Let’s start at the beginning. Wikipedia provides a useful definition of a pyramid scheme. It’s
"an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.”So, for instance, Amway and Herbalife aren’t pyramid schemes because they have products. They’re Multi-Level Marketing schemes that just have a pyramid structure. With these two schemes you’re certainly actively encouraged to build multiple layers of people beneath you in the structure but there are actual products being shipped. The figures that Amway and Herbalife produce show that hardly anyone makes any profit from the schemes but they’re not pyramid schemes. Not quite.
But World Ventures is a pyramid scheme. So say the authorities in Norway who investigated them and discovered that most of the money people were making from World Ventures came from the recruitment of other people in the pyramid, not the sale of any product. Similar investigations around the world have also suggested the same conclusion. So it’s not just me.
But let’s, for a moment, assume that World Ventures is a legitimate business. Let’s assume it’s not a scam. Will you make money from joining?
Almost certainly not. And who can I thank for teaching me this? World Ventures themselves.
it makes interesting reading. Like all such schemes the majority of the money is earned by a very small proportion of the people, the ones at the top of the pyramid.
The 2015 statement declared very proudly that World Ventures has 238,684 Independent Sales Representatives (“IRs”) in the United States. However, they reported that only "22.24% of all IRs earned a commission or override, while 77.76% did not". In simpler terms, three quarters of all their American recruits made nothing from the scheme. Nothing at all. Zero.
Of the quarter of recruits who earned something, the news was very good but only if you were at the top of the pyramid. In fact, 84% of all the money generated was earned by the top 19%. Or, if you prefer it the other way round, 81% of the recruits who earn something have to share just 16% of the money.
It gets worse. Two thirds (actually 68.7%) of all the income earned in 2015 went to the 3.7% lucky enough to find themselves at the very top of the pyramid. In fact, the people at the very top of the pyramid are doing very well for themselves. The 1 in 20,000 people described as "National Marketing Director" level had an annual income of $238,645. The 1 in 14,000 at "International Marketing Director" level earned an average of $409,280.
Overall, if you include everyone who made some money from the scheme, the average income was $1,348 but that's not a good indication of what the average recruit will earn because the figures are distorted by those fat cats earning a fortune at the top of the pyramid. The median income level is a much better illustration of what you can expect to earn. That's a meagre $150 per year, about P1,500.
But don't forget two important things. Firstly, like I mentioned above, less than a quarter of all the people who join earn anything. These figures just refer to the quarter of victims who earned anything at all. If you include the three quarters who don’t earn anything, the average annual earnings are a meagre $300. The median earnings, the more realistic figure, drops to a pathetic $33. Just P330 per year.
Even more importantly, all these numbers refer to income, not profits. These figures are before you take account of all the money the victims had to spend on travel, accommodation, electricity, internet access and trying to recruit potential victims. If the evidence from legitimate schemes like Amway and Herbalife can be trusted then it’s probably fair to assume that the vast majority of people who join World Ventures either make nothing or actually lose money.
In fact, all they’re doing is earning lots money for the tiny number at the top of the pyramid.
AIM Global scheme selling their illegal magical health products, Total Life Changes with their apparently disease-curing tea, Tupperware with their kitchenware, BitClub Network with their claim that people can become Bitcoin miners, Questra or alternatively Atlantic Global Asset Management with their Get Rich Quick claims, the claims are always exactly the same. With minimal effort, you’ll make lots of money.
Sometimes they’re brazen about it. One of the recruiters for Questra, a well-known “Man of God”, posted on Facebook that with Questra, there were “No Joining fees, No monthly payments, You invest n see ur money making u money without lifting a finger.”
If only life was that simple. But it’s not. There are no quick ways to make money without effort unless you win the lottery. Even then it’s not the complete truth. A lottery can only afford to give the winner a million if the losers have lost more than a million in total. The losers pay the winner’s winnings.
Pyramid schemes like World Ventures are even worse than lotteries. Imagine a lottery where the person running the lottery fixed the results and was also the winner, every single week. That’s what a pyramid scheme is like, a conspiracy organised solely to take money from the people who lose every week and give it to the winners, who also are the people who created the scheme.
Do you want to be that loser?