The Dark Side of Multi Level Marketing: Women Selling Their Houses, Judging Each Other, and More with Emily Lynn Paulson

0:01Light that spark fire nation a JLD here and welcome to entrepreneurs on fire brought to you by the HubSpot podcast network, the audio destination for business professionals with great shows like Imperfect Action. Today, we'll be breaking down the dark side of multi-level marketing, women selling their houses, judging each other, and more. To drop these value bombs, I brought Emily Lynn Paulson into EO Fire Studios. Emily is a writer, TEDx speaker, founder of Sober Mom Squad, and author of Hey Hun, Sales, Sisterhood, Supremacy, and Other Lies Behind Multi-Level Marketing. And today, if our nation will chat about what the heck is MLM?

0:40How do people get roped into this? How do these companies stay in operation? What about social media? People look like they're doing so awesome and so much more. And a big thank you for sponsoring today's episode goes to Emily and our sponsors. Artificial intelligence has made a splash in the headlines and for good reason. The digital landscape is changing quickly and AI is a huge part of that. If you're feeling behind the curve, don't worry. HubSpot has got your back. HubSpot's AI power tools, including their content assistant and chat spot, are a perfect place to start learning the power of AI.

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1:53Want to live better, longer? We all do, and that's why LifeForce is making proactive and personalized healthcare easier than ever. Start your membership today and receive$200 off. Visit mylifeforce.com to get started now. That's my, L-I-F-E-F-O-R-C-E.com. Emily, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. You know, I think a lot of people are afraid to share maybe their skeletons. I have found that being vulnerable and sharing the things maybe I'm not so proud of has actually led me to the people and things that have helped me get to the place of success that I have wanted to be at, even if I didn't realize that's where I wanted to be.

2:44A great start to a spicy conversation, Fire Nation, as we talk about the dark side of multi-level marketing, women selling their houses, judging each other and more. And Emily, just for somebody that may not be familiar, what is MLM? And then share why. why people get roped into these schemes? Multi-level marketing is, it's a corporation and they employ a multi-level marketing selling system, which means that people sell products to their friends and recruit others to join the company. So the thing that really differentiates it from influencing or just regular sales is that is the actual multi-level aspect to it, which then can become predatory because you really are just recruiting people to sell the same thing in an already saturated market.

3:36And it has a 99.7 % loss rate, meaning that 0.3 % of people will actually make money. Those aren't great odds, Fire Nation. I don't think anybody would start a business if you knew that was your chance of actually succeeding. So the question has to be, Emily, why are people still getting stuck and can what only be described as a failing system? There's a lot of different layers here. MLMs really prey on hope, the hope that you could be that small percentage of people who succeed. And MLMs really amplify the stories of the people at the top. So it seems like the success is more widely available than it really is.

4:24And it also preys on a lot of the socioeconomic barriers, especially for women. 80 % of people in these schemes are women, and a lot of them are moms. And the fact is, there's a lot of systemic issues. Moms hold up a lot of the... Our unpaid labor holds up a lot of the economy. And so you have these barriers and women who maybe can't afford childcare or who can't afford to go back to the workforce because of time or pressures at home, this looks like a really good solution. So it's really the fact that this is offered as a solution when we're bereft of other options. And then this, the cultural epidemic of isolation, you know, as a society, we don't really have built in villages anymore.

5:12We don't have an extended network of family as much as, you know, we did a hundred years ago, 200 years ago. And so we feel alone. We feel like this leads to some sort of community. And that's really how people get roped into the schemes. And then the schemes themselves, MLMs, regardless of having a huge loss rate, they're still in a almost$200 billion industry. The government supports them, lobbyists protect them. So they, regardless of the abysmal numbers, they are legal enough that they are allowed to stay in operation. And so the system just continues. There's a lot of interesting things here at Fire Nation.

5:52One of the most interesting things I don't think a lot of people would actually think about is that word that you used, Emily, isolation. I mean, they don't think about that because we live in this world where we're all so connected. I mean, at the touch of a button, I can send a text message to my mother in Maine. I can call, you know, my sister when she's in Florida. You know, I can do all these things like at the touch of a button. And, you know, back in the day, we had none of those things, you know, 100 years ago, 500 years ago. Forget about it. But in a lot of ways, we're so much more isolated now because we used to rely on each other.

6:26We used to see people every day, interact with them, engage with them, count on them to help us, to give us advice, to give us, you know, value in our lives. And now there's people that are isolated and those isolated people can really be targets, especially when those isolated people spend a lot of time on social media and social media. I got to be honest, Emily, it's just showing the best one second of people's day usually, but that's what a lot of people that are consuming that content think that is that person's entire day. So tell us how social media is playing into getting people roped in to MLMs.

7:04Absolutely. Yeah. And again, that's one of the reasons that people do fall for MLMs is kind of that FOMO, right? That fear of missing out, seeing the pretty filtered pictures when that's not really how the whole story goes. You know, 30 years ago when, say, my mom hosted a Tupperware party, you could really geographically only do so much. You could invite the women who were in your neighborhood, in your town. And that was really it. Like the damage could only go so far. You could only recruit so many people. You could only sell to so many people. Well, social media, all of a sudden, the tendrils go out so much farther.

7:43You can recruit and sell to anybody anywhere. But at the same time, companies that are not MLM are in the marketplace too. And it's really sometimes hard to tell, you know, am I buying from an MLM? Am I buying from a real company? Who's benefiting here? And so I think there's a lot of confusion in there of, oh, I'm buying from an MLM. This doesn't seem that bad. It's just like buying a product elsewhere. So it's sort of confused, I think, consumers a little bit. And I do think consumers are getting smarter, understanding a little bit more what the deal is with MLMs. But again, social media has really just amplified the fact that despite, again, being 99.7 % loss rate, the stories you see on social media are these pretty, very filtered stories, people on these trips.

8:34And again, it preys on that hope that you think that could be me too. Those could be my photos too. There's a lot of interesting things that we've discussed, Fire Nation, around this. And we're going to talk about a lot more interesting things when we get back from thanking our sponsors. Success Story, hosted by Scott D. Clary, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversations on sales, marketing, business startups, and entrepreneurship.

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11:06Members also receive a certified health coach for one-on-one coaching and accountability. No wonder 85 % of LifeForce members report improved quality of life within their first three months of membership. Better energy, more focus, and deeper sleep are all within reach. Start your membership today and receive$200 off. Visit mylifeforce.com to get started. That's my, L-I-F-E-F-O-R-C-E.com. Emily, we are back. And I know that I have and probably some people in Fire Nation have as well seen the Herbalife documentary and others like that. I think there was another one that had something to do with like women's leggings.

11:46And there's a couple of documentaries that are out there that have kind of shared a lot of what you're sharing right now. Can you talk about one of these companies, maybe one that I've already mentioned or one that I haven't mentioned? If you're able to say the name, great. If you're not, you know, maybe just talk around it a little bit, but give us like a story of what it looks like from the first time somebody maybe hears about it to how they get roped into it and then why it can be so dangerous once they do get roped in. Yeah. Well, I can use Lularich as an example. So Lularich was the documentary you said, and it's about the MLM LuLaRoe.

12:25So the way that a lot of these MLMs start, they start small. So LuLaRoe, you know, it was just a husband and wife and they were like selling some skirts and some leggings, you know, out of the back of their car. And they get the one first person to help them host parties. And they derive this multi-level marketing idea because it seems, it seems like it makes sense. It's like, oh, you could make money too. And so could you. And so could you. But then, and then eventually you are recruiting the market of the same people who live in your area geographically, you can reach saturation at a very, very, you can reach it very quickly.

13:05And not only that, but you're competing with other companies like Ziya Active Wear and Savvy Active Wear, and there's lots of other companies that sell very similar products. So one reason that it's dangerous in that way is that you don't have the same protections as, say any other company, say you wanted to open a franchise for McDonald's or whatever, you would have to be, they would do market research to see, okay, how many people will buy these products here? How many other McDonald's do we have in this area? That's not done with an MLM. The more people who join, the better it is for the corporation.

13:44So the lady who started it, the first few women who joined, they're going to be the ones who really profit. And then the other people adjacent to them are going to say, oh, wow, look, they're so successful. They're making all this money. I'm going to join too. Well, as you go down the pyramid, the people who join have less and less ability to obtain success because, again, the market's been saturated. There's just too many of the same people and the same product in the same area. So it continues to trickle up. And the other thing that's dangerous about it is a lot of really cult-like tactics are employed.

14:21So you're told from the beginning, this meritocracy aspect of, you know, you could succeed. Just keep working, you'll succeed. Do X, Y, and Z. And the only way you fail is if you quit. All of these kind of platitudinous buzzwords and all of these thought-stopping cliches. cliches. And you're love bombed when you join. You really believe that if you want to be successful, you just have to keep grinding and keep working. And if it doesn't work out for you, then you can then be blamed. It's your fault. You must not have worked hard enough. So the real danger in these schemes is that the only people who succeed are the people who get in early.

15:02And it's at the expense of all the other people who join after who will never earn a dime. So Emily, one thing that I want to really dive into now, because it just baffles my mind hearing you talk about what you're talking about. And I know that we've mentioned some things around this, but if such a minute percentage of the people are actually succeeding in any way, shape or form financially, and there's obviously word that's getting out with these documentaries, etc. How the heck do these companies stay in operation? Yeah. Well, again, it's a huge industry. It's$180 billion industry. So they're essentially legal pyramid schemes that the government not only supports, but they protect.

15:45Lobbyists and politicians are all tied up in MLMs and they take money from them, or they take money from the Direct Selling Association, which is this supposedly self-regulated body that regulates direct selling, even though it doesn't, it lobbies for them. Even the UN takes money from MLMs. So there's so much at stake here that there's no incentive for any government body to shut this down. And there are small, like the FTC does investigate MLMs and they do investigate claims, they investigate financial claims or health claims, and they do on a smaller scale, like shut down certain MLMs, like Advocare, for example, a few years ago was shut down to a single level organization and Vemma was shut down.

16:32So on a company by company level, they do get investigated, they do get shut down. But the industry as a whole stays in business because so many people in the government politically benefit from them. So it's really insidious. And again, what you see is the stories of the 0.3 % on social media who are succeeding. And those people don't have a vested interest in really exposing what's going on because they're making so much money and the corporations themselves are making so much money. So really it's, you know, money talks. It's the financial benefit of too many people for these to go away. It seems like it always comes down to self-interest.

17:12That's why Fire Nation, you have to, you must do your own research, really go deep, really have the tough conversations, the real conversations. But now the reality is we might be a person who's currently in a situation that they would like to not be in because of an MLM or know somebody who is, who's a victim of these shenanigans. How can we support those individuals? Yeah, absolutely. So the first thing to realize is when people are in an MLM, they're probably the victim of a lot of undue influence. They probably believe, you know, most people go into MLMs with very good intentions. They intend to help themselves, their family, their community, and they don't realize they're getting involved in something that's predatory and harmful.

18:00So the first thing to realize is that they probably love what they're doing. They love the people they're associated with. They love the products. They love everything about it. So they will probably be defensive if you do show any disproval of what they're doing. And you're often taught when you're in an MLM that anyone on the outside who maybe says anything that's discrediting or critical is a hater. And so remember that when you are talking to people who are inside the system, they're likely not going to take your advice. So it's just good to be a soft space to land for when they inevitably do fail, because again, most people do.

18:39Most people don't make money. A good thing to do is really suggest helpful information or ask questions like, hey, have you ever done a profit loss statement? Have you ever found that your upline, the person who got you involved in this company, only checks in with you at month end when it's time for her to get her paycheck? Or have you ever been forced to send a message you didn't want to or post something you didn't want to? You know, just ask questions, don't judge, but try and get that critical thinking to come back online. And then if you are yourself in any way associated with an MLM, you know, just asking yourself, why do I believe what I do?

19:21You know, where did I hear this information? And is there any way I could get this information from a source that's outside of this commercial cult? Basically, can I go, can I get, can I talk to my accountant? Can I talk to someone who has an actual small business who can tell me how this profit loss statement works? How, how my, how my numbers look right. Um, and, and remembering also that if you want to be supportive of your friends or family who are in these schemes, the best way to be supportive is again, be a soft place to land when, and if they leave and to not purchase from them. And that seems counterintuitive because you think, Oh, you know, it's just, I'll just buy a spatula or an eye cream or whatever, what, what harm could that do?

20:05But all you're doing is first of all, giving money to an organization where they are going to get very little of that sale. They'll get very little, they're upline. It'll go up the chain to the corporation, but they will just be more stuck in this system. So the best thing you can do is say, Hey, you're, you're my friend. I want to support you. What's another way I can support you. You know, do you need help with childcare? Again, it goes back to that epidemic of isolation where what is it that you need from this MLM? Is it friendship? Can I be a friend to you? Can I spend time with you? Can I come over and help you cook a meal?

20:40Ask how you can be supportive without keeping them further stuck in this system. Such good feedback, Fire Nation. So many good steps that you can take. Emily, I want you to give us one key takeaway to make sure Fire Nation really understands the key theme you want to press upon us today, then give us the best way that we can connect with you, any call to action you have, and then we'll say goodbye. All right. Well, the first thing I always want to say is, you know, if you have been coerced by one of these companies, if you do purchase from them, if you are in one, you know, it's not your fault.

21:14Really, everybody who is in an MLM is a victim before they become a perpetrator. So the best thing to do is just kind of sit back and ask yourself questions and not judge yourself. Don't judge your friends. Everybody goes into these things with good intentions. So again, it's not your fault. It's the system that's flawed, not people. And that's what I really try and call out in my book. It's really my experience. It's publicly available information. It takes a journalistic approach to why these are harmful and damaging to women. And you can find more about me on social media. Emily Lynn Paulson is my website and that's pretty much my tag everywhere on social media.

21:55And you can find out more in my book that comes out in one month. You can pre-order anywhere books are sold. And what's the actual date of that book launch? May 30th. Okay. So by the time this episode is live, Fire Nation, this book will be available because you're the average of the five people you spend the most time with. And you've been hanging out with EP and JLD today. So keep up that heat. And for links to everything we talked about to check out more details on this book, visit eofire.com, type Emily in the search bar, the show notes page will pop up and we'll link to all that we chatted about.

22:31Emily, thank you for sharing your truth, knowledge, value with Fire Nation. For that, we salute you and we'll catch you on the flip side. Thanks, John. Hey, Fire Nation, a huge thank you to our sponsors and Emily for sponsoring today's episode and Fire Nation. Are you ready to rock your very own podcast? Check out our free podcasting course where I will teach you how to create and launch your podcast for free. Freepodcastcourse.com. Freepodcastcourse.com. I'll catch you there or on the flip side. Success Story hosted by Scott D. Clary is brought to you by the HubSpot Podcast Network, the audio destination for business professionals.

23:08Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversations on sales, marketing, business startups, and entrepreneurship. One of Scott's recent episodes was with none other than Jack Canfield, where they discuss adapting to life's twists and turns. Listen to Success Story wherever you get your podcasts. Want to live better, longer? We all do. And that's why LifeForce is making proactive and personalized healthcare easier than ever. Start your membership today and receive$200 off. Visit mylifeforce.com to get started now. That's my, L-I-F-E-F-O-R-C-E.com.