Get Rich Quick Bologna

  • Thread starter Thread starter Danoff
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Alternatively, you could turn to a life of crime.
 
danoff
How did you know? :)
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I won't answer that question unless you go to one of my seminars. Or at the very least, buy some detergent.

A neighbor suggested I go to a meeting, that they were serving free food. I figured, what the heck, I'm broke and hungry...it was about 10 years ago, and I brought a pen and paper to take notes. It's a good thing I can do 8th-grade math without a calculator.
 
I had a guy who works in another office in my building try to get me in on this.

He got me to this big seminar at a hotel by saying that they were looking for website designers and managers and it was an information and interview session. It sounded legit so I went.

He sits me in the front row after introducing me around to everyone and I had no quiet escape, so I sat there for an hour. The guy giving the presentation looked at me and asked a question, I answered sourly and he realized I knew. He quickly attempts to take the opportunity to convince me and asks what is wrong. I say the words pyramid scheme and he has his answer all ready. It is a trickle down plan. The profits spread to us all and the more we work the more we earn. My response was, "It trickles in a pyramid shape." He said that it was a branching trickle plan and if I talked to him afterwards, because he had to move on, he would explain it to me.

After the presentation was over and we were supposed to meet our sponsor to get answers to any questions I skirted along the wall avoiding the crowd and was out of there in roughly 5 seconds. My sponsor came outside just as I was shutting my car door. I caught him start to say my name, but missed the last of it. He was waving and saying something but as I was making my engine nearly redline I couldn't hear it. He called me every day for a week. Thank God for caller ID.

He saw me outside and didn't even bother doing more than saying, "Hey." I saw him talking to a co-worker about a week later and as soon as they were finished I called the co-worker over to warn him. The guy stood there staring at me. I wanted him to know that no pyramid schemes were getting played on anyone I knew.

No one else has been talked to since.


The idea was that I ran my own website and got others to run websites, so not only did I get money from people under me buying stuff, but from their website profits and my website profits as well. It also only went down 7 people, me counting as one. The rest of the profits went to the head guy.

They were selling an energy drink that I had never heard of before. Nevermind the pyramid scheme but they were trying to sell a product in a saturated market without putting it in stores or advertising. I saw bad idea all over that one.

Oh yeah, one of the hotel clerks said, "good choice," when he saw me speed walking to the door.
 
Emohawk
There's also a saturation point. Eventually all availible suckers will be consumed, and the ones on the bottom layer won't make anything.
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This is another problem with pyramid schemes. But I think the collapsing problem will happen first. The people invovled like to point out that the world birthrate is such that the population will supply lots of new people to the scheme all the time. I like to point out to them that people ARE the problem. The move tiers in the pyramid, the closer it becomes to collapsing.

There's another problem that makes things worse than the way I've described... overhead.

People in this pyramid aren't just giving each other money, they're buying products with their money. They spend a certain amount on a website buying "what they would normally buy", items like toothpaste, paper-towels, and dog food. You supposedly save money because you get a percentage back from what you spend, and you don't have to make a trip to the store. Plus, the prices are competetive with local grocery stores. Sure they might be just a tad higher, but you don't spend gas or time going to the store and you get a percentage from everything you spend.

There are a few problems with this.

1) You're going to the store ANYWAY because the website doesn't have everything you need to skip the trip. You you don't save time or gas.
2) The prices may be similar, but you don't get the same products. Typically you get knockoff products that they claim are "better than brandname" but are actually generic. So you're paying brand name prices for generic products.
3) You have to pay shipping.
4) The website has overhead for the products that they send you - which causes the pyramid to collapse earlier.

Let's go back to my 10% example.

Jon Spends 100 dollars/month at the online store every month.
The two people under him spend the same.
The 6 people under them spend the same (3 for one, 3 for the other).
The 12 people under them spend the same (2 from each above).

And everyone gets 10% back from what they spend and the people below them.

There are 21 people in this example spending 100/month, which is $2100 in income for the website. But the website had to actually supply them with products. Let's assume overhead for those products is 1/3 of the income for the store. So the profit for the online store is 2/3 of 2100 or $1400/month.

Now we have to pay the people their bonuses.
Jon gets 10 bucks back for what he spends and what everyone below him spends. So he gets $210/month.
The two people under him get $10 for themselves, $10 from the 3 people they recruited, and $10 from the 6 people those 3 recruited. That's $100 each.
The next tier gets $30 each, and the last teir gets $10.

Notice that we only have 4 levels and already the person at the top gets 21 times what the person at the bottom gets, and all he did was sign up 2 people. Also notice that he gets 7 times what the people on the second-to-last tier gets when he did the same amount of work.

Ok, so let's count up the payouts. We've got
$210
2x$100
6x$30
12x$10

So total payouts are $710. That's HALF of the online store's profit margin. If we expand our example to a standard 7-recruit-per-person pyramid for only 7 levels, assuming each person spends $100 and gets 10%, the company runs a negative profit margin (pays out more than it takes in).

So it doesn't take 9 levels before things get bad. The fact that the online store is shipping goods means there are fewer tiers in the pyramid before the scheme collapses. Only 7 levels in the example above!! And just think, only the top 5 of those 7 levels get more than $100/person in bonuses. But here's one more thing about the hypothetical I fleshed out here.

Almost exactly 98% of the people in the 7-recruit, 7 level pyramid are in the bottom 2 levels!! So good luck getting your $100/month back out of the system let alone making millions upon millions like they promise.


I've explained this to the people I know who have joined this system, and they don't listen. They're convinced that I'm missing something, that I don't know what I'm talking about. That they actually own a "business" and that they're working on their "business" when they try to get other people to join the pyramid. It's like a twilight episode I swear.
 
emad
Have them go to cockeyed.com and read through their user emails regarding Herbalife. It's scary what happens.

This article in particular is pretty interesting
http://cockeyed.com/workfromhome/herbalife_conversation.html
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That is interesting, funny and quite depressing all at the same time... that poor guy argued his points pretty calmly and always rationally, and time and time again was met with the kind of circular (and fundamentally) flawed logic that companies like GOS rely upon to dupe people like her out of their cash. Interesting come back at the end as well... and fair play to the guy for recognising that the woman had the guts to tell him he was right all along...
 
I have relatives on Herbalife. When I express my doubt that anyone can make money off of it, they point at the guy with the mansion and five cars.

Of course, what they fail to see is that he's the only one in the pyramid with a mansion and five cars. :rolleyes:
 
emad
Have them go to cockeyed.com and read through their user emails regarding Herbalife. It's scary what happens.

This article in particular is pretty interesting
http://cockeyed.com/workfromhome/herbalife_conversation.html
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Wow, that was a great link. I've been responding to all of the exact same BS arguments that that lady was using, but for a different "online business" than the one she got hooked on. Unbelievable ending!
 
I recently was invited to a Quixtar seminar under the premise it was an opportunity for an engineering internship. Boy was I surprised! First thing out of my mouth was pyramid scam and they went into detail of it being a trickle down system. Needless to say that I ignore his phone calls now.
 
r0gu3
I recently was invited to a Quixtar seminar under the premise it was an opportunity for an engineering internship. Boy was I surprised! First thing out of my mouth was pyramid scam and they went into detail of it being a trickle down system. Needless to say that I ignore his phone calls now.
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Was that the energy drink guys? It sounds familiar.
 
r0gu3
I recently was invited to a Quixtar seminar under the premise it was an opportunity for an engineering internship. Boy was I surprised! First thing out of my mouth was pyramid scam and they went into detail of it being a trickle down system. Needless to say that I ignore his phone calls now.
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Foolkiller
Was that the energy drink guys? It sounds familiar.
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Quixtar is what I was writing about. When I started this thread I didn't realize there were any other large pyramid schemes out there.

But this nonsense is part of what I'm talking about. They'll tell you whatever you want to hear about their company as long as they can get you in to make money off of you. This is... um.. an engineering internship.. yea... that's the ticket! You'll be... engineering.. yea! Engineering a pyramid! This is construction!

I like how they're instructed about how to explain to you that it isn't a pyramid scheme. You'd think that would be a red flag. When you say "this is a pyramid scheme" and they're like "oh no no no, here's why it isn't". That should be a red flag right there. It's like saying "we get this question all the time". They actually told me "a normal corperation is more of a pyramid than this is". Like that responds to the accusation. I like that reasoning. "Our system isn't a pyramid scheme because this other system is more of one". And they proceed to draw a pyramid instead of a blob as if the shape on the paper is what's important.
 
danoff
Quixtar is what I was writing about. When I started this thread I didn't realize there were any other large pyramid schemes out there.
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I think we have all dealt with the same company here. I remember writing the name Quick Star and having to correct it when the guy wrote it on the dry erase board.
 

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