A couple of days ago, I got an email from my friend Evan who runs My Journey to Millions asking if I've heard about Rippln. I hadn't. Turns out it's super-new... as in the company seems to have been putting out their main promotional videos this week (though there were some going back to middle of April). Specifically this promotional video from the company caught my attention:
I was going to pick this video apart, but it seems like the nice people at TechCrunch have already done it for me. Their reaction was similar to mine, when I read it: "Thanks to my job, I get to see a lot of stupid bulls**t. Most gets filtered out, but every now and then something just rises up that is so ridiculously stupid, it’s just begging to be called out." The article breaks down 17 ridiculously stupid points in the video, explaining what not to do in a start-up video. Here are a few samples:
- "Don’t tell us that your app is going to be viral before it’s even friggin’ released."
- "Don’t expect the press to cover your stupid app before it’s even friggin’ been released. Except for maybe in posts parodying it."
- "Don’t say your stupid app is going to change the way we communicate, or call it 'The biggest breakthrough since email.'"
- "Don’t promise (again) that your stupid app is going to go viral. Don’t compare its growth to Facebook, or Twitter."
- "Don’t make your stupid app sound like some sort of exclusive club with an 'inner circle' and talk about how lucky we were to be invited and s**t."
- "Don’t say that there’s just a brief window for me to join!"
TechCrunch called out the video for including Adam D’Angelo of Facebook fame, but it missed the most obvious scam in this video. The video shows how Mr. D'Angelo's 0.8% of Facebook is worth hundreds of millions of dollars. Well, that's nice. Is Rippln giving you 0.8% ownership of the company? No. They aren't give you any ownership. You would be a user of the app the same as if you were a user of Facebook's app. Putting that aside, if Rippln was really going to give you the cut that D'Angelo got, 0.8%, they could only have 125 people getting it, before they've given away 100% of the company. Is the media and news really going to cover something with 125 users? Nope.
When Evan told me about Rippln he also included this promotional video from the company.
The video has adds a few more red flags. Specifically, the marketing in it is just plain slimy. First they say that we are in "hand-chosen few" that are behind the "velvet ropes", but then make a big point that they can't say too much about what they are doing. It sends a clear message: We are going to say that you are important to get you to sign up, but you aren't important enough to know what you are really signing up for.
The other part of this video that got to me is that they push the "you are making Facebook and Twitter rich, but you get nothing for your efforts." This is a common pitch in the MLM world. It sounds good on the surface, but let's remember two things: 1) users get to use these companies great products and technology for free and 2) if Twitter and/or Facebook were to share their billions with its users, each person wouldn't get a lot of money, just a few dollars.
If a company honestly thinks that they are going to share more than with you they aren't a very smart company. So either Rippln isn't very smart or they are trying to scam you with misleading marketing. I think it's clear that both are true.
Rippln's Founders and Company Information
Let's dig a little deeper into this mysterious company. Here are the major players:
Brian Underwood - CEO - Underwood was a Master Distributor at Burnlounge, which the the FTC has shut-down and sued for being a pyramid scheme. He then went on to co-found iZigg, an MLM company that promised wealth based on text message advertising. In this video from June of 2010, he claims that iZigg is "launching the biggest brand name in mobile media history." Have you heard of iZigg? Is it talked about in the news or blogs? Nope. Looks like iZigg failed to attract attention, and all those people who bought in were essentially kicked to the curb with Underwood starting Rippln, an extremely similar MLM, mobile company to try to create buzz from scratch.
Terry LaCore - Co-Founder - LaCore is the founder of b:hip, an MLM company that sells "lotions and potions" like many of the other MLMs that I've covered here in the past. Their products include a bunch that promise to repair your DNA and other outlandish claims that they can't and don't prove.
Jonathan Budd - Co-Founder - Jonathan is perhaps best known for his information product Online MLM Secrets and The 7-Figure Networker System. These are typical MLM Tool Scams. The idea is that people gullible enough to get involved in MLM are gullible enough to pay for these products. Of course, it's little surprise that there are complaints about bad credit card charges from Jonathan Budd.
If you are going to compare yourself to Twitter, Facebook, or Instagram, you should have extensive background in technology start-ups. None of these people have that. There is no venture capital from the founders of Paypal (or similar) like you see with Facebook and Twitter.
All that matters is that people sign up?
Jonathan Budd has been commenting on critics websites, which is something I give him credit for. Most of the MLMers know better than to make themselves look that foolish like Jusuru's VP did on my article. Budd commented on the aforementioned TechCrunch's article saying (amongst other things): "It's difficult to deny the effectiveness of our opening marketing at this point, judging by how we are having this conversation on techcrunch's blog... so say whatever you will about that." and "However unlike most companies, we believe the user deserves to share in the rewards of their word of mouth marketing. A concept that our users believe in too, as we've just crossed 200,000 people in our first 10 days." and "If you dislike our marketing... that's your opinion. But we're proud of the buzz we've created in the marketplace, and will continue to test new direct response concepts, ideas, & media as we roll out more of our company in the future. Hopefully there will be something other technology companies seeking to get buzz might be able to learn."
He also commented on the great site BehindMLM saying, "When someone criticizes how you market... that’s not a fact, it’s an opinion." Update: he's actually left a few comments on the site. One of them claimed: "If you think you could do a better job getting 210,000+ users in 11 days, by all means... I encourage you to leave the world of commenting & go become an entrepreneur." (I shouldn't nitpick, because there are so many big problems with Rippln, but they haven't released a product and thus have zero users.)
Call it opinion if you want, but the FTC has clear opinions on what legal marketing is. As they've written in the past, endorsers have to "Clearly and conspicuously disclose the generally expected performance in the depicted circumstances." Rippln is clearly misrepresenting the opportunity that they are presenting when they cite Adam D'Angelo Facebook stock money.
There's a term for this Mr. Budd. It's called "fraud." It's not my opinion, you can look it up: "...fraud is intentional deception made for personal gain..."
In that Behind MLM article, Budd also quotes the following frequently passed MLM clichés, "One of my favorite lines I’ve heard recently is: 'There’s no statue built for a critic.' And it’s quite true." Who needs a statue when Gene Siskel has a Film Center. And let's not forget that Hollywood stopped to honor Roger Ebert too.
I could go on for a week about Budd's comment in the Behind MLM article. It switches from: "We believe that the world’s social graph is missing transparency" to "The criticism so far for our model, is frankly something we cannot fathom to us because no one knows any details yet. After the model is fully released..." to "Have actual information to base your opinions from" to "Give us a little time, and we will gladly take care of you, and answer any question you might have" to "If anyone has true critical analysis of our model, products, plan, or has questions... please post them here and as soon as time permits, I or someone from my team will address them."
So they are trying to be transparent, but they can't release their model. Yet we are supposed to have actual information (which they haven't released) to base our opinions on? They want a little more time, yet they continue to take sign-ups and release misleading videos. Budd invites us to post "true critical analysis of the model", but remember what he said previously, "no one knows any details of the model."
Doublespeak much, Budd?
The rest of his comment is pretty much generated from the bad MLM argument generator. In this case the generator must have produced, "you’re just out to get hits for your blog", "You’re just negative", and "You just don’t understand it." May be there are some others that I missed.
But Really, What About the Model
As Budd made clear, they are still working on it. That should give you a lot of confidence, right? That aside, we know a lot of things that they've worked on and even released, so it is worth discussing those as it gives valuable insight as to where the company is going with this.
There are numerous reports that people can pay $300 to be a Domestic affiliate and $600 ($900 total) to be a Global Affiliate. In addition, it seems that comes with a $49/mo. fee for the right to distribute the mobile application. If true, and again, I've seen multiple reports so it seems credible, it's going to be a slam dunk to show that Rippln is an illegal pyramid scheme. It doesn't seem like Rippln intends to sell anything other than the business opportunity to recruit more people to Rippln. It's not like the product is the app, because that's supposed to be free. Update: it looks like Rippln is going to try sell in-app purchases and tracking of them.
That's very interesting because in this 11 minute video from Rippln explaining the compensation plan, it definitely seems like the money comes from recruiting people who pay to become "players." It surely doesn't look that Rippln is interested in focusing on the in-app purchases from the video, which is a major red flag for it being a pyramid scheme.
At around the 9:40 point they explain the All-Star Bonus. It seems like this person collects any bonuses that weren't collected by new people. The example they give is a person joins last month and only qualifies for payment on 4 Ripples. You'd get the money he would have made if he had 10 Ripples. It's complex and their explanation is clear as mud, but it seems like the All-Stars will pick up a majority of the money. This also sounds like the way that they give the hand-picked early adopters big cash, since at some point, mathematically there will be many, many people who won't be able to fill up their Ripples. It's the nature of any kind of pyramid recruiting scheme that there is simply no one left to recruit at some point.
One my favorite parts of the video is at 10:40 when after a ridiculously confusing explanation of where all the money is being sent through this system, it adds, "there's a more complete explanation about the comp. plan inside the 'inner circle'." Wait, it gets even more complicated requiring further explanation?!?!
Again, don't quote me on these statements being entirely accurate, because as Rippln's co-founder Budd said, it hasn't put out the details of the compensation plan (even though there's a video) . So either the company is A) not transparent enough to disclose the true compensation or B) has their priorities messed up to the point where marketing an app without a business model or C) is lying about not having put out a compensation plan. It's probably a little of all three.
About this Mobile App
Apple has been pretty strict in what apps it allows. If there's a compensation plan behind it where people are making money from recruiting others, you can be very certain, it won't get approval. Google Play is a little more loose with it's restrictions, but it too probably wouldn't approve such an app. I'm not as familiar with Windows Phone and Blackberry 10 apps, maybe Rippln plans to take on Facebook and Twitter with the less than 5% market share those smart platforms have? With a plan like that, how can it fail?
In the end, when I look at Rippln, I see the following:
- Laughably-bad marketing. Worse marketing designed to misleading its potential users
- A compensation plan that appears to be a clear pyramid scheme...
- A product that doesn't exist and probably can never exist the way they hope (due to app store policies)
Rippln is already on defensive about the past of CEO Brian Underwood. Jonathan Budd commented in the aforementioned TechCrunch article and was quick to throw the defamation word out there from well-meaning commenters. In addition Rippln's lawyer took to their Facebook page saying, "The allegations of Brian Underwood being sued or investigated by the SEC or in another lawsuit are false." Given how MLM lawyers have threatened me with legal action in my other articles (such as One24), it probably won't be too long before they come after me with a Strategic lawsuit against public participation (SLAPP).
In which case, I really invite them to do their worst. I would be happy to sit in a court room and discuss the FTC's guidelines on endorsements.
I'm going to close with this, a video from another person who smells a rat with Rippln, Chris Voss. On his show, he dug up a lot of dirt on Rippln, including information that they don't seem to be doing business from real office space. There's a good deal more and I don't want to spoil the fun.
57 Responses to “Is Rippln a Scam?”
Next: Committing to a Credit Card? Don’t Underestimate Annual Fees