I wrote this longer piece almost an year and a half ago on the arrest of Amway's CEO then. And it happens again. The shorter version of this blog post got published in Businessline too: "The Bane of Multi-Level Marketing". (http://tinyurl.com/lpq5bsu)
Amway's CEO got arrested for financial irregularities. I am so glad this happened in my lifetime and not during my kid's retirement years. Amway is just one of the several MLM schemes that have got the better of many intelligent people. I know of most sober and savvy people working in companies like Google, Microsoft, SBI, SBH, ICICI Bank, HDFC Bank guard the Amway products and schemes like a fanatical zealot. I had always resisted the advances of such people and wondered what is it with lovely people who will turn mercenaries overnight and begin to talk like vacuum-cleaner salesmen. Daniel Pink has just written a book "Its Human to Sell." I beg to differ. It is not human to sell always, especially when the audience is captive and they are your best buddies, teachers, students, co-workers, pen pals, boss's wife or husband, twitter followers, facebook friends, landlords, tenants, co-travellers, gas suppliers, meter readers, you name it. I have gone through the embarrassments of being at the receiving end of atleast few of my relatives and friends and closer kin. I was devastated whenever I went through the experience, I couldn't say No because they are so close to me, I couldn't buy the products, and I wouldn't "recruit" more. The chain invariably broke with me and I could never, never again resume a normal conversation with any friend or a relative or an acquaintance who sold me vague concepts of "time", "annuity", "financial freedom" and other fuzzy financial management concepts steamrolled into emotional packages.
At the core of such schemes of Amway or any such MLM scheme lie three principles: 1. They play on your insecurities of life - inadequate money, passionless job and rising expenditure to match aspirational levels.
2. They indoctrinate you with fancy "recruiting" functions that have the feel of an Evangelist session where many newcomers like you are greeted by older "recruits" breaking out into ecstatic shouts and shrieks, even getting footloose from where they are standing, talking about "How I raised myself from failure to success in selling Amway/Tupperware/Japanlife/Saradha/MihiraMagic/Landmark/whatever, how everything in life is achievable and all prosperity is sitting in the bank balance and how you can too". You have to attend atleast five such functions before you get into the jingoism that is smeared into the experienced elite who are singing hosannahs now.
3. Then having got you, your "converted" zeal, you will have to get into a producing mode of recruiting other people into your network, or become a huge consumer or even a pro-sumer - a combination of both. This is where, very few make it. And those who make it, may have succeeded against all odds - of embarrassments, of ostracisation, of hard-selling their own friends and colleagues and relatives.
I have seen a few cycles of such principle-centered selling of these schemes and have been a victim of atleast one bad experience where I was conned into a Questnet MLM scheme in the hope of owning a rare coin, an insignia of a FIFA World Cup, which will become so rare that it will cost more than the gold and the silver blended into the coin. Finally, the Questnet scheme owner got arrested and the scheme was abandoned. Having paid Rs.45000 in those days for a puny coin which has a Mexico World Cup signage on it. I got a mere Rs.9000 when I gave it to my mother a few years back because there was less silver than gold and even less gold than the powder used as letters on the coin! For all the love of soccer, my savings became a succor for someone's greed. I never invested in any Ponzi scheme after that because I now firmly believe P.T.Barnum, America's greatest showman salesman who said: A sucker is born every minute.
Many years back, when I was a banker at BNP Paribas, I spotted atleast two such Ponzi schemes - Mihira Magic, which made stuff that are flying off the shelves just as Amway products today and a call-centre which operated like a Ponzi scheme, which I will not name. Mihira Magic also finally folded up but I tried to outstmart the owners by making every chain subscriber open a salary account with the bank. It won me lot of plaudits and helped me register a fine performance at work. But the tragedy struck elsewhere, BNP Paribas, the retail bank folded up in India before Mihira Magic pulled down the curtains many years later. Moral of the story here: One swallow doesn't make a summer for a bank.
At a basic level, at a very conceptual level, one can argue that all schemes are Ponzi Schemes, whether it is about products or product managers or product consumers - its all about recruitment. But the ones that stand out are usually having the flavor that marks all the others which eventually collapsed, sooner or later. Having been in sales and relationship-building for many years now, I like to conclude this autobiographical excursion on Amway-like schemes with a few strong learnings which I learnt after many fifty-hour work-weeks during my career.
One, whether you are an employee or a business owner, your biggest asset is your career (in case of a working professional) or your business (in case of an owner or an entrepreneur).
Two, Invest in your career or business most because they have the best payoffs. Do not fall for schemes which promise you the moon and the six pence - they cannot succeed like the way you can.
Three, Stop burning your inner and outer circle of contacts with bummer proposals and schemes which take you nowhere and what more, ostracise you forever. Build your skills, spend all your energies into making yourself relevant, employable and precious till your last day. There is no financial freedom that comes without blood, sweat, tears and hardships. DeVos is the richest man in Michigan. Okay, he is the co-founder of Amway, is worth $5.1 Billion but that is the worth of all his factory assets and stocks traded. The rest of the MLM subscribers are not worth as much.
Four, in a day of 24 hours, you work for 8 hours whichever way and sleep for 8 hours. The remaining 8 hours is for relaxation, recreation, renewal or capacity-building. Not for selling a pipe-dream, somebody else's dream.
Five, repeat of point no.three. Do not run the risk of becoming a social outlaw - "Here comes the Amway man or woman". Get the boot or Re-boot your thinking about MLMs. Build businesses or Invest in businesses or become a careerist. Don't be a MLM evangelist.
Amway's CEO got arrested for financial irregularities. I am so glad this happened in my lifetime and not during my kid's retirement years. Amway is just one of the several MLM schemes that have got the better of many intelligent people. I know of most sober and savvy people working in companies like Google, Microsoft, SBI, SBH, ICICI Bank, HDFC Bank guard the Amway products and schemes like a fanatical zealot. I had always resisted the advances of such people and wondered what is it with lovely people who will turn mercenaries overnight and begin to talk like vacuum-cleaner salesmen. Daniel Pink has just written a book "Its Human to Sell." I beg to differ. It is not human to sell always, especially when the audience is captive and they are your best buddies, teachers, students, co-workers, pen pals, boss's wife or husband, twitter followers, facebook friends, landlords, tenants, co-travellers, gas suppliers, meter readers, you name it. I have gone through the embarrassments of being at the receiving end of atleast few of my relatives and friends and closer kin. I was devastated whenever I went through the experience, I couldn't say No because they are so close to me, I couldn't buy the products, and I wouldn't "recruit" more. The chain invariably broke with me and I could never, never again resume a normal conversation with any friend or a relative or an acquaintance who sold me vague concepts of "time", "annuity", "financial freedom" and other fuzzy financial management concepts steamrolled into emotional packages.
At the core of such schemes of Amway or any such MLM scheme lie three principles: 1. They play on your insecurities of life - inadequate money, passionless job and rising expenditure to match aspirational levels.
2. They indoctrinate you with fancy "recruiting" functions that have the feel of an Evangelist session where many newcomers like you are greeted by older "recruits" breaking out into ecstatic shouts and shrieks, even getting footloose from where they are standing, talking about "How I raised myself from failure to success in selling Amway/Tupperware/Japanlife/Saradha/MihiraMagic/Landmark/whatever, how everything in life is achievable and all prosperity is sitting in the bank balance and how you can too". You have to attend atleast five such functions before you get into the jingoism that is smeared into the experienced elite who are singing hosannahs now.
3. Then having got you, your "converted" zeal, you will have to get into a producing mode of recruiting other people into your network, or become a huge consumer or even a pro-sumer - a combination of both. This is where, very few make it. And those who make it, may have succeeded against all odds - of embarrassments, of ostracisation, of hard-selling their own friends and colleagues and relatives.
I have seen a few cycles of such principle-centered selling of these schemes and have been a victim of atleast one bad experience where I was conned into a Questnet MLM scheme in the hope of owning a rare coin, an insignia of a FIFA World Cup, which will become so rare that it will cost more than the gold and the silver blended into the coin. Finally, the Questnet scheme owner got arrested and the scheme was abandoned. Having paid Rs.45000 in those days for a puny coin which has a Mexico World Cup signage on it. I got a mere Rs.9000 when I gave it to my mother a few years back because there was less silver than gold and even less gold than the powder used as letters on the coin! For all the love of soccer, my savings became a succor for someone's greed. I never invested in any Ponzi scheme after that because I now firmly believe P.T.Barnum, America's greatest showman salesman who said: A sucker is born every minute.
Many years back, when I was a banker at BNP Paribas, I spotted atleast two such Ponzi schemes - Mihira Magic, which made stuff that are flying off the shelves just as Amway products today and a call-centre which operated like a Ponzi scheme, which I will not name. Mihira Magic also finally folded up but I tried to outstmart the owners by making every chain subscriber open a salary account with the bank. It won me lot of plaudits and helped me register a fine performance at work. But the tragedy struck elsewhere, BNP Paribas, the retail bank folded up in India before Mihira Magic pulled down the curtains many years later. Moral of the story here: One swallow doesn't make a summer for a bank.
At a basic level, at a very conceptual level, one can argue that all schemes are Ponzi Schemes, whether it is about products or product managers or product consumers - its all about recruitment. But the ones that stand out are usually having the flavor that marks all the others which eventually collapsed, sooner or later. Having been in sales and relationship-building for many years now, I like to conclude this autobiographical excursion on Amway-like schemes with a few strong learnings which I learnt after many fifty-hour work-weeks during my career.
One, whether you are an employee or a business owner, your biggest asset is your career (in case of a working professional) or your business (in case of an owner or an entrepreneur).
Two, Invest in your career or business most because they have the best payoffs. Do not fall for schemes which promise you the moon and the six pence - they cannot succeed like the way you can.
Three, Stop burning your inner and outer circle of contacts with bummer proposals and schemes which take you nowhere and what more, ostracise you forever. Build your skills, spend all your energies into making yourself relevant, employable and precious till your last day. There is no financial freedom that comes without blood, sweat, tears and hardships. DeVos is the richest man in Michigan. Okay, he is the co-founder of Amway, is worth $5.1 Billion but that is the worth of all his factory assets and stocks traded. The rest of the MLM subscribers are not worth as much.
Four, in a day of 24 hours, you work for 8 hours whichever way and sleep for 8 hours. The remaining 8 hours is for relaxation, recreation, renewal or capacity-building. Not for selling a pipe-dream, somebody else's dream.
Five, repeat of point no.three. Do not run the risk of becoming a social outlaw - "Here comes the Amway man or woman". Get the boot or Re-boot your thinking about MLMs. Build businesses or Invest in businesses or become a careerist. Don't be a MLM evangelist.
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