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Why you should not invest in Network Marketing or Multi Level Marketing?

In last six years I have come across the concept of Network Marketing or Multi Level Marketing two times. Once in 2006 someone very close to one of my friend pitched the full proof concept of GOLD QUEST. Second time in 2011 one of my client pitched to invest in Speak Asia. I certainly rebuffed the pitching of Gold Quest because I was able to see that there is something seriously wrong with the whole concept. I was not able to deny Speak Asia completely but managed to save myself because of a question: What is the business design of this company? It was a big shock to know that Speak Asia was Rs 2000 crore fraud as per Economic Offences Wing of India.

I was more interested to know that how Indians can invest Rs 35,000 in buying coins which will be antique after thirty years or believed that by filling survey forms they can earn thousands of Rupees per month. There are some amazing similarities in GOLD QUEST and SPEAK ASIA concept.

1) Bogus Product: GOLD QUEST was asking for investment on the name of coins which will be minted by a factory in Germany. One point which was special about this minting company was “Olympic Medal is also Minted by this Company”. The economics of antiques is completely different from what GOLD QUEST was pitching. No one can make antiques, it just happen.

The economics of antiques is based on purity, rareness, historical importance, artistic taste and it can’t be reproduced because the man who has made it dead. GOLD QUEST whole concept of antique was fraud.

Speak Asia product was survey which they will sell to companies. The concept was good on Paper but I knew that online survey market was already captured by websites like surveymonkey.com. As a marketing professional I knew that process of online survey  which is followed by Speak Asia was not proper.

You will find that product which is being sold by any Networking or Multi Level marketing companies have serious issue.  I will equate product of these companies with Air.

Why any one invest in Network Marketing or Multi Level Marketing?

1. Boss Pressure

2. Friends

3. Relatives

4. Greed to come out middle of the middle class level.

In maximum cases people have been victim of first three. If your boss has made an investment then his subordinates will cover his fraud investment. This has been the main reason this network marketing has been successful in corporate world. If a  big Kahuna of  any company has invested in any of these Network Marketing companies then  the chances  of poison  of fraud  reaching to lower management level is very high. The educated young middle class bachelor or recently married professional has been the target point of these fraud companies because they have the disposable money.

A friend in need is a friend indeed. A victim friend need another victim friend with whom he can share his victimization. The perfect presentation and logic which is given to come out of the status of middle middle class in a year and a life of vacation in Hawaii is one of the most important point because of which innocent hard working young professional get trapped.

India has huge number of young earning middle class population and they have the money to dispose. Why we have not heard a poor person in investing in these Ponzi companies. It is simple that they didn’t have the money to spend. Any young person who is earning money should also respect his hard earned money. There is no problem in saying no to your boss, friend and relative. It will be a one time no and you have the right to say a big NO to your BOSS, Friend and Relative. It is also important that if you have made a mistake by investing in any of these ponzi companies then don’t ask your friends, subordinates and relatives to invest. Instead you should beware them from these companies. There is no profit in putting a relationship on stake for some short term benefits.

If you think that you have been cheated by any of your Boss, Friend, relative then tell them that straight forward. You have the right to do that.

People who are dreaming of earning millions should know one thing very clearly that there are no shortcut. You have no idea how much hard work done by any entrepreneur to establish a business. The crisis which a person face in his life as an entrepreneur is million times more than any person who is in job. If you want to be a millionaire or billionaire then please go on the path of an entrepreneurship.

Adrian J Slywotzky & David J Morrision has defined business design in their seminal book The Profit Zone. I am quoting verbatim from the book

A company’s business design is composed of four strategic elements

1. Customer selection: Key Issues: Which Customers do I want to serve? Key Questions: To which customers can I add real value? Which Customers will alow me to profit? Which Customer do I not want to serve?

2.Value Capture: Key Issues: How do I make Profit? Key Question: How do I capture as profit, a portion of the value I created for customers?What is my profit model?

3. Strategic Control: KI: How do I protect my profit stream?  KQ: Why do my Chosen customers buy from me?

4. Scope:   KI: What activities do I perform? Business Design: Why Do my chosen customer buy from me?What makes my value proposition unique/differentiated vs other competitors? What strategic control points can counterbalance customer or competitor power?

You can easily find out that any of these Networking companies is faulting on the first point only which is

Customer Selection: Network or Multi Level Marketing companies rule is any one who can pay the money is their customer. No one can serve whole market and any one can’t be the customer of the company. I can guarantee you that if You will test any of these companies on the above model of business design then you can easily find out that there is something seriously wrong with this company.

You don’t need to apply even four points. I am pretty sure that only on the point of customer selection or “value the product will provide”  is enough for any of these companies business model to fail.

You should not invest in any Network Marketing or Multi Level Marketing companies they are Ponzi or Fraud companies that’s why you should not invest. I will request you also to read the history of the word ponzi.

Always remember No one can make antiques, Antiques are accident of some rare chances which happen with the combination of art, uniqueness, timing and history.


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