Exploiting the Pyramid | Multi-Level Marketing

Hey guys, thanks for clicking my Facebook
link! I was just thinking back on our time in high
school and I realized that you would be perfect for this new business I’m involved with. Don’t click away yet, there’s nothing
shady about this. I used to be like you, I used to live paycheck
to paycheck, I used to split the flavor packets of my ramen in half to make them last longer. Now I use the whole packet. I’m my own boss, I make my own hours, I
work from home, which gives me plenty of time with the kiddos. So how would you like join this amazing journey
with me? This video was brought to you by Skillshare. You’ve been hearing about MLMs a lot recently. They’ve been around for over a hundred years
– the company that would eventually be known as Avon started in 1886 and is still the second
largest MLM. But there was a big explosion of them after
World War 2. At the same time that new religions were being
founded, old ones were being rekindled, and alternative and eastern medicine were becoming
popular – direct, network marketing companies took off. Thanks to social media, we’re seeing a surge
of new MLMs. The r/antiMLM subreddit keeps a running list
of all current and past MLMs, it’s worth scrolling through just to see how many of
them there really are. But in the last two or three years, a few
of the larger MLMs have gotten into legal trouble with the Federal Trade Commission. Causing several of them to shut down or restructure. So it’s worth taking a moment to examine
what these companies do, how they work, and why people fall for them. And wait, aren’t pyramid schemes illegal? Look, we all eat, and sometimes, we eat less
than we make. What are you going to do with the rest, throw
it out? Nah, save it for later with Betterware. It’s a plastic container with a lid that
you’ll probably lose. Put it in the fridge, put it in the microwave,
put it in the dishwasher, you know how this works. But you see, this isn’t your run of the
mill crapperware, these are some serious fiber woven bowls. Now I’m a fairly strong guy, let’s see
if I can… so uh, how does the dealio sound to you? MLM stands for Multi-level Marketing, sometimes
referred to as network marketing or a chain referral scheme. Which right away makes it sound like a pyramid
scheme. The Ponzi scheme is probably the well-known
variation of the pyramid and was somewhat recently made famous by Bernie Madoff and
Bitconnect. The way it works is that you start with a
founder who convinces a few people to invest in some fantasy venture or company. When one of those people calls asking for
the return on their investment, the founder recruits more people and uses that money to
pay the original investor. This continues until the founder is eventually
caught – but as you can see, the money always stays within the pyramid and it’s not on
the recruits to recruit more. The only person who knows about the pyramid
is the founder. Ponzi schemes are obviously illegal, but MLMs
still exist, so let’s take a look at how they work. It’s important to note that they all work
a little differently, but in general… You have a founder who recruits a few people
to sell a product, so far so good, sounds like a regular business to me. But there’s a catch, you make more money
recruiting than selling. So these people recruit a few people, who
recruit a few people, who then, you get the idea. This is referred to as your downline, while
the person who recruited you is your upline. I personally think this looks more like a
family tree than a pyramid and I’ll explain why later, but this is a pyramid scheme. In fact, both of these are pyramid schemes. And while Ponzi schemes are always illegal. Things get hazy when we look at MLMs, which
allow people to say stuff like this… It’s not an illegal pyramid scheme, it’s
a direct selling network marketing company. Is it shaped like a pyramid, the business
structure? It is shaped like a pyramid, yes. But you’re saying it’s not an illegal
pyramid scheme. It’s not an illegal pyramid scheme. Running a company with a pyramid shape is
not, in itself, illegal. There are legal pyramid schemes. In general, MLMs make money in two ways. Through the direct sale of product to outside
customers and through the recruitment of more members. The balance between these two revenue streams
is what determines the legality of the pyramid scheme. Some MLMs make most of their money through
direct sales, like Tupperware, making it legal. Tupperware was the first MLM I ever learned
about while living on a military base almost 30 years ago. Another thing we’ll get to in a bit. I didn’t know this until making this video,
but they still throw Tupperware parties, and it’s their primary source of revenue. Who throws Tupperware parties anymore? While they do still recruit consultants and
receive a cut of their downline, most of Tupperware’s income still comes from outside sales. Totally fine. But when this balance is reversed and a company
is making more money from its members, it becomes illegal. And according to the FTC, the legal ratio
is 80-20, a company must receive at least 80% of its revenue through sales and not recruitment. Most MLMs that currently exist do not follow
the 80-20 rule and the only way to find that out is to pressure the FTC investigate. You’ve heard the saying, “it’s only
illegal if you get caught!” So, while every MLM is a pyramid scheme, not
every pyramid scheme is illegal – you have to look at each one individually. Hey girls, it’s Fall! It’s back to school season and time to update
that wardrobe – so you know what that means… Sales! If you’re anything like me, it isn’t fall
fashion without leggings! That’s right, I’ll be showing off the
best LoLuKno leggings tonight on Facebook Live. So get your wine and wallets ready ladies. Because if you share this video – and I’m
not supposed to do this – free shipping on all items. Hashtag bossbabe! Lularoe is a women’s clothing company started
in 2012 by Deanne and Mark Stidham. Their name is a combination of their grandkids,
Lucy, Lola, and Monroe. They became famous for their buttery soft
leggings and experienced explosive growth in 2016. Which is also when everything started to fall
apart. Lularoe, like most MLMs, specifically targeted
women, and even more specifically, stay at home moms. It has to do with the post-WW2 economic boom. Remember, women weren’t always allowed to
have a job and make money outside of the house, so for many of them, selling makeup, or Tupperware,
or leggings, was their only option. A lot of their recruitment pitches use feminist
empowerment language. For many of these women, MLMs offer a social
outlet and a feeling of community that they might not get otherwise. Especially military wives, another favorite
of Lularoe. Other MLMs have their own targets, but typically,
it’s moms, military, minorities, college students, and… Mormons. Which might sound weird, until you think about
it. Imagine a group of people with deep community
connections and built in door-to-door sales experience. Lularoe fashion consultants typically sell
during Facebook Live sessions lasting anywhere from 2-4 hours. I watched more of this than I care to admit
– these days they typically average one or two sales per hour, and customers buy stuff
by typing “Sold plus the item number” in the chat. After the live stream, the consultant will
contact the buyer and perform the transaction. Some consultants have a helper reading the
chat off screen, some have software that take care of it, but most people do it manually. Don’t forget guys to share and comment with
that heart emoji to be entered into the drawing for Lula-Cash tonight. Lularoe was unique in their use of Facebook
this way and other MLMs have started to catch on. But selling Lularoe on Facebook is not how
you make money, if you want to do that, you have to recruit. Lularoe is the most expensive MLM to join. They call the process onboarding and you’re
presented with three options for a starter kit, ranging from $5000 to $9000. It’s called front-loading and almost all
MLMs work this way. You buy the starter kit or onboarding package
and then it’s on you to sell it – the company has already made its money. But… $5000? Most MLM starter kits are around $100. All businesses have a start up cost, you have
to spend money to make money. But these aren’t venture capitalists, these
are stay at home moms. Most people who join Lularoe use a credit
card, putting them thousands in the hole before they even get started. You start off as a Consultant, there’s nobody
underneath you so the only way you can make money is by selling clothes. The average Fashion Consultant makes 85 dollars
a year – a year. Which is immediately negated by the fact that
in order to maintain your business status with Lularoe, you are required to purchase
at least 33 items a month. And you don’t get to choose the items. While looking at the starter kits, you might
have noticed where it says Classic T, 50 pieces or Leggings One Size, 40 pieces – that means
you’re picking the style, but not the print. It’s basically a loot box. You’re ordering a specific cut or style,
but the prints and colors are totally random, a lot of it ugly as sin. You think I picked this on purpose? In your random assortment, you are guaranteed
a few high-value items, which they call unicorns. Which I guess are shiny or foil cards in this
analogy? Either way, a lot of consultants have taken
to selling outfits rather than individual items, pairing unicorns with undesirable junk
and selling them as a set. Adult leggings come in three sizes. One size, which isn’t the only size, for
people between size 2 and 10. Tall and Curvy for 12 to 18, and Tall and
Curvy 2 for 18+. Here’s where all of the men are going to
make a joke about “What about size 11?” During live sales, they typically refer to
these as OS, TC, and TC2. The fact that they do these QVC-like sales
one at a time like this means that for any pair of leggings they hold up, there’s a
very small chance that it fits you. When you refer one person, you move up to
Sponsor, where you start earning bonus checks that average around 7000 a year, on top of
whatever you make from sales which is negligible. 27% of all Lularoe members are at this rank
and they are required to purchase 175 pieces a month – which costs around $3000. Once you’ve personally referred three people
and have at least ten people under you, you become a Trainer. You’ll make an average of $52,000 a year,
but you’ll also have to buy 250 pieces a month and all of the people on your team must
collectively buy 1750 pieces a month. This is your Team Volume and your personal
purchases don’t count towards that number. You would think that making $52,000 a year
would be great, but you’re also spending at least $4500 a month on product, which is
$54,000 a year. You aren’t even in the black for the year. This is how most people in an MLM lose money,
even the apparently successful ones. Sure, they’re making a lot – but they’re
also spending a lot. Lularoe consultants are encouraged to live
a luxurious lifestyle, with expensive purses, cars, houses, and vacations – whatever it
takes to look successful. So other people will consider joining. They also have expensive conventions and retreats
every other month to keep you spending. But more sinisterly, to keep you involved. You’re not going to quit if you’ve already
paid for your flight and hotel to the Coach’s Retreat next month. To become a Coach, you need at least three
Trainers underneath you in separate branches – it’s starting to get complicated. On top of the 250 personal volume and 1750
team volume. Lucky for you, you’ll be earning an average
of $226,000 a year, just like 0.61% of Lularoe – you might actually make a profit if you
can keep the trips to Tahiti to a minimum. And lastly, the highest rank possible in Lularoe,
the Mentor. 3 Trainers and 3 Coaches in six different
branches, along with the same requirements as Coach. If you’re a Mentor, you are a millionaire,
congratulations… all 0.08% of you. A Lularoe Mentor can have over 3000 people
in their downline. If you think that’s complicated, Lularoe
has the simplest rank structure of any MLM I researched. But the bonus structure is somewhat easy to
follow. You earn 5% from your direct referrals, 3%
from theirs, and 1% from theirs. It’s important to note that that’s how
it works for everyone, so this person receives 5% from that person. It’s also important to note that the rank
structure doesn’t directly follow the pyramid structure. It’s technically possible to be a mentor
under a sponsor, because they don’t have enough coaches in different branches or they
didn’t have enough personal volume. So, while you might be at the top of the rank
pyramid, you might be on the 20th step of the referral pyramid. During their 2016 popularity boom, Lularoe
was unable to keep up with demand and instead, lowered quality. In 2017, multiple class action lawsuits were
filed, many of which are ongoing. To get ahead of the FTC, Lularoe changed their
bonus structure to resemble more of a legitimate pyramid scheme, emphasizing sales rather than
recruiting. And that was basically the end of Lularoe. Since nobody would buy the tissue paper quality
leggings, nobody was selling, so nobody was making money, so a mass exodus occurred. Lularoe still exists, but… barely. Hey, you’re fat. You know you’re fat and you know that I
know you’re fat. Because I’m fat and I know I’m fat. Takes one to know one. But at least I’m doing something about it
with Betterlife. Betterlife is a total nutrition program designed
to get you the body you’ve always wanted. All it takes is one heaping tablespoon in
the morning to start your day off right… Herbalife Nutrition was founded by Mark Hughes
in 1980 as a nutrition, supplement, and weight loss company that primarily sells protein
shakes. Over 30% of its business comes from this product
alone. And since this is food, it has an expiration
date, so if you don’t sell it in time, it’s worthless. Unlike Lularoe which lasts until… the first
time you put it on. So while I can buy this from a going out of
business sale, where someone is just trying to cash out before donating it to a thrift
shop… I had to buy this from an actual distributor. So the question becomes why would I buy this
when I could get this at basically the same price? The answer is that I’m paying retail price. If I join Herbalife, I get a discount that
starts at 25% and grows to 50% as I move up. Why pay retail when I could be paying wholesale? And that’s what makes Herbalife unique,
80.2% of all Herbalife members join just for the discount for themselves. There are two ways to join Herbalife. Most people join as an at-home distributor,
which is just like any other MLM, but you aren’t required to sell anything, and you
can keep the discount for yourself. You’re basically just a customer. You aren’t necessarily recruiting other
distributors, you’re recruiting other customers who frontload product they’ll never sell. But the ultimate goal is to recruit more distributors. Herbalife has ranks as well, you start as
a distributor, then move to senior consultant, then success builder, and then qualified producer
– where your discount is 42%. Or you can skip this line entirely and open
a nutrition club. Where you join as a Supervisor with an automatic
50% discount. A nutrition club is a physical storefront,
where you serve protein shakes and other Herbalife products to members who pay $5 a day. The initial startup cost is at least $5000. And that’s not including rent, utilities,
and any food inspections or certifications you need, which can double the cost. Notice how I didn’t say advertising or signage? Because you are not allowed to advertise your
association with Herbalife or the fact that you exclusively sell their products outside
of the club itself. Which makes it somewhat difficult to attract
customers or turn a profit for obvious reasons… I mean, would you go into a store with no
signs or even a name? Or just something incredibly generic? It almost seems like it’s designed to fail. As most of these clubs do within the first
year, saddling their owners with an average of $8000 of debt. Herbalife’s rank structure continues with
the World Team, the Global Expansion or GET Team – which I know is a lot like saying
ATM Machine or HIV Virus but that’s how they say it. And then there’s the Millionaire team, which
no, you’re not a millionaire at this level – in fact, you’re barely making six figures. You know, words either mean something or they
don’t, you can’t just call it whatever… You may be wondering what these Active ranks
at the bottom are, and it’s just a lateral promotion for any of you familiar with military
ranks. They don’t get anything special aside from
the pin. The President’s Team is the end goal – there
are actually 11 sub-ranks in here that I’m going to ignore, but the Chairman’s Club
is a member of the President’s Team who has five other President’s Team members
in their downline – and the Founder’s Circle has ten. Only people in the GET Team and above earn
production bonuses on their downline in what’s known as the TAB Team… and now you understand
why we deep-dove into Lularoe’s ranks instead or we’d be here all day. Here’s just a sample of what it takes to
be a Supervisor… How to qualify: 4,000 Volume Points or VP
in 1 month with at least 1,000 Unencumbered Volume, or 4,000 VP over 2 consecutive months
with at least 1,000 Unencumbered Volume, or 4,000 VP in 3-12 months, with at least 2,000
Personally Purchased Volume. What you get: 50% Potential Retail Profit,
8-25% Wholesale Profit, and up to 5% Royalty Overrides. I promise, that was English. How does that translate into actual money? Of the 69,000 Herbalife distributors in the
US in 2015, 93.4% of them made less than minimum wage and 72.6% made less than a thousand dollars
that year. And that’s just their revenue, when you
factor in expenses, almost everyone loses money. These aren’t people who joined because they
wanted cheaper shakes, these are people with a downline trying to turn a profit. The top 0.3% makes all the money, averaging
over 600,000 a year. The neat part about this chart is that you
can see fewer than a thousand Herbalife distributors are making middle class wages. This is Herbalife’s Income Disclosure Statement,
they’re required to do it every year for every country. Though they haven’t in the US for the last
few years. Because in 2016, Herbalife was investigated
by the FTC and ordered to fundamentally restructure its business, since it was found to be on
the illegal end of the pyramid spectrum. The FTC ordered that… The company will now differentiate between
participants who join simply to buy products at a discount and those who join the business
opportunity. That’s why in some newer Herbalife materials,
the lowest rank is Member rather than Distributor. At least two-thirds of rewards paid by Herbalife
to distributors must be based on retail sales of Herbalife products that are tracked and
verified. Companywide, in order to pay compensation
to distributors at current levels, at least 80 percent of Herbalife’s product sales
must be comprised of sales to legitimate end-users. And perhaps most importantly… Herbalife is prohibited from allowing participants
to incur the expenses associated with leasing or purchasing premises for “Nutrition Clubs”
or other business locations before completing their first year as a distributor and completing
a business training program. They were also ordered to pay $200 million
dollars to reimburse former Herbalife distributors, especially those that started a club. Despite that, Herbalife is still growing. They’re declining in the US, they peaked
at 80,000 distributors a few years ago, but fell to just under 50,000 last year. A large portion of which are minorities. But they’ve been expanding globally – especially
in developing countries for some reason… Hey, are you getting older? Of course you are, I can see it right now,
it’s like watching paint dry but in fast forward. You starting to get lines on your forehead? Maybe your knees crack when you stand up? Yeah, that’s what I thought, you need these
pills from Knoway. Just two a day is all you need to completely
reverse aging, but that’s not all, they’ve also been clinically proven to cure most cancers,
balance your pH levels, stop snoring, and block blue light. What’s in it? A unique proprietary blend of… it’s deer
placenta. But it’s not like you can taste it. That’s right, the freshest deer placenta
on the pl- I can’t, this one is just too gross. This one is real, it’s called Riway, and
it really is made out of deer placenta. Can we pick one that’s a little less disgusting
please? Right so I just spoke to a Facebook friend
I met once on a plane five years ago, and she told me I can get all of that stuff I
was just talking about. But without the deer placenta. It’s called Better Living Essential Oils
and just one drop on the bottom of your feet at night will fix everything that’s wrong
with you. Yes, even block blue light. So I got some tea tree oil, the ferrets love
it, it’s in their shampoo, it’s … ooh that’s strong. So they say this one helps with acne and nail
fungus, but I’m sure it has some blue light properties. Science doesn’t know everything! Young Living Essential Oils blurs the line
between MLM and religion. It was started in 1993 by D. Gary Young, the
D stands for Donald, not doctor. Before selling essential oils, he practiced
naturopathy in Mexico, where a reporter once submitted cat and chicken blood for clinical
testing… turns out they had cancer. No mention of them not being human, though. Before that, he was convicted of practicing
medicine without a license in the US, in fact, throughout his life, he opened and was forced
to close at least four different clinics. But then he started Young Living. The name evokes images of living a healthy
and youthful lifestyle forever. But no, it’s just his name, Gary Young. When he was 24, he was paralyzed in a logging
accident and cured himself using the products he would eventually sell. Where have I heard that one before? While they didn’t invent the product and
they’re certainly not the only one, they are one of the largest sellers of essential
oils – which sound like a vital nutrient or mineral that your body needs to survive. Nope, an essential oil is just the “essence”
of the plant. What does that mean? Basically, whatever you want it to, there
is no… Look, I don’t want to spend too much time
debunking essential oils. When you boil it down, this is just a bottle
of perfume, if Tea Tree oil did anything aside from just smell nice, we’d know by now. And if that’s all you use the oils for,
knock yourself out. It’s like lighting a candle, aside from
smelling nice, aromatherapy is a real thing and can help with anything from depression
to pain. But… it’s not going to cure anything like
cancer. The people in Young Living see this bottle
as a panacea, a natural cure-all tonic handed down by God himself. Being a Christian and reading the bible, they
talk about oils all the time. God created these things, these natural things
for us to use that have these amazing benefits for our body. Why am I not using them? Tea Tree specifically is an insect repellant,
under arm deodorant, antiseptic, hand sanitizer, mouthwash, and it treats acne, dandruff, nail
fungus, and athlete’s foot. If Tea Tree doesn’t cure it, something else
will. Young Living sells over 150 essential oils,
some of them single and pure like this, while others are special blends, and each one does
its own thing. If there’s something wrong with you, or
your pet, there’s an oil for that. Melrose, I told you guys Melrose was going
to be in here! So, this goes in my swimmer’s ear blend… It must be really inconvenient to have to
boil some eyes of newt and summon an ender dragon every time you want to go swimming. They claim the oils cure everything from autism
to night terrors to diabetes. But, since this is just some mom doing an
unboxing in her living room and not Young Living making these claims, the FDA can’t
really do anything about it. Young Living advises those who want to share
their oils to avoid making any claims about treating or curing disease, but instead talk
about the structure or support of the body. So rather than treating insomnia, an oil can
help with sleep. It can’t cure the flu, but it can support
a healthy immune system. I wasn’t making up that bit about blue light
by the way. It’s called IlluminEyes, it is a whole food
essential oil supplement that is specifically for eye health and protecting against blue
light. That’s like taking a pill to prevent a sunburn
it just doesn’t work- I told myself I wasn’t going to do this… Okay, just one last thing. In case you didn’t buy that the non-existent
active ingredients in essential oils did anything medicinal. They also apparently have a frequency. The human body has a certain frequency that
it stays between, it’s like don’t quote me on this, 60 to 70, maybe 50 to 60, somewhere
in there. And learning the frequencies of different
oils, you don’t have to have them exactly memorized, but just know which ones are low,
which ones are kind of mid-range and which ones are high, can help you… You use essential oils by diffusing it into
the air, which is basically vaping an entire room, absorbing it through the skin, or ingesting
it using the special Vitality line of oils. Looking at the ingredients list, there is
no difference between Lavender Vitality and just regular lavender. Thieves is by far their most popular blend
and gets put in everything from cleaning products to toothpaste. Yes, they put essential oils in toothpaste. Young Living isn’t just selling some nice
smelling oils, it’s a lifestyle that completely takes over. If you wanted, you could fill your entire
house with Young Living products. I don’t mean hoarding it in boxes in your
garage, I mean replacing every other brand you currently buy. Which is what a lot of them end up doing. Because just like Herbalife, you get a discount
for joining. Unlike other MLMs, they aren’t trying to
sell a product to outsiders, the idea is to get more people to join and live the all-natural
lifestyle. They don’t even call it selling – they
call it sharing. Empowering you to love and share all the many
benefits of Young Living with confidence and a clear conscience. The religious and language aspects are somewhat
unique to Young Living, combined with everything else, it ticks enough boxes to be considered
a cult. But don’t worry, you’re not obligated
to join. They think if you buy an essential oil kit
with Young Living you are committed to a monthly order you have to spend money every month. That is just not the case. You can buy the starter kit, that doesn’t
mean you’re like, part of a business and you have to sell things now. You never have to sell anything or buy anything
ever again. You’re not, so you can cancel Essential
Rewards at any time you guys. Well, not if you want to keep that 30% discount,
you can’t. Essential Rewards is Young Living’s monthly
auto-shipment program, you get a discount, but you’re required to spend at least $50
a month. In exchange, you also get points and free
promo items. Look, for spending $300 this month, she got
a branded mason jar – and how! Young Living also has a complicated rank and
commission structure, beginning with Members and Stars, going through Silver and Gold,
and ending with Royal Crown Diamonds. With commissions paying for eight steps down
your downline. Though all of this might change soon, since
Young Living was served with a class action lawsuit in April 2019. They might have to restructure their payment
and referral systems just like Lularoe and Herbalife. Most people don’t join Young Living looking
to make a business out of it. They’re looking for that natural lifestyle. All multi-level marketing companies share
that characteristic, they may differ in a few areas here and there, but in the end they’re
all selling a lifestyle. The product is secondary and almost meaningless. You are a customer of the MLM and you are
tasked with recruiting other customers. To the exclusion of anything else. There’s a reason people in MLMs are referred
to as huns or hunbots, everything is about the MLM and getting more people to join the
MLM. Anyone who doesn’t support you is a hater. They’re not approving of your entrepreneurial
bossbabe dream, and you don’t need that kind of negativity in your life… Even if they’re family. The MLM is your family, your friends, and
your job. Some MLMs even encourage your spouse to quit
their job to help you, so they’re also dependent on the MLM. That’s why there are so many couple’s
retreats. Home school is also very popular among MLM
families – what’s the point in working from home if your kids aren’t going to be there
with you all the time. Further growing the pyramid. And that’s what it really comes down to
– you are either crushed by the pyramid or you are crushing others as part of the
pyramid. Even the perpetrators are victims. They’re told that if they aren’t successful
and aren’t making money, it’s because they are doing something wrong. MLMs are capitalism on steroids. We often hear about the top 1% reaping all
of the benefits of our economy – well in an MLM, it’s the top 0.3% or 0.08%. You can make it if you just work hard enough
and market your business properly. A skill you can learn by going to skl.sh/knowingbetter11. Skillshare is an online learning community
with thousands of courses taught by mentors in their upline. Take this course in social media marketing,
learning how to create the perfect profile and gain more followers since none of your
friends from summer camp will answer your messages anymore. Or this course in social media strategy, where
you can learn how to make the right content and even optimize for Facebook, how else are
you going to tell people about this amazing journey that you can’t wait share? You can learn this and much more with an annual
subscription costing less than $10 a month. And if you head over to skl.sh/knowingbetter11,
you can get two months of unlimited access to all of Skillshare’s courses for free. You’ll also be supporting the channel when
you do… but, like… I don’t get a commission. You don’t have to recruit anyone. This, this isn’t a pyramid scheme! Now, I know we haven’t spoken since that
one math class we had in college five years ago, but I was just thinking about how you
would be perfect for this business opportunity I’m part of. It’s called Youtube, and odds are, you’re
already a member. If you’re just starting out, you’re a
graphite – but once you get a thousand people under you, you become an opal, which is when
you’re eligible to start earning commissions. Or what we call in the biz, “adrev.” I’ve been doing this for a while so I’m
a silver-tier creator, but I am working my way up to gold and you can help by hitting
the subscribe button to join my downline. It’s free and you can cancel at any time,
you guys. But, for those of you who are committed to
helping small business owners like me, there’s a special pyra- program we call Patreon. We have colored tiers and ranks there too. Trust me when I say this is the easiest job
in the world, I just make videos, put them online, and earn a passive income. I don’t even have to leave the house. Now, none of you mentioned this in my last
video, but you might have noticed I have a new couch. It’s actually a futon from Walmart. But that, that is an IKEA bookshelf. Now, I’ve only owned three IKEA bookshelves
in my entire life – two of which are right now. That’s how good things are going for me. And that’s how good things could be going
for you, if only you had the ambition and you knew better… I’d like to thank Ben and Peter for being
the latest Golden Forks to join my downline. But a special thank you to Josh for being
the first to join this amazing journey with me. Sorry this video took a little longer, as
you can imagine it was a large project, so thank you for being patient… and sticking
around to listen to the end.

100 thoughts on “Exploiting the Pyramid | Multi-Level Marketing

  • There's a documentary about ex LulaRoe consultants and in the video you can read where she says she made $100,000 one year which she is suprised to hear because her take away after putting in all that effort ad buying the items was only $30,000 and that's not including taxes. Your being taxed on what was received and that means the $100k.

  • you've earned yourself a subscriber, i almost thought you where genuinely selling a scheme, how did you not laugh yourself to death doing the "infomercial" parts?

  • Actually, Teatreeoil hellps with a bunch of stuff. Like, burns and yes, akne. I dont know about the one youngliving sells, though. I get mine through a pharmacy. ANd the one thing the lady tells me everytime, DO NOT DRINK TEATREEOIL! It is dangerous when you ingest it.

  • Whats funny is if you actually work for an MLM like as a legit employee a lot of them give you money each month to buy their product and wholesale price. So you can get a guaranteed income and the product! (Once worked for an MLM)

  • The intro is fucking hilarious because at 0:31 right after he finishes asking if we want to join an MLM the video cuts to the animated guy sticking a fork into an outlet (which is exactly what I want to do every time someone asks me if I want to join their “totally not pyramid scheme”)

  • 13:37 you good there bud? hah, i can see the regret in those eyes.
    Also have to say, i love your intro graphics. it was confusing till i saw your channel name.
    this was a very good video.

  • This is very informal. Advocare which is a company in Plano who sponsors FC Dallas and many athletes just got slapped with a $150 million dollar penalty for running a pyramid scheme. I happen to live in Richardson which is right down the road from Plano.

  • My familiary with MLMs came early. When I was 15, my very first job was working for a guy who got involved in an MLM scheme. He wanted me to build a website for his MLM crap and tried to sell me on the idea of us being 'partners' and getting rich together instead of him paying me. I told him I was young, and if this ended up being an opportunity I missed out on, I would have plenty of others, and told him to just pay me my normal hourly rate. He did, and I built the site. As I recall, it was selling vitamins, a market rife with MLMs. I did read all of the material he had from the MLM, and I honestly couldn't find any problem with their structure. It honestly seemed pretty legit the way it was built. Complicated, sure, but it seemed like a solid business where you really could make decent money without having to recruit tons of people. That changed quickly, however. The entire compensation system was thrown out and re-made into a classic pyramid scheme. The guy I worked for and a bunch of the others who had gotten in early bailed and started a class-action lawsuit against the founder. Not sure what happened after that.

  • I buy essential oils for the foot soak/ sugar scrub I make to sell. My aunt told me the one I used weren't "pure enough" 😟😟😟
    I almost told her I didn't give a crap, but I respect her.
    She got me some DoTerra ones and they…smell nice.
    I later found out its an mlm but it looks like she did as well because she hasn't asked me about it since.

  • No joke, I think you have liver failure. The skin under your eyes are really yellow which could be caused from the buildup of bilirubin, the chemical that makes jaundice yellow and signifies liver failure if the liver can't filter it out from the blood stream.

  • Can you please do a video about strange almost cult-like new age groups? For instance Human Design that a man called RaZen has pieced together. No one talks about it and it is absolutely bizarre and a load of mumbo jumbo. Or about these quacks convincing people to drink bleach or rich fake faith healers or psychics?

  • MLM's have completely ruined the reputation of essential oils. they do have some uses aside from diffusion- my opa actually used tea tree oil on me and my sisters hair when we were dirty nit infested ten year olds and it actually eradicated the lice and kept them away (and it didn't completely melt our scalps)

  • I got into an intense argument with a meathead from highschool who was trying to pedal this garbage. Wake up now, it was called. Lease expensive cars and apartments for less than anyone else! You get groceries and utilities at a discount also!
    Yeah. Nobody bought into it but the severely mentally challenged. 10 years later he now works at a mattress and couch store. So I guess he didn't wake up after all.

  • Really liked the way you ended this. 😁 Especially seeing your fur babies in the leggings. At least you got some use out of them.

  • Suggested topic: Federalism in US: What it is, how it evolved, and Supreme Court cases related to state/federal powers. International context: Federalism in Canada and Australia, how UK devolved parliaments and the European Union are different from federalism.

  • Your "pitches" were a little too convincing.I suspect, probably correctly (which is an assertion with an equal ground of proof) that you slightly modified pre-existing examples that already existed. Good video, regardless: can't blame you for something like that.

  • That transition into the skillshare ad was so smooth that I thought I had just watched an entire 31 minute skillshare ad

  • In high school my classmate’s mom came for career day & tried to get us all to be herbalife distributors…. needless to say I was disgusted

  • The Realtor Brand is another disguised MLM with a 90% dropout rate and thousands of dollars spent by the new recruit Realtors to get and activate there license. Typical MLM results only 3% make any real money and as long as monthly fees are paid to your upline or Office, Real Estate Board , State and national bodies you never lose your Realtor status.
    The managers playbook states the product of a real estate office is Realtors.Also, most Realtors are female.

  • Does it make me a bad person if I think that anyone who is stupid enough to fall for a pyramid scheme after the 2000s got what they deserved?

  • I can smell an MLM scam as soon as it pops up on my radar. Run! Don't walk! Run, the other way!! xD
    Once an acquaintance of mine tried selling/recruiting me into the infamous "Time Share" deal. As soon as I head those dreaded words, I said "NO! NO! NO!" He insisted, so I asked him "Which part of NO did you not understand?! It's a simple two letter word consisting of the letters 'N' and 'O' – NO!" He's never bothered me again. lmao It just baffled me that in this internet age some people still fall for that bullcrap… shame on them for still being misinformed.
    By the way, I still split the Ramen noodles packets in half, cuz that's the way I like it. xD

  • as a Utah native, i can vouch for the fact that MLMs target Mormons sooooo hard. for real, it's ridiculous how many of them i've seen come and go over the last decade or so.

  • I’m totally anti-MLM so don’t think I’m defending them. But your info is wrong/out of context ie. you don’t mention that people can stay a part of LLR without the minimum pieces, they just loose a huge amount of the money their downlines make/are dropped lower in the pyramid. Also: the founder isn’t pro-women (though she claims she is) her family were ANTI-equality campaigners & wrote a book about how you should repeat in the mirror “I am weak & at the mercy of big strong men” to get you into a nice female mind set that a man would find attractive and want to marry.
    All the “mentors” who qualify for trips MUST bring their husbands on the company trips or they aren’t really allowed to go – they don’t invite single people and if you want to spilt from your husband they get you together for their version on marriage counselling. It’s twisted shit that is only explained by the fact that they are hardcore mormans!

  • Amway was one I remember from the '80s. My mother tried them out as a sales person despite being warned, and quickly learned that they were just a pyramid scheme.

  • Tea tree oil does do more than smell nice, and we do know it. It acts as an antiseptic with mild antifungal and antibiotic properties. Not good for much more than a topical treatment, fixing aquarium fin rot, and 50/50 on fixing mild athletes foot, but it does do something. Should've picked rose oil or something else for that specific example, some people might focus on that to make it seem like everything you said was wrong.

    Edit: that may be why Tea Tree Oil is their most popular, it's the only one that actually does anything.

  • what i get is cult like pyramid structure where people sell items based on fictional science. not real science but stuff that sounds sciencey. and claims to cure all your bullshit. power crystals, oils, tonics, creams, ect.

  • Convincing people to buy products to resell at a ridiculous price isn't illegal – but it should be, as it directs all the funds straight up to the top to the person who created the MLM. A normal business does not charge their own workers to sell the product.

  • The cruelest thing is they advertise in job sections of the paper.

    PS Teatree oil does help with skin blemishes (not cure, just help), but you'd get a better deal than that little thimble if you just went to the body shop.

  • I'm honestly still a bit confused as to how the investors make money from many of these models. Maybe I'm misassessing the revenues from recruiting, or maybe they're that fuckin stupid

  • Even Jontron got in on the MLM bashing game with his recent Goop video. (kind of)
    As well as Genetically Modified Skeptic.

  • “It must be really inconvenient to boil an eye of newt and summon an Ender dragon every time you want to go swimming” pfffffffft

  • I just joined your downline!
    Loved this vid. I have friends on fb that are into this stuff, and I don't want to be the one to break it to them.

  • Just wanted to say Tea Tree oil actually is a treatment for a lot of those things. It’s anti fungal and is proven to help with acne (in its diluted form, otherwise is irritating), and 25-50% tea tree oil solution can aid in curing athletes foot. But it’s no replacement for medical-grade treatment.

  • I don´t know how I got here but great video. My sister actually joined a MLM company years ago and made a shitload of money. She is a narcissistic sociopath though and got a major in psychology to better manipulate people. She ended up hosting large seminars for the company to recruit more people. My grandma was visiting and after seeing the sales tactics they use she broke off contact with my sister out of disgust.

  • While YL does look like a cult, you have to accept that essential oils are per definition distillates of certain plants and teatree is a quite good antifungal just like mentol and eucalyptus are good decongestants(inhalators anyone?).
    Also why did you think colgate tastes like peppermint? Surprise: there is mentol(mint oil) in it. Oil in toothpaste???? MIND. BLOWN.

    Come on, mate. I get that you're dissing mlms, and im all for it coz they are parasites, but really?

  • As an Italian-Peruvian living in Perú, it's so sad to see how many of these MLM companies take advantage of Latin American countries (and communities in the US) to expand themselves.

  • Essential oils CAN have healthy benefits for various purposes. HOWEVER. most of the shit in Young Living is just scented oils. There isn't enough actual ingredients to be useful. Real essential oils are cooked down elements of specific plants. It's the same as many vitamins are made. In a format that is sometimes easier to absorb. Which is why they have such watered down shit. Overdosing on certain things is bad. lol.
    Using Christianity to sell a business is also underhanded and pathetic. As a Christian, I Hate when people who use religion of any kind for financial purposes. It's just morally reprehensible. Plus, as much as I hate to admit it, many Christians are REALLY nieve and vulnerable to clever speak if it comes from somebody claiming to be Christian. Christians trust each other way too much. Humans are assholes and should never be trusted blindly. Also?…. Science people! It's a thing! Look at the scientific evidence or lack thereof!
    My wife's sister is caught up in an mlm and when I used math to point out the holes in the business model they got mad, pointed out that I admit to being terrible at arithmetic and refused to look at the detailed Excel sheet that I had made to do the arithmetic for me. Oh well.

  • I come from a family who is very health conscious and prefers natural remedies when possible. But we never were blind to the idea that pseudoscience is also prevalent in the natural health area. And sometimes, real doctors and carefully designed drugs are the best option. Most people seem to be either 100% must be all natural OR 100% avoid natural stuff. And it's because of people like this who drink the coolaid and become mindless naturopathy "health" bots.
    Yes, I have had good success with natural products and techniques in improving my health after some years of eating fast food after moving out of my parents house. But sometimes it doesn't work. And you gotta step up your game to fix yourself.

  • Hey now essential oils help just not as much as some people claim. Tea tree oil really does help with fleas and ticks. Ive been using tea tree oil for years. But I can see why they have a bad rep.

  • Ugh, what is it with people who believe pseudo-science and not understanding the word "frequency".

    Frequency: 'the rate at which something occurs over a particular period of time or in a given sample'

  • Vector Marketing is another bad MLM. They target college students and have them sell Cutco knives under false assumption of making $15+ an hour.

  • Oh thieves. I remember when my mom made me sit for 30 minutes so she could tell me about how thieves helped people cure the black plague. Why are women so susceptible to these cure-all things?

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