WEBVTT
00:00:00.160 --> 00:00:01.120
Oh my gosh.
00:00:01.360 --> 00:00:06.400
Hi! I just had to stop you and tell you about this amazing podcast.
00:00:06.559 --> 00:00:11.519
It talks about topics and things, and the host even has a cat.
00:00:11.839 --> 00:00:13.439
I have to get you tuned in.
00:00:13.599 --> 00:00:15.759
Today they're talking about MLMs.
00:00:15.919 --> 00:00:17.440
Let's get you signed up.
00:00:45.600 --> 00:00:54.240
MLM stands for multi-level marketing, which is a tiered business model that funnels money upwards, making the few at the top rich.
00:00:54.479 --> 00:01:07.680
Some of the most popular MLM companies are Monate, DoTERRA, New Skin, Young Living, Optavia, Herbalife, Plexus, Arbon, Amway, and Beachbody, now just body.
00:01:08.560 --> 00:01:14.400
The simplest way to explain it is this: a company is created by a group of people.
00:01:14.640 --> 00:01:23.680
Those people recruit new people to work under them to sell the company's products and recruit more people to sell under them.
00:01:23.920 --> 00:01:30.959
With each new recruit and sale, a commission is paid to each person above the seller that recruited them.
00:01:31.200 --> 00:01:37.760
For example, Company ABC is created and Jane Doe is one of the company's founders.
00:01:38.079 --> 00:01:46.879
Jane goes to her Instagram, her church, her mom friend group, and recruits people to be on her team and sell the products.
00:01:47.200 --> 00:01:50.560
Jane recruits Mary, who recruits Sally.
00:01:50.959 --> 00:01:57.040
If Sally makes a sale, a percentage of her sales gets paid to Mary and to Jane.
00:01:57.280 --> 00:02:04.079
At some point, Jane can stop selling and just make money off of all the people that are selling beneath her.
00:02:04.319 --> 00:02:13.439
It seems great, but I'm here today to tell you the truth about this business model and how it is not at all what the reps make it out to be.
00:02:13.759 --> 00:02:18.719
Let's start out with some basic terminology that I'll be using throughout today's episode.
00:02:19.039 --> 00:02:23.280
As I said, MLM stands for multi-level marketing.
00:02:23.520 --> 00:02:33.599
MLMs go by other names as well, such as social selling, network marketing, referral marketing, or the most accurate, pyramid scheme.
00:02:34.000 --> 00:02:43.360
These companies make sure to tell their sales representatives to use one of these other names because more people have become wise to pyramid schemes.
00:02:43.919 --> 00:02:49.520
If you tell someone you work for an MLM, that person will most likely walk away.
00:02:49.680 --> 00:02:54.080
If you tell them you work in network marketing, they may keep listening.
00:02:54.319 --> 00:02:59.759
A huge part of the MLM business model is to have uplines and downlines.
00:03:00.080 --> 00:03:06.080
Using my example from before, Sally's upline is Mary and then Jane.
00:03:06.400 --> 00:03:13.039
Jane's downline is Mary and then Sally, and anyone that Mary or Sally recruit.
00:03:13.360 --> 00:03:18.400
Terms like upline and downline are now synonymous with MLMs.
00:03:18.560 --> 00:03:21.759
So they now like to use the term team.
00:03:22.240 --> 00:03:25.039
Sally is part of Mary's team.
00:03:25.360 --> 00:03:27.840
Mary is part of Jane's team.
00:03:28.080 --> 00:03:32.159
The word team also gives the setup a more wholesome feeling.
00:03:32.400 --> 00:03:36.719
You don't want to be left out of someone's team, right?
00:03:37.520 --> 00:03:40.800
Also, money flows up the pyramid.
00:03:41.280 --> 00:03:46.000
Money is paid from the seller in the down line up the up line.
00:03:46.240 --> 00:03:50.159
The other two terms I want to hit on are commissions and PV.
00:03:51.039 --> 00:03:54.319
Commission is a fee or percentage of a product's sale.
00:03:54.479 --> 00:03:59.759
For example, Jane makes 5% commission off every product she sells.
00:04:00.000 --> 00:04:06.879
If the product is worth$25, Jane will make$1.25 off of that product's sale.
00:04:07.199 --> 00:04:10.400
PV stands for personal volume.
00:04:10.800 --> 00:04:13.840
This is the amount of product the seller has on hand.
00:04:14.000 --> 00:04:20.480
It can also be called inventory, but again, saying you need to have inventory doesn't sound as good.
00:04:20.720 --> 00:04:22.160
And lastly, a hun.
00:04:22.800 --> 00:04:26.959
This term is used to label the seller of an MLM product.
00:04:27.199 --> 00:04:37.279
Back in the day, these people would message their acquaintances and sometimes complete strangers online, opening with, hey hun, this is how they got their name.
00:04:38.240 --> 00:04:42.399
The early MLM companies started out as a normal business model.
00:04:42.639 --> 00:04:52.319
Examples are Avon, a makeup and skincare company, Kirby, who sold vacuums, and Tupperware that sold plastic food storage containers.
00:04:52.560 --> 00:05:02.000
These businesses had sales rep who would sell the products to friends, family, and whoever else wanted to buy, and the seller made a commission off of each sale.
00:05:02.319 --> 00:05:09.680
Over time, these companies wanted to boost sales, and so the multi-level commission plans were born.
00:05:10.000 --> 00:05:20.240
This model now pressured their sales rep to not only make sales, but to build a downline so that they could get commission from their downline's sales as well.
00:05:20.720 --> 00:05:27.920
With this model making millions for the people at the top, new companies sprang up with the same model.
00:05:29.600 --> 00:05:33.600
In the MLM business model, you get money in a few different ways.
00:05:33.839 --> 00:05:35.920
The first is recruiting people.
00:05:36.160 --> 00:05:48.160
When you sign someone up to be in your downline, you get a sign-on bonus, plus commission from the starter pack that the new recruit is encouraged or sometimes has to buy.
00:05:49.040 --> 00:05:52.399
Second, you get commission from selling products.
00:05:52.560 --> 00:05:56.560
And third, you get commissions from your downline's sales.
00:05:56.800 --> 00:06:02.000
I know some of this was repetitive, but I want to make sure I'm laying out all the facts for you.
00:06:02.319 --> 00:06:08.639
A huge factor that plays into recruiting is what is called making rank.
00:06:08.879 --> 00:06:18.800
The pyramid has different levels to it, and each level is a rank, which often has some nonsense name, like regional director or executive.
00:06:19.040 --> 00:06:24.000
These labels mean absolutely nothing in the real world, by the way.
00:06:24.240 --> 00:06:31.680
In order to reach a specific rank, you have to hit a few goals each month, and the clock restarts every month.
00:06:32.000 --> 00:06:39.920
Each MLM business is different, but for the most of them, you yourself have to sell a certain dollar amount of product.
00:06:40.160 --> 00:06:48.480
Each member of your downline has to sell a certain amount, and you have to sign up new people to maintain your rank.
00:06:48.720 --> 00:07:03.040
When your upline is up against the clock and it's five minutes to midnight at the end of the month, they will tell their downlines to buy product to hit the quota and help your upline either maintain their rank or move up a rank.
00:07:03.279 --> 00:07:05.680
I'll get into this a little more later.
00:07:06.079 --> 00:07:09.519
This is also why the products are so expensive.
00:07:09.680 --> 00:07:17.680
The company needs to cover the cost of the item, make a profit for themselves, and be able to pay these different commission tiers.
00:07:54.000 --> 00:07:57.120
Remember, money flows up the pyramid.
00:07:57.360 --> 00:08:01.600
Sitting under those few at the top is every single person's downline.
00:08:02.000 --> 00:08:06.639
They do not see downlines as people, they see them as dollar signs.
00:08:06.879 --> 00:08:12.560
As much as these team leaders like to love bomb you, you are just a commission check to them.
00:08:12.800 --> 00:08:19.680
These sales reps are very good at sniffing out the vulnerable people around them and getting them to join their downline.
00:08:20.000 --> 00:08:25.680
Some are even encouraged to use their tragedy and pitch the business to other people like them.
00:08:26.079 --> 00:08:37.039
I watched one Zoom meeting for a popular MLM company where the team leader told a woman to use her support group for those that lost children as a fishing pond.
00:08:37.200 --> 00:08:41.519
It's a very predatory behavior, and frankly, it's gross.
00:08:41.919 --> 00:08:45.360
There's also the fact that you'll run out of people to pitch to.
00:08:45.600 --> 00:08:48.080
You get signed up by your cousin, let's say.
00:08:48.320 --> 00:08:55.200
You both share the same side of the family, and the cousin already pitched to them, so you try the other side of your family.
00:08:55.440 --> 00:08:58.559
If you get someone on that side of the family to sign up, great.
00:08:58.799 --> 00:09:04.879
But now the person that that person can pitch to is cut in half because you already tried everyone.
00:09:05.120 --> 00:09:09.759
If neighbors keep pitching to neighbors and family to family, you'll run out of people.
00:09:10.000 --> 00:09:16.320
Everyone you know will already be a sales rep, and now it's a race to try and make money each month.
00:09:17.440 --> 00:09:21.759
The MLM business model has a lot of similarities to cults.
00:09:22.000 --> 00:09:25.519
A key tactic that cults use is isolation.
00:09:25.840 --> 00:09:32.639
Get the person away from any naysayers or haters and surround them with people that support the cause.
00:09:32.879 --> 00:09:40.159
The second you join one of these businesses, you're added to social media groups, text change, and video conferences.
00:09:40.320 --> 00:09:43.679
They want to keep you surrounded by like-minded people.
00:09:44.000 --> 00:09:49.840
These groups want to make sure that the only information you're receiving is coming from the group.
00:09:50.080 --> 00:09:53.759
They don't tell you to research the products and their ingredients.
00:09:54.000 --> 00:09:59.200
They send you a link to a report that was issued from the company's laboratories.
00:09:59.440 --> 00:10:04.000
They send you claims to make in your pitches, but nothing to back up the claim.
00:10:04.159 --> 00:10:10.000
If people question you or your company, they're just haters and you need to move on.
00:10:11.279 --> 00:10:14.799
Another tactic cults use is sleep deprivation.
00:10:15.039 --> 00:10:18.639
Good example of that is David Kuresh in the Branch Davidians.
00:10:18.799 --> 00:10:25.759
David set up his own sect of a religion, built a small community, and would preach to his members for hours every day.
00:10:25.919 --> 00:10:28.240
Even kids had to sit in these sessions.
00:10:28.480 --> 00:10:32.240
Nowadays, MLM team leaders use Zoom calls.
00:10:32.399 --> 00:10:37.679
There will be weekly check-ins or hangouts to make it sound more informal and relaxed.
00:10:37.919 --> 00:10:42.480
You're also pressured into training sessions that take more time out of your day.
00:10:42.720 --> 00:10:45.759
These businesses don't want you to have downtime.
00:10:46.000 --> 00:10:53.600
Downtime gives you time to reflect and think about what it is that's being expected of you, and they certainly don't want that.
00:10:54.080 --> 00:11:05.840
If you aren't on a Zoom call or a training session, you best believe you're expected to be posting multiple times a day on your social media accounts about the business and tagging your upline.
00:11:07.039 --> 00:11:12.720
The reason you aren't being favored in a cult leader's eyes is because you aren't giving enough.
00:11:12.960 --> 00:11:18.879
The reason why you aren't succeeding in your business is because you aren't working hard enough.
00:11:19.120 --> 00:11:20.879
You need to give your all.
00:11:21.120 --> 00:11:23.120
And even then it may not be enough.
00:11:23.360 --> 00:11:28.720
There's always the threat at the end of each month that if you don't pull your weight, you may not get paid.
00:11:28.960 --> 00:11:33.440
This is where a lot of the love bombing comes in, or in some cases the bullying.
00:11:33.679 --> 00:11:38.879
It's not a good place to be, and not how a true team acts.
00:11:40.320 --> 00:11:45.440
There are quite a few lies that potential uplines will tell in order to get you to sign up.
00:11:45.679 --> 00:11:50.000
The one that every company uses, yet is never true.
00:11:50.720 --> 00:11:54.799
You get to own your own business and be your own boss.
00:11:55.279 --> 00:11:56.240
No, you don't.
00:11:56.480 --> 00:12:00.159
If you do sign up, your boss isn't you, it's your upline.
00:12:00.320 --> 00:12:03.440
They enforce expectations on you and keep you in line.
00:12:03.600 --> 00:12:06.639
It also isn't your own business, nor could it ever be.
00:12:06.879 --> 00:12:12.559
If you own your own business, you are in control of the product sold and the prices.
00:12:12.799 --> 00:12:17.200
In the MLM business model, you're told what to sell and for how much.
00:12:17.440 --> 00:12:19.759
Even discounts are determined for you.
00:12:20.000 --> 00:12:25.039
The only thing you might own is your website link that the company makes for you.
00:12:25.279 --> 00:12:33.279
If you join an MLM business, your boss is your upline, and you are not a business owner, you are a sales rep.
00:12:33.600 --> 00:12:42.080
Being a sales rep alone doesn't sound so bad, but you need to remember that this is a predatory business model that you would be supporting.
00:12:42.879 --> 00:12:49.840
If a sales rep approaches you to join their team and you counter with, that sounds like a pyramid scheme.
00:12:50.080 --> 00:12:56.000
Nine times out of ten, they will respond with, pyramid schemes are illegal.
00:12:56.320 --> 00:12:58.000
Yes, Susan, I know that.
00:12:58.159 --> 00:12:59.919
That doesn't mean they still don't exist.
00:13:00.240 --> 00:13:10.480
On paper, the only difference between an MLM business model and a pyramid scheme is that MLMs sell products, whereas pyramid schemes sell an idea.
00:13:10.720 --> 00:13:16.559
The way both of them make money, and the only thing keeping them afloat, is recruiting new people.
00:13:17.759 --> 00:13:23.519
We talked about ranks, but what I left out was the practice of rank stacking.
00:13:23.679 --> 00:13:28.879
This is usually against the company's policy, but that doesn't stop people from doing it.
00:13:29.200 --> 00:13:31.039
Rank stacking is this.
00:13:31.360 --> 00:13:37.279
Jane signed up Mary, but Mary is having trouble finding people to sign up.
00:13:37.679 --> 00:13:45.519
Jane takes people that she was going to sign up under her and instead signs them up under Mary.
00:13:45.840 --> 00:13:47.120
This does two things.
00:13:47.360 --> 00:13:54.399
It helps Jane move up a rank, and it gives Mary this false confidence that she's successful.
00:13:54.720 --> 00:14:02.879
Mary will also use this confidence and the fact that she now has people under her to use when she pitches to new people.
00:14:34.159 --> 00:14:38.240
The brand of car changes by the business, but the carrot is the same.
00:14:38.480 --> 00:14:41.679
Here's what they don't tell you about this car.
00:14:42.320 --> 00:14:44.879
Probably because they don't know themselves.
00:14:45.200 --> 00:14:50.799
The sales rep that is driving that car is financially responsible for it.
00:14:51.039 --> 00:14:55.120
That sales rep has qualified for a car bonus.
00:14:55.519 --> 00:14:58.480
The company does not give them a car.
00:14:58.960 --> 00:15:00.399
It works as such.
00:15:00.639 --> 00:15:04.960
If you reach a specific rank, you qualify for a car bonus.
00:15:05.120 --> 00:15:09.679
This is a check that the business gives you every month for the car payment.
00:15:09.919 --> 00:15:11.600
It's not as simple as that though.
00:15:11.840 --> 00:15:12.320
Duh.
00:15:12.559 --> 00:15:14.080
Let's use our girl Jane.
00:15:14.320 --> 00:15:20.159
Jane moved up a rank by rank stacking and signing up five people under Mary.
00:15:20.399 --> 00:15:23.679
Jane now qualifies for the car bonus.
00:15:24.000 --> 00:15:25.279
Boss babe.
00:15:26.000 --> 00:15:32.960
The company determines the make, model, and even color of the car Jane can purchase.
00:15:33.279 --> 00:15:37.519
Sometimes the color is dependent on the rank, too, which is so stupid.
00:15:37.919 --> 00:15:45.519
Jane goes to the dealership and takes out a loan for the only type of car the company says she can purchase.
00:15:45.840 --> 00:15:56.639
Side note, some sales reps have a hard time qualifying for a loan because, as a sales rep, at least in the United States, you're considered a 1099 employee.
00:15:56.879 --> 00:16:01.600
This means that you do freelance work and this money's never guaranteed.
00:16:02.159 --> 00:16:07.759
In these cases, the sales rep may need a partner to co-sign the car loan.
00:16:08.559 --> 00:16:17.360
Okay, so now that Jane and potentially Jane's partner are saddled with a car loan, she now sings the praises of her business.
00:16:17.600 --> 00:16:20.399
However, then comes the end of the month.
00:16:20.639 --> 00:16:27.440
If Jane and her downline don't meet the rank requirements, Jane will not get that car bonus.
00:16:27.679 --> 00:16:32.559
This means that the monthly loan payment is all coming out of Jane's pocket.
00:16:32.879 --> 00:16:43.840
If her team did hit all the requirements, Jane gets that car bonus check, but it's only for a portion of the loan, almost never the full amount.
00:16:44.080 --> 00:16:50.320
She may get a$300 car bonus check to go towards her$800 car payment.
00:16:50.559 --> 00:16:53.759
The company is not paying for Jane's car.
00:16:54.000 --> 00:17:03.840
Jane's commissions are paying for it, and she may get a check from the company if she and her downline hit all their sales goals.
00:17:04.160 --> 00:17:13.279
Jane is now even more dependent on her downline making money since she now has this massive car loan and image to uphold.
00:17:14.160 --> 00:17:19.839
Oh, and those trips and conferences that your upline has you working towards, don't get too excited.
00:17:20.000 --> 00:17:24.799
The company might pay for your airfare, usually the cheapest they can find.
00:17:25.119 --> 00:17:32.160
You are responsible for transportation to and from the hotel, all of your food, and drinks.
00:17:32.319 --> 00:17:41.279
And if this is a conference, which is just a massive love fest on how great the top of the pyramid is, you have to pay for the ticket to get in.
00:17:41.519 --> 00:17:49.119
Sometimes reps have to pay a deposit to make it on a list to qualify for a conference ticket.
00:17:49.359 --> 00:17:51.759
Yeah, nothing is ever guaranteed.
00:17:54.960 --> 00:17:56.319
Okay, friends.
00:17:56.640 --> 00:18:01.759
You now know what an MLM business model is and why they are bad.
00:18:02.000 --> 00:18:05.119
Now I want to teach you how to spot one.
00:18:05.759 --> 00:18:08.720
On social media, it's actually pretty simple.
00:18:08.960 --> 00:18:18.960
Your friend or in-law or elementary school teacher will all of a sudden start posting a lot about a business that they never name.
00:18:19.200 --> 00:18:28.960
These posts will be in a completely different voice from them, using a lot of emojis and will come with a slew of pictures to prove how great the products are.
00:18:29.200 --> 00:18:30.160
Now hang on.
00:18:30.640 --> 00:18:33.119
Why aren't they naming this business or company?
00:18:33.359 --> 00:18:42.160
Well, as I said at the beginning, if the sales reps put the name out there, savvy persons will look it up and see that it's a pyramid scheme.
00:18:42.559 --> 00:18:47.359
If the rep creates mystery around it, they have a better chance of roping you in.
00:18:47.599 --> 00:18:51.680
The sales rep, though, isn't clever enough to know to do this on their own.
00:18:51.839 --> 00:18:58.319
Their upline sends them pages of photo captions and posts to just copy and paste.
00:18:58.559 --> 00:19:03.039
This was sent to them by their upline, who received it from the heads of the company.
00:19:03.359 --> 00:19:13.359
If you comment that you're interested or want more information, they will respond with messaging you, once again, not sharing any information on a public platform.
00:19:14.000 --> 00:19:18.079
Now, not everything they post throughout the day will be about the business.
00:19:18.240 --> 00:19:18.960
No, no, no.
00:19:19.119 --> 00:19:27.599
They need to play around with the algorithm so that when they do post about whatever nonsense it is that they're trying to sell, they will hit enough people.
00:19:28.160 --> 00:19:32.319
Social media algorithms are kind of like mathematical equations.
00:19:32.480 --> 00:19:37.200
The more you click or interact with certain accounts or posts, the more you'll see it.
00:19:37.440 --> 00:19:41.839
If this seller is posting an innocent question like, what's for dinner?
00:19:42.079 --> 00:19:48.000
Or Am I the only one who you feel like it's a normal post and add your response?
00:19:48.240 --> 00:19:50.240
This plays into the algorithm.
00:19:50.480 --> 00:19:56.960
Now you'll begin to see this person's post more often, and they'll be up towards the top of your feed.
00:19:57.200 --> 00:20:04.559
Some people will post these simple questions with a picture of their kids or pets to further encourage you to click that like button.
00:20:04.720 --> 00:20:05.839
But stay strong.
00:20:06.079 --> 00:20:07.359
Do not engage.
00:20:09.440 --> 00:20:13.119
In person, sales reps will often play the same game.
00:20:13.279 --> 00:20:17.680
They'll compliment you and tell you that you would be perfect for their business.
00:20:17.920 --> 00:20:28.000
No info given, no business name, but they'll pressure you to get your contact information so that they can rope you into a video call with their upline.
00:20:28.319 --> 00:20:31.440
Remember, no is a full sentence.
00:20:31.599 --> 00:20:37.519
If they continue to pester you, call over a store manager or threaten to call 911.
00:20:39.359 --> 00:20:43.200
Let's say you got sucked in and sat in on that video call.
00:20:43.440 --> 00:20:46.799
Pay close attention to what is being said.
00:20:47.440 --> 00:20:54.480
So often, the person that recruited you remains silent and lets their upline do all the talking.
00:20:54.720 --> 00:21:02.240
This upline is going to do a lot of talking without saying a gosh darn thing.
00:21:03.680 --> 00:21:10.640
Take a minute to process what they just said and ask yourself, Am I walking away with any information?
00:21:10.960 --> 00:21:12.720
Was my question answered?
00:21:13.039 --> 00:21:16.160
Do I have any idea what's being expected of me?
00:21:16.799 --> 00:21:19.759
The answer is probably Nope.
00:21:20.240 --> 00:21:27.839
They just throw around a lot of buzzwords that they're told to say because more likely than not, they don't know the answers either.
00:21:28.079 --> 00:21:31.920
Or they may have been instructed to skirt around these questions.
00:21:33.039 --> 00:21:38.799
The MLM company Herbalife started getting their reps to open smoothie shops.
00:21:39.119 --> 00:21:42.880
These shops don't have an Herbalife logo anywhere.
00:21:43.119 --> 00:21:46.319
The shop will also be called Something Nutrition.
00:21:46.720 --> 00:21:58.160
Their drinks are always brightly colored, most times multicolored, and if you peek behind the counter into an open cabinet, you'll see the Herbalife brand protein powders.
00:21:58.400 --> 00:22:08.480
If you mention this brand Name or ask if the shop is affiliated, the person behind the counter will usually shut down and be quick to shuffle you out the door.
00:22:10.000 --> 00:22:15.599
Multi-level marketing companies are everywhere and tout legitimacy all day long.
00:22:16.240 --> 00:22:17.839
Don't be fooled.
00:22:18.160 --> 00:22:19.759
Ask questions.
00:22:20.079 --> 00:22:22.640
Pay attention to the answers.
00:22:22.799 --> 00:22:31.519
And while you're at it, watch some awesome anti-MLM YouTube creators like Hannah Alonzo, Kiki Chanel, and Brianna Jewell.
00:22:31.680 --> 00:22:35.519
And come back next week to see what else has been hidden.
00:00:00.160 --> 00:00:01.120
Oh my gosh.
00:00:01.360 --> 00:00:06.400
Hi! I just had to stop you and tell you about this amazing podcast.
00:00:06.559 --> 00:00:11.519
It talks about topics and things, and the host even has a cat.
00:00:11.839 --> 00:00:13.439
I have to get you tuned in.
00:00:13.599 --> 00:00:15.759
Today they're talking about MLMs.
00:00:15.919 --> 00:00:17.440
Let's get you signed up.
00:00:45.600 --> 00:00:54.240
MLM stands for multi-level marketing, which is a tiered business model that funnels money upwards, making the few at the top rich.
00:00:54.479 --> 00:01:07.680
Some of the most popular MLM companies are Monate, DoTERRA, New Skin, Young Living, Optavia, Herbalife, Plexus, Arbon, Amway, and Beachbody, now just body.
00:01:08.560 --> 00:01:14.400
The simplest way to explain it is this: a company is created by a group of people.
00:01:14.640 --> 00:01:23.680
Those people recruit new people to work under them to sell the company's products and recruit more people to sell under them.
00:01:23.920 --> 00:01:30.959
With each new recruit and sale, a commission is paid to each person above the seller that recruited them.
00:01:31.200 --> 00:01:37.760
For example, Company ABC is created and Jane Doe is one of the company's founders.
00:01:38.079 --> 00:01:46.879
Jane goes to her Instagram, her church, her mom friend group, and recruits people to be on her team and sell the products.
00:01:47.200 --> 00:01:50.560
Jane recruits Mary, who recruits Sally.
00:01:50.959 --> 00:01:57.040
If Sally makes a sale, a percentage of her sales gets paid to Mary and to Jane.
00:01:57.280 --> 00:02:04.079
At some point, Jane can stop selling and just make money off of all the people that are selling beneath her.
00:02:04.319 --> 00:02:13.439
It seems great, but I'm here today to tell you the truth about this business model and how it is not at all what the reps make it out to be.
00:02:13.759 --> 00:02:18.719
Let's start out with some basic terminology that I'll be using throughout today's episode.
00:02:19.039 --> 00:02:23.280
As I said, MLM stands for multi-level marketing.
00:02:23.520 --> 00:02:33.599
MLMs go by other names as well, such as social selling, network marketing, referral marketing, or the most accurate, pyramid scheme.
00:02:34.000 --> 00:02:43.360
These companies make sure to tell their sales representatives to use one of these other names because more people have become wise to pyramid schemes.
00:02:43.919 --> 00:02:49.520
If you tell someone you work for an MLM, that person will most likely walk away.
00:02:49.680 --> 00:02:54.080
If you tell them you work in network marketing, they may keep listening.
00:02:54.319 --> 00:02:59.759
A huge part of the MLM business model is to have uplines and downlines.
00:03:00.080 --> 00:03:06.080
Using my example from before, Sally's upline is Mary and then Jane.
00:03:06.400 --> 00:03:13.039
Jane's downline is Mary and then Sally, and anyone that Mary or Sally recruit.
00:03:13.360 --> 00:03:18.400
Terms like upline and downline are now synonymous with MLMs.
00:03:18.560 --> 00:03:21.759
So they now like to use the term team.
00:03:22.240 --> 00:03:25.039
Sally is part of Mary's team.
00:03:25.360 --> 00:03:27.840
Mary is part of Jane's team.
00:03:28.080 --> 00:03:32.159
The word team also gives the setup a more wholesome feeling.
00:03:32.400 --> 00:03:36.719
You don't want to be left out of someone's team, right?
00:03:37.520 --> 00:03:40.800
Also, money flows up the pyramid.
00:03:41.280 --> 00:03:46.000
Money is paid from the seller in the down line up the up line.
00:03:46.240 --> 00:03:50.159
The other two terms I want to hit on are commissions and PV.
00:03:51.039 --> 00:03:54.319
Commission is a fee or percentage of a product's sale.
00:03:54.479 --> 00:03:59.759
For example, Jane makes 5% commission off every product she sells.
00:04:00.000 --> 00:04:06.879
If the product is worth$25, Jane will make$1.25 off of that product's sale.
00:04:07.199 --> 00:04:10.400
PV stands for personal volume.
00:04:10.800 --> 00:04:13.840
This is the amount of product the seller has on hand.
00:04:14.000 --> 00:04:20.480
It can also be called inventory, but again, saying you need to have inventory doesn't sound as good.
00:04:20.720 --> 00:04:22.160
And lastly, a hun.
00:04:22.800 --> 00:04:26.959
This term is used to label the seller of an MLM product.
00:04:27.199 --> 00:04:37.279
Back in the day, these people would message their acquaintances and sometimes complete strangers online, opening with, hey hun, this is how they got their name.
00:04:38.240 --> 00:04:42.399
The early MLM companies started out as a normal business model.
00:04:42.639 --> 00:04:52.319
Examples are Avon, a makeup and skincare company, Kirby, who sold vacuums, and Tupperware that sold plastic food storage containers.
00:04:52.560 --> 00:05:02.000
These businesses had sales rep who would sell the products to friends, family, and whoever else wanted to buy, and the seller made a commission off of each sale.
00:05:02.319 --> 00:05:09.680
Over time, these companies wanted to boost sales, and so the multi-level commission plans were born.
00:05:10.000 --> 00:05:20.240
This model now pressured their sales rep to not only make sales, but to build a downline so that they could get commission from their downline's sales as well.
00:05:20.720 --> 00:05:27.920
With this model making millions for the people at the top, new companies sprang up with the same model.
00:05:29.600 --> 00:05:33.600
In the MLM business model, you get money in a few different ways.
00:05:33.839 --> 00:05:35.920
The first is recruiting people.
00:05:36.160 --> 00:05:48.160
When you sign someone up to be in your downline, you get a sign-on bonus, plus commission from the starter pack that the new recruit is encouraged or sometimes has to buy.
00:05:49.040 --> 00:05:52.399
Second, you get commission from selling products.
00:05:52.560 --> 00:05:56.560
And third, you get commissions from your downline's sales.
00:05:56.800 --> 00:06:02.000
I know some of this was repetitive, but I want to make sure I'm laying out all the facts for you.
00:06:02.319 --> 00:06:08.639
A huge factor that plays into recruiting is what is called making rank.
00:06:08.879 --> 00:06:18.800
The pyramid has different levels to it, and each level is a rank, which often has some nonsense name, like regional director or executive.
00:06:19.040 --> 00:06:24.000
These labels mean absolutely nothing in the real world, by the way.
00:06:24.240 --> 00:06:31.680
In order to reach a specific rank, you have to hit a few goals each month, and the clock restarts every month.
00:06:32.000 --> 00:06:39.920
Each MLM business is different, but for the most of them, you yourself have to sell a certain dollar amount of product.
00:06:40.160 --> 00:06:48.480
Each member of your downline has to sell a certain amount, and you have to sign up new people to maintain your rank.
00:06:48.720 --> 00:07:03.040
When your upline is up against the clock and it's five minutes to midnight at the end of the month, they will tell their downlines to buy product to hit the quota and help your upline either maintain their rank or move up a rank.
00:07:03.279 --> 00:07:05.680
I'll get into this a little more later.
00:07:06.079 --> 00:07:09.519
This is also why the products are so expensive.
00:07:09.680 --> 00:07:17.680
The company needs to cover the cost of the item, make a profit for themselves, and be able to pay these different commission tiers.
00:07:54.000 --> 00:07:57.120
Remember, money flows up the pyramid.
00:07:57.360 --> 00:08:01.600
Sitting under those few at the top is every single person's downline.
00:08:02.000 --> 00:08:06.639
They do not see downlines as people, they see them as dollar signs.
00:08:06.879 --> 00:08:12.560
As much as these team leaders like to love bomb you, you are just a commission check to them.
00:08:12.800 --> 00:08:19.680
These sales reps are very good at sniffing out the vulnerable people around them and getting them to join their downline.
00:08:20.000 --> 00:08:25.680
Some are even encouraged to use their tragedy and pitch the business to other people like them.
00:08:26.079 --> 00:08:37.039
I watched one Zoom meeting for a popular MLM company where the team leader told a woman to use her support group for those that lost children as a fishing pond.
00:08:37.200 --> 00:08:41.519
It's a very predatory behavior, and frankly, it's gross.
00:08:41.919 --> 00:08:45.360
There's also the fact that you'll run out of people to pitch to.
00:08:45.600 --> 00:08:48.080
You get signed up by your cousin, let's say.
00:08:48.320 --> 00:08:55.200
You both share the same side of the family, and the cousin already pitched to them, so you try the other side of your family.
00:08:55.440 --> 00:08:58.559
If you get someone on that side of the family to sign up, great.
00:08:58.799 --> 00:09:04.879
But now the person that that person can pitch to is cut in half because you already tried everyone.
00:09:05.120 --> 00:09:09.759
If neighbors keep pitching to neighbors and family to family, you'll run out of people.
00:09:10.000 --> 00:09:16.320
Everyone you know will already be a sales rep, and now it's a race to try and make money each month.
00:09:17.440 --> 00:09:21.759
The MLM business model has a lot of similarities to cults.
00:09:22.000 --> 00:09:25.519
A key tactic that cults use is isolation.
00:09:25.840 --> 00:09:32.639
Get the person away from any naysayers or haters and surround them with people that support the cause.
00:09:32.879 --> 00:09:40.159
The second you join one of these businesses, you're added to social media groups, text change, and video conferences.
00:09:40.320 --> 00:09:43.679
They want to keep you surrounded by like-minded people.
00:09:44.000 --> 00:09:49.840
These groups want to make sure that the only information you're receiving is coming from the group.
00:09:50.080 --> 00:09:53.759
They don't tell you to research the products and their ingredients.
00:09:54.000 --> 00:09:59.200
They send you a link to a report that was issued from the company's laboratories.
00:09:59.440 --> 00:10:04.000
They send you claims to make in your pitches, but nothing to back up the claim.
00:10:04.159 --> 00:10:10.000
If people question you or your company, they're just haters and you need to move on.
00:10:11.279 --> 00:10:14.799
Another tactic cults use is sleep deprivation.
00:10:15.039 --> 00:10:18.639
Good example of that is David Kuresh in the Branch Davidians.
00:10:18.799 --> 00:10:25.759
David set up his own sect of a religion, built a small community, and would preach to his members for hours every day.
00:10:25.919 --> 00:10:28.240
Even kids had to sit in these sessions.
00:10:28.480 --> 00:10:32.240
Nowadays, MLM team leaders use Zoom calls.
00:10:32.399 --> 00:10:37.679
There will be weekly check-ins or hangouts to make it sound more informal and relaxed.
00:10:37.919 --> 00:10:42.480
You're also pressured into training sessions that take more time out of your day.
00:10:42.720 --> 00:10:45.759
These businesses don't want you to have downtime.
00:10:46.000 --> 00:10:53.600
Downtime gives you time to reflect and think about what it is that's being expected of you, and they certainly don't want that.
00:10:54.080 --> 00:11:05.840
If you aren't on a Zoom call or a training session, you best believe you're expected to be posting multiple times a day on your social media accounts about the business and tagging your upline.
00:11:07.039 --> 00:11:12.720
The reason you aren't being favored in a cult leader's eyes is because you aren't giving enough.
00:11:12.960 --> 00:11:18.879
The reason why you aren't succeeding in your business is because you aren't working hard enough.
00:11:19.120 --> 00:11:20.879
You need to give your all.
00:11:21.120 --> 00:11:23.120
And even then it may not be enough.
00:11:23.360 --> 00:11:28.720
There's always the threat at the end of each month that if you don't pull your weight, you may not get paid.
00:11:28.960 --> 00:11:33.440
This is where a lot of the love bombing comes in, or in some cases the bullying.
00:11:33.679 --> 00:11:38.879
It's not a good place to be, and not how a true team acts.
00:11:40.320 --> 00:11:45.440
There are quite a few lies that potential uplines will tell in order to get you to sign up.
00:11:45.679 --> 00:11:50.000
The one that every company uses, yet is never true.
00:11:50.720 --> 00:11:54.799
You get to own your own business and be your own boss.
00:11:55.279 --> 00:11:56.240
No, you don't.
00:11:56.480 --> 00:12:00.159
If you do sign up, your boss isn't you, it's your upline.
00:12:00.320 --> 00:12:03.440
They enforce expectations on you and keep you in line.
00:12:03.600 --> 00:12:06.639
It also isn't your own business, nor could it ever be.
00:12:06.879 --> 00:12:12.559
If you own your own business, you are in control of the product sold and the prices.
00:12:12.799 --> 00:12:17.200
In the MLM business model, you're told what to sell and for how much.
00:12:17.440 --> 00:12:19.759
Even discounts are determined for you.
00:12:20.000 --> 00:12:25.039
The only thing you might own is your website link that the company makes for you.
00:12:25.279 --> 00:12:33.279
If you join an MLM business, your boss is your upline, and you are not a business owner, you are a sales rep.
00:12:33.600 --> 00:12:42.080
Being a sales rep alone doesn't sound so bad, but you need to remember that this is a predatory business model that you would be supporting.
00:12:42.879 --> 00:12:49.840
If a sales rep approaches you to join their team and you counter with, that sounds like a pyramid scheme.
00:12:50.080 --> 00:12:56.000
Nine times out of ten, they will respond with, pyramid schemes are illegal.
00:12:56.320 --> 00:12:58.000
Yes, Susan, I know that.
00:12:58.159 --> 00:12:59.919
That doesn't mean they still don't exist.
00:13:00.240 --> 00:13:10.480
On paper, the only difference between an MLM business model and a pyramid scheme is that MLMs sell products, whereas pyramid schemes sell an idea.
00:13:10.720 --> 00:13:16.559
The way both of them make money, and the only thing keeping them afloat, is recruiting new people.
00:13:17.759 --> 00:13:23.519
We talked about ranks, but what I left out was the practice of rank stacking.
00:13:23.679 --> 00:13:28.879
This is usually against the company's policy, but that doesn't stop people from doing it.
00:13:29.200 --> 00:13:31.039
Rank stacking is this.
00:13:31.360 --> 00:13:37.279
Jane signed up Mary, but Mary is having trouble finding people to sign up.
00:13:37.679 --> 00:13:45.519
Jane takes people that she was going to sign up under her and instead signs them up under Mary.
00:13:45.840 --> 00:13:47.120
This does two things.
00:13:47.360 --> 00:13:54.399
It helps Jane move up a rank, and it gives Mary this false confidence that she's successful.
00:13:54.720 --> 00:14:02.879
Mary will also use this confidence and the fact that she now has people under her to use when she pitches to new people.
00:14:34.159 --> 00:14:38.240
The brand of car changes by the business, but the carrot is the same.
00:14:38.480 --> 00:14:41.679
Here's what they don't tell you about this car.
00:14:42.320 --> 00:14:44.879
Probably because they don't know themselves.
00:14:45.200 --> 00:14:50.799
The sales rep that is driving that car is financially responsible for it.
00:14:51.039 --> 00:14:55.120
That sales rep has qualified for a car bonus.
00:14:55.519 --> 00:14:58.480
The company does not give them a car.
00:14:58.960 --> 00:15:00.399
It works as such.
00:15:00.639 --> 00:15:04.960
If you reach a specific rank, you qualify for a car bonus.
00:15:05.120 --> 00:15:09.679
This is a check that the business gives you every month for the car payment.
00:15:09.919 --> 00:15:11.600
It's not as simple as that though.
00:15:11.840 --> 00:15:12.320
Duh.
00:15:12.559 --> 00:15:14.080
Let's use our girl Jane.
00:15:14.320 --> 00:15:20.159
Jane moved up a rank by rank stacking and signing up five people under Mary.
00:15:20.399 --> 00:15:23.679
Jane now qualifies for the car bonus.
00:15:24.000 --> 00:15:25.279
Boss babe.
00:15:26.000 --> 00:15:32.960
The company determines the make, model, and even color of the car Jane can purchase.
00:15:33.279 --> 00:15:37.519
Sometimes the color is dependent on the rank, too, which is so stupid.
00:15:37.919 --> 00:15:45.519
Jane goes to the dealership and takes out a loan for the only type of car the company says she can purchase.
00:15:45.840 --> 00:15:56.639
Side note, some sales reps have a hard time qualifying for a loan because, as a sales rep, at least in the United States, you're considered a 1099 employee.
00:15:56.879 --> 00:16:01.600
This means that you do freelance work and this money's never guaranteed.
00:16:02.159 --> 00:16:07.759
In these cases, the sales rep may need a partner to co-sign the car loan.
00:16:08.559 --> 00:16:17.360
Okay, so now that Jane and potentially Jane's partner are saddled with a car loan, she now sings the praises of her business.
00:16:17.600 --> 00:16:20.399
However, then comes the end of the month.
00:16:20.639 --> 00:16:27.440
If Jane and her downline don't meet the rank requirements, Jane will not get that car bonus.
00:16:27.679 --> 00:16:32.559
This means that the monthly loan payment is all coming out of Jane's pocket.
00:16:32.879 --> 00:16:43.840
If her team did hit all the requirements, Jane gets that car bonus check, but it's only for a portion of the loan, almost never the full amount.
00:16:44.080 --> 00:16:50.320
She may get a$300 car bonus check to go towards her$800 car payment.
00:16:50.559 --> 00:16:53.759
The company is not paying for Jane's car.
00:16:54.000 --> 00:17:03.840
Jane's commissions are paying for it, and she may get a check from the company if she and her downline hit all their sales goals.
00:17:04.160 --> 00:17:13.279
Jane is now even more dependent on her downline making money since she now has this massive car loan and image to uphold.
00:17:14.160 --> 00:17:19.839
Oh, and those trips and conferences that your upline has you working towards, don't get too excited.
00:17:20.000 --> 00:17:24.799
The company might pay for your airfare, usually the cheapest they can find.
00:17:25.119 --> 00:17:32.160
You are responsible for transportation to and from the hotel, all of your food, and drinks.
00:17:32.319 --> 00:17:41.279
And if this is a conference, which is just a massive love fest on how great the top of the pyramid is, you have to pay for the ticket to get in.
00:17:41.519 --> 00:17:49.119
Sometimes reps have to pay a deposit to make it on a list to qualify for a conference ticket.
00:17:49.359 --> 00:17:51.759
Yeah, nothing is ever guaranteed.
00:17:54.960 --> 00:17:56.319
Okay, friends.
00:17:56.640 --> 00:18:01.759
You now know what an MLM business model is and why they are bad.
00:18:02.000 --> 00:18:05.119
Now I want to teach you how to spot one.
00:18:05.759 --> 00:18:08.720
On social media, it's actually pretty simple.
00:18:08.960 --> 00:18:18.960
Your friend or in-law or elementary school teacher will all of a sudden start posting a lot about a business that they never name.
00:18:19.200 --> 00:18:28.960
These posts will be in a completely different voice from them, using a lot of emojis and will come with a slew of pictures to prove how great the products are.
00:18:29.200 --> 00:18:30.160
Now hang on.
00:18:30.640 --> 00:18:33.119
Why aren't they naming this business or company?
00:18:33.359 --> 00:18:42.160
Well, as I said at the beginning, if the sales reps put the name out there, savvy persons will look it up and see that it's a pyramid scheme.
00:18:42.559 --> 00:18:47.359
If the rep creates mystery around it, they have a better chance of roping you in.
00:18:47.599 --> 00:18:51.680
The sales rep, though, isn't clever enough to know to do this on their own.
00:18:51.839 --> 00:18:58.319
Their upline sends them pages of photo captions and posts to just copy and paste.
00:18:58.559 --> 00:19:03.039
This was sent to them by their upline, who received it from the heads of the company.
00:19:03.359 --> 00:19:13.359
If you comment that you're interested or want more information, they will respond with messaging you, once again, not sharing any information on a public platform.
00:19:14.000 --> 00:19:18.079
Now, not everything they post throughout the day will be about the business.
00:19:18.240 --> 00:19:18.960
No, no, no.
00:19:19.119 --> 00:19:27.599
They need to play around with the algorithm so that when they do post about whatever nonsense it is that they're trying to sell, they will hit enough people.
00:19:28.160 --> 00:19:32.319
Social media algorithms are kind of like mathematical equations.
00:19:32.480 --> 00:19:37.200
The more you click or interact with certain accounts or posts, the more you'll see it.
00:19:37.440 --> 00:19:41.839
If this seller is posting an innocent question like, what's for dinner?
00:19:42.079 --> 00:19:48.000
Or Am I the only one who you feel like it's a normal post and add your response?
00:19:48.240 --> 00:19:50.240
This plays into the algorithm.
00:19:50.480 --> 00:19:56.960
Now you'll begin to see this person's post more often, and they'll be up towards the top of your feed.
00:19:57.200 --> 00:20:04.559
Some people will post these simple questions with a picture of their kids or pets to further encourage you to click that like button.
00:20:04.720 --> 00:20:05.839
But stay strong.
00:20:06.079 --> 00:20:07.359
Do not engage.
00:20:09.440 --> 00:20:13.119
In person, sales reps will often play the same game.
00:20:13.279 --> 00:20:17.680
They'll compliment you and tell you that you would be perfect for their business.
00:20:17.920 --> 00:20:28.000
No info given, no business name, but they'll pressure you to get your contact information so that they can rope you into a video call with their upline.
00:20:28.319 --> 00:20:31.440
Remember, no is a full sentence.
00:20:31.599 --> 00:20:37.519
If they continue to pester you, call over a store manager or threaten to call 911.
00:20:39.359 --> 00:20:43.200
Let's say you got sucked in and sat in on that video call.
00:20:43.440 --> 00:20:46.799
Pay close attention to what is being said.
00:20:47.440 --> 00:20:54.480
So often, the person that recruited you remains silent and lets their upline do all the talking.
00:20:54.720 --> 00:21:02.240
This upline is going to do a lot of talking without saying a gosh darn thing.
00:21:03.680 --> 00:21:10.640
Take a minute to process what they just said and ask yourself, Am I walking away with any information?
00:21:10.960 --> 00:21:12.720
Was my question answered?
00:21:13.039 --> 00:21:16.160
Do I have any idea what's being expected of me?
00:21:16.799 --> 00:21:19.759
The answer is probably Nope.
00:21:20.240 --> 00:21:27.839
They just throw around a lot of buzzwords that they're told to say because more likely than not, they don't know the answers either.
00:21:28.079 --> 00:21:31.920
Or they may have been instructed to skirt around these questions.
00:21:33.039 --> 00:21:38.799
The MLM company Herbalife started getting their reps to open smoothie shops.
00:21:39.119 --> 00:21:42.880
These shops don't have an Herbalife logo anywhere.
00:21:43.119 --> 00:21:46.319
The shop will also be called Something Nutrition.
00:21:46.720 --> 00:21:58.160
Their drinks are always brightly colored, most times multicolored, and if you peek behind the counter into an open cabinet, you'll see the Herbalife brand protein powders.
00:21:58.400 --> 00:22:08.480
If you mention this brand Name or ask if the shop is affiliated, the person behind the counter will usually shut down and be quick to shuffle you out the door.
00:22:10.000 --> 00:22:15.599
Multi-level marketing companies are everywhere and tout legitimacy all day long.
00:22:16.240 --> 00:22:17.839
Don't be fooled.
00:22:18.160 --> 00:22:19.759
Ask questions.
00:22:20.079 --> 00:22:22.640
Pay attention to the answers.
00:22:22.799 --> 00:22:31.519
And while you're at it, watch some awesome anti-MLM YouTube creators like Hannah Alonzo, Kiki Chanel, and Brianna Jewell.
00:22:31.680 --> 00:22:35.519
And come back next week to see what else has been hidden.
