In this story, we explore why a high-tech telecommunication company based in Miami, Florida chose network marketing to sell its cutting-edge information products; why it is rewarding people for doing word-of-mouth marketing and building relationships, instead of using old advertising models and distribution systems.
“When you have the most advanced technologies,” says company founder and CEO Fabio Galdi, “you need people to spread the news and share their passion for innovation, so you can touch as many lives as possible.”
Fabio’s approach may herald a paradigm shift for business at large—the recognition that the network marketing business model delivers a better return on investment to bring innovative technologies to market.
Fabio’s company is a category-creator that is disrupting “business as usual” by providing its network of distributors with a unique selling proposition, inspiring entrepreneurs around the world to join a pioneer in the network marketing space, as well as in the tech sector.—J.G.
Fabio, tell us a little about your background and how you got started.
I’m from Cava dè Tirreni, a small town close to Pompeii and the Amalfi Coast, famous for tourism as it is one of the most beautiful places in Italy.
As a child, I was passionate about technology and brimming with creative ideas. At age 11, I was already building electronic devices, including an FM radio transmitter to conduct my own shows. I made lots of new friends, as I was able to transmit my voice to their traditional radio.
At age 12, I created my first video game. This was in the mid-eighties before LCD screens and DVD players, when video games were not much more than lights in a box. When I was almost 14, I wanted to get a motorbike, but my father was strongly against it because of safety concerns. I got a traditional bicycle, found some engine parts, and built my own motorbike.
Following my passion for electronic communication, I studied computer science in high school. When I was 19, I opened a small computer shop in my hometown. My father invested all his money to help me realize this dream. Since it was the only computer shop in town, I became famous and sold my computers to almost every lawyer, accountant, and other professional. Even now when I go back home, I meet people who remember buying their first computers from me.
In the early nineties I recognized the new opportunities and unlimited potential offered by the emerging Internet. I was fascinated with the idea that people were connecting their computers and surfing the web for information that was now available from anywhere in the world. Now, we are so used to this, but back then it was quite revolutionary to be able to search and instantly connect with sites in Russia, China, or the US.
I created my own marketing campaign, showing that the Internet was the future and convincing people to subscribe—which meant getting a small modem and dial-up connection. Once more, I turned my passion into a business, transforming my small shop into an Internet provider.
In 1994, I created the People’s Network, an Internet startup that became Italy’s second largest ISP and the fifth largest in Europe in only three years. While serving as its Chief Technology Officer, I saw the potential market and set up a franchising organization with more than 60 points of sale throughout Italy. In 1996 I expanded my activity into the UK.
By that time, the telecom industry was looking at the Internet as a new opportunity, so they started an aggressive campaign to take over and control the market. I quickly created an exit and sold my business for a high return in 1997.
That same year, I made a life decision to move to Singapore. It was a time of great change, not only for business but also in my personal life. I met my wife, one year later we got married, and soon had two beautiful children, Marco and Valentina. I launched my career in the computer industry, opening two manufacturing plants, one in China and one in Thailand. I moved to China for four years and we did over 100 million Euros in sales per year.
Passionate about creating new technology products, I brought to market the first LCD-PC workstation with touch screen. I launched the first VoIP video call on Nokia mobile phones. I spent over ten years in Asia building a thriving career as a computer and telecommunications expert.
This was when the idea of having a small computer with everything inside was a novelty. I remember showing the new concept of touch screens at one of the most prestigious European expos, and people didn’t know how to use the computer without keyboard and mouse. I said, “This is going to be the future!” It was hard to get people to understand what I was trying to achieve. Ahead of its time, the project did actually quite well, but not as well as I was expecting.
How did you come across network marketing?
In 2004 I had moved back to Italy and ran into a friend from my hometown. He happened to be a leader in a famous Russian network marketing company. He knew I was about to launch a new product in the telecommunication space, which was based on Voice over Internet Protocol (VoIP). At the time, VoIP was available in the market for business application, but not really for consumers. As I told my friend about this product, he said, “Why don’t we launch your product using network marketing?”
I was not very familiar with network marketing, except that in the mid-nineties I had joined an American company that sold soap and cosmetics. It was far removed from my culture and background, but I was fascinated with the compensation plan and the idea that you could buy products you were already using every day—cleaning products, toothpaste, cosmetics—and at the same time make money by getting other people to do the same; and that you could start your own business that way.
It became something I played with, and three months later I earned a $700 check, which I later heard was unusual in just a few months. Soon thereafter I quit the business, because it wasn’t the right time for me. I remember my sponsor trying to encourage me to think about my dream car, put a picture on the fridge and near my bed, and dream about it every day. Little did he know that at age 23, I was already driving my dream car!
Remembering this experience ten years later, I became excited about the idea of selling my product through network marketing. Together with this friend, we met with some company owners, managers, and other experts who could help us. I told them, “I can run a traditional company, I know how to manage complex operations, but I have no idea how to run a network marketing company.”
My friend said, “Let’s hire managers who have experience. Let’s get a CFO, a sales director, whatever we need.” We headhunted people who could help us build this company, and in one year’s time we launched our business in Italy and Russia. This was in 2005.
Building these two markets for a few months, I caught the network marketing virus. When you are exposed to this business, when you see the value of the model and what it is really about, you quickly understand that this is not just a distribution system. It’s a way of life. It’s a different way to think about the economy.
Now, 11 years later, my attitude about network marketing has matured, but initially I went through a steep learning curve. Running my own company, I wanted to study and absorb everything. I was not satisfied just knowing about technology, I also wanted to learn about network marketing. I educated myself by listening to CDs, watching DVDs and videos, and going to seminars. I also found a mentor by the name of Randy Gage. I never worked directly with him, but I bought all his materials. I’m proud to say I’m completely self-taught in network marketing, thanks to the Randy Gage trainings. I never sponsored people or built organizations, but I caught Randy’s philosophy and vision.
Having an IT mind, I always look at network marketing from a technical standpoint. I like to see how things work behind the scenes. The dynamics of network marketing are amazing when you look at the numbers. Most people think this is just a way to sell products, but in reality it’s all about building relationships, leading teams, molding behavior, and creating culture. These are not individual dynamics, but mass dynamics, involving thousands and sometimes millions of people. In addition to your product, your compensation plan, and your vision, you need to create a culture and mold it to match specific market segments.
You approached network marketing like a scientist, but it also caught your passion.
Yes, I put my heart into it. An unusual characteristic of my career may be that I see this business from a rational point of view, but I also work with people and build leaders. Nowadays we operate in over a hundred countries, so we work with many different cultures. To me, the most attractive and interesting part of what we do is the relationships we build and the real opportunity we have as entrepreneurs to change people’s lives.
This may sound cliché, because in every training in every company, you always hear people say, “We change people’s lives.” But as entrepreneurs, this is exactly what we do. We don’t use this as a marketing pitch. Thousands of people are trusting us, and we truly see them buy their dream car, build their dream house, live their dream lifestyle.
In this business, your success depends on your efforts. Nobody pays your salary. You need to make yourself and build your income. We see families with children dramatically change their life situation. I travel to India, Columbia, Bolivia, Paraguay—countries where many people are poor, where parents struggle to bring food on the table. You truly get the significance of this business when you work in these markets.
I was in India two months ago for our launch in Mumbai. There was a gala dinner where we were recognizing people who were already making good money. There was an Indian gentleman who came to me and said, “Can I talk to you? I just want to share my quick story.”
I agreed, so he said, “Three months ago, I had no shoes.”
“What do you mean you had no shoes?” I asked, because he was wearing a nice suit with tie, looking very presentable.
He said, “Yeah, I had no shoes. I was on the street with no shoes, and someone talked to me about this opportunity and invited me to a hotel meeting. I wanted to go, but I had no shoes, so the doorman at the hotel wouldn’t let me in. My first objective was to get a pair of shoes so I could enter the hotel and attend the meeting.”
I heard another story in Paraguay: a guy was a street vendor selling food from a small booth he made by hand. Now, he has built a beautiful house for his family and leads an international business.
To me, network marketing is “democracy in business,” especially compared to traditional business, because everybody, at any level, at any time, has the same opportunity to change their life and career.
It doesn’t matter if you enter now or later. If you have a fair compensation plan and good products, whether someone got in five years ago or now, they have exactly the same opportunity. Also, it doesn’t matter where you live. If you do the same amount of work, you can make the same amount of money in Paraguay and Bolivia as Americans can make. If someone can make $10,000 a month in Europe or in the US, you can make $10,000 a month in Bolivia.
The opportunity is the same cross culturally and cross economically.
Yes, and that’s why I believe technology is the best product category for network marketing, because technology is cross cultural. People use the same technology in India, Brazil, or the United States. Today technology is the great equalizer. It’s the only way the world is creating uniformity in terms of possibility, in terms of commodity. If you have a cosmetic or nutritional product, you have to create different products for different markets. In technology, you have one global market.
Technology offers network marketing a truly global product. My smartphone today can be sold in the US, in Argentina and Vietnam, in Thailand, India, or in Morocco. We all use the same technology, so you can do the marketing and education of the network one time for 20 or 30 countries.
Another reason I believe technology can create the next generation of network marketing is that today it is used by everyone. It’s a product nobody can live without. Most other products are for a niche market or a specific part of society.
Twenty years ago, this wasn’t the case, as technology wasn’t as widely used. But today, everyone uses a smartphone, from children to seniors. Regardless of our age, technology is now part of our lives. We have entered a new era of technology where it’s no longer optional, but an essential part of our lives. Many people live without nutritional supplements, but we can’t live without our smartphone. The revolution technology brings to the world is now established. It’s no longer questionable.
What are some of the challenges in selling technology through network marketing?
It’s not been easy, because technology either works or doesn’t. It’s not the kind of the product you can create a story around. Technology is black or white. If you make a phone call, it either goes through or not. It costs you 1 cent or 10 cents. There’s not much to talk about. You have to bring to market a true value proposition, a genuine product at the right price. I cannot sell my smartphone at twice the price of an iPhone or Samsung.
To the contrary, technology products sold through network marketing usually have to be priced lower than the ones from the big brands. This is an anomaly, because most products sold through network marketing are more expensive than similar products in the market, because of the commissions that have to be paid out. So there has to be a unique selling proposition that cannot always be proven. In technology, this is one of the biggest challenges. I cannot offer you an Internet connection on your mobile phone that is more expensive than any other operator, because I cannot say that my Internet connection is better. An Internet connection is either on or off.
It’s really difficult to create a unique selling proposition and compensation plan for a technology product. Also, most technology services are commoditized. There is not much value you can add compared to the traditional brands. I believe this is why there are few technology companies in network marketing. It’s not easy to compete given the network marketing economics.
Why has your company been so successful?
I believe it’s because of our capacity to innovate. Instead of putting our brand on existing products, we build our own. Together with my team, we create 90 percent of our products, from concept to design to manufacturing a physical product or service that goes out to the customer.
All our products are innovative. For example, we had the first smartphone in the market that offers unlimited Internet in 85 countries without buying any subscription. You just buy the phone, and out of the box, it comes with the Internet connection installed. Because of our strong unique selling proposition, we can stay in the market and get tons of people excited about our products.
We recently launched the first smart glasses for virtual reality and augmented reality. In this market, we compete with giants like Google, Microsoft, and Sony. You may see our product positioned like theirs, but we have chosen to distribute them only through network marketing.
Here I need to make a quick clarification. I always like to say we are a network marketing company that distributes technology to consumers, not a technology company that uses network marketing to distribute products. It sounds similar, but it’s quite different. The reason we are still in the market after five years, why our company is growing, and why we are one of the few technology companies in the network marketing space, is simply this: we define ourselves as a network marketing company first.
What’s the difference? When you’re a network marketing company, you have to build your company around totally different criteria—starting from the quality of your managers, the formation and the knowledge of your team, your own organization, and your marketing assessment. Many companies fail in this field, because they are first a technology company and don’t understand the network marketing culture and dynamics. They think this is just another system to distribute their product, like the franchising model, except it’s network marketing.
Our company is multinational. Based in Miami, USA we operate in the UK, Ireland, India, Singapore, Tunisia, and many more countries. We hear a lot of different accents, but I always say, “It doesn’t matter what kind of accent you have, as long as you have the MLM accent.”
If you have the MLM accent, you can work well in this company, and we can create the right communication and correct strategy for the market. We help people understand that network marketing is more than a distribution system; it’s an entire culture and lifestyle.
How did an IT entrepreneur become so passionate about network marketing?
I fell in love with this business, because from the first moment I worked with the people in the field. I worked with my leaders, and even with prospects. We decided from the beginning not to have the typical corporate structure where a specific person oversees the network of distributors. Instead, we decided to be in the first line. I have built my company outside the concept of the ivory tower. Instead, I do my events directly with the field leaders. We created a council where the top leaders in the company can sit together with me and the rest of the corporate team to discuss strategy, new product lines, new promotions, and so on.
Many times when I expose my company to top leaders, as in the past few months, they are surprised, because they expect to see the typical MLM organization with a Vice President of Sales who works in the corporate office. In our company I’m directly in the field. I like to talk to my leaders to give my vision and ideas about network marketing. I am very proud of this, because I believe that together, we can bring network marketing to the next level.
Today the Internet and technology have brought a revolution. The old story about network marketing was that we bring products from the factory directly to the consumer, instead of paying advertisers and going through all the channels. By cutting out the middlemen, the company saves time and money, so it can pay the distributors for promoting the product. Today, with e-commerce, this story no longer holds up, because there are many ways manufacturers can sell directly to consumers. Think of Amazon, eBay, and Alibaba.
Even if you buy an Apple computer, chances are you buy it directly from Apple. It’s easy to get new products or new concepts to market without any intermediary, especially with social media. In addition to network marketing, we now have Internet marketing, social marketing, viral marketing, and phenomena like Kickstarter where new products can get market share just by people talking to other people. Consequently, for network marketing to continue to flourish, it needs to reinvent itself.
How do you see this next generation of network marketing?
We need to understand that the world has changed. The distribution of products and services has changed, so we have to find new ways and new motivation for people to join a network marketing company. Today, I believe that technology is one of the answers. Why? Because technology has all the elements of the kind of distribution dynamics we need. When people discover an exciting product or a new invention or a technology product, they talk about it. They share their experience on social media, where millions of people can get to know the product. What are these social media phenomena, if not the basics of network marketing? We simply have to go back to the basics, which means offering a product or service people truly want to use and spontaneously want to promote.
The key is no longer the compensation plan or the bonus check. The key today is to have a real offer and a real demand from the market. If you have these elements, you can grow a healthy company that can stay in the market for the next 20 to 40 years. With what’s been happening this last year, many U.S.-based network marketing companies have realized what’s going on. The market—and the regulators—are forcing companies to have a real product that responds to a real demand. If you have a genuine demand for your product, people will promote it to their friends and anyone they’re getting in touch with.
I strongly believe that the best of network marketing can be created by a product that offers true innovation. What makes me proud of my product is that somebody can say without talking about the compensation plan, without talking about opportunity, “Look at this product. See how nice it is. Here are the benefits.” Our customers are easily able to convince others to get our smartphone or try our brand new wearable technology.
We did a lot of testing in the market, and when you promote just the product and its features, people say, “I want one. I want two. I have friends who surely will want to get one of these products.” I always tell my people, “If we have this kind of product, if we have real demand, presenting the opportunity and compensation plan is just icing on the cake.”
This gets you customers in a very genuine way. No need for sales techniques or any sophistication.
That’s right. We’ve put 11 years into finding the right proposition, the right product, the right service to build a healthy, credible, sustainable network marketing organization.
Today, we have two products—our smartphone with Internet already on board inside, and the other one is a wearable product that combines health and wellbeing with technology. We are crossing old lines that have never been crossed before, which is my new challenge. We’re going to produce 100,000 units to do a first-time launch in the market.
In the next two months, I’m flying all over the world to promote a product I created with my team of engineers, but the concept is straight out of a sci-fi movie. I was getting this Canadian series called Continuum from Netflix. When the series was in its third season, I looked at this product and said, “This is so cool. Why don’t we create this in real life?” I started to study, and my engineers worked on the technology that had become available.
Today I want to be in the front lines to promote it. I will be giving presentations to leaders and sometimes even to prospects, as prospects are future network marketers. I’m personally demonstrating the product and teaching the concept, because what could be more exciting? We are literally bringing an idea from a sci-fi movie into reality and sharing it with the world.