As wonderful as it is, the Internet has a dark side: as the “people’s soapbox,” it provides a ready forum for anyone with a PC—regardless of research, accuracy or credentials. The sheer fact that you can “read it on the Internet” tends to make a “fact” seem credible. Are we really that gullible? Alas, all too often, yes…and I still get letters like this one:

“My friends and family keep trying to get me to join MLM deals that look like pyramids. I read on the Internet that ‘All network marketing deals are pyramids,’—and all I’ll get is grief and in trouble. Are they right? How can I tell if an opportunity is legal or not?”

Let’s set the facts straight.

Network marketing is a massive and growing, legally recognized profession. International and even global expansion is commonplace now in network marketing. Real estate, mortgage brokers, Internet services and many other “conventional” companies are turning to network marketing. Why? Because network marketing pay plans produce higher incomes and happier representatives.


The Acid Test

A pyramid scheme is a system designed to have money change hands rapidly, flowing from the “bottom” to the “top.” It doesn’t sell a real product or service of any value to end users: it’s a financial shell game.

How can you tell if worthless products or services are part of the deal you’re looking at? Ask yourself, “Could I sell these products or services to people who didn’t belong to the scheme? Would they be willing to buy them?”

Illegal pyramids are based on taking money from the last people in. Someone has to lose money for you to make money. If recruiting new people stops, the entire system collapses.

In a true network marketing program, even if recruiting came to a complete halt, the last person in could still make money by selling products and services. When I examine any new network marketing company, the first question I ask is, “If no new people were brought into the company starting tomorrow, would the company still be in business next year?”

The best companies in network marketing provide people with legitimate and often exceptional products and services at a fair price. People buy because they want them. It provides a powerful growth channel for both companies and their representatives.



I have owned 16 businesses, three different franchise operations, and participated in a 40 other ventures. Most required money in the six-figure range to get started. Most demanded killer amounts of time. The return on investment (ROI)—in terms of time as well as money—is better in network marketing than in any other form of venture.

Network marketing is about leverage. You invest your time by multiplying your direct efforts in sponsoring other people, and then earn a small income on their efforts. You don’t have to hound family and friends. With the Internet providing leads and training companies you can do well on your own.

You don’t need any specialized education or skills. You don’t have to be a rocket scientist to earn a good living. Anyone with a high school education—or less—can go to the top. I have helped handicapped and elderly people succeed by teaching them and their folks to sponsor others and then duplicate themselves, creating compound growth and resulting in hundreds and even thousands of people coming into their businesses.

As with franchising, a simple, duplicable system is the driving force of good network marketing companies. Many provide training that would cost a serious bundle if you were taking it in a business school or public course—if it were even available.

However, there are no big cash requirements to start,
as there are with a franchise, and any volume quotas or ongoing requirements are usually minimal. And network marketing offers many tax advantages that a part time job does not. Working from your home provides a low-overhead business.

There are also no geographical limitations, as there are with a franchise. Like to travel? Congratulations: in this business, you can create a network of friends that stretches over the continent, even the world.


Work Slow, Retire Rich

“Get rich quick”? Not in network marketing. John Fogg calls it “get rich slow,” and he’s right. Some novices have made large amounts of money quickly, but they are the exceptions, not the rule. “Getting rich slow” is the best attitude to take.

If you work at network marketing slowly and consistently, you will have a steady stream of income within a few years. For some, having a house payments covered and a new car paid for are enough.

Some people make a great deal of money through network marketing. How? Through hard work. It takes time, education and diligence to learn how to build a large organization that sells large volumes of products or services. It takes learning about
people and the details of what you’re selling. Most network marketing companies or large distributor groups have professional, effective training systems to help “newbies” learn the ropes.

In fact, the biggest shortcoming of the business is the number of people who join who are not willing to put in the time and effort to learn how to properly promote their products and companies. Such folks are hoping for instant gratification (read: money), not a long-term financial growth plan.

Americans are generally very bad at putting money away for retirement. Network marketing can provide the money for your future. Take it easy and study hard! Work a set number of “dedicated” hours each week; don’t quit. You may have to try several companies; don’t quit! The only way to fail is to quit or not work.

Network marketing is the last hope for the little guy, the most truly democratic business opportunity there is. I devote my time now to protecting this wonderful profession and the people in it by tracking down pyramid schemes and scams, because our noble profession is the brightest spot in modern business, and it deserves to shine!


ROD COOK is an industry
consultant, veteran distributor, and is editor and investigative arm for
MLM Insider magazine. He is also
chairman of the Consultants Credentialing Committee of the Multilevel Marketing International Association (MLMIA) and cochair
of the MLMIA’s model MLM
Legislative Committee.