If you don’t know the term “MLM”, you’re probably still familiar with the type of business. It stands for Multilevel Marketing (scheme). It’s the kind of company where that kid from high school you weren’t really friends with sends you a facebook message after not talking for 15 years asking if you want to “join their team” selling nutrition shakes. But that kid isn’t motivated by selling shakes. They’re motivated by recruiting others to join with a dream of getting rich. They try to portray success and sell that same dream to those they recruit.
It’s estimated that about 90% of participants lose money in a traditional pyramid scheme. But those are illegal! So if you take a pyramid scheme and start tweaking tiny little things until it’s just barely legal, what you end up with is an MLM company. MLMs are pyramid schemes pretending to be a nutrition shake company. But in this more nefarious version, instead of a 90% loss rate it’s over 99%!
The overwhelming evidence against MLMs is overwhelmingly bad. But so many people still get wrapped up in them because they do an amazing job selling “the dream”. Work from home! Be your own boss! Make a side income! Opportunity to grow! Look at all these successful people. If you want it bad enough you can do it!
But the dream is a lie. The math behind the pyramid scheme makes it impossible for almost everyone to succeed. MLMs are good at three things: Costing you time. Costing you money. Costing you friends. They’re not a way to build wealth. You won’t make a side income. Find something else to do.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often (not in an MLM).
-Jeremy