We recently shared a link to a Youtube video about pyramid schemes. During the latest episode of John Oliver’s Last Week Tonight, he talked in-depth about the ramifications of forming part of such organisations. It was a subject I didn’t think much of until I was recently duped into attending a presentation of one of these schemes by a friend.
My first impulse was to leave the presentation immediately. However, I decided to stay and listen to what an unprepared audience would be told. I quickly realised that, just like myself, no one really knew what they were about to see. They were all invited by friends of theirs, without getting any more information.
The perfect life
The particular pyramid scheme presentation I attended was focused on travel. The first speaker took the stage backed by loud cheering from other members. He began with a brief history of himself, his previous job, and his previous life. He complained that he was overworked, stressed, and never had time or money to take holidays. I almost felt sorry for him.
He quickly changed his tone when he started speaking about his current life. He claimed that for the past 25 months or so he has gone on holiday a total of 25 times. The business changed his life and allowed him to holiday frequently and, often, for free. It sounded amazing. He clearly captured the audience’s imagination.
The unbelievable offer
The first speaker then introduced another successful member of the pyramid scheme. This second member took it upon himself to introduce the various offers. He gave examples of holidays at ridiculously low prices which members could avail themselves of. Whilst everyone was amazed, I quickly noticed that flights were not included, nor mentioned.
Nevertheless, this member, a true performer, continued keeping the audience interested. In between jokes, memories, and inspiring words, he quickly presented the membership prices. At first glance, they seem logical and affordable. I am sure that many in the audience thought so too.
The speaker immediately stressed that the members of the audience could get the recurring membership fees canceled. All they needed to do was introduce 4 new members to this pyramid scheme. Suddenly, the reason why every person in the audience was invited became clear. Their friends needed them to join so that they get their membership for free.
I can only imagine how the members of the audience felt about being used by their trusted friends. I, for one, was very disappointed. In any case, the offer was presented to the audience, but before giving them time to think they quickly moved on.
Not the product, but the way of life
The next speaker spoke about how he had his own IT business before getting his livelihood from this pyramid scheme. He said that he thought that having his own business would mean fewer hours, less work, and more money. It took all my self-control to stop me from asking him why he thought this.
I interviewed and researched hundreds of entrepreneurs. None of them ever thought that by starting their own business they would work less. In fact, a friend of mine once said, “Entrepreneurs are the only people that in order not to work forty hours a week are ready to work eighty hours a week.”
He continued by saying that by becoming a business member of the pyramid scheme the audience can quit their jobs and get rich. To sell his offer further he also boasted how the company leases a fantastic sports car for him.
The secret to success
The speaker explained that it is really easy to be successful in this pyramid scheme. A member would only need to bring friends and family and encourage them to be members. Then, these members should be encouraged to invite their friends to become members, and so on.
The secret lies in using people’s trust to get them on board. A person is more prone to sign up to a pyramid scheme if their trusted friend is encouraging them. This is the shady method of success employed by practically all pyramid schemes. At this point, I couldn’t take it anymore and left the presentation.
The trouble with pyramid schemes
This experience has allowed me to see first-hand some of the techniques used to attract new members. In all pyramid schemes, the top part of the pyramid earns the big money. As you travel down the pyramid the member numbers increase and their earnings decrease drastically. At the very bottom of the pyramid you usually find members who aren’t making money or, sometimes, even losing money.
Many people think of these pyramid schemes as ways to get rich quickly. It is very easy and cheap to start and the risk is minimal. What people do not realise is that for the top members to become successful, they worked long hours trying to convince their friends and families to join.
If the new members have any chance of becoming successful they need to put in the hours. If they are ready to do that, why not start a business instead? Having your own business allows you to focus on doing what you want to, rather than being told what to do by the leaders of pyramid schemes.
Ultimately, the goal of pyramid schemes is not to sell products or solve a problem. The goal is to recruit more new members. These are not businesses, their members are not entrepreneurs.
In closing, if anyone wishes to start their own business, they should look away from pyramid schemes. Instead, they should think of ways to solve real problems and make money doing it. They don’t need to go at it alone, and can find support in local entrepreneurship events, expert advice, and, of course, The Fun Entrepreneur!