Money for Nothing

A gonzo investigation reveals that the prevalence of multi-level networking schemes reflect the tragic yearnings of an unequal society.

Housekeeping: The Stinger Newsletter. New editions are sent out on Mondays.

In this edition: A dispatch from the front lines of U.S. class aspirations. A gonzo exploration of a multi-level marketing scheme reminds us that the prevalence of multi-level networking reveal the tragic yearnings of an unequal society. I went there so you don’t have to.

Preview: Next week, we’ll take a look at the data from the U.S. election. To tip my hand, this was not a very good election for the Democrats.

Ignore all the crowing. We are looking at a conservative court, a Republican-controlled Senate, and a severely weakened House. In this context, a presidency is remarkably weak. The second-term Obama era was so gridlocked because of a Republican-controlled Senate. This will probably be worse since the workaround that Obama overused was the executive order, which is not a very attractive option this go round. 

In California, progressives took a shellacking as well, and the mere fact that Biden won the nomination isn't a good signal for integrating the strands of the Democratic Party. Moreover, Biden's performance specifically was not as good as promised. If Trump wasn't such a narcissist, he would see that this election was a pretty decent one for conservatives. 

Share The Stringer by Daniel Mollenkamp

A nondescript corporate hotel in Southern California, pre-coronavirus closures. It was late in the evening, and I had bolted down the freeway to attend a social event for a multi-level marketing scheme. An overly zealous recruiter had approached me over LinkedIn. Several over the phone “mentoring” sessions later, in which I was presented with reading materials and testimonials in podcast form, and I was regretting the decision to do this. Why, I asked myself, would I subject myself to the sales pitch knowing it was bullshit?

The recruiter sounded so slick on the phone I felt like this was my best chance to experience a relatively common phenomena in its most persuasive form: the MLM.

Still, there is only so many times you can read through Robert Kiyosaki on the “worker” versus “owner” mindset without suffering a massive aneurism.

The room was stuffed. I was clearly underdressed, my poorly-made, mismatched blazer and shirt were bagging in all the wrong places. Most of the people in attendance appeared to be immigrants, or the children of immigrants: mostly Asian and African. They were dressed in Sunday bests. Many had access to some other form of income, I would guess. But a few were plainly desperate. All seemed to be yearning for an avenue to advance into the vaunted 1%. Aspirations of class mobility, in the U.S., involve corporate hype and lots of practiced meaningless small talk, apparently.

Kulin Desai, an ex-vp for Citibank, was the keynote speaker. And he entered and exited to a surprising amount of fanfare. Desai worked for Citibank in the 2000s, before getting in on the “mentor” racket. According to his website, his multimillion-dollar business in “direct sales” spans several continents. “His efforts and dedication saw him reach the top 5% income bracket in the USA within a very short span of time,” the about me section brags. He also wrote a book.

Social media tools offer up a means of direct contact, more intimate in some ways than cold calls or going door to door. Rajesh (let’s stick with the first name only), my ostensible mentor, had opened up the relationship by stressing his intelligence, and by dangling the social networking aspect of his pitch. He had cold approached me over LinkedIn.

“Daniel, I am a Software Engineer by background & I am also an entrepreneur in the social commerce space tied up with a private mentorship group,” he said. “Do you have any prior experience in entrepreneurship, team building or leadership? If not, do you have an inclination to learn more about it?”

And with that began one of the most pointless and brief relationships in my life. Rajesh was sketchy on the details initially; a red flag. Eventually, after several rounds, I learn the company is called Britt Worldwide, and it wasn’t mentorship so much as salespersons they were looking for. So, not a “private group” after all.

The culmination of this experience was the speech in that corporate hotel, after which I finally cancelled the remaining “mentorship” sessions and cut the chord. Desai’s speech underscored the grossness of this enterprise. Desperation clung to the molecules of cheap wafting perfume, and Desai was primed to take advantage. At the hotel I would learn that Britt Worldwide was a distribution channel for Amway, one of the most well-known multi-level marketing companies in the world. We had also reached the point, I had gathered, where I would actually have to put money into the thing to keep interacting with them, and I felt like I had received more of the sales pitch than I really wanted, anyway.

I have a private test which has helped me several times over the years. If, unprompted, a representative for some organization says either (a) we are not a cult, or (b) we are not a pyramid-scheme, then it may pay to re-look at the fine print.

Britt Worldwide’s preemptive defense was interesting on this count. During his speech, Kulin Desai took up the “pyramid scheme” question, not that anyone in the room had asked. Desai didn’t, in fact, deny that it was a pyramid scheme. As Desai actually said at the event, all work is like a pyramid. How was my job as a vp for Citibank any different than a pyramid?, he commented. Indeed, he has a point here. I have had more than one lawyer describe to me the structure of a law firm as a pyramid. But to exclaim this, which he did to some scattered applause and compliant laughter, sort of misses the point. The point of calling something a pyramid is to say that it is exploitative. To reply that all work is exploitative hardly lets you off the hook, even if it brings others to dangle on that hook with you.

Rajesh asked why I cancelled.

According to the numbers presented at the event, I had explained to Rajesh, a very tiny fraction of “IBOs” actually make money. This was only apparent because I had smuggled in a reporter’s notebook to do back of the napkin figures. The speaker had subcategorized the people who work with them, which they term independent business operators (IBOs) into “active IBOs” and “inactive” ones, making it slightly harder to track in the ultra-fine print of each progressive slide in his powerpoint. The “active IBO” status hides those who buy into the initial investment but who can’t hack it (but they still lose money). The returns were also tiered. To make actual money, you’d have to hit the higher tier of returns, which incentivizes investment by the “IBOs”. In other words, you’d have to sink in your own money. Since broke people like me have little cash to invest, we would have to bring other people in (what the organization people called “investing time”). They called it “mentorship” but it was essentially a rebranded sales gig with bad incentives.

Several people at the event explained that they actually made money selling credit cards. They were chasing the percentage game on those numbers. This was something that was denied to my face when I brought it up later.

“Looks like my friend, you’ve not understood the business! Anyways good luck with your future endeavors! Btw the team too feels you might not be a good fit,” wrote Viral Rajesh.

The childish taunt aside, Rajesh revealed in that comment how the game works. More or less, standard multi-level marketing tactics were dressed up as “mentorship.” The social aspect was playing a not small role in Rajesh’s early charm. All the grease of a snake-oil merchant and the forked-tongue, too. But he hid it well.

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