Debating Amway?

 I once had a debate with an Amway supporter, and I sometimes wonder how some Amway supporters can continue to defend some of the claims they make even when they have no facts to back them up. For example, the supporter insists that Amway has created more millionaires than any other company. So I asked where he found that information because as far as I know, Amway has never made that claim and if it were true, there would be no reason for Amway to hide it.  The most valuable company in the world right now is NVDA.   I'd say most of their employees and a lot of their investors have become millionaires since NVDA was founded.  The company valuation exceeds 5 trillion dollars.  Meanwhile Amway has less than 10 billion in revenue, last I heard.  Do the math.

The Amway supporter also insisted that he is proof that Amway works because he is successful. He never spoke about the financial condition of his downline, nor revealed anything about his level or structure. Instead, challenged Joecool to talk about my former business and why I wasn't profitable. As I explained in a previous post, my Amway business didn't prosper because I followed upline advice to reinvest my profits into tools. And I am certain that I am not alone in having been given this advice. I do not claim they don't exist, but it is my guess that a group where even half of the IBOs make a net profit would be very rare, especially when some groups teach their downlines to primarily "buy from themselves".

When discussing the miserable average income of an IBO, supporters like to cite that some IBOs do little or nothing but fail to mention that when calculating the average income, Amway disregarded the IBOs who were not considered active. And because we know that you need to move at least 100 PV pv to earn a bonus, then we can conclude that IBOs as a whole, earn very little, with a few big pins bringing up the average. I believe if we looked at the median income for IBOs, it would be far less than $115 a month.

So the question is how can an IBO actually prove that they are successful? Maybe the first step is to be willing to talk about your business. Most IBOs are anonymous commentor on this blog, yet outright refuse to disclose any details about their business, and downplay the expenses associated with the business, even when upline will promote "low overhead" as an incentive to join Amway. While $150 or $200a month might be low overhead, it is very high if your monthly income is $10 a month. Somehow, upline will convince IBOs that taking losses is a sign of success. Or that an IBO is successful as long as they remain on standing order and continue to attend functions.

Honesty and transparency is how an IBO can prove his or her success. Making a nice living on the backs of your downline is not success, that is exploitation of your downline.

The Millionaire Next Door?

 I keep hearing from some IBOs that they belive that Amway has created more millionaires than any other company in the US. I call BS on that claim. I am not saying that Amway hasn't created any millionaires, obviously, the Amway owners are worth billions of dollars. But what the IBOs are apparently implying is that the diamonds are millionaires. I'm sure there are some diamonds who indeed are millionires, especially if they are tenured diamonds, in particular the double diamonds and higher. But conversely, I believe that many high level diamonds are not millionaires. I believe it is just as common for a diamond to be in debt as it is for a diamond to be living large. I also believe that many diamonds did not accumulate their alleged wealth exclusively from Amway.

The reason why this is an issue is because these big pins will stand on stage and show off excessive wealth and imply that it is their Amway income that pays for these mansions, sports cars, and in some cases, jets. In the US, I attended a function called "Dream Nite" where these kinds of trapping are displayed, to the tune of the song "I wanna be rich". The diamonds would say that you can have what they have, if only you will do what they advise. These functions still go on today and I believe it is now called Winter Conference.

Stanley and Danko's book, "The Millionaire Next Door"
http://www.personalfinanceplaybook.com/2009/08/the-millionaire-next-door/

This book makes some very interesting points which I believe applies to Amway diamonds. I will outline the significant ones and I will comment below:

**Predictably, the data shows that most people who you believe to be very rich are not.

**High net worth individuals, statistically, tend to be people that live within their means. They don’t spend a lot of money. They don’t waste money. They tend to be pretty frugal people.

**The authors point out that most of the richest people you know aren’t driving expensive luxury automobiles. That’s what the people who want everyone to think they’re rich drive.

Joe's commentary. The book does say that about 1/3 of millionaires acquired their wealth thru a J-O-B and saved and invested, but did mention that many millionaires were also business owners, such as a pest control company, etc. But based on the points made by the book above, I can see where it is likely that diamonds portray a wealthy lifestyle as a recruitment tactic, when the reality is they may be living very middle class lifestyles off stage, or may even be in debt. I have seen evidence of diamonds having their homes foreclosed and being in debt (Ruth Carter's book: Amway: Behind the Smoke and Mirrors). Recently, there was also a report that a Triple Diamond filed for (chapter 7) bankruptcy in 2009 or so. The report indicated that he could not make his mortgages, or something to that tune. Odd, because when I was in WWDB, some of the upline leaders said diamonds paid cash for everything because paying interest to the bank wasn't very smart.

My question is why IBOs continue to make up these claims? Try googling millionaire or Amway millionaire. There is nothing to indicate that Amway was responsible for creating the "most millionaires" of any US company. If this were true, wouldn't Amway state it on their website? If someone finds any veracity about this claim, inform me and I will post it.

Ineffective Tools?

 One of the things my Amway upline always pushed on us was the tools system. While the tools are said to be optional, they are not promoted that way. They were promoted as vital, necessary, almost as if you were insane to try and build an Amway business without tools. Basically the tools were a defacto requirement. My upline always claimed that nobody ever "made it" without tools. Some Amway defenders insist that the tools work, and that IBOs who were on the system proved it with higher levels of success and product volume. But the tools work for maybe a fraction of 1% of IBOs who try them. The vast majority of people who use tools make nothing or lose money. Similar to a lottery.

IBOs participating in the system (voicemail, book of the month, standing orders, functions, etc) do more PV. I believe this is true, but it is true, only because once the upline can convince you to participate in the system, then that same IBO is also convinced that they should or must do 100 PV as part of the deal. People who aren't convinced that the system is vital, subsequently do not purchase or sell as much PV because they have not been convinced that moving PV will make them successful or wealthy.

Critics and Amway supporters have debated this issue for years, but clearly, the evidence supports my position. Why? Because if there was a true demand for Amway products because of their quality and/or value, then there wouldn't be such a steep drop off in movement of volume when an IBO becomes a former IBO. Many, probably most former IBOs never buy a single Amway product once they leave the business. If the products had true quality and value as Amway supporters claim, why don't people continue to purchase 100 PV per month when they quit? Because they never wanted or needed all of that product in the first place? If former Amway IBOs continued to but products, Amway sales would continue to increase. Amway's sales and revenues dropped more than 25% from 2014 to now (2018).

If someone is convinced that Amway will be their financial savior and that by using tools and moving 100 PV will result in long term financial security and residual income as claimed by upline, then that is what they will do in hopes of achieving the end goal. When that goal or dream doesn't materialize, the former IBOs realize that the tools and products no longer have the value they once thought they had. How many former IBOs will buy standing order or attend functions? If these materials really made you nicer, or saved marriages, why don't any former IBOs keep buying them? Why do they resort to selling them for pennies on the dollar on Ebay or Craigslist? What happened to the great return policy?

Bottom line is that the tools don't work. They only work for the uplines who directly profit from the sale of tools, plus the artificial demand in product sales created by those IBOs who are convinced that Amway wil make them rich. Once the reality sets in that Amway will not make them rich, and that the tools are simply draining their resources, then the demand or tools and Amway products disappears almost instantly. There is no unbiased evidence that I know of to suggest that these tools work, and basically, the miserable amount of new diamonds emerging in the US seems to confirm this fact.

Submit To Upline?

  Another cult-like teaching that comes from upline diamonds is to submit to upline.  Sometimes it’s called being teachable but as you get more immersed in the system, you are expected to consult with upline for everything, including important life decisions such as getting married or buying a new car.  In retrospect, I believe it’s done because upline doesn’t want you making decisions that could hinder your ability to purchase tools.  Thus IMO, they will advise you to do things that keep disposable income available so they can teach you to buy more tools and functions.

But they make it sound harmless, that checking upline can help you because upline has experience in the business and can tell you how some decisions can impact your business.  Sounds harmless but the upline teaches this more likely for their own benefit than for your benefit.  If you can recognize the game, you can see thru the idiocy of upline teaching.  Looking at it in another angle, how much analysis did upline do on your business before giving you business advice.

Some upline even “counsel” their downline.  Can you imagine submitting to someone for such important decisions that can affect your life and your upline's only real qualification to do this is they joined Amway before you.  You could actually be a counselor, but you would be counseled by someone upline with less qualifications simply on the basis that they joined Amway before you.  Or can you imagine a young say 30 year old single guy sponsoring a 45 year old married guy.  The married guy would get advice from someone who isn't married any may not have been in Amway for long.   Yes, the sponsor will go upline to seek more expertise, but is that really a reliable "system"? 

When I was an IBO back in the 1990s, I was engaged to be married and my upline advised to dump my fiancée because I could build the business faster and if I achieved diamond, women would line up to court a single diamond.  By then I had already smelled a rat with regards to Amway teaching so that was the last straw for me. 

I was a 4000 PV IBO at the time, so I told my group what happened and that because of what happened, I had decided to walk away from Amway.  All of my group except 1 or 2 IBOs downline from me walked away when I did.  So, my upline and sponsor went from direct distributor to less than 4000 PV and I do not believe he ever requalified at that level again.  

I do know that my sponsor was still active as recently as 2019 but I’m not sure if he’s still chasing Amway in a "all in" manner.  Being that he was a physician, I see it as a life wasted on Amway.   Submit to your upline is total BS.  

Always A Diamond?

 I've seen some interesting discussion recently about how a diamond pin is like winning a gold medal. That you don't get it taken away from you later even if you don't qualify anymore. The discussion also flowed as to where they mentioned that former US President Jimmy Carter is still addressed as Mr. President. Or that someone with a Superbowl ring can be addressed as a Superbowl champion. While I agree with that to some degree, I think the issue of diamond or former diamond is significant and different from former President Carter or a former Superbowl Champion. Terry Bradshaw or Peyton Manning don't parade around as if they just won the Superbowl last year.

The diamond pin is a significant achievement for sure. Seems that recently, it's even harder to achieve in North America. I don't know of more than a few new diamonds emerging in the last 25 years or so in the US. But if say a diamond qualified in 1988 and never qualified again, how would you as an IBO feel about paying to see this diamond speak function after function and how many would continue to buy standing orders from a guy who may have achieved diamond 25 years ago and never again? Would the audiences be "fired up" to see these speakers? I find this ironic also, because many Amway defenders like to criticize Amway critics for having an outdated experience. Well, conversely, a one-time diamond would be basically the same thing. If not, then Joecool should command the respect of a 4000 PV Eagle since that was my highest level.

I actually have no issue with Amway allowing the achiever to carry their highest pin as a recognized achievement, but I do believe that those who use their former pin status to exploit and profit from new IBOs and prospects should be stopped. I know I would not have been so excited attending a function where the keynote speaker went diamond for 6 months a decade ago and was no longer qualified. Else, by upline's definition, he will teach me to go diamond and fall apart? I believe there are fewer North American diamonds now than ten years ago. Some diamonds resigned and some outright quit. So much for residual/passive income. Obviously if these things existed, then nobody would quit or walk away from residual income.

BTW, an article on an Amway Corporate website says this about passive income:
"Passive income is a term we do not permit distributors to use and it’s not a term the Corporation uses. In our business, there is no such thing as doing no work, and expecting money to still come in.” Link:
http://blogs.amway.com/answers/2010/11/02/unwelcome-words/#comments

Still think there's a free ride at the end of the tunnel?

IBO = Glorified Customer?

 One of the silly things IBOs say is how they need to be their own best customer. That a McDonald's owner would never eat at Burger King, etc. That is complete hogwash. While there is nothing wrong with supporting your own business, IBOs are blinded by the fact that their business produces nothing. They are simply middlemen distributors. Do you really think diamonds consume thousands of dollars of standing orders because they own or profit from tool companies, which are for profit companies that produces training materials? Of course not. When you purchase something from your Amway business, you make no profit. Any "false" profit you see is simply money out of your own pocket moving to the other pocket. The Amway corporation makes the profit. Yes, you may receive a volume bonus, but that is still a lot of your own money being given back to you. Spend $300 and get back $10. If you can get enough people to follow you and move volume, your bonus will increase, but the increase then comes out of your follower's pockets instead of your own. The only real profit would be selling product to actual non-IBO customers.

I know some business owners, and they are never the best or sole customer of their own stores. Many Amway business owners are their only customers or their best customer. That simply is not how a business is run. Any REAL business cannot support itself by having the owners and perhaps the owner's employees as the primary customer base. For any business to thrive, you need customers and a demand for products. Without customers and a demand for products, you have no business. But some upline leaders still teach "buy from yourself" as the primary means of doing business. Other leaders may ask you to sell, but to focus on sponsoring others because they are hopeful that this will result in increased volume. Sadly, most IBOs will never sponsor a downline, and many will never acquire a customer other than themselves.

It seems as though many IBOs think they are business owners, but the reality is that they are simply glorified customers of their own business. Their only hope of making a profit is to sponsor others. In my opinion, this method of doing business is a pyramid because the only way to eventually make a profit is to sponsor enough downline until you can leverage enough volume to finally break even or profit. An IBO with a real customer (and not buying tools) can make a profit by selling a single product. But many IBOs are not taught this because their upline makes a much bigger profit by selling to their downline IBOs standing orders, voicemail, books and seminar tickets. Many IBOs do not realize that they are simply customers of Amway and customers of the tools system.

For people already involved or considering involvement in the Amway opportunity, you are highly encouraged to seek more information and to fully understand how a profit is made in this business. Simply seeing circles drawn oversimplifies the process as most IBOs never get close to finding six (6) like-minded people. Even those who find six are unlikely to be able to retain them. Over time, the cost of the products and the cost of the training will start to add up and the losses will escalate. For real business owners, an assessment of profit/loss and return on investment should be done and if the return is not good, a real business owner would consider other options.

So, are you a business owner or a glorified customer?

Something For Nothing?

 In my opinion, Amway is a legal pyramid. They have not been found illegal but still operates a product pyramid. The reason why they remain legal, apparently is because they do not pay anyone for directly recruiting downline and they claim to sell products to actual customers. But most everyone has been or knows someone who was recruited by a zealous Amway IBO. The emphasis of most active IBOs is on recruiting and much of the teaching by upline is on techniques to recruit and/or how to talk to people without tipping their hat to reveal the Amway name. Most IBOs are not very good at this and they stick out like sore thumbs in many cases. It's also comical when uplines teach crazy antics, like how some IBOs use to deny that Amway and Quixtar were even remotely connected, or if anyone remembers the "perfect water" fiasco a number of years back.

One of the reasons IBOs use to justify their involvement in the product pyramid is that they can earn more than their sponsor. While that is true, it is only because everyone below the emerald or diamond level is basically expendable, or a slave in the pyramid. There are many IBOs who achieve fairly high levels who quit or had upline wreck their businesses. Thus, even platinums are expendable to upline. In fact, an upline might make more money by removing the platinum because then the downline are directly under his/her control and spot in the hierarchy.  For new IBOs or recruits, do you really believe that you are going to ever surpass your current upline diamond or higher? If you believe that, you are sadly mistaken.

And for those who dream of achieving diamond and walking the beaches of the world. How do you think you can ever achieve that? You don't get something for nothing unless someone gets nothing for something. In order for you to receive income for little or no efforts, your downline IBOs must keep purchasing products and replacing IBOs who quit. If your downlines cannot keep up with the attrition rate, your business will collapse in a hurry. Come to think of it, if a diamond can walk away and collect a large income forever, why hasn't anyone done it? I mean we still see crown ambassadors still busy working functions or dying on the job and I don't know of any who walked away to spend their lives jet setting on the beaches of the world.

The sad reality is that you see new faces at meetings and functions, just as often as you see familiar faces disappear. With that kind of attrition rate, you may have to work even harder at the higher levels just to keep your business status quo. In Egypt, the slaves built the pyramids. Do you have enough slaves? What many Egyptologists find amazing is how the Egyptians were able to motivate the slaves to keep on going, doing backbreaking work all of their lives. The same can be said of a diamond level business (or higher)