MLM (Multi-Level Marketing) : Job Seeker Beware?

The MLM dream has all the elements of a typical gangland paradise: Big resorts by the beach, money to spare, and all the good things in life you can possibly lay your hands on.

The idea that by ensuring the continuous cycle of recruitment and purchasing MLM products, you could end up in the upper strata of the company, is somewhat misleading, because certain market forces will ensure that you will very likely fail in your endeavor, regardless how much effort you may put in.

MLM: A Thinly-Veiled Pyramid Scheme

The pyramid scheme, also known as the Ponzi's scheme, was a fraudulent scheme invented by an Italian, Charles Ponzi, who managed to scam millions into putting money into his trust banks, with the promise of high returns. While the returns were real enough, he was merely using money from his most current clients to pay for his previous clients. In short, he was merely rolling the money; as long as the machinery kept going, his scheme would work.

Of course, in the long run, he would have to run out of participants, and everything would collapse, though in the case of Ponzi, he was caught before it could happen.

The MLM is merely an extension of the Ponzi's scheme: By using the products as a front to legalize its motives, the MLM promises recruiters grand sums of profits in the hope that the MLM machinery will keep on operating.

Market Forces At Work

One of the greatest enemies of the MLM dream would be the market forces: For every product, be it an investment scheme or toothpaste, market forces would determine the sell-ability of a product.

Say, for example, I manufacture toothpaste in a small city of 2 million people. Would I be foolish to peg my market share at 2million consumers?

Out of 2 million consumers, 200,000 might prefer to use my rival's toothpaste. Some consumers may not even use toothpaste at all. It would be foolish for me to manufacture my brand to cater for 2 million people without first doing a consumer survey to gauge my market share.