Welcome to the Money Mastermind Show. Let’s
Talk Money.
Have you ever been approached to take part
in a Multi-Level Marketing business, there’s
just way too many M’s and L’s there for
me to get my head around that. Anyway, they
tend to be presented in such a way that you’re
going to get riches and you’re going to
do quite well but is that really the case?
Tonight we have Brian of Lazymanandmoney.com
and he’s here to help us understand MLM’s.
Welcome to our show Brian.
Thanks for having me.
The members of the Money Mastermind Show are
Miranda Marquit of Planting Money Seeds, Peter
Andersen of Bible Money Matters, Kyle Prevost
of Youngandthrifty.ca and Tom Drake of the
Canadian Finance Blog and I am Glenn Craig
of Free from broke, your moderator tonight.
If you are watching live and you have any
questions, head over to our event page, there
is an app there where you can ask questions
of us and we’d be happy to answer them for
you.
Let’s start. MLM’s, Multi-level marketing
businesses. Brian, can you help our audience
out and understand what those really are,
to think we sort of maybe, every one of us
has probably heard of one or two of them but
maybe they didn’t understand what they were?
They’ve actually change over time. Many
people are familiar with Tupperware or Avon
or Mary Kay. Those names have been around
for a number of years, Amway is another common
MLM. They typically involve recruiting independent
sales people into a business where they sell
products and you make money by selling product
and also from something called your down line
which is the people you’ve recruited into
the system and their selling of products.
That’s kind of like a short explanation.
It gets to be very complicated very quickly.
That’s sort of a brief introduction. I think
most people kind of understand the idea of
Tupperware party or a Mary Kay party where
someone will host something and invite some
friends and family together
and show them some makeup or Tupperware products
and say, “Here’s what these products can
do for you and improve your life and you want
to buy them?”
Yeah, there’s other ones like candles and
maybe scrap booking and there’s probably
a ton of them out there right?
Yeah, pretty much for almost anything you
can think of except for things like electronics
or appliances and things that people would
only make big purchases once, you won’t
ﬁnd a car MLM because people aren’t going
to make a car buying decision on a party.
Not in your living room. That would be interesting
if it did happen that way. It sounds like,
I think we’ve all like you said heard of
Avon and Tupperware, it sounds pretty benign
but that’s always the case is it?
No, and it’s actually become — it’s
changed over time. There is a ruling in the
1970’s, 1979 when the FTC took Amway to
court saying that it was a pyramid scheme.
Essentially stating that the idea was that
Amway was recruiting more people into it,
into a business opportunity to sell Amway
products in which they themselves had to purchase
the products to be in the business opportunity
and there was really no selling going on to
other people. It was just join the opportunity
and buy the products and just keep on recruiting
other people to join the opportunity and buy
the products.
The person at the bottom ended up having no
one left to recruit because the whole system
was saturated and when they didn’t make
money, they quit and then the people on the
next level up were not making money from the
people below them quit and it becomes a very
unstable situation where the people at the
bottom of this pyramid or multi-level marketing
system, hierarchy or whatever you want to
call it, the people at the bottom, when they
don’t’ make money, they end up quitting
typically because there’s nothing in it
for them. If the money is dependent on recruiting
then most of the people will leave every year
and the people at the top have to keep on
recruiting more people in and creating a massive
churn rate.
In some cases it sounds like the real way
to get in to it is you have to buy in to it.
You’re stuck with a product one way or another?
Yes. I ﬁrst learned about this when someone
approached my wife to buy a $45 bottle of
juice called MonaVie and we’re all personal
ﬁnance bloggers here. Who’s going to spend
$45 for a bottle for 25 ounces of juice? That’s
just insane.
Unless it’s magic juice.
I’m sure it’s magic juice, it’s got
to be magic juice.
Juice ﬁlled with steroids or something,
yeah.
It better give me a magical life for $45 a
bottle.
That started to become the problem because
people realize they couldn’t sell that $45
bottle of juice as a bottle of juice unless
it did have the magical power of curing cancer
and autism and Alzheimer’s and any other
disease that you can think of.
See you called it Glen, it is magic juice.
I’m intrigued, where could I get this stuff?
From a snake, cause it’s called snake venom.
I take it that it doesn’t quite live up
to that sort of reputation then?
It does not. In fact, the inventor was brought
into court and he said that it was nothing
but ﬂavored water and that anything else
that people are saying was just not accurate.
He had a more colorful word for it but I’m
going to go with the PG version of it.
Is that something that themselves promoted
or just something that became a sort of myth
from outside or why would that build up that
reputation?
It’s kind of a combination of both. The
company did say that it was equal to eating
13 fruits and what they did is they took a
scientiﬁc way of ﬁguring out what a quantity
of a fruit, vitamins are in a fruit and then
kind of trying to extrapolate that. It was
a very misleading situation. It’s almost
like a game of telephone in high school where
someone will say something and then it gets
distorted as it goes down the line of distributors.
It just gets more and more distorted and when
someone says, “Oh well the president drinks
this,” that’s what it ends up with. Originally
it was the president of like some small club
of four people but in the end it’s the president
of the United States.
I was going to say, it seems like there are
all these claims that maybe the company didn’t
do a lot to ﬁght those claims then or to
say that that wasn’t the case I guess?
Yeah, they kind of draw a legal line between
what they are as a company and then say, we
have these independent distributors that have
their own companies that are independent entities.
Almost sometimes like how Uber says that Uber
makes the app but everybody else driving cars
are independent drivers that do their own
thing.
They can kind of separate and legally play
this game of we can incentivize the people
to make money from them but we in some ways
have some legal protection and don’t have
to pay these independent distributors beneﬁts
or minimum wage or anything like that. It’s
really a great business model for the companies
themselves.
I was just going to say, “We’re not saying
that it’s curing cancer, that’s just a
claim the distributor is making.”
It seems like there’s a strong incentive
for somebody who has, maybe they have a case
of this stuff sitting in their basement to
do whatever they can to kind of push it off
to other people.
I was gonna say there’s a built in incentive
for these companies and the executives and
people that are high up in this companies
to not squash those things because they’re
the ones that are really making all the money,
isn’t that part of the problem that these
people at the bottom, they’re all buying
cases of this stuff so they can resell it
to their friends and other people and then
they’re getting stuck with it when people
don’t want to buy $45 bottle of juice.
That’s a lot of it but one thing that happened
with MonaVie is that they also had this thing
that in order to make money in the commission
structure, you had to buy around $200 worth
of juice a month. You had to buy four bottles
of juice yourself and you can drink about
one bottle a week. In theory, you didn’t
have to sell any juice at all, you just had
to buy your own juice and drink it yourself
and keep on recruiting other people. You’d
making money from the people down below that
had been recruited…
To buy their own juice.
…to buy their own juice that they needed
to qualify to make commissions or to make
commissions on those lower sales.
That’s magical right there.
you didn’t just sell any product at all.
You could just buy it, drink it yourself and
then tell other people there’s this great
business opportunity where you buy this juice
and drink it yourself.
What point does this all become illegal and
it became a pyramid scheme versus an actual
legal MLM that is not going to get pursued
by the government?
That’s an interesting line because my mom
did Avon when I was growing up. She sold to
other people and she liked doing it because
she got the discount on the Avon products.
So she got to buy it at a discount but she
also sold to other people and like Avon is
perfectly legit, right?
Right?
Don’t crush her childhood Brian.
Don’t crush my childhood memories.
That’s actually a really interesting point
because back in the 70’s as I said or even
80’s and 90’s. That was sort of a common
thing that happened and multi-level marketing
and for the most part, that’s okay. Then
companies realize that they could do the kind
of things that MonaVie was doing and not get
persecuted for it by the FTC. It’s a lot
easier to recruit people into a business opportunity
than it is to sell these products.
Actually sell something?
Yeah, that they actually sell things. You
can sell it on the side if you wanted to,
no one’s going to stop you if you had this
bottle of juice and someone says, “Yeah,
I want to pay for your $45 for it.” Yeah.
You could do both and even Avon has gone more
towards the recruiting system over time. They
started to go down that line and recently
a couple of years ago, they said, “We’re
disassociating ourselves with the main trade
group that covers most multi-level marketing
companies because we think they look like
pyramid schemes.” And Tupperware said the
same thing. Tupperware joined in and said,
“We want no part of this new age of what’s
going on in MLM.”
Yeah, I just remember like my mom was like,
she didn’t do a whole lot to market the
stuff, it was pretty much just around the
neighborhood, she’s just like, “Hey ladies
around the neighborhood, come get some stuff
from Avon,” but she always knew that if
she really put the time in and really did
her own marketing and really kind of did a
little bit more then yeah, she could actually
sell more stuff.
So I think too, it depends on, I like what
you were talking about, what’s the main
goal here? I mean is there a product that
people can actually afford to buy that they
can buy or do you always had to be recruiting
somebody?
I feel like social media sort of jump started
or I don’t know, exponentially grown this
whole thing. I don’t know. My Facebook feed
is ﬁlled up with so much all natural crap.
There’s nothing natural left in the world
because it’s being sold to me on Facebook
and they
want me to help them sell it and it’s doing
great and here’s the before and after picture.
I have good friends that are trapped in this
crap.
I lived in Utah for nine years. Utah is literally
the MLM capital of the world.
Oh eally?
Right Brian?
Yes, at 
least 80% of them are in Utah.
Is that just favorable court law treatment
Brian or why is that?
Why don’t I tell you about it later, not
on this show?
Okay.
Where I can really get myself in trouble.
I’d like to hear more about this myself.
Law treatment.
This is the episode where we learn why Miranda
needs to keep a sword on her wall.
That’s right! “They’re coming for me.
They’re coming for me.”
Does anyone else notice this though, the insanely
— start your own business like a lot of
people who are the partner and relationship
that stays at home maybe isn’t the bread
winner? I’ve seen just an explosion of these
things.
Facebook parties, they’re everywhere. Come
to my Facebook party.
It seems like it’s just made it easier to
try to recruit people, you don’t have to
go door to door and try to ﬁnd a personal
network anymore.
What a great deal for these MLM. You want
social proof, you’ve got all these people
coming, you’re a trusted source and you’re
saying, “Here’s my product,” like it
doesn’t get any better than that from a
business marketing perspective.
Yeah. Just to be clear, what we’re talking
about here as far as the pyramid scheme aspect
of it is not so much, I think you said it’s
not so much selling the product but that when
you could recruit more people, you’re getting
a piece of kind of their action right? You’re
getting a commission from them and then when
they recruit people, you’re still getting
sort of a piece of it. If you build up enough
people under you, you really almost don’t
even have to do anything anymore, is that
pretty correct?
Yeah. There’s a little bit more to it too,
we talked about Avon a little bit but someone
else have been done of Mary Kay which is pretty
much a similar thing, it’s just a different
makeup company from a guy’s point of view,
I’m sure they’re probably very different
but.
Is that the one that’s pink?
Yes, the pink Cadillac’s and things like
that. It turns out, some 250,000 people, women
churn out of there every year which means
250,000 quit and 250,000 new ones come in.
They don’t ever grow, it’s just the bottom
of the pyramid shifts when the people lose
money and the people at the top are promoting,
“Here’s this great business opportunity,
I made so much last year. You can do this
too.
People on the bottom are leaving, the new
people coming in, they don’t see that, they
don’t have the education or the resource
to see that that’s what’s really going
on, that this churn is going on at Mary Kay
and hoppers magazine did a great expose on
them a couple of years back.
Yeah, I read that.
Wow, I thought I was the only one.
No, I did. Because I know people who do Mary
Kay.
What they found out, or what the journalist
realized is that the company makes money from
distributors more than they do, distributors
make money from their business. Mary Kay,
at least according to this journalist, Mary
Kay focused on selling products to distributors,
telling them that they had to have every product
in the line and then they could discontinue
some products and create new products that
distributors had to buy more of to have the
current line available and then it was just
like a situation where distributors are the
ones that are losing money to Mary Kay itself
and not making the money themselves.
They’re just sort of pawns to the bigger
scheme.
I was reading actually somewhere online today
that one of these large MLM companies, they
acknowledge that only about I think it was
like 15 to 20% of their sales were made to
non-distributors. Just think about that number.
85% of their sales are to their distributors.
It’s huge.
That’s really interesting because if it’s
not 70%, the FTC says that is a pyramid scheme.
That’s one of the guidelines that they have
to at least be, they have to have 70% to non-distributors
or else it really falls into the guideline
of being a pyramid scheme. They’re almost
they’re pyramid scheme.
That may be one of the ones that went out
of business. I don’t know.
Maybe it was MonaVie.
Just to clarify. What’s the difference between
it being an MLM or a Pyramid scheme or whatever
and just being a wholesaler?
That’s kind of the difﬁcult thing. It’s
a kind of a sliding scale where there’s
no bright line deﬁnition. The FTC has said
that if you make more of your money from your
down line, from
the recruitment than you do versus sales then
it’s a pyramid scheme. You should make more
money selling the product to people outside
the company than you do from your down line.
Based on that deﬁnition, every multi-level
marketing company I’ve ever seen is really
running a pyramid scheme because you can look
at the people at the top and there’s a person
at the top who is making two or million dollars
a year and they’re not selling an equivalent
amount of product to people outside the scheme.
They’re just getting all the point value
from the people, from the whole organization
that they have built and getting paid off
of that.
As we were talking about it, I was also thinking,
how is that different from maybe a franchise
but based on what you’re saying is, a franchise
would be, you buy into something but you’re
really just selling the product and even if
you’re building more franchises, you’re
still selling the product to a consumer, your
job is not to get other people to buy franchises.
Yeah, there’s no recruiting in franchises.
A lot of people say, “Oh yeah, multi-level
marketing is just like a franchise.” Well,
there’s no recruiting component and it’s
100% sales.
When you all walk into a McDonalds, nobody’s
trying to tell you to buy McDonalds, you’re
just getting their burger.
Yes, exactly.
That would be awesome actually. Would you
like fries with your new building?
Yeah, instead of it being the dollar deal
it’s like the $250 million deal.
That brings up another point that if they
were to do that, how many McDonalds are you
going to have at one city before it’s saturated?
That’s the good thing with franchises, they
limit the competition to match the supply
and demand. Multilevel marketing, there’s
now match between supply and demand, they
will create as many sellers as anyone wants
to sign up even if there’s no demand for
the product. You could have 12 million people
selling MonaVie juice and no one interested
in buying it.
We can have one heck of a lot of people selling
plants and workout plans and Facebook feed.
That’s the thing though, I’ve even bought
some of the stuff to help friends of mine,
I buy Scentsy from people that sell Scentsy.
I went ahead and bought the 21 day ﬁx. I
did that. Brian is just like, I’m so ashamed.
I’m ashamed for you.
No, that was just an itch.
I’ve done some of that stuff that my friends
are selling because it’s there and you’re
just like, help them out, we’re in this
personal ﬁnance where we’re like yeah,
help him out it’s like an afﬁliate sale,
right?
I was going to say, is an afﬁliate sale?
That’s a legitimate question, is it like
an afﬁliate sale? That’s one of the things
I say about multilevel marketing is that it’s
not a single level afﬁliate sale which is
clearly not a pyramid scheme, it’s multilevel
part of it that becomes the pyramid. People
say, “Well multilevel marketing is just
a way to make money using word of mouth. I
say, why not just go with an afﬁliate commission
program because that clearly works and it’s
clearly legal and no one’s going to confuse
it with the pyramid scheme. So you can do
something that’s clearly legitimate but
yet you’re going to choose to kind of go
swimming in murky legal waters.
What’s the angle right? Is the angle to
say that again, a product to a consumer’s
hands or is the end goal to get more people
to sign up more people underneath you?
Yeah.
We have a question from a long time listener
it seems. Mr. Tom Drake. Tom could make our
show tonight, he was a little under the weather
but he’s asking, what are some other MLM’s
that might be somewhat suspicious besides
MonaVie that people might want to be cautious
of?
Frankly, pretty much all of them.
Even like the Avon’s and Tupperware’s
and such?
Okay, the ones that are — there are some
that are called party plans and that’s sort
of the view of the Tupperware that we’re
just having, we’re inviting friends and
family to buy some kind of microwave dish
or something like that. That’s more or less
legitimate. If it’s going to be a party
planned multilevel marketing but those are
starting to become fewer and farther in between
and I don’t typically look into those that
much, not because I’m trying to avoid them
or anything. What really catches my attention
is when someone says, “Take this pill or
this juice because it’s going to cure your
cancer.” That to me is really the dangerous
ones and I write about those quite a bit.
I started to get into some of the wrinkle
cream ones.
Yes, you did one in Rodan and Fields.
Yes. Another personal ﬁnance blogger, Jenny
Penny Pincher had written an article about
Rodan and Fields and one of my readers was
another personal ﬁnance blogger sent me
an email and said, “Hey, isn’t Rodan and
Fields a multilevel marketing company? Have
you heard about them?” And so I went through
the claims that was on that personal ﬁnance
blog because I don’t see personal ﬁnance
bloggers usually promoting multilevel marketing.
I did some more research on it, I spent like
a week coming up with stuff on Rodan and Fields.
There was a prominent blog out there that’s
now been deleted and a prominent Reddit threat
that’s now been the person that had written
most of the stuff, it was is it? Like IMI
Reddit or ask me anything?
Oh AMA, yeah.
Yeah, AMA. The person that was doing the AMA
deleted all her stuff. That’s one of the
things that happens when you start to become
a blogger against this multilevel marketing
companies is you get legal threats and things
of that nature that force you to delete things
when you may not want to because their lawyers
have a lot of money.
Well and that happened to you though too right?
You’ve got lawsuits up the wazoo.
Well, I’ve been threatened about eight times
and I had one follow through with it and I’ve
got another one which is not related to multilevel
marketing oddly. Yeah, I guess in eight threats,
one legitimate one or one following through
with the lawsuit isn’t so bad.
But a lawsuit in itself, that’s pretty scary
and you have to have some either really good
legal friends or some real cash in order to
really ﬁght that off wouldn’t you?
I got lucky. I found a lawyer who was willing
to take it on a basis it’s called an antislap,
which basically says that this is a nuisance
lawsuit that this company is trying to silence
your freedom of speech and he took it on that
basis. The idea is that if you can prove that
then he gets his court fees which is pretty
good for a lawyer to get all those fees but
he’s taking a risk that if he can’t prove
it, he gets nothing and he just waste lots
of his time.
That’s their intimidation factor right there
too. That most people don’t have that access
to a lawyer that can do that. Rather than
try to go in to court and ﬁght that, they
just roll over and delete whatever they’ve
been requested to delete.
I think it says something though that you’ve
found a lawyer who thinks that your position
is one of integrity and that you’re out
there ﬁghting the good ﬁght and he’s
willing to put it on the line, it’s nice.
Yes, it was very nice.
So I guess that goes back to the original
question, there really aren’t in your opinion
many MLM’s that are worthwhile for people
to go into?
Yeah, it kind of goes back to what I was saying
earlier that if there was a good MLM, I think
it wouldn’t be an MLM. It wouldn’t try
to play in the world of pyramid schemes, they
would play in the world of just single level
commissions and it would be like an Amazon
afﬁliate program or Commission Junction
afﬁliate program which I’m sure, us as
bloggers are familiar
with them. I don’t know if your viewers
are but there’s a way of just doing commission
sales that’s legitimate that doesn’t play
in the world of pyramid schemes.
That’s still something closer to being a
wholesaler than it is to being an MLM type
of deal. Because the goal is you’re still
in touch with the consumer about the product,
it’s not so much about you including somebody
else to sell it.
Yes, that’s what I’m saying is that that’s
a good relationship, that such companies,
if you’re going to try to sell a product,
that should be the relationship that you go
with and not the multi-level marketing company
where, I mean if you even think about it,
you’re incentivizing people who are seven
steps ahead, who have never met the person
who is making the sale at the bottom. And
the person with seven steps all the way up
the line is getting such a huge amount of
the money. It’s just crazy that that person
way up there is getting all the money when
they’re not even really involved in making
the sale in any way, any tangible way.
Yeah, that’s pretty interesting. We also
have a comment here, Lauren Greutman of Iamthatlady.com
is telling us that she used to drive a pink
Cadillac with Mary Kay, which is interesting
but she’s also saying that she thinks that
all MLM’s are terrible. Their ﬁrst customer’s
the consult, which means the consultant always
loses. I wish we could just grab her and put
her on the show right now and discuss that
with her.
It’s interesting, there was a time when,
I don’t know if this counts as MLM but I
was considering to going to stock brokering
right? It was one person who brought me in
and it was, I had to work for him and if I
got him enough leads then the company would
take me on, the brokerage would take me on
and then if I did enough sales then I’d
be able to build up my team and then if they
got enough leads, they could build up a team.
It almost sounds like the same type of a pyramid
deal but this was like a stock brokerage.
That’s amazing.
Was there like free cocaine involved in this
too?
Were they like in a boiler room?
I didn’t get that far. It didn’t smell
right to me off that ﬁrst day so I just
kind of ran away from it at that point. That
made me think, we can’t even trust the stocks
that are being sold to us because all these
strange incentivized reasons that a broker
might try to call you and try to sell it to
you.
Absolutely.
It’s one thing to buy some Tupperware but
it’s pretty scary when we have our market
maybe even running on some small portion of
this. Are there ways that people legitimately
can do well without being slimy, it doesn’t
seem like that’s the case is it?
I don’t’ see how, simply because the most
multilevel marketing things that exist today
to make the big money does come from recruiting.
One can still do the Avon thing like Miranda’s
mother did and that sort of party business,
that’s going to be reliant on how many family
and friends you have and being able to make
repeat sales to those people and maybe I’m
just showing my lack of a social circle here
but I’m not sure if I’m going to make
a full income making $5 here and there on
a cream or a Tupperware dish or makeup to
friends and family like that.
So why do people do it? I think everybody
here maybe know somebody or know somebody
that knows someone that has done this in some
way, shape or form. Somebody’s doing decent
enough on it?
Well there’s always the people at the top
that are doing decent enough on it. They’re
live examples of, “Hey, I made a million
dollars last year with this,” and they show
the big ﬂashy checks and all that sort of
things, pink Cadillac’s and such.
Lauren’s on.
Hello.
That’s the magic of internet, we do have
Lauren here to give an opinion on her experiences.
On the pink Cadillac.
Yeah, so sorry I don’t have headphones,
you guys just caught me while I’m like sitting
in my living room. I have to tell Mark to
turn off — yeah Mark, you have to turn off
the computer now. Mark is like watching a
show next to me.
Why isn’t he watching our show?
No he’s not, he’s watching some like,
I don’t even know, some tech show or something,
I don’t know. Yeah, so I drove a pink Cadillac
with Mary Kay, that’s like not a lot of
people know that about me.
What does that mean to drive the pink Cadillac
exactly? That sounds like a kind of strange
euphemism.
Yeah, it’s a real pink car that you drive
but this is the catch. So Mary Kay is very
elite. If you become a pink Cadillac driver,
you’re in the top 2% of the company so they
say. It’s really important, everybody wants
to be a pink Cadillac driver and I actually
won my Cadillac in 10 months from when I started
to when I got the car.
That’s yours to keep or you just drive it
around?
No, this is the thing that people don’t
tell you. You think it’s all cool, like,
“Oh you won a car,” but it’s actually
a company lease and if you don’t make a
certain amount of production, you have to
pay a ridiculous amount of money to keep that
status. For the car, for me, if I didn’t
make $100,000 in sales, me and my team within
a six month period, I had to start paying
$900 a month to drive the car.
Oh wow.
That’s like.
Basically you have to pay for the lease?
The lease is in your name right?
The lease is in your name, right. If you default
on it, you’re defaulting and you’re hurting
your credit report.
You’re going through all this to get a lease
for a pink Cadillac.
Right.
Where you could have just picked any car you
wanted and leased it.
That’s the thing though.
Or just paint your own car pink. To hell with
it.
I know right? It’s a pink Cadillac. Sorry,
I’m trying to ﬁnd headphones, we found
some, okay, good.
You don’t really win that then? It’s just
some sort of like, if you can maintain a certain
level of sales, they’ll kind of cover it
for you for a while?
Exactly. You don’t really win anything anyway
because if you win a prize, they send you
a 1099, you have to claim it on your taxes.
It sounds like they’re basically selling
you on this big dream of this lifestyle and
you’re going to be wealthy and driving a
Cadillac when reality, it’s not so simple.
Exactly, is that better now? Can you hear
me better?
It’s perfect though, it really is the perfect
sort of elite symbolism to drive. I’m assuming,
I’m going out on a limb here and seeing
it’s a lot of highly self-motivated, A type
young women who are selling Mary Kay and it’s
like the perfect carrot to dangle, everyone
recognize you as being the best.
Yeah. They’re very careful. All MLM’s
kind of train their people on how to prey
on certain personality types. You know that
one person is really motivated by prizes,
then you dangle that carrot in front of her
face and then you know that one person’s
really motivated by security for their family
so then you dangle the security. You’re
trained very early on in all of this MLM’s
to read people, make them take personality
tests and then use that against them to get
them to buy more products.
To be fair, is this something that comes straight
from the company or is this something from
the person who is maybe the seller above you?
I can only speak for Mary Kay because that’s
the one that I was in. A lot of the training
for that thing came from the company. That
was coming straight from — I went to Texas
when I became a director in Mary Kay because
you have to be a director. I recruited like
over 300 women in a 10 month period, you have
to be a director so they send you out to Texas
and you go through everything, there’s a
million pink Cadillac’s in Dallas Texas.
They teach you everything and that was one
of the things that they teach you. Learn your
people, learn how to read people and then
help them in a way that they need to be helped.
Not necessarily saying dangle the carrot in
front of their face but help them in the way
that they want to be helped and essentially
meaning…
How do you feel about yourself now Lauren?
I feel great that I quit and I stood up for
myself. This was, goodness almost nine years
ago. I was young, I was 24 when I joined and
I got the pink Cadillac when I was 25. I was
also one of the youngest people to win it
in the company but I actually, I have a whole
chapter in my book that’s coming out next
year about the night that I won my pink Cadillac
and all that it
took to win it and how stressful it was and
how crazy it was and I have since gone back
and apologized to everybody that I recruited
and they’re all friends now.
It sounds like this 12 step program.
It is.
Part of what makes a lot of these schemes
really that’s so awful is because you’re
basically taking advantage of a lot of personal
relationships that you have with other people
and you’re trying to basically monetize
people in some ways.
Yeah but at the same time, you don’t realize
that you’re being monetized.
When this is done, be it MonaVie, Avon or
whatever, I’m willing to bet that the people
who were being maybe recruited, and Lauren
you can certain speak to this, is it done
with the expectation that yes, you’re going
to be a person who is going to need to recruit
this many people? Or do you go into a thinking,
maybe I’m just going to sell some products
to my friends but then you start doing that
and all of a sudden you’re down the rabbit
hole and all these different expectations
come onto you?
Well Mary Kay, when you sign up with them,
the ﬁrst thing that they hit you with is
that you should buy inventory. The inventory
packages start at $600 and they go all the
way up to $4,800 and there’s a lot of training
that goes into getting people to buy those
higher level packages. For me, this is one
of my beneﬁts and my downfalls is I’m
an all or nothing person. So I’m like, “Hey,
sign me up for the $3,600 package. I’ll
sell it, no big deal.” So all of a sudden
I start at $3,600 in debt and now I have to
sell it and I have to recruit to pay that
money back.
That’s kind of what’s my experience and
watching a lot of other people kind of go
through the same thing was, I watched so many
people do the same exact thing that they have
all these products in their house and now
they have to sell it and now they have to
recruit people because they can’t pay the
bill to the credit card company and then you
get just wrapped up in the whole mentality
of it.
It almost sounds like you maybe get desperate
and get stuck there and now you’re in this
vicious cycle.
Brian, do a lot of people come to you as like
an authority or someone who is maybe visible
on the Internet about this stuff? Do you hear
a lot of similar stories to that one?
They do and I hear so many stories like that.
I call it the multilevel marketing quicksand
where you’re falling down and the only way
to get out is to grab on to 10 other people
and bring them in with you. And then those
10 other people have to grab on to 10 other
people and bring them down which is kind of
what Lauren was just describing there where
you need to recruit that $3,600 that you spent,
so you need to recruit other people and then
they do the same thing and then it’s just
this cycle that keeps on spawning out through
everything and the money just goes in to the
people at the top that get the majority of
all the recruiting. And Mary Kay, a multilevel
marketing company itself from all those sales,
people saying, “I’ll put in $3,600 to
try to make this business work.”
What are some of the reasons Brian that you
see people getting into it? Why do people,
what are some of those reasons that people
really start getting into it.
I’d say desperation. They lose their job
sometimes so they’re looking for any kind
of income opportunity which only exasperates
the problem worse or the situation worse sometimes.
Sometimes they just don’t have the education,
it sounds like it’s a good idea, they’re
maybe not the brightest bulb on the Christmas
tree.
Present company excluded.
Other than Lauren of course.
Sometimes they’re young. A lot of the times
they don’t have experience. Yeah, don’t
have life experience. Nine years ago, the
Internet didn’t quite have all the information.
You couldn’t ﬁnd some of the things that
you can ﬁnd now on multilevel marketing,
if you were doing a Google search for example
or some other stuff.
There’s a lot of reasons why people do it
and sometimes they’re kind of being lied
to that they’re told that a lot of you is
the next cancer cure and they think, “I
want to get in on this next cancer cure. I
want a MonaVie juice because if I get invited
to sell the cure for cancer, that’s a goldmine,
I want to get in on that.”
The other thing I wanted to ask either one
of you or whatever about, are these conferences.
A lot of these things have conferences right?
You’re supposed to go in solidarity and
rah, rah, rah, right? How does that kind of
feed in to this desire to keep going and I
guess, I assume that they’re not paying
for you to go to the conference, I assume
you have to pay your own way?
Yeah, it’s very expensive. These women are
spending $2,000 to go to Texas to get ball
gowns and wear pink boas and for the chance
to run across the stage, to say that they’ve
won a car. Everybody wants their recruits
to go to conference because then they come
home and they’re motivated. It’s the same
as us going to a blogging event, we come home,
we have a list to do right? We’re excited,
we’ve gotten new ideas. It’s a really
similar thing to any kind of conference except
it’s just you go homer and you do your MLM
instead of something else.
I’d say there’s a lot more pep rally to
it. There seems to be a lot more motivational
aspect to it of, “You can do it, you could
be great.” Not that there isn’t that some
of the blogging conferences but it seems to
be a little bit more of a single company is
sponsoring this and they’re really, they’re
pushing their distributors because they are
selling their product.
If I go to FinCon, Phill Taylor runs FinCon,
he’s not going to, he has no incentive to
really push me to be motivated to do all the
sales stuff. It’s a little bit different
in that aspect and I don’t wear a ball gown
to FinCon, I wear a money pants.
I could vouch for that. I haven’t seen that.
It cost a lot less though. If you’re going
to spend some money, spend money and come
to Fin Con and learn how money works, right?
It’s a funny thing though because didn’t
the two of them coincide one year?
Yeah, that was amazing in Saint Louis?
I would have had a ﬁeld day with that.
The company that was suing me was actually
having their conference in Saint Louis and
so I had to walk around with my badge hidden
so that no one could see that the man was
there in Saint Louis at the same time. I got
on an elevator at my hotel and there were
three other people from that company in the
elevator there. They all knew me, they didn’t
know me because they didn’t have my picture
but they all knew who Lazy-man was who had
written about the company because the company
had put out some, “We’re suing Lazy-man
for his article,” and I was their worst
enemy for what I exposed.
That was interesting because I remember going
to that conference and I was on the train
and there was an older couple who came up
to me and they started talking to me and they
were very friendly and they told me what they
were there for and I didn’t know what the
name of this company was, I think the parent
company and asked me what I was there for
and I said, “Oh I’m here for a personal
ﬁnance blog or a conference.” And they
kind of gave me a strange look and it wasn’t
until I spoke to you a little bit later that
I can understand where that was coming from.
Public enemy number one.
Lauren, what was it that got you recruited
into it and what was it that ﬁnally got
you out of it?
Well, I got in to it, I was pregnant with
my ﬁrst child and I was young.
Recruiting right off the bat.
When I got recruited, I was young, I wanted
free makeup, I love makeup and the lady that
I met was really fun and she — I mean the
whole thing was like, “Yeah, just get the
starter kit because you get a really good
deal. You get $350 the product for a hundred.”
I’m sold. Sure. I did that and then I got
all wrapped up in the whole you know, I loved
recognition and that was one of my things
that I loved recognition and they were giving
that to me. So I thought, “Oh I’ll just
continue to do it and have fun and I’m a
competitive person.”
That was another thing, to see that this person
was doing that, I can do that, I can totally
do that. Then 
I was in it for two years to rule, I quit,
I won my Cadillac, I was in so much debt because
one of the things…
Okay, wait, I’m sorry. You won the Cadillac,
you’re like one of the elite but you’re
still in debt?
Oh yeah.
Okay, go on.
So I went to director training in Dallas as
one of the brand new directors, the future
of the company. The girl that I was staying
with was in $40,000 worth of debt in the past
six months. They won’t tell you that this
is what happens and I fully kind of, I did
a podcast on this on my podcast a few weeks
ago where I talked about this in detail. I’m
kind of waiting for Mary Kay to sue me, we’ll
see what happens with that.
Let me know, I can help you that if they do.
A lot of these women, they get to a point
where you have, you need 30 women to qualify
for a director and let’s say you have 19
and you have a month left. I only need 11
people. All I have to do is sign 11 people
up and put orders under them and then I get
my director status and then I have all these
people to work under me and I can keep my
status.
A lot of these people are fronting tens of
thousands of dollars to get to this status
and this happens all the time. It wasn’t
me, it was encouraged by my higher up, it
was encouraged by the other directors that
I was in director training with and this is
what happens all the time.
People are buying their way into this positions
and I was in, I mean I had my own spending
issues on top of it, which is why got into
so much debt.
That’s another show.
That’s whole other podcast we can get into.
We were drowning in debt, we had $40,000 in
debt, we couldn’t afford our bills and I
remember praying one day and I just said,
you know what? I’m going to go out and they
say if you’re struggling, do a 10 class
week where you book 10 skin care classes and
go out and do them. I did that and I worked
my tail off and I said, “Okay god, if I’m
supposed to do this, you tell me? I’m going
to do the work,” and I lost a thousand dollars
that week by giving away product and not selling
anything.
It sounds like at least you had that realization.
There was the answer right there and I packed
my stuff off, I shipped it back to the company,
all my inventory that I had, I put on a suit
and I went out and got a waitressing job so
that we could pay our bills. That’s kind
of what happened, I just had a realization.
Mark was telling me, Lauren, hello, you’re
paying for the Cadillac? At that point I was
paying that $900 a month for the Cadillac.
I think I only did it one month and he was
like, “Lauren, you’re quitting, we’re
done, we’re not doing this, this is ridiculous,”
but I was so in the mentality that I couldn’t
see it. What?
“I’m on the verge.”
When they came to tow my pink Cadillac away,
I was so embarrassed that I hid in my bedroom
peeking through the window because I made
Mark go and take the keys to the guy because
the pink Cadillac director whose car got repo’d
and in the nice neighborhood. It was the talk
of the town.
Hope is a great motivator isn’t it right?
Or maybe desperation.
Or a cult.
Or that. Yeah, it’s an embarrassing story
but.
I’m glad that you’re telling it and we’re
getting Brian’s side of it also because
I think a lot of people, even in the beginning
in the show, I had said that some of these
companies they sound so benign and you think,”
I’m just going to get in to this, I’ll
sell to some family and friends, it will be
maybe a couple of extra bucks but you know
what, like I said, maybe I’ll get some discount
on makeup.”
Then it turns into this giant behemoth where
maybe all of a sudden you’re in debt or
you have all this obligations that really
don’t ﬁt in to what you thought you were
getting into. I think that’s the scary thing
that people are maybe being sold this hope
and this giant carrot that they’re never
going to get to.
I’d like to ask Lauren a question if I could.
Absolutely.
Lauren, did you see a lot of churn in your
group? The people leaving Mary Kay underneath
and your need to recruit people to kind of
keep the same level in order to maintain the
car or in order to maintain your rank, just
keep on recruiting people to replace the ones
that had quit?
Yeah, you had to constantly do that. For every
three people or ﬁve people you brought in,
one might stay. I said I had recruited over
300 people but probably only 30 of those people
were actually doing anything. Yeah, it was
a big challenge because you deplete your friendships,
you deplete your family, nobody wants to come
near you when you’re trying to sell to them
all the time and I think I did a pretty good
job not doing that because I was real, like
I didn’t want to.
They even teach you crazy things like how
to go up to strangers in the mall like scripts
to use to get them to come to your events.
I’m telling you, I’ve got all the… it’s
crazy what they teach you. It’s called warm
chattering. You go out and warm chatter. That
means you go up to somebody at the mall.
This reminds me and I had completely forgotten
about this but there was one time when where
somebody was trying to recruit me and I don’t
know which company. I don’t want to misuse
Amway but it was something along those lines
if it wasn’t that. I remember my parents
saying, “Hey, can you come over one day?
These people have this offer, we just want
to get your opinion on it and this person
in the living room and really amiable, just
talking about all these great opportunities,”
and then he builds in to that yeah, I buy
all this great stuff. It was a little bit
like that scene in Go, that movie, without
the nakedness.
Next thing I know, I’m thinking on my head,
you’re trying to get me to sell me this
stuff, you’re not trying to just sell me
this stuff and that’s when I was like, “Woah,
woah, this is weird.” Thankfully I ran away
from that too.
You’re making me uncomfortable.
It did. Thankfully I was able to recognize
all that but I’m sure that that’s a technique
that does recruit a lot of people. That’s
scary. We’re coming up to our hour here.
I think we got a lot of great information
here today because I think a lot of people,
they don’t know enough about these types
of companies and it sounds like it goes from
the very obscure, very sketchy if it sounds
too good to be true, you really need to run
away to the more benign sounding where you’re
going to get sucked in to without even realizing
it.
I think people need to know a lot more about
that and I think we could probably keep going
and keep providing people information but
there’s only so much time. Thank you both
Brian and Lauren for coming on and helping
inform our audience. Lauren, you’re a bit
of a surprise guest, so tell everybody a little
bit about Iamthatlady.com?
Okay, you’ve heard my story about getting
into debt but we had to get really resourceful
with how we got out of debt, I consider myself
a recovering spender and I have a book coming
out about that in the fall of next year. I
teach people how to enjoy life on a budget
and get out of debt as being a recovering
spender and all that I went thorough to change
my lifestyle from being a spending addict
to being somebody who can live ﬁnancially,
with ﬁnancial
freedom. So yeah, my husband Mark and I work
from home together and we have four kids and
yeah, it’s fun. That’s what we do.
Alright, go check that out and I’m sure
if you had questions about Mary Kay you could
probably shoot her an email or a comment.
Don’t send me death threats if you are still
in it.
No, I’m saying more for people who might
have thought about joining it. Brian, tell
us a little bit about what you do and where
people can ﬁnd out more information about
you online?
I’m sorry, I was losing you a little bit
there if you don’t mind repeating that.
Repeat.
Technology there. Brian, his site is Lazymanandmoney.com
and Brian has really spent a lot of his time
investigating these types of companies and
really being a consumer advocate for this
companies to help people out. Besides being
a personal ﬁnance blogger, I think he was
that ﬁrst and then this came up but he certainly
spent a lot of time on that. If you ever need
to look into that, certainly check him out.
Let’s see if we have him back here. Are
you with us Brian?
Yeah, I might be back.
Alright.
Is that better? I don’t know what happened,
the Internet connection cut out and.
That does happen from time to time. I was
just telling the audience how you spent a
considerable amount of time investigating
a lot of this companies and you’ve become
maybe the consumer advocate or rather against
these companies. Certainly an expert in what
these companies do. If you wouldn’t mind
adding a little bit more about what you do?
Yes, I prefer to just be a regular personal
ﬁnance person just like everybody else here
and go into personal ﬁnance topics but I
ﬁnd myself fascinated by this strange world
that all these things that are going on that
appear to me to be very dishonest and just
really out to harm consumers. It goes against
trying to help people with their money while
there are these organizations out here that
are trying to hurt people, trying to proﬁt
off of consumers using these tactics.
I like to go through and help people sort
of see what these companies are doing and
look at it kind of from what the experience
I’ve found which is kind of similar to what
Lauren had said except she lived it, I didn’t
live it. I live vicariously through thousands
and thousands of comments that people leave
on my site and give me different opinions.
Over the last eight years I have a lot of
experience through that and kind of ﬁlling
with hundreds and thousands of people in the
multilevel marketing community and sort of.
I want to share that with everybody else and
just let them make an intelligent decision
what they should do if they want to get in
to this.
Thank you for putting that time in to all
that research and all that writing. I’m
sure it’s probably helped a lot of people
who are wondering about MLM’s. Both of you,
thank you very much for coming on and thank
you everybody out there for listening and
until next week, be good with your money.
