This article is Part One of Three in a series of the top three things all veterans should avoid when eturning from the military. The series has been compiled from lessons learned, too often the hard way, by veterans I know, and by yours truly: Me. I hope this series steers you to success, even if slightly.
The three things all veterans should avoid are:
1) Pyramid Schemes
2) Binge Drinking
3) Unnecessary Responsibility
This is the most controversial post because it will enfuriate a lot of people. Basically, the people that are currently involved in a pyramid scheme. But I do it because I believe it needs to be said and because I have seen too many of my fellow brothers and sisters fall pray to these schemes. So remember, it was put together with the collaboration of other veterans, with the intent to help.
After leaving the military, or when you are in the military but getting ready to leave, many service members get lured into these schemes. While in the past they were straight fraudulent and their founders were ferried off to federal prison, they have evolved into legitimate businesses. While this may prevent their victims from committing suicide after losing their life savings, it doesn’t prevent them from ripping you off. The difference is, now you get ripped off legally.
The reason many vets and service members get sucked into theses schemes is because these schemes depend on building a network. The military is the biggest network there is, making it easy for young men and women to think they are joining something legitimate, because the person recruiting them is usually someone from their own military unit.
Pyramid schemes claim to make you a business owner, an entrepreneur, and cater to the military’s work ethic and camaraderie, but ultimately they are praying on your desperation to find a source of income.
Never have I ever known a friend that became wealthy, better yet, made a living off of a money marketing scheme. Actually the only reason they were able to stick with the schemes they were in for so long was because they were 1) still in the military 2) living with parents or 3) had a primary source of income.
You can recognize a pyramid scheme easily.
#1: You know its a pyramid scheme if they have to tell you they are not a pyramid scheme. No legitimate employer will ever have to mention this in a recruitment pitch. If you are required to purchase minimum amounts of merchandise at scheduled intervals, if you are required to recruit others, if you are collecting a small percentage of commission from those you recruit and in turn, you are paying a small commission to the person that recruited you… its a pyramid.
#2: They blatantly tell you they are a pyramid scheme. The difference is they don’t call themselves a pyramid scheme, they use the term “multi-level marketing company.”
#3: They coach you on how to make “your own website.” However, all you are really doing is purchasing your own domain name, which then links into their own website, which is just more of an affiliate link to keep track of your sales for them. Or they claim to be coaching you in anything, often times calling your boss a “mentor” or a “coach” who claims you too can be a “mentor” and a “coach” who will one day help your other buddies.
The only person that can make a living from this system is the person at the top and founders of pyramid schemes don’t just make a living, they get filthy rich. This is why no one has been able to get rid of them. The billions of dollars generated have afforded these companies good lawyers, resulting in the evolution of multi-level marketing schemes into companies that now resemble legitimate companies. Worse yet, they are transnational. Even when one country bans them, as Germany has banned many, they still generate millions in other countries while simultaneously planning their refurbishing to re-enter the country that banned them.
For example, Herbalife (listed below) hired a former Federal Trade Commission official to run its compliance operations. That is the equivalent of a mafia drug cartel hiring a former DEA agent. It’s just a dog hair away from bribery, yet its completely legal.
Examples of the top 3 pyramid schemes are:
3. Mary Kay
All three companies at one point or another tried to recruit me… via guess who? That’s right, other Marines that I worked with. When the person doesn’t make money, they blame them for being lazy and not working hard enough. The problem with this is, the only way to truly make money is to recruit more people into buying your products, otherwise you will barely scrape by.
This is why the entire system falls apart for approximately 97% of people. It is completely unsustainable because it is predatory in nature and continually needs new members to exist. Without new members, the company falls. For those that are completely clueless as to how a pyramid scheme works imagine this.
Instead of me selling my awesome hoodies, I recruit 5 people to buy 10 hoodies each. Then I add stipulations like, stating you must buy 10 hoodies every month and sell them all. Of course they keep one so they wear it. They get to purchase the hoodies at 50 dollars, and then sell them at 60 dollars to the next 5 people they each recruit. This way they make 10 bucks off every sale. The person below them then has to recruit another 5 people who then by the hoodies at 70 dollars. This way everyone in the pyramid is getting paid 10 bucks a hoodie, however, I get 50.
This makes for a very bad scheme, but it gives you a very overly simplified example of a pyramid scheme. The business model is predicated not on providing a product but upon recruiting people who are the ones actually making the purchases. In real life, selling the products is difficult and getting new recruits is even more difficult. This is why these companies would hire motivational speakers and have big rallies to get everyone excited to keep selling. Nonetheless, its an unsustainable system.
What keeps it alive is PRIDE. Once people are in the pyramid game, their ego prevents them from facing the reality that they are being ripped off. Plus, now they have to save face to their friends and family who tried to warn them it was a pyramid scheme. Even after the person quits, the shame of having been a part of this keeps them from talking openly about their experience, or even admitting they were a part of a scam.
While entrepreneurship has been touted as the premise for joining a pyramid scheme, Herbalife ingeniously combined fitness into their model. Herbalife added a whole new dimension of predatory tactics by not just targeting people desperate for income, but people also desperate to stay in shape, and or make a living training others to stay in shape. People get swindled even more because the added dimension of fitness allows them to rationalize why they would allow themselves to get ripped off.
“Well, at least I am eating better and losing weight,” is one of the many ways people rationalize these types of pyramid schemes.
If you want to be an entrepreneur, a fitness coach, a business owner, then go do it. But I recommend staying away from pyramid schemes, the amount of work required to survive in one is UNSUSTAINABLE. Its bad enough losing money, but what you really lose is time.
If you absolutely must engage in these schemes, do your research first and remember: talking to other people that are a part of this is not research. The web is full of articles listing all the law suits and court cases, and settlements and I recommend you read these first, so you at least know the game you are entering.
It’s my belief that people get sucked into these schemes because they just don’t know enough about business. Therefore, I recommend getting yourself an education on how to start a business instead. While this list is not complete, its only a start and I believe will get you motivated:
If you can study MCIs (Marine correspondence education), you can read these, especially since they are actually entertaining.
The last book has more to do with job hunting, but it changed my life and it has a section on entrepreneurship as well. I include in my article 3 Books Every Cop Must Read.
If you do purchase any of these books, a small percentage of proceeds will go towards funding this website, and I thank you in advance for your support. However, making a buck is not the goal here. You can also listen to the audio books of these books completely FREE on YouTube, with the exception of What Color is Your Parachute. If you happen to find the free audio book, shoot me an email, I would love to catch up on the latest version next time I am commuting to work.
I hate to admit it, this article was not motivating for me to write and I don’t expect it to motivate you. But if it can prevent at least one veteran from falling into the trap of pyramid schemes, then I have accomplished my mission.