Have I discovered a pyramid scheme? What should I do?

[shaftman11]

Sniper,

I agree that this job/business is not for everyone. Only the shady companies force you to get into a negative cash flow and I am with one that doesn't force that. Yes they want you to buy the CD's and books, but thats the point. You don't have to spend time "teaching" or "training" anybody. The system does it, yes it costs money, but it's a hell of a lot cheaper than getting involved in any other business.

[Sniper]

[ QUOTE ]
Sniper,

I agree that this job/business is not for everyone. Only the shady companies force you to get into a negative cash flow and I am with one that doesn't force that. Yes they want you to buy the CD's and books, but thats the point. You don't have to spend time "teaching" or "training" anybody. The system does it, yes it costs money, but it's a hell of a lot cheaper than getting involved in any other business.

[/ QUOTE ]

I disagree that MLM is the cheapest business option... and I believe that many here who have started online businesses, would say the same thing.

And, if you don't think that MLM involves teaching and training, you probably don't fully understand how to be successful in MLM.

Also, you might want to scroll up a bit in the thread and review the analysis of the numbers I posted a while back, to better understand the negative cash flow issue.

[KidLifeCrisis]

[ QUOTE ]
KLC... here is my suggestion.

If you are bored and looking to do a little socializing and listen to some motivational [censored]...

Keep your wallet at home.
Let them wine and dine you.
Keep asking interesting questions about the business.
Ask them for sample tapes and books.
Get all you can out of it without spending a penny.
Keep telling them you are really successful at what you do now, and are not sure that making the change is right for you; but you know a lot of people who might find this interesting if you did get involved.
[censored] Starbucks, you want to see the dream in action...
When you get tired of being wined and dined up the MLM foodchain.. stop taking their calls [img]/images/graemlins/wink.gif[/img]

[/ QUOTE ]
LOL, I like this, but I don't think I have the balls to go through with something like it...except for the "stop taking calls" thing since I do that with people all the time as it is. [img]/images/graemlins/tongue.gif[/img]

[maxtower]

Just remember good deals don't find you.

[spex x]

[ QUOTE ]
DWarrior, Bills and others...

Quixtar is not a SCAM (per se)... it is a MLM program. It is Amway's Internet arm.

However, bottom line... the Average GROSS income for "active" Quixtar IBOs in 2005 was $115/month... (since there are a few at the top making significantly more than this, the MEAN is obviously lower).

For anyone actually trying to build this type of business, which is primarily recruiting other IBOs, the COSTS are pretty significant... and you are then OBLIGATED to spend time training the people that you recruit... more COSTS & TIME.

So basically, in order to simply reach the 50th percentile of all active distributors, where you will be Grossing less than $100/month, and have costs significantly higher than $100/month.... your NET will be negative [img]/images/graemlins/wink.gif[/img]

If you manage to perform better than 99.83% of all Quixtar IBOs (including those with already substantial long term businesses), you will have reached the Platinum level and your reward will be an Average GROSS income of roughly $47,000/YEAR, BEFORE factoring in SUBSTANTIAL COSTS and TIME in training, developing and educating your downline... not to mention your own costs in training & educating yourself (+ benefits) [img]/images/graemlins/wink.gif[/img]

You will at this point also be living this business at all times... and your reward is netting less than minimum wage. You will of course be dreaming of moving into the magic 0.01% of IBOs... and beyond...

You are also working against the fact that any intelligent person you might want in your downline, quickly equates Quixtar with Amway... and EVERYONE has already heard about Amway. They also started marketing Quixtar in 1999.

Do your due diligence!

[/ QUOTE ]

I completely agree with these sentiments. The problem with the MLM marketing system is that IBOs simply CANNOT POSSIBLY ever ever sell enough product to make any substantial amount of money. To make the big cheese, you've got to recruit, and in order to recruit effectively you've got to be slicker than a used car salesman PLUS you've got to be able to motivate your people to perform. But once they realize that they can't make any real money selling produce, they'll be pretty bummed and probably quit.

And there is a more fundamental problem still. It lies in the fact that the MLM marketing system relies heavily on you being able to sell to/recruit your family and friends. Here are two facts for you: People don't really want to have a 1-2 hour meeting with you just to pick out tupperware, cleaning products, or anything else that they can get at the grocery store, where they have to go anyway to pick up their food. When people agree to meet Amway/Tupperware/other MLM agents, they're doing it out of politeness. Second, people think that they want to own their own business, but really they just want to think about owning their own business, and sit around doing nothing, complaining about how things don't go their way. MLM has a 99.5% failure rate. That should be telling.

As Ron Mexico alluded to, real money makeing opportunities don't need to be sold using the types of hard sell tactics that the MLM people employ.

This post has focused a lot on the cost of the IBO. One thing that you've got to remember about cost is that your time is worth money. Its called 'opportunity cost', which is basically the idea that if you weren't spending your time working your MLM business to make a handful of pennies, you could be spending your time developing and implementing plans to make a fistful to dollars. If you chase pennies, you'll make pennies. If you chase dollars, you'll make dollars.

[DWarrior]

Oh yeah, I totally forgot about this.

Let me update you on what happened, if anyone cares.

My sponsor told me I should go to "their biggest meeting", which cost $20 (I believe, maybe it was $10). This was a large assembly, probably a couple thousand people, in an auditorium in a school. It was a long motivational speech by their top dog. Then there was a congratulatory ceremony honoring the Diamonds and Rubies and whatnot.

At the end they said there will be the biggest meetup of the year that will cost more money and where we'll learn the necessary techniques.

This is when I gave up because it started becoming everything the bloggers and 2+2ers said it would be. You'll also have to pay for their internet communications program, I forget the name now. Also their products were overpriced so I couldn't profitably substitute them, and I'm not sure how I can pitch it to others.

I just completely forgot about Quixtar and lost all interest. I think the sponsor called me twice after and then stopped.

[ QUOTE ]
Curious about what you think your edge is?

[/ QUOTE ]

I hear a lot of people get burned on the costs of motivational stuff Quixtar higherups sell to its IBOs. I think most people's sales do not outweigh their expenses. I thought I could avoid the trap of becoming a motivational material addict, thereby decreasing my costs (like the tubs of taps people have up for sale on eBay).


This is just in case anyone thought I got abducted by the cult.