Simpleology Blog

If you're in an MLM for the express purpose of making lots of money... than maybe gambling would indeed be a better choice.

What the statistics aren't taking into account is that many people who are "involved" with MLM are happily buying the products every month and don't really care if they make money or not. And that is absolutely the ONLY way MLM should be done -- with a product that has real value on its own merits, regardless of the opportunity.

Unlike gambling, you can actually develop a skillset and contact database and become successful in MLM. Gambling almost always tilts in favor of the casino - no matter how skilled you are.

Bottom line... don't join MLM for the money, do it for the product. Build your skills and "your list" through real marketing, with your MLM as just ONE product you might recommend.

Note from MJ: Hey David, just playing the Devil's Advocate here ... If it is 99.9% certain that they won't make money maybe the products should just be sold then and the people told it is extremely unlikely they will make money? If they are only in it for the product and the remote chance of making money maybe a lottery ticket could be given with each unit?

Mark --

I agree the opportunity in most MLMs (the vast vast majority) is overplayed big-time. While I can't imagine you would ever join an MLM as a distributor without being a fan and user of the product, it does seem that most MLMs would do better just putting the products on a Website, lowering the prices to "distributor pricing" and selling auto-shipments.

BUT -- you have to agree, it's a great way for a company to get a bunch of folks committed to buying the product.

The problem is the pricing. Most MLMs can't compete on the store shelves because they have to pad the price so much, to generate revenues to pass up umpteen levels.

The REAL reason for the structure is...revenue from the distributors, in one form or another.

And few who join do so without visions of sugar-coated $100s dancing in their heads.

All-around I think it's a great structure for the company and rarely for the individual.

--- Alan

Don't know who you have been playing poker with- definitely the wrong ones. I am a pretty good poker player and have won lots of money but not as quickly as being an MLM. Maybe you need a better product or service.

Note from MJ: Hi Don, not me - the CAI. They are only quoting the stats. What you have there, sir, is what we call a "Red Herring" :-)

being a MLM 'veteran', i'd agree that statistically, very few people turn a profit at all with a network marketing company.

that isn't to say it doesn't have its merits -- the skills required to build a great networking business serve you well outside of MLM.

one problem is the average rep doesn't put forth the effort to develop these skills, and believes that what their upline tells them is the best way to build their business will make them money (make a list, tell your friends and family, etc).

it usually doesn't.

i got into networking because i saw it as an opportunity for anyone, with pretty much any financial background, to build something great for themselves and their families.

however, while learning how to market the MLM opportunity through the internet my eyes were opened to much more profitable, and less costly, ways to earn a great income.

for less than 100 bucks you can get several domain names and a web host, used to promote anything you like -- be it your own products, or as an affiliate of others' products who do not charge you to promote their stuff.

compare this to my MLM business, where the average buy-in for new reps was between $400-1000, plus $100-200/mo (toward product purchases) to stay 'active' so they could be paid -- assuming they qualified to be paid at all, by sponsoring a downline.

so yeah, it's a bum deal.
far better ways to earn a buck out there, for sure.

MLM was a great learning experience though.

if i didn't join up, i probably wouldn't have invested so much into my education to learn how to become a great networker.

i wouldn't have explored ways to market myself, the product, and opportunity online, i probably wouldn't have discovered the potential for internet marketing itself, and i wouldn't be where i am today.

but who knows?
maybe i would have done all of the above, for other reasons.

Mark,

I'm curious, how much money in MLM did you make compared to how much you have ever made gambling?

Note form MJ: Hi Carolyn, most definitely more at MLM (and I don't really gamble), but I'm not talking about how well *I* can do - I'm talking about how well average people do. And when I say "average" I'm not talking about the relative worth of people or their talents - only the mathematical concept of the average. Again, if the "average" guy knew his odds going in, would the MLM guru be able to make money? The stats from CAI are based on comparing what populations do in reality. From a statistical standpoint, it is certainly interesting data, don't you think?

Click on the URL and see the product. I joined this MLM for the product to benefit some ill loved ones. I was to late for them but it has helped me and many others. It is a life altering product. I'm not into a lot of money but that is my fault.

When someone says they are making money with MLM, it begs the question:

Where are you in reference to the MLM Companies position in its life cycle? Are you in at the effective begining, middle or end?

But then how would one know?

Is the company re-inventing itself keeping a perpetual source of new or improved products so as not be a fad or is it a one horse pony show destined for a curtain call?

With MLM, you only know what your told and how can you be sure then?

Still think MLM is a sure shot?

With Gambling, I bet you can know your odds better. ha ha...

Gambling, especially when you know the odds, IS much more profitable than MLM, whether you are playing cards, stocks or options!

I have been involved in MLM'S in the wellness industry ( product based ). Its hard to sell a product every month. But in this MLM in the "Energy Industry is the biggest transfer of wealth in American History.the deregulation of Energy in TX.its life changing.and it's working miracles.Esther Heredia- herediaesther@yahoo.com

I have been a distributor for b0th MLM and direct sales comp-anies. Both take work to produce financial sucess.Both require people skills. MLM encourages and trains those willing to be trained
in people skills and business techniques.A plus in either direct sales and MLM is excitement about and use of the products.

Well, this is funny timing. I just won a trip to NY tonight from my beloved MLM company (got one to Las Vegas 6 months ago, LOL). I haven't bought a lottery ticket in years though. Waste of money in my opinion. None of the rich people I know gamble. Everyone I know who plays lotteries ends up spending even more than they win on tickets. Huh??? Am I missing something here? Is there such thing as a happy gambler?

Note from MJ: Hi Sharon, I'm certainly not condoning gambling if that's what you're implying. I'm just comparing stats and ideas. Yep, some people can be quite sucessful at MLM, but let's be honest about the odds of the little guy. Then ask this - if the little guy knew those odds going in, would it be possible for the MLM guru ot make as much money? Just asking questions ....

I would like readers not to mix up real MLM companies with so called "Fast Wealth" programs that use MLM name as a cover up for their pyramid scheme. These programs usually don't have any real or valuable product and they get their money only from recruiting - clear pyramid. That means these programs has very short period of life. After the closing of one program the founders of these programs open new programs and so on...
I am very surprised that reputable marketers don't shy to play this game.
Very sad...

Note from MJ: Aliaksandr, pay close attention to the link above. They compare pure pyramid schemes with some well-established MLM companies that are touted as product-centric and the pyramid schemes actually did better. Consider challenging the assumptions that your upline might be telling you to get you to believe the "my company is different' line. Ask for some facts to back up those assertions. If they have them, great. If not, ask how the person who taught you that learned it.

My upline was making tons of money, and I wasn't getting anywhere.

I wondered what the hell was wrong with me...why people in my upline were so successful and I was not...

...they told me I just hadn't "self-developed" enough...

...That I was "attracting" those losers for some reason...

...That I should quit blaming my company, my upline, MLM...

What a bunch of CRAP!

I later found out that they all got their start with special "sweet" leads.

Don't know why I'm protecting the not-so-innocent here, but I won't reveal the name of this big-time real estate "guru" who is heavily involved in a certain MLM...and the secret "sweet" leads that come to him via his book and website that went to my upline and a few select others in the company...

They signed up the sweet leads, then sold the BS leads to me (and thousands of others) for a profit.

Did I learn my lesson?

Yes...but not the ethical one, unfortunately (at first, at least).

I went on to help build an online "marketing" system that never worked, charging others every month & selling THEM crap leads, for which I received a commission.

I never got into the "sweet lead" club.

I honestly thought (or had deceived myself into thinking) that we'd eventually figure it out.

Guess it was my sick justification for continuing.

I was personally going broke, and I hadn't met a single person who made it big without the "sweet leads."

It's amazing the self-deception I inflicted upon myself to rationalize doing this...but I had already quit my job and was so far into it, I just rolled on.

Anyway, I ended up making more money selling stuff to MLMers than I ever made doing MLM.

And that's the secret the company owners and top networkers have all figured out: Sell "development" to MLMers for the big bucks.

After years of going broke and bored to tears with the business, I finally couldn't live with myself anymore and walked away from the whole scheme a little less than a year ago.

I went into internet direct response marketing.

Now I"m selling honest products, working with AMAZINGLY creative people, and loving my work.

Now I've got people like this CONTACTING me now:

"My name is *******. I built, or was involved in building, 35 businesses during my career of 38 years. The businesses ranged from a pet shop, to a bank, to a basket ball league, to an airline, an insurance company...and more. One of my businesses had over 450,000 customers. After selling one of my last companies for several hundred million dollars, I retired in 2000. However, I�ve decided to come back and do what I love to do, which is help businesses grow.

"Let me know if I can be of help, and if so what the next step is."

What a contrast that is to the down-and-out "opportunity lead" dregs of society I pursued by phone for endless hours, month after month and year after year.

I'm still amazed at the contrast. It's WAY easier doing business with multi-millionaires than it is to sell $40 vitamins to someone who's broke.

MLM is a bad joke.
Selling anything on ebay and working for yourself is WAY WAY better than some idiotic,
"debt free" "ground level"
"get in quick", " secure you position" time wasting, so-called business that is the fastest way possible to alienate your friends.
Buying leads, conference calls, training tapes, conventions, rah rah rah,
Thank God, I woke up and got back to reality and
success.
Yes, I did learn some very good life lessons, valuable skills, and even how to file bankruptcy.
EVERY MLM product has a better alternative that can be bought through normal channels. If you are currently involved with MLM and really love it, and it really makes you happy, and its not draining your bank account, on running up your CC's, and not chasing away your friends, that
Great! Enjoy! : )

I definitely think MLM is the better bet--but with the right product.

Note from MJ: Hi Linda, that's what I used to think, too. Check out the stats comparing great product MLM companies with no-product pyramid schemes. Very interesting, indeed.

I've lost at both! You have to show up early in the game for making it in MLM. Gambling, you can always bet the house, NOT!

This is a very interesting post. I have a lot of experience with MLM's starting way back in 1983 when many were enjoying a heydey. I didn't ever make any real money being in MLM but I did enjoy and benefit from both the products and the subtle selling and presentation skills. Overall I'd agree that most MLM high flyers are the only true winners and that to get amongst the action you have to get in early and get out early (and onto the next new thing). Having said that I do feel that some MLM's can be worthwhile as long as you either keep your involvement in perspective or pull a few partners together and head the start-up yourself. I noticed some recent hype and promo on the Net regarding "The death of MLM" and it put forward some interesting notions,.. most of which I would agree with. I think that if a person can find the right product(s) under a good MLM model and forge them together with some really solid Internet marketing and Web 2.0 principles then it could be really worthwhile and offer decent returns without all the typical overheads and "rah rah" meeting hype that goes along with MLM. I've been keeping an eye on the wellness and health industry for quite a while now and may embark upon some kind of venture along the lines I've stated herein. We'll see,.. got to get focused and prioritized first. "Thars gold in them thar hills for sure",..I'm just not sure whether to buy a shovel and start digging,..or to start selling shovels!

Note from MJ: Hey Rex, the notion of bundling a good product with web 2.0 ideas and solid internet marketing is not a new one. It's been done a great many times and from what I've seen the failure rate for a net-heavy MLM company is just as high - perhaps higher. The stats showing that no-product pyramid schemes actually have a higher probability of payout is a telling one. I think people smell dollars and then will convince themselves that they love just about *any* product. As for selling shovels, that would be the way to do it. It doesn't take long to figure out that the people selling MLM training materials are the ones making the real fortunes. Talk with even the top distributors and that truth will come out. And the reps making serious money are using direct marketing tactics.

Check this out...
"Nobody should pin their hopes on a miracle. - Vladimir Putin"

MLM is a successful business model for those who own the company. The products suck and can be bought cheaper elsewhere with much better quality. If you mlm'ers read the above article, pyramid schemers with absolutely no product do 100 times better than product based pyramids.
No one wants anyone pills, potions, and lotions. They want money and lots of it.
And just because Gambling IS better than MLM doesn't mean you can turn it into a profitable venture. It means get your head out of the gutter, review your options and educate yourself. Hope this helps

Wow. Why would anyone start in an MLM after reading all this? I'm just researching starting in an internet business which I think is a 'direct sales' business, but honestly I have a lot to learn. I must admit I'm not entirely clear what's the difference between the 2.

Note from MJ: Narayani, "direct sales" is virtually the same thing as MLM or network marketing. An "internet business" can be just about anything depending on what someone means. Usually that refers to someone using the web as the primary way to contact people and make transactions - that's not necessarily MLM. Google these terms for more info :-)

if you can find a opportunity where the product move, mlm works. i have people in the team that earn �35,000 on retail income , if you build a team too, the income is unlimited. our company show the turnover every 4 weeks, if the company you are involved with will not show you turnover or income , there is a rabbit away.
with a mlm where products move you have a pot of gold if you share it.
the only winners in gambling are the book makers or people selling systems to beat book makers.

What everyone is missing...

I've been involved in MLM for many years and have made lots of money....BUT the products I promote are actually related to, you've guessed it...GAMBLING!

Internet Gambling is a colossal market and when combined with the MLM business model, you have a winning combination.

I could never imagine running a successful MLM business selling pills and potions, but with a virtual lottery ticket business, almost everyone you meet are your warm market.

So, in my opinion, there's nothing wrong with the MLM business model, the reason most people fail is due to the lack of demand for the product they are trying to promote!

In MLM one at least gets a product, usually a good one. In lottery you can spend lot of money and get nothing. And you spend you time and can get addicted to lottery.
Regarding money, some people earn a lot in MLM ( usually few) , some earn a reasonable extra income, and some earn nothing. And good products may be difficult to promote, because most people are accustumed to use junk things.

I have watched the mercurial rise of an American guy doing NuSkin in Japan. I also saw hundreds of people go through the grinder and lose lots of money they couldn't afford to lose on buying products and traveling to "opening" countries to get the edge.

Personally, through a blessing of pure chance with hard work, I still make a few hundred bucks profit per month from this company some five years after I personally sponsored my last distributor.

I hated the cruel exploitation of MLM. I often heard, "Some will. Some won't. So what? Next!" It made me cringe.

Many broken marriages and friendships were left in the wake of such a cold-heartedness.

MLM is based on a big gamble, and most people who rise high don't give a damn about small fries. They use, abuse and trash you without a blink.

Gambling and MLM are kissing cousins methinks. But then again, affiliate marketing is often a close relative as well.

Note from MJ: Hey R, thanks for the real-life stories. It's exactly that kind of observation that got me out of it. Someone tried to explain that to me and I just didn't listen.

Gambling takes a risk - MLM doesn't.
People always see all or nothing. What about the people who make 500 - 1000 US $ a month? I am with MLM since 4 years and I am convinced that it is fair deal for the ones who want to chnage something in their life and have no idea how to start their own business. The skills you learn are helping you in any business.
Because people don't invest a lot of money they are not committed enough to do the things which are necessary to be successful - like in any other business.

I use both mlm and gambling. The money I make at mlm normally goes on some donkey that never had any chance of winning. Seriously though the stats are probably right as only a very small percentage of people actually make any money at all from mlm.

Hi Mark, and thanks for all the great stuff.

This is an interesting post. I'm a fan of MLM with the right company, although I do believe that there's only one or two good ones around. I'm doing ok with mine as are many thousands of others, and I sincerely believe that within a couple more years it will give me total financial security, even though I do it very part-time alongside 2 other businesses. If the MLM/gambling data had been posted by anyone other than the CAI I may have taken a more serious look at it. I've had dealings with Jon Taylor before. He's an extrememly biased individual who only ever looks at one side of the MLM argument. We have exchanged several emails in the past regarding MLM and he will not listen to anything positive about the MLM industry. While we on the simpleology blog can all have a good debate and respect each others views, Jon's attitude is 'my way or the highway'.

Speaking of a one sided debate, in my last email to Jon Taylor I suggested he take a look at some of the success stories and images of successful MLMers from my particular company as we had lots of pictures of our European profit share event posted online. This could give him an idea of all the people in Europe who were achieving a good level of success. His response was "I care not how many gleaned fat checks with **, but in the percentage of people who lost money trying to meet their expenses". (copied and pasted from my email).

I personally can't continue such a one-sided argument.

You know yourself that making money in MLM won't be easy and that many lose money, but that's the same as starting any other small business from scratch. People who start more traditional businesses have a business idea and a plan and still 50% fail within a year. Many people join MLM on the spur of the moment because they are misled by their upline, promised quick money, and are aggressively recruited. They have had no urge to start their own business previously, and when they realise they actually have to work hard consistently to achieve a degree of success they drop out and go back to their daily grind. These people should never have been offered the business in the first place. (How many who buy the simpleology course or any other actually finish it?)

If you look at Jon Taylors bio it tells us that Jon gave up Nu Skin "as my aggressive recruiting was affecting our most treasured relationships".

Well it's no wonder he feels bad about MLM. Is that the way to run a business? I think not. Jon Taylor was an unprofessional networker who had enjoyed poor or no training from his upline and company. Those days are now over I believe, as with the help of people like Tim Sales we strive to be 'professional networkers'. We aim to provide a solution and to build lasting relationships with our team and our customers. Rather than use the old '3 foot rule' we now qualify people before we ask them to take a look at our business, and then we show them how they can use MLM as a vehicle to achieve what they desire. We then plan with them and help them achieve it. Job done. This method saves a lot of time and a lot of rejection, and leaves people feeling good, even if they end up saying no.

I'm not saying that MLM is all good as it most certainly isn't. There will be bad companies and bad distributors wherever money changes hands, but not all companies are created equal. Do your own due diligence before joining.

(By the way I worked in casinos for 20 years before I did MLM, and the people in my MLM company are far happier then the people I dealt Blackjack to!)

Note from MJ: Hey Mark, thanks for the polite agreeing to disagree :-) You totally get it - this is more or less an open forum (we'll delete people who are rude, spam, propagandize, of course) and I'm open to questioning my own personal beliefs. While it would probably take 1,000 wild horses to drag me back to MLM, I can still love and respect the people who do it - even if I disagree with them.

Hi Mark
:) Nothing like a bit of controversy.

My opinion on MLM is as follows,
if you are going to succeed at MLM you would have succeded in any other business you put your mind to that involved selling something, which is probably why you did so well at it.
Most of my clients in my financial planning company could not sell a glass of water to a thirsty man in the desert, so how on earth are they going to promote and market products that are overpriced and often not even needed by their prospects.
Of course, us go get 'em, "we can sell ice to eskimos" types would have no problems at all recruiting a downline and of course selling tonnes of product.
Yes people will succeed at MLM just as people will succeed in traditional business's, however when people go into business for themselves it is normally in an area they know a lot about or they are passionate about.....even then 80% or more fail in the first year.
I agree with some of your respondants that MLM can teach you some fantastic skills however those same skills can be learned in any good business that has a sales team (note I say good business, not all sales organisations I have worked with have good training systems in place)and good training systems.
In my various financial services business's for example we have regular weekly training sessions on things such as networking, marketing yourself, motivation,prospecting, sales techniques and of course every one gets signed up for simpleology 101.
IF there was a MLM company out there that had a product that people bought rather than relying on distributors to sell it then MLM would be great... unfortunately there are not too many business's of any kind (MLM/traditional/internet) that have products that beg to be purchased just because they are there.

Cheers

Terry Rota

Note from MJ: Hey Terry, I still owe you and your future Mrs. a dinner at French Cafe :-)

I0ve done mlm in the past and had some success. Long term, not something i'd recommend doing though. Moved away long time ago, building my own sites now and enjoy doing that.

Sam
http://www.thebesteyecream.com

Hello Mark,

I certainly do understand you stance on MLM although I respectfully disagree to a point. I was in a MLM company where the climate was throw enough mud against the wall to see if someone sticks. It was all about the rah, rah and the biggest house, the best car, and the Rolex watch. People joined, as I did on emotions. People in that company were having life changing experiences with the exceptional products so that was the sell. I learned the hard way to NOT join a company using emotions as your only criteria. It took me 5 years after leaving that company to build a list of BUSINESS CRITERIA for finding a company if residual, reproductive and reliable income is your goal. ALL home-based business needs to be looked at for the business model not just the hype! Once you do your due diligence and decide what it is you truly want from the business using BUSINESS criteria things change.

Wishing you the BEST!
Carol

Note from MJ: Hey Carol, thanks for disagreeing respectfully. It's great that we can discuss these ideas openly and rationally.

Interesting, I am happy I did not read this 22 years ago. At 75 healthy, full of vim and vigor, my present and future is extremely wonderful with MLM. I am the most non agressive person who just tells my story and countless other stories who has made it really big in MLM. It is all about the product. I do know about other MLM that would be a gamble if you joined. My health and the health of my friends and family tell me this is the right thing to do. Because I am so successful in what I do, people approach me about all kinds of MLM and they would all be a gamble. Fortunate I found the right one. And, the products are NOT overpriced.

This is all very interesting to me. I have been an MLMer for years now, and while I haven't gotten rich off of it I am proud of the products I sell and am glad to use them personally. The lack of funds is due to my own lack, not the business structure. I had a great upline that was doing quite well and were excellent teachers. I didn't put forth the effort. I was too busy "stepping over dollars to pick up dimes". What I was told when I joined was if I refer a girlfriend to a product at the grocery store, the grocery store isn't going to pay me for that referral, and neither will the product manufacturer. Why not refer my own products that I like and get paid for it? Made sense to me.

MLM is great oportunitis for everyone who know cominications with people very well.
Product is the best, make money is the best way for people.

Thanks
http://www.pxds.com

Ah, a conversation I can sink my teeth into!

I checked out the statistics, the fine print, and the "5 red flags" document that Dr. Taylor presents (incidentally, I saw nothing that told me what his PhD was for).

Here's the most interesting fine print I found:
'A "recruiting MLM" is a multi-level marketing (MLM) program that uses a compensation plan that allocates the majority of its payout to participants to those who recruit a large downline of participants, rather than to front-line sales persons for sales to persons not participating in the scheme. The vast majority of MLM's are recruiting MLM's, in which participants must recruit aggressively to profit'

So Dr. Taylor is very much pursuing a specific niche in the market, so to speak. Amway has long been a target of bad business, to the point where several MLM reps screamed to the DeVos/VanAndel regime to keep their noses out of the "tapes and marketing" of the upper "leadership" or said leadership would quit, because that was where the bulk of their income was being derived.

Dr. Taylor suggests that companies that pay fewer than 6 levels are discounted from this statistical foray, as well as programs that place the brunt of the payout at the distributor (rather than recruiter) level.

Terry, above, lamented that "unfortunately there are not too many business's of any kind (MLM/traditional/internet)"
I am fortunate, I guess, in that I am part of a multi-channel Direct Sales Company that started as a retail establishment and grew a network marketing company from there. We appear to fall into that small minority - which may explain a portion of my success with that business.

That said, I am not altogether ignorant of the risks inherent with starting any business, and I frequently turn interested recruits away because they're not business people.

There is a right and a wrong way to conduct business, and so many people will sign up "anyone with a pulse" - who frankly had no business in business in the first place. This is part of what brings "the average" down. Or up in the case of Dr. Taylor's statistics.

I am pleased that my retention rate is probably one of the highest in the industry (approximately 70% to date), and these people are active, productive, and happy due in part to the fact that I put a LOT of hurdles in front of them before they join. MLM should NEVER be seen as a get-rich quick scheme, and I encourage recruits to invest a year of their time and effort before they even think about being profitable. They know going in that there's work involved, but that it's not like digging ditches.

Here's the big problem with statistics: anyone can massage them to validate nearly any point they want to make.

Dr. Taylor's "5 red flags" document surveyed Utah tax professionals. Utah is the HEART of MLM in America. Do we not think those numbers might be slightly skewed, rather than a microcosmic look at MLM altogether?

This is decidedly a fantastic conversation! I am so glad I was able to participate. I hope I can contribute more in the future.

Having spent considerable time (i might add - away from family and friends) building up what I thought was a "sure thing, ground floor, untapped market..." etc etc MLM business, and making all of mid five figures a year it made me realise a few things:

a) You shouldn't rely on others to produce you an income

b) Your family and friends are very very important

c) You only get your time ONCE

d) It's more profitable building "funded proposal" systems (direct response) giving networkers more of what they need (so that's what I do now, surprise surprise)

and

e) I wouldn't do what I do now, if I didn't "get in" and then re-evaluate my life INSIDE an MLM, to "getting out" seeing my life OUTSIDE an MLM.

It's quite humbling when your wife tells you that almost every single friend of ours has commented - saying - Dave's so much better now - what's different? Hmmmmm.... Was i THAT bad?

Most MLMer's are quite simply "chasing the dream" or should I say "chasing the illusion" - which is EXACTLY what gambling is.

The difference in mindset between the two would have to be - One expects to make money, but doesn't know they will probably lose, and the other expects to lose money and is excited when they don't!

So I agree completely with you on that one Mark.

The fundamental flaw behind MLMs is that as a distributor you have NO CONTROL over the product or service, or delivery, or customer service, or price, or basically anything...

The absolutely only thing you can control as an MLMer (apart from what you promote) is your "list" - which for the most people is unfortunately their friends and family... Not much control in that either!

So - in comes direct response marketing tactics - which can work to help you build a "list" (but not always)...

The same goes for affiliate marketing. Apart from the CAI article being extremely limited on information, I wonder what the failure/cost rates are for the punters trying the "internet marketing" roulette?

I would hazard a guess that it's right up there with some of those MLMs...

Keep up the great work Mark - it's primo.

Dave

Firstly, let me say that I also came to the same conclusion as MJ and left the MLM industry several years ago. When you understand pure free-enterprise, it's hard to justify why you're constantly sharing your efforts with an upline of people who often have nothing to do with your results.

So, MLM is great if you want to be a hundredaire or a thousandaire. But it's my experience that most MLMers have no idea how many customers they will need to have to reach a simple $3,000 per month income. And in most cases, it's hundreds if not thousands.

With that said, though, from a critical thinking standpoint, I'm curious as to how the CAI can presume to know the break-even point for these thousands of MLMers.

After all, even their companies don't have any idea what someone is spending in business expenses to run their business.

How, then, did the CAI come up with these numbers? Simple: they looked at the published numbers of MLM companies to determine what percentage of people were spending more on product than they were earning in commissions.

So the question is: IS that an accurate way to determine if someone is successful in MLM?

No.

Why? Because there are thousands of people who are enrolled as "distributors" who A.) have ZERO interest in building a profitable business and B.) only enrolled in the company in order to buy the products they wanted at the wholesale price.

This alone skews the numbers beyond repair. (The CAI's numbers are based on the assumption that everyone involved was TRYING to be profitable. )

It would be better if the CAI had limited their statistics to include ONLY the distributors who had enrolled (for instance) at least TWO other people as distributors in the last 60 days. In this way, they could have made sure that they were really looking at a group of people who were showing a legitimate interest in business-building.

So, I'm not sure if these numbers are accurate and unbiased enough to prove the statement that "gambling is more profitable than MLM".

But, again, after years of being involved in the traditional MLM business model, I have to agree that there are OTHER compelling reasons for why the idea of sharing your profits with an upline don't make sense.

When I quit MLM and started moving into another direction, my income for the same amount of time and effort multiplied by 10.

So, if nothing else, I appreciate this thread for the simple fact that it should encourage people to actually DO SOME MATH before joining that latest, greatest, hottest MLM deal that's promising you a fortune for chasing your friends and family with vitamin offers.

Tony Rush

WOW!!! What a great discussion! I can definitely add a few cents here! Like many others out there, the MLM industry has not braught my husband and I the financial freedom we so deserve as of yet. However, it has braught power, purpose and passion into our lives and marriage. MLM is an awesome vehicle to take anyone willing to the destination of his or her choice. But even more important than the destination, it's the JOURNEY that impactsz your life in ways that are otherwise infathomable. WHO YOU ARE when you sign up IS NOT WHO YOU ARE 6 MONTHS LATER if you are willing to open yourself for change and growth. These types of miracles do not happen at casinos, or even Wallstreet for that matter! Though luck may be on your side at the gambling house, you are still the same empty,friutless, needy person you were before the "big ship came in." With the training and mentorship of an MLM,and your commitment to change, you are abundant in ALL areas of life, including your wallet!

It's true that few MLM'ers succeed in making "the big bucks". In my opinion, the only reason for this is the fact that many of them don't bother to educate themselves to properly manage the business, do the work as instructed, and teach on what works. The only way to succeed in MLM is to be tennacious, do the work, day in- day out (what works of course)and believe that there is no other option that to succeed... Like in any business, you have to educate yourself on how to succeed, how to have the proper mindset, people skills. It's important to have a unique product line, a fair and good compensation plan. All these issues need to be checked before "jumping" into an MLM company.
Any regular business owner will tell you that to open a shop of any kind - you need a very substantial capital to start with and it can take you from 3 years and up to make that money back again. About 95% of these businessowners fail miserably within those 3 years and often have to file for bancrupty prior to the end of 3 years.
Being independant isn't a game. It requires many skills, education, experience, intelligence, good intuitions and acting upon them. And that's true for any kind of business. People think that if they can start an MLM business for a few 100's of dollars they know enough to succeed with their previous experience and knowledge.No!MLM is totally different ! An MLM distributor needs to think totally differently that a direct salesperson. MLM is built on return customers,follow up and referrals from happy customers. Direct sales is less focused on follow-up and refferals. Many happy customers become successfull fervent distributors as they "ooze" with conviction and motivation and have no problem presenting the products and opportunity to everyone and everything that mooves... As an independant businessowner and MLM'r I can tell you that the 2 require commitment, taking responsability, education, development of skills, proffesionalism and work work work. Then you can succeed like I am succeeding.

My friend loves MLM and is in several companies--and is still working part time for right now money when she can get it. The one program I have seen up close and personal basically works like a certain un-named intern program for unpaid workers to do the legwork for the upline.

You can call it training, if you can learn to do for yourself what you are doing for the company. You can call it training because you might learn how to speak to people you don't know and how to sort the suckers from the savvy, as it's the suckers who will buy in every time.

My friend has also seen several businesses tank because the company incorporated in the wrong state (one that does little oversight), or they did not enforce compliance on over-enthusiastic associates, or they just plain could not product product to meet demand.

I got an email form someone promoting healthy chocolate (love that idea!!!) but $200 for 4 bottles of cocoa? Maybe not.

98% of gamblers lose but for many it is a hobby and all hobbies cost money. MLM seems so yesterday to me and EVERYONE I know glazes over if not runs away at the first sign of the old hype and sales talk that comes with MLM. The people involved in healthcare MLM are the worst as they often dont have a clue about health and are just repeating nonsense from their company literature.

I know a number of folks who are making money at MLM's. The products that are the most successful are the ones that are real needs for the customer, and are really and readily consumable during the month or quarter cycle. The slow moving products are the ones that are the most difficult to make money at, since you must continually prime the pump by finding new customers. On the other hand, what are the stats for other, more traditional businesses? Isn't it something like 95% of businesses fail in the first year, and 95% of the rest fail in the next 4 years? How is that compared to gambling?

WOW...sure is a lot of discussion on this topic. Let's see where I fit into the picture.

MLM-GAMBLING-HYIP (or pyramids)

For "ME" hyips=better known as *surfing, clicking, matrices, etc. There is a lot of money to be made in these programs. ***There are also LOTS OF LOSSES***

As with any type of program(s), there is a LEARNING CURVE. And most of the time, the learning curve COST U MONEY!!

Once, you *learn* the system, then you are more knowledgeable about what you can and cannot accomplish.

I don't know who on here has participated in these types of programs. But, when I first got in...BOY WAS I GUNG-HO.

I remember going to a friend and talking them into investing $2500.00 into "what was then - SUPPOSEDLY - the HOTTEST investment program out there.

WELLLLLLLL, I put all the money into the program and bout 2-3 weeks later...POOF BE GONE!

Don't need to explain what happened to our friendship.

Or BLACK FRIDAY (January06) 2 years ago, when a very VERY good hacker, literally took down a majority of the hyip programs....payment processors were being shut down, with OUR MONEY still in there.

Man, a lot of people still haven't recovered.

Well, I did, got through my learning curve, and LITERALLY lived off hyips for almost a year. I was up to making a couple thousand a month. As with anything...nothing is forever!!!

So, I took a break and now I'm getting my feet wet AGAIN in this market.

I told someone that no matter what you do - YOU GOTTA LOVE THE GAME!

Be it: MLM-GAMBLING-HYIPS

There's only 1 RULE - learn the game!

Hi Mark, I have dabbled in MLM the last 20 years. More of a customer recommending to a few friends than serious. Several years ago I joined a company who's main product has helped many people who were suffering with poor health. The results were very good on people and pets. I would recommend this even if I was not involved with the company.The strength of this has created a group of a couple hundred and a nice monthly check($1000.00 +). I am sure it would be much more if I worked as hard as some I have watched go from nothing to big checks. I believe most people will no succeed. There are a lot of companies that are difficult to succeed in and from what I have seen many people are just not willing or able to follow good training and work. It is a job if you want big income. If someone tells you go get two and they will get two and you will be rich by summer RUN. Of course I have also had several terrible experiences when I was sold and fell for the "dream" of lots of money for little work. Companies that went broke. Companies changed the marketing plan to bennifit the company after sales grew and they had to reduce the payout. Still all and all a good company with a good group can give you lots of training and people skills that will help you the rest of you life in other areas.

I believe any type of business is great whether it is MLM, online business, Internet Marketing, offline business... the person that succeeds is the one that does not give up...
I have both a MLM and an offline business. My MLM business is more profitable than my offline business The residual income is amazing. Offer the right products to the right trends and the right people.

MLM is a true relationship building people business...a have long term income

Direct Marketing is a sales business... You sell once and you have to continue to offer a new product and get quick sales...

In any business you have to develop yourself as a trusted advisor and leader to have a following of customers.

Jose

I am in a company with an MLM component. The problem I see with MLM in general is the outright lies that are told to get people involved in the business.

"It's easy! Anyone can do this! You will make a fortune, just talk to your friends and family...bla, bla, bla."

Its not easy. Only those who are willing to learn sales and marketing can do it, because to exploit friends and family for money damages relationships.

Many MLM products are highly overpriced and so profit margins are minuscule. There are always conditions that need to be met to qualify to receive the money you earned. On the other hand, there are always conditions to be met to qualify for a weekly pay check, too.

Times are changing and people don't want to be sold-to more so now than ever. Find a way to build your MLM business that does not involve prospecting everyone with a pulse. With the company I represent for instance, my customers and prospects call me, so I never have to spew all over innocent people who have no interest in what I am selling.

And if I can plug an online friend who is working to change the face of MLM for the better, Google Kim Klaver and check out her philosophy. I find it brilliant for anyone who is in an MLM that doesn't provide for customer/prospect acquisition.

Gamble if what you want is a daily hit of adrenaline and the possibility of winning a bit here and there. Choose MLM if you are entrepreneurial, self-disciplined, understand that you will need to learn sales and marketing [and the costs associated with same] or pay someone else to do it for you, and that overnight success usually takes 3 to 5 years of continuous focus on your business.

All the best,

Tracy Austin

It's interesting how our emotions can blind our judgment, since your original message was quite CLEAR, including the reference AND the disclaimer.

Personally I think people joining this industry lack the proper foundation, knowledge and preparation.

�If you fail to prepare, the prepare to fail�

I never thought about making a comparison between gambling and MLM, that certainly was another clever move my friend.

In my humble opinion, most of people getting involved in MLM programs approach this business pretty much with the same, wrong mindset they do with Gambling: Easy Money!!! Get Rich Quick!!!

But nothing could be further from the truth.

So once more, this is a foundational and educational problem, just ask it to the tinny successful MLM and Gambling Micro Community...

P.S.1 There are some enthusiasts who join MLM programs just for getting the product for themselves or people who gamble just for the fun of it, in either cases, this group are not considered in my opinion expressed above, since the behavioral patterns are quite different.

P.S.2 Talking about salting...seems like you have your hands full with this topic don't you Mark? JAJAJA ;-)

I was involved in MLM for 12 years. It allowed me to travel internationally and live in a few different countries. I learned to speak 6 languages (3 fluently). I had a rather large network and made some money. I say "some" because compared to the investment in time, money, and sacrifices made (lost my wife and daughter because of it), the money was nothing to be proud of. It was a good learning school anyway.

The residual income ploy is a lie. The one thing I learned is that MLM is plagued by the "leaky bucket syndrome". You incessantly fill your bucket with active distributors and each month a few will quit. Your bucket has a hole in its base. No matter, keep on sponsoring to top it up, right?

Wrong! The day you choose to retire your bucket will continue to leak until it's empty. That's what you have to look forward to when you finally stop recruiting.

I think we're asking the wrong question. The question should be 'how many people who actually spend 10 hours a week or more, consistently doing nothing but profit building activities make money in MLM."

From my experience, 100% if someone will last past a few months of a learning curve, which, by the way, we tell people in my company.

This makes me laugh. A famous mlm trainer, Dani Johnson, says: "your activity should be composed of 80% prospecting, 19% training, and 1% problem solving.

The problem is, most people spend 80% problem solving, 19% training (at least something right) and 1% prospecting.

Mark Yarnell has compiled some interesting statistics about success of people who stick with a company long term, and after a 10 year window, more than 90% of the people who have stuck with a company are at a significant leadership position and are earning six figures or more.

How many of your jobs will earn six figures a year after 10 years? not many.

I was involved in MLM for 12 years. It allowed me to travel internationally and live in a few different countries. I learned to speak 6 languages (3 fluently). I had a rather large network and made some money. I say "some" because compared to the investment in time, money, and sacrifices made (lost my wife and daughter because of it), the money was nothing to be proud of. It was a good learning school anyway.

The residual income ploy is a lie. The one thing I learned is that MLM is plagued by the "leaky bucket syndrome". You incessantly fill your bucket with active distributors and each month a few will quit. Your bucket has a hole in its base. No matter, keep on sponsoring to top it up, right?

Wrong! The day you choose to retire your bucket will continue to leak until it's empty. That's what you have to look forward to when you finally stop recruiting.

Although I agree with most everyone?s comment since it really depends on your experience. The goal to any MLM should not be to simply get rich. Only those who truly help people will benefit. www.HomeownersFinancialDashboard.com

Wow, lots of opinions and I value each. Just so you know I am not in MLM right now (but may join with the RIGHT PEOPLE and the RIGHT COMPANY in the near future) but have been in and out of the industry since I was 16 (31 now). I dont think we are giving MLM enough credit here. If you look back at most of the big internet GURU's, etc, I am willing to bet 95% of them got involved with a MLM business as their first venture. Even if you are chasing the money or chasing your deams gues what, you are chasing something better for yourself wich is more than most of the people out there.

I think MLM is alot like smoking weed, no serioulsy hear me out. It is a an introduction to having a home based business, as smoking weed is an introduction to other drugs. Most people who smoke weed end up trying other dugs, the same way most people who try MLM keep trying other business's until they find the one that works for them.

Mike Filsame of the butterfly report (multi millionaire) started as an MLm junkie as did many others. We have to at least give it credit for what it does and that is get peolpe off their ass and helps them dream about what is possible, not enought people do that now days.

Yes there is a right and a wrong way to do the business but so is every business opp. people have been selling busineses opps for 100 years, i bet you 99.9% of them fail. Is is the fault of the information or like a person stated above is it becasue they did not dedicate 8 hours a week prospecting, 2 hours a week training and an hour a week problem solving. I bet they didnt. Is their crooks in mlm, you better belive it, is there crooks selling lotions, potions, and information through direct sales, you better believe it.

Bottom line is this, and I will use my 66 year old father as an example. He needs to make extra money, (the average person that goes bankrupt does so becasue they are $400 a month short on the bills, $400) and is wondering how to do it. Franchises are out because of the cost, so we have direct sales and MLM. With direst sales he has to create or fins a product, create a website, set up an autoresponder, learn to advertise, learn how to write copy, set up a shopping cart, ship the products, do customer service, etc, etc.

With MLM he has to research the industry, find 2 or 3 companies and products he likes, interview multiple sponsors making and doing what he wants to do (missing step) then get on his mentors back, learn how to create a personal webpage or who is site, learn how to advertise, and most importantly, learn how to disqualify people from joining his team. Both require work but you tell me what one seems more enjoyable. Not to mention the company looks after all product fillfilment and creations, all he does is send them customers and he gets a % of sales. Not to mention the tax breaks you get with either option.

Like I said, it is an introduction to having a business and that is why we should all be happy that MLm is around. Mark I love your stuff, ben following you since aesop.com, but I am willing to bet you are where you are today because sometime when you where in your teens you answered a MLM ad and that caught the fire in your ass to become the person you are today. Good luck to all in this thread becasue you are the true leaders.

Mark, I have never before read all of the comments unless there were only a short few. However, since I feel MLM has a place in the business world, I read on.

First, having been a math teacher for a few years I know how easy it is to bend the numbers to suit your purpose.

Second, I believe that 95% of the people that pursue an MLM business and 95% of regular businesses fail within the first 3 years.

Third, there are good business models and not so good business models as there are good and not so good MLM companies.

So why do so many people fail? Perhaps if is because, as others have mentioned, they do not treat their business or MLM as a business. They go at it as a hobby or something fun to say they were in it, kind of like gambling is a fun (sort of) way to be entertained.

There are addicted gamblers and addicted MLMers who go at it the wrong way and for the wrong reasons.

Given the choice of working for someone else, making them rich and allowing them to treat me as an inferior, or spending hundreds of thousands on a franchise or other brick and mortar business or finding a good networking business and treating it as a business, I will choose the latter.

There are businesses that have only two levels, kind of like an affiliate program with permanent income streams, that cost zero to start. You only make money when someone uses the product/service and you are paid monthly as long as they use that product or service. You just need to do some research to find them.

I have learned a great deal from my MLM experience. The greatest knowledge I have gained is that the relationships you build in your business and the way you treat people is the best gauge of how well you will succeed.

That being said, I do agree that the quickest way to wealth in MLM or any other business model is to sell the shovels.

Hi Mark,

I have to agree with CAI's stats. Most people fail miserably at MLM and would probably have been better off playing Blackjack in a Vegas casino. But, in defense of the MLM business model, there are some people who do very well with MLM. The folks that do well would probably do well with any business model that they pursue. The same is true for those who fail at MLM. I base my opinions on many years of personal observations.

I see new distributors come and go all the time. The reason why so many people fail is not simply because they MLM is not profitable, but because some people just aren�t passionate about this type of work (and believe me it is a lot of hard work).

What is the point of starting an online home based business that you are bored with before you begin, when you could find a much more stable boring job in the outside world? By making sure that your home business is something you are enthusiastic about, you are ensuring that it is something you will stick with for longer than a few months.

Being enthusiastic about your business will also help in marketing. If you want to tell everyone about what you�re doing, then you are more likely to get new customers! It is also important to be enthusiastic about the type of marketing you are doing. Make sure that the business cards you order (or make) look just the way you want them to, so that when you can hand them out proudly.

In my opinion, no matter what type of business you choose, whether it's MLM or some other business, do it with everything you've got or don't do it at all.

Cheers,

Ron H.

Dear Mark and Friends,

A few thoughts regarding Mark's provocative question (Does this make him a provocateur?).

Here, let me heat this up:

No, the "Institute" is not correct and everything about their website, their pseudo scientific study and their "We are going to save you from yourself" collectivist outlook indicates to me that the owner/s of the Institute has found himself quite a very large niche to focus his attention on. That niche being, everyone who has signed up for a MLM / Network marketing company, never made any money and was also hounded by their spouse over their "business" failures (obviously, a lot of people in this niche!).

For me, and this is just my opinion-- I find the activities of the "Institute" far more damaging and predatory than the organizations they purport to be saving us from: the Institute is parasitic and preys on and benefits from people that have enjoined themselves to the worldwide disease called entitlement philosophy. I detest this type of business that spreads chronic dread: I find the activities unnatural.

Simply, the study they have done is silly. Firstly, just because someone signs up as a distributor for a MLM company doesn't mean they are actually doing the business. In fact, I personally interviewed hundreds of people in the MLM / Network Marketing / Affiliate Marketing / Home Based Business, etc., industries and what I found is that the majority of people that profess to be doing all of these money making activities (businesses) actually do nothing other than get ready to get ready to do business. In linguistics and in teacher assessment they are people that could be identified as using excessive meta-language. Simply, they talk about doing business instead of actually doing business and when they fail to do anything… it's the company's fault: this is just sophomoric thinking.

Now, with regards to gambling -- it's 100% a losing proposition and your losses aren't tax deductible! At least with MLM, if your business structure is set up correctly, you can write off your expenses and minimize much of your risk while you test whether or not the business will work for you. Also, the added benefit is that at least you can learn a skill (sales) that will be useful if you should decide to go the way of getting a sales job. Lastly, I would much rather be around MLM people, people who are upbeat and positive and sincerely trying to better themselves whereas gamblers offer no value - at least to me.

Now, here's my disclaimer!

(Disclaimer: I am negatively biased against companies that offer no value that use the MLM model and positively biased towards companies that do offer value and use the MLM model. I condone any ethical business activity that lead people towards their goals. And -- I believe one should absorb what is useful and disregards what is not (B.L.))

Here is some food for thought:

http://www.youtube.com/watch?v=Zc7oZ9yWqO4
http://www.youtube.com/watch?v=1xKGZMwaIG8&NR=1

Kind Regards,
Bill

I've transcribed qualitative market research focus groups for years. That is why I got into MLM. Madison Avenue is brimming with deceit (in my somewhat informed opinion). Additionally companies like the Gap spend about $.50 to make a shirt in a sweatshop in Malaysia and need sell it for $15-$30 US, in great part to cover its advertising costs.

Although the execution of MLM is 95% failed (in terms of customer/distributor retention), I believe it a more ethical activity than conventional media marketing/advertising. Everyday people can promote a product & get compensated, instead of Ad Execs, endless bickering teams of concept creators, focus group moderators, coordinators, facilities, etc.

I sell a "green" fuel re-formulator, btw and mostly introduce it to truckers & commercial enterprise, not friends and family. There are all sorts of great magnet & running cars on water or sludge, technologies out there, but that's a stretch for a lot of people who would just rather save on gas & reduce their emissions easily without a lot of fuss. It's one way, but not the only way.

I think success in MLM really depends on an existent and accessible warm market, that a distributor be organized and clear in his or her communication, & be working with a company which has good leadership and a reasonable compensation plan.

Mark --

One more thought that I didn't see skimming through all the GREAT responses you have pouring in...

Once upon a time, MLM made sense to me. I could see the logic of a company forgoing the usual multi-million dollar "hit" to launch a marketing campaign by getting representatives to eagerly spread the word for you, demonstrate the product and press the flesh to get sales coming in.

It was once the ULTIMATE in pay-for-performance marketing, costing a company only when a sale was made AND earning representative signup fees and monthly required payments and orders in the process.

Today -- there is almost no reason to need this at all, thanks to the power of Internet marketing. Anyone with any amount of money (or lack thereof) can post a site, put up a product and start selling quickly and cheaply.

As far as I'm concerned, today's online affiliate programs (which cost nothing if they're legitimate) work as well as MLM ever did to generate money for an average person. Better.

It is funny how many MLMs tout that you're setting up your own business and becoming your own boss -- then set out tons of rules that must be followed.

:)

Thanks again for a great discussion.

--- Alan

Note from MJ: Hey Alan, great to see you here. Yeah, that's the interesting thing ... When just about every great MLM success becomes so by using Direct Marketing methods, it begs the question: why not use Direct Marketing to sell your own product (without having to dangle the opportunity in front of someone) ... I imagine the ROI would be much higher ....

I used to have a good friend who insisted I go to an Amway get together, which I reluctantly did. The speaker said "If you can't be motivated by money, this isn't for you". I'm motivated to contribute, to make a difference - and fully believe the money will follow. I asked for a catalog. If I buy something, they make money. If I share it with others and they but or do the same, they make money. No one would even let me see a catalog! It was a motivational meeting only, there was no discussion of products. I politely told my former friend the same thing I told him before the meeting, and he never returned my calls again. I do not respond to ads that offer money, but don't tell why anyone would want to pay you (product, service, value added?). In an ideal world, what's money for? Honest value, I think.

Some great views for and against MLM - I bet many struggling MLMers are considering giving up reading the negatives, or is that realistic comments? Maybe even using these pages as an excuse to end the pain of failure at their business. My MLM business has gone through many ups and downs and this is with a hugely successful company generating 2-300 dollar millionaires in commission payouts.

To make money your MLM business must be treated as such. Not a hobby, not a "sit back and let others do the work" skive, not a directionless wander through life talking to the occasional prospect.

Most businesses fail in the first few years. Most take a lot of capital, expertise, employees, rules and regulation and ideas to even get started. MLM does not. So it attracts opportunity seekers (another name for gambler?) prepared to believe any hype but not prepared for the journey in terms of persistence, skills or hard work. Anyone can buy a lottery ticket and anyone can join a MLM company so of course the stats are worse. MLM takes effort - buying a lottery ticket about 10 seconds.

With respect to MJ the comparison is stimulating debate but, I would suggest, like comparing Simpleology 101 to a post-it note reminder. Are our egos are quick to damn all MLM because helps justify our own inadequate efforts?

Bill said:

"Now, with regards to gambling -- it's 100% a losing proposition and your losses aren't tax deductible! At least with MLM, if your business structure is set up correctly, you can write off your expenses and minimize much of your risk while you test whether or not the business will work for you."

I'm not an accountant -- but I wanted to point out that you CAN INDEED deduct your losses from gambling. However, you are limited to deducting only from WINNINGS. No winnings -- no deduction for your losses.

With a business, you CAN deduct your losses building it. But -- even in this case, the IRS can usually come back five years later, if there is still no profit, declare your enterprise a "hobby" and demand back-taxes for the amounts you were originally allowed to deduct.

This is why you MUST operate your business as a business from the get-go, whatever that business is. Do everything as a business would, keep solid business records, and you can challenge that determination that you're just a hobby.

A LOT of people miss this. SOME people start a "business" to start writing off everything under the sun. Not good.

Finally, the BIGGEST problem I see in MLM today is the hype. MLM companies sell the "dream" of setting up your business, recruiting a downline, then sitting back and doing nothing while your downline does all the work and makes you an endless stream of money forever.

This is pure fantasy. MLM is WORK. You have to HAMMER a downline that was brought in through the hyped promises...to get any sales happening below you. And you have to KEEP hammering.

I'd rather set things up once on the Web, do some marketing -- and start cash flow coming in that can be automated.

Hello:

All I kinow is this. MLM is
a great business model. Like any business, it has it's challenges. The question a person must ask themselves is this. What do
you want in life and what are you willing to do. If
you go the job route it has challenges. If you go the business route it has challenges. If you go MLM
route it has challenges.
It is up to a person to decide what price they are willing to pay and where they are willing to pay it.
In the end we all have a price to pay for any kind of success. I believe in MLM cause I know I am in the right company with the
right service to offer.
What I notice in life is people are too afraid to do anything. They also don't have the right Mentor
working with them. It's all about decisions and actions with a clear purpose in mind. I love to
help others succeed and that is why I succeed in MLM. You gotta love to give. Then you deserve to get paid. Unfortunately, most people are not happy
and usually regret not being a risk taker. I wish
all of you luck in whatever
you decide. Sincerely a very proud MLM marketer who loves his business.

Note from MJ: Hi Rich, you're quite right that taking risk is essential for any financial gain. However, wouldn't one want to take risks that are statistically more probable of success? Just a thought for you to consider ...

Hi Mark,

My experiences in MLM were very similar to yours. Many years ago I went from having a production company at Universal Studios into an MLM company. Yes, it's a long story.

I made more money in MLM than I made the previous 3 years in show biz. After that I had a few profitable ventures as a distributor and owned or help start other companies and gave numerous seminars.

The failure rate is horrible, both for distributors and companies. But, we showed a lot of "average" people how to build a business, how to network and many made decent to great incomes.I know people today who've gone on from very humble positions to great successes in all areas of business because of this training.

But,the sheer numbers of companies today contributes to all the deservedly bad taste the industry has.

However, the hybrid versions of some of these companies are looking better in this "new" market. It's safe to say that I automatically don't trust any of them without a great deal of research. I'm not involved in any, but if I didn't have the Internet business I have I would look more closely.

Many try to appeal to the sucker, get rich quick crowd, which is endless. I remember in my first company telling a new candidate at a meeting that it wouldn't be easy and why, but how rewarding it could be if. . . at that point her eyes glazed over. They guy next to me tried to save her by hyping her. I just asked him how much he was making and that shut him up.

That kind of hype really ticks me off.

We have large numbers of people entering Internet Marketing with the same hype from unscrupulous purveyors.

When we tell our potential students at First Step Internet Marketing that it's no cakewalk and to NOT believe the get rich quick BS, we find they either leave or embrace the concept.

The latter is so much more preferable!

All the best,
Tom Justin
www.FirstStepInternetMarketing.com

P.S. I live in Vegas. No tables or slots for me! They don't call it "Craps" for nothing. : )

Hi Mark,

Awesome question!

I wonder if the failure rates of MLMers is higher than an other small business startup?

I suspect MLM failure rates could be higher. Why? Because the persuasion (e.g. Conformity to Group Norms, Conformity to Emotions, Framing, Foot in the Door, Obedience to Authority) 'manufactured' in a controlled environment is probably going to be overwhelming for most people.

As a serious student of persuasion, I have attended 'opportunity-meetings' where you can tick almost every persuasion factor being unleashed on the audience.

It's just too hard for anyone not exposed to the knowledge you have shared in Mind Control Marketing & Simpleology book, to be convince themselves this is the best thing since sliced bread.

Awesome post!
N

I like all the feedback on this topic.
I've been through 3 or 4 MLMs in the past, ending in 1998, and actually being quite in debt. While there seemed to be good products, most people don't want to have to "sell" to their friends and family, or anybody else for that matter. (Mark's copywriter friend talked about Incentivised word of mouth)
They don't want to overpay for products because there are commissions built into them, when they can get an equally good product somewhere else (i.e. Ebay)
I didn't think I'd ever get back into an MLM, but how one of these companies is structured has made, not only a lot of sense to me, but is making me money as well. There is no product to stock in your garage. We only re-direct what people are already doing, but saving them time and money. This "travel" company that I'm working with uses a binary matrix, which works better than any other structure I've had experience with.
All I'm saying is that there do seem to be some genuine MLM companies and there also seem to be a whole bunch of "expensive product"/ "have to sell stuff" companies out there.

Here in Nevada, gambling is a way of life (no matter what disguise it takes). Mentors Club has a new twist on an old model, because the "product" is educational. Neat idea!

Funny this should come up. I've just started reading your stuff again since my 'free agent path' days. I've missed ya, he he.

Hi Mark,

this blog post rocks! Here are my 2 cents:

I have been involved in MLM since I was a teenager with not too much success I have to admit though. My father was a direct sales trainer and probably one of the first in Europe to realize the enormous potential MLM bears for everyone.

I think MLM definately has its place and is one of the few ways to LEVERAGE any efforts without taking much risk. I totally agree that until the advent of the internet is was pretty much the only way for many non-privileged to pursue a real career and earn more money than they otherwise could. Bucket-holes or not. It is still a very viable option.

However there is a problem with the concept. Actually two.

MLM relies on DUPLICATION. The Monkey see - Monkey do concept. But not everyone has the same skills and personalities vary widely. Some can be compensated by training but we are all individuals. And individuals cannot be duplicated.

So in order to build a successful downline , there has to be a DUPLICABLE system in place that everyone can use to the same extend. The internet can be of great use to accomplish this.

One thing that most people don't understand is that it takes a certain mindset. An employee is used to do what he/she is being told to do. And they stop doing whatever they do in their jobs when the clock stikes 5. This is what they have learned. This is what they have done all their lives.

Trying to educate employee-minded people the traits of being an entrepreneur is a very tough job (not to say it is impossible). And this has nothing to do with the amount of training or having a duplicable system. You cannot WALK for somebody else. It is them who have to get going... You can only be their crutches.

But the greatest problem I think is the dependency on the network company. You are in fact NOT building your own business, you are building THEIRS. At least in most cases. And your income is very sensitive to the hickups of your mother company.

I have observed companies where the CEO - once they have build a decent customer base - opened a competing direct sales company, offering very similar products for a much lower price to the customers of the MLM company. Thus betraying the reps of their commission.

I have seen companies selling promotion articles for outrageous prices and even starting to CHARGE for the permission to sell a certain range of products (don't they want their distributors to make sales for them?).

I know companies that changed their marketing plan, effectively cutting commissions by 1/3. Everyone who did not sign the new contract was expelled - with no compensation for their downline of course.

I have seen companies where the quality of products went down so fast, customers returned almost ALL their purchase.

I have seen company CEOs split up and become competitors with the SAME products and for some time even the same name, effectively splitting the downlines and making sales materials and year long brand building of the distributors obsolete.

I know companies that only focus on the countries that are opening and leaving long standing distributors with NO support in name branding, advertising or even prevention of abuse or a media attacks that severly damaged the companies reputation - and the rep. sales.

Do YOU have control over all this?

NO. It's not your business.

So in this respect - Yes, MLM IS like gambling. You are putting your income into somebody else's hands - be it a croupier or your companies CEOs.

For those who looks forward for jobs and business opportunity I would like to tell that Gambling can provide most of the tax revenues that support our public services. I don't exactly remember the website which tells that gambling is responsible for over 60 percent of jobs in Las Vegas.

If you know that majority of your new distributors are going to fail and probably end up worse off then before... why would you engage in such an activity -- it's like leading the sheep to the slaughter house!
While there are great people in MLM, the industry is sickening...

Gambling is worst than MLM. It is addictive and has spoilt many good families. Talking about MLM, I have an article to share: http://www.tipskey.com/consumer_alert/read_this_before_joining_mlm.htm

Hey the planet,

We just registered on the message boards and I only desire to tell you how we would like to join this community. In all seriousness. We cherish the assistance of your comradeship :)

Some info about me:

I was born in Spain but at the moment I am staying to the exotic location that you could read in the title :D. I am really quiet but I still love adventure. I also am crazy about meditation.

I am 24 years of age. I can't wait to be part in this association.

I write a blog too. check it out http://simulationcredit1.com

Great Post. I'll have to use this to add to my blog material I'm putting together for next year ;o)