(Or are they?)

Earlier this week, I had a call-in guest on the radio show. I don’t think I want to name him, as that would only serve to increase his popularity, something he is quite adroit at doing himself.

But halfway through the interview, I found myself thinking, “This guy (who got on the show by using a third party to talk me into the fact that his real talent was “building businesses”) is an MLMer. I’ve been had!

I remember my very first exposure to the world of MLMers. The year was 1969, and the company in question was called, “Koscot Interplanetary.” Koscot was my introduction to the most remarkable salesman/self-promoter I’d met to that point in time. His name was Glenn Turner, and his “product” was a series of audio cassettes entitled, “Dare to Be Great.”

Apparently, DTBG was Glenn Turner’s own personal story. Born with a cleft palate, Turner was also a diminutive, frail kid with no money and no prospects of same. Through sheer will, he built businesses and became a multi-millionaire. Whether or not his fortune was because of his MLM activities, I know not. I just know that when he stood in front of a room and spoke, he had an almost mesmerizing effect on the crowd.

“Scary,” I thought to myself. “Put this guy in a Munich beer hall and Uncle Adolf has a partner.”

Anyway, the deal was this. First, you buy copies of DTBG and then you get a bunch of other silver-tongued devils to both sell it and recruit others to sell it. In time, you’re sitting at home opening envelopes with checks in them.

Now, if that sounds like a pyramid scheme, you’re right. It is. And in those days, that was what we called businesses like Mr. Turner’s. Pyramids.

In time, the Federal Trade Commission moved in, and it wasn’t too much later before the term “pyramid” had given way to the term, “multi-level marketing (MLM).”

It seems that MLMs walk the skinniest of skinny lines. They succeed only when they achieve uber-distribution by virtue of logrhythmic growth. You know, the “Parable of the Wheat.” (Great story, if you don’t know it, look it up sometime.)

It seems as if the Justice Department is o.k. with this method of sales and distribution, but only so long as there is a legitimate product somewhere in the mix. Thus, all of these companies that MLM sell things like beauty aides, special potions to keep you looking and feeling younger, and even products that protect your car from scratches, are kosher.

Whatever. So long as there is some product changing hands, the Justice Department and the FTC are forced to bite the bullet and allow that business model to operate.

Over the years, I have regarded MLMs and their brethren with some combination of awe and disgust. Here’s why:

• Their business model is a zero-sum game. That is, if you follow the “parable” to its ultimate conclusion, just one person, one individual, ends up with all the money! Logically, this must be. But would this not also be the case with a “real” business? I mean, if a business is so good at what it does that it wipes out all of its competition, well … ?

  So, from that standpoint, an MLM is a real business.




• MLMer’s are only interested in selling “downline” distributors, and not real products.

  Yes, this is clearly the case.

  But so what? Almost all MLM “products” are really just commodities anyway. And, they are commodities being sold at the lowest possible price. (I am forever chastising my students for using “lowest price” as their key business differentiator. I tell them, “Never be the lowest-priced seller. The winner of this game is always the guy with the deepest pockets.”)

  But if you’re going to try to win the “selling commodities” game, then you almost have to be the lowest-priced player. And if this is so, then you must also achieve mega-distribution. Which, in turn, means MLM.

  So, the emphasis on selling distributorships is exactly as it should be. It should be the primary focus of the business owner who simply cannot afford to distribute nationally out of his own pocket.




• Finally, any discussion of MLM naturally leads to a discussion of “employees – vs. – owners.” That is, you’ll be hard-pressed to find any MLM organization with more than just a couple “employees.” Why? Because there are no people in: research and development; product management; quality control; finance; accounting --- hell, even the mailroom!

  For the simple fact of the matter is that MLMer’s need only keep track of the “dollars generated” by each and every downliner previously sold to by that particular MLMer.

  It’s almost as if you took a national company and made each of the stops in their distribution channel a separate company, with that company being owned by a separate individual who each year receives a separate 1099 statement.




• Finally, MLM organizations, and while very savvy at selling, generally fall way off when it comes to marketing acumen. This is odd, as one would think that marketing would be a big part of what they do.

  Until that is you look at the types of people typically recruited by MLMs. And this is where the most glaring differentiator rears its head.

  MLMs seem to typically prey upon those who are “down and out.” (Man, am I going to get letters on this column!)

  But I mean this. People in the MLM game seem to consciously seek out individuals for whom life has been difficult; particularly, their recent life.

  For example, I remember sitting in an MLM meeting in Hawaii (it was one of those “reward trips”) and testimony after testimony after testimony was from people whose lives were miraculously changed as a result of their participation in an MLM. These people were eating dog food. They were living out of their cars. Many of them were left with three kids, no car, and a mortgage.

  In other words, they were desperate.

  The MLM gave them a chance to “own their own business,” and make more money than they ever might have believed.

  And what’s wrong with that?

Clearly, I don’t have answers. I just wonder. Which causes me to have even more questions.

Questions like:

• Does our society really need these kinds of organizations?
• Do the products they sell really “add value,” or do they exist simply to burn even more oil (plastic)? I sometimes think that you could be rid of 99% of the products sold by MLMers, and the world would not miss even one beat.
• And while on this topic, what do these organizations really do to foster innovation? Particularly, when it comes to “pushing the envelope” vis-à-vis new technologies?
• And finally, what happens when a regional marketplace is fully saturated with downline distributors? I’ve seen this.

One thing I do know is that MLMers are very good with “hiding” their foibles while accentuating their good points.

Let’s go back to the person that was recently on my radio show, I looked on the Internet and had to get to the fifth page before I could find any articles indicting the company or the individual.

Talk about search engine optimization. This guy had managed to push every negative thing ever written about him to the back of the line. Corporations pay huge dollars for this result.

I always wonder when I see someone working so hard at “managing” the “Google” flow (my phrase, like it?) such that only the good stuff shows up early and all the bad stuff is neatly buried at the end.

Talk about lipstick on a pig!

Like I said, I don’t really know how to regard these guys. But one thing I do know is that some of the greatest salespeople I’ve ever met in my life are somehow and someway involved in MLMs. The two just seem to be made for each other.

I’ll leave it to you to decide what that means.