The Truth about MLM

By Mike Myatt, Chief Strategy Officer, N2growth 

Today’s Myatt on Mondays question comes from a CEO who asks: “I’m evaluating using multi-level marketing to accelerate my distribution Is there anything truly wrong with MLM?” Let me begin by disclosing that I am not involved in multi-level marketing (MLM) and/or network marketing. Let me also be quick to state that in my opinion there is absolutely nothing wrong with the business model. In fact, the business model in-and-of-itself is rather brilliant. In today’s post I’ll share with you where I believe the MLM industry misses the mark, as well as what it is that makes most of us shiver when we hear the term MLM

My personal belief is that MLM is like any other business in that there are very successful and credible companies within the industry and there are those to be avoided like the plague. In spite of whatever perceptions people may have, the fact is that companies like Amway, Mary Kay, Excel Communications, Primerica, PrePaid Legal, USANA Health Services, and many others have sold millions upon millions of dollars of products to a broad base of satisfied customers, many of whom are NOT also reps. As further proof of credibility, many of the world’s leading consumer products manufacturers have chosen to align themselves with MLM companies in diversifying their distribution strategies.

MLM is just a business model, and really amounts to little more than “micro-franchising.” Its upside is that it has a very low cost of entry, with the potential for exceptional revenue, and there are those who achieve that. So why is it that in the circles I tend to run in you might as well declare yourself a leper as admit to being involved with network marketing? The answer is that for the reasons mentioned above (low barrier to entry and large earning potential) MLM doesn’t always attract the best people. The reality is that most people that have a problem with MLM don’t really have a problem with the business model, but rather they have a problem with some of the people they have met over the years that have been involved with MLM.

Let me give you two personal experiences with MLM encounters at both ends of the spectrum: The first is a negative experience that occurred when my wife and I were a newly wedded couple just getting to know other young married couples in our neighborhood. We were invited over for a dinner at a neighbor’s house and were excited to get to know the couple better…that is until in the middle of a pleasant conversation the husband abruptly left the room and returned with a vacuum cleaner. He then promptly proceeded to demonstrate the vacuum by dumping a veritable plethora of disgusting materials on his carpet so that he could show the prowess of his shiny and way overpriced machine. We in fact were not potential friends, but rather just prospects that were subjected to less than professional sales tactics.

The other experience that I’ll share is one that was positive, motivating, and that is perhaps the definition of what MLM is all about. I had a workout partner for a few years that was at the highest level of the Amway hierarchy. When I met him he was three years removed from being a UPS delivery driver and was at the time making between $40 and $50 thousand dollars per month. He is an outstanding husband and father and works very hard for the income he earns. Since that time he has moved into an incredible home (he even has his own lighted baseball diamond) and his business and income have only continued to grow. In the entire time I have known him he has never once attempted to “recruit” me. He has respected what I have accomplished while I have respected what he has accomplished and I count him among my friends.

The difference between the two examples mentioned above is that in the first example the people were in fact attempting to get rich quick (while only working “part-time” I might add) by exploiting their friends and family. I certainly don’t begrudge anyone the opportunity to earn a living, I just prefer that I have the opportunity to make an informed decision as to the authenticity of someones intent. In the second example this man treated what he did as a business. He worked hard, smart, professionally, and would have been successful in any business endeavor he chose to undertake regardless of the model or platform. It was his honesty, work ethic and professionalism that made him successful.

Bottom line There is nothing wrong with MLM as a business model. But there is often times much that is wrong with the people it attracts and the tactics employed…it is all about the people. If an MLM organization attracts well educated people who desire to build a company based upon solid business principles and professional practices it will thrive. If the organization recruits inexperienced people with unrealistic expectations as to what it takes to build a successful company then the organization, its associates, and customers will collectively experience less than favorable results.     

Interview with Mike Myatt

By Mike Myatt, Chief Strategy Officer, N2growth

One of the hidden pleasures of being a long-term survivor of the entrepreneurial life is that you are afforded the luxury of being invited to participate in any number of interviews, focus groups, surveys etc. I was recently asked to take part in a survey consisting of 20 questions posed to a group of 50 entrepreneurs.  The purpose of the survey was to search for common traits possessed by successful entrepreneurs. For those of you who are consistent readers of the N2growth Blog I thought you might enjoy having the opportunity to look inside the mind of its author. Following are the questions that were posed to me and my corresponding answers…

Q: What do you eat for breakfast?
A:
 I only eat breakfast if I have a breakfast meeting scheduled, otherwise I skip it.

Q: What was your nickname in high school?
A:
 I actually had a few all of which I’ve grown out of and none I which I care to admit to…

Q: What was your first job?
A:
The summer of my 5th grade year I picked strawberries in the morning and split firewood in the afternoon.

Q: How often to do exercise?
A:
I make an effort to exercise daily. On a good day I’ll get in a run, and when pressed for time I’ll settle for some push-ups, pull-ups, crunches and flutter-kicks. It allows me to burn off stress and have some alone time for thinking…

Q: Who was your mentor?
A:
I didn’t have any single mentor, but have had the benefit of receiving help and direction from many extremely talented people over the years. The person most responsible for shaping how I think today is clearly my wife and I wouldn’t be the man I am today without her love and support.

Q: How many hours a day do you read?
A:
3 to 4 hours every day. Reading is a passion of mine and I consume as much information as possible. Most of my reading is done via the Internet these days, but I still read some of the major periodicals as well…

Q: What motivates you?
A:
I have always been motivated by helping others achieve their goals and objectives. Any success I have had has come from helping others achieve their own success…

Q: What is more important: the idea or the execution?
A:
Great ideas are a luxury, certainty of execution is a necessity. The best idea in the world without a successful implementation is utterly useless…

Q: Worst day of your life?
A:
Laying in a hospital bed after a stroke not being able to remember certain things from my past. That being said, anytime I’ve hit a low in my life it has always turned out to defining or redefining moment to make major needed changes.

Q: Do you pray?
A:
I pray every day and often multiple times throughout the day.

Q: What was your biggest mistake?
A:
I’m a big believer that success is born out of the lessons learned through failure or near failure. I have had numerous failures over the years and those that say they haven’t experienced failure are being less than candid. My largest and most painful failures occured earlier in life whenever I chose to decision outside of my value system.

Q: Worst business idea you ever heard?
A:
I see about 40 business plans a week and regrettably most of them are ill-conceived at some level, but the worst one of all time was clearly the frictionless toilet.

Q: What can’t you live without?
A:
While it might serve as a sound bite for some, without a doubt my faith and my family are things that I could not live without.

Q: What is your favorite way to relax?
A:
Running followed closely by sleeping.

Q: What is the best part of being the boss?
A:
Making the tough decisions and watching them play out.

Q: What is success to you?
A:
Living my faith, making my wife smile, watching my children make great decisions and helping clients achieve their goals.

Q: What is the best investment advice you ever heard?
A:
First, understand the conventional wisdom and then carefully assess where it’s in error and then “arbitrage” the difference. The best opportunities present themselves via market gaps exploited through innovation. Don’t follow the rest, but rather chart your own course.

Q: Is there any reason to get an MBA?
A:
Education is a life long endeavor and should not end with a graduate degree. If you have the time for an MBA then it certainly won’t hurt, but it clearly isn’t a prerequisite for success.

Q: If you could be anything else, what would it be?
A:
I wouldn’t choose to be anything other than what I am. I feel blessed to be in the position I’m in and you couldn’t pay me enought to change…However, if forced to put forth some type of answer I would be a high school teacher.

Q: What is your advice to young entrepreneurs?
A:
On the business side of things: Create your business around something you’re passionate about, build a competitive advantage and push that advantage to extremes. On the bigger picture: Remember that your business is not who you are, but simply what you do…Don’t sacrifice your family or your values in pursuit of economic success.