (friends/family) glaze over pretty quickly when you start pitching the idea to them.

 

I have a past coworker who I would call a friend who is a serial participant in MLM. Lately it's been three (four?) in the travel industry. My last conversation with him . . .

 

Me: I am enjoying life right now, relaxing on the island, taking some classes, reading. A part time job just does not fit.

Him: But this is (yet another) ground floor opportunity. This will allow you the financial freedom to do what you want!

Me: Really? That does sound good.

Him: You bet, imagine what you could do with the free time . . .

Me: Yeah, I could relax on the island, take some classes, read some books I've been meaning to get to . . .

Him: EXACTLY!

[lostfan]

I kept trying to explain that I barely have any free time as it is because my life's moving at a pretty blistering pace right now, but they always try to convince me it's only a few hours a week. First of all I know full well that if I actually wanted to make money I would need to do more than that, secondly, I don't have "a few hours a week."