David Ciemny, VP of Business Development at the MLM, Jusuru, suggested that I watch the ten minute video from Tim Sales below because I was ignorant about the MLM industry. I had watched Tim Sales' videos before. Typically, I like to play a game of "Let's count the logical flaws and bad analogies." I'm never sure if I can find them all. I'm going to give it a try. Please help me in the comments by filling in any I missed.
1. Tim Sales starts out asking who would make the claim that "most people fail at MLM." He presumes that anyone asking the question is pretending to be a victim. One doesn't need to pretend to be a victim to ask the question. In fact it is a logical question for anyone to ask before getting involved in MLM.
Logically, it is irrelevant who is making the claim. It is the claim itself that should be evaluated. Any attempt to evaluate who is making the claim is is logical red herring, meaning that it is an attempt to move the focus from the claim itself to the person.
As far as the claim itself, we know that one joins an MLM with the goal of making money. Those who do not make money would then logically be deemed as failing at the goal. Extensive research shows that far fewer than 1% make money at many MLMs. Thus when someone makes the claim that "most people fail at MLM", it is with sound logic.
2. Tim Sales then tries to justify MLMs failure rate because people fail at other things. He then says that "the same thing could be said of anything that people attempt." This does not appear to be true. People are successful at any number of things. They take successful showers. They make successful breakfasts. They commutes successfully to work each day. Imagine if that last one had a failure rate of over 99% like MLM. That brings a whole new definition to a bad commute right?
He suggests that most people fail who open a stock trading account. It is quite common for an MLM scammer to not cite the sources of lies and this is one example. Most people who open up stock trading accounts do not fail at trading stocks. He may be thinking about day traders, but those are the minority of people who open trading accounts.
He also suggests that most people who want to sing at an opera or play professional sports fail. These would all be true. However, in general people understand the odds of success in these endeavors are minimal. People recognize this fairly quickly and move on. Few people are under the impression that it is smart financial decision to spend all their hours practicing a professional sport. Additionally, those who do not tend to play sports or sing in front do so also because they enjoy it. Lastly, no baseball player or opera singer make their money by trying to persuade others to join them in something with such a low success rate. MLM is built around that notion, spreading the high failure rate amongst the world like a plague.
3. Tim Sales, at the 2 minutes mark, suggests that failure is determined by stopping an MLM at any point in the future. Some may say that, but I wouldn't. It is not how that statistic is calculated as Tim states. I would define failure as stopping before making a reasonable profit for time spent. Remember the goal is to make money. We can't categorize success as making a single dollar after spending 600 hours, can we? Any minimum wage job would have been far more successful.
Tim Sales says at the 2:30 mark that if the person quits, they may have lost money on a $50 starter kit and the stocking fees of the product. However, as we learned in The MLM Gas Station and $8/Gallon Gas the real cost was the autoship of overpriced product month after month while they were trying MLM. For example, in the case of MonaVie, a year of being in the business will cost you over $1600 in juice. Juice that you can't return because it has expired or you have consumed it. (Side note: This is why MLMs focus on consumable products.) In addition to that $1600 of juice, your upline will push motivational tools and seminars which can cost you several thousand more dollars.
Thus the accurate definition of failure for MLMs has to take these costs into account.
4. Tim Sales on Golf. At around the 2:45 mark Tim Sales says that got interested in golf after watching Tiger Woods because he "he was having a blast" and "made it look so easy." Can you spot the failure in this analogy right away? First Tim Sales thought process of watching one of the top professionals inspiring him to spend $4000 bat-excrement crazy. Millions watch the Tony Hawk skate, but no one goes and buys a bunch of stuff expecting to duplicate his success. They pick up skateboarding or golf because they find it enjoyable. People are smart enough to realize it isn't likely a profitable business. So Tim Sales has no business of comparing MLM to golf. The goals are entirely different.
Tim Sales goes into a cost breakdown of his golf experience. Again Tim shows a lack of intelligence, because he could have bought the equipment used on Craigslist or Ebay and resold them later for a similar price to what he paid if he decided that golf wasn't for him. He also talks about going to Ritz Carlton in Naples to play golf. It happens that I've been to this exact hotel and it didn't cost $700 a night. It was under $300.
He sums up his entire golf experience as costing him $5000, none of it being refundable. This is his own fault for being a dumb consumer. Of course, this shouldn't come as a surprise as the video has provided ample examples of his lack of intelligence.
At the 4:15 mark, he asks why he "didn't create a website and post that the golf industry is ripping people off and when you look at the statistics the odds if playing golf like Tiger Woods is less than .00001%; I think he means to this be a rhetorical question. However, I'll give the logical answers to his questions.
1) Did the golf industry promise Tim anything? No. Tim did it all on his own after watching Tiger on TV. The golf industry didn't recruit him.
2) I think Tim Sales should start a website about how the golf industry doesn't make people aware that playing golf like Tiger Woods is less than .00001%. It would be the world's worst website, because this is something that everyone in the world, but apparently Tim Sales, knows.
The MLM industry does everything can to hide the fact that most people lose money, and instead recruit people with the prospect that it is a good business opportunity. Tim Sales is doing it right in this video. This is why people put up websites to warn others.
He asks why he didn't post a website about the unfairness that the actual cost of a golf club being $6 and that GolfSmith charged him $100. Again the logic answer is that $100 is the market price for a golf club. It costs a lot of extra money for all the technology and distribution of the golf club. If Tim Sales thinks that $100 is too much for a golf club that costs $6 to make, he should go into competition with GolfSmith and sell them at a cheaper price, say $80, and collect all the profits. However, with MLM, we have fruit juices like MonaVie that are $45 that compare to Ocean Spray that is sold for $4. Now if Tim Sales had spent $1000 on a golf club that was effectively the same as the $100 one, he would be justified in starting up a website, don't you think?
At the 4:40, Tim Sales suggests that he didn't fail at golf, he quit. However, he misses the most important point: quitting his pursuit to be the next Tiger Woods was the only smart move he's made in this entire video. He could have continued to try to be the next Tiger Woods doing extensive damage to his net worth. The only thing that Tim Sales is right about in this video is that quitting a doomed venture like becoming the next Tiger Woods or making money in an MLM is not failing... it is the only successful move.
From a practical perspective though quitting MLM is failure. Remember that we defined failure in an MLM business as not making a good return for the money and time spent in the venture. If you quit MLM before you have made back that money, you have failed in the business venture. Tim Sales and other MLM scammers would have you believe that quitting is not the same as failing because they want to pitch the illusion that if you stick to it and don't quit, you'll be like Tiger Woods someday. It sounds good in theory, but we know better. As we pointed out earlier, running up the costs of buying juice or golf memberships year after year is the real failure.
At the 5:30 mark, Tim Sales tried to draw a parallel about how every professional golfer has off days, but they didn't quit. He says that this is "because their interest in being great at golf was greater than their interest in quitting." This is another misleading statement from Tim Sales. In the vast majority of cases, perhaps every case, professional golfers have a talent for it and had some early success that gave them desire to stick to it. If you aren't having that early success in golf or MLM, there's a good chance that you don't have that talent and it just isn't your thing. That's fine, we can't all be Tiger Woods at whatever area we want to. In fact, few of us can ever hope to be the best in the world in one thing.
Tim Sales makes the point at 7:15 that Tiger Woods is great because he worked his guts out. He then claims that MLM isn't any different. To go back to the earlier point, Tiger Woods' success doesn't rely on his ability to sell people on bad opportunities. If Tiger Woods was in the business of trying to convince others that they could be the next Tiger Woods, he would be a failure. What Tim Sales also doesn't understand is that with MLM It’s Not a Matter of Effort, it’s a Mathematical Certainty.
At the 8:15 mark, Tim Sales says that the claim that people make that "the odds of making big money on MLM is slim to none" is irrelevant. People going into business with the hopes of making money, preferably big money. Would you rather go into the business with a 99.999% chance of making big money or one that has a 0.001% chance of making big money? If you are like me, you like the 99.999% odds.
How can Tim Sales spin this into being an irrelevant question? He then explains odds as being separate from performance like rolling a die, flipping a coin, or playing the lottery. His claim is that since performance doesn't play in roll in these we can talk about odds, otherwise we can't. He then says that if he''s trying to put a white ball into a hole on a golf course there's performance involved. If he's trying to build a business there's performance involved and odds are irrelevant. He suggests that performance is what matters not odds.
He couldn't be more wrong.
There's performance involved with my ability to hit a baseball, but the odds are greatly impacted by placing the ball on a tee vs. having Tim Lincecum throw it. There's performance involved with getting the white ball in the hole in golf, but the odds are much better from 2 inches than from 200 yards. Any true analysis of likelihood of success has to take in the external factors beyond what you can control. In the case of building a business, starting a pizza shop on the street with 10 other pizza shops will likely decrease your odds of success.
We can look at MLM the same way. Since we know that odds of making money in MLM are so small, smaller than getting a hole-in-one from 200 yards away, it is the performance aspect that becomes irrelevant.
The one thing that Tim Sales didn't mention in the entire video is that most of the people who are successful in MLM, didn't get that way from showing a MLM plan. Most of them were friends of the company and were given special treatment, the opportunity to be one of the first few people in. In some cases like with LifeVantage, the top people didn't get there from showing LifeVantage plans. They were invited over from Zrii another MLM: LifeVantage Top Distributors Came From Zrii.
So imagine that you worked your butt off in MLM and then realized that someone else was just handed the success because they were friends with the right person. It suddenly doesn't seem like something worth working for.This post involves: