The Illusion of the Pyramid in Network Marketing

The earliest Ponzi scheme was organized and carried out by Charles Ponzi from the year 1919 to 1920. Although any scheme of this sort involves the taking in or money from investors to pay off earlier investors, Ponzi schemes are generally operated by a central entity or person and don’t necessarily have a hierarchical structure like a pyramid.. In reality, if it is a pyramid or Ponzi scheme, there is no product being sold to anyone and larger and larger numbers of people must be recruited to keep feeding money upwards. In the end, when there are no more people to recruit or who will be recruited, it is the folks who contributed money last who lose out and are left holding the bag.

Legitimate network marketing companies do have products and often they are some of the best products available. Recruiting is often emphasized (sometimes overemphasized) because that is a large part of what creates the financial opportunity for people who get involved. Anyone who is contemplating getting involved with a multilevel marketing opportunity must understand a few things. First, the primary purpose of your involvement is to expose people to the product. If you notice, I did not use the word ‘sell’ in the last sentence. If you believe in the product and like it, the biggest challenge is getting others just to try it. No body, anywhere, makes any money if people are not buying the products. I believe that a superior product will almost "sell" itself.

Other things to consider are that you are starting a business and some form of marketing will be required. The whole reason that a company with a product wants to partner with you is that person to person or "Network" marketing has been shown to be the most effective and cost efficient form of marketing. The cost of advertising for the company takes the form of commissions to those who are most effective at creating sales of the product. Often, for a young company, Network Marketing is the best way to go. Once they’ve paid for manufacturing costs, support staff, and informational materials little is left for massive advertising.

In closing, you should look at the company you work for if you want to examine a true pyramid. Does the CEO make less than the president? Do the vice presidents make more than the president? Does middle management get paid more than the upper management? Every legitimate company has a hierarchical structure where those higher up are paid more. Ideally, that is somehow tied to performance too. Imagine a company where you are one of the people on the bottom but you have 200 customers who just want the product. You might not be making as much money as someone above you, but I’ve seen some plans where maybe you would because you went out and got those customers yourself.