Pyramid

The Dangers of Multilevel Marketing

Entrepreneurship by default is fraught with hardship and a fair amount of mental and emotional strife. But when enough effort is expended on the right enterprise, in the right circumstances, the benefits vastly outweigh the costs. This is why you’ll often hear the adage that entrepreneurs are the only people who will work 80 hours a week to avoid working 40. The lifestyle of an entrepreneur is a worthwhile one, and one of the purest ways to live the American dream. Naturally, this leads to idealists wanting to get involved in entrepreneurship, and this is where the greatest danger to aspiring entrepreneurs lies: multilevel marketing recruiters.

“So you said you’re an entrepreneur too, right?”

This is their go-to tag-line to reel you in. When posed that question, anyone who identifies as an entrepreneur will proudly say “yes.” They like to approach you as a peer, a fellow hustler, grinding to get their business off the ground. The problem is, it’s never their business. They’re just another layer in the pyramid scheme.

What is a pyramid scheme?

The original pyramid scheme was orchestrated by a man named Charles Ponzi back in the 1920’s. Ponzi would reel in investors with promises of incredible returns on their investments, he would then use the money from the newest investors to pay back the older ones, making it seem like they were making great profits, while Ponzi himself was the only one profiting. The definition of a pyramid scheme is a form of investment where each paying participant recruits other paying participants; with returns being given to early participants using money contributed by the later ones. The modern pyramid scheme takes the form of multilevel marketing scams.

What exactly is multilevel marketing?

If you’ve ever had a relative, friend, acquaintance or stranger try to sell you Avon, a timeshare, Fit Tea or “A fitbit on steroids,” then you’ve brushed shoulders with multilevel marketing. These scams promise you not only a great product (which if we’re honest, rarely, if ever, work) that will not only change your life, but allow you to make incredible amounts of money in a matter of days or weeks. They’ll make fantastical quotes about their “multibillion dollar, that’s right, with a B, industry” and give lovely anecdotes of mentors and individuals who made millions using their simple system. All you have to do is make a “small investment,” and you can be on your way to tens of thousands of dollars, and in some cases, even a company car.

So what’s the problem?

This is in no way, shape or form “entrepreneurship.” In the entire organization, there is only one true entrepreneur, and that is the person who started the scam. Everyone else, no matter how pure their intention initially, is now another brick in the pyramid. Generally, those who get roped into these things think that this is entrepreneurship, or maybe they were trying to fund their own venture and thought this was the best way to raise capital; but for the majority people involved, these scams lead to wasting your own money and time (sometimes even going into debt) to build someone else’s dream.

So what should I do?

If you are, or ever want to be an entrepreneur, you should avoid these scams like the plague. The minute you hear multilevel marketing, network marketing or anything of the sort, run for the hills. Not only do they put you at considerable financial risk (remember again that most people lose money in these systems), but they destroy your reputation as well. If you’ve ever had someone try and recruit you into one of these schemes before, you know first-hand how irritating it is, and furthermore, you almost certainly lost respect for them. Don’t let yourself be a victim of a system designed to profit from your labors, while leaving you with nothing. If you’re a young aspiring entrepreneur, looking to cut your teeth in this world there are dozens of high school and collegiate competitions where you can test your business plan and practice pitching your idea to win funds to build your company. If you’re out of school but still looking to actually be your own boss, many banks, cities, counties and sometimes even states will fund ventures with grants. There are countless groups of angel investors all over the world, looking for that next great idea. America is designed for entrepreneurship, there are dozens of ways to build, network, and fund your venture; without resorting to spending your time and money to pester your acquaintances to sell chinzy garbage.


About the Author:

Mica Sloan

From a kid selling soda out of a duffel bag, Mica is now the executive engineer with Portal Power, the Lassonde Studios first organically grown company. In addition to his entrepreneurial efforts, he is also pursuing a degree in biomedical engineering at the University of Utah. More of his work can be found on his company’s website at portalpower.us. Follow him on Instagram and LinkedIn.


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