The Multi-Level Mirage

The illustration is "There they go plucked" - Plate 20 from Los Caprichos, Goya 1799

Comments about specific MLM and pyramid organisations:

One day it finally got to me. Another intelligent, educated person with a knowledge of business approached me to join a pyramid scheme and I snapped. I know that legally it wasn't a pyramid scheme, but it was pointy at the top, wide at the bottom, and recruiting was more important than selling. Of course, this was not the first approach to me. By now, almost everyone on the planet must have been offered the chances at great wealth at least once. I'm sick of it. Sick of getting several emails each week, sick of strangers offering to take me on as a "business partner", sick of people I haven't seen for years ringing me up for a chat and then never calling again after I say "no", sick of seeing people I like and respect wasting their time and energies on a useless pursuit.

This MLM category in The Millenium Project is a reaction to the continual barrage of misinformation about Multi-Level Marketing. I am not targeting any particular company in the business, although one or two attract a lot of attention simply because they are big. I'm against the principle of MLM - the mathematical absurdity that would have the entire population of the USA in someone's downline after a year if they do what "everyone can do", the ridiculous business model that suggests that you actively seek and encourage competitors for your business while simultaneously spending more than you earn, the immoral and cult-like behaviour of the "motivational organisations" which promote the systems.

In many cases, I have no unfavourable opinion about the products being sold. There are many good products offered through these schemes, although a disturbingly large number of systems push quack medicines. It is the principle and the method which concern me.

I have never been a part of any MLM or pyramid scheme, so this is not sour grapes from someone who could not make it work. Almost nobody can make it work, and I believe that those few who do succeed must have a different set of ethics to the rest of us.

Conical Marketing

Here's something I wrote back in 1995 for the local newspaper. The editor received many complaints from personal business owners (and the local office of a motivational organisation), but none of them said anything to me about it. They probably did not want to be around a loser, in case the negative thinking was contagious.

Conical marketing - the next wave

This article appeared in The Sydney Business Review on 15 August, 1995

A new marketing paradigm is here, from the oldest science of all - mathematics. It is "Conical Marketing" and it is based on conic sections. These are the shapes formed when a cone is cut in different directions. The shapes are the circle, ellipse, parabola, hyperbola and the triangle. I want to share this vision of the future with you, so we can all achieve our dreams.

There have been other attempts to base marketing and distribution on geometric shapes. One was "pyramid selling", where people were led to believe that unlimited wealth could be achieved if enough people could be brought into a network. You didn't have to be a salesperson, because the scheme would work if everyone in the network just bought for their own consumption. Pyramid selling is illegal in Australia so nobody does it any more. Some people appear to be doing it, but they must be doing something else.

The Circle

When you look at something from above, the shape you see is called "the plan". The plan section of a cone is a circle. A major part of conical marketing is the process of "showing the plan". Also, the circle is used to draw diagrams on a whiteboard or butcher's paper showing how the plan has made many people rich (some will even be cruising The Bahamas right now).

The Parabola

This shape, with its single focus point, tells us how we must concentrate on the most important goal in life - getting rich so we can achieve our dreams. It is the shape of a headlight reflector, to remind us that the future belongs only to those who can see what's ahead. If you roll a parabola along a line, its focus follows a curve called a "catenary". This comes from the Greek for "chain", a reminder of another geometric sales pitch - rectangular marketing, sometimes called a chain letter. The catenary is the curve across a yacht sail, another reminder of how those up the chain are cruising The Bahamas even as we speak.

The Hyperbola

A feature of a hyperbola is that the curve approaches but never quite touches a pair of lines. This is to remind us that when presenting the plan there are matters which must never be revealed, no matter how closely we are questioned. The name also reminds us of the word "hyperbole", which is a gentle and harmless stretching of the truth whenever necessary.

The Ellipse

The two focus points of the ellipse represent the dream and the vehicle for achieving that dream. Only if both are placed correctly and our lives structured correctly can the path between them be optimised. To speak elliptically is to talk around the point, a technique essential for showing the plan. Those three dots (...) called an "ellipsis" remind us that something can, and often should, be left out of even the best story. The other name for an ellipse is an oval, from the Latin for egg. This reminds us of the nest egg which will give us the lifestyle we deserve.

The Triangle

The arrowhead shape reminds us that goals and riches are only achieved by those with direction. The triangle illustrates how wealth flows up to those few who work hard to build a broad foundation. Also we are reminded of the Bermuda Triangle, a place where things disappear (like friends, family, self-respect, dreams), and Bermuda is near The Bahamas, scene of much sailing by successful personal business owners.

So what are you doing Thursday night? Nothing? Great, I've got a business idea you just have to look at. It's something else. 8 o'clock, OK? I can't promise you anything, but it's a way to make a lot of money. You need to see the whole thing, and your wife needs to be there too. It's too important for her to miss. See you Thursday. Gotta go.

MLM Post Office

To make it easy for people to criticise me, the following form may be used to submit clichéd commentary about this page. As I (and anyone else who has ever criticised MLM) have heard them all before, I will not read it and no response from me will be required or sent. Please check as many boxes as you need and fill in the blanks where appropriate. Anyone with something new or interesting to say can email me directly using the link at the bottom of the page.

Joining strategy.

Here is my suggested plan of action for anyone considering joining a multi-level marketing scheme:

Make a list of all your friends. (This is the same thing you are told to do when you join a pyramid.)
Estimate how much money you will spend over two years on entry fees to distributor meetings.
Estimate your costs for travel and accommodation for those two years' worth of meetings. Include the cost of fancy clothes, accessories, jewellery, hair styling and dry cleaning so that you can look successful.
Estimate the cost of tapes, videos and other tools which you would be expected to purchase in a two-year period.
Estimate how much it will cost over the next two years to hire babysitters for when you are at meetings or out several nights a week showing the plan.
Add up the amounts in Steps 2 to 5.
Add $5,000 for incidental expenses - petrol for the car when out showing the plan, magic markers, butcher's paper for drawing circles on, breath freshener, tooth whitening paste, ...
If you don't have a mobile phone, add another $1,500. (Being always accessible is important. Friends of mine asked their upline to be the godfather of their daughter. He kept his mobile phone in his hand throughout the baptism ceremony.)
It is important to look successful, so if your car is more than four years old talk to your local BMW or Mercedes Benz dealer about a lease. Do not even consider a Lexus. For the time being, don't add the lease payments to the total.
Inquire at either or both of the local country club and yacht club about membership. Again, leave out these costs for the moment. (There is no need to budget for a boat or golf clubs - membership is what matters, not playing games. You won't have any spare time, anyway.)
Look at the total estimated expenditure after Step 8.
Subtract $100 for projected income from product sales.
Subtract $200 for projected real savings from buying overpriced products at a discount.
Write out a cheque for three quarters of the remaining amount, made out to your local children's hospital or some other suitable charity. (This will be a legitimate tax deduction. Despite what the pyramid salesmen tell you, most taxation authorities will not allow you to deduct the costs of participation in a multi-level marketing scheme. The costs are so much greater than the income that these activities are not considered to be serious or viable businesses.)
Spend the remaining quarter of the money on a big party and invite all those friends that you listed in Step 1.
At a suitable time during the party, stand on a chair and tell everyone that the night was paid for with money that you didn't waste by chasing an impossible dream. Also promise them that you will never ring them up and offer them a business opportunity.
Enjoy an honest, productive, friend-filled life.

Some jokes

A Big Pin in a multi-level marketing outfit is on his way to Super Saturday. He is whistling to himself and daydreaming about all the tool money he is going to be collecting from the suckers. "Sorry" he says to himself with a wry smile, "I shouldn't call them that because they are Independent Business Owners". He then bursts out laughing and remembers how he mentally thanks his old drama teacher every day for showing him how to keep a straight face while telling the suckers (oops, there's that word again) about the rivers of cash which will be flowing over them when they get the system working.

Suddenly, a truck coming the other way crosses the double lines and hits the side of the Pin's car. A police car arrives on the scene within minutes and finds the Pin sitting in the car wailing "My BMW! My BMW!". The police officer looks at where the side of the car has been torn away, and says "Don't worry about your car. Your arm has been ripped off". "Aarrgghh!", screams the Big Pin. "My Rolex! My Rolex!".

Q: What do you call a multi-level marketing company which has gone into bankruptcy?
A: A good start.

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