Yes, it's an MLM but unfortunately, they have a business model that works. Amway is an MLM that survived a similar attack as Ackman vs Herbalife. Ackman did not bring anything new to the fight. I wished he would have won since many people lose money since they feel that Herbalife will sell itself. They're not ready to put up with the low pay and long hours until they reach the upper ranks. Most people just give up and lose their investment.
You don't really climb or reach in an mlm. You just build lots of people under you to make money.
In most mlm compensation schemes, you would receive the same amount of money if you were at the very top of the pyramid or somewhere much lower, assuming you have the same size team built below you.
But the one at the top has a bigger pyramid than anyone below. The early adopters have also cleared the pool of most of the easy catches, so your chance of building the pyramid is reduced.
Sure, but that doesn't change the fact that you don't really "climb" or "reach the top" - if you aren't at the top, you can either fail or succeed by building underneath you, but you're not going to get to the top and the one above you will forever have a bigger pyramid than you do.
Leaf nodes quit, the specific people in the chain above you gain as you grow but just because someone get in at stage 2 does not mean anyone is still under them.
Yes and no. In most mlm compensation schemes, your override compensation is only calculated downward a finite number of generations.
So it is actually very common for someone at the top of the pyramid to have a smaller income than someone several levels below them. Because if you have a much larger team closer to you, you are getting a larger share of their revenue than the guy 5 levels up. In fact, he may be so far above you, that he doesn't get any share of your revenue.
In fact, I would say that your very earliest people usually earn substantially less than those below them who may still be actively working and building. (because the earliest may be retired or focusing on other things). The compensation schemes are built this way to keep people from simply resting on their laurels and not building anything of value after finding a few good men.
You can't get closer to the top, but nodes die off as people quit. So someone can't move up the chain, but they can have a larger than average chunk of active people below them and receive a larger share of the pie.
The problem is if you share profits with N people then you are not creating extra profit and the average person is no better off.
That's a great point about the illusion of climbing which in reality is just adding nodes (rubes) beneath yourself.
Rank speculation-- at its core, every mlm depends on not paying people for their time. E.g., want to make a "home visit" by abusing my web of trust? FU pay me. Want me to "attend" a sales pitch? FU pay me. Want to invite me to dinner and use my social time to sell me on vitamins? FU pay me.
I don't think they are all that way. Some actually sell decent products. (not usually great products, but comparable to what is being sold via 'normal' channels.)
As for not paying for people's time, yes, they don't, because most everyone in an MLM is considered a business owner. So you are basically franchising a business model rather than getting hired by a company.
I'm not talking about the business owners, but the customers.
If I choose to go and give the Cinnabon at the mall a five dollar bill, they give me some crap and my change. End of transaction.
With every MLM I've ever seen, the salesperson comes to me (or leverages a pre-existing friendship to sneak in to my space) without my permission, tries to pitch me on why I want some product, and then tries to pitch me on becoming part of the MLM. During that time I am not doing what I set out to do-- instead I'm listening to their sales pitch. That's my time and consequent opportunity cost.
I'm claiming that the only way any MLM makes money is if they don't pay their potential customers/underlings for the time it takes to pitch them on what they are selling.
Am I right? Can you think of an example of an MLM that violates my claim?
Example-- Mary Kay salesperson uses someone's residence for their showroom, but doesn't pay the resident for use of their real estate.
