from Newcomer
(I have) a completely different experience that poses what I feel is an interesting question about human behavior in our society. Hopefully others here will find it interesting as well.
It might be akin to what Becky was referring to in her post #6 above when she says, “To wax philosophical for a moment… our culture has, for the better part of the last half century, bit by bit, instilled in each of us how ’special’ each of us are. Special people needn’t bother with the rest of us. Not only is everyone special, we have also done almost everything we can to avoid explaining how things work in real life. There is no awareness of how each of us fits into the fabric of life - the structure of society.”
My family, like so many others, is having to tighten up the wallet in these tough economic times (not whining, just setting the scene here). About a week ago, a very close relative emailed me a video about a business opportunity. I dragged my feet and didn’t watch it until yesterday when her persistance got the better of me. To me, it sounded like a pyramid sales scheme veiled as a “MLM” (multi level marketing) model. I do not have a business background so I only had a vague idea that such things exist, but did not know particulars. I googled and researched these terms in an attempt to educate myself.
I came upon a very interesting article in which the author first educates the reader as to what these “business models” are and how they work. But at the end of the article, the author discusses how they are illegal and are being allowed to permeate our society anyway from politics to Wall Street, to the average Joe on the street.
Here’s the link to the article if anyone else cares to read it:
http://www.falseprofits.com/MeaningofPyramids.html
Here’s a link to the author’s website also:
http://pyramidschemealert.org/category/news/
So yesterday, as I was settling in back home after being out on a long road trip out of state for a legitimate job interview, this “too good to be true” offer falls squarely into my lap. My relative tells me how she’s making money hand over fist because she got into this early and very near the top of the pyramid. Two men co-founded the MLM in question and my relative is close friends with a friend of theirs so my relative is probably in the second or third tier of the pyramid.
So here I am, minding my p’s and q’s, trying to get a job the old-fashioned way, the kind where I get paid an honest wage for an honest day’s work, and then this whole MLM thing comes out of nowhere and clubs me in the head.
I have decided not to participate.
So the question is, what would you do if you were me? And more for public discussion, what do you think most people in my shoes would do? If you had a chance to get in to a business opportunity early, when there’s still money to be made, but you know it’s probably shady and immoral, do you toss your values and principles aside in favor of keeping a roof over your head? Or do you hold tight to your values, even if it lands you in the poorhouse?
These pyramid schemes, dressed up as legitimate business opportunities (in the form of MLM’s) are becoming mainstream. Yet the only ones who profit are those at the top few tiers and those few profit at the expense of others’ losses. Amway has been cited as one example of this kind of company. Is the founder of Amway the successful business genius he’s purported to be, or is he a carnivorous criminal? What about Usana vitamins? I know someone right here in town who got sucked into selling those and is in debt to the person one tier above her to the tune of $800.00 while the CEO’s sitting pretty.
Our culture has evolved with a “kill or be killed” mentality toward survival. So am I an idiot to take the moral high ground and not jump into this scheme near the top where I can profit off others’ investments? Am I a whimp for not getting into this dog-eat-dog scheme when I’m near-guaranteed to be the predator and not the prey? I hope I’ll at least get brownie points toward Heaven for this!
Newcomer, you did the right thing. More than likely, you would have gotten burned. Also, I am surprised as to how many people are willing to hurt others to make a buck. I really dont know how they sleep.
I have two stories of my own. One was a guy who sold Amway as a side job that worked for us. However, he was so desperate to add clients that first he dogged all of his coworkers (all were smart enough to say no thanks) and second he started to make the Amway pitch to his clients. That is when we let him go.
The second was a guy that I was friendly with in the military. He moved to southern New England where he was living with family and working as a handyman. Then a couple of years later I got a call from him asking me if we wanted to go to dinner. After I said sure he told me that he wanted to talk to me about one of these pyramid schemes that he was involved in and was now making “hundreds of thousands of dollars” a year. My BS alarm went off (how do you go from a handyman that was clearing peoples gutters and doing odd jobs to making that kind of money with no education and no skills). I got out of the dinner knowing that it was going to be a sales pitch for something that I wanted no part of.
The worst thing with these schemes is that it forces you to hit up friends and family for things that they dont want or need, eventually hurting relationships.
Thanks Dean.
I think ignorance and a neglect of doing one’s homework before getting involved in one of these things might explain it. Nowadays, it only takes a quick google to become educated but years ago, it wasn’t as easy and convenient to do. One of the articles I read even showed how pyramid schemes cannot mathematically succeed because eventually, the number of people in the bottom tiers of the pyramid is insufficient to support the number of people needed to invest/create a new bottom tier. Meaning, the friends, family, and co-workers in all but the top 2 or 3 tiers are hung out to dry. I think if more people understood this, they wouldn’t fall for these things. Because they aren’t usually advertised openly and are generally promoted through word of mouth, many people still remain completely unaware of the trap being set for them that they in turn unknowingly set for those closest to them.
Newcomer,
I agree with what Dean says. I also would take with a grain of salt any claims of making money “hand over fist” even from a relative on such a scheme. I don’t want to put too fine a point on this but there is a conflict of interest for your relative. Given the fact that they are asking you to join a pyramid in the first place I’d at least consider the possibility that there might be some embellishing going on. This might even feel legitimate in their mind, they are sure they will make money hand over fist and they are sure you will too so whats the harm?
There is no such thing as a free lunch. You might be able to con someone else into paying for it, but someone is paying for it. No this is not ethical and is very different from a legitimate business that trades things of value with both parties being given a reasonably accurate representation of what is being lost and what will be received. These schemes sell the promise that each level will make money knowing that it is impossible and those near the bottom will be loosing what they invest. It would be like selling lottery tickets while claiming that everyone who buys one will make money. Sure, it might be true for a couple of people who buy a ticket but most will lose money.
Thanks,
Kevin
Some Key Elements seem like Sales Tactics: Create a Sense of Urgency (”act now, because 10 people are waiting to take your place and make that money!”); Create a Sense of Opportunity not likely to come again; Create a Vision whereby the ‘mark’ begins losing a sense of perspective (and with it goes common sense analysis). Play on the real sense of a ‘marks’ desire to get ahead by seizing the initiative (and thereby distort her/his Judgement and Perspective).
So often, when you pull the thread of any one of these elements, often the sales pitch also begins also to unravel (and the one making the pitch usually has a pre-packaged, boilerplate response for every reasonable objection, just as a Sophist would…)
These schemes have been around for a long time and I guess plenty of people who have actually made money from participating, but it always seems like a game of Musical Chairs where you must pay for the chair before participating, gambling on whether you end up in one or not when the music stops…
Consider how many people say “I am SO glad I decided to opt in” versus how many people must be saying “I so regret having opted in”…
VERSUS, in turn, how many people are saying “I wish I had opted in”. I think most of us are NOT wishing we had opted in, but instead glad we did not, when viewed with undistorted Judgement & Perspective.
Thanks to everyone who replied about this. It sounded shady to me too but this company produced an extremely professional looking video and I also had a relative telling me it was a great deal and I’m crazy not to jump in. When you need $$ and you don’t have any experience with stuff like this, you’re vulnerable. At least I was. But that old adage about if something seems to good to be true is what stuck in my mind the most. I know there are a lot of people in town with more business experience than me so I wanted to post my story here. If 100 people had posted back that it sounded like a sound investment and I was a nutjob for passing, I don’t think I would have automatically joined because I’m not THAT easily influenced, but I would have gone back and given it a second look anyway.
To hear that my first instinct was correct is very reassuring.
So when will the political races heat up so we can get back to picking on each other??!!!!
Just kidding…
Newcomer,
One thing to watch out for (from my limited experience) is feeling a lot of regret if, say, the investment pays out really well. So do a lot of investments we don’t take a risk on and you can’t dwell on that; instead, think of how large your regret would be had you invested and lost.
Chances are that the latter regret ’size’ is much larger than the first - that still means you did good (used sound judgement in making the decision). My 2 cents…
PS - When a stock ‘peaks’ at, say, $200 a share, many folks kick themselves and say “I could have sold at $200/share!”, but what they fail to recognize in the reality and logistics of trading is that ONLY one person actually got that price and it went downhill from their. Each single trade affects the next, and so on. I think it relates to this proposal in a way.
It’s also like the employees of the High Tech Companies of the 1990s who held on to their stock (obtained via options from continued employment) because it kept increasing.
They leveraged house loans, bought expensive cars, etc. COUNTING on the stock being worth at least what it was worth on paper that day (never imagining it would go lower, just higher like all else; this is when the NASDAQ was just over 5,000, etc.) - of course, when the bottom dropped, so many were stuck with staggering debt and that awful feeling that they COULD HAVE so easily just sold what they had, but they just had to hold out for more.
Sorry for going off on a tangent, but it brings back a lot of memories of those salad days…
Con,
Not a tangent at all. In fact, you just taught me something else. I didn’t know that when a stock sells at it’s peak price that it’s probably only one person who gets that peak price on their sale. I’m not a player in the stock market either. I was raised by a mom whose parents survived the depression and they raised my mom to be extremely frugal and to never trust the stock market. I guess that’s why I’m old-fashioned in a lot of ways, especially with finances. My mom never even had a credit card because she was taught that you saved up your money and didn’t make a purchase until you had enough saved to buy it in cash. The only exception to that was a mortgage for a house. I’m very afraid of the stock market because I was taught that it’s nothing more than legalized gambling.
Nowadays, that makes me a complete dinosaur!!
After hearing that I was not feeling well, a neighbor came over with a nutrient drink. She said that she was selling the drink, and was actually able to draw a salary from the “dividends” of her sales, and that I was welcome to the bottle- for my “health”. She also left handsomely designed literature for me to look at. After Google and some investigation, I eventually tasted the contents- and it was very nice. Within a week or so, and as expected, this woman called on me again, to inquire about my health and how I liked the drink. She was very nice about the whole thing, but her intent was clearly, to sell it, and it was almost $40.00 a bottle. I haven’t seen her in a while, and I often wonder, how many bottles of this stuff she has gone through in efforts to sell it, or to get me to sell it.
Actually, I didn’t mean literally ‘one person’ only gets the highest price, it all depends on the actual Volume of Trading. Some larger companies can trade hundreds of thousands of shares daily, so it’s relative to Trading Volume. In general, the sale is in ‘blocks’ and the size of the blocks can affect the market (and if traders or market makers know that there are numerous blocks in Que. waiting to be sold, price is depressed accordingly so there are many games being played with people’s money, no surprise…).
I prob have a few things wrong - I’m no expert at all, but did participate in the hey days when things were, as Al said, ‘Exuberant!’
No Way,
My neighbor did something similar selling an Acai berry drink as a diet. This was about a good 6 months before Acai became mainstream in every product on the market. When I looked over the literature that accompanied the drink, the “diet” was to fast and only drink the Acai juice in place of meals - no solid foods at all!! I guess if a liquid fast doesn’t take weight off, nothing will!!!
Needless to say, I didn’t try it, buy it, nor sell it.
I have a problem with “try this” when she meant “buy this.” I also don’t think I believe the tale of living off the “dividends” and reaping rewards from selling this stuff door to door. How many other people actually allowed themselves to feel bad, and buy the bottle once they opened it? Very weird stuff all around. The drink was great, it really was. Selling it? Developing a sales team to sell it? Come on…..