What Is A Pyramid Scheme?Essentially, a pyramid scheme is an investment "scheme" wherein money must be fed into the bottom of the pyramid to keep things growing.
How Do Pyramid Schemes ‘Make Money?’
Pyramid schemes make money when a scam artist gains the confidence of their victims then convinces them to ‘invest’ their money by signing up into the pyramid below the recruiter. The scammer then pays themselves the proceeds from the sign up.
The con artist then trains their new recruits to subsequently go out and recruit others so they too can ‘get their original money back.’ This goes on and on as new recruits wanting to quickly get back their original investment, actively recruit others.
Typically new recruits are extremely eager to find other new recruits so they can make back what they’ve forked out.
If they’re ‘lucky,’ the recent recruits will make back their money and if they’re lucky and recruit enough people to recover what they’re out, they can actually start ‘making money.
Basically, the greater amount of new recruits they sign up, the more money they make.
However, a pyramid scheme can't carry on forever. Why? Simple, pyramid schemes have no business model; it's just an organized house of cards which means that the earlier get in to the house of cards (i.e., the top of the pyramid), the greater your chances are of making back your original investment and maybe more.
Pyramid schemes are fed from the bottom with new recruits. In order to keep the pyramid from sinking into the sands, the bottom must be fed with new funds. As soon as no one is funding the base, the pyramid stops.
Pyramid Schemes Always Fail
Eventually, like a house of cards, real pyramid schemes will collapse under their own weight, simply because it runs out of new recruits to scam.
Remember chain letters from junior high school?
A typical chain letter consists of a message that attempts to convince the recipient to make a number of copies of the letter and then pass them on to as many recipients as possible.
Most chain letters include common threads of deceit such as emotionally manipulative stories and or get-rich-quick plays; the whole ‘send a dollar to the person at the top of this list’ routine.
Common to all chain letters is some form of the classic ‘takeaway sales close’ wherein the reader is ‘threatened’ with a potential loss of some sort.
Often the reader is told they’ll lose out on some great financial benefit if they fail to act or worse, they may be threatened with some form of bad luck or personal harm if they break the chain and fail to fulfill the terms of the chain letter.
Today, charlatans are savvier in their deceit by using email, blog postings, and social media to spread their schemes.
How does this relate the LIFE Business? Simple.
If the LIFE Business is a pyramid scheme like a chain letter in which the success of the scheme is totally based on first feeding the pyramid with new recruits by swindling hapless new victims, instead of the offering solid, desirable products along with highly effective leadership training, then the LIFE business will ultimately fail.
But, is this the case? Read on.
Straws and Bricks
In other words, it takes straw to make bricks.
So Dathan, how can we meet our tally of bricks and continue to build the LIFE pyramid without new straw being added to the mud pits? We can’t; ergo, the LIFE Business isn’t a pyramid.
Pyramid Schemes: How to Identify & Avoid Them
Typically pyramid schemes fall into the ‘Short Con’ classification (as opposed to the Long Con). Con artists run short cons to make a fast buck from their victims because they know there’s a small window of time to pull everything off.
Direct selling companies such as the LIFE Business seek to make money along with their distributors by helping the distributors build their respective businesses by selling consumer goods and services AND recruiting.
Therefore, the key to success for any legitimate company is to rely on solid sales over time coupled with a strong customer base that both enjoys and uses the company’s services or products.
Remember a pyramid scheme counts on you making a large upfront payment, from which the scammer derives their profit and then quickly and quietly moves on.
Scam artists aren’t concerned with building a solid business over time because they fully know that time isn’t on their side; quickly both the scheme will collapse and the Feds show up with handcuffs and handguns.
Unfortunately, by that time both the ‘business opportunity,’ the recruiter and your money are long gone.
Therefore, if the LIFE Business was a pyramid scheme, do you honestly believe that they’d fill stadiums with people? Do believe they’d have a physical address you could drive to?
Remember how Bernie Madoff operated? He was a classic confidence man who operated in the shadows; working referrals provided by people who trusted him…he didn’t fill stadiums.
Aren't Pyramid Schemes, Ponzi Schemes and Multilevel Marketing all the same?
Lots of people mistake pyramid and Ponzi schemes with legitimate multi-level marketing businesses (MLM's).
In contrast to pyramid or Ponzi schemes, MLM's offer a real product to sell. Most importantly, network marketing companies actually sell their product to the public, without requiring public customers to pay anything extra or sign up in someone’s down line within the organization.
Most critically, network marketing companies may pay commissions to a long string of distributors; however these commissions are paid from the proceeds from legit retail sales, not from the money taken from new recruit sign ups feeding the bottom of the pyramid.
Where Does The LIFE Business Differ?
By contrast, the LIFE Business is designed to help people.
Whether you’re successful running your own lemonade stand, dry cleaning store, or the LIFE Business depends on a single factor: YOU.
Ask yourself if you’re willing to attend meetings, read and listen to motivational material chosen to both make you squirm because the truth is hard and see the gap between your current state and your desired state? If so, then you’re starting to get it.
Most of us already talk attend meetings, read books and listen to a variety of things (both good and bad); however, are you willing do these things to change yourself and your current condition?
Finally, once you start changing for the better, are you willing to talk to others and help them feel the uneasiness and eventual damage of complacency?
After you personally begin to change, money can become secondary as you develop purpose. LIFE teaches you to surround yourself with others with purpose and positive energy, and choosing to live with intention.
Is There A Cost?
Yes, everything has a cost. In fact, if someone offers you something for ‘free’ start at the top of this article and re-read it.
I’ve read critics who counter that self-help books are readily available at the library and that you can go on Amazon and buy self help books without LIFE. True statement.
However, I can purchase TIME LIFE series on home-based surgery and take out my sons tonsils to save myself a little scratch; cost saving yes, but stupid.
What LIFE offers is different. You get leadership mentoring, friendship within a group dedicated to success and community of likeminded individuals.
You pay for everything in life: housing, fuel, utilities and education. Do you know of any free universities? Remember, stupidity is still free.
The LIFE Business is no different; there’s no hidden cost…you’re paying for life changing education.
Is It Fair To Charge For Leadership Training?
Of course it’s fair; people for hundreds of years have paid for advice. Kings and queens had counselors and advisors. Today people pay for life coaches. In fact, Tony Robbins charges significantly more than LIFE.
However, the LIFE Business gives something in return; you receive back some of what you spent and, by helping others improve, you can get back some of what they’ve spent.
But above all, you’re helping yourself and others improve.