Herbalife and Other MLMs

[Connor]

Hey guys,
Just read this article on Seeking Alpha about Herbalife and the MLM industry: http://seekingalpha.com/article/1814782-what-no-one-wants-to-say-about-herbalife

Just curious if people here agree with the author that Herbalife and its brethren are a Ponzi scheme or a legitimate business model. Personally, I wouldn't go so far as to call it a Ponzi scheme, but I don't think it's a good long-term business model and definitely not rewarding for the majority of the employees/participants. Ready, set, debate!

Also, I put this in the Slowlane category, since I think it's a bit of an indictment of much of America that people would rather try to latch on to a business where they are competing with 10,000 others doing the exact same thing than start something on their own where they can control the business model, profits, etc. Let me know if you think it deserves a better home, and I'll try to be more accurate with future posts.

 

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[raynoldcj]

Hey guys,
Just read this article on Seeking Alpha about Herbalife and the MLM industry: http://seekingalpha.com/article/1814782-what-no-one-wants-to-say-about-herbalife

Just curious if people here agree with the author that Herbalife and its brethren are a Ponzi scheme or a legitimate business model. Personally, I wouldn't go so far as to call it a Ponzi scheme, but I don't think it's a good long-term business model and definitely not rewarding for the majority of the employees/participants. Ready, set, debate!

Also, I put this in the Slowlane category, since I think it's a bit of an indictment of much of America that people would rather try to latch on to a business where they are competing with 10,000 others doing the exact same thing than start something on their own where they can control the business model, profits, etc. Let me know if you think it deserves a better home, and I'll try to be more accurate with future posts.

I was with Forever Living Products and really love their wellness products. From my experience networking with the top guys in the industry, I think MLM offered a legit business opportunity. You get paid from selling the products, and also commissions from referring other people to join the company. The video below gives great explanation about MLM.

http://www.youtube.com/watch?v=tKj_7fGsZnc


In my opinion, MLM is legit but it's not a fastlane business, unless you own an MLM company

 

[AllenCrawley]

:bgh:

This topic has been discussed ad nauseam. Use the search function if you really want to know how the majority around here feel about MLM.

 

[Lauryn]

While it's been overly discussed here, I will state that I mirror your viewpoints. It's definitely not Fastlane, but if you're "not ready," it can be a test dummy to see if you've got hustle and desire to take control as a business manager and owner.

 

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[CommonCents]

Absolutely super fast lane with the right product to start your own. I am working on starting one now. (Not a deep MLM structure peddling nothing but a biz opp)......but more of a direct sales model offering recurring product value to consumers, with some recruitment/biz op incentives. I'll do a thread sometime on it after it gets up and running.

The biz model (direct sales models get lumped in too) gets a bad rap and is overdone, by some publicized unsustainable ripoffs. That is like the entire retail biz model getting slammed because there are some bad apples, or the entire internet marketing industry being all bad because there are some ripoffs. Or the entire financial industry trashed because of Bernie Madoff and Jon Corzine(he in jail YET????).

the big beef with them getting a bad rap is untrained "sales" people hammering their friends and family. ANY business with untrained sales people would get the same rap.

Herbalife has been around for 30+years. I don't know how a ponzi scheme could last that long? You'd think they'd a run out of new people by now(geometric progressions burn out fast if based on a one time churn and burn). They are actually product pioneers for many of the modern day comprehensive nutritional systems, popularizing protein/MRP shakes, introducing guarana as energy/caffeine source etc... look at Isagenix now, growing like crazy offering a similar nutrition system, peddled by many many fitness competitors. I've never distributed herbalife, nor have never joined a direct sales/MLM, but see the opportunity in using the business model for an appropriate product.

 

[Connor]

Herbalife has been around for 30+years. I don't know how a ponzi scheme could last that long? You'd think they'd a run out of new people by now(geometric progressions burn out fast if based on a one time churn and burn).

You're totally correct. If it were really a scheme, it wouldn't last that long.

And my apologies for starting a new thread when there already are so many. Clearly I wasn't paying attention and probably should have posted this in investing, especially since I was curious if people would be willing to short it.

 

[Tony I]

You're totally correct. If it were really a scheme, it wouldn't last that long.

Bernie Madoff only ran his scheme for a decade. If it really was a scheme, it wouldn't have lasted that long.

Most MLM'ers lose money and have lottery odds of making anything more than minimum wage.

 

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[stranger]

My friend had been selling this crap 16 or 18 years ago. Many folks bought this crap while the herbalife products were banned here. i tasted one of their product and i don't suggest it to someone else.

 

[raynoldcj]

My friend had been selling this crap 16 or 18 years ago. Many folks bought this crap while the herbalife products were banned here. i tasted one of their product and i don't suggest it to someone else.

Companies like Herbalife, Amway, Forever Living etc are all legit. Their products are also of the best quality. I have seen lives changed from using the products.

I'm sorry but your statement here is just unfair.

 

[stranger]

Companies like Herbalife, Amway, Forever Living etc are all legit. Their products are also of the best quality. I have seen lives changed from using the products.

I'm sorry but your statement here is just unfair.

It's your choice. I just said what I know and not what i heard from someone, somewhere. If it's legit, it doesn't always mean good for health.
Good luck.

 

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[raynoldcj]

It's your choice. I just said what I know and not what i heard from someone, somewhere. If it's legit, it doesn't always mean good for health.
Good luck.

It's not from what I heard, I'm using the products myself. It's not that I'm pro-MLM. There are also companies selling products no better than those in the local store. But saying MLM companies are selling crap is just unacceptable.

 

[mayana]

But saying MLM companies are selling crap is just unacceptable.

I don't think that all of the products are bad (I've never personally tried herbalife). I've bought stuff from people selling ThirtyOne, Mary Kay, etc. I DO think that they are typically very overpriced, which makes sense - they have to sell them at those high prices in order to leave all those layers of commissions and bonuses.

(Note: I realize, obviously, that more "traditional" business models also have profits built in to their prices, but I think that a MLM company has almost no flexibility on this.)

What anyone considering signing up for a MLM needs to realize is that YOU are really the customer for the company. That's why they always try to get people to sign up for those big packages, depending on how "serious" you are about launching your "business".

I know a couple who is doing pretty well in an MLM company (maybe 300-400k per year), but they freaking LIVE their business every single second of their lives. All of their relationships with people who aren't doing the "business" with them are completely ruined, since they never talk about anything else. Supposedly, their product helps keep you young and healthy, yet they look much older than they should (stress, since they both quit their jobs to do it full time).

Another lady I know has been doing a MLM for about two years, and she makes about 400 per month. She works as much as she can, and I am actually really impressed with how seriously she has been taking it - and yet, she can't break out of that income range.

Everyone else I know that has tried MLM has had bad experiences. I would NEVER recommend that anyone try a MLM. I've changed my mind about this over the past few years. I feel like there are so many other ways (i.e. simple hustling) that people can get real business experience.

 

[Lauryn]

I don't think that all of the products are bad (I've never personally tried herbalife). I've bought stuff from people selling ThirtyOne, Mary Kay, etc. I DO think that they are typically very overpriced, which makes sense - they have to sell them at those high prices in order to leave all those layers of commissions and bonuses.

(Note: I realize, obviously, that more "traditional" business models also have profits built in to their prices, but I think that a MLM company has almost no flexibility on this.)

What anyone considering signing up for a MLM needs to realize is that YOU are really the customer for the company. That's why they always try to get people to sign up for those big packages, depending on how "serious" you are about launching your "business".

I know a couple who is doing pretty well in an MLM company (maybe 300-400k per year), but they freaking LIVE their business every single second of their lives. All of their relationships with people who aren't doing the "business" with them are completely ruined, since they never talk about anything else. Supposedly, their product helps keep you young and healthy, yet they look much older than they should (stress, since they both quit their jobs to do it full time).

Another lady I know has been doing a MLM for about two years, and she makes about 400 per month. She works as much as she can, and I am actually really impressed with how seriously she has been taking it - and yet, she can't break out of that income range.

Everyone else I know that has tried MLM has had bad experiences. I would NEVER recommend that anyone try a MLM. I've changed my mind about this over the past few years. I feel like there are so many other ways (i.e. simple hustling) that people can get real business experience.

I can say the same thing. As has been mentioned in this thread, there's a lot of bad training. These companies rely on "each one teach one" but many times, there's a hint of desperation in the minds and hearts of the people involved. They're spending money they don't have to buy the promise of time they'll never get by selling something.

When something is new and highly marked up, only the early adopters are interested. The last MLM I held interest in was Bedroom Kandi by Kandi Burruss - you know, the sex toys? However, you had to pay 500 upfront and sell $1k in 30 days or you were forced to pay $1000. You couldn't sell your kit or pieces of it either. I believed in the products and toys, but at the same time, if I need to make money, the last thing I need is something with a contingency over my head.

Most of the MLMs I was involved with had "team" leaders who were doing 2 or more MLMs and had a job. It's a slippery slope. "I'm doing Fine Choice Food Club while I'm building my Mary Kay biz" - one woman told me. And she sold me on both! And at the age of 22, living on my own and nearly homeless (cause I was waitressing at Applebee's during the day - and let me TELL YOU NOW the tips aren't ish during the day in Stone Mountain)... I was trying to do EVERYTHING.

If you're going to risk your time and money with a gamble... and throw your energy and effort aimlessly in the air, I'd rather someone just get a Real Estate license or SEO certification instead. Having none of these things guarantees you're going to be successful, but if you were to "give up" (as many MLM recruits do, being unable to sustain their focus - speaking from experience) then if you were to resume job hunting, you would be able to throw those experiences into your resume.

(Of course we at the Fastlane don't want to believe this is an option, but for many of us it's going to "seem" like it's the "only sane choice"... all I'm saying, is take a risk that can leverage you elsewhere - not necessarily a job, but elsewhere. Not in brainwashing you in the dream and the idea that you're not trying hard enough if you're not being successful.)

 

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[MattCour]

As CommonCents said, the business model of starting an MLM is super Fastlane.. If you are selling products people want and will pay for, I dont see a problem with it.. No one is forcing people to join and sell for a MLM company are they?

 

[mayana]

As CommonCents said, the business model of starting an MLM is super Fastlane.. If you are selling products people want and will pay for, I dont see a problem with it.. No one is forcing people to join and sell for a MLM company are they?

FOUNDING a MLM company is a Fastlane business, for sure. No one here would dispute that.

It's just going to be a tough sell on this forum to get someone to say that JOINING an existing MLM company is a good idea.

Anyone considering starting an MLM, though, has to be really careful that they don't violate any other of the Fastlane commandments. I'm thinking primarily about NEED. If the business legitimately satisfies a real, established market need, and touches thousands (or more) lives in a positive way, that's good. (Scale and magnitude)

If it doesn't, and worse, if it DETRACTS from the lives of those involved in the business, and especially if it treads upon the illegal or unethical, then it's a great way to end up in jail, or at least ruining your reputation.

Edit: Obviously, no one forces people to join MLM companies. It's great for the founders of the company.

 

[Maxjohan]

Compared to Apple, Google and other businesses. MLM isn't fastlane, enough. Maybe I just think big, but I don't see MLM businesses as real fastlane. Amway has okay revenue. But quite a lot less than real businesses like Proctor & Gamble and Unilever.

MLM is just st*pido. Make, say 5% on your direct sales and another 5% on five levels. It's beyond st*pido. Why should anyone do that, when with a real business you could maybe get 25-30% on your direct sales. Then, you don't have to depend on what people in your downline is doing.

MLM's work because they promote the "make money" aspect of the product. And most people when they see and hear that, they see "green".

People should stop and think instead. For every $1 billion dollar MLM business, there are like 100 legit businesses doing the same thing, but not using the "levels" system and selling people on the "dream" of financial independence.

Build a real business instead. That's my advice.

MLM's are good for those who doesn't know any better. (Both owners, and distributors.)

Also like "mayana" said in one of her posts. Most MLM products seems to be kind of overpriced.

But this is just my opinion.

 

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[stranger]

But saying MLM companies are selling crap is just unacceptable.

I only meant 1 MLM-company here.

 

[Maxjohan]

I found this post, kind of a diss to Amway and mlm's: http://www.stardestroyer.net/Mike/rantmode/amway/

This was probably my favorite part: (I hope it's okay to make a quote out of a post, from another website?.)

But if you can do it, the payoff is huge, right?

Let’s suppose you’re a stubborn sunuvabitch, and you’re confident that you can do it. You’re willing to sacrifice most of your family life for two years or more, in order to collect 10 distributors who will be active, and who will stay on for the long haul. So are you sitting pretty?

In a word, no. The truly amazing thing about the Amway business model is the enormous sales volume required in order to make any money. A 1985 issue of Forbes magazine gave the example of Robert Crisp of Tulsa, Oklahoma. This man’s network of distributors generated $120 million (yes, one hundred and twenty million dollars) in sales for Amway, from which he earned $200,000. Just think about those numbers, people! His profit is less than 0.2% of the sales volume going through his “business!” If you had an independent business and you were making less than 0.2% profit on sales volume, would you be happy?

Remember, this is not my words or my post/blog. It's just a post I found, and I found it quite interesting. The article is kind of long, too. But I felt it was worth the read. But that's just me.

 

[CommonCents]

I found this post instead, kind of a diss to Amway and mlm's: http://www.stardestroyer.net/Mike/rantmode/amway/

This was probably my favorite part: (I hope it's okay to make a quote out of a post, from another website?.)
Remember, this is not my words or my post/blog. It's just a post I found, and I found it quite interesting. The article is kind of long, too. But I felt it was worth the read. But that's just me.

People who join MLM's aren't quite at the level or motivation to do what it takes to start their own business. So they follow someone elses. Thank goodness those people are out there. Along the same lines are franchisees to an extent of them paying for an existing concept and executing. People finding their way to this forum prob won't join one but rather consider starting one.

 

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[JEdwards]

This thread is still going..... WTF??

Guys.. Do not waste your time on MLM. Don't do business with broke dreamers and most mlmers that's all they are and all they will ever be period.

If you really think your grandmother is going to stay on auto ship and build you a lifetime of residual income, you are about as smart as a box of rocks.

 

[LOYD]

I'll just leave this right here.

http://www.usatoday.com/story/money/business/2014/03/12/herbalife/6330287/