Speaker 1: Hey, Dream listeners. If you like this podcast, you're gonna
Speaker 1: love the book. Yeah. I wrote a book. It's called
Speaker 1: Selling the Dream and it's coming out March twelfth, twenty
Speaker 1: twenty four, on Atria. It's about all of your favorite
Speaker 1: characters from MLMs and some that you've never even heard of.
Speaker 1: I hope check it out previously on the Dream. Growing up,
Speaker 1: I always knew that I wanted to be a leader.
Speaker 1: As a young child, I used to say I wanted
Speaker 1: to be the first woman president. We have a ladder, obviously,
Speaker 1: like most truck sales companies have. It is not a pyramid.
Speaker 1: I always like pointing in there's no pyramid scheme. Those
Speaker 1: are legal. I would never be a part of that. Hello, hello,
Speaker 1: you you are here here. I'm a people person, so
Speaker 1: I love the home party. That's what fills my cup.
Speaker 1: I'm a stay at home mom, sometimes left listening. That's
Speaker 1: a free time. And I have gotten the opportunity. As
Speaker 1: much as it cost to have a party, absolutely nothing.
Speaker 1: The only thing that you're ever out would be snacks
Speaker 1: and drinks. Now, what do you have to lose? Right?
Speaker 1: For me? Without thirty one, we would not be We'd
Speaker 1: still be living in a trailer park. We have a
Speaker 1: bathtub with the drain open, and the water is forever
Speaker 1: flowing and going out that drain. You have to be
Speaker 1: constantly bringing people in because they're going to leave. This
Speaker 1: will come as a surprise to exactly no one but Danielle,
Speaker 1: that ace recruiter and distributor of thirty one we profiled
Speaker 1: last week. Her success is unusual in the world of MLMs. First,
Speaker 1: the company itself sells a product that's attractive and useful,
Speaker 1: and though some of the items are a bit pricey,
Speaker 1: the business model is loaded with prizes and hostess gifts
Speaker 1: and clearance events, and so when those things work, they
Speaker 1: kind of balance the costs. Also, Danielle lives in an
Speaker 1: area where, according to the people in her downline and
Speaker 1: my experience living there, you don't need a huge income
Speaker 1: to have a good life. And then there's the obvious
Speaker 1: reason she's an outlier. She got into her MLM a
Speaker 1: long time ago, so now a huge portion of people
Speaker 1: who sell thirty one in Michigan are in her down line.
Speaker 1: She's almost at the top of the ladder. Not many
Speaker 1: people get up as high as Danielle in any MLM,
Speaker 1: and yet with all she has working in her favor,
Speaker 1: including one hundred and seventy distributors directly under her. She
Speaker 1: still only makes forty two thousand dollars a year a
Speaker 1: fine salary. But where are all the yachts and mansions
Speaker 1: and Lamborghinis. You know, I thought they were supposed to
Speaker 1: be Lamborghinis anyway, So Danielle's a rarity. What's much more
Speaker 1: typical is making little to no money, or worse, going
Speaker 1: into debt in direct sales. People aren't generally super cool
Speaker 1: standing up in front of their friends and family to
Speaker 1: say I got swindled and maxed out my credit cards
Speaker 1: on diet shakes. It's humiliating, but they will tell the
Speaker 1: internet just hunt for the going out of business sales
Speaker 1: on Facebook. They're so popular they have an acronym goob.
Speaker 1: Hello ladies, eyes hie. So what are we doing today?
Speaker 1: We have a little bit. Yes I am, I'm going
Speaker 1: out of business. This is an agnesa door going out
Speaker 1: of business sale. Everything is fifty percent off five zero.
Speaker 1: So today, you guys, I need to get rid of
Speaker 1: all this lula in this bus. Please help me. We
Speaker 1: have tons of stuff, yeah, still have lots of stuff.
Speaker 1: I am doing wholesale from now until I am down
Speaker 1: to my last few pieces. So if you are interested
Speaker 1: in getting yes, sweetheart, okay, so please please, please, you
Speaker 1: guys help me out. I just can't do all these businesses.
Speaker 1: And I told everybody I would explain. Oh, lover of
Speaker 1: my hair, I've been mowing today. Still up beat, but
Speaker 1: how depressing. And then there are anti MLM groups on
Speaker 1: Facebook and tumblers you can follow, and message boards. Some
Speaker 1: of the best stories are on Reddit. This one they
Speaker 1: write when my siblings and I were young, my parents
Speaker 1: got recruited into amway my dad had just been diagnosed
Speaker 1: with MS. They bought boxes and boxes of products, cassettes,
Speaker 1: and went to hype conferences. Tons of debt later, they
Speaker 1: finally stopped for ten years. They poured money and more tragically,
Speaker 1: hope into the idea that they could provide for themselves
Speaker 1: as my dad's illness inevitably got worse. Or this one.
Speaker 1: I need some guidance. I made an investment, let's say,
Speaker 1: roughly fifteen thousand dollars over a year ago in a
Speaker 1: direct sales business. I now have a ton of products
Speaker 1: sitting in my house and half of our debt is
Speaker 1: on this credit card. I'm not sure how to come
Speaker 1: up with the extra money other than get a second
Speaker 1: day job. Now that I say that, I'm thinking I
Speaker 1: need to stay in the business as my second job
Speaker 1: help and so on? What on earth is going on here?
Speaker 1: How are there so many people who not only fail
Speaker 1: at MLMs but go into debt trying to make money
Speaker 1: with one And why isn't this the dominant story? Hey,
Speaker 1: we'll hear from someone who lost big time in an
Speaker 1: MLM and who took a while to be able to
Speaker 1: admit that to anyone, And we'll speak to an expert
Speaker 1: about why we collectively just refuse to accept the truth
Speaker 1: about this industry. I'm Jane Marie, and this is The
Speaker 1: Dream Episode six, How a Dream Becomes a Nightmare. It
Speaker 1: took us a while to find someone who studies these behaviors,
Speaker 1: but we did, introducing Stacy Bosley, an associate professor of
Speaker 1: economics at Hamlin University. And I've been studying this industry,
Speaker 1: multi level marketing and the associated issue of pyramid schemes
Speaker 1: for about eight years or so. What got you interested?
Speaker 1: I saw significant losses among people that I knew well
Speaker 1: as they moved from one opportunity to another. This was
Speaker 1: in the nineteen nineties when people really believed that there
Speaker 1: was some secret sauce that they were missing out on.
Speaker 1: And it's also this area is a really strong subculture
Speaker 1: that sort of runs under the radar of a lot
Speaker 1: of people, especially a lot of formal academics. So it
Speaker 1: was a really untouched area for study. We're finding that
Speaker 1: to be true, and it's really frustrating because it feels
Speaker 1: like it's such a huge, huge industry and like no
Speaker 1: one's looking at it. No, it's so true. There's okay,
Speaker 1: there's a couple of issues here. One, there's a lack
Speaker 1: of data. So economists don't want something that doesn't have
Speaker 1: data attached, right. It makes it very difficult for them
Speaker 1: to do any kind of empirical analysis, and so that's
Speaker 1: a barrier. I think another barrier is that there's a
Speaker 1: gendered element here to some degree, and that a lot
Speaker 1: of multi level marketing is right, is in the female realm,
Speaker 1: and so there's I think, you know, the field is
Speaker 1: at least speaking from an economists perspective, the field is
Speaker 1: male dominated, and so it's just not on the radar.
Speaker 1: Stacy says, it's not just a lot of data or
Speaker 1: girliness that makes this an unpopular thing to study. It's
Speaker 1: that it's really hard to categorize people who are involved
Speaker 1: in MLMs, and you need to put people in categories
Speaker 1: in order to run experiments and do studies on them.
Speaker 1: Are these people consumers? Are they investors? Are they laborers?
Speaker 1: Are they entrepreneurs? And the truth is they're all of
Speaker 1: the above. One thing that makes MLMs so fascinating to
Speaker 1: Stacy is that question I had, how are they not
Speaker 1: universally disliked at this point? Where are the new recruits
Speaker 1: coming from? I mean, this is something that requires a
Speaker 1: lot more study, So, you know, I'm starting to do
Speaker 1: some experiments, some economic experiments that try to dig into
Speaker 1: you know, when when people see the same pitch, how
Speaker 1: do they react differently? Right? And there are people who
Speaker 1: react violently differently, right, I mean people who literally go
Speaker 1: run and scream and really you know, well, for one,
Speaker 1: I mean they worry about mixing their social and economic lives, right,
Speaker 1: Maybe they don't want to ask friends to buy stuff
Speaker 1: from them, right. And others who fully embrace that. There's
Speaker 1: you know, there's people who see the recruiting element and
Speaker 1: immediately think pyramid scheme and go running right, and others
Speaker 1: who think that that, you know, they hear the words
Speaker 1: team building and entrepreneurship and that appeals to them. So,
Speaker 1: you know, part of it is how you process the rhetoric,
Speaker 1: how you process you know, and what are your expectations
Speaker 1: going in and are are you okay with this kind
Speaker 1: of labor? Right? Those people who hear about these opportunities
Speaker 1: and say yes, that's for me, Like I said, when
Speaker 1: they get burned, they can feel really embarrassed that they
Speaker 1: ever felt that way. We reached out to those folks
Speaker 1: from Reddit and YouTubers and the people on Facebook. No
Speaker 1: one wanted to talk to me, which is completely understandable.
Speaker 1: If I biffed super hard at direct sales, I wouldn't
Speaker 1: want to talk about it either, especially with a stranger.
Speaker 1: But then a light guess who went into debt selling.
Speaker 1: Mary Kay, the fill in pastor at Danielle's church, Katie Hyde.
Speaker 1: Katie started out in TV news. If there was a
Speaker 1: snow storm, they would put me out in the snow
Speaker 1: bank to tell people at home that it was indeed snowing.
Speaker 1: Katie grew up in mid Michigan and got her master's
Speaker 1: degree in journalism from Northwestern University one of the best
Speaker 1: journalism programs. Katie is super smart and ambitious, but daily
Speaker 1: news reporting is one of those all consuming jobs. You're
Speaker 1: up before dawn every day trying to find a story,
Speaker 1: or you're up all night standing in a snowbank. After
Speaker 1: a few years, Katie was over it. She'd gotten married
Speaker 1: and wanted to spend time chasing her future kids around
Speaker 1: the house rather than chasing ambulances around the county. And
Speaker 1: right around that time, an incredible opportunity fell in her lap.
Speaker 1: My best friend was living out of state, and she
Speaker 1: called Meybe because she had started mary Kay and I
Speaker 1: just happened to think that sounds fun. I was her
Speaker 1: first recruit. I signed up. I interviewed with her director
Speaker 1: and liked it. I could play with makeup, and I
Speaker 1: really enjoyed selling. Discover something new. Turn modern makeup and
Speaker 1: skincare that women love into extra income. Discover a part
Speaker 1: time choice that can lead to independence. Need this now
Speaker 1: Discover for yourself at Marykay dot com or contact your
Speaker 1: independent beauty consultant. Katie is back in news these days
Speaker 1: as a radio reporter, but sixteen years ago she was
Speaker 1: hustling as a Mary Kay salesperson. For those of you
Speaker 1: who don't know, mary Kay is the makeup and skincare
Speaker 1: company that has those pink cadillacs and a lot of
Speaker 1: other pink stuff. Katie said that her experience selling mary
Speaker 1: Kay turned her from one of those optimistic about MLM's
Speaker 1: people into one of the run for the hills people
Speaker 1: in a matter of months. I of course had gone
Speaker 1: to all the mary Kay leadership meetings that they have,
Speaker 1: and they hosted those at that point in time once
Speaker 1: a week, and I liked the idea of Hey, I
Speaker 1: could become a director. I could have women working under me.
Speaker 1: I would get a portion of their hard work essentially,
Speaker 1: and I'd have a commission and I could work out
Speaker 1: of the house. I could when the time came to
Speaker 1: have my kids, I wouldn't have to put them in daycare.
Speaker 1: I mean, this sounds wonderful. And so I recruited eight
Speaker 1: people who really wanted to be part of my team.
Speaker 1: You reach out to your aunts, you reach out to
Speaker 1: your grandmother, You reach out to these people that you
Speaker 1: think are soft targets that will do anything for you.
Speaker 1: They might have some cash laying around. You have to
Speaker 1: get them to buy the starter kit. At that moment,
Speaker 1: it was one hundred dollars plus your shipping, plus your tax,
Speaker 1: and then they had to order at least six hundred
Speaker 1: dollars worth of product. And it was at that point
Speaker 1: the recruiting and the building of the team, that something
Speaker 1: just did not sit right with me. Do you remember
Speaker 1: what that was? It was the idea that you were
Speaker 1: essentially builking people out of their money. In this area,
Speaker 1: I was encountering women that didn't even have bank accounts,
Speaker 1: that had their credit cards shut off. I didn't feel
Speaker 1: good squeezing them for every penny that they had, or
Speaker 1: telling them it was okay just to buy their starter
Speaker 1: kit and then see what product they could sell. And
Speaker 1: the big thing that they had, which this is not
Speaker 1: anything I felt good about at the time or promoted,
Speaker 1: but they had the husband unaware plan, which meant you
Speaker 1: go to a meeting, let's say, with your friend, and
Speaker 1: you find out about this great Mary Kay opportunity and
Speaker 1: you want to buy the one hundred dollars starter pack,
Speaker 1: and then maybe you want to do inventory. Doesn't your
Speaker 1: husband want you to be successful? Yeah, but I really
Speaker 1: need to check with him. Oh, you can always ask
Speaker 1: for forgiveness later. It was this manipulative thing. And I
Speaker 1: don't know about anybody else's marriage, but I tell my
Speaker 1: husband things, and he tells me his things, and we
Speaker 1: have an equal stake and how we spend our money.
Speaker 1: And if that's how it is in my marriage, I
Speaker 1: don't want to tell somebody else. Oh, don't tell your
Speaker 1: husband like I'm driving a wedge in their marriage, Like
Speaker 1: there are huge implications involved there. But this is what
Speaker 1: you're preaching in your company marketing tools, like this is
Speaker 1: a well known marketing ploy. Ignore your husband and just
Speaker 1: write this check to me. Wait, it was called the
Speaker 1: husband unaware planned like in their adicially, but it was
Speaker 1: you couldn't go to a leadership meeting or a local
Speaker 1: meeting without hearing that. It wasn't just these sales tactics
Speaker 1: that sketched her out. There were also other job requirements.
Speaker 1: For instance, quotas, the amount of product her team needed
Speaker 1: to sell every month to keep earning a commission. Now,
Speaker 1: every multi level marketing company will tell you there's no quotas.
Speaker 1: We don't require quotas, And I don't care what word
Speaker 1: they use, they require quotas. The problem came at the
Speaker 1: end of the month for me when I didn't meet
Speaker 1: that sales cap and back at that time, it was
Speaker 1: four thousand dollars a month from my production, which is
Speaker 1: buying the product from the company to sell to others.
Speaker 1: It could be anybody within my unit that would buy products,
Speaker 1: So thirty eight dollars here, four hundred dollars here, whatever
Speaker 1: it was, then I would give that commission. If I
Speaker 1: didn't get that four thousand dollars, then that was problem.
Speaker 1: I can't tell you the amount of hours I put
Speaker 1: in or the amount of uncomfortable phone calls I made
Speaker 1: to people toward the end of the month when things
Speaker 1: are winding down and we hadn't met our unit quota
Speaker 1: and hey, I noticed you hadn't placed an order in
Speaker 1: a while. Do you think you could maybe put in
Speaker 1: two hundred or four hundred dollars? If you know anything
Speaker 1: about me, I'm like a type a overachiever, like you
Speaker 1: don't set goals to fail, you carry through. And my
Speaker 1: big hango was everybody knows I'm going for this. What
Speaker 1: if I fail? And you're hearing the mary kay like nobody. Well,
Speaker 1: the reason nobody fails is because if there's a lacking
Speaker 1: between what your unit has and what you need to
Speaker 1: become a director. You just PLoP it on your own
Speaker 1: personal credit card. No one's gonna say boo. All you
Speaker 1: have to do is order product in your team members'
Speaker 1: names and have it shipped to your address or another address.
Speaker 1: The company does not care if you sell the product.
Speaker 1: They just care if you buy it. They're not looking
Speaker 1: at your credit card statements. They don't care if you
Speaker 1: can make ends meet at the end of the month.
Speaker 1: They just care that you're ordering the minimum and that
Speaker 1: your team is at least doing the minimum and ordering
Speaker 1: that product, so you could have one hundred time wise
Speaker 1: cleansers on your shelf. They don't care if they ever
Speaker 1: wind up in the hands of customers. All they know
Speaker 1: on their balance sheet at the end of the day
Speaker 1: that you ordered it and they got that profit, and
Speaker 1: now we're moving on. And what's the point of doing that.
Speaker 1: That is a great question. So there Katie was ordering
Speaker 1: thousands of dollars of product on her personal credit card
Speaker 1: to satisfy her team quota. This idea seems so nuts
Speaker 1: to me to actually take on debt, your debt on
Speaker 1: your credit card in the names of people who are
Speaker 1: supposed to be making you money. How could that ever
Speaker 1: feel like the right choice. Stacy has part of the answer.
Speaker 1: There are some things that I think are sort of
Speaker 1: universal behavioral frailties that we have as humans. We have
Speaker 1: what we call honoring sunk costs. You know, when we
Speaker 1: spend a lot of money on something and it's irreversible
Speaker 1: and we've done that, we've made that decision, and we
Speaker 1: often follow that money with more money. Honoring sunk costs
Speaker 1: is a very interesting economic theory that I'd like to
Speaker 1: dig into for a minute because it applies to what
Speaker 1: goes on in a lot of MLMs. Sunk costs are
Speaker 1: money spent that can't be recouped, and a lot of
Speaker 1: studies and experiments have been done about how they affect
Speaker 1: our actions and outlook. For example, in one study, people
Speaker 1: were asked to predict how well their horse would do
Speaker 1: at the racetrack. One group was asked before they placed
Speaker 1: a bet, and another group after they placed a bet.
Speaker 1: The people who had already plunked down cash predicted their
Speaker 1: horses would do great, while those who hadn't yet spent
Speaker 1: money had more reasonable expectations. So some costs can make
Speaker 1: some people feel more optimistic about making money at the
Speaker 1: same time that they're actually in the hole. Another thing
Speaker 1: about sunk costs sometimes they cause you to spend even more.
Speaker 1: Take this example, you've purchased a non refundable plane ticket
Speaker 1: and hotel room in Vegas. The day of the trip,
Speaker 1: you do not feel like going at all. If you
Speaker 1: stay home, you're out the money you've spent, but you
Speaker 1: could spend your time doing something you want to be doing.
Speaker 1: If you go on the trip, you spend your time
Speaker 1: doing something you don't want to be doing, and you're
Speaker 1: spending more money because you're in Vegas. Same applies to
Speaker 1: a non refundable movie ticket. Same applies to a wedding.
Speaker 1: Once you've paid for a wedding, you got to get married,
Speaker 1: even if you've changed your mind. So that's honoring sunk costs.
Speaker 1: It's a logical fallacy, but we all do it. So
Speaker 1: you're sending money on your credit card to make it
Speaker 1: look like your downline is keeping up so that you
Speaker 1: are you making enough back to make that expenditure worth
Speaker 1: it somehow? Are you just spending the money to maintain
Speaker 1: your director's status. You were spending the money to maintain
Speaker 1: your director's status, or you're spending money to maintain your
Speaker 1: red jacket status or the car that you so desperately
Speaker 1: want to earn. Because if I'm supposed to have a
Speaker 1: four thousand dollars quota and I'm at two thousand dollars
Speaker 1: and I'm really tired and no one's going to order,
Speaker 1: then I might as well just put two thousand dollars
Speaker 1: on my credit card, right, because I can sell it
Speaker 1: and I'm a good seller and it doesn't matter, and
Speaker 1: I'll wake up feeling better tomorrow, and That's what I'm
Speaker 1: going to do, right, And then you feel good for
Speaker 1: forty eight hours, and then you realize, shoot, there's twenty
Speaker 1: eight days left in this month and I need to
Speaker 1: get another four thousand for this month. And it's the
Speaker 1: same scenario over and over and over again. You hate
Speaker 1: being there, but you're not sure how to leave, and
Speaker 1: you feel guilty if you do. You've invested so much
Speaker 1: of your life and your identity, and I think when
Speaker 1: it comes to Mary Kay or anything like that, people
Speaker 1: look at you and say, okay, you're going to become
Speaker 1: a millionaire selling sensey okay. That people do have that
Speaker 1: natural inclination to look at you that way, and you think, no,
Speaker 1: I'm going to prove them wrong, and then I didn't.
Speaker 1: But I have so much invested, I'm not really sure
Speaker 1: I can drop out of this. It's just you're conflicted.
Speaker 1: Then there's this other theory, loss of version. Loss of
Speaker 1: version says that we feel losses much more acutely than gains.
Speaker 1: We really feel losses to such a level that psychologically
Speaker 1: that we seek to do things to avoid realizing the loss.
Speaker 1: So that you know, people stay with bad relationships, they
Speaker 1: stay with bad a poor house investment, they stay with
Speaker 1: poor financial investments because they don't want to actually realize
Speaker 1: the loss. And so long as it's ongoing, right I
Speaker 1: haven't actually pulled the trigger on finishing it out, then
Speaker 1: I don't have to realize that loss. Yet. We hate
Speaker 1: to lose money so much that we do a lot
Speaker 1: of weird, counterintuitive things to avoid feeling like we've lost
Speaker 1: money even while we're losing money. And then there's this
Speaker 1: tendency we have to do what's called overweighting small probability events.
Speaker 1: It's what happens when you buy a powerball ticket, like, no,
Speaker 1: you are not going to win the lotto, or are you?
Speaker 1: What were you hoping would happen? As you're going into
Speaker 1: debt as you're adding more and more onto your credit cards,
Speaker 1: Like what was the long game? I think you're hoping
Speaker 1: that you'll run into this woman at the supermar that's
Speaker 1: really looking for the Mary Kay opportunity, and she's going
Speaker 1: to order five thousand dollars of inventory, or you're going
Speaker 1: to do a party where you sell five hundred dollars
Speaker 1: worth of product in just one hour. I mean, you're
Speaker 1: hoping for these big moments that they would speak about
Speaker 1: at these company events all the time, but at the
Speaker 1: end of the day, people are just buying one lotion
Speaker 1: at a time. I guess I hoped that it would
Speaker 1: turn around. I would have my one big break and
Speaker 1: it would pay down this debt and then we would
Speaker 1: be fine. There was such great relief that final month.
Speaker 1: I was only a director for a couple of months
Speaker 1: because I failed miserably. I tapped out all of my
Speaker 1: people and didn't want to do it anymore. And there
Speaker 1: was such a great relief where they said We're going
Speaker 1: to have to strip you of your director title and
Speaker 1: I'm like, whoo who, Like I just needed someone to
Speaker 1: do it for me. How much that were you in
Speaker 1: toward the end, you do you know it wasn't ten thousand,
Speaker 1: but it was thousands of dollars that I had spent
Speaker 1: on product and having product ordered under team members' names
Speaker 1: and shipped to a different address, and I paid for it.
Speaker 1: So if you look at it, you're like, I didn't
Speaker 1: do anything illegal. I didn't do anything dishonest, but I
Speaker 1: didn't do anything honest necessarily smart in a business way,
Speaker 1: or smart or ethical. It just smells hanky. Can we
Speaker 1: use that word? It just and I did not like
Speaker 1: being that person, but I knew that every meeting I
Speaker 1: went to, I'm like, you're doing this too, are you?
Speaker 1: They had to. In addition to those few bits of
Speaker 1: human nature that MLM's exploit, there's another big one that
Speaker 1: Katie find is particularly egregious, and it's the same thing
Speaker 1: that true believers like Danielle love most about some of
Speaker 1: these businesses. The other thing that is really tough about
Speaker 1: this company is they have their motto is God first, Family, second,
Speaker 1: career third, which, if you listen to it is so
Speaker 1: manipulative because you're using Jesus as your marketing ploy. I
Speaker 1: don't think you ever use Jesus as your marketing ploy.
Speaker 1: I don't think God sits up there and wants people
Speaker 1: to be successful at mary Kay. I think he has
Speaker 1: bigger plans than that for their lives. It's just this
Speaker 1: disconnect between, Okay, we're going to take God as our
Speaker 1: business partner, and it has nothing to do with helping
Speaker 1: the world we live in. It just has to deal
Speaker 1: with selling product and making your quota, and that should
Speaker 1: rub everybody the wrong way. It rubbed Morley Safer the
Speaker 1: wrong way too, during his nineteen seventy nine profile of
Speaker 1: mary Kay herself for sixty minutes. I think that's really
Speaker 1: fair in terms of marketing to inject God into it
Speaker 1: as though there was some religious experience involved in other
Speaker 1: working for buying and selling. Let me say this, I
Speaker 1: really feel that our company is where it is today
Speaker 1: and has been blessed beyond all belief by the fact
Speaker 1: that God is using our company as a vehicle to
Speaker 1: help women to become the beautiful creatures that he created.
Speaker 1: But do you think in the sense you are using
Speaker 1: that I hope not. I sincerely hope not. I hope
Speaker 1: he's using me instead. And then there's the problem of information.
Speaker 1: I mean, there is a lot of lack of transparency Here,
Speaker 1: Stacy says that in addition to praying on basic human frailties,
Speaker 1: MLMs have positioned their industry in such a way legally
Speaker 1: that they aren't required to do simple things that almost
Speaker 1: any other industry would have to do to survive. For example,
Speaker 1: they don't have to disclose how much you can expect
Speaker 1: to me or lose how well. First, they're almost all
Speaker 1: privately held, so that information is private, and they don't
Speaker 1: have to follow franchise law, which would also require them
Speaker 1: to make these numbers public, because a business is only
Speaker 1: a franchise if you're required to spend more than five
Speaker 1: hundred and seventy dollars in the first six months to
Speaker 1: get started. So all the MLMs keep their enrollment fees
Speaker 1: at five sixty nine or less. And even those companies
Speaker 1: that do choose to give an income disclosure statement, those
Speaker 1: are often somewhat misleading. They leave out, for example, typically
Speaker 1: the percentage of people that made no check at all.
Speaker 1: That just seems super shady. We looked at a bunch
Speaker 1: of these income disclosure statements to see exactly what Stacy's
Speaker 1: talking about. One MLM, rodanin Fields, a skincare company, famously
Speaker 1: began releasing this info in a pr effort to seem
Speaker 1: more transparent. It's a one page document, which is already weird,
Speaker 1: seeing as how other company literature, like their Policies and
Speaker 1: Procedures handbook or the company station plan, are each the
Speaker 1: size of a novella at any rate. On this one
Speaker 1: sheet of paper about income, there's a paragraph at the
Speaker 1: top it's about empowerment, followed by another paragraph about earning
Speaker 1: fun money or perhaps more. Halfway down the page we
Speaker 1: get to some numbers, and they are bananas. First, Rodan
Speaker 1: and Fields claims to have four hundred thousand enrolled distributors,
Speaker 1: four hundred thousand people trying to sell or buy at
Speaker 1: a discount lotion and soap. For reference, there are fewer
Speaker 1: than twenty thousand CBS's and Walgreens in America aka lotion
Speaker 1: and soap stores combined. Back to those four hundred thousand,
Speaker 1: of them, only about half received any commission check at all.
Speaker 1: In twenty seventeen. Of those, nearly sixty percent made an
Speaker 1: average of wait for it, two hundred and forty three
Speaker 1: dollars for the year. Less than one percent made more
Speaker 1: than a beginning teacher's salary. And going back to the
Speaker 1: roughly one hundred and seventy five thousand folks who made nothing.
Speaker 1: There's no line showing how much they lost. Those people
Speaker 1: are not represented in the in an earning's table, for example.
Speaker 1: They also don't don't publish expenses. So absolutely you can say,
Speaker 1: while they sold x amount at retail, and you know
Speaker 1: one percent of them made a profit, but we don't.
Speaker 1: That's not what we're telling you. We're not telling you
Speaker 1: what their profit was. We're telling you how much money
Speaker 1: they gave us. They're telling you revenue. Right. Yeah, so
Speaker 1: again they're sort of not allowing you to even to
Speaker 1: fully process your profit right because you're focused so much
Speaker 1: on the revenue side, which r I'm finding that it's
Speaker 1: hard for people to even see while they're in it,
Speaker 1: like how much money they're actually spending. Like people aren't
Speaker 1: really that great about accounting. Oh my goodness. Absolutely, I mean,
Speaker 1: and I would say there in some cases actively discouraged
Speaker 1: from doing so. Not only are distributors not encouraged to
Speaker 1: keep good records, the companies themselves often purposely avoid collecting
Speaker 1: information that any other business would deem crucial. You know,
Speaker 1: if we think about what a traditional retail organization does.
Speaker 1: Of course, they want to know who's buying their product, right.
Speaker 1: They want to know everything about who's buying their product
Speaker 1: because that allows them to do a better job as
Speaker 1: a retailer. Right. And so what is you know, astonishing
Speaker 1: is and concerning is when firms actively fail to capture
Speaker 1: that information, because then it appears as though the actual
Speaker 1: ultimate user is irrelevant. Right, And this is one of
Speaker 1: the things that frustrates me is that sometimes I feel
Speaker 1: like people who are who believe that network marketing, direct selling,
Speaker 1: multi level marketing is sort of the way of the future,
Speaker 1: or is like this amazing alternative approach to economics often
Speaker 1: suggests that the rules of economics just don't apply to them. Right,
Speaker 1: So it doesn't matter if it's a recession and nobody
Speaker 1: has any money, this is a great time to be
Speaker 1: in multi level marketing, right. It doesn't matter what the
Speaker 1: prices are in g n C or you know, Walmart
Speaker 1: or Amazon, because our product is so different that we
Speaker 1: can't you can't even imagine a comparable product. Well, we
Speaker 1: know that's not true, right, I mean almost You know,
Speaker 1: any product probably has a definable class of alternatives. You know,
Speaker 1: it doesn't matter. You know, you know how many sellers
Speaker 1: are in our area, right, that somehow the sky's the
Speaker 1: limit on compensation, the sky's the limit on demand, right,
Speaker 1: And so there's all these ways in which they the
Speaker 1: promises and the arguments around it suggests that that they're infallible, right,
Speaker 1: that they just don't have the same rules as the
Speaker 1: rest of the marketplace. And the truth and the reality
Speaker 1: is that they do, and therefore, right, it's not going
Speaker 1: to work. You know, sometimes these kinds of businesses are called,
Speaker 1: you know, turn key businesses, literally turn the key. We've
Speaker 1: given you the key, right, you've given you the vehicle,
Speaker 1: and now you drive it, and and if you go
Speaker 1: off the road, it's because you didn't do it properly.
Speaker 1: And then there's this other mantra, right that the only
Speaker 1: way to fail is to quit. You might have heard
Speaker 1: that saying, and that's really frustrating, right, this sense that
Speaker 1: you know, literally you will success is guaranteed so long
Speaker 1: as you do not quit. And they're always on the
Speaker 1: precipice of the next level. Right, I'm so close, and
Speaker 1: like you said, I need that jump start. Maybe I'm
Speaker 1: going to go to an extra training to do that.
Speaker 1: Maybe I'm going to buy some extra sales, tools, samples,
Speaker 1: and I'm always on the precipice of being profitable, you know,
Speaker 1: or rising to the next level. And so I just
Speaker 1: I've been given the keys. I just need to not quit.
Speaker 1: We reached out to Mary Kay and rodan in Fields
Speaker 1: for comment. No word yet from Mary, but Rodan and
Speaker 1: Fields replied with an unsigned statement that came from the
Speaker 1: email address corporatepr at Rodaninfields dot com. In it, they
Speaker 1: asked us to clarify that they do not sell lotion
Speaker 1: or soap. They sell quote prestige dermatologists inspired skincare my Bad.
Speaker 1: When asked why they didn't structure their business as a franchise,
Speaker 1: they said it was to save their recruits money. When
Speaker 1: asked to offer proof that end consumers and not just consultants,
Speaker 1: are buying products, they said that orders are placed through
Speaker 1: a website and quote. Thus consumers buy the vast majority
Speaker 1: of our products, like as if their consultants don't have
Speaker 1: access to their own websites. And then, unsurprisingly, they say
Speaker 1: that rodanin Field's consultants are not paid for recruiting, even
Speaker 1: though their compensation plan is all about how to earn promotions,
Speaker 1: higher commissions and deeper discounts by recruiting. Finally, they spent
Speaker 1: a paragraph speculating on how content and empower their sales forces.
Speaker 1: This response infuriated me personally, what with all the leaps
Speaker 1: of logic and propaganda. But everyone in the office is like,
Speaker 1: what do you expect? The facts are that almost everyone fails,
Speaker 1: So what what is it about our psychology? I guess
Speaker 1: that won't let us see that truth. Well, there's a
Speaker 1: lot of there's more silence than you think, probably about
Speaker 1: that the fact that you stated, right, so you know,
Speaker 1: you know, you've come to understand the failure rates. I
Speaker 1: wouldn't say that that's common knowledge in any way. If
Speaker 1: you look at the Federal Trade Commission fraud statistics, pyramid
Speaker 1: scheme and business opportunity fraud are the least reported fraud
Speaker 1: types that they monitor. Really, so this is not something
Speaker 1: that people like to tell people about. So silence is
Speaker 1: a big problem either because they don't understand that they
Speaker 1: were the victim of a fraud. They don't want to
Speaker 1: tell anyone they were a victim of a fraud. And
Speaker 1: so you know, even when it's just you know, really
Speaker 1: pretty blatant, you know, there's a lot of silence around this,
Speaker 1: and we actually found it in an experiment we did
Speaker 1: at a state fair that if you knew someone who
Speaker 1: had participated in a scheme in the past, you were
Speaker 1: more likely to try our scheme. And my hypothesis is
Speaker 1: that it's because the experience of seeing someone else do
Speaker 1: it actually validated it, as opposed to inoculating you from it.
Speaker 1: Really because because you don't know what happened in many cases, right,
Speaker 1: you don't know the true outcome. All you know is
Speaker 1: this looks familiar to me. I've seen it in my
Speaker 1: Facebook feed, or my sister did this right at one point.
Speaker 1: And so we have a lot of work to do
Speaker 1: with even just victims and even helping themselves identify as
Speaker 1: victims and helping to spread the word you know, or
Speaker 1: could if we can grow the capacity for people to
Speaker 1: actually be honest about their experience and their outcome. I
Speaker 1: just don't think, you know, sort of, The accurate picture
Speaker 1: is just is out there, and that, ladies and gentlemen,
Speaker 1: is why we're making this program to give you the
Speaker 1: accurate picture next time on the dream. The owners of Amway,
Speaker 1: Jay Van Andel and Richard de voss One was the
Speaker 1: chairman of the United States Chamber of Commerce. Vanandel DeVos
Speaker 1: was the finance chairman of the Republican Party at the
Speaker 1: time that Amway was being prosecuted. Correct. So is it
Speaker 1: possible really that the FTC was going to truly close
Speaker 1: down a company that had such political influence with the
Speaker 1: sitting president. I don't think so. I am not criticizing
Speaker 1: the Commission or the administrative law judge. What I'm simply
Speaker 1: saying is that our evidence, he didn't reject it, he
Speaker 1: ignored it. The Dream is a production of Little Everywhere
Speaker 1: and Stitcher, written and reported by Me Jane Marie, Dan Galucci,
Speaker 1: Mackenzie cassab Lyra Smith and help from Claire Rolinson. We
Speaker 1: are edited by Peter Clowney. Our fact checker is Michelle Harris.
Speaker 1: The Dream is executive produced by Laura Mayer, Chris Bannon,
Speaker 1: Dan Galucci and me. We appreciate you subscribing, rating, and
Speaker 1: reviewing the show. Wherever you listen, Hello the Dream listeners.
Speaker 1: Have you had a personal experience with MLMs, We want
Speaker 1: to hear from you. Leave us a voicemail at seven
Speaker 1: one five six zero zero zero three two six, or
Speaker 1: send us an email at This is the Dream Podcast
Speaker 1: at gmail dot com. Oh yeah, do you have any
Speaker 1: Mary Kay to show me? This is all I have,
Speaker 1: and I will show it to you. And I think
Speaker 1: that there is a psychological reason why I keep it around.
Speaker 1: It's right on your desk. Whatever it is. It is
Speaker 1: my checkbook cover. Now it's twenty eighteen and we don't
Speaker 1: write a lot of checks, but it's the Mary Kay
Speaker 1: check cover and it's gold. And the reason that they
Speaker 1: did it in gold is so that you could always
Speaker 1: focus on the amount of money that you could be
Speaker 1: making with the company. And I glanced at it the
Speaker 1: other day when I was writing a check to my hairdresser,
Speaker 1: and I thought, why do I keep this thing? And
Speaker 1: I wonder if it's just because I don't want to
Speaker 1: go back. It's just a reminder to be better with
Speaker 1: your money.