From George H: “I am all confused and I really need some good sound investment advice. A few nights ago, a friend of mine brought this man in a business suit named Tom over to my home to show me a hot new ground-floor business opportunity that could really make me rich. My friend told me that Tom was really pulling in BIG bucks and was a leader in this business. (I really want to believe him, except I kind of suspect this to be bull because I had to jump-start Tom’s 1977 Cordoba on his way out…three hours later…boy the wife was P.O.’ed.) Anyway, Tom set up this white board and began to draw circles on it. He told me that I only had to sign up 6 people and I would be a Garnet or Rhinestone or something. (No wait…I remember now…I would be a Diamond.) Tom said that if I really worked hard at this business and listened to lots of instructional tapes, I could retire on a six figure income in approximately two years. It all sounds pretty good to me. They showed me this book called ‘Profiles of Success,’ which has pictures of all of the people who are ‘Big’ in the business. Tom said that my wife and I could be in the very same book if we showed this business plan to others five nights a week. (My wife isn’t to [sic] keen on that part…but I’ll keep working on her) From what I understand, I don’t have to do any selling…just buy the things I need from my own business at wholesale prices and teach others to do the same. Anyway…I need your help desperately. What should I do? This guy has called me every night since he came over. He keeps talking about this ‘Function’ thing that I must go to. Only then will I be able to commit to the business and build a group…whatever that means. Worst of all, Tom told me that it would cost me $100K if I don’t attend the function. I tried to explain to Tom that I just got laid off, the wife and kids are sick, and most importantly, I don’t have the stinking $1,000 to go to this function in Seattle. (I live in Florida for crying out loud!) Then Tom starts making suggestions…like why don’t I sell my TV or sell my car. Then I will have enough to go. And, that I won’t regret it, nor will I miss my TV. I love my TV…
“So anyway Andrew, what should I do…Should I go for it? It costs about $300 to sign up, and an additional $25 a week for instructional tapes, where the Rhinestones [not to be confused with the Flintstones-A.T.] tell you how to build this business fast. I figure, the worst that can happen is we will get a little behind on the bills for this cash outlay…until my next unemployment check comes in. Also, with the money I will be making, I can get my dream car. I was getting sick of driving that beat-up old truck anyway.
“Should I go for it Andrew? I am undecided. Part of me wants to dive right in…yet a small inside voice is telling me to ‘Run like HELL!'”
A.T.: I did not make this up. And so far as I can tell, George didn’t make it up, either. Indeed, the same drama is played out thousands or tens of thousands of times every day – most often over the kitchen tables of the people least financially advantaged, most desperate for a miracle. All too often, the small voice telling you to run like hell just can’t yell loud enough to be heard over the voices telling you how good you’ll look in your new car with all that money pouring in.
And not all these schemes have such blatant warning labels as Tom’s 1977 Cordoba. (No one more enthusiastically advocates used cars than I, but Tom does not strike me as the type to shun conspicuous consumption if he could avoid it.)
I don’t know which specific pyramid scheme this is, but they are all chain letters, basically – and chain letters, as you know, and I’ll explain tomorrow, don’t work.
Yes, there is a place for the rare multi-level marketing organization that actually sells products – like Amway – where if you work really, really hard, you just might make good money (as would be true in many jobs). But the vast majority of these things, with their white boards and “levels” and $300 for the tapes, etc., are no more likely to solve your financial problems than the matchbook covers that offer the prospect of earning big bucks in your spare time.
Note that, at least from George’s not-short description, there was no mention of an actual product or service. There was no terrific food supplement that, sure enough, you have personally tried for six months that really does seem to give you more pep, so you are truly motivated to share your good health with others (and maybe make some good money doing it). There was no device that, left alone for three hours in your closet, cleans and organizes the closet all by itself. That’s a device I would rep for. (At the end of the three hours, the closet is tidy and the device has two refuse bags, one filled with dust to be emptied in the trash, the other filled with stuff for Goodwill, neatly tagged with your name and address for the receipt.)
And even with most of the multi-level marketing schemes that do sell products or services, such as the ones that sell genuinely good deals in phone service or satellite TV – real services – most of the people who sign on make only very modest commissions and drop out discouraged. It’s the circles and the levels and the garnets and the rhinestones that make them so alluring – and so much like chain letters.
Forget about it. Even if you were early enough into it and persuasive enough to sign up six who signed up six who … you’d have to live with the knowledge that the overwhelming majority of people at the bottom of the pyramid would lose their money. Better to become an Avon lady or something, where the money is modest but come by honorably.
Quote of the Day
On the day of the 1983 economic summit, James A. Baker 3rd, then chief of staff, realized Mr. Reagan had not read his briefing book. When Mr. Baker asked why, Mr. Reagan responded, 'Well, Jim, The Sound of Music was on last night.'~Professor Herbert S. Parmet reviewing President Reagan: The Role of a Lifetime
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