Speaker 1: Hey, Dream listeners. If you like this podcast, you're going
Speaker 1: to love the book. Yeah. I wrote a book. It's
Speaker 1: called Selling the Dream, and it's coming out March twelfth,
Speaker 1: twenty twenty four, on Atria. It's about all of your
Speaker 1: favorite characters from MLMs and some that you've never even
Speaker 1: heard of. I hope check it out previously on the Dream,
Speaker 1: Can you just tell me a little bit about yourself?
Speaker 1: I know a lot about you because you're my grandma.
Speaker 1: I live in Crouna, Michigan, and I'm eighty one years
Speaker 1: old and I love every morning. Mary kay Malluka, Protandem
Speaker 1: Herbal Life, Ladhara Young Living Oils. I always told myself
Speaker 1: that I could do better with my money than some
Speaker 1: other people. Could we miss the significance of what these
Speaker 1: organizations are doing if we only look at them in
Speaker 1: financial terms. It may look like a small opportunity to
Speaker 1: some people, but for her it was a way for
Speaker 1: her to use her graciousness and be able to communicate
Speaker 1: that it's really impossible to separate questions of gender from
Speaker 1: questions of business strategy. Right, they weren't selling products. They
Speaker 1: were selling women's products, and they weren't just using sales
Speaker 1: people they were using women. I've told you that multi
Speaker 1: level marketing can be super secretive. These companies go to
Speaker 1: great lengths to not reveal much about themselves, and yet
Speaker 1: the whole point of this business is to get the
Speaker 1: word out, exploit your social network. You know, get people
Speaker 1: preaching about how joining the company will change their lives.
Speaker 1: But what happens when you actually join whenever. We've tried
Speaker 1: to find that out, just as regular people on the outside,
Speaker 1: you know, folks who aren't signed up with any sort
Speaker 1: of MLM. The answer we get is we'll tell you
Speaker 1: once you sign up. I mean, all we want to
Speaker 1: know is how few people actually make money, or why
Speaker 1: it's so hard for them to make money, or how
Speaker 1: much money can they make, or you know the things
Speaker 1: that you would ask if you're trying to get a job. So,
Speaker 1: in order to get a real sense of what it's
Speaker 1: like to join an MLM, we joined an MLM. One
Speaker 1: of our producers volunteered for the job. Mackenzie Cassab started
Speaker 1: out in public relations, working for the kind of beauty
Speaker 1: brands you find in a high end department store. Yeah,
Speaker 1: so I used to work for Bumble and Bumble in house,
Speaker 1: and then I also worked at an agency where I
Speaker 1: had clients like Ferragamo, Maxima, a lot of fragrances. It
Speaker 1: was really fun. So my job was to pitch stories
Speaker 1: to magazines for the products, so to try to convince
Speaker 1: them to write about the perfumes and then hopefully they
Speaker 1: would write about it in their magazines. And then you
Speaker 1: got to work on the other side of that. Yeah,
Speaker 1: And then I switched at some point and started working
Speaker 1: in editorial, where I was writing about those things, so
Speaker 1: writing about the retail industry and writing about fashion collections
Speaker 1: and makeup and trends and you know that kind of thing.
Speaker 1: And then also my cousin sells ridden fields and I
Speaker 1: see she's skincare, right, yeah, skincare, and she's always posting
Speaker 1: about it on Facebook. Really the only interaction I see
Speaker 1: is between her and her mom my aunt. Yeah. So,
Speaker 1: I mean, I haven't asked her about how her business
Speaker 1: is going, but I'm a witness to it on Facebook.
Speaker 1: And it doesn't look easy. But I come from a
Speaker 1: pr background. I know how to pitch and sell trends
Speaker 1: and brands. I feel like, if there's anyone in this
Speaker 1: office who can get out there and make this work,
Speaker 1: it's me. I'm Jane Marie and this is the Dream
Speaker 1: Episode three. Yes, I would like to swim in cash.
Speaker 1: So we started looking around for an MLM that would
Speaker 1: play to Mackenzie's strengths. Yeah, so what did we look at?
Speaker 1: We looked at it Works, which you kept describing as
Speaker 1: saran wrap, and I thought you literally meant to wrap
Speaker 1: food up. But it turns out it's actually to wrap
Speaker 1: your thighs for what's swimming, Okay, just to slim your thighs.
Speaker 1: And then there's like vitamins and stuff. Great day. One
Speaker 1: of the at Work system is your wrap date. Start
Speaker 1: your results in just forty five minutes with that crazy
Speaker 1: wrap thing. The powerful botanically based cream formula gives tightening, toning,
Speaker 1: and firming results. So we looked at that, but we
Speaker 1: ultimately rejected that one because it seemed a little too
Speaker 1: over the top, just gimmicky and not believable. Yeah, and
Speaker 1: it's claims, and I would say that I have refined
Speaker 1: tastes when it comes to beauty products, and also my
Speaker 1: experience and work is more on the luxury side of things,
Speaker 1: so I kind of wanted to stick with something that
Speaker 1: was more on brand personally, so that if I started
Speaker 1: pitching this stuff in my Facebook feed, my mom wouldn't
Speaker 1: be like, why are you selling saran wrap for your thighs.
Speaker 1: And we looked at a bunch of other makeup companies
Speaker 1: and some more vitamin yeah, a lot of health yeah.
Speaker 1: Forever Living was another one, right, based on alo and
Speaker 1: unique yep, uh huh. We ultimately went with Limelight because
Speaker 1: I think it felt the most legitimate, just in terms
Speaker 1: of I mean, if we're honest, the way it looks
Speaker 1: Limelight is something that I could see myself being attracted to.
Speaker 1: It's like modern packaging, really contemporary design, clean minimalists. The
Speaker 1: products look decent. There's nothing crazy about it. There's no
Speaker 1: saran wrapping your thighs or anything like that. It all
Speaker 1: looks like pretty much regular makeup. I mean, they do
Speaker 1: some crazy eyeshadow palettes, but for the most part of
Speaker 1: the regular makeup. And then they have some trendy things
Speaker 1: I have, like that collection of black Ish lipsticks. Yeah,
Speaker 1: and no no crazy claims, no hard I mean, no
Speaker 1: blatantly hard cells on anything. It's just like it looks
Speaker 1: very much like other makeup websites, except you know, you
Speaker 1: scroll a little bit more and there's a big section
Speaker 1: about recruiting people or more joining other than that side,
Speaker 1: it looks very much like Sephora. Yeah yeah, I mean
Speaker 1: in terms of the pictures are really professional looking. You
Speaker 1: go on some of these websites and pictures are like
Speaker 1: low res and so yeah, in terms of in terms
Speaker 1: of professionalism, it looks pretty professional. I mean it is.
Speaker 1: If I didn't know that it was an MLM and
Speaker 1: I kind of missed that part, that large part at
Speaker 1: the bottom of the website. Yeah, it's something I probably
Speaker 1: in everyday life would think. Cool. This looks like makeup.
Speaker 1: Yeah yeah, great, yep. Not only did this brand seem
Speaker 1: sort of class, it had a storied history as well.
Speaker 1: To give you a little more background on Limelight, we
Speaker 1: need to go back in time to the nineteen fifties
Speaker 1: on Broadway. You don't know it, but right now Manhattan
Speaker 1: is getting itself dolled up for the evening chorus. Kids
Speaker 1: like checking in backstay box offices are getting busier shooting.
Speaker 1: This company was birthed by another company called al Cone,
Speaker 1: and al Cone got its start as a theater supply
Speaker 1: company in the fifties. The owner was a guy named
Speaker 1: al Cohen. Get it al Cohen al Cone. They supplied
Speaker 1: almost everything you'd need to put on a good Broadway show,
Speaker 1: lighting and some hardware, but also eyelashes and makeup. And
Speaker 1: then in the eighties, this other Broadway hardware store owned
Speaker 1: by the Malardy family they bought al Cone and their
Speaker 1: first big claim to fame is that they supplied makeup
Speaker 1: to the original production of The Blue Man Group. That
Speaker 1: is some serious makeup. After running a sixful makeup store
Speaker 1: in Manhattan, they got into TV, selling products on QBC
Speaker 1: and HSN, and then in nineteen ninety six they launched
Speaker 1: their own line of makeup. Meanwhile, they're still killing it
Speaker 1: on Broadway as the exclusive makeup suppliers for The Lion
Speaker 1: King and some other shows. I'm not really up on
Speaker 1: my mid nineties Broadway, but through the magical alchemy of
Speaker 1: both the popularity of their makeup and the HSN success,
Speaker 1: it seems they get the idea to start an MLM
Speaker 1: Limelight by Alcone in twenty fifteen. Here's one of the
Speaker 1: founders of Limelight, the daughter of Vincent Mallardy, the guy
Speaker 1: who brought Alcone to fame. Her name is Michelle Gay,
Speaker 1: and she's speaking directly to you from one of her many, many,
Speaker 1: many Facebook videos where she pumps up her salesforce using
Speaker 1: her sleepy children as cheerleaders. Hello Empire, Hi guys, we
Speaker 1: are just jumping on. We're about to go to bed.
Speaker 1: These are my kids. But before we put everyone to
Speaker 1: bed and before I go to bed, we have a
Speaker 1: big announcement. What happened? Guys? You're sales record, you brought
Speaker 1: the sales record, you broke the sales PI. Yay you
Speaker 1: guys want to say good night to them? The awesome
Speaker 1: empire on the Limelight Empire is now tens of thousands
Speaker 1: of women strong. We don't know exactly how many distributors
Speaker 1: there are because that would be like a normal business practice,
Speaker 1: and that's not what these companies do. And the French
Speaker 1: beauty brand Laxton recently acquired a forty percent stake in
Speaker 1: its US business. One more thing for clarity. During production
Speaker 1: of this show, Limelight went international and became Lime Life.
Speaker 1: But because we started reporting the story before the rebranding,
Speaker 1: when everyone was still calling it Limelight, we'll keep calling
Speaker 1: it Limelight. Once we started looking deeper into this quote
Speaker 1: unquote upity, we found that one of the most appealing
Speaker 1: things about Limelight is how normal and likable the owners seem.
Speaker 1: The co founders are this duo of pretty ladies, Michelle
Speaker 1: and her niece Madison Mallarty. They dressed in like anthropology
Speaker 1: and you could picture them shopping at home goods just
Speaker 1: like us. We found this YouTube video that made them
Speaker 1: feel really down to earth, like they were aware of
Speaker 1: the stigma around MLMs and it did not apply to them.
Speaker 1: But for those who don't know me, my name is
Speaker 1: Madison mllarty and I'm one of the co founders of Limelight,
Speaker 1: I have an amazing opportunity for you that is going
Speaker 1: to change your life. I'm just kidding. That's how most
Speaker 1: direct sales companies start their pitches when they're trying to
Speaker 1: get you to join. But that's not what I'm here
Speaker 1: to do. Despite what Madison just said, the company does
Speaker 1: run a lot like every other MLM nowadays. There's recruiting,
Speaker 1: there's parties, weird price structures, et cetera. We hadn't heard
Speaker 1: of Limelight before our research, which is weird seeing as
Speaker 1: how both Mackenzie and I were deeply involved in the
Speaker 1: beauty business for many years. I was a beauty editor
Speaker 1: as well. But if you've seen it anywhere. It was
Speaker 1: probably in your Facebook feed. Like most MLMs these days,
Speaker 1: the business is social media based. On their website, you
Speaker 1: can see the products and retail prices, but nothing else
Speaker 1: about how the business really works. There are no details
Speaker 1: about what happens after you become a seller, so it's
Speaker 1: like a firewall pretty much like give us your social
Speaker 1: Security number and then you can see literally because they
Speaker 1: need it for payment. Oh, it just tells you like
Speaker 1: on once you sign up and you have access to
Speaker 1: like the back office kind of, then I guess you
Speaker 1: would see what the wholesale prices are because you don't
Speaker 1: have access to that, so you actually don't even know.
Speaker 1: I mean, you know the one hundred and sixty eight
Speaker 1: or nine dollars for the starter kit, but aside from that,
Speaker 1: you don't know what the wholesale prices are, so you
Speaker 1: don't know. The lipstick is listed for twenty dollars on
Speaker 1: the website as a beauty guide. What would I be
Speaker 1: buying them for? I have no idea, and a lot
Speaker 1: of times people say to me, well, I love the
Speaker 1: idea of Limelight, I just don't know how to sell.
Speaker 1: Every one of our top salespeople has said that to
Speaker 1: me at some point. And the reason why they're successful
Speaker 1: is they don't sell. We are all about sharing where
Speaker 1: shares people. So it's really for all the beauty guys.
Speaker 1: They know that just sharing the product is all they
Speaker 1: really need to do to be successful. I am hoping
Speaker 1: to find out that it's as easy as they make
Speaker 1: it sound. I can't wait to hear what actually happens
Speaker 1: when you get past that firewall. Yeah, me too, I
Speaker 1: mean I hope I get in what if you want again,
Speaker 1: and you spend the one sixty nine and then like
Speaker 1: the face of the Wizard of Oz comes on your
Speaker 1: computer screen and is like you've unlocked the secrets to
Speaker 1: eternal life, and then and then and then like millions
Speaker 1: of dollars still out of your keyboard, right until you
Speaker 1: get to the millions of dollars part. If you've ever
Speaker 1: looked at any of these other businesses like that, that
Speaker 1: is the type of language that they use and the visuals,
Speaker 1: so it's not that far fetched. But I will keep
Speaker 1: you posted. We sent Mackenzie off with the company credit
Speaker 1: card and a tape recorder to capture the beginnings of
Speaker 1: what will surely be an amazing, life changing journey So
Speaker 1: I'm here and rolling to be a beauty guide in
Speaker 1: training for a Limelight by al Cone. I've already gone
Speaker 1: through step one, which is to pick a basic starter
Speaker 1: kit based on my complexion or three choices light, medium,
Speaker 1: and dark. So I chose mine. Now I'm filling out
Speaker 1: my information. They're asking for things like three different phone numbers.
Speaker 1: They're asking for my email address, and I actually went
Speaker 1: and created another email address just in case this all
Speaker 1: goes south. Now I'm to this part set up your website. Okay,
Speaker 1: So signing over my life right now, along with my
Speaker 1: credit card and my home address. Okay. So now we
Speaker 1: get to review my order and the basic starter kit
Speaker 1: is one hundred and sixty nine dollars, tax is sixteen dollars.
Speaker 1: And then I need to choose shipping, so I'm going
Speaker 1: to go with regular, which brings my total now to
Speaker 1: one hundred and ninety six dollars. To click and complete enrollment. Okay,
Speaker 1: I just got a notification saying your amazing journey starts here.
Speaker 1: This company and your Limelight business is all about you. Shortly,
Speaker 1: you will begin your online training through emails sent from
Speaker 1: our company at Limelight by Alcone. Okay, it then tells
Speaker 1: me there's a lot I can do while your starter
Speaker 1: kit is in transit. I can announce this new venture
Speaker 1: to the world through social media and email. I can
Speaker 1: begin my online training. I can start planning a grand
Speaker 1: opening party. I have no idea what that is. I
Speaker 1: can contact my leader for tips on how to and
Speaker 1: this is in capital letters start strong, and then the
Speaker 1: two co founders, Madison and Michelle, say, we can't wait
Speaker 1: to see how you grow the simple step into one
Speaker 1: of the best decisions of your life. With love and
Speaker 1: limelight Madison and Michelle. Okay, so tell me, so you
Speaker 1: signed up this weekend. Okay, So I signed up this
Speaker 1: weekend and it's now day four. I've had twenty one
Speaker 1: emails from them so far, not including like your package
Speaker 1: has shipped, your order's gone through that stuff separate emails. Yeah,
Speaker 1: I'm not counting those. I'm talking emails that are like
Speaker 1: motivational announcements of new products. Are you feeling motivated? I
Speaker 1: would say motivated is probably not the word I feel
Speaker 1: right now. I got this packet today. I was only
Speaker 1: able to print out thirty nine pages before we ran
Speaker 1: out of paper, so I don't know how long it
Speaker 1: actually is, but like by the time I go through
Speaker 1: the emails, click through all the links, print out the material.
Speaker 1: Even in terms of just acquainting myself with the brand,
Speaker 1: I mean, this is almost a full time job. Maybe
Speaker 1: not in terms of tasks, but in terms of sort
Speaker 1: of mental commitment, because my uplines contact me and they'll
Speaker 1: send me text messages to ask how I'm doing. You know,
Speaker 1: I'm getting contacted at night. I'm getting contacted at eleven
Speaker 1: o'clock on a Saturday night before a deadline. Oh my god.
Speaker 1: Another one. I'm a beauty guide in training and I
Speaker 1: until I hit one thousand dollars in sales. So once
Speaker 1: I hit one thousand dollars in sales, I get promoted
Speaker 1: to beauty guide. And I can do that over any
Speaker 1: time period. But there's something called the fast Track program
Speaker 1: which they really encourage, and that is hitting the thousand
Speaker 1: dollars goal in forty days, okay, which sounds like challenging
Speaker 1: from the beginning. You're like four days down already. I've
Speaker 1: lost four days having just having to read all this shit, right,
Speaker 1: and I haven't received my product yet. I don't even
Speaker 1: know what I'm selling yet. I haven't seen anything, but
Speaker 1: the clock stick, the clock take cack. Yeah, And so
Speaker 1: I started looking through. This is actually probably the most
Speaker 1: interesting and I guess useful, but also intimidating packet that
Speaker 1: I've received. I'm not sure what this one is called,
Speaker 1: but it's sort of like what you need to do
Speaker 1: to make that thousand dollars in sales in forty days?
Speaker 1: In forty days? Oh, it has a table of content, yeah,
Speaker 1: apparently it was forty four pages, and the suggestions why
Speaker 1: do you need to do the fast track? Do you
Speaker 1: get some sort of special bye you get? I don't
Speaker 1: even know at least, I mean, I'm trying to wade through.
Speaker 1: There are tables and graphs and charts and so many numbers.
Speaker 1: I'm not in numbers per and they certainly don't make
Speaker 1: it easy by just having lists of numbers everywhere. But yeah,
Speaker 1: I don't know. If you do it in forty days,
Speaker 1: you get like discounts on products, or like free samples
Speaker 1: or I don't know what, but there's something, there's some incentive. Okay.
Speaker 1: So they outline what they suggest you do to get
Speaker 1: through this fast track program, and just to give you
Speaker 1: an idea, they are suggesting that I make over thirty
Speaker 1: faces in thirty days. Do you even know thirty people
Speaker 1: in LA? First of all, no, I don't. So unless
Speaker 1: I go sit in Starbucks and offer free makeovers, I
Speaker 1: don't know how this is going to happen. But on
Speaker 1: top of that, the other snag is that I don't
Speaker 1: have products. Oh right, they haven't arrived. Well, even if
Speaker 1: they do arrive, I'm not giving you a makeover. I
Speaker 1: picked the starter kit for my own complexion, and we
Speaker 1: do not have the same skin tone, we don't have
Speaker 1: the same eye color. So what I got for myself
Speaker 1: is not going to work on you. We can try,
Speaker 1: but I don't think you look like a mime like
Speaker 1: ICP a jocal. You can make me over into a juckalo,
Speaker 1: but they actually do, because apparently not everyone knows thirty
Speaker 1: new people a month to make over. They outlined some
Speaker 1: potential quote unquote faces that you could reach out to
Speaker 1: your baby. Yeah, the waitress or checkout clerk who wishes
Speaker 1: to earn more than she is currently. Oh so it's recruitment.
Speaker 1: Oh oh oh, oh okay, sorry, yep, I hadn't gotten
Speaker 1: to page thirty seven yet. The challenge is to the
Speaker 1: purpose is to build your business and then The intention, though,
Speaker 1: is to let people know about your business and your
Speaker 1: skills as an educated beauty guide and as a business leader,
Speaker 1: and then you should be using that opportunity to share
Speaker 1: your success story and recruit new people. That doesn't that
Speaker 1: seem like something for next year? You're not successful yet?
Speaker 1: The hole? Well, I actually I am in the hole
Speaker 1: because I've spent now two hundred dollars. If I get
Speaker 1: through this thirty faces and thirty Days challenge, I earn
Speaker 1: a twenty percent commission on my thousand dollars, which is
Speaker 1: two hundred dollars, so I break even. But that's not
Speaker 1: taking into account the fact that I have to buy
Speaker 1: other products to make over people like you with different
Speaker 1: skin colors, and that I have to host parties where
Speaker 1: I need to serve people food and drinks. I assume
Speaker 1: they also suggest all of these theme parties, like one
Speaker 1: is my ties and makeup, where I'm supposed to give
Speaker 1: out lays to people. So I've got to go buy
Speaker 1: some lays and stuff to make my ties. I don't
Speaker 1: even know what's in my tie, but a lot a lot,
Speaker 1: So I need a lot of liquor. Just get them
Speaker 1: drunk enough that they can't drive to cvs and buy
Speaker 1: regular right, get them drunk enough, they don't notice that
Speaker 1: I can't do their makeup and I'm not a good
Speaker 1: makeup artist. In addition to the one hundred and ninety
Speaker 1: six dollars we spent on the one hundred and sixty
Speaker 1: nine dollars starter kit, there are other mandatory expenses we
Speaker 1: did and see coming. There's a ten dollars monthly website fee,
Speaker 1: a seventy five dollars annual member fee, and then the
Speaker 1: optional cost of marketing your business. As if marketing a
Speaker 1: business is optional, they don't really supply you with much
Speaker 1: in terms of catalogs or flyers. Those you have to
Speaker 1: buy from them, nor do you get business cards. But
Speaker 1: they've got that covered with a Vista Print partnership prominently
Speaker 1: advertised on their website where you can buy them. And
Speaker 1: then there's also the cost of shipping, the cost of
Speaker 1: hosting parties, the cost of replacing discontinued and expired items
Speaker 1: in your kit. But there was at least one way
Speaker 1: to save money, and that was by getting products at wholesale,
Speaker 1: or so we thought. The other thing that's that's not
Speaker 1: transparent is they tell you in the beginning you know,
Speaker 1: you get things at wholesale prices, so but they don't
Speaker 1: ever tell you what the wholesale price is. So I'm
Speaker 1: sitting here. I did a bit of research and advance,
Speaker 1: and the figure I found was that on average, most
Speaker 1: cosmetics are marked up seventy eight percent. Okay, I was
Speaker 1: kind of assuming it would be something like that. So
Speaker 1: I log into the back office after after or I've
Speaker 1: paid my two hundred dollars because I don't have access
Speaker 1: to any of that information until I pay, and the
Speaker 1: markup is twenty percent, meaning I'm getting a twenty percent
Speaker 1: discount on the retail price. So so so they're having you
Speaker 1: eat the difference basically of what a cosmetics company would
Speaker 1: normally make. Yeah, exactly, so they're offering me a retail
Speaker 1: price like they've definitely already marked it up at least.
Speaker 1: I mean, these we can have someone look at the
Speaker 1: quality of the products, but I don't think it's costing
Speaker 1: them ten dollars to produce this two inch portable lipstick.
Speaker 1: To find out, we called a friend of mine who
Speaker 1: recently finished up a ton of research and development for
Speaker 1: her own makeup company. Julie Frederickson has a marketing background,
Speaker 1: and she just launched Stowaway Cosmetics. When she was getting
Speaker 1: ready to start her business, she traveled the world looking
Speaker 1: at factories and processing plants and talking to distributors and
Speaker 1: branding people. We sent Julie a handful of Limelight to analyze,
Speaker 1: and she said that this makeup was all very standard,
Speaker 1: middle of the road ingredients and packaging. Nothing horrible, but
Speaker 1: nothing amazing. Julie said that lipstick we were curious about.
Speaker 1: It probably costs the company about two dollars a tube
Speaker 1: to make, So what about the prices? Then we compared
Speaker 1: Limelight to other brands, and the retail price tags look
Speaker 1: a lot like the high end collections you see at
Speaker 1: like Bloomingdales or Sacks. There's a twenty four dollars lipstick
Speaker 1: and eighty four dollars I cream, a thirty six dollars foundation,
Speaker 1: and then there were also some wild cards, like an
Speaker 1: eyeshadow palette that retails for one hundred and eighty eight dollars.
Speaker 1: What some of this makeup is crazy expensive, but the
Speaker 1: company actively denies this in its literature, as if calling
Speaker 1: something a good deal makes it a good deal. Buzz
Speaker 1: marketing is so important for us because it helps us
Speaker 1: keep our prices low? What right? What? This is a
Speaker 1: feeling we had over and over again as we learn
Speaker 1: more about this business, like this company seems to be
Speaker 1: gaming us at every opportunity. You have to buy catalogs
Speaker 1: and business cards, as I said, and there's a mandatory
Speaker 1: website fee as I said. But perhaps most calling of all,
Speaker 1: they pay you through a proprietary visa debit card, which
Speaker 1: has the following fees attached. There's a one dollar monthly
Speaker 1: service fee, a five dollar fee if you don't withdraw
Speaker 1: anything for ninety days. It's a buck fifty to use
Speaker 1: any ATM but you can only take out five hundred
Speaker 1: bucks at a time. If you want cash back at
Speaker 1: a store, that's a five dollar fee. There's a one
Speaker 1: dollar transfer fee. If you want to put money into
Speaker 1: your own bank account, twenty dollars will make that a
Speaker 1: wire transfer. And if you lose your card, it's six
Speaker 1: ninety five to replace it. And that's an abbreviated list.
Speaker 1: We didn't want any of you to die of that
Speaker 1: fatal combination of boredom and fury. We're going to pause
Speaker 1: this conversation with Mackenzie for just a minute so that
Speaker 1: I can turn to my producing partner, Dan Galucci, and
Speaker 1: ask a few questions. He's been looking into the legal
Speaker 1: side of this for a long time, and we'll be
Speaker 1: hearing a lot from Dan this season. But I keep
Speaker 1: getting the hunch over and over again as we dive
Speaker 1: into what happens behind the scenes at MLMs, I keep
Speaker 1: getting the hunch that something is weird here. I mean,
Speaker 1: not necessarily illegal, but wrong. So, Dan, something just came
Speaker 1: up in our reporting, Okay, in a discussion between Mackenzie
Speaker 1: and I about the pricing of this makeup from Limelight
Speaker 1: by Alcon. Okay, So Mackenzie is selling makeup through this company,
Speaker 1: and she, as a distributor, gets the makeup at a
Speaker 1: wholesale price. And what we noticed is that the wholesale
Speaker 1: price is in a lot of cases the same or
Speaker 1: around the same as the retail price of comparable products
Speaker 1: in the marketplace. Okay. In addition to that, the markup
Speaker 1: at Limelight between the wholesale price and the suggested retail
Speaker 1: price is hovers around twenty percent, which is way, way, way,
Speaker 1: way way lower than industry standard. So we looked at
Speaker 1: some numbers, and let's just start with the eyeshadows. Since
Speaker 1: this is the one that people say is closest to
Speaker 1: Urban Decay. Okay. For a distributor to buy a six
Speaker 1: shadow palette from Lime Light, their wholesale cost is fifty
Speaker 1: one dollars and twenty cents okay, So fifty one dollars wholesale.
Speaker 1: That seems like a lot. Now compare that to Urban Decay,
Speaker 1: which the product does get compared too often. Their six
Speaker 1: shadow pallett the highest price, Like, if it's not on
Speaker 1: sale or anything, what you're gonna pay is twenty nine
Speaker 1: dollars retail. Got it. So Lime Light's wholesale price is
Speaker 1: way higher than Urban Decay's retail price. So my question
Speaker 1: for you is, since the company is basically building in
Speaker 1: like a crazy markup into their wholesale price, uh huh,
Speaker 1: they're making all the profit they would ever need to
Speaker 1: make off of selling everything at the wholesale price to
Speaker 1: their own distributors. Is there a name for what they're
Speaker 1: doing here, like making the distributor the end consumer. Yeah,
Speaker 1: it's called a closed system. Dan in his research spoke
Speaker 1: to an attorney named Doug Brooks. He'd been working on
Speaker 1: franchise law for about thirty five years and class action
Speaker 1: lawsuits against MLMs, and he described what a closed system is.
Speaker 1: That type of closed system where all of the money
Speaker 1: is coming from people who are trying to participate to
Speaker 1: earn money in the system, you're just transferring money from
Speaker 1: the later entrance to the earlier entrance. And that is
Speaker 1: the classic definition of a pyramid scheme, and that's illegal.
Speaker 1: If anyone's making a profit, you're making it from within
Speaker 1: the pyramid. So I'm the they have a way of
Speaker 1: getting around that, and you can't necessarily prove that the
Speaker 1: distributor is paying the retail price or the wholesale price.
Speaker 1: Is there an incentive for the distributor? There is? Yeah.
Speaker 1: According to the compensation pack, you get a bump and
Speaker 1: commission when you hit a certain retail amount right now,
Speaker 1: So while McKenzie's building up her kit, it would behoove
Speaker 1: her to purchase items from her kit at a retail
Speaker 1: price to reach the level of an activated beauty guide.
Speaker 1: So if she spends one thousand dollars on her kit,
Speaker 1: but she buys all the stuff through the retail site,
Speaker 1: there's absolutely an incentive. So there's an incentive for the
Speaker 1: distributor in order to try and squeeze money out of
Speaker 1: this any way that they can, which we know is
Speaker 1: objectively difficult. There is an incentive for them to pay
Speaker 1: retail pricing, as opposed to if you were doing the
Speaker 1: same thing for noll And the wholesale was forty bucks
Speaker 1: and the retail was sixty five or something. There's a
Speaker 1: huge disincentive to buy retail, right, you know, if you
Speaker 1: could buy wholesale, right. So Doug and I were actually
Speaker 1: talking about a case the FTC brought against an MLM
Speaker 1: called burn Lounge. It was in two thousand and seven.
Speaker 1: They were an online music store. And believe me when
Speaker 1: I say their business model was complicated. I was going
Speaker 1: to guess they were a vape company. I thought they
Speaker 1: did like workout stuff, none of the above. Yeah, exactly,
Speaker 1: complicated music store. And so the FTC was trying, can
Speaker 1: I just interrupt you, Yeah, don't we have enough of those?
Speaker 1: Well apparently not in two thousand and seven. Oh okay, yeah,
Speaker 1: or the case was brought in two thousand and seven,
Speaker 1: So yeah, no, they were early. They were early. So
Speaker 1: the FTC was trying to prove that they were a
Speaker 1: closed system and that all their were internal that if
Speaker 1: there weren't commissions being paid to the distributors, their sales
Speaker 1: would drop early on Burne Lounge was ordered to stop
Speaker 1: paying this multiple compensation, and the demand for its products plummeted,
Speaker 1: and the Ninth Circuit was able to use that fact
Speaker 1: to say, you really don't have retail demand for these products.
Speaker 1: You know, once, once you took away the recruitment incentives,
Speaker 1: no one knows buying these products. That was strong evidence
Speaker 1: that this was a pyramid scheme and not a legitimate company.
Speaker 1: The other thing that we know about this put Limelight
Speaker 1: up against Urban Decay there, you know, you're there right
Speaker 1: next to each other in the store, but Irving Decay
Speaker 1: costs roughly twenty nine dollars and Limelight costs sixty four dollars. Yeah,
Speaker 1: haven't much. So who's going to buy Limelight? Nobody? Okay,
Speaker 1: So how did they stay in business? And what I
Speaker 1: would say is they stay in business by selling to
Speaker 1: their distributors because they make all of their money through wholesale,
Speaker 1: which is what you originally said. Okay, all right, So
Speaker 1: what the hell I feel like if I were honestly
Speaker 1: trying to sell this makeup and I'd invested the two
Speaker 1: hundred bucks and then I saw all this nonsense going
Speaker 1: on behind the scenes. I hope I would be the
Speaker 1: kind of person who would call it a day at
Speaker 1: this point, and then I probably wouldn't tell anyone how
Speaker 1: I got suckered, and then I'd delete my Facebook and
Speaker 1: then disappear into obscurity, which is what most people do.
Speaker 1: But now we have a lot more questions than answers
Speaker 1: about what's going on in this world, so we can't
Speaker 1: call it quits just yet. I think the easiest way
Speaker 1: to fast truck and get promoted from beauty guide and
Speaker 1: training to beauty Guide in that forty days is to
Speaker 1: just buy your own product. If you invest one thousand
Speaker 1: dollars in your business by way of samples, brushes, they
Speaker 1: have makeup, remover, things like that, then you can be promoted.
Speaker 1: That's the easiest way to do it. So the first
Speaker 1: thousand dollars doesn't have to be sold to like people
Speaker 1: that are going to use the makeup. You can actually
Speaker 1: achieve your next level. None of this has to be
Speaker 1: purchased by outside people. Well, we keep seeing posts on
Speaker 1: the Internet and people talking about how much debt they're
Speaker 1: in because of MLMs, and when you read stuff like
Speaker 1: that where it's like I put three thousand dollars into
Speaker 1: this makeup thing, and I'm in debt and I couldn't
Speaker 1: sell it, and it's a stam. You're like, well, yeah,
Speaker 1: we all knew that, right, you know, right? But are
Speaker 1: you starting to have any sympathy for those folks? Yeah,
Speaker 1: it's funny because Okay, so last night I was thinking
Speaker 1: about it from the perspective a small bit of a
Speaker 1: small business owner. So I started thinking again, two hundred dollars.
Speaker 1: Investing two hundred dollars in a small business is nothing.
Speaker 1: I mean, that's that's nothing. That's your custom stationery. Investing
Speaker 1: one thousand dollars. If I am legitimately thinking of this
Speaker 1: as a small business, as an actual business venture, investing
Speaker 1: twelve hundred or fifteen hundred dollars is really reasonable. I
Speaker 1: mean that's not an exorbitant amount of money, no, just
Speaker 1: to kickstart a business. Plus, they tell you like, you
Speaker 1: do have to do all of this stuff in order
Speaker 1: to make this work, and so you kind of I
Speaker 1: have to tell yourself, well, I can either give it
Speaker 1: my all, right, which requires me to invest a lot
Speaker 1: more than I thought I was going to, because they're
Speaker 1: not up from about it, both in time and money
Speaker 1: is it ever? I just want to see on a
Speaker 1: piece of paper, like, is it mathematically possible to make
Speaker 1: any money? To make money? Maybe we're gonna get it
Speaker 1: and be blown away and wonder why this is like
Speaker 1: the world's best kept secret. Okay, so it's been eleven
Speaker 1: days since Mackenzie signed up to be a beauty guide
Speaker 1: and finally her kit has arrived. Sense this is going
Speaker 1: to be like the first audio unboxing tape. In the
Speaker 1: box we found I owned two lipsticks, a mascara, and
Speaker 1: a few blushes, a beauty blender, a cleanser of face cream,
Speaker 1: a stack of catalogs, and then an errant USB cable
Speaker 1: that puzzled both of us until, oh, what is this
Speaker 1: That's like a iPad? At the bottom of the box.
Speaker 1: We found this shitty iPad looking thing that was made
Speaker 1: out of cardboard and it was preloaded with some exclusive content.
Speaker 1: I got involved with Limeley. I didn't know anything about
Speaker 1: direct sales. All my friends after they got their linline products,
Speaker 1: and they loved them so much, and every single one
Speaker 1: of them called me saying, I've never felt moreau after
Speaker 1: playing with the makeup. I bet you're dying to know
Speaker 1: what it's like here is my personal and professional opinion.
Speaker 1: It's gross. I hate it. It smells bad, the packaging
Speaker 1: is unhygienic and cheap looking, and the foundation actually felt
Speaker 1: like wearing nozema all day. But according to them, Mackenzie's
Speaker 1: all set now to start living the dream. She has
Speaker 1: access to this site, she has her box of growth makeup.
Speaker 1: Nothing can stop her. Now. Okay, so you just got
Speaker 1: off the phone with your upline. Yes, what did she
Speaker 1: tell you to be told me to treat this as
Speaker 1: a brick and mortar business on Main Street. First, you
Speaker 1: would have an open house where you invite your friends
Speaker 1: and family. Then you would encourage them to use word
Speaker 1: of mouth to expand your business a bit. Then you
Speaker 1: might start investing in marketing and pr for yourself and
Speaker 1: your business. I did voice some concerns about the cost
Speaker 1: of doing the parties as they suggest them. She told
Speaker 1: me people aren't coming to buy wine and appetizers. Don't
Speaker 1: spend money on that or decorations. Invest in products to
Speaker 1: show them because that's how you're going to win them over.
Speaker 1: I got a list of products that I should be
Speaker 1: investing in. I need to look at the prices because
Speaker 1: this is not cheap, but she suggested getting several shades
Speaker 1: of foundation based on what skin tones my friends are, eyeshadows,
Speaker 1: a finishing spray, the primer, and then she also does
Speaker 1: this really cool demonstration. I'm actually into this. So she
Speaker 1: asks everyone to bring their dirtiest brush to the party,
Speaker 1: then they vote on who has the dirtiest brush, and
Speaker 1: then she uses this magic cleanser soap. I had I soap. Well,
Speaker 1: I mean, okay, Martha Stewart, when you start a blog,
Speaker 1: I did oh to have a beauty blog where I
Speaker 1: showed people how to clean their brushes with soap. With soap.
Speaker 1: She really just instilled upon me the importance of building
Speaker 1: up my kit so that I can demonstrate on people.
Speaker 1: But she just sold you a shitload of product, and
Speaker 1: she's going to get a portion of that and her
Speaker 1: work is done for the day. I actually forgot about
Speaker 1: that part until you just mentioned it. I really forgot
Speaker 1: that she does make money off of I really, for
Speaker 1: a minute, was like it didn't occur to me as
Speaker 1: it was happening that that's what was happening. Truly, it
Speaker 1: really just felt like she was giving me pointers so
Speaker 1: that I could just be my best hashtag girl. Boss,
Speaker 1: I feel like you just got conned. I also feel
Speaker 1: like I just got I have a grocery list of
Speaker 1: one thousand dollars worth of product I need to buy,
Speaker 1: you know. And the funny thing is, I went into
Speaker 1: this knowing that that's how she makes her living, and
Speaker 1: I still fell for it. It is really disappointed and embarrassing.
Speaker 1: All right, Well, I wasn't embarrassed until you brought it up.
Speaker 1: I would be embarrassed if I were you. I fine,
Speaker 1: I'm embarrassed. It's true. She just made like a couple
Speaker 1: hundred bucks on his phone call. Yeah, and that sounds
Speaker 1: really easy. I mean, she literally was doing unloading her
Speaker 1: dishwasher and playing with her child as we were speaking.
Speaker 1: She did tell me that the real money comes from
Speaker 1: recruiting people. That is way more lucrative than selling a
Speaker 1: couple hundred dollars worth of products at a party. I
Speaker 1: asked Mackenzie how she was feeling as she tried to
Speaker 1: get promoted from beauty Guide and Training to Beauty Guide
Speaker 1: to whatever comes after beauty Guide. Yeah, I'm feeling sort
Speaker 1: of like I'm already failing in a way. I know
Speaker 1: it's ridiculous because I know why we're doing this, but
Speaker 1: at the same time, I mean, I don't fail at things.
Speaker 1: I keep doing things until I succeed. And this is
Speaker 1: something where I feel like a hamster in a wheel.
Speaker 1: I just keep running in circles and nothing is it's
Speaker 1: not getting better. And at the end of the month,
Speaker 1: when I'm five dollars short or nine dollars short of
Speaker 1: making my goal, I'm reset to zero. So it really
Speaker 1: does constantly feel like it's an uphill battle that I'm
Speaker 1: just not cut out for, which is just not a
Speaker 1: good feeling. We're doing this for fake, for the show,
Speaker 1: but we know a lot of you are doing this
Speaker 1: for real, and we see you next time on the Dream.
Speaker 1: Occasionally it gets dark and the finger gets pointed at
Speaker 1: you and you're told that if you fail, it's your fault.
Speaker 1: You know what if people are making money in your
Speaker 1: company and you eight, it's not your sponsor's fault, it's
Speaker 1: not the system, and we don't have a very good system.
Speaker 1: It's not your product's fault, it's not the company's fault,
Speaker 1: it's not customer service's fault. It is your fault. His
Speaker 1: Dream is a production of Little Everywhere and Stitcher, written
Speaker 1: and reported by Me, Jane Marie, Dan Galucci, Mackenzie cassab
Speaker 1: Lyra Smith, and help from Claire Rolinson. We are edited
Speaker 1: by Peter Clowney. Our fact checker is Michelle Harris. The
Speaker 1: Dream is executive produced by Laura Mayer, Chris Bannon, Dan
Speaker 1: Galucci and me. We appreciate you subscribing, rating, and reviewing
Speaker 1: the show wherever you listen