Beware of Loved Ones Peddling Products!

An Excerpt from: Street Smart Network Marketing: A No-Nonsense Guide for Creating the Most Richly Rewarding Lifestyle You Can Possibly Imagine
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Back in 1996, in the Toronto Star newspaper, a lady by the name of Rita Smith wrote a nasty anti-Network Marketing article with above title, "Beware of loved ones peddling products".

In it, she cried foul about networkers approaching friends and family with their products and opportunity. She seem to have refered to it as a despicable concept.

This was the reply of reknown network marketer, John Milton Fogg:

"...If you were to open a traditional business, say a shop of some kind, wouldn't your first customers likely be friends and family? That's only natural. With the exception of some dysfunctional relationship problems, who's more supportive to your success than the people who love you? Why would it be any different in Network Marketing?

Do some MLM people abuse their close relationships? Of course, but that is not the fault of Network Marketing any more than the institution of marriage is to be held responsible for the heartbreak of child abuse.

It is unfortunate that Ms. Smith has chosen such a one-sided view of Network Marketing.

Whether you are approached by a loved one offering a great product they have thoroughly enjoyed - perheps even one that has changed their life in some dramatic way - or, a dear friend encourages you to earn some extra income by joining him or her in a fun, easy, creative and enjoyable business adventure, please, be open to what's being offered. Profitting from our relationships - both giving and receiving - is one of the most rewarding and worthy of all human endeavors. To have that profit be expressed in the form of cash money as it is in Network Marketing...well, what a nice innovation!

Perhaps you could look at money as simply a symbol or measure of genuine value. When you do that, you might easily see that giving money to another person is an exchange of something more than dollars. You might even be able to see it as an expression of love. Looking at it that way, Rita Smith, if you were my sister, I'd do all I could to involve you in Network Marketing and make you a millionaire."

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Interesting how when the circumstances of traditional businesses are applied to network marketing, many people respond differently isn't it?

That's for another topic, for another time ^^

James Phang's student was the founder of what?!

Cost Lab anyone?

Those of you in the network marketing industry or are pretty business savvy might have come across this company the last few years. I believe it had an office within the CBD area, though I can't confirm.

Apparently it was a failure.

Based on what I was told, the system they use is uncannily similar to that of Sunshine Empire's, difference being they had different products and that they guaranteed payouts. The latter difference being emphasized in black and white.

Sunshine, I believe, states that payouts are not guaranteed. In emphasized in black and white.

Hmm...

I was also recently informed that the founder of Cost Lab was (is?) a student of James Phang, the founder of Sunshine Empire.

Which leads me to another point...

I have a friend who has recently become a pretty big success in Amway. About two years ago, we talked about some of these schemes starting and failing and he told me, matter-of-a-factly, that he didn't mind participating. Why? Because:

1. He knew a few of those people who started such schemes and
2. As a result, he was always one of the 'Founding Members' and was guaranteed to make money.

He noted that many such money games were started by the same people.

He also reached the same conclusion as me: that if you want to join such games, join with eyes wide open and if what you are offered is in fact in its early stages, you can take the risk and join it. We also agreed that, since people are going to lose their money anyway, might was well lose it to you.

One of such companies he joined early in? Swisscash.
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Update 07/11/07

From the Straits Times -

Added to the list of failures:
Number One Product (NOP) - marketing arm for an Indonesian resort project, Magic Kingdom, which was never built.

Hmm...sounds familiar..

Greedy greedy...

It's very ironic:

When presented with a legitimate Network Marketing opportunity, one of the most common objections you get is "eee...it's a pyramid scam lar"

But...

When the same person comes across one...promising high returns without effort in a short amount of time? "but it's a fixed payout! and stable returns! don't need to recruit/stock-up!"

Then...

When it's finally over, they ask why'd they do it in the first place.

Remember people..greed breeds stupidity.

So be smart.
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With regards to such schemes...I was talking to a few of my friends and we agreed on one thing: if other people's gonna fall for it, it's always better to let their money fall into your hands.

Note the difference in attitude. It's about diverting the money to you...since it's got to be diverted elsewhere anyway. You can always do something good with that money.

This is purely for 1. those who wish to participate and 2. in schemes that have yet to mature.

Sunshine Empire - Newsflash

Guys..

Remember what I warned about Sunshine Empire?

It was announced on The Straits Times, 24/10/07, that it has been listed on the Monetary Authority of Singapore's (MAS) 'Warning' list for operating a potentially illegal pyramid.

I have been to the presentations.

I am in fact very impressed by their concept.

However a few things bug me, mainly:

* Essentially 'guaranteed' profits (you can give it many names.)

* Nothing wrong with an investment company, but paying out profits when the 'investments' are still incuring costs and have not even generated revenue?

* An over-priced callback service

* An understated emphasis on stocking up on 'callback service credits' to produce more profits.

* It's almost as if the callback service is just an excuse for people to put their money in. "We do have a product!"

Update, 29/01/08: - It seems like they have had quite a few products over the years. I've heard of them selling health products, and even shampoo. Fancy buying $10,000 worth of shampoo! Anyway, here's my point - it seems like their ultimate focus is to simply make money, evident in their changing of products. Nothing wrong with that, though it makes you a little uneasy isn't it?

* They recently increased their entry pricing and reduced their payouts. They say that this is to ensure longevity of the company. Which is hypocritical because:-
1. It goes against one of the basic principals of MLM, which is that everyone is given an 'equal chance' to reach the top. This act has essentially made it more difficult for newer distributors to join and grow.
2. It just proves the point that payout is made from continued recruitment of people.

* It looks and feels uncannily like a Ponzi Scheme

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That being said, I also know of a quote, which basically says that truth comes in 3 stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as self evident.

So I concede: despite the MAS warning listing, it is still possible that it is in fact a revolutionary concept in doing business. It is also possible that it's similarities with previous pyramids have cast a light of doubt over it.

Then comes another sticking problem: if it is too good to be true, it probably is.

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update : 25/10/07

check the comments section for Sunshine Empire's point of view

What is a Pyramid/Ponzi Scheme?

There are, in fact, quite a few articles that differenciate legal MLMs from such money games.

I'll link one of them here:

http://www.marketwaveinc.com/articles/Pyramid.asp

I would also like to highlight one portion of another article, which is basically a case study:

"1991: Cooper is the National Director of Training for American Gold Eagle, a gold coin MLM, and one of the early pioneers of the binary compensation plan. AGE is eventually shut down for securities and pyramid violations (they claimed the Gold Eagle coins were a great "investment"). The pyramid label was due mainly to AGE reps buying product solely to acquire additional income positions in the compensation plan (the emphasis was on recruitment, not actual sales of the products - keep that in mind for later)."

Sounds familiar to some of you?

Here's the link:

http://www.marketwaveinc.com/articles/TTP.asp

With so many companies nowadays coming up with smarter ways to work around rules that instantly qualify them as an illegal operation, we, as potential business builders, must have due diligence in making sure thatour choices don't burn us in the future.

P.S. To those in Sunshine Empire, start thinking long term. Such companies have been around since the early 1900s and are generally called 'Ponzi Schemes'. So thread lightly, and carry a big gun (hehehe)

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Update 29/10/07

Here are some more links with regards to pyramids, ponzis and legal MLMs

http://www.sec.gov/answers/pyramid.htm
http://www.ftc.gov/bcp/conline/pubs/alerts/pyrdalrt.shtm
http://www.ftc.gov/bcp/conline/pubs/alerts/lotionalrt.shtm

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