Pyramid Schemes
2007.06.13, 23:57
Mind that I am not saying that these types of businesses cannot work. Indeed they can, but they are not sustainable.
Oh, and excuse the lack of flow here. I just brainstormed some points and didn't bother to organize it or make it flow like an essay or anything.
1. The only way to purchase the product is by becoming a distributor for the company.
Businesses indeed have proprietary secrets that cannot be shared. Successful businesses possess a competitive advantage over their competitors due to these proprietary secrets. In order to learn such secrets you must become a prominent, trusted member of the business over time.
In a legitimate, successful business, the sharing of secrets does not depend upon how many people you have brought into the business.
Additionally, cost is almost always involved in becoming a member. In some schemes there is a membership fee, and in others the cost of advertising material for the product is offset onto the distributor.
2. The business model is not sustainable.
Each person must contact a number of other people, and the amount of money one makes depends upon the number of people they sign up. What happens when the ultimate goal, everyone on the planet, signs up?
The product and its marketing materials are distributed as wholesale items. The product can only bought in volume because there is no end consumer.
A reward-to-work ratio greater than one. The reward is always greater than the amount of work one has to do.
The only business advice gained from demonstrators is to buy the product. No advice is given about succeeding in business unless it involves the product.
There is a sense of urgency or the feeling of being let in on a well-hidden secret. If you get in on this business opportunity RIGHT NOW, you are guaranteed success.
The advertisers discuss their day jobs. Duh. Either that or they seem to lead normal lives. How many people can you name that make 5 figures PER WEEK that lead normal, middle-class lives?
3. There are intimate social gatherings held at distributors' houses to advertise the product.
Because there is no end consumer or venture capitalist (because smart venture capitalists only invest in legitimate businesses) to provide advertising revenue, most advertising is done through meetings and seminars.
The meeting or seminar opens with advertisements about the cure-all product or about how to make large amount of money quickly and with minimal effort.
4. The product is only a means to an end, not an end in itself.
The product is introduced as an unbelievable item that people are "just finding out about." Because of this, you are offered a business opportunity to sell the product. As the presentation continues, you find that you are in fact not offered a way to sell the product, but instead a way to get others to sell the product. Using Computer Science terminology, there is no base case. There is no end consumer to provide revenue because all consumers are also sellers.
Some of these businesses even have a legitimate, excellent product. The apparent product is not the goal of the business.
Because the product is apparently without fault, it seems logical that everyone would want to get involved in its sale. For every argument about the product there is a counter-argument. Pseudo-science prevails stating the product is a miracle. Everything seems to have been considered. There is no room for the product to improve because it is already perfect.
The product provides miraculous benefits. For example, a naturally occurring food that acts as a cure-all. That somehow even ancient peoples that recommended it to us did not know about. This is often supported with testimony about how it has changed lives.
If you can acquire a similar product through an alternate channel, it is inferior for pseudo-scientific reasons. Benefit can only be acquired from the product if it is purchased through this particular channel.
5. No branding and ubiquitous anonymity.
The owner of the company is an ethereal being. There is no direct contact information and no presentable business license. The product, company, and compensation you may receive are extremely anonymous. When have you ever heard of a company whose employees make tens of thousands of dollars per week but no one has ever heard of the CEO? Typically successful companies are headed by people who have become limelight celebrities in the process.
The company has apparently been doing successful business forever! But no one has ever heard of them before. Businesses are only successful when they carry a BRAND NAME that is known commonly in households. Building a solid, recognizable name is the only way to become widely successful in business.
It's being heard about everywhere. On the news, in science and pop culture magazines. Even on Oprah. Because - you know - Oprah doesn't fuck around. The kicker is, you've never heard of it.
One of my favorite essays (No Silver Bullet by Frederick P. Brooks, Jr.) reminds us that if it sounds too good to be true, it probably is.