Prologue

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"It is a cult, thinking about it, it's a cult that's simply based around money. At first, everything seems okay; everything is welcoming. The way they did it, they don't tell you what it is; they just said come to an event, and I think I just turned 15 years old at the time. I got more people out pushing something than selling. It's confusing to me. What is a pyramid? What is it? If that's not a pyramid? What's a pyramid then?"

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When the opportunity is presented to you, when you're told that your dreams can be achieved faster than you think, that wealth is not as far off as you think it is, that financial freedom is yours for the taking—when these things are dangled in front of you like a carrot on a stick, when it sounds too good to be true but believing otherwise means losing hope, why would you refuse?
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"This little black box that says 'Younique,' it changed my life," "and I would love to kind of share this business opportunity," "and I'm here to share with you the business opportunity." "Over the next few minutes, I'm going to share a way for you to make money from home, to a passionate purpose-built set, and make your family financially free." "I would pay hundreds of dollars to join a business like this," "we have a million-dollar opportunity," "the wildest dreams you've ever thought of can come true in Herbalife"; multi-level marketing companies have been around for along while now, and if you're not familiar with what multi-level marketing is, then perhaps you're familiar with the companies that follow the multi-level marketing model.

These are companies that are valued in the billions, international in their reach. It sounds just fine, doesn't it? On the surface, it seems ordinary, something you may never take a second glance at. But once you go beyond the surface level and uncover what's underneath, 'it's a huge business; it's also created a huge controversy,' a strategy where they decided to target the poorest people in the world. They indoctrinate you with so much self-help and mindset doctrines. They are predatory; however, the people most likely to be preyed upon are already vulnerable. You tell the people you love they're in a pyramid scheme, and they go, 'No, I'm not; you're just a hater.' But, hold on, that business structure sounds familiar, isn't that a pyramid scheme?"
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Again, I ask you, if it sounds too good to be true, but believing otherwise means losing hope, why wouldn't you refuse? It's important that you pay close attention now because when a pyramid scheme or a cult is presented to you, it will not reveal itself as such. It will come wrapped in well-decorated packaging with a pretty bow on the top, disguised as a million-dollar opportunity, disguised as a way to work when you like, set your family free financially. When it presents itself to you, it will not come dressed in the robes of an unfamiliar character; it will come dressed as your best friend, your neighbor, someone you admire, someone you love. Its message will be that of hope and that of all you've ever wanted. It will come disguised as anything and everything but that of which it actually is - MLM: Lies, Pyramid Schemes, and the Pursuit of Financial Freedom.

Part 1: The Pitch

Consider the next two parts of this article a simulation for a common collective experience for many who enter well-known MLM companies. There are nuances to them all, but the overarching story remains relatively the same. We'll discuss the details later and just how reflective this model is of the industry as a whole. But for now, sit back and brace yourselves. This is The Pitch: it's a message; the platform in which it's sent on doesn't matter, but it's an old friend, a family member, someone you know. They've just reached out, asking how things are going with you. It seems harmless on the surface, maybe a little strange.

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But you respond; you start talking. Then they mention a "business opportunity," and that they thought "you'd be a good fit for it." They explain that they've been working for a company recently, and "this company is changing lives." "It changed their lives," and again, "you'd be perfect for it." They tell you phrases like "six to seven-figure earners," "financial freedom," "be your own boss" seem to float around effortlessly in their sentences. It sounds great, but there's still that feeling, something that's not quite right. They invite you to a seminar or an event of some sort... You decide to go.
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You arrive at the event, and suddenly you're engulfed with positive energy. People are smiling,cheering, jumping up and down; the opportunity has them excited. A speaker comes to the stage, mouthing off words of motivation: "everything in this business is mindset," stating "how the company is impacting lives" and how "in four short months my life has changed quite a bit." "It is the one thing that changed my life." Those phrases appear again: "financial freedom," "six to seven-figure earners," "be your own boss," "passive income." Then you're finally told that the company that's changed everything for them sells nutritional supplements, clothes, essential oils, skincare, financial products, makeup, perfume... the list goes on, but the principles remain: they have a product. But the only people allowed to sell this product are their "distributors," their"consultants," their "coaches", and whenever you sell, you earn a commission. Then you hear: "last year he was 25 years old, making $10,000 a week with no college degree." And you tell them that you'll think about it, and although something feels off, you can't help but feel tempted.
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You browse through the social media pages of the friend that got you into this in the first place, and you see: motivational quotes, a happy lifestyle, a car given to them by the company, they're working from home. Those phrases appear again: "financial freedom," "be your own boss"; "work from home"—they're enticing concepts. Why? There's hope in this opportunity. You callback your friend; you reach out to them, or perhaps they've asked if you've decided yet. And although something doesn't feel quite right, the promise of a greater life has enticed you enough. You agree to join.

Part 2: The Opportunity

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"The opportunity, and the great thing about the opportunity, it doesn't care who you are. It doesn't make any difference what your background is. It doesn't make any difference what color skin you've got. It doesn't make any difference what religion you are. It doesn't make any difference what kind of a place you are."
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It starts by purchasing a starter kit or a monthly membership fee - this is important, you're told for your business to thrive; you need to invest in it. You're told that you must become a "product of the product" and you're encouraged to purchase as much stock as you can. That's what it means to invest in your business - "you're using your Young Living products every single day, incorporating them into your lifestyle on a daily basis." You're shown a list of tiers in the company, and as your sales increase, you are granted points that allow you to progress through each tier, and with each tier, you're given bonuses from the company. "In LuLaRoe, the ranks are trainer and then coach and then mentor."
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The friend that recruited you into this opportunity is now labeled as your upline, your manager so to speak. They encourage you to start posting about the company and its product on social media, to start talking about it as much as possible to your friends, your family, the people you meet every day. But the products are overpriced compared to other products on the market -these shakes, these clothes, this makeup. It seems far too expensive. But before you can even start worrying about that, you're told to attend another weekly seminar meeting or some form of get-together with other distributors of the product. The usual motivational speak begins, and you hear, "success is not a matter of doing; it is a matter of being," "let's talk about your mindset." You're told that the opportunity can make you so much money, "you know, next month I'm on track to hit Ambassador rang, which is by the numbers a quarter million a year I make," that it's possible but only if you work really hard at it. And then again, you are told, "you cannot expect to have massive success if this is something you do in between the other stuff that you're focused on." You're told that you have to stay positive; the negative people will get in your way, but you must rise above it and stay positive no matter what. And yet then you hear it again by the coach: "can you expect to learn at a rapid pace if you're surrounded by people who are constantly trying to pull you down?" You're given some self-help or mindset material to read as homework. Then something else happens: you're told that if you want to make good money in this business, you'll have to start recruiting - "the action phones behind this business is in recruiting, so that's bringing people into the business; that is where the big money comes from. "It's simple: you recruit someone else into the company, and when they make a sale, you'll get a commission for it. Do the math: if you have just five people working under you, and they each earn you five hundred dollars in commission, and they each recruit five people, that will get you $12,500 in commission every month without having to do anything yourself.

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The math impresses you; imagine what you could do with that money—car, mansion, food, etc.,etc. Your thoughts are cut short as you again hear from your upline: "you have to be able to recruit hundreds," "you gotta recruit more people into that team on a weekly basis", "Recruiting.You need to become a great recruiter, period—the bottom line." You're told to write a list of 100 names—friends, family members, people you haven't spoken to in a while, numbers on your contact list, Instagram followers—anyone and everyone.

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And then again, you hear the guidelines: "reach out to 10 people a day for the rest of this month," "you know what I mean, we should really push it; we should spread the word as much as possible", "reach out to 100 people that you know that you think could be good for this industry." And then you start messaging your friends, you start telling your family members about this opportunity, you start posting more to your social media pages, you buy your next month's supply of products. Once more, you're told that you must invest in your business because you again hear it from your upline: "this is your opportunity, and this is your time, and get in your vehicle and drive." You continue reading the self-help material, you attend the weekly seminars, calls, events. Your upline continues telling you that anything is possible if you"work hard" at it, if you "stay positive" and get rid of the negative people who doubt, as the words pile up: "your new life is going to cost you your old one." You're showered with more stories about others in the company who are living the dream thanks to this opportunity: "I introduced my own wife to the company, and she earns tens of thousands of dollars now" or "there's no doubt in my mind; I'm already watching people make it work. I've already made about a thousand dollars doing this in about three weeks, so it's working." "We have an incredible upline of proof that this business works."
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Now you've gotten a few rejections; now your friends weren't as open to the ideas as you had initially thought. Perhaps some chose to buy some product off you, but when it came to recruiting, you just couldn't get them to cross that bridge.

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And then, more team meetings, seminars, calls, more self-help motivations. And you think to yourself, "no recruits yet," and even though you haven't finished your thoughts, you are cut to the chase, only to hear from your upline: "it's because you haven't worked hard enough," "you weren't thinking positive enough," "your friends aren't interested in joining; it just means you need new friends." And to validate this statement, you again hear: "they will resent you, some people, because you're so successful, and you must not let those people bother you" from your coach. You're told to post more on your socials, even if it feels like you're faking a lifestyle or faking your income. You're told that it will be enough to attract curious eyes. Hope and belief keep you going; some friends have begun distancing themselves from you, or perhaps you've distanced yourself from them. After all, if they weren't willing to join the company, then they're just negative influencers—at least that's what your upline tells you while encouraging you to buy more product and continue investing in your business. Sure, you haven't made much money yet, but hope keeps you alive.
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The company holds a conference that year, a conference where countless distributors across the world come to celebrate the opportunity. It's a spectacle—flashing lights, performances,motivation—and the dream is once more sold to you. And then, again, a fresh wave of motivation overcomes you; this is your community, your family, people with like-minded goals, opinions, and interests. The cycle continues; you reach out to more people now, finding anyone that seems like they would need some cash, someone that you could sell the dream to. "Work harder," "stay positive," "remove negative influences"—it's all on you to make this happen.

Perhaps you finally recruit someone or a few people, and suddenly a little more money comes in. It may not be much, but it's the start. You tell yourself you're officially their upline; you're officially hosting your own meetings, telling them that they have to work harder for the dream,encouraging them to buy more product, to invest in their business, encouraging them to stay positive, to reach out to as many people as possible. You need these recruits to stay on board; they're essential to the dream. But there it comes again—that feeling that something isn't quite right, something just feels off. A look through your social media profiles reveals a lifestyle that you aren't really living, products from another company that you don't really own, bank statements that reveal that not much has changed over the last few years, a bookshelf worth of self-help content, old friends you haven't spoken to in a while who you've either distanced yourself from or cut out from your life entirely. The people you hang out with now are from the company you're a distributor for, and "how many of them are living the dream," you wonder,"why is it that we're all faking it till we make it." "Who are the ones that are actually making it there?" These are dangerous thoughts you realize; any mention of these thoughts to your upline, and that spells trouble. But yet this feeling has been here from the start, as though you were lied to about something, as though the truth of the matter has been concealed from you,and you'd be right. You see, before you joined this company, there were some critical details that you should have understood about what you were getting yourself into. Stick with me now because it's about time you find out exactly what these details were.
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Part 3: The Industry

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"Soon, though, I looked into the history of the company, and what I found left me shocked and actually worried about my family." "It's a shame that you're never doing it if you're never working hard enough; you're never being enough; you need more and more."
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Multi-level marketing companies fall under different names, different products, different people,but the overarching structure remains the same. These companies don't sell their products via retailers but rather a workforce of people who are paid a commission on their sales. Sounds just fine, so why the controversy? Let's start with its pyramid-shaped recruiting model. MLMs, as they're often shortened to, allow their distributors to recruit other distributors who are called their downlines. Uplines are able to earn a commission on any sales that their downlines make,but remember these downlines are also able to recruit their own members. So, it's a pyramid scheme, right? We'll get to that. MLMs have been around for a long while, with roots that go as far back as the 1880s. These companies have existed for generations, and many of their practices remain the same — the promotion of self-help content and concepts, big conventions,the selling of a dream. All of these themes are prevalent in many of these companies.
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Some of the top MLM companies are well known for their female target market. According to the Direct Selling Association, 74% of those involved with MLM companies in America are women. If you visit any stay-at-home mom's page on Facebook, it won't take you long to find someone promoting their MLM company. The MLM pitch appeals to those who are struggling to make ends meet financially or those who are young and naive enough to be taken in by the grandeur of the events and the barrage of self-help messages. The controversy that surrounds these companies is endless.
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"The Federal Trade Commission has already received 170 complaints against the company." "They make you feel guilty." "They will specifically target your insecurities." "An MLM's biggest weapon that they can use against you and that they do use against you is shame." One infamous example in 2012 saw billionaire investor and hedge fund manager Bill Ackman take a short position on the MLM company Herbalife. He called the company a flat-out pyramid scheme. "What are you accusing Herbalife of being a pyramid scheme? We believe we're believed experiments game," which sparked a Wall Street rivalry between himself and rival Carl Icahn, who started buying shares into Herbalife to counter Ackman's position. And yet, despite Ackman's confidence, he exited his short position in 2018 without success. So what's really going on here? "Is the dream real or one big lie?" "Why all the self-help content and the grand conventions?" "Why aren't MLMs illegal if they're supposedly pyramid schemes?"

Part 4: Pyramid Schemes & Cults

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A pyramid scheme usually operates under the following premise: there's a founder. The founder tells a select few people that, for a certain price, they can join his amazing business opportunity.It sounds great, and they agree to buy in. These people are then encouraged by the founder to recruit other people for a buy-in to recoup their initial investment. Each new member of the scheme is encouraged to recruit somebody new, and the money continues to be funneled up the system. However, any mathematician can see the colossal problem with this model, and it's why it's made illegal. For everyone to make money in a pyramid scheme, there needs to be an endless supply of recruits. But that's impossible. If the founder recruited five members and these five members recruited five more members, after 13 tiers, you would have exceeded the entire population of the United States. And after 15 tiers, you exceed the entire population of the planet. Pyramid schemes are mathematically designed to collapse.

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And when those on the bottom of the pyramid start realizing that nobody is making money and drop out of the scheme, the tiers above lose their ability to make money, and suddenly each tier begins collapsing. Once they lose their only source of income, these schemes are disguised as many things and come in different shapes and sizes, but their effects can be devastating. They place an emphasis on recruiting others and are riddled with promises of high returns in short periods of time and claims of easy money or passive income. It is only those in the top tiers that make money from a pyramid scheme, and since most people come in at the bottom tiers, the vast majority of those entering a pyramid scheme will lose their money as finding enough recruits to pay for their initial investment gets harder and harder. Keep that in mind.Now let's look at cults: spotting one can sometimes be difficult because, just like pyramid schemes, they hide in plain sight disguised as many things but not what they actually are.Some red flags on their own are not enough to draw conclusions, but combined they create a mantle piece for manipulation and indoctrination. They're designed to influence who you are as a person, step by step, until you've walked so many steps that you're no longer what you used to be and haven't even realized it yet. Those red flags include:

• A high level of commitment from its members and a seemingly unquestionable loyalty towards its leader or anyone at the top of the hierarchy.
• A feeling that you're working towards some sort of bigger goal, mission, or dream with the group.
• The promotion of an us-versus-them mentality.
• The idea that you are a collective group, a family, and those that oppose the ideals of the group are an enemy and must not be listened to.
• Anyone who leaves the group is shunned by others because of this; critical thinking is often abandoned by the group members; you can't question what you're being told; to be negative or critical about the group's ideologies is the equivalent of betrayal
• You're made to feel dependent on the group; over time, the group becomes your only environment; you don't see or speak to your friends and family as much, and in some cases, you'll be made to lose any connections with your friends and family unless they're part of the group too.

It's a process designed to isolate you from your past identity, turning you into a drone that is entirely dependent on the group and the hopeful mission and vision that what you are doing is for the betterment of the world. With both pyramid schemes and cults, there's an assumption that to fall for it, you must be a "fool" or an "idiot," but that isn't true. In most cases, an individual falls for these schemes and groups because of their circumstances, particularly when they a rein a vulnerable position—the loss of a job, a loved one, a lack of high-quality relationships, a feeling of helplessness with your life. These groups and schemes are designed to use your emotions against you and exploit you in some way or another, whether financially or emotionally. And that brings us back to MLMs.

Part 5: Unraveling the Truth

At its core, multi-level marketing (MLM) is a strategy to market a product or service without needing to worry about advertising costs or paying employees on a standard payroll. Legally,these companies are not pyramid schemes. As we saw, a standard pyramid scheme makes its money solely off recruiting. MLMs, on the other hand, revolve around the selling of a product or service and pay distributors a commission on their sales. Therefore, it is possible to make money in an MLM without recruiting someone else. It's through this loophole that MLM companies can get away with being legal pyramid schemes.
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However, with each MLM, there is a fine line and an all-important question that must be asked: Where is the majority of the revenue coming from? Is it from the actual selling of a product to organic customers, or is it from distributors buying the product from the very company they're working for so they can remain as distributors?

And what's encouraged more within your MLM: the recruiting aspect or the sales? The more recruiting is pushed, the more you should question your position in that company and the facade that's being laid out in front of you.

And how real is the dream that you've been sold, the promise of financial freedom that draws in so many distributors year after year? What about the people that you hear about who are making so much money from the company? Legally, these companies are expected to release income disclosures each year, a chart that details the average earnings for distributors in the company, which does not include expenses. In every MLM company that I have seen, the vast majority of distributors will lose money, while others will break even or make minimum wage. It is the top 0.1% of those at the top of the company that are making a substantial income.

And how real is the dream that you've been sold, the promise of financial freedom that draws in so many distributors year after year? What about the people that you hear about who are making so much money from the company? Legally, these companies are expected to release income disclosures each year, a chart that details the average earnings for distributors in the company, which does not include expenses. In every MLM company that I have seen, the vast majority of distributors will lose money, while others will break even or make minimum wage. It is the top 0.1% of those at the top of the company that are making a substantial income.They're the ones that are praised and put up on stages at these events so that a survivorship-bias (definition: The logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not) is spread amongst other distributors so the dream and the hope are not lost. So that the other 90% of those in the crowd don't realize that most of them are not making money, that the dream they were sold is a lie.
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And what about the self-help content, the cult-like mentality that some of these MLMs promote? They're designed to keep you hooked in, to isolate you from any outside forces that could persuade you from leaving. And if you feel as though you're failing, then it must be your fault.After all, "you didn't work hard enough," "you weren't positive enough." That's why they indoctrinate you with so much self-help and guilt you into always staying positive, or else everything bad that happens to you is your fault because you didn't try hard enough, you didn't work hard enough, and you didn't stay positive enough.
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But is my assessment of these companies too harsh? Truth is, I can't comment on every MLM in existence. When multi-level marketing is just a marketing strategy, each company has to be looked at on a case-by-case basis. But let me point out some key flaws in this business model that I think you should be aware of:

• There is no screening process, there is no interview to see how qualified you are for the job. The barrier to entry is negligible, as long as you have enough money to buy the starter pack or the membership fee. These companies end up with countless inexperienced salespeople making money solely through their commissions with no sense of accountability. What could one possibly expect from such a scenario, especially when these people are encouraged to recruit more and more individuals not based on their qualifications but on who they think are in a vulnerable enough state to buy into the dream."I targeted people like me, mums, young mums, people on maternity leave. As it got towards Christmas, I actually targeted people that couldn't afford to pay for Christmas."HBO movies about MLM.
• There is no grasp on supply and demand. Anyone can join and start selling the product,and at some point, the market for that product will reach its limit, but the supply will continue to grow, resulting with a bunch of distributors competing over the same market,spreading the profits thinner and thinner between each other.
• And what about the actual products? The odds are usually stacked up against distributors,especially when they're selling products that have prices marked up three times higher than the standard retail price.
• And being your own boss? It's another facade. You're simply an independent contractor for the company; you have no control over the products nor the commission structure.

I can't comment on all MLMs, but I can say that if you are reading this and feel as though you want to join one, then do your due diligence. And if you were sold a dream of quick money, tread carefully; if you see that the majority of the money is being made through recruiting, tread carefully; if a cult-like mentality is pushed and you're made to distance yourself from friends and family or are made to feel guilty for not succeeding because you didn't work hard enough, tread carefully. The pursuit of financial freedom or a better life are not uncommon dreams; they're shared by many, including myself. But if someone or something comes promising you that goal,that dream, that vision, dangling it in front of you like a carrot on a stick disguised as an opportunity, then it's best you take a moment to pause, think rationally, and remember that if it sounds too good to be true, it probably is.

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- Kacper Patryk Sobczak on MLMs, 4 January 2024

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𝐒𝐨𝐮𝐫𝐜𝐞𝐬/Qutes

• WHY I QUIT THE MLM INDUSTRY AT THE TOP | ANTI-MLM HORROR STORY:  https://bit.ly/2YHkt1T
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• The MLM "Girl Boss" Narrative is a Lie: https://bit.ly/3jjSz3H
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• Why Women Are Quitting Their Side Hustle: Leaving LuLaRoe: https://bit.ly/3lmXSkM
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• Multilevel Marketing: Last Week Tonight with John Oliver (HBO): https://bit.ly/3je16Fk