Everything Is A Pyramid, But ...

"Everything is a pyramid - the church, corporations, the military ... "

Too often, though, that argument is used by inexperienced networkers to explain the MLM business model when someone asks, "Is this a pyramid?"  Using that answer always seems evasive to us.  It does not answer the real question being posed, which is, "Is this an ILLEGAL pyramid?"

In the church or corporate or military pyramid, there MUST be fewer people at the top.  You can only have one Pope or one Donald or one General, but you need many more Cardinals, upper management, and officers.  At the 'bottom', you need many many more priests or ministers, office employees, privates and foot soldiers.

The real question should be "Are all these people receiving fair pay for their efforts?"  If the going rate for a good CEO is $200000 per annum, and the company is paying that much, it's legitimate.  If upper management is receiving a fair $60000 per year and if an unskilled labourer is earning minimum wage, that's legitimate too.  

The pay has nothing to do with the pyramid structure.  It has to do with the skills the structure needs, and what it is willing to pay for them.  It also depends on what the provider is willing to accept.  No CEO will be working for $10 an hour and no company will pay a sweeper $200k!

An MLM company will have a pyramid structure simply because of the the way it grows.  There can be only one master distributor who recruits others to join the business.  A common scenario used in presentations is 1, 3, 9, 27, 81, etc.  It has to grow this way, but this is not what makes MLM legal or illegal.

It's whether each participant is receiving fair value for his/her money and efforts.  When you start your business and send $500 to the company, you should receive $500 worth of stuff - $500 in health products, or $500 in luggage or clothing, or $500 worth of travel, or a $500 phone plus airtime, or ... well, you get the picture.  If you receive fair value for your money, that's legitimate.

If you send $500 to the company, and you receive a $20 kit they call 'a business' plus permission to go out and find others to send $500 to the company for a $20 kit they call ... well, you get the idea.  That's NOT legitimate.

If your commissions are being paid out of that $500, you are in an illegal pyramid.

Your commissions should be paid from the difference between the retail and wholesale cost of the health products, clothing, luggage, travel, or phone.  Just like it works in a store downtown!

If the business you are in does not 'sit right' with you, ask yourself and the company some tough questions like these.  If you don't like the answers, get out now.  

All we have in this industry is our reputations, and we must not tarnish them in shady 'companies'.

To read Jerry DRhino Clark's definition of an illegal pyramid, click here