Creating a pyramid scheme for fun and education

John Young says: "Here is a picture of a toy pyramid scheme I did for one day with my friends. People who made money are in green, people who lost money are in red. I think it's a stark picture of what MLM really looks like!"

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      1. Manatee, sweet manatee
        Your mustache bristles tickle me
        In places no one ever sees
        My soft and loving manatee

    1. Just to make things more phrenologically interesting and/or complicated for you: 
      * Some of the folks you see are siblings, and 
      * Many of the folks you see are on the same roller-derby league, and
      * Some of the siblings are captains of rival derby teams

  1. There are far too many people profiting to be a MLM, but then again, the rate’s going to slow wayyyyyyyyyyyyy down as the chart gets bigger :D

  2. To be fair, most of the people didn’t ‘lose’ money: they simply paid $1 for their ‘product’ (the pic with Chris) and didn’t receive anything in return other than that picture.

    This is the case of most MLMs: most people simply pay for their product (usually overpriced), receive it, use it, end of story. Some make a bit, a few make a lot.

    MLMs basically replace the supply chain (warehouses, distributors, retails outlets) with the MLM chain. There is nothing inherently wrong or ‘ponzi-esh’ about it, although of course many are crooked and seem to make more money from selling ‘training’ than from selling their stated product.

    It’s worth remembering that, when you go down to any retail outlet and buy a product, the distribution of income is not so different: Sam Walton makes $12, a few smaller suppliers make $3, everybody else spends $1.

    1. Sasha, I completely agree with everything you say. In this case, my network is not made up of people that thought they were going to be able to pay their mortgage with a new home-based business; it was made up of folks that said “ha! Sure, here’s a dollar.”

      I think the thing that freaked me out was how stark it made things IF this scheme had advertised itself as a reliable moneymaker.  Buffie (the woman who made $1.19) was a HUGE seller, she worked really hard… and still only made a dollar and change. And she’s the exception, rather than the rule.
      I think it’s the overpromising that’s the problem, not (necessarily) the math itself.  If I showed someone this graph and pretended that getting involved was a guaranteed way to get them out of financial trouble, they would say “no it isn’t.”

      1. In my experience with people who have gotten into these things, they don’t value their own time. They think, “Wow, if I sell 10 lipsticks I get $100!” and then spend hours putting together sample baskets, planning a party, hounding friends to get the order forms back, and filling in the paperwork. 

        They never stop and look at it and say, “You know, I could have gone down to the local temp agency and worked at an office for a day answering phones and made $100.”At first giving up a little free time doesn’t feel much like work; it’s exciting and fun to be starting your very own business! Over time, though, it’s hard to keep up putting so much effort into something with so little reward. So they drop out, usually having put more money into the start up effort than they ever reaped out of it, feeling like a failure. The company, however, sold all those products without ever paying the salesperson one dime.

  3. My sister and her husband got roped into one of these a few years back (Mellalucca). I actually like their products okay but when I tried to throw her a bone and purchase some stuff, Sis had me in on this awful phone call where the phone rep rattled through the deal details. The final detail was that this was a recurring order that would hit my charge card every single month. Uh, no thanks. 

    Then she had me on another call with her sponsor or whatever you call the next person up the chain where the sponsor spent the entire call reading a terrible script to me then meanwhile hustling my sister to buy more of the Mellalucca products so she could try them all out and better recommend them to her own customers. It was painful to hear my sister being so manipulated. My sister has a long history of having a weak personality where she gets drawn into cultlike things, and she had been doing so much better lately, so I just hated to hear her getting once again wrapped up with people who were taking advantage of her and she didn’t even seem to see it. I have another Internet friend I met through a discussion board and am Facebook friends with…she’s not a real in person friend but I’ve emailed and conversed online with this lady for many years. She’s into Airbornne. Most of her Facebook posts are hustling this stuff, but she’s a nice lady so I put up with it. Recently I was sick and she mailed me some product samples of vitamin tablets and tea and lotion. They were pretty decent and I wouldn’t mind ordering a few things but I am terrified this woman is going to hustle me to join up so I’m currently avoiding her. What’s annoying about these is that there are so many people who want to start legitimate home businesses, and the products often are pretty good. The MLM stuff seems to drive the legit business away – I guess the products are a big loss leader. It’d be so nice if someone could actually provide a real business that just involved selling products. 

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