My oldest son (age 4) is on vacation this week which, of course, means that the world is exploding with catastrophes. Well, not the real world, and not real catastrophes, but just one annoying problem after another.
After putting out most of the fires, it was time for a little story time before nap. I found a book of fairy tales that my mother had bought him. I opened it up to a random page and came across The Fox and the Goat. It’s short enough to quote a couple of versions that I saw online here:
“By an unlucky chance a Fox fell into a deep well from which he could not get out. A Goat passed by shortly afterwards, and asked the Fox what he was doing down there.
‘Oh, have you not heard?’ said the Fox; ‘there is going to be a great drought, so I jumped down here in order to be sure to have water by me. Why don’t you come down too?’
The Goat thought well of this advice, and jumped down into the well. But the Fox immediately jumped on her back, and by putting his foot on her long horns managed to jump up to the edge of the well.
‘Good-bye, friend,’ said the Fox, ‘remember next time: Never trust the advice of a man in difficulties'”
Here’s another version I saw:
“A FOX one day fell into a deep well and could find no means of escape.
A Goat, overcome with thirst, came to the same well, and seeing the Fox, inquired if the water was good. Concealing his sad plight under a merry guise, the Fox indulged in a lavish praise of the water, saying it was excellent beyond measure, and encouraging him to descend.
The Goat, mindful only of his thirst, thoughtlessly jumped down, but just as he drank, the Fox informed him of the difficulty they were both in and suggested a scheme for their common escape.
‘If,’ said he, ‘you will place your forefeet upon the wall and bend your head, I will run up your back and escape, and will help you out afterwards.’
The Goat readily assented and the Fox leaped upon his back. Steadying himself with the Goat’s horns, he safely reached the mouth of the well and made off as fast as he could.
When the Goat upbraided him for breaking his promise, the fox turned around and cried out, ‘You foolish old fellow! If you had as many brains in your head as you have hairs in your beard, you would never have gone down before you had inspected the way up, nor have exposed yourself to dangers from which you had no means of escape.’
Look before you leap.”
And just to belabor the point, here’s a YouTube video:
Deconstructing MLM via The Fox and The Goat
Most people familiar with MLM should instantly recognize the relevancy of this fable. Nonetheless, I will explain it as clearly as I can for all potential goats.
It has been repeatedly shown that at least 99% of people in MLM lose money.
It has also been repeatedly shown that few people make any real money selling product. Usually the products are very, very expensive and don’t compete well with reasonably priced non-MLM products. Also, many of the products are generally available on Ebay for very cheap prices from former
Nearly everyone in MLM is “a man [person] in difficulties.” It’s mathematically shown to be true.
The way out of losing money in MLM is to be the fox. The fox needs to convince many goats that the MLM’s water (sometimes literally) is great and to come into the well. It is as if the fox needs to put together 20 goats to build a goat-ladder to get out. And since this is a fairy tale, we’ll pretend a magician turns each of those goats into foxes and puts them in their own wells. We repeat the process over and over until there are millions of foxes stuck in their wells.
In the world of MLM, there are many ways that foxes convince the goats to come into the well. They may show pictures of luxury cars, houses, or vacations. Even the FTC says this is misleading. Other times MLMs use illegal health claims like these to target goats. That’s why I’m against companies like Youngevity, DoTerra, and Le-Vel Thrive, just to name a few popular MLMs that I have written about in the past.
Moral of the Story
I am completely floored that Aesop so accurately described MLM more than 2500 years ago. As best I can tell recruiting/pyramid schemes didn’t even exist back then. I don’t know what’s beyond “floored”, but I love that he found a way to explain it so that even a 4 year old can understand it.
Moral: If you come across a fox in a well, don’t be the goat. Show the world that you are smarter than a goat or a 4-year old.
Instead of falling into the trap, give that fox a ladder by sending him/her an article like this one. To (not-so-accurately) paraphrase Smokey the Bear, “Only you can prevent foxes in wells.”
What a perfect comparison.
Be aware that MLMs/Pyramid selling companies will often say during an opportunity/intro seminar we are not MLM, or we are a hybrid system, or use the words Network Marketing or Direct Sales. Another common fallacy perpetuated by MLMs is that MLMs can not be listed on the NYSE, etc. In fact, legal Pyramid Sales companies can be listed with any product or services organizations. An MLM is determined by its compensation method, not by the corporation itself.
For a complete listing of MLM corporations, Google the DSA (Direct Selling Association). The DSA not only oversees the industry, but is comprised of its members. In essence, the industry polices (or fails to) itself.
Lazy Man says
There are a lot of MLMs that are not part of the DSA. That is far from a complete list.
Victor nyorani says
A video by John Oliver on Last Week Tonight gave me the clearest understanding of why MLMs are a terrible idea. Before then, I was still a bit unsure.
Lazy Man says
Yes that was a great video.
Hi Lazy Man, have you heard of these new company CJCLive, FETC Hawaii, FETC Magazine, and TruGold? I’m thinking it’s an MLM and illegal. It’s related to blockchain and cruptocurrency which I’m not too familiar with. It seems too complicated. Their website doesn’t give out information and have to attend their meetings to get more info.
Lazy Man says
No, I haven’t heard anything about those. I’d stay away from anything with blockchain or cryptocurrency in it. It’s particularly bad if that’s combined with MLM.
The only MLM that I’ve found that doesn’t have overpriced products is Paparazzi Jewelry. However they have the same problem other MLMs you don’t make good money unless you recruit a bunch of people to sell and before you know it all the people you sold to previously are now selling. Which is good since your their upline but soon everyone’s customers will dry up. Also I feel like there are a limited amount of women that want to buy cheap jewelry (I call it costume jewelry). It is lead and nickel free which is a positive.
The basic problem is that Paparazzi (yet another Utah-based MLM) requires an upfront inventory purchase (ranging from $99 to $499), so it’s basically another pyramid scheme in disguise that’s selling to its own distributors rather than to retail customers. The starter kits also include a ton of worthless marketing junk like promo flyers, brochures, window decals, thank you cards, etc, and the buyer also has no choice as to which items they receive, so invariably the starter kits will be loaded with a lot of sub par junk that won’t sell. Plus they have to purchase about $70 worth of merchandise monthly in order to stay qualified for commissions.
There’s also the problem that the basic structure of MLMs dictates that they will have to sell their products at an exponentially higher price than their actual retail value. So their $5 bracelets are probably worth about 25 cents, and it’s inevitable that they will look and feel like hopelessly cheap crap, fall apart, and turn your wrist green.
They also have a putrid F rating with the BBB and lots of complaints regarding shoddy billing/return practices and cheap/damaged merchandise.
As for the claim that the products are nickel- and lead-free, I wouldn’t lend it the slightest bit of credence. Aside from the fact that Paparazzi admits openly that their products are mass produced in China, MLMs are notorious for wildly deceptive claims about the quality and manufacturing of their products.
In other words, one would be foolish to buy the products under any circumstance, and doubly so to become a distributor.
Aside from all the obvious red flags, co-founder Chani Reeve’s ridiculously bad hairdo should be enough to sway anyone from considering buying anything that the company sells. Seriously — WTFF?
But hey, if you want to buy overpriced crap costume jewelry from an MLM scammer who coifs her hair with a lawnmower, have at it.
Vogel, I wasn’t saying it was a good thing to get into. I agree with everything you said. I just feel like it’s one of the only MLMs product where you are know the quality you are paying for. No one is expecting top notch jewelry for $5 at least I hope not. I wasn’t really commenting on anything besides the price (everything you buy is at a markup). It would be interesting to see what the items would sell for at a retail store. I figured that they probably did the basic things all MLMs do like make you purchase a bunch of product up front. Again the original comment wasn’t a pro paparazzi comment. I wouldn’t recommend any mlm to anyone.
No offense taken, but when you said “the only MLM that I’ve found that doesn’t have overpriced products is Paparazzi” it needed to be clarified that overpricing is baked into every MLM scheme. Perhaps you meant that the items aren’t expensive at $5 a pop, but they are still overpriced, and it is still expensive for the distributor because they have to buy a costly pile of mystery inventory and make monthly quotas, which they often end up filling themselves due to low sales/demand.
I also don’t think their buyers are well informed enough to know that the products are poor quality/bad value (which is a design feature, not a bug, of all MLMs). That’s certainly not the way the products are being pitched on the company’s website, and we all know how MLM distributors constantly lie about the quality/value of their products, so I don’t really agree that people truly know the quality they are paying for — a far cry from top notch; it’s sub-bottom notch. I also felt compelled to point out why the claims about the products being nickel- and lead-free are probably not reliable. So pretty much nothing positive can be said about Paparazzi. And that haircut!!!
Vogel, finally went and looked at the haircut. Wow! it’s bad. Anyway we agree on this. MLMs in general are bad “business” models for the distributors. Even ones with low priced products.