“It’s a Set up for Failure”
By: Erik Jones
Tags: Podcasting, MLM, Podcast, Entrepreneurship, Interview

An interesting modern Rorschach test is to simply say the words “multi-level marketing” (MLM) to someone. You are sure to elicit some form of annoyance, curiosity, or maybe even defensiveness. There will be no shortage of opinions, but your conversation will probably be based on anecdotes and emotion, not expansive reporting or facts. This is because as an industry, MLM companies — or direct sales as they label themselves — go out of their way to obscure any data about how their business model works.

This is where The Dream comes in. The first season’s 11-episode examination of the history of pyramid schemes and multi-level marketing, is, as a whole, completely satisfying, and it will likely maximize the amount of cynicism you can hold towards a business model.

We recommended The Dream in our 100 Outstanding Podcasts of 2018, and it was among the most recommended shows overall of last year (including by Time and The Atlantic). The show is a production of Stitcher and Little Everywhere, and is the type of deep but human reporting that podcasts can excel at.

The reporting on The Dream is done by a team of three. Jane Marie (of This American Life and DTR) is the host, expertly weaving a narrative of deeply flawed business practices with more nuanced stories from family and friends in her hometown of Owosso, Michigan. MacKenzie Kassab (The Wall Street Journal, Jezebel, The Hairpin) is a writer who goes undercover to join the ranks of an MLM company called Limelight. Dann Gallucci is a podcast producer (Bullseye with Jesse Thorn) and musician (Modest Mouse, Cold War Kids) who digs deep into and reports on the historical and political side of MLMs.

I had the pleasure of speaking with all three of them shortly before the release of their season finale in the late fall of last year.

(This interview has been edited for length and clarity).

THE INITIAL PITCH

I would love to know how you all met and how The Dream ultimately came to be?

Jane: People always ask where The Dream came from, and honestly it was Laura Mayer at Stitcher. She called us up a year and a half ago at Little Everywhere to see if we wanted to produce the show. But all she had at the time was “MLMs!” And we were like “OK!” And then because we had personal experiences with them and feelings about it, we ended up coming back to her being like, “Well, let’s just take it and host it, not just produce it.”

PERSONAL HISTORY WITH MLMs

I’m so glad you guys did this show because as you mention early on, there’s just not a lot of information about MLMs in academia or in journalism. And I know, Jane, you talk quite a bit about your background with your hometown in the series. Now for MacKenzie and Dann, did you guys have any kind of strong connection with MLMs prior?

MacKenzie: No. I mean, I had a cousin that was involved, but I honestly didn’t really even understand how the business worked, which made it even more surprising and eye opening as Jane was explaining to me how her family was involved. And then as we started doing a little bit of research it was kind of like, “Oh my god, I didn’t realize this has existed under my nose this whole time.” So that made it exciting for me in a very different way. But equally interesting.

Dann: I had none. I went on the internet the day after we had our first meeting.

Jane: He opened a door that no one would ever want to open and Dann had to jump in.

Dann: Yeah, I think it allowed me to have a slightly different take on it because I started looking into people who are anti-MLM activists, and then I went down a path of “How does this stuff exist? Why hasn’t the government looked into this? Or if they have, what’s going on with that?” That thread was kind of the thread I ended up landing on.

DIFFERENCES BETWEEN MLM COMPANIES

The MLM industry likes to label itself as direct sales, which has a more legitimate ring to it. Did you end up finding any companies that do follow the MLM model that you feel are good businesses, and it’s all on the up and up?

Dann: We were specifically looking into companies that fit the term multi-level marketing, but that was something we did not see.

Jane: I think what we fundamentally have an issue with is the business model, and we have come to the conclusion — and I think we have reached a consensus — that this business model is bad.

Dann: It’s a set up for failure unless you get in early and you’re one of the people at the top. I mean, any model where you need to keep recruiting people in order to keep money flowing to the top is dangerous.

THE LOPSIDED POWER STRUCTURES OF MLMs

One of most fascinating things I’ve learned from the show is how power structures can work. The way multi-level marketing has inserted itself within the power structure of Washington was just fascinating to me. I feel like it’s easy to be smug towards people who join MLMs, but in reality we should be angry towards the politicians and the people on top. Is this something you were aware of before starting your reporting and research?

Jane: [laughs] Our walls have been covered with various post it note maps. Like, here’s what’s going to happen, and pfft forget that. Now here’s what’s going to happen, and then all right forget that. I think we have the last version and it’s still in the kitchen on the wall. We should frame it because it’s nothing like the first a year ago.

Dann: We talked in an earlier episode about the way the FTC had gone after these companies in the 60’s and 70’s as though they were an actual threat to society and that they were presented as a consumer protection issue. But then there was the emergence of political power specifically from the Amway folks. Then that would just continue to grow and keep going for the next four decades until now, with President Trump having lent his name and having been weirdly involved with the industry, including one called The Trump Network. The whole thing was surprising to me.

Jane: Yeah, that surprised all of us, just how far up to the top of the powers that run the world it reaches.

The goal of these companies is getting people to leverage trust with the closest people to them, their family members, their best friends, their coworkers.

MacKenzie: I was sort of expecting to go into this with a better understanding of how people operating the MLMs worked. Like, I would go to the conference and see the kind of language they used or how they’re running the meetings. I did see that. But, I think I was much more touched on a personal level with the stories of the people that were there.

I really thought I was just going to have a better understanding of the business. What I got instead was something that affected me on a very intimate level with normal women who I could see myself being friends with, outside of this conference room. I mean, I don’t want to say that I had preconceived notions of who would join an MLM because — like I said I have a cousin who’s in one and I’m friendly with her — but they’re just nice average women.

Jane: There wasn’t like a rah rah session.

MacKenzie: Not at all.

Dann: Like what you were saying about trying not to be smug. We definitely went into the season with that in mind. We did not want to either create victims or to be cruel or mean.

MacKenzie: Or condescending.

Dann: Yeah, or condescending to the people involved for a number of reasons. Jane’s obviously…

Jane: Because that’s my Grandma! [laughs].

Dann: I could be susceptible to this. I know that. Absolutely. So that was a goal. I was pulling clips two nights ago, and there was a woman speaking on YouTube that was working with Limelight, and it was perfect. It was exactly what I needed as far as what she was saying, but I felt terrible. I felt terrible for this person who obviously seemed like a really nice person that was trying so hard and was stuck in the middle of this thing. That’s condescending on its own and I realize that but…we mean to say that we have a lot of heart for the people who are doing this.

I think that comes across really well, too.

MacKenzie: We had some meetings at Stitcher where a bunch of us were sitting around, and I think most of us were like, “I can see the point in my life where this really would have appealed to me.” When I was right out of college or when I was moving into an apartment, I could see how this would be super appealing with the language that they’re using. So I don’t think any of us are like, “Oh those idiots.” We all see how easy it is to want to believe it.

Dann: The goal of these companies is getting people to leverage trust with the closest people to them, their family members, their best friends, their coworkers, whatever it may be like. That is how you get people into this network. They’re good at it.

Dann: The industry is exceptionally adaptable at all things, including getting around laws and getting around compliance. But also they’ve learned how to adapt their language for a modern era. Limelight in particular is really good at that.

MACKENZIE GOING UNDERCOVER WITH LIMELIGHT

Mackenzie, I would love to ask you a few questions about your experience going undercover with Limelight. So first of all, how did it feel in the middle of it when you couldn’t reveal anything to your friends and family?

MacKenzie: I think it was kind of disappointing because everyone ignored me, too. They were all just kind of like, “What are you doing?” I asked them after the fact, “Why didn’t you come to this party that I was hosting?” And they said, “Why would I pay to come and hang out with you?” or, “You know, I didn’t understand why you keep posting those makeup messages, but I just muted you on Facebook.” So it was just alienating people without even really realizing it. But no one really said anything to me, which is interesting. And I think that’s part of the psychology of it. Like, no one was saying to me, to my face, “This is so weird. Why are you doing this?” Instead they were just ignoring my messages or not showing up to my party.

And that’s the insidious thing about what they do psychologically. I’ve seen people lash out on Facebook, saying things like, “Oh, now I’ll know who my real friends are, the ones who support me,” and it just drags people away further.

MacKenzie: Right, definitely.

Dann: You gotta stay away from stinking thinking. Let’s not associate with people who are skeptical about this business model. Otherwise you will not succeed. [Sarcastic, as something an MLM sales trainer might say.]

Jane: That might be my favorite thing from Robert [Fitzpatrick]. When he was at some conference for one of these MLMs in Canada he started doing some math about how long it would take to recruit everyone on Earth. And he told the guy on stage, and the guy was like, “Look at this guy with a calculator, he needs numbers!” [mocking voice].

Dann: Look at the loser and his calculator. If that’s what you think you need to succeed then…

Jane: You have no vision. [laughs]

REACTIONS FROM HOMETOWN OF OWOSSO, MICHIGAN

Now that this season is almost over, Jane, how has the reaction been from your hometown, or MacKenzie, even your friends after the fact, now that they know what’s happened?

Jane: Well, my grandma and my aunt are wondering when their next episode is going to be [laughs]. I’m not kidding. My aunt texted me the other day like “Is that it for me and grandma’s parts on the show?” and I just said, “I don’t know. I’ll know later.”

My friend Danielle who works for Thirty-One, she’s the one that makes $42,000 a year….fucking looooved it. I mean, her upline emailed her and said, “Wow you did such a great job representing the company. You were so professional. We’re so proud of you.” And she still texts me all the time.

MacKenzie: I do our social media stuff because we’re a small operation. And so I’m looking at what people are saying about us and so many people have said, “Jane’s burning bridges with everyone in her town” and “You know that Danielle must have put her on her shit list.” But no.

Jane: Yeah, no. Like every other day she’s texting me things like, “Want to do a give away? Maybe your listeners would want some bags.”

Dann: I think that goes back again to the approach that you specifically took in your writing around those episodes.

Jane: Yeah, I never lied to her. I mean, there’s no way she would have thought I was coming in to, you know, do some fluff piece. She’s known I was the girl with the shaved head on the bus. I wasn’t about to be on board with Thirty-One.

THE CAREFUL TONE OF THE WRITING

How did you approach how to walk the line on the tone you took? You did a really good job with the writing in explaining everything, but also not being too generous to MLMs, but also not making the people within them ostracized.

Jane: That’s just who I am. [sarcastically] [laughs] I’m joking, but my last big endeavor besides Tinder was this kind of intersectional inclusive beauty blog over at Jezebel where you got a lot of practice just giving people respect, and trying to be kind and critical at the same time. I just wanted to be honest and not be a dick.

Dann: It was a hard process to try and walk that line between telling a story that we felt very much needed to be told and included people that you were close to without alienating them.

Jane: Or the listener.

Dann: And it wasn’t just about the individuals. It’s about the town and also the class structure.

Jane: About women in general. I mean, there was a lot to consider. I got started in public radio right out of college. I went to college late, so I was a little bit older [laughs] but I was just out of undergrad. Most people in that world at that time were people of privilege. People who went to really good colleges and all this stuff. I’ve felt that since I started working in journalism I have always been a little bit of an outsider and wanted people to treat me and my people with respect. And that didn’t always happen.

And so you know what that feels like.

Jane: So that’s something I think I’m hyper aware of.

Dann: I’m endlessly grateful to Jane for being able to pull this off. MacKenzie and I did a lot of reporting, but Jane did the writing. And she was able to strike a tone that I think was really special. I don’t think the show could have been that way if anyone else had written it.

THE MLM CULTURE OF SECRECY

Why do you think there is so little about MLMs out there? Besides the forums and blogs of people venting and within certain sub-Reddits.

Jane: It’s by design. Well, first, almost all of them are privately owned companies. They don’t have to divulge any information about how their business works, or money, or numbers, or anything. They don’t encourage their workforce to keep their books.

Wait a second, now I get why 99% of people either lose money or break even.

Dann: One of the things that we started talking about a couple months ago is okay, imagine an MLM recruitment pitch based entirely on numbers. No rhetoric whatsoever. Just numbers, like someone came up to you while you were in college and said to sell these knives. I’m gonna lay it out here. Here’s the numbers. This is how you get paid. This is what you’re going to need to spend in your cost, and on and on. That’s never happened before, and it couldn’t happen because if you looked at those numbers you’d be like, “Wait a second now, I get why 99% of people either lose money or break even.”

Jane: It’s a pillar of their business model. It’s to not talk about numbers. Do not talk about dollars. Do not talk about the data.

Dann: That’s one of the reasons why they have what is called an independent distributor as opposed to an employee or a franchisee. They’ve worked really hard to get underneath the franchise laws, mainly for disclosure. We spoke with a woman named Christine Richard, and she’s been trying to get sued by Herbalife for years because if they sued then she could request disclosure from them and could finally see their numbers. This is a woman who’s a financial analyst and a financial journalist who spent almost a decade working on this, and she doesn’t know all that she needs to know because they’re so good at hiding it.

MacKenzie: What’s also interesting to an outsider — people who are not involved in MLMs and with uplines or downlines or anything — is that the companies do a really good job of making themselves look like regular old companies. So if you go on the websites for Limelight or a lot of the other beauty ones, they look like legit companies. If I’m someone who doesn’t know a lot about MLMs — for example, Beautycounter is one that keeps coming up on our social media a lot. People are like, “Wait, Beautycounter is in Target. It’s an MLM?” Yes, they have some sort of deal with Target, and they have deals with bloggers also.

The websites of every single one of these companies have some sort of foundation or NGO type organization. They have the most random things to try to let you know they are stand up citizens.

Jane: But you just look a little closer and you’ll see the ‘join the opportunity’ button.

THE PSYCHOLOGY OF PEOPLE WHO START OR JOIN AN MLM COMPANY

I know all the MLMs have slightly different products and ideologies, but do you see any common themes for the psychology of the people who start them or who join them?

Jane: I don’t want to disparage my own mother, but she bought The Secret, you know? It’s people that bought The Secret and want their families to read The Secret, or they give The Secret to people in their stocking at Christmas.

Dann: There are people who for at first gravitate towards this idea of entrepreneurship and prosperity thinking, the precursor to the human potential movement and all that stuff, but then they recognize very quickly that it is so exploitable because that is a network created by trust. It is a lot like when you start getting into going to Carnegie meetings and EST (Erhard Seminars Training). That’s a whole group of people who are sitting in a room that need that thrive on trying to trust each other. If they are going to give something to this group awareness training, then they are going to have to trust the people around them, and they exploited that over and over and over again.

Jane: It’s the idea that you’ll be rewarded for hard work, and that you deserve and could possibly achieve great wealth, and that’s a measure of your goodness as a human being. I don’t have that gene. [laughs]

I mean I’m being an asshole right now, but there should be a cap. I mean, no one needs a billion dollars, you know what I mean? But it’s people that have the attitude of, “Well, I would like a billion dollars” that either start the company or sign up for the company. It’s a world view.

It’s almost like MLM founders take the American Dream rhetoric and just put it on steroids. Maybe they get some success so they believe it, but I also get the sense from your reporting that they know what they’re doing [taking advantage of the business model].

Dann: Yeah, they know exactly what they’re doing. They have been able to exploit the American dream for a long time.

Jane: They must know there’s no other reason to set up a business that way. There is no other reason, and you can make more money being a regular makeup company.

Dann: It’s predatory.

Mackenzie: Well, I always wanted to give the founders of Limelight — as I was so entrenched in it — the benefit of the doubt. We had lots of conversations where I was saying, “But they seem like such nice people, surely they don’t know what they’re doing.” But if I had any tinge in the last month or so, it was absolutely eliminated when Michele started sending her emails saying, “Guess how much money we make? I don’t have to tell you numbers.” If you’re a legitimate company, and if you believe that you’re doing the right thing, why would you not just answer the questions? You are hiding something.

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