Objectivism and MLMs

Posted by Abaco 4 months, 2 weeks ago to Business
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I had to ask here. What is the Objectivist's take on multi-level marketing? We've all seen it: the starry-eyed soap-selling friend, "fake it till you make it", etc... I have my own take on MLMs but wanted to hear your opinions.


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  • Posted by dave42 4 months, 2 weeks ago
    I have never seen an MLM that meets what I consider to be the minimum standard: A person on the bottom level (who only purchases the product and never recruits anyone) must be objectively better off than a non-participant. This means that there must either be a price or delivery advantage for commonly-available products, or the product must be unique, widely desired without the need for elaborate sales pitches that leave out lots of relevant facts, affordable to most people, unavailable elsewhere, and doesn't have a significantly cheaper, almost-as-good competitor.

    Paying $75 for vitamins you can get at the supermarket for $8 is right out, even if they come with fancy marketing.
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    • Posted by  $  skidance 4 months, 1 week ago
      Actually, there are rare companies that offer environmentally friendly, effective, and concentrated products that are cost-effective on a per-use basis. One I know of offers a 180-day money-back guarantee. Its food supplements contain concentrated nutrients obtained from plants grown on certified organic farms and manufactured to the highest standards. I don't know of another brand with its record, standards, and R&D. If you think all vitamins are the same, think twice. You get what you pay for. I was raised to think quality over quantity, so perhaps that biases me. As to other MLM complaints, I can sympathize, to a point. Many such companies are not particularly ethical, do not properly "police" or train their distributors, and allow them to run amok with their claims. Another thing that paradoxically turns some people off about MLM is the overt enthusiasm often displayed by the salespeople. My own reaction initially was to be put off by such excitement; it reminded me of evangelicals and mass movements, such as National Socialism. I quickly came to realize that such positive excitement is rare in most people's lives, and as long as it doesn't override reason and ethics, that's great.
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      • Posted by LibertyBelle 4 months, 1 week ago
        Oh, is it something like Amway? I think I have been
        invited to participate in something like that before. One time, I went to some meeting, when the guy said something like, "When you get these other salespeople working the sell the product..."without telling me how I was supposed to do this, and I knew right there that I wasn't going to fall for it. And a friend of mine once tried to recruit me into sales for Amway, but I didn't trust the idea (not that I thought my buddy would cheat me, but I think maybe he was being suckered himself), and I called it "Shamway", and didn't get into it.---I just don't get very enthusiastic about proposals that don't make sense.
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    • Posted by CircuitGuy 4 months, 1 week ago
      Yes, they're generally pyramid schemes with products for sale as a crude fig leaf.
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      • Posted by ewv 4 months, 1 week ago
        An Amway leader high up in the food chain once told me that the big advantage is that the company is run by and for sales instead of manufacturing (production). Observing them in action reveals that that it operates with a cult mentality. The "products for sale" are essentially shiny objects used to keep the pyramid game going while spreading the myth that they are superior quality. The cultists believe their own propaganda.
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  • Posted by ycandrea 4 months, 1 week ago
    About 8 years ago I was an Herbalife Distributor. I learned a lot about sales and managing large groups of people to help us all become successful. I quickly ascended the levels and I made it to Global Expansion Team which is the 8th level in sales and team building. I helped many, many people on different levels to achieve what I achieved. I had many retail customers who purchased monthly from me. I sponsored over a 100 people that I personally brought into the company. They consisted of other distributors, senior consultants, success builders, quality producers, supervisors, and World Team Leaders and they were all in my personal team who were also climbing up the ladder with me. I had a great sponsor who taught and helped me as I taught and helped those that I sponsored.
    I used many tools to achieve this. I had automated tracking of my team and I had weekly conference calls with them and weekly personal calls with those directly below me to discuss goals, problems they were having, news, changes, and training. I had an automated lead generator and I had an automated dialing program so that I could contact many people during the day. I had my own website and my own credit card processing program linked to my organization and my bank. I had automated order and shipping system linked to my organization so ordering and shipping products was simplified.
    I gained so much doing this and it was not easy. It takes a lot of time, and training but I thoroughly enjoyed it. I learned how to develop a team, how to help others succeed and how to make money. I also learned a lot about customer service, solving problems and creating return customers. I quit when Herbalife was having a lot of problems and my entire organization moved to another company. Thousands of them. It took 2 years before I started turning a profit, but it was worth it to me. I did all of this while still working full-time as a Vice President of a $6 million dollar company. It was kind of fun and a change of pace for me.
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    • Posted by LibertyBelle 4 months, 1 week ago
      I notice you speak of it in the past tense. So why did you stop?
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      • Posted by ycandrea 4 months, 1 week ago
        I retired 4 years ago and after two years, I couldn't stand it. There is just so many paintings I can paint. so many games of World of Warcraft I can play, so many quilts I can sew for my 17 grandkids, so many dogs I can rescue, (4 so far), and so many plants I can raise in my greenhouse before I go stir crazy. So last year I got a job working for a tax preparer which goes against my principals, so this year I found a perfect work from home job selling sponsorships in magazines for two publishers. It is perfect for me. I set my own schedule and I am paid for what I accomplish plus bonuses. And I do it when we travel in our RV too. I love it!
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        • Posted by 4 months, 1 week ago
          Good for you.
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          • Posted by ycandrea 4 months, 1 week ago
            This is why I do not understand how anyone could not find a job. I live in a rural little town on the east side of the Cascades in Oregon and I have never found it hard to find a job. Anyone can do this job. All you need is a cell phone, an email address, a pencil, a calendar, and a way to print out the lead lists the publishers send you. That's it! You make what you put into it.
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  • Posted by mia767ca 4 months, 1 week ago
    I participate in an MLM...essential oil company Young Living...I love product and quality...but I do it just for my health...a few others have signed on beneath me, but only for better health reasons...
    As long as the company is open about it's MLM program, it is consenting behavior between adults...fine with me...
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    • Posted by  $  skidance 4 months, 1 week ago
      Take a look at YL's history and that of its founder. I did, and was appalled! https://www.linkedin.com/pulse/201407...
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      • Posted by mia767ca 4 months, 1 week ago
        thanks for the reference into Gary Young of YL...he is a total character....the essential oils speak for themselves...and I have researched their use and also use Do Terra...the spin-off...

        the whole medical profession has been co-opted by the pharma industry and today's medical profession is in the toilet...one has to educate oneself and do as much prevention as possible...
        just trying to stay away from the govt and medicals....
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        • Posted by  $  skidance 4 months, 1 week ago
          I doubt many, if not most, of the claims made by essential oil companies. Show me the results of third-party, independent tests, and I may be convinced. Personally, I'm sensitive to, or even allergic to, strong scents, and my experience points to essential oils. While I think that certain scents, such as lavender, may have beneficial effects, the likelihood is that most such claims are unfounded, if not fraudulent. For example, have scientific studies shown that Thieves oil (not your product) actually is antiviral/antibacterial? I would doubt there is anything other than anecdotal reports. Not to mention that certain essential oils are toxic to pets. SHOW ME THE SCIENTIFIC STUDIES!
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          • Posted by mia767ca 4 months, 1 week ago
            I read a lot of books on essential oils, which have been used for thousands of years for their curative properties...if the oils I use solve the problem...good oil...YL oils have performed as advertised...
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  • Posted by Mitch 4 months, 2 weeks ago
    I think that Multi-Level marketing in itself is Objective and nothing wrong with concept. The classical, a little bit of bile in the back of your throat, feeling when someone says “it’s multilevel marketing” is because of the implementation by people will little to no objective reasoning. The people that run a multilevel marketing campaign objectively doesn’t target people that they know will not follow through and simply exhaust the sales channel of friends and family before the burnout.
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    • Posted by ewv 4 months, 1 week ago
      What does calling it "Objective" with a capital 'O' mean? If you intended Objectivist, it doesn't apply at all, even aside from the pyramid fallacy aspect. Objectivism is Ayn Rand's philosophy, not any kind of industrial or sales organization. There is no such thing as Objectivist science, let alone sales schemes, etc., let alone 'voluntary' pyramid schemes.
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  • Posted by freedomforall 4 months, 2 weeks ago
    It's another method of selling usually by someone without capital for traditional channels.
    Most of the most successful companies are led by a charismatic salesperson (aka Bill Clinton type) that I reject as a fast talking used car salesman who is running a Ponzi scheme.
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  • Posted by  $  rockymountainpirate 4 months, 1 week ago
    Network Marketing can be very Objectivist, depending on the people involved & the ethics of the company. There are as many scammers in traditional retail as in network marketing.

    Here are some statistics:
    NFL $9.5B
    Music Industry: $16.5B
    Video Gaming: $67B
    Movie Industry: $80B
    Organic Products: $91B
    Network Marketing: $167B

    I've seen many here call Network Marketing a pyramid scheme. I call that corporate America. I can never make as much as the Dr. I work for, nor more than the incompetent manager that is above me. In Network Marketing I can make as much as I choose by choosing how hard I want to work. Eddie Willers was never going to make more than Jim Taggart, even though he was far more competent.

    When I told people I liked Star Wars, Disney didn't send me a check for marketing their product. PURE does send me a check for telling people I like their products and sharing with others how they can also get a check.
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  • Posted by Solver 4 months, 1 week ago
    Relating this to a real Galt’s Gulch,
    I’m guessing that the government at the Gulch would even allow blatant pyramid scheme’s, unless it violated individual rights. Gulch individuals, using rational selfishness and understanding that there is no free lunch, wouldn’t be good marks. How long can a pyramid scheme last with out a continuous inflow of marks?
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    • Posted by ewv 4 months, 1 week ago
      It's not a matter of whether the Gulch in Atlas Shrugged would "allow" it on libertarian grounds as long as it were "voluntary" -- the kind of productive individuals invited to the Gulch wouldn't think to engage in such a scheme.

      The nature of a pyramid scam becomes obvious much sooner even to those who can't see it conceptually when there is a small population that is quickly drained. Even James Taggart, if he had somehow snuck into the Valley, would not have gotten anywhere with it against the number or kinds of people there.
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    • Posted by CircuitGuy 4 months, 1 week ago
      "government at the Gulch would even allow blatant pyramid scheme’"
      I think they would as long as the schemes don't cross the line into flat out lying to get money, fraud. I actually think it's a good thing that most people understand pyramid schemes as a bad choice, yet the gov't has not declared war on them. The concept that gov't not using force on its citizens to stop them is not tantamount to endorsing their actions is so important.
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      • Posted by Solver 4 months, 1 week ago
        Fraud sounds like a violation of individual rights.
        The biggest pyramid scheme is social insecurity. Opps my mistake. Social insecurity is not a mere pyramid scheme; It is deviously worse. You have a free choice to join at the bottom of a pyramid scheme.
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  • Posted by chad 4 months, 1 week ago
    I haven't observed anything contrary to objectivism in MLM's other than the system of sales and distribution is annoying. If you don't like it don't sign up or purchase from them. The only ones who make money must work it as a full time job constantly recruiting and keeping the sales force enthused and calling on potential buyers. Some products may be worthwhile, others not. Buyer be aware, know products and costs.
    Real Ponzi schemes are where there is no product and the payoff comes from the first being paid by the 2nd, 3rd, 4th, etc. generations signing up for the fraud. Even those are less detrimental than a government enforced (use of violence to ensure compliance) schemes that continue to expand in size and cost driving labor to constantly try to increase production to maintain equilibrium.
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  • Posted by  $  puzzlelady 4 months, 1 week ago
    Multi-level marketing? isn't that like a pyramid scheme? Moreover, social media enable the spreading of spores/memes/ideas with virus-like febrility.
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  • Posted by  $  allosaur 4 months, 1 week ago
    Me dino got my first PC after I retired from my department of corrections career ion 2003 and saw "work at home" adds and, for a little while, stepped into the pep talk world of MLM.
    I was required to listen to motivational speaker after motivational speaker and at some point realized none directly spoke of calling people on the phone to sell a product and hopefully recruit some into doing the same thing I was in order to take my cut off those I sucked in beneath me.
    I was among several recruits during a conference call when we were told we would have to get "leads," that supposedly meaning people susceptible toward cooperating on the telephone.
    I was provided with a link that had leads for the taking. I saw two photographed broadly smiling men in suits lovingly extending their arms to the word, "LEADS!" Below that were leads that cost around $100 each to expose the lists.
    Me dino complained about the cost of leads to my recruiter, who sourly said, "No, YOU don't have to BUY leads." She suggested that I instead start with family and friends.
    Family and friends?
    This led me dino to looking up MLM scams and to an email conversation with and ex-MLM person. He told me he was a member of the NFAFL, which means, "No Friends And Family Left."
    After all that nonsense, I off and-on, due to my corrections career, had no serious problem working for four different security guard contractors up until 2013 when health problems influenced a full retirement.
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  • Posted by giallopudding 4 months, 1 week ago
    Caveat emptor. If a salesperson is good enough to convince a buyer that something is worth more than the established market value, well, value is subjective and plastic. If selling virtual currency that has no utilitarian value whatsoever is acceptable to libertarians, then it would be ludicrous to assume moral compunction to someone selling "over-priced" detergent.
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  • Posted by  $  IAMGROOT 4 months, 1 week ago
    I believe the concept of network marketing is sound. The problem is that, in order to earn the deferred income stream(s) by recruiting your downline, the products are all overpriced, as others have mentioned. So if your interest is strictly consumer-based, not a good value.
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  • Posted by DrZarkov99 4 months, 1 week ago
    MLMs are, quite bluntly, fancied up Ponzi schemes. Only the few at the top actually make much money. I'm astounded that the creators of these things aren't automatically charged with fraud.
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    • Posted by 4 months, 1 week ago
      Eh...that's a stretch, IMO. I don't like either model, mind you. A pyramid is clearly illegal and is represented by what Bernie Madoff did and how Social Security operates. That's different than an MLM. I often hear people mix these up.
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      • Posted by ewv 4 months, 1 week ago
        A Bernie Madoff pyramid scheme is illegal because of how it is dishonestly promoted. The MLMs tell you in advance how it works and count on people believing they can get rich in their own fantasies.
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  • Posted by  $  Snezzy 4 months, 1 week ago
    A relative of mine does these things from time to time. There is no economic advantage either to him or to his supposed customers. The last one he had me try was the fancy acai-berry grape juice that came in fancy wine bottles, supposedly good for your health. Actually only good for the wallet, and then only if you could manage to sign up dozens of greater fools and keep them hooked. Didn't even taste good. I finally stopped delivery and threw out like ten unopened bottles.
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  • Posted by MrSmiggles 4 months, 1 week ago
    The idea is sound. The problem is that you have to bring others in to work under you without you having any responsibility for their failures, actions, etc. If they screw up you just disassociate yourself and get another. To be successful you have to have multitudes of people under you to get the bottom up profits allowing your rank in the organization to go up (silver, gold, diamond is a standard ranking system). This is where the pyramid scheme term comes in. The person you work under doesn't have to care at all if you succeed or not because they are constantly looking for others to work under them as well. At the same time they are pushing their underlings to find underlings thus further detaching them from the responsibility of any actions of others. The lack of responsibility is what makes this free-market sounding idea a sleazy scheme.
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    • Posted by  $  rockymountainpirate 4 months, 1 week ago
      You don't make a residual income by dumping those under you and not helping them to succeed. You work with the willing. Its not a magic bullet, write the check and get rich. Just like anything worth while, it takes time and effort. If you don't want to put in that time and effort you should stay a W2 person a,d let someone else dictate your value.
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      • Posted by MrSmiggles 4 months, 1 week ago
        Oh I'm totally with you on that and the good mentors do help out their underlings. However that's not how the system is commonly sold. It's made to look like a get rich quick scheme, "All you have to do is sell! Then get others to make the money for you!"

        At the same time it's not you working with a W2 for your underlings. It's a company paying you like a contractor with a W9, meaning you owe Uncle Sam every year.
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  • Posted by  $  pixelate 4 months, 1 week ago
    Whether MLMs are Objectivist or not, I cannot say. However, I did participate in the Toastmasters Humorous Speech Contest ~20 years ago with a speech titled "Hello Friends!"

    I acted out the role of an MLM "Triple Crystal" and my product de jour was Pond Scum -- a most fabulous elixir that put a spring in my step and a million dollars in my pocket. There were a number of props -- including a large poster showing all the wonderful Circles as I shared the joy of building a business and a family (in terms of the down-stream).

    I even shared a few testimonials, including a letter from Marge Gimble from Pascagoula, who wrote:
    "During the first forty-seven years of my life, I could scarcely keep down a meal. I have been using your product for the past two weeks and my intestines have never felt better. Thank you, thank you. You're beautiful people.
    Sincerely,
    Marge Gimble
    PS: My long lost dog returned home only last week. Coincidence? I don't think so.
    "

    The speech was a hit -- in large part because most folks had become acquainted with both the "circles" and the MLM "pitch."
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    • Posted by ewv 4 months, 1 week ago
      No marketing method is "Objectivist". Objectivism is a philosophy. The philosophy also does not endorse scams or self-delusion in general, but philosophy and marketing schemes are different categories. But as you observed, people don't have to understand Ayn Rand to see through this scam.
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    • Posted by  $  pixelate 4 months, 1 week ago
      Thanks! The speech went all the way to up to District 9 (Washington, Idaho and Oregon) ... but since there was no Regional or International level for the Humorous Speech contest, it stopped at District. Based on the material and delivery, I could have taken it International, but oh well. Management continues to invite me to share the speech at conferences and to open the key-notes for our user-group meetings. Good times!
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