Beware of the phone call from that “friend” you haven’t seen in years and they suddenly “want to catch up”. Usually, “a fantastic business opportunity” is close behind.
Business opportunity are never fantastic. Vacation can be fantastic. A party can be fantastic. Real business opportunity, even the best ones, are work. Even if it makes you rich, like co-owning a high-value mineral mine, it is not "fantastic."
One of the reasons my parents divorced was because of an MLM having its hooks in my dad. He spent a lot of money on the products, going to events, and buying educational/inspirational audiotapes. I don't think he will ever let it go.
"The truth is a static." Meaning, it doesn't change from one end of society to the other. I like and liked the video. I am honestly grateful for your efforts to educate me. Still, bro, I'm still picking up my teeth from the number of sheer stupid decisions I took joining MLMs to "help" my friends and family . And I did the insurance thing; I'm still groaning for the knee to my nuts. >ouch< Please keep up the good work. I'd rather you kick my head than some unethical tramp selling me the Brooklyn Bridge.
I think your take was completely accurate. I've been the target of MLM recruitment. I lost no money because I know very well that I'm not a salesman, nor do I have any interest in managing a team of salesman.
Is joining a MLM company really “starting a business”? Since you don’t set prices, determine what products to sell, or do any back end admin work, it seems more like a 100% commission salesperson
So it isn't starting a business, you are employed as an independent contractor (1099) who can only sell the products of the company you signed with--basically stuck an exclusive covenant that would prevent a person from actually building a business since you can only have only 1 client (the mlm you signed with) and also their contracts specifically indicate that engaging in a contract with them does not qualify as a franchise agreement. They have no responsibility and no liability. MLMs survive because the primary customers are the market partners themselves since they have to buy their own inventory and often have monthly fees to stay as an active market partner in addition to personal volume requirements (irrespective of personal sales that a market partner may be required to buy themselves ) to stay active.
@@SB-my8fi ...and the moment when revenue starts to come more from their "independent empowered contractor omg yas queen" whatevers joining instead of sales, you've reached the magical blurry line to the land of pyramid schemes and the government is finally allowed to let shit get real :)
A "job" in which you don't get any money if you don't sign up anyone or sell anything, despite all the unpaid work you do for this. An actual sales job gives you money at the end of the month at least.
The biggest issue John Oliver had with MLMs is not the business side, but the promotion and predatory side. They might not be outright scams, but targeting lower finance IQ population bands, which are lower income and usually jump at any opportunity to improve their lot in life should be considered as malicious intent. Another problem is that in the secret recruitement meetings, the product is not pushed as the main moneymaker, but the additional salesmen recruited by the prospect are, thus being a pyramid scheme. If the company was selling products to distributors to sell on commision, nobody would bat an eye. The main criticism is stems from their HEAVY emphasis on further recruitment of salesmen, perpetuating the pyramid scheme. Video was alright and explained what they do, but completely missed the mark, why those companies should be banned from operating. There is a reason why John Oliver made an extra Spanish version of the MLM show.
Totally agree. If these businesses changed their model to not provide multi-level "trickle-up" commissions then I don't think most people would have a problem with them. But every pitch I've heard from someone buying into an MLM scheme has been 90% about how much money you can make and 10% about the product.
@@Spectification completely agree it’s not exclusive but it’s easier. I don’t recall the businesses of hand but insurance and other MLM will have primarily Muslim or whatever respective religion ethnicity primarily.
@@cakash , is it about his vehicle's extended warranty? Or do you have an amazing opportunity to generate wealth that you're gonna be nice enough to let him be a part of?
I think another aspect of the success that MLMs have had in generating profit is that people have gotten more desperate over the years. The economic landscape hasn’t always been the healthiest and if people are desperate they’ll try anything. Even if they know deep down that it won’t pan out.
I know someone who did very well working with MLM. It didn't start out as a full time job, but it worked well with her fitness career, and ended up being a very substantial income for her, along with her other income. I bought her products sometimes when I saw her at the gym. I thought they were good. I don't think that sort of thing would work well for most people, but she did very well for herself, so good for her.
Calling it even an opportunity to "start a business" is a gross misrepresentation of what working for an MLM really is. You're not working for yourself no matter what they tell you, you're under their roof and the house always wins.
True. They are salespeople for the MLM company. Essentially an unpaid worker for the profit of the MLM company. That is NOT "your own business" in any way shape or form.
You make some great points. For me, the big downside (and the reason I don't like these companies in general) is the way they weaponize social contacts like friends and family. I don't hate sales or the products, but I do hate it when a company convinces people I'm on good terms with to become demanding jerks who try to pressure everyone to buy. That hard sell, directed at people who are not looking to buy and are targeted because a friend got sucked in, more than any economic factor, is a big part of why people don't like these companies.
I like the "Defending the undefendeble" concept, but if I may give a suggestion: Make the name of the series a bit more front-and-center. The title of the video makes it sound like one of those other thousand videos complaining about MLM's, whilst you do have something new and more interesting to tell.
@@anthonypillarella same, but on the other hand TH-cam algorithm works in a stupid way, you have to use the words used in the most popular videos to make it suggested to more people.
At first glance, I thought you were going to tell how these companies defend themselves THEN say how they're all just wrong and whack. After watching the video though, seems good enough. It doesn't give you a wow factor leaving the video but it gives you a whole new perspective on how these guys operate. Thanks for that! BTW, hope you get more likes and subs. You definitely have so much potential! I had a hard time searching for this video using TH-cam's own search bar. I had to copy the link from discord to get here :/
@@HowMoneyWorks we want you to grow! Still rooting for you! I'll continue to watch your videos don't worry! Cheers! Edit/Follow up: still waiting for that hedge fund video cause that'll be spicy and very interesting
Great video. My relative did drag me into one of these MLM recruiting meetings. It feels like a cult to an outsider but the people are aware of their potential for making money. it feels most are joining these MLM's to be a part of something much like a church group.
In my experience with MLMs, the common problem was that they misrepresented the opportunity to entice people to join. The group I was with wanted to recruit as many people as possible but then only backed up and supported the superstars who are selling the most product. If one did not move enough product soon enough, they found themselves out in the cold. Likewise, just as is happening with some franchise opportunities, MLMs do not guarantee a market share. It is very common define your area oversaturated with people trying to push the same product, making it very difficult to be successful. Also, if you are in an organization that requires licensing, you may be pushed to obtain more and more licenses so that you can sell more and more product even if you were only interested in the opportunity on a part-time basis. Finally, certain business advantages, such as customized literature, software, and the ability to advertise, are only available to higher ranking members of the MLM. This often means obtaining a physical office of your own considerable expense or buying these items through the MLM at significant cost.
I finally joined! idk why I haven't sooner, I watch the eff out this channel and rewatch it over and over every other month! Great content bro, keep it coming
Boomers: We'll just borrow money to expand the economy so we can all have great jobs, cheap houses, tons of savings. Millenials: Ok, but how do you pay the money back Boomers: That's what you guys are for. We'll all be rich and retired or dead by then So millenials are basically at the bottom of the MLM. Which means the solution is to sign up the Gen-zers and keep the cycle going, hoping to not be the ones left when it comes crashing down.
disagree.... your business might be based on someone elses product... Amazon much?.... you dont need to create it to sell it with profit, you are mediator....
Basically,They are giving people a big responsability that compromises their finances for the promise of financual salvation. And given the approuched are mostly people with low inteligence( or skills and knowledge) in finances and economics, it becomes predatory, especially when they drag them with sweet-talk and their meetings to assure/reinforce the loyalty and faith in their activity.(the effectiveness depends on how economically and mentally vulnerable you are as well how much knowledge you have of finances and economics).
The thing that baffles me about MLMs and the legality of Pyramid Schemes was never that "some MLMs are legitimate companies", but that the only difference between both is what happens in the recruitment. Both are structured the same, both work in the EXACT SAME MANNER, with the only difference being how people work in it and their mentality. These are not described in any law and isnt regulated by any agency, unlike what defines a company to be legal or illegal, like compliance to federal and state regulations regarding salary, contract, worker safety and job security. If the only difference between crime and business is verbal, then might as well not support either of those! This is just how I see this kind of thing. Great video nonetheless!
Just a quick response to this topic, with caution about the idea of MLMs and also the current economic situation we might be heading into. There are at least 3 key areas I find to be most important in understanding what this industry is about, especially when it comes to the nutrition side of things, like supplements. For this, I'll use NuSkin and USANA, and for good reason. Firstly, the price. Of course, when you compare theirs to store-bought brands in the market, some will be comparable, while others feel a little more overpriced than necessary. One response I've heard for this has got to do with the current model of distribution, especially with the convenience of e-commerce. Where once you needed to have the stock to actually do any sales at all, you're now literally doing it like any online store, ie. you are the customers' direct word of mouth (marketing). The business handles all the logistics, while you handle the information, hence the lack of marketing or middleman which they can reinvest instead into the products. The other point of the business is how the products are recommended, and this is one of the reasons why many people shirk from this business entirely. Ie. people. We tend to see less of this problem with traditional marketing because of ads, but MLMs depend entirely on the network model, so unscrupulous distributors tend to give the industry a bad rep, especially when they can't really give you much confidence about the products. Here's where USANA and NuSkin seems to do better, if you check " pdr.net ". pdr.net (Physician's Desk Reference) is apparently the most reliable reference doctors have for every known prescription in the market. You can check any drug prescribed to you by your doctor on that site, it'll probably be there. So how does USANA and NuSkin stack up? I've checked (just type USANA or Pharmanex, the lab for NuSkin in the search bar) and both of theirs with full details are available, but not AmWay's. I've heard pretty reputable doctors here too have done their due diligence, and they're as equally impressed. Of course, the downside is that it takes some confidence to actually do well or successfully in this or any business. Besides the price point, the product's legitimacy and people, it takes a little market savvy to know if you're a good fit for the industry, as any business goes, ie. "niche". A large number of people will not be the right fit as customers, nor will see this industry like they do others, if they understand marketing at all. So of course it will always be an uphill battle for someone new to actually make headway in the beginning, even with the few points I made previously. But I think this industry will eventually become as big as e-comm (if they haven't already) when things start falling into place, unless the economy unexpectedly collapses under our feet.
@@thekingofbeez3192 Years ago, after I finished school and was desperately looking for a job in a recession, I was approached by one of their recruiters who saw my resume on a job board. I thought that it was an IT job (Nerds on Wheels type stuff) and because the word "insurance" was not mentioned once during the initial meeting. It's only when I got to the group interview that I realized that I was recruited for an MLM. I actually considered joining for a few seconds before I slapped myself silly and drove home. There was no way I could make any money from this as I did not have a network of family members and friends I could sell to and I have a pathological fear of cold selling.
My best friend got sucked into Primerica. He calls himself an entrepreneur and financial guru. I feel sad for him because he is getting screwed and doesnt see it.
the fact that you played devil's advocate on MLMs and STILL came up with nothing even thoroughly convincing shows how predatory and shady these businesses are
I had experience as an Amway member. I would never sign up again in the hopes of making money, but the Amway products were the type I would like to use again. The energy drinks were tasty.
I couldn't decide whether I loved or hated the video format of being devil's advocate for terrible business models. Great video! Can't wait to love/hate the hedge funds video.
I enjoyed this video but the advice to just buy whatever your long lost friend wants to sell you will only get them to bug you more. A firm NO is the most effective. Tell them you do not mix business and family/friends.
This is a good point. This is a contributing factor why I didn't join "World Wide Dream Builders", a promotional-organisation/pyramid-structure for Amway products. For a social activity it isn't bad but it is more for people who are already comfortably middle/upper-middle class, not on the lower end of the income distribution. I bought a few products and found them to be "good quality at premium prices".
I was invited to one that was such a bare naked pyramid scheme they didnt even have a product to sell. They just asked people to pay $100 to be recruited, then recruit other people by taking $100 from them, who then recruit other people by collecting $100 from them. And this building was just buzzing with well dressed and charismatic people who were members. parking lot had a good few luxury cars too. People just love being scammed.
I hate MLMs with a passion, but you make some great points. One thing though, not every country has these "evolved" ones. Around here, the old "we will pressure you into burning all your social bridges with guilt trips and plain bullying" method is alive and well.
I bought LFVN stock, which is an MLM. Ive done a ton of research into MLMs and this video sums it up perfectly. MLMs are cheap business ideas for people to start out on. If they fail then they can decide to do a different business idea or to get a salary job. Great way to learn about yourself.
Main points I gathered 1) Some products are more expensive than normal while some are cheaper (like any other business) 2) People are just as likely to fail at other business as an MLM (or succeeding at anything at that high of a level. Think of all the kids who play peewee football vs make it to the NFL) 3) People who take MLMs as seriously as they take any other hobby/subscription are usually the ones who don't make alot of money. ( like all the people who want to lose weight at new years just to quit 2 weeks later) 4) Some overpromise and underdeliver (Valid, Some people are very pushy and it honestly annoys even me. I think it's very unprofessional) As someone in the industry (that's actually making money) I'd say this video is tough but somewhat fair if you are generalizing every single one as a whole. There are teams in different MLMs that help people succeed at a much higher rate but the individuals have to be willing to be mentored, and grow themselves and their skillsets first if they want to hit the big time. You can't help everyone and everyone honestly should not be part of your business as it will be a waste of time for the both of you. At the end of the day it's just another way of making income. If its your cup of tea cool. If not, cool as well. Do what works for you.
Thank you for this excellent video. Definitely deserves a “Like & Suscribe.” With MLM’s the devil is in the details. I had Amway pitched to me years ago and I declined. My wife participated in one for access to the product for herself, family and friends. The intent was not to become wealthy and it was never presented that way. The product was a consumable so we regularly needed replacement but it improved our quality of life and we would do it again.
Something interesting to add to the 'Loss Leader' thing: Most consoles are sold with a loss and Sony, Microsoft and Nintendo mostly rely on games' sales to make them that money back. But after a few years as the hardware becomes more outdated and cheaper they actually do turn profits.
I went to an Amway promotion event out of curiosity and it was nothing short of a cult following. I felt super alienated. The people there were chanting weird shizz about striking it rich and living the American dream and all that, but in reality they are just stay at home moms who are too bored and would like to meet other stay at home moms with the promise of making an extra buck doing this glorified sales job. The MLM also had a confusing sales to point conversion system and 'promotion' and 'ranking' to gamify the process, but somehow a lot of people were scarily enthusiastic about the system. To me, either they are delusional, or they are paid actors to make the event look like a huge success on paper with an enthusiastic crowd and big turn out. They really should look at their monthly paycheck to decide if joining an MLM is worth the time and effort compared to other jobs.
Up front (before passing 1:20): Yes! Definitely more defending the indefensible! There are so many elements of different markets that don't make sense and still exist and make some a living.
Mum’s Losing Money is the best way I’ve ever heard these scams described. They’re no better than Madoff or Ponzi himself just with a veneer of legitimacy by selling a product.
An objection to MLM’s I would add is that the actual business model, followed to its logical conclusion, is not sustainable. “Warm market” is not a consistently effective way to generate leads for a business... UNLESS you can find a way to get into the warm markets of your warm market and so on. Many financial advisors for example do this ethically, simply by asking their own warm market prospects(and everyone else) for referrals until they can build a network of clients large enough to sustain the business. The issue I have with MLM’s is that their model constitutes leeching off of the warm markets of other people under the pretenses of “training” them for their own successful business. In reality, the only way for them to succeed to exploit someone else the way that they’ve been exploited.
to "defend the indefensible" i will go a step in an alternative direction. there is a legitimate subset of products that just CANT be marketed in the same way that others can. its easy to market house cleaner or makeup. but marketing something that takes education and validation by peer reviews studies. thats not easy to do in a 30 second commercial.
6:40 You're missing the point. Yes, both ventures are highly risky, but it's not about risk, but rather risk return characteristics, which are guranteed to be worst if the go to strategy of people in this business is to saturate the market with more aspiring subservient businessmen.
That's fair, I suppose it ultimately comes down to what you are selling, is it a business opportunity, or a product. If it's a product you are absolutely right, you don't want competition, if it's a business opportunity obviously you do well by bringing people in. But of course we all know which one is worse.
@@HowMoneyWorks I don't understand. How does the thing you're selling effect whether it is worthwhile to sell, if its market is going to be saturated whichever way?
@@eliyasne9695 Not really. That's mostly how fiat currency systems work. Since its all just theoretical math and nothing really exists, you can get wacky results.
@@HowMoneyWorks The biggest issue John Oliver had with MLMs is not the business side, but the promotion and predatory side. They might not be outright scams, but targeting lower finance IQ population bands, which are lower income and usually jump at any opportunity to improve their lot in life should be considered as malicious intent. Another problem is that in the secret recruitement meetings, the product is not pushed as the main moneymaker, but the additional salesmen recruited by the prospect are, thus being a pyramid scheme. If the company was selling products to distributors to sell on commision, nobody would bat an eye. The main criticism is stems from their HEAVY emphasis on further recruitment of salesmen, perpetuating the pyramid scheme. Video was alright and explained what they do, but completely missed the mark, why those companies should be banned from operating. There is a reason why John Oliver made an extra Spanish version of the MLM show.
I have a family member who has done several MLMs. Despite claiming to make “over 30k a month” she had quit and started several new ones. It’s almost as is these businesses don’t actually make her a profit! And to this day she won’t show me her tax returns when I asked her to prove her wild profit claims.
In many cases, MLM companies can present themselves as legitimate business opportunities with rules in place to protect it's members. But when you interact with the MLM, its not through company officials but other independent members. If the members don't police each other, it opens the door for wide spread abuse. You will see things like coercing members to front load inventory to get key promotions or "training" conferences that are really closing events. I would love for you to cover how money actually works inside the MLM. One thing they never tell you to do when considering the "business opportunity" is calculate your monthly expenses, then calculate the effort required to cover those expenses each month. They push you into it with the promise of residual income without making sure you can survive long enough to get it or make sure you understand exactly what it takes to get those big checks.
i like this video, because u spoke some facts, if u r doing it as a business, then its much better than anything else, but lets just add something, some companies even teach you how to sell, which is basically what any business do, so in the end, it sounds good for someone who dont like to lose a lot of money in a business
I've been through several direct sales companies and sales pitches. I still have a sale contract active with one for now over 20 years. I barely broke even or made barely minimum wage in the years I actively pursued the sales. I agree if you are a very good salesman then this is an opportunity for you to consider. If you detest direct sales then run away. Remember the person pitching to you is selling you buying into the MLM more so than buying the product. And when you run into the customers of bad lying salesmen you will understand quickly why salesmen have such a bad rapport. Nobody believes the next guy that contradicts the first liar, nobody; because now you're both lying. And human nature cannot possibly be duped twice or believe the lie or believe the truth when you can prove it.
This series is fantastic, btw. There are so many "mlms-are-evil" videos whose main resource seems to be each other. This feels like you actually thought about it.
The worst thing about MLMs is that they pollute the job market with completely worthless "interviews" that you walk out of the moment you realize it's an MLM and not a real job.
I appreciate that he tried to give a more nuanced look at MLMs, but the video seems to miss some key points (some already raised elsewhere here): 1) The largest concern is that it seems almost impossible to make a significant profit by actually selling the products. You have to recruit other people who in turn recruit other people near exponentially. You then get a cut of all those peoples' "wholesale purchases". That is what primarily makes MLMs pyramid scheme-like. The video neglected to mention the tiered incentive structure. 2) If people really are just buying these packages to get a "wholesale" discount as some MLMs claim, that is NOT a "good thing" for potential MLM businesses. Rather than "giving you a built in market for the product" it would show that anyone who actually want these products can buy them for cheaper by going straight to the MLM company instead of you. 3) While a café is higher financial risk than an MLM, it is also higher financial reward. MLMs offer lower upfront costs, but for virtually no reward. 4) MLMs often specifically target people with very low incomes, sometimes in a predatory fashion. To such people, the aforementioned "lower upfront cost" can actually be a substantial risk, especially if their recruiter convinces them to buy the "wholesale" products in bulk. Remember the person recruiting them gets a cut of their "wholesale purchase" per #1 and has every incentive to get them to buy as much upfront as possible. 5) There is often a stark contrast between the MLM pitch when they are defending themselves and the MLM pitch when they are trying get people to sign up. In defending themselves, they might say people are just doing this for minor supplemental income. In the pitches, they might do nothing but flash their top 0.1% of earners (at the top of the proverbial pyramid) talking about how you too can have a sports car. In my personal opinion, MLMs are similar to pyramid schemes in the same way that payday loans are similar to loan sharking. Payday loans are basically a watered down legalized version of loan-sharking. It is at least *more* feasible to use payday loans without falling into a debt spiral and they can serve a legitimate purpose (e.g. one-time coverage of a financial emergency). In the same way, it is at least *more* feasible to get involved in an MLM without losing significant money and MLMs can serve a legitimate purpose (e.g. limited supplemental income if you are a good salesperson). However, at the end of the day, at their core, payday loans are about trapping desperate people in debt spirals and MLMs are about building pyramid schemes out of people looking to better their financial situations.
Amway has or at least had a 10 customer rule. You should not be able to be a wholesale customer and still access bonuses or Points Value. If you dont retail to customers your not in a credible business. If this is not enforced the credability is gone. Its a good opportunity for anyone to build a network and thus scale but the focus on business building and no retail is negative. This is what gives the bad impression. Love the video content.
A friend of mine got involved in a MLM and even invited me over to his place to have one of their salespeople hype it up to me. I thought it sounded dumb at the time. Like why would I buy overpriced consumer goods from my friend's MLM when I could get the same goods at King Soopers for less money and without having to wait for them to ship?
Not every MLM company is a scam. It depens on their marketing. Church by the way is an MLM business. So is drug dealing. Also, it's not necesarily about product. It may be about attention. I don't know about now, but 50 years ago it was mostly targeted on bored housewifes when they mostly stayed at home. They paid not so much for the product which often was not better that same product that you could buy 2 times cheaper from convenient store, but for time that sale representatives spent entertaining them.
how is church an mlm? you don't pay to participate, you get no money by recruiting others, and you don't like move up a hierarchy by bring more people in under you.
Here’s how I was brought into the mlm I joined: as a “small business owner”, you get a 1099, which allows you tons of flexibility during tax season. Just declare all your lunches as tax deductible and you can save far more during filing season than you ever would by buying the products. Still requires good tax knowledge, which I will admit most people lack in this day and age.
It takes tax knowledge, especially to file correctly. For example, if your MLM requires you to wear a blue blazer (I'm making this up) and you buy a regular blue blazer, you cannot write that off. However, if they require you to buy a branded blue blazer with the company logo on it, you can. I joined Mary Kay many years ago and one of the quirks of being a wearable product is you could write off your makeup as advertising. Problem is , many people don't get correct advice and file something wrong, which could lead to IRS issues.
This is a good info channel, I have had friends selling me their MLM schemes which I wasn’t convinced of but I didn’t know what exactly is wrong with it, just a gut feeling
I my country Tupperware is available in almost every major retailer store where you can buy it directly. However it also runs a mlm model. Maybe not a scam afterall like other mlms.
I actually got involved with Amway. There was a sign up bonus promised for 50 dollars and they never asked for any money. I signed up, got my 50 dollars, and then never showed up again
OT: a friend of my mum brought her to a Herbalife meeting once and she was kinda convinced to start with them. Fortunately I told her in time what this company is about
My mother was pressure to buy Mary Kay started box for $500. The whole market is highly predatory towards the gullible. Even the lady she bought it from has boxes stack of boxes collecting dust
Ah yes the business my friend tried to get me in, he has high hopes and started with 1500 $ ish investment which is also a loan and alot in this country, hope he does well in there. I personally hated the very concept of it but ya they were very good at persuading wont lie, also another reason i disliked them instantly is how they had encouraged the crowd to take loans and invest for a better future where money flies into their bank accounts tsk also a funny thing that happened was the "inspiration" speech took all day and this one girl prolly broke up with her bf who was consistently calling her to know her whereabouts, i could easily sense everyone in the room was desperate for money while i was more worried of catching covid cuz of how packed the room was.
As far as the company culture for MLMs some of them do behave like it's a cult and it can foster a toxic work environment. It's not to say that non-MLM companies don't have toxice work environments, but I do know that they don't behave like a cult either. It doesn't really help that NXIVM is actually a sex cult disguised as an MLM.
Worst issue with these kind of companies is the cult sensation you get when you get in. If they were honest and say "look this is hard, it takes time but after X amount of time you'll see profits" it would be different. But of course, not as many people would join if they present the business as realistic so instead they choose to tell you the big stories of success and how you'll make lots of money and suddenly everyone is your best friend and then you realize you're in a bizarre church applauding some mf who made 60 000 in the last year, rented an expensive car and bought some tight jeans saying "You can do it too" but actually teaches nothing and you still down by thousands.
I cannot agree that it is good for anyone to sign up. Anyone that wants to join an MLM is likely already not doing well. It is like recommending they buy lottery tickets. The chance of success for so many reasons is so low.
Confession/Testimony here: I was in an MLM for a while (2 years) and made a few $1000s during the time. Definitely spent more than what I earned, though, which is the most significant factor to consider. With that said, my upline and downline were unique; they were strict about who could sign up. They are more selective and a lot more realistic about expectations, such as taking years for it to work and multiple people quitting. I was at a lonely time, and this seemed like the dumbest thing in the world at first to me, but they provided companionship that no one else did at the time. Unfortunately, it came at a hefty price, but I don't regret it. I learned a lot about myself, read books, listened to podcasts, and challenged my negativity. It always bothered me having to recruit people who can only succeed if they recruit more people who recruit more people. Friends and family also laughed at me, and I am still trying to recover those relationships. It became a habit to attend these conferences, which eventually turned into me going to separate, independent seminars on things I personally wanted to work on, like relationship seminars and marriage seminars (I was 21, single, and with no women on my mind at the time). I'm grateful for learning to attend those overly expensive conferences because it led to me finding private seminars, which grew me into the man I am with my girlfriend. Overall, while the business aspect was a no for me, the growth was pretty legit after giving it my all. I now have a high-paying job in engineering/consulting. My gorgeous NC girlfriend is moving with me to Chicago with zero student loans, credit cards, or car debt, and maybe buying a condo in December (the market is nasty right now). Long story short, MLMs are still MLM, but some are run way better than others and emphasize the people and growth mentality. The business aspect is not for me, but I am about growth. Unfortunately, this is true for 1 every 1000 people. This is why there is such a bad rep. I learned a lot during my time, and it is time to move on. It was a risk I took, and glad I did. Now to move on to other endeavors like real estate, stocks, and investing in my 401k
Gonna be honest, I was kinda hoping this video would dive into the technical side. Like what makes them legally classifiable as a pyramid scheme. That's what I got from the title anyway
The main difference legally between Pyramid Schemes and MLMs is that in an MLM, bonuses are paid based on sales of products by either you or someone you have recruited. Pyramid Schemes usually have no product and the bonuses are paid based on how many people are recruited.
Joining a MLM company might worth it and bring you some money IF two questions get answered: 1 - Is their product/service something of high demand with a solid quality? 2 - Are you very good at sales? If the answer for both is YES, then go ahead, but don't invite me 'cuz i'm hard at persuasion.
My big issue is that "starting a business" shouldn't involve exploiting other people, and MLMs are based on doing just that. Sure, you may get your "business," and if you're smart, you may even avoid most of the pitfalls and make actual money. But because recruitment is so heavily incentivized, making any money without recruiting is, as you noted, nearly impossible. That means you're going to have to recruit others into a losing proposition if you want to be a winner. I don't think you can defend that.
So who are the people that come up with this stuff? What's the typical background of those who initiate the scheme, and how do they get others on board? Those details interest me, as someone from a relatively whitebread suburban background, I don't think I'd ever wake up one day and think "Time to draw up the plans for a pyrimid scheme!"
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Beware of the phone call from that “friend” you haven’t seen in years and they suddenly “want to catch up”. Usually, “a fantastic business opportunity” is close behind.
Business opportunity are never fantastic.
Vacation can be fantastic. A party can be fantastic. Real business opportunity, even the best ones, are work. Even if it makes you rich, like co-owning a high-value mineral mine, it is not "fantastic."
Yup! Went to meet a girl and it turned into a seminar
One of the reasons my parents divorced was because of an MLM having its hooks in my dad. He spent a lot of money on the products, going to events, and buying educational/inspirational audiotapes. I don't think he will ever let it go.
Damn this is sad
Having a cranky dad like that is funny
Did he have any success though?
The biggest loss from MLM is your credibility of stature with everyone you know
Yes, and probably well-deserved. Someone who can't see through the MLM company probably don't deserve much trust anyway.
And the damaged and forever lost relationships.
Please don't dislike the video for defending a scummy industry, if anything dislike me for role-playing as a defense attorney.
They don't matter bro. I dislike videos so I can keep track of if I watched it in past. I remove from watch history to not get recommendations.
@@rahulprasad2318 I feel like you also toss trash out of your car window on the freeway.
"The truth is a static." Meaning, it doesn't change from one end of society to the other. I like and liked the video. I am honestly grateful for your efforts to educate me.
Still, bro, I'm still picking up my teeth from the number of sheer stupid decisions I took joining MLMs to "help" my friends and family . And I did the insurance thing; I'm still groaning for the knee to my nuts. >ouch<
Please keep up the good work. I'd rather you kick my head than some unethical tramp selling me the Brooklyn Bridge.
As long as you understand society would be a little better without them and that lives have be damaged or sometimes destroyed by MLMs
I think your take was completely accurate. I've been the target of MLM recruitment. I lost no money because I know very well that I'm not a salesman, nor do I have any interest in managing a team of salesman.
Is joining a MLM company really “starting a business”? Since you don’t set prices, determine what products to sell, or do any back end admin work, it seems more like a 100% commission salesperson
to be fair, that's what he says at the end
@@marctreal If you are a part of a franchise the only thing you do out of those is backend admin work, and that to a degree
So it isn't starting a business, you are employed as an independent contractor (1099) who can only sell the products of the company you signed with--basically stuck an exclusive covenant that would prevent a person from actually building a business since you can only have only 1 client (the mlm you signed with) and also their contracts specifically indicate that engaging in a contract with them does not qualify as a franchise agreement. They have no responsibility and no liability. MLMs survive because the primary customers are the market partners themselves since they have to buy their own inventory and often have monthly fees to stay as an active market partner in addition to personal volume requirements (irrespective of personal sales that a market partner may be required to buy themselves ) to stay active.
@@SB-my8fi ...and the moment when revenue starts to come more from their "independent empowered contractor omg yas queen" whatevers joining instead of sales, you've reached the magical blurry line to the land of pyramid schemes and the government is finally allowed to let shit get real :)
Exactly. Always Marco here on YT explains this in detail.
It’s not “starting your own business” when someone else controls your product and distribution. It’s merely a sales job.
Is it a job if you can't get fired and decide when to work?
A "job" in which you don't get any money if you don't sign up anyone or sell anything, despite all the unpaid work you do for this. An actual sales job gives you money at the end of the month at least.
The biggest issue John Oliver had with MLMs is not the business side, but the promotion and predatory side. They might not be outright scams, but targeting lower finance IQ population bands, which are lower income and usually jump at any opportunity to improve their lot in life should be considered as malicious intent.
Another problem is that in the secret recruitement meetings, the product is not pushed as the main moneymaker, but the additional salesmen recruited by the prospect are, thus being a pyramid scheme.
If the company was selling products to distributors to sell on commision, nobody would bat an eye. The main criticism is stems from their HEAVY emphasis on further recruitment of salesmen, perpetuating the pyramid scheme.
Video was alright and explained what they do, but completely missed the mark, why those companies should be banned from operating. There is a reason why John Oliver made an extra Spanish version of the MLM show.
Also a lot of them operate and treat their members like they are a cult.
I assume you’re touching on the fact it targets low income immigrant familys.
@@IL_Bgentyl does not have to be immigrants, but in the John Oliver segment about Herbalife, then it's spot on
Totally agree. If these businesses changed their model to not provide multi-level "trickle-up" commissions then I don't think most people would have a problem with them. But every pitch I've heard from someone buying into an MLM scheme has been 90% about how much money you can make and 10% about the product.
@@Spectification completely agree it’s not exclusive but it’s easier. I don’t recall the businesses of hand but insurance and other MLM will have primarily Muslim or whatever respective religion ethnicity primarily.
Here's hoping your channel grows like an MLM company!
Unsustainable and at the expense of the majority of people involved? I sure hope not!
Thanks though :)
HAH ! GOOD ONE.
@@HowMoneyWorks How can I get in touch with you?
@@cakash , is it about his vehicle's extended warranty? Or do you have an amazing opportunity to generate wealth that you're gonna be nice enough to let him be a part of?
Share it with your five closest friends!
I think another aspect of the success that MLMs have had in generating profit is that people have gotten more desperate over the years. The economic landscape hasn’t always been the healthiest and if people are desperate they’ll try anything. Even if they know deep down that it won’t pan out.
I know someone who did very well working with MLM. It didn't start out as a full time job, but it worked well with her fitness career, and ended up being a very substantial income for her, along with her other income.
I bought her products sometimes when I saw her at the gym. I thought they were good. I don't think that sort of thing would work well for most people, but she did very well for herself, so good for her.
Calling it even an opportunity to "start a business" is a gross misrepresentation of what working for an MLM really is. You're not working for yourself no matter what they tell you, you're under their roof and the house always wins.
True. They are salespeople for the MLM company. Essentially an unpaid worker for the profit of the MLM company. That is NOT "your own business" in any way shape or form.
@@culturecanvas777 Sounds like slavery or unpaid internship actually
You make some great points. For me, the big downside (and the reason I don't like these companies in general) is the way they weaponize social contacts like friends and family. I don't hate sales or the products, but I do hate it when a company convinces people I'm on good terms with to become demanding jerks who try to pressure everyone to buy. That hard sell, directed at people who are not looking to buy and are targeted because a friend got sucked in, more than any economic factor, is a big part of why people don't like these companies.
I like the "Defending the undefendeble" concept, but if I may give a suggestion:
Make the name of the series a bit more front-and-center. The title of the video makes it sound like one of those other thousand videos complaining about MLM's, whilst you do have something new and more interesting to tell.
Yeah you are probably right. I am a bit of a noob when it comes to getting clicks on TH-cam, so I will be sure to try it next time.
@@HowMoneyWorks agree with the other guy, and your content is so much better than the subs/views you get now so keep plugging and you'll grow quick
Thanks my friend, hopefully you are right. Even still I am having a lot of fun making these videos anyway so I don't really mind.
Hm. For what it's worth, the title "Defending the Undefendable" is what grabbed me. I'd consider polling before changing the series name.
@@anthonypillarella same, but on the other hand TH-cam algorithm works in a stupid way, you have to use the words used in the most popular videos to make it suggested to more people.
At first glance, I thought you were going to tell how these companies defend themselves THEN say how they're all just wrong and whack. After watching the video though, seems good enough. It doesn't give you a wow factor leaving the video but it gives you a whole new perspective on how these guys operate. Thanks for that!
BTW, hope you get more likes and subs. You definitely have so much potential! I had a hard time searching for this video using TH-cam's own search bar. I had to copy the link from discord to get here :/
Thanks for the feedback.
I hope so too but if not it's good to know that the people that do watch are enjoying :)
@@HowMoneyWorks we want you to grow! Still rooting for you! I'll continue to watch your videos don't worry! Cheers!
Edit/Follow up: still waiting for that hedge fund video cause that'll be spicy and very interesting
And they forget to say, you have to be entrepreneur to sell things legally. You have to pay taxes for sales.
Great video. My relative did drag me into one of these MLM recruiting meetings. It feels like a cult to an outsider but the people are aware of their potential for making money. it feels most are joining these MLM's to be a part of something much like a church group.
In my experience with MLMs, the common problem was that they misrepresented the opportunity to entice people to join. The group I was with wanted to recruit as many people as possible but then only backed up and supported the superstars who are selling the most product. If one did not move enough product soon enough, they found themselves out in the cold. Likewise, just as is happening with some franchise opportunities, MLMs do not guarantee a market share. It is very common define your area oversaturated with people trying to push the same product, making it very difficult to be successful. Also, if you are in an organization that requires licensing, you may be pushed to obtain more and more licenses so that you can sell more and more product even if you were only interested in the opportunity on a part-time basis. Finally, certain business advantages, such as customized literature, software, and the ability to advertise, are only available to higher ranking members of the MLM. This often means obtaining a physical office of your own considerable expense or buying these items through the MLM at significant cost.
I finally joined! idk why I haven't sooner, I watch the eff out this channel and rewatch it over and over every other month! Great content bro, keep it coming
Thank you!
MLMs are literally Boomer economics in practice.
Now this is funny
Boomers: We'll just borrow money to expand the economy so we can all have great jobs, cheap houses, tons of savings.
Millenials: Ok, but how do you pay the money back
Boomers: That's what you guys are for. We'll all be rich and retired or dead by then
So millenials are basically at the bottom of the MLM. Which means the solution is to sign up the Gen-zers and keep the cycle going, hoping to not be the ones left when it comes crashing down.
@@graham1034 "the ones left when it comes crashing down" hahaha, funny... like there'll be anyone left
Kicking that can down to the next generation! Cuz who cares! Will be dead by then!
@@pdxpleb7917 truly the American dream
I found your Eve videos a few weeks ago and I'm really glad I subscribed. Great stuff!
I’m glad :) working hard to provide you with more content
You aren't starting a business though. It's someone else's business. You're just a worker. You don't own anything.
disagree.... your business might be based on someone elses product... Amazon much?.... you dont need to create it to sell it with profit, you are mediator....
The IRS would say otherwise. All independent contractors are business owners. They own the independent contract
Basically,They are giving people a big responsability that compromises their finances for the promise of financual salvation. And given the approuched are mostly people with low inteligence( or skills and knowledge) in finances and economics, it becomes predatory, especially when they drag them with sweet-talk and their meetings to assure/reinforce the loyalty and faith in their activity.(the effectiveness depends on how economically and mentally vulnerable you are as well how much knowledge you have of finances and economics).
With several, you can sell that contract to another person. However, this isn’t often done.
@@Zoltan1251 Many MLMs will still control what you can sell and set a minimum of what you should buy.
The thing that baffles me about MLMs and the legality of Pyramid Schemes was never that "some MLMs are legitimate companies", but that the only difference between both is what happens in the recruitment. Both are structured the same, both work in the EXACT SAME MANNER, with the only difference being how people work in it and their mentality. These are not described in any law and isnt regulated by any agency, unlike what defines a company to be legal or illegal, like compliance to federal and state regulations regarding salary, contract, worker safety and job security.
If the only difference between crime and business is verbal, then might as well not support either of those! This is just how I see this kind of thing. Great video nonetheless!
Just a quick response to this topic, with caution about the idea of MLMs and also the current economic situation we might be heading into.
There are at least 3 key areas I find to be most important in understanding what this industry is about, especially when it comes to the nutrition side of things, like supplements. For this, I'll use NuSkin and USANA, and for good reason. Firstly, the price.
Of course, when you compare theirs to store-bought brands in the market, some will be comparable, while others feel a little more overpriced than necessary. One response I've heard for this has got to do with the current model of distribution, especially with the convenience of e-commerce. Where once you needed to have the stock to actually do any sales at all, you're now literally doing it like any online store, ie. you are the customers' direct word of mouth (marketing). The business handles all the logistics, while you handle the information, hence the lack of marketing or middleman which they can reinvest instead into the products.
The other point of the business is how the products are recommended, and this is one of the reasons why many people shirk from this business entirely. Ie. people. We tend to see less of this problem with traditional marketing because of ads, but MLMs depend entirely on the network model, so unscrupulous distributors tend to give the industry a bad rep, especially when they can't really give you much confidence about the products. Here's where USANA and NuSkin seems to do better, if you check " pdr.net ". pdr.net (Physician's Desk Reference) is apparently the most reliable reference doctors have for every known prescription in the market. You can check any drug prescribed to you by your doctor on that site, it'll probably be there. So how does USANA and NuSkin stack up? I've checked (just type USANA or Pharmanex, the lab for NuSkin in the search bar) and both of theirs with full details are available, but not AmWay's. I've heard pretty reputable doctors here too have done their due diligence, and they're as equally impressed.
Of course, the downside is that it takes some confidence to actually do well or successfully in this or any business. Besides the price point, the product's legitimacy and people, it takes a little market savvy to know if you're a good fit for the industry, as any business goes, ie. "niche". A large number of people will not be the right fit as customers, nor will see this industry like they do others, if they understand marketing at all. So of course it will always be an uphill battle for someone new to actually make headway in the beginning, even with the few points I made previously.
But I think this industry will eventually become as big as e-comm (if they haven't already) when things start falling into place, unless the economy unexpectedly collapses under our feet.
“And yes.. there are MLM’s that sell life insurance policy’s.”
*Looking at you, Primerica*
I cant believe how hard I fell for, and how many other people fall for them
@@thekingofbeez3192 Years ago, after I finished school and was desperately looking for a job in a recession, I was approached by one of their recruiters who saw my resume on a job board. I thought that it was an IT job (Nerds on Wheels type stuff) and because the word "insurance" was not mentioned once during the initial meeting. It's only when I got to the group interview that I realized that I was recruited for an MLM. I actually considered joining for a few seconds before I slapped myself silly and drove home. There was no way I could make any money from this as I did not have a network of family members and friends I could sell to and I have a pathological fear of cold selling.
@@przemekkozlowski7835 Good man 👍
Arnt all life insurance companies companies basically MLMs? Ive worked at a couple.
My best friend got sucked into Primerica. He calls himself an entrepreneur and financial guru. I feel sad for him because he is getting screwed and doesnt see it.
I believe when they say "they're mathematically destined to fail" its referring to individuals that join these MLM have really low chances of success.
Wow, details and actual logical arguments and responses?! Keep it up!
Glad you enjoyed watching :) It's always so great to hear that people are enjoying my videos.
mlm is basically like working in sales but with no base salary and thus all the risks being offloaded on to you
I loved the, "... small loan of a million dollars." Statement! Awesome!
This needs to become a series. Absolutely sharp and informative
So far I've watched three of your videos, and it seems like one of these rare occasions where YT has recommended me good content...
Truth
the fact that you played devil's advocate on MLMs and STILL came up with nothing even thoroughly convincing shows how predatory and shady these businesses are
I think his approach was "it's not as good as the members say, but the criticisms are also not fair"
I had experience as an Amway member. I would never sign up again in the hopes of making money, but the Amway products were the type I would like to use again. The energy drinks were tasty.
Yeah man, XS is good shit. It was a good learning experience overall
100% products were actually good. Still overpriced, but XS was SOOO good and healthy. Imagine eating a burger and cracking an XS open jeez man
MLM's are the perfect business to get into to learn how not to be fooled by shady business practices...
adding a comment now to support a new series! love to see it, man😤
I couldn't decide whether I loved or hated the video format of being devil's advocate for terrible business models. Great video! Can't wait to love/hate the hedge funds video.
Don't like or hate - just observe and be neutral.
You can't see a reflection in a stormy water
I enjoyed this video but the advice to just buy whatever your long lost friend wants to sell you will only get them to bug you more. A firm NO is the most effective. Tell them you do not mix business and family/friends.
This is a good point. This is a contributing factor why I didn't join "World Wide Dream Builders", a promotional-organisation/pyramid-structure for Amway products. For a social activity it isn't bad but it is more for people who are already comfortably middle/upper-middle class, not on the lower end of the income distribution. I bought a few products and found them to be "good quality at premium prices".
I was invited to one that was such a bare naked pyramid scheme they didnt even have a product to sell. They just asked people to pay $100 to be recruited, then recruit other people by taking $100 from them, who then recruit other people by collecting $100 from them. And this building was just buzzing with well dressed and charismatic people who were members. parking lot had a good few luxury cars too. People just love being scammed.
I hate MLMs with a passion, but you make some great points.
One thing though, not every country has these "evolved" ones. Around here, the old "we will pressure you into burning all your social bridges with guilt trips and plain bullying" method is alive and well.
You're doing a great job talking me into starting an MLM company.
I bought LFVN stock, which is an MLM. Ive done a ton of research into MLMs and this video sums it up perfectly. MLMs are cheap business ideas for people to start out on. If they fail then they can decide to do a different business idea or to get a salary job. Great way to learn about yourself.
The difference is, there is a product. That is the only thing making them legal.
I have relative who is amway agent. They use it for buying fertilizer.
These were some impressive, olympics-level mental gymnastics, not gonna lie.
Main points I gathered
1) Some products are more expensive than normal while some are cheaper (like any other business)
2) People are just as likely to fail at other business as an MLM (or succeeding at anything at that high of a level. Think of all the kids who play peewee football vs make it to the NFL)
3) People who take MLMs as seriously as they take any other hobby/subscription are usually the ones who don't make alot of money. ( like all the people who want to lose weight at new years just to quit 2 weeks later)
4) Some overpromise and underdeliver (Valid, Some people are very pushy and it honestly annoys even me. I think it's very unprofessional)
As someone in the industry (that's actually making money) I'd say this video is tough but somewhat fair if you are generalizing every single one as a whole. There are teams in different MLMs that help people succeed at a much higher rate but the individuals have to be willing to be mentored, and grow themselves and their skillsets first if they want to hit the big time. You can't help everyone and everyone honestly should not be part of your business as it will be a waste of time for the both of you.
At the end of the day it's just another way of making income. If its your cup of tea cool. If not, cool as well. Do what works for you.
Thank you for this excellent video. Definitely deserves a “Like & Suscribe.”
With MLM’s the devil is in the details. I had Amway pitched to me years ago and I declined. My wife participated in one for access to the product for herself, family and friends. The intent was not to become wealthy and it was never presented that way. The product was a consumable so we regularly needed replacement but it improved our quality of life and we would do it again.
Something interesting to add to the 'Loss Leader' thing: Most consoles are sold with a loss and Sony, Microsoft and Nintendo mostly rely on games' sales to make them that money back.
But after a few years as the hardware becomes more outdated and cheaper they actually do turn profits.
I went to an Amway promotion event out of curiosity and it was nothing short of a cult following. I felt super alienated. The people there were chanting weird shizz about striking it rich and living the American dream and all that, but in reality they are just stay at home moms who are too bored and would like to meet other stay at home moms with the promise of making an extra buck doing this glorified sales job.
The MLM also had a confusing sales to point conversion system and 'promotion' and 'ranking' to gamify the process, but somehow a lot of people were scarily enthusiastic about the system. To me, either they are delusional, or they are paid actors to make the event look like a huge success on paper with an enthusiastic crowd and big turn out. They really should look at their monthly paycheck to decide if joining an MLM is worth the time and effort compared to other jobs.
Up front (before passing 1:20):
Yes! Definitely more defending the indefensible!
There are so many elements of different markets that don't make sense and still exist and make some a living.
Mum’s Losing Money is the best way I’ve ever heard these scams described. They’re no better than Madoff or Ponzi himself just with a veneer of legitimacy by selling a product.
An objection to MLM’s I would add is that the actual business model, followed to its logical conclusion, is not sustainable. “Warm market” is not a consistently effective way to generate leads for a business... UNLESS you can find a way to get into the warm markets of your warm market and so on. Many financial advisors for example do this ethically, simply by asking their own warm market prospects(and everyone else) for referrals until they can build a network of clients large enough to sustain the business. The issue I have with MLM’s is that their model constitutes leeching off of the warm markets of other people under the pretenses of “training” them for their own successful business. In reality, the only way for them to succeed to exploit someone else the way that they’ve been exploited.
I don’t like how many MLMs convince folks into monetizing their families. Those people and their families are the actual product.
This was a great video. MLM isn’t necessarily a scam, it’s like a private franchise.
to "defend the indefensible" i will go a step in an alternative direction. there is a legitimate subset of products that just CANT be marketed in the same way that others can. its easy to market house cleaner or makeup. but marketing something that takes education and validation by peer reviews studies. thats not easy to do in a 30 second commercial.
6:40
You're missing the point.
Yes, both ventures are highly risky, but it's not about risk, but rather risk return characteristics, which are guranteed to be worst if the go to strategy of people in this business is to saturate the market with more aspiring subservient businessmen.
That's fair, I suppose it ultimately comes down to what you are selling, is it a business opportunity, or a product. If it's a product you are absolutely right, you don't want competition, if it's a business opportunity obviously you do well by bringing people in. But of course we all know which one is worse.
@@HowMoneyWorks
I don't understand.
How does the thing you're selling effect whether it is worthwhile to sell, if its market is going to be saturated whichever way?
@@eliyasne9695 Not really. That's mostly how fiat currency systems work. Since its all just theoretical math and nothing really exists, you can get wacky results.
@@HowMoneyWorks The biggest issue John Oliver had with MLMs is not the business side, but the promotion and predatory side. They might not be outright scams, but targeting lower finance IQ population bands, which are lower income and usually jump at any opportunity to improve their lot in life should be considered as malicious intent.
Another problem is that in the secret recruitement meetings, the product is not pushed as the main moneymaker, but the additional salesmen recruited by the prospect are, thus being a pyramid scheme.
If the company was selling products to distributors to sell on commision, nobody would bat an eye. The main criticism is stems from their HEAVY emphasis on further recruitment of salesmen, perpetuating the pyramid scheme.
Video was alright and explained what they do, but completely missed the mark, why those companies should be banned from operating. There is a reason why John Oliver made an extra Spanish version of the MLM show.
I'm glad this channel is taking off.
I have a family member who has done several MLMs. Despite claiming to make “over 30k a month” she had quit and started several new ones. It’s almost as is these businesses don’t actually make her a profit! And to this day she won’t show me her tax returns when I asked her to prove her wild profit claims.
In many cases, MLM companies can present themselves as legitimate business opportunities with rules in place to protect it's members. But when you interact with the MLM, its not through company officials but other independent members. If the members don't police each other, it opens the door for wide spread abuse. You will see things like coercing members to front load inventory to get key promotions or "training" conferences that are really closing events. I would love for you to cover how money actually works inside the MLM.
One thing they never tell you to do when considering the "business opportunity" is calculate your monthly expenses, then calculate the effort required to cover those expenses each month. They push you into it with the promise of residual income without making sure you can survive long enough to get it or make sure you understand exactly what it takes to get those big checks.
i like this video, because u spoke some facts, if u r doing it as a business, then its much better than anything else, but lets just add something, some companies even teach you how to sell, which is basically what any business do, so in the end, it sounds good for someone who dont like to lose a lot of money in a business
Interesting video. Really like the "middle of the road" approach (I mean, I guess that's exactly what the title of this series suggests).
I've been through several direct sales companies and sales pitches. I still have a sale contract active with one for now over 20 years. I barely broke even or made barely minimum wage in the years I actively pursued the sales. I agree if you are a very good salesman then this is an opportunity for you to consider. If you detest direct sales then run away. Remember the person pitching to you is selling you buying into the MLM more so than buying the product. And when you run into the customers of bad lying salesmen you will understand quickly why salesmen have such a bad rapport. Nobody believes the next guy that contradicts the first liar, nobody; because now you're both lying. And human nature cannot possibly be duped twice or believe the lie or believe the truth when you can prove it.
Thank you for probably the most fair and accurate assessment of the multi level marketing industry.
Fantastic Video - would love to see more. Would like to hear you defend conglomerates, certain life insurance policies and timeshares.
This series is fantastic, btw. There are so many "mlms-are-evil" videos whose main resource seems to be each other. This feels like you actually thought about it.
The worst thing about MLMs is that they pollute the job market with completely worthless "interviews" that you walk out of the moment you realize it's an MLM and not a real job.
I appreciate that he tried to give a more nuanced look at MLMs, but the video seems to miss some key points (some already raised elsewhere here):
1) The largest concern is that it seems almost impossible to make a significant profit by actually selling the products. You have to recruit other people who in turn recruit other people near exponentially. You then get a cut of all those peoples' "wholesale purchases". That is what primarily makes MLMs pyramid scheme-like. The video neglected to mention the tiered incentive structure.
2) If people really are just buying these packages to get a "wholesale" discount as some MLMs claim, that is NOT a "good thing" for potential MLM businesses. Rather than "giving you a built in market for the product" it would show that anyone who actually want these products can buy them for cheaper by going straight to the MLM company instead of you.
3) While a café is higher financial risk than an MLM, it is also higher financial reward. MLMs offer lower upfront costs, but for virtually no reward.
4) MLMs often specifically target people with very low incomes, sometimes in a predatory fashion. To such people, the aforementioned "lower upfront cost" can actually be a substantial risk, especially if their recruiter convinces them to buy the "wholesale" products in bulk. Remember the person recruiting them gets a cut of their "wholesale purchase" per #1 and has every incentive to get them to buy as much upfront as possible.
5) There is often a stark contrast between the MLM pitch when they are defending themselves and the MLM pitch when they are trying get people to sign up. In defending themselves, they might say people are just doing this for minor supplemental income. In the pitches, they might do nothing but flash their top 0.1% of earners (at the top of the proverbial pyramid) talking about how you too can have a sports car.
In my personal opinion, MLMs are similar to pyramid schemes in the same way that payday loans are similar to loan sharking. Payday loans are basically a watered down legalized version of loan-sharking. It is at least *more* feasible to use payday loans without falling into a debt spiral and they can serve a legitimate purpose (e.g. one-time coverage of a financial emergency).
In the same way, it is at least *more* feasible to get involved in an MLM without losing significant money and MLMs can serve a legitimate purpose (e.g. limited supplemental income if you are a good salesperson).
However, at the end of the day, at their core, payday loans are about trapping desperate people in debt spirals and MLMs are about building pyramid schemes out of people looking to better their financial situations.
Amway has or at least had a 10 customer rule. You should not be able to be a wholesale customer and still access bonuses or Points Value. If you dont retail to customers your not in a credible business. If this is not enforced the credability is gone. Its a good opportunity for anyone to build a network and thus scale but the focus on business building and no retail is negative. This is what gives the bad impression. Love the video content.
A friend of mine got involved in a MLM and even invited me over to his place to have one of their salespeople hype it up to me. I thought it sounded dumb at the time. Like why would I buy overpriced consumer goods from my friend's MLM when I could get the same goods at King Soopers for less money and without having to wait for them to ship?
Not every MLM company is a scam. It depens on their marketing. Church by the way is an MLM business. So is drug dealing. Also, it's not necesarily about product. It may be about attention. I don't know about now, but 50 years ago it was mostly targeted on bored housewifes when they mostly stayed at home. They paid not so much for the product which often was not better that same product that you could buy 2 times cheaper from convenient store, but for time that sale representatives spent entertaining them.
how is church an mlm? you don't pay to participate, you get no money by recruiting others, and you don't like move up a hierarchy by bring more people in under you.
Yeah, Idt you understand how a MLM works…..
@@Noschool100 i think that's church of scientology
Your channel is catching traction and thank you for the perspective
searching and searching for good vids on mlm .... i found something! thanks! subscribed
This is imo the best MLM video I've ever seen. Love it
I would absolutely love this series! Thank for giving such an insight.
Here’s how I was brought into the mlm I joined: as a “small business owner”, you get a 1099, which allows you tons of flexibility during tax season. Just declare all your lunches as tax deductible and you can save far more during filing season than you ever would by buying the products. Still requires good tax knowledge, which I will admit most people lack in this day and age.
It takes tax knowledge, especially to file correctly. For example, if your MLM requires you to wear a blue blazer (I'm making this up) and you buy a regular blue blazer, you cannot write that off. However, if they require you to buy a branded blue blazer with the company logo on it, you can. I joined Mary Kay many years ago and one of the quirks of being a wearable product is you could write off your makeup as advertising. Problem is , many people don't get correct advice and file something wrong, which could lead to IRS issues.
This is a good info channel, I have had friends selling me their MLM schemes which I wasn’t convinced of but I didn’t know what exactly is wrong with it, just a gut feeling
I my country Tupperware is available in almost every major retailer store where you can buy it directly.
However it also runs a mlm model.
Maybe not a scam afterall like other mlms.
I actually got involved with Amway. There was a sign up bonus promised for 50 dollars and they never asked for any money. I signed up, got my 50 dollars, and then never showed up again
If mlms remove the recruitment aspect, I would probably not bet an eye at them as most of the scammy part of mlms is eliminated
OT: a friend of my mum brought her to a Herbalife meeting once and she was kinda convinced to start with them. Fortunately I told her in time what this company is about
Really well made video, shocked you don't have more subscribers. Hope you succeed!
Lol, a Beachbody ad came up during this video! 🤣🤣🤣
One aspect you did not mention is that MLMs are fundamentally flawed in that they inherently encourage you to recruit your competition.
The 200+ dislikes are probably the ones who run or "made money" in mlm
My mother was pressure to buy Mary Kay started box for $500. The whole market is highly predatory towards the gullible. Even the lady she bought it from has boxes stack of boxes collecting dust
2:32 I choked at that part.... Watching others happen to them, then later to myself. Very common
Ah yes the business my friend tried to get me in, he has high hopes and started with 1500 $ ish investment which is also a loan and alot in this country, hope he does well in there. I personally hated the very concept of it but ya they were very good at persuading wont lie, also another reason i disliked them instantly is how they had encouraged the crowd to take loans and invest for a better future where money flies into their bank accounts tsk also a funny thing that happened was the "inspiration" speech took all day and this one girl prolly broke up with her bf who was consistently calling her to know her whereabouts, i could easily sense everyone in the room was desperate for money while i was more worried of catching covid cuz of how packed the room was.
It's a bad sign if management only ever meets you at Starbucks or in rented office space on the weekends =)
As far as the company culture for MLMs some of them do behave like it's a cult and it can foster a toxic work environment. It's not to say that non-MLM companies don't have toxice work environments, but I do know that they don't behave like a cult either. It doesn't really help that NXIVM is actually a sex cult disguised as an MLM.
Worst issue with these kind of companies is the cult sensation you get when you get in. If they were honest and say "look this is hard, it takes time but after X amount of time you'll see profits" it would be different.
But of course, not as many people would join if they present the business as realistic so instead they choose to tell you the big stories of success and how you'll make lots of money and suddenly everyone is your best friend and then you realize you're in a bizarre church applauding some mf who made 60 000 in the last year, rented an expensive car and bought some tight jeans saying "You can do it too" but actually teaches nothing and you still down by thousands.
I cannot agree that it is good for anyone to sign up. Anyone that wants to join an MLM is likely already not doing well. It is like recommending they buy lottery tickets. The chance of success for so many reasons is so low.
This is the third time I notice you say this in your videos and it is time. The word is "adaptation" not "adaption". Ty
Confession/Testimony here:
I was in an MLM for a while (2 years) and made a few $1000s during the time. Definitely spent more than what I earned, though, which is the most significant factor to consider. With that said, my upline and downline were unique; they were strict about who could sign up. They are more selective and a lot more realistic about expectations, such as taking years for it to work and multiple people quitting.
I was at a lonely time, and this seemed like the dumbest thing in the world at first to me, but they provided companionship that no one else did at the time. Unfortunately, it came at a hefty price, but I don't regret it. I learned a lot about myself, read books, listened to podcasts, and challenged my negativity. It always bothered me having to recruit people who can only succeed if they recruit more people who recruit more people. Friends and family also laughed at me, and I am still trying to recover those relationships.
It became a habit to attend these conferences, which eventually turned into me going to separate, independent seminars on things I personally wanted to work on, like relationship seminars and marriage seminars (I was 21, single, and with no women on my mind at the time). I'm grateful for learning to attend those overly expensive conferences because it led to me finding private seminars, which grew me into the man I am with my girlfriend.
Overall, while the business aspect was a no for me, the growth was pretty legit after giving it my all. I now have a high-paying job in engineering/consulting. My gorgeous NC girlfriend is moving with me to Chicago with zero student loans, credit cards, or car debt, and maybe buying a condo in December (the market is nasty right now).
Long story short, MLMs are still MLM, but some are run way better than others and emphasize the people and growth mentality. The business aspect is not for me, but I am about growth. Unfortunately, this is true for 1 every 1000 people. This is why there is such a bad rep. I learned a lot during my time, and it is time to move on. It was a risk I took, and glad I did. Now to move on to other endeavors like real estate, stocks, and investing in my 401k
Gonna be honest, I was kinda hoping this video would dive into the technical side. Like what makes them legally classifiable as a pyramid scheme. That's what I got from the title anyway
The main difference legally between Pyramid Schemes and MLMs is that in an MLM, bonuses are paid based on sales of products by either you or someone you have recruited. Pyramid Schemes usually have no product and the bonuses are paid based on how many people are recruited.
Joining a MLM company might worth it and bring you some money IF two questions get answered:
1 - Is their product/service something of high demand with a solid quality?
2 - Are you very good at sales?
If the answer for both is YES, then go ahead, but don't invite me 'cuz i'm hard at persuasion.
My big issue is that "starting a business" shouldn't involve exploiting other people, and MLMs are based on doing just that. Sure, you may get your "business," and if you're smart, you may even avoid most of the pitfalls and make actual money. But because recruitment is so heavily incentivized, making any money without recruiting is, as you noted, nearly impossible. That means you're going to have to recruit others into a losing proposition if you want to be a winner. I don't think you can defend that.
I fell for one of the insurance mlms back in the day. At least I got a free financial seminar out of the deal.
Ah yes, my second favorite stock footage economics channel
I'm genuinely surprised that these things are legal in most countries.
So who are the people that come up with this stuff? What's the typical background of those who initiate the scheme, and how do they get others on board?
Those details interest me, as someone from a relatively whitebread suburban background, I don't think I'd ever wake up one day and think "Time to draw up the plans for a pyrimid scheme!"
You should do more catchy titles like:" DEFENDING THE INDEFENSIBLE - MLM Companies"
Me: Opens this video
TH-cam: Let’s start him off with an ad for a pyramid scheme