I was ripped off by a pyramid scheme.
If anyone asks you to join any kind of multi-level marketing organization (MLM), don't walk, run the hell out. Often a friend will ask you to join, and the best way to save your friendship is to say
I revisited my MLM experience after reading Perry Marshall, a Google adwords expert, talk about his painful experience in, and eventual liberation from, MLM giant Amway.
It started with my friend Dennis asking me to join his MLM. It was a tremendous opportunity to sell a discount medical care program. Dennis knew guys who were making huge money, and the organization was just staring to take off in the area.
First of all, I had to enroll in the program. The cheapest option was something like $60 a month. Since I already had health insurance, my monthly enrollment was just so I could sell the program. There was also a starter kit, which cost nearly $300.


Warning Sign #1
How much does it cost you to sell something?
Do you have to pay to become a newspaper boy? No. You sell newspapers, and the local paper gets a share of the profits while increasing circulation. There are no sign up fees, no starter kits, no monthly dues.
Imagine you are selling a book you've written. Why would you charge me a sign up fee, monthly membership, starter kit, training tapes, etc.? The more I sell, the more money you'll make, and we'd share the profits.

As Perry Marshall points out, the real money in Amway is not product sales to the public, but in the fees incurred by members looking to get rich, fees for tapes, seminars, training, etc.






In the healthcare MLM we had meetings at hotels, and I was a speaker. I'm good at public speaking. I made up brochures and business cards. One time Dennis and I went out in the snow in nearly blizzard conditions to post and hand out flyers. Nothing came of it. I asked Dennis to show me how to sell the program, but he never did. I never saw him make a sale.
I had a couple of presentations to a few prospects, but never closed the deal.
In my year or so in MLM, I never sold a product, nor did I ever see anyone in the organization sell the product.




Warning Sign #2
Are you selling a real product or a pipe dream?
Eventually I realized what was being sold was not the product, but the dream, or the as it was called.
Imagine I'm selling Freedom Paste, a regular sized tube of toothpaste for 7 bucks. You pay a one-time sign up fee of 297.99, plus a monthly enrollment fee of 48.99. You buy Freedom Paste from your upline for $6 a tube, plus shipping and handling.
Why would anyone buy Freedom Paste from you, when they can buy toothpaste at Wal-mart for less than two bucks? How much Freedom Paste do you have to sell before you break even?
Suppose you have no marketing skills or experience, no sales skills or experience, and no special product knowledge. It is not realistic to expect to be idly wealthy. It is more realistic to go to MacDonald's and get to work. In fact, given the choice between MLM and MacDonald's, fast food is the better choice, hands down. At least MacDonald's pays minimum wage. There's no sign-up fee or monthly dues you pay to work at MacDonald's amazingly, they pay you. You can fry burgers at Mickey D's without exploiting your friends and family. It's honest work.
It turns out that the Egyptian pyramids weren't built by slaves, but by paid laborers, who received beer as part of their wages. If I had got a beer out of my MLM experience, that would be a vast improvement. The real slaves are toiling in pyramid schemes, dreaming of making it big.

And almost everybody in an MLM loses money. That's right. I lost money. But I consider myself lucky, because many people lose thousands and tens of thousands-- of dollars.


It Gets Deeper
Some bigshots came in from corporate headquarters. I won $500 for a powerpoint presentation contest. (I split the money with Dennis, since the presentation was largely his ideas.) After the higher ups left, Dennis asked me what I thought of them. I responded that they seemed knowledgeable and helpful.
Oh really? Dennis replied. That's not how they came across to me.
Now Dennis revealed that something was fishy in the organization. He'd known of this for weeks, but said nothing to me. Some people who were supposed to get checks (Like him, for instance. I never got a check other than for the contest) were having trouble getting their money.
Dennis was abandoning the current MLM, and going with a new one, the New Improved MLM. It was a similar healthcare plan, only the minimum monthly fee for this one was $99. I never joined, and I soon quit.
I called and canceled, yet the next month the organization still took money out of my account! I eventually got it straightened out, and was done.
Soon Denis had gone to a third organization, because there was something fishy going on with the New Improved MLM.
Now Dennis was with the Latest New Improved MLM. He was appointed to be a regional manager. The founder of the Latest New Improved MLM was a guy who had made huge money on MLM one.
Before long Dennis and his wife found out that they were going to be millionaires. They were about to go from renting a modest apartment to living in a multiple bedroom mansion. They no longer had any kids living at home, but that was beside the point. Dennis and his most productive salesman went out shopping for homes, and had pictures of palatial estates they had visited with real estate agents. They were test driving Mercedes Benz cars.
An e-mail went out. NOW is the time to get in on this opportunity! There is a HUGE income potential!
And I had to ask myself, What if this thing pays off huge, and I miss out? There seemed to be strong evidence that Dennis was going to be rich.


Well, I reasoned it out.

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