Failure By Design?

While new and active Amway IBOS May disagree with me, I have the experience of being a fairly high level IBO and understanding what it takes to build an Amway business.  It’s no secret that the vast majority of Amway IBOS fail in Amway.  Amway defenders like to cite many reasons for that failure but they don’t point out the obvious.  They claim a lack of dedication to the system and not doing as they were taught.

But how can do many “sharp” people, Amway recruiters words, not mine,  fail at such a high rate?  It is my conclusion that so many people fail by design rather than any other reason.  If you look at it objectively, you can easily discern that people fail because it’s by the Amway business model design. The Amway model tries to sell generic based products for premium prices.  That is a system designed for failure.

When you add in the “system” of tools and functions, it’s nearly impossible to build a profitable Amway business without recruiting a massive down line who will be able to sustain your business.  So how else can a business be built?  It’s apparent that Amway can only be built on lies that allow new recruits to get sucked into the system.

Can Amway be built on the truth that the vast majority of people who enter the Amway world will fail, mostly from the costs of tools and functions?  Do the down lines know that a significant income for diamonds are from tools and functions?

In any case, must Amway IBOS fail, not because they didn’t try hard enough or because they they don’t put forth effort.  They fail because the Amway system is designed that way.  It’s not possible in a group of “system” IBOS to profit because the system will exceed the bonuses that Amway pays out to the group as a whole.  Don’t believe me?  Do the math.   😃

Just A Few Examples?

Since I retired from the workforce last year, I live pretty comfortably although covid 19 has brought some disruptions to my life such as restrictions on being able to travel and a bit of restrictions on lifestyle as we deal with the pandemic. But eventually it will pass and hopefully things will resume to normal life activities.  One of the things I occasionally do is hang out with other retirees. There are retired fire fighters, police, electricians, office workers, sales people and on and on.

What I don’t or haven’t run across is any Amway retirees who built their business right and decided to walk into the sunset to enjoy a quiet but bountiful retirement funded by Amway residual income.  You’d think after more than 60 years in business, there would be some of these people floating around enjoying life.  This is the Amway nirvana that is pitched to prospects and IBOS constantly.  Go diamond and quit the J O B right?   Heard it many times myself and my friend’s kid is in Amway and that’s what she is hoping for.

So why don’t any current diamonds walk away to enjoy a peaceful but luxurious retirement.  You know, like the stuff they pitch at functions?  It can’t be that all of these diamonds love running to functions and meetings when they could be walking the beaches of the world right?  In the last 10 years or so I’ve seen a handful of crown ambassadors pass away but none of them walked away to enjoy. A quiet peaceful lifestyle. Maybe they all enjoyed working?  Maybe but that seems implausible since they are the ones pitching the residual income and early retirement.

But let me offer a contrarian thought.  A diamond lifestyle is not cheap.  Flying first class and staying at 5 star hotels can be very expensive, especially for a family.  Amway’s own numbers show that a Q12 diamond earns around 600k annually but a non Q12 earns less than 200k.  A Q12 diamond is a rare exception thus most diamonds earn less than 200k annually not including the income from selling tools and functions.  So let’s say a diamond earns an additional 100k gross income from tools and functions for a gross income of about 300k.  A nice income but after taxes, business expenses and health insurance and other misc expenses, you aren’t buying mansions in cash, nor are you able to live a jet set lifestyle unless you are living beyond your means.

And maybe, just maybe that’s why we don’t see Amway retirees.  The diamonds can’t afford not to work.  If they stopped, their tool and function income would stop and their Amway business is likely to fall apart once they stop recruiting new members.  And this is why a diamond seemingly works forever.  They can’t afford not to.  Over the years in  my blogging experience, I’ve challenged Amway apologists and IBOs to provide a few names with some supporting evidence of Amway retirees living on residual income.  Never mind several examples, I’ve not seen or heard of a single one to date.

Investing In Your Business?

If you own a conventional business, you more than likely had to make some significant investments into that business by acquiring a property to operate on, purchasing equipment and possibly hiring employees.  But once you open your doors, customers purchase your product or service and hopefully you make more than your expenses, which would be your profits.  Most likely you will not invest in equipment or people who do not help you to further your profit and/or build up your business.

But in Amway, you’re very likely told how you can operate with little to no overhead which gives you a chance to profit quickly.  It makes perfect sense when you say it like that but sooner or later, your upline will advise you to invest in yourself and your business in the form of books, voice mail, meetings and functions, and other self development types of activities.  While some upline may mention it to you, they most likely down play the fact that they (the diamonds) make significant profits from creating this overhead for rank and file IBOS.

It will be called education or an investment into yourself and your business.  But stop and think for a bit.   What is the return on your investment?  In other words, is that book or attending a meeting going to create a profit for your business?   Here’s a good one.  Why should you pay to attend a recruitment meeting if you don’t have any guests to recruit?  Oh, your upline will say it’s to learn and to show support for the diamond but the diamond is supposed to be rolling in dough while your business is likely losing money, directly attributable to the expenses of the tools, meetings and functions.

Real business owners do not incur business expenses unless those expenses result in profits for the business.  Yet your upline will have you believe that you should blindly spend your money on hopes that someday you will make it or that you can fake it till you make it.  Or maybe success is right around the corner so keep going and never quit.  Nice platitudes but in business, sometimes the wise decision is to quit and try something else.  If not your Amway business just becomes a money pit.  You keep feeding it but it only needs more and more investment with little to no return.

Keep a weekly log of incoming profits and losses/ business expenses.  If the expenses consistently exceed the profits, ask yourself honestly.  What will change that will turn things around?  People too often spend years doing the same thing and getting the sane results.  That term about insanity also applies to the Amway business.   😀

Amway Creates Millionaires?

I had a great LOL in that my recent post “Blatant Upline Lies” elicited a comment that up until 1998, Amway had created more millionaires than all other business combined,   It was ironic that this blatant lie appeared appropriately in that thread.  I’m pretty sure Wall Street has created more millionaires than Amway hands down.   Amway IBOs and recruits assume that all of the diamonds are millionaires but they fail to see how a diamond lifestyle can be expensive to upkeep and diamonds may indeed be living in debt or check to check like many in the US.

We know that the owners of Amway have done well, being listed as billionaires.  But how would anyone know who might be a millionaire in Amway.  The diamonds don’t release their financial details and would likely tell you it’s none of your business if you asked for business related financials.  So many indoctrinated IBOs and Amway apologists assume that diamonds are wealthy beyond belief but the fact remains that nobody really knows.  Now I don’t think that there aren’t any millionaires in Amway but to think Amway created more millionaires that all other business combined up through 1998 is hogwash.  Microsoft corporation itself probably created more millionaires than Amway during the same time frame if you count stock holders of which I am one.

Some years ago I was curious so I emailed a local hotel to ask how many diamonds were in attendance at diamond club when they were in Hawaii for that event.   While I no longer have the email. I was told that 160 people were in attendance.  That 160 included wives and kids.  But hey, let’s assume they are all millionaires.  160 millionaires plus maybe a few who could not attend is more millionaires than all business combined through 1998?  Seriously?  Diamonds must teach these lies and sadly, prospects and IBOS believe it.

If the diamonds want to tell lies to strengthen their case for Amway, you’d think they could come up with a better story.  Anyone ever wonder why there is seemingly a huge lack of Amway retirees as diamonds are forever in terms of working.  They apparently work until they drop although they pitch early retirement as an enticement for people to join which I find humorous and ironic.  😎

Blatant Upline Lies?

When you break down some of the teaching by the upline diamonds, you can see through what looks like blatant lies to me.  I won’t go into all of them but I’ll focus on some common ones that I sat through as an IBO and I have reason to believe that little has changed over the years.  The narrative rarely changes for the upline.  Their focus is to wring out as much cash from down line as they can while pretending to truly care about you.  Try missing a few meetings and functions and see how much love comes your way.

Lie#1:  upline says we make pennies only after you make dollars.  When an IBO earns a bonus, day from generating 100 PV, they qualify for about a $10 bonus.  What they don’t see is that their efforts generated about $90 to $100 dollars but the IBO who did the work gets only a small portion of the bonus while layers of upline enjoy the rest.  Also, IBOS who attend functions are helping the diamond to earn serious dollars as the tools and functions are a significant source of income for diamonds.  They make dollars off your personal use and any sales you have plus they make a nice profit from your attendance and participation in their system.

Lie#2:  upline says they have your best interest at heart?  Really, so do these “mentors” spend individual time to asses and help IBOS or is the help in the form of an audio that was purchased or a function that was attended?  Or a meeting that the IBO paid to attend?   How can they have your best interest at heart if you must pay for every bit of advice regardless of whether the advice works or not?   It sounds like diamonds have their own best interest at heart.

Lie#3:  it’s a level playing field, everyone starts at zero.  Well, no.  Rank and file IBOs do not participate in tool profits.   That gives upline a huge advantage in making profits.  Also, IBOs can’t innovate and sell products to retail outlets or advertise without special permission from Amway.  These are business inhibitors that Amway imposes on IBOS.   That leaves most with personal consumption and selling a few things to sympathetic friends and family.  How many real businesses can profit in this manner?

These are just a few of the common lies I’ve seen. Perhaps a part 2 or 3 is in order for a future post.  Food for thought, if your upline cared about your success and well being, why charge you for a Zoom meeting when they would benefit from the advice they give you?  Zoom is free and if they want your success, why not make a cost free meeting free for IBOS?  After you read this post, you probably know why.   😎

Investments Are Like Gambling?

One of the biggest loads of guano told by upline diamonds was that the stock market was essentially gambling.  As if buying shares in a solid company was like betting on a hand of blackjack or red or black on a spin of the wheel on roulette.  This is extremely dangerous teaching on the part of the diamonds.  I often wonder if the diamonds themselves are invested into the stock market themselves? Let’s face it, for an average middle class person, investing at a young age can be a means to grow wealth in the long run.

I can agree that day trading can be a form of gambling because you aren’t giving the stock and the company to overcome short term setbacks and problems.  But let me give you food for thought about something I figured out a in the late 1990s.  It seemed like every so often when you read the news, Bill Gates kept getting wealthier and wealthier.  It wasn’t because he was putting his money in a bank.  He owned billions of dollars in Microsoft stock.  Having had that revelation, I bought shares of Microsoft as well and I haven’t sold a share yet although I am now retired.   The stock took some damage due to the covid 19 hysteria but has recovered nicely since April.

Now I’m not claiming to be rich because of that investment but I have a fairly nice small fortune because of it.  I also own shares in other companies as well but I won’t discuss that here.  I do recall a tape made by a diamond named Dave Severn where he downplayed investing and said a broker gave him a hot tip on a stock and he said something like (not verbatim) “listen here Ace, I’ll put up as much money as you are”.  As if stock brokers aren’t willing to invest in their own advice.

Let’s look on the other side of the coin.  Diamonds advise prospects and IBOS to invest in tools and functions. I’d say that’s a much greater gamble since you can research Amway’s own numbers on their website and extrapolate that only about 1/4 of 1 percent ever reach platinum and out of those, only a small fraction ever reach diamond.  I’d venture to say confidently that you can invest in most companies with a proven track record and you’ll make positive gains in the stock as well as dividends in many cases.

Smart investing is not gambling but I’d say pouring money into an Amway business plus buying into the tools and functions gives you a worse chance of making a net profit than a day in Las Vegas.   Don’t believe me?  Who are among the richest men in the world?  Bill Gates?  Jeff Bezoes?  Warren Buffet?   They didn’t make their money with Amway.  While the Amway owners are billionaires, you can note that they are not Amway distributors.  They own the MLM company, which can be lucrative when you have armies of distributors working for commission only and no benefits such as medical insurance.

Serious food for thought.

The Bait And Switch?

One of the reasons why people get into business is to make a few extra bucks or to earn an extra source of income.  It sounds like a great idea and it makes sense at least on the surface.  I mean who doesn’t want more money or another source of income.   It’s how people get enticed into joining the Amway business.  The pitch is often to join Amway as a way to earn money or save money.   That makes perfect sense except that in Amway, neither of those scenarios typically happen.  

The pitch I saw was that you save 30% by shopping with Amway.  But you save 30% compared to what?  You pay much more for Amway products than you do for comparable products from Walmart or Target.   That’s when upline will tell you that Amway products are premium.   But is that the truth. Are Amway products premium?  And again, compared to what?   It’s more like Amway products costs are premium but the product itself is generic.  And that’s just one facet of the scheme.  

The next portion is how Amway has no overhead and therefore you have the ability to earn a profit quickly.  But you join and you don’t see profits.  That’s when upline switches the narrative to how a real business doesn’t see profits for up to 5 years and that you must invest in your business as well as educate yourself in order to succeed.  Up front you’re likely to be told that Amway is very simple then later told that you need to invest and learn how to build your business.  

Upline will slowly get you involved and then raise the bar and your commitment level until you wind up in debt spinning your wheels but getting nowhere near the level of success that upline sells the recruits on.  It’s like a sly game of bait and switch that upline plays on down line.  But it happens slowly and cleverly so much so that most people don’t see it happening to them.   IBOs and prospects beware.