pyramid imageOr is it more of an ‘MLM’?

Food for thought.

I have been seeing a few post here and there on the internet recently, comparing the traditional work structure of a ‘9 to 5’ job to pyramid schemes. I wanted to dig a little deeper to see if this was a valid argument, or not.

Here is what I discovered:

The definition of a pyramid scheme, according to this source, is a business model which recruits members with the promise of payments for recruiting other members. There is no product, or service for sale. Therefore, the scheme relies totally on payments (for joining) from new recruits to pay the ‘up-line’, those above them in the structure of the scheme.

As there is nothing for sale, once new ‘recruits’ stop joining, the scheme becomes unsustainable.

The image below shows the traditional structure of a ‘Pyramid Scheme’.

pyramid scheme image

 

 

 

 

 

 

 

 

As you can see, the difficulty in recruiting the required number of new members grows with each subsequent level. This one is based on each person recruiting only 6 new members, and by the time 13 levels are reached, the whole population of the World would need to have joined, and it still wouldn’t be enough to sustain it.

There are variations of this model, such as the ‘8-ball’ scheme, or the ‘Airplane Game’, in which there are a set number of levels required (usually four).

In a pyramid scheme, when a new member joins, the payment received is shared out with the members above them…a different percentage going depending on the recipients ‘level’ in the pyramid.

In the other models described, once the required number of levels are full, the person at the top receives all of the fees from the people below, then leaves. Everyone moves up one level so then there are two at the top level. The group then splits into two, more members are recruited to fill the four levels up again, the person at the top of each group leaves with their ‘commissions’, and the cycle continues.

All this sounds great in principle but because there is no real product or service being sold, only the promise of a payment eventually, they inevitably fail if the required levels cannot be filled (no money in = no money out). At some point, there will be no new recruits available, so someone will lose their money. This is what makes it finite in nature. Get in early and you may get lucky (if it is not a scam to start with) but someone will lose out eventually.

Multi-Level-Marketing (MLM) is similar to a pyramid scheme, except there is a product (or service) for sale.

You can make a profit just from selling those products yourself but if you recruit other ‘sales people’ below you, you will receive a portion of their profits as well.

This all sounds well and good but there is one problem. If the products are sold to people outside the scheme (the general public) then this is sustainable as long as the products are in demand.

If, on the other hand, the products are only sold (or mainly sold) to members within the scheme, it becomes a pyramid scheme, which we have seen to be unsustainable.

There are a few very well known businesses which use this model but I will not name them here. I am sure you can think of one or two yourself.

How does this compare to the ‘traditional’ business model?

Let’s take a look at the structure of most companies in the world today.

traditional business structure image

Kinda looks like a pyramid, doesn’t it? In reality though, it’s more like MLM as there is a product (or service) for sale. Now here’s the thing. Who makes all the money? Obviously, if you work a ‘traditional’ job, you get paid. Whether it is by the hour, by salary, or by commission, everyone makes money.

What is surprising though, is those at the bottom of this ‘pyramid’ do most of the work, whilst those at the top make most of the money. You could argue that the higher up the structure you are, the more responsibility you have. This may well be true but is it fair?

As a production worker, you will probably be getting paid the same whether you do the bare minimum to satisfy your job requirements, or you are exceeding them. If this were a true MLM, the harder you worked, the more you would make. Those at the top take the extra profits that come from the efforts of those below them. That is the thing that annoys me the most about traditional work.

Why should my efforts be making someone else rich, while I live paycheck to paycheck? It never ceases to amaze me that so many people are content to put up with this situation. Is it because we are ‘programmed’ from an early age to accept this as being ‘normal’?

I think if schools taught ‘entrepreneurial studies’ instead of ‘business studies’ then the world would be a different (and arguably better) place.

Well, I refuse to accept this practice as ‘normal’. I have seen past the false ‘reality’ just like Neo in The Matrix. This can’t be all there is to life; get up, go to work to make someone else rich, barely earning enough to get by myself.

No, I prefer to get out of this particular version of a ‘pyramid scheme’. Surely it is not the way things were meant to be. The phrase ‘wage slave’ comes to mind. The industrial revolution has a lot to answer for.

I want my efforts to produce returns for me in proportion to how hard I actually work. I want to be the one who dictates when, and where, I work. I want to be in control of my own future. How about you?

So, you can either take the blue pill, and return to your ‘normal’ life, or the red one, and come along for the ride of your life (yes, I am a fan of the Matrix movie).

blue pill or red pill image

If you chose the red pill, sign up below for my Guide and get started right now. The future is yours to make.

Til next time, take care.

Kev

 

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