I often write about ways to save money or fix your finances, but today I thought I’d share with you an easy way to start a $500 million company. If done well, you’ll probably make 8 figures for yourself, enough to live extremely comfortably for the rest of your life. Let’s start with one word of caution, I am using “easy” as a relative term. There’s still significant work involved. No amount of magic wand waving will create a $500 million company… and no one is just going to hand you $10 million or more.
Finding the Right Product
The first thing you are going to need is a product to sell. I should probably charge a consulting fee for this information, but you’ll want a very specific type of product. You are going to sell nutritional supplements. Why nutritional supplements? For the most part the FDA doesn’t regulate them. That’s not to say that they don’t at all, but according to the NY Times article, “DNA tests show that many pills labeled as healing herbs are little more than powdered rice and weeds.” If Pfizer was doing this with their FDA-approved medicine it would be a scandal of the highest level and their executives would probably spend extensive time in prison.
The second thing you are going to need is a “hook.” This is typically an exotic ingredient. Some examples include acai berries, mangosteen, goji berries, and arctic cloudberries. Berries are a great choice. They are nearly universally believed to be healthy. The ingredient has to be exotic. If it is common, people will buy it elsewhere for cheap. We want this ingredient to be the star of the show. One good place to find these ingredients is the Dr. Oz show.
If you can’t find one great ingredient, you can get away a “proprietary blend” of a few fairly common herbals, but it isn’t ideal. You might have to pay for “studies” to be conducted.
It might seem difficult to create this product, but there are companies (many of them in Utah where the supplement industry seems to thrive) that will take your formulation and work with you to make a finished product. This is going to take some money to get started, but it can probably be done for under a million.
Hire or Partner with Some “Doctors”
People hold doctors in high esteem (see Dr. Oz). There’s a great level of trust there. So you want to get some doctors to speak well of your product. You need credibility, since you aren’t going to prove our product is clinically effective.
You can pay them cash if you have it, or you can give them equity. You might not be able to find the most reputable doctors. However, you might get lucky and find an academic researcher nearing retirement age who might take a stake worth several million dollars. Or maybe you can get really lucky and get a “doctor” who has a mail-order degree and comes with his own star ingredient.
Chances are you’ll have to settle for a naturopathic “doctor”, who couldn’t cut it at a real med school. This will still work since you are only selling a supplement. You’ll also demonize legitimate doctors and suggest that they want to keep people sick because it is good for their business. This will make your “alternative” person look better by way of comparison. (Hopefully no one is smart enough to challenge you by stating the clear fact that doctors lose their loved ones to disease too. Pretty dark to think all doctors are keeping their loved ones sick to make some money.)
How Do You Sell this Product?
You could put the product on the shelf at Wal-Mart or GNC, but there’s a lot of competition there. Also unless you are going to have a big advertising campaign like Pom Wonderful did for its pomegranate juice, people aren’t going to know about star ingredient. Either way, each of these two things would set you back a lot of money.
Instead you’ll go with Multi-level Marketing (MLM). This is an ideal way for you to sell your product for several reasons:
- Your Sales Force Will Work Cheaply! – On average they make less than minimum wage. Not only that, but we don’t have to pay them benefits like health insurance.
- Your Sales Force Will Be Forced to Buy Product from You – In order to earn commissions, you’ll force them to buy product… even if they don’t want it through monthly auto-shipments. You will instill a belief that to be great salespeople, they must consume the product every day. Also since the product is a consumable, they’ll have to buy more and more to use as samples.
- That Product Will be Insanely Expensive – You’ll sell people 25 ounces of juice for $40. Or you could sell a bottle of pills with less than $5 worth of ingredients on Amazon.com for $45. This allows you to use the product’s exorbitant price to charge admission to the business opportunity. Since you have your special ingredient and your “doctors” validating the health benefits, people will attribute any kind of positive health change to the product. The price placebo effect plays right into your hands. Consumer advocates may expose why your product doesn’t ‘work’. Let’s hope they don’t read that.
- Your Sales Force Will Pay You to Train Them – You’ll make them buy your sales materials… pamphlets, posters, and car wraps and such that describe and advertise your business.
- Your Sales Force Will Make Illegal Claims For You – If you hired employees and they claimed your special ingredient cured cancer, you’d be legally liable and your company would likely get shut down very quickly. Instead you’ll make these distributors “independent businesses”, which limits your liability. You’ll make sure that in the fine print you say all the right things such as “our products are not intended to treat, cure, prevent or mitigate any diseases.” However, you’ll give these business people training and spread word of mouth that your ingredients actually do help with diseases. Hopefully, no one reads The Huffington Post to see the end result is distributors making illegal claims based on their ignorance of the science.
- Your Sales Force Will Pay You for a Website and Propaganda – You can make a single website, but have it database-driven on the back-end, so that each distributor thinks they have their own website. You’ll charge them $20 a month for this. It is kind of like paying $20 for a Facebook or Tumblr account, but you’ll be able to justify it to distributors as “a cost of doing business.” You’ll partner with Success Partners which partners with all MLMs to distribute a cleverly slanted Success Magazine that gives legitimacy to MLM by mixing in trusted business axioms.
- Your Sales Force Will Pay You to be Brainwashed at Events – A few times a year, we’ll rent out a stadium for our annual “meeting.” You’ll pepper them with motivational speakers, even songs and clapping. Anything that typical cults use and everything that you’d see at a faith healer show is in play. You’ll make sure that no one can talk sense into them by telling them beforehand that these friends of yours are being negative and just jealous of you. Hopefully they won’t find this guide on how to get deprogrammed.
The saddest truth of all is that this sales force will be nothing more than cannon fodder. You’ll be bribing high MLM earners from other companies to come to you where they can get in on the ground floor and be at the top. This will give your company instant credibility in the “industry” and make you look like we’re growing, which is what the
cannon fodder new distributor wants to see. The people you bring over from the other MLMs will occupy the top levels and promote your company as the reason for their success, even if they had their success at other companies which is why you poached them in the first place.
It may sound difficult to brainwash the cannon fodder into all things mentioned above. It isn’t. You’ll show examples of those high MLM earners and their fancy cars and vacation cruises. The cannon fodder will erroneously believe that they will achieve the same with “hard work” as that’s what we’ll tell them. This will set them on a hamster wheel… starting a long quest for riches and paying exorbitant amounts for your products each month. The only way to get off the hamster wheel is to quit. If they quit you’ll shame them for giving up and call them failures. If only they knew that failure for them is not a matter of effort, but it was a mathematical certainty all along.
You’ll pray that your salespeople don’t read Harper’s Magazine and realize the ugly truth (emphasis added):
“The women I interviewed for ‘The Pink Pyramid Scheme’ told me stories about struggling to patch together daycare or to survive high-risk pregnancies while working long hours scouting prospects and hosting parties without any guarantee of a sale. Debts mounted, marriages failed. They couldn’t have it all because Mary Kay’s business model (like that of any multilevel-marketing enterprise) is designed primarily to profit from, rather than enrich, its workforce.“
Fortunately, like an email phishing scam, you don’t need everyone to fall for your “business opportunity” trick… we just need the most desperate/easily brainwashed 5%.
When Our Distributor Levels Drop…
At some point the cannon fodder figure out that the story of recruiting 3 people through 4 levels to create a
pyramid team of 81 people is completely unrealistic. Organizations simply can’t continue to grow at an exponential rate. They may blame themselves for not working hard enough, but the circumstances of the scheme we set up screwed them before they even had a chance.
In any case, they’ll leave in droves, as many as 90% of them a year. This means you’ll have to recruit in droves. You’ll do this by hiring more kingpins from other companies and giving them secret sweetheart deals beyond their level of recruitment. It’s not fair to the cannon fodder, but they’ll be brainwashed to only listen to us.
You’ll also expand to other countries. This is an easy growth story to sell your distributors. Since your company is at zero in the other country any growth in distributor numbers at all will offset the drop or plateau in the United States.
Hire the Famous MLM Lawyers
In order to get your salespeople to believe that your business is legal and not a pyramid scheme, you’ll hire lawyers. There are about three or four main lawyers that support the MLM industry. Off the top of my head, I’d go with Kevin Thompson, Jeffrey Babener, and Kevin Grimes (from MLMlaw.com) as the big three.
You might want to skip MLMlaw.com, though. It seems that Kevin Grimes was supporting Zeek Rewards, which was shut down by the SEC for being a pyramid scheme. Now the SEC seems to be suing him for negligence. The law firm has quietly changed its name from “Grimes and Reese PLLC” to “R&R Law Group” (Steven Richards replacing Grimes).
So you’ll hope to get lucky with one of the other two lawyers. This is an important step though, because the first question people have about MLM is if it is a pyramid scheme. You need to be prepared to say, “Our lawyers vetted everything and it’s all legal.” Our
victims distributors won’t challenge it, because lawyers are professionals and educated in the law. They also likely won’t have researched what happened with Kevin Grimes and Zeek Rewards to understand the confidence game here.
Start a Charity
One way to keep the distributors thinking your company is truly awesome is to create a charity. A company giving money to charity is definitely one worth sticking with, right? Instead of actually donating the money to charity yourself, you’ll lean heavily on distributors to make the bulk or even all of the donations.
If we want to be really sneaky, you’ll use some of the money donated to hire a family member of the CEO to run the charity.
You’ll hope the distributors aren’t smart enough to realize that if they weren’t grossly overpaying for your products, they could make 5 or 10 times the difference to a charity of their choosing.
When the Truth of Our Company Comes Out
The internet poses a huge problem for us, because people can document and share information quickly and easily. When word of mouth stays within your organization you control the narrative. On blogs and in the media you don’t.
Inevitably people will catch on and you’ll have to suppress this information. Otherwise your distributors may realize the truth before you are able to indoctrinate them into your culture.
You’ll use a combination of money and legal threats to get these critical authors to shut down their sites. Perhaps you can talk to others in the “industry” and figure out exactly how they got the following sites shut down: Purple Horror (MonaVie), YPR Pariah (Vemma), and BehindMLM (MLM in general, hopefully down just temporarily).
But We Have to Hurry!
The public, enforcement agencies, and lawmakers are getting smarter. The internet has provided a great tool where people can research information and realize that our berries aren’t so magical, our “doctors” didn’t go to schools that anyone has heard of, and that we are victimizing our salespeople.
It seems that everyone is catching on that MLM appears to be nothing more than a cleverly hidden pyramid scheme.
In the past you could trot out a series of (somewhat) respected companies such as Avon, Tupperware, Mary Kay, Herbalife, and Amway. However, Tupperware moved away from this because the industry was dominated by apparent pyramid schemes. Avon has followed as well Avon splits with trade group, citing risk of pyramid schemes. And don’t dare look at Avon’s stock performance over the last 5-10 years… it is horrendous.
Amway paid $155 million to settle a lawsuit that alleged the company was a pyramid scheme. I don’t know about you, but I’m not paying out $155 million unless there’s a very, very serious business risk. After all, that’s about 1/3 of the value of the company we are going to put together.
Smart math people have looked at Mary Kay’s own numbers and determined the company is destroying 500,000 women a year. Then there’s the matter of the Harper’s article above on Mary Kay, as well as this NPR interview.
Finally, there’s Herbalife. So many people believe it is a pyramid scheme that it is being investigated by the FTC as well as the FBI and DoJ according to many news organizations. Herbalife stock has responded by losing 45% of its value year to date while the S&P 500 is up 7% (chart).
At the end of the day, the most reputable companies aren’t really all that reputable. They’ve just been around for a long time.
When it All Collapses on Us
You should be able to mint money from your distributors for years, maybe even a decade or more. It may sound unbelievable, but in the past law enforcement have looked the other way. After all, Fortune Hi-Tech Marketing operated for a decade before the FTC shut it down. It took a few years even after USA Today questioned whether the company was a pyramid scheme.
It might never catch up with you, but if it does all is not lost. You’ll have paid yourselves millions and lived like a king. There’s even a chance you can start a new 500 million dollar business.
The high level MLMers will hook onto another MLM, so they’ll be okay.
The cannon fodder are left in ruins: ruined finances and ruined relationships (because they’ve pushed our miracle product on all their friends and family members, and shut out the “negative” people who didn’t buy into it), but that isn’t your concern.
Great article LM. Clearly an MLM blueprint to success and “how to” guide to drain the bank accounts of the gullible. Hopefully more readers will start to see the trend and perhaps use this as their “measuring stick” to determine legitimacy.
Brilliant article LM. Well done. However, you forgot to add that when you can’t bully your detractors with empty legal threats, you can threaten them with physical harm and constantly send your brainwashed lackeys to the websites to badger and insult the few consumer protectors with a barrage of non-sense/non-sience and unintelligent babble. If that doesn’t work, you can work your minions into such a froth that one or some of them will threaten to harm the family and children of someone who is only trying to educate the public against these schemes. That had to be one of MLM’s finest hours.
Bravo LM. Brilliantly illustrates the obvious transparancy, and damage inflicted, by all product based pyramid schemes. Although I believe it was meant to be facetious, the irony is this playbook really would work. So much so, I think you should sell it. All you need is to sell it to three people, who could sell it to three people…
Thanks for all you do!
Lazy Man says
Hey, Jim, glad you are still a reader.
Glad that you saw that it was a playbook that really would work while being facetious at the same time. I tried to hit both because that it is what makes the article work. Hopefully it gets people thinking, “Hey wait a minute… this IS how these companies ‘conduct business’.”