That's how a training with one of my mentors started many years ago. He had seen so many talented people get lost in the network jungle over and over again without understanding how to evaluate different concepts.
When Randy Gage started with Agel Enterprises he did a training on how he did his due diligence before joining a company, and he sorted every company into 5 categories.
Randy moved on when the company was sold to an investment firm and Agel doesn't exist today, but his way of evaluating the network marketing world by categorising all companies this way is something I've carried with me through the years. He said this is what separates the slaves from the rock stars in our profession.
Category 1: The bottle rockets
The kind of company that starts with a bang. They drive an extreme hype. They attract very cool, energetic, charismatic people who just go all in and talk to everyone they know about it, and it's all about positioning yourself as fast as possible because this is going to take off, and it does. In a week or a month they bring in thousands of people, and in two or three months they earn hundreds of thousands of kronor and the organisation grows exponentially. It's a lot of people's dream! The only problem is that after 3 weeks, 3 months or 3 years it comes to a halt. Either because the authorities shut them down after the police got involved, or because the hype has settled and nobody has the energy to keep cranking because enough people have seen that there's nothing there. This is often linked to secret marketplaces that are going to be bigger than Facebook. A cryptocurrency the whole world will use when the financial markets crash, or a forex robot that gives you 400% a year with leverage through your network. A platform with a low monthly fee that offers everything you can buy in terms of digital or physical products, preferably with a focus on poor countries, where nobody can afford or manage to take the fraudsters to court once the house of cards collapses.
Things that are too good to be true. Deep down you know it isn't true. You can't help yourself. Those kinds of people often go from company to company and end up writing everything off, because this whole "network" thing isn't for them. This isn't network marketing. These are the pyramids. These are the criminal money games. The definition of fraud is that you've gone into something that was presented to you and it turns out not to be what you think it is, it turns out to be something completely different, or nothing at all. Air. No truth in it. You've been tricked by fraudsters. Scammers.
Category 1 is the pyramid schemes. Nothing you should be involved in and nothing I think anyone should be involved in. They destroy people's lives. There are different ways to make money, but if you're going to involve other people, do something serious. Pyramid schemes are a fraction of what people lose money on compared to the stock market or ordinary startups. What's interesting, though, is that pyramid schemes get so much attention because so many people are involved and therefore affected. They can point at so called leaders or point at the company, if there's anything behind it. Often there isn't, just a bank account in Panama or Dubai.
Category 2: The old guard
The dinosaurs. These companies have been around forever. We stand on their shoulders and should be eternally grateful for the path their legendary leaders have paved. Companies like Amway, Herbalife, Nu Skin and Shaklee have been around for 40 to 50 years or more. They're solid, but getting to the top can be hard if the goal is to earn big money. For an extra income they're excellent, but for a leadership income their compensation plan can be designed to retain the big leaders, which leaves less room for fast growth. There really is no saturated market, since the number of 18 year olds each year is greater than the number of people starting in network marketing, but still, the feeling is there: the train has already left.
Category 3: The flatliners
They have a good product. They have a good compensation plan. People join, start working and they do manage to sell products, but somewhere it flattens out. There's always a reason why these companies never gained momentum, and it can be down to so many different things. It can be competition. It can be pricing or scalability. It can be that the product isn't consumable: the customer buys it only once (plastic containers, frying pans, magnets, mattresses, water purifiers) with a lifetime guarantee.
Maybe it's a juice company with just one product, where growth only happens when they open new countries. Leaders aren't drawn to them because the concept isn't attractive, lacks a healthy culture or the capital for full support from corporate. Without a focus on personal development people feel they're not growing, and then growth stagnates. If you're going to build exponential growth you can't join a company that flattens out. You're looking for a product that runs out. A bottle, box or jar that customers want to buy more of every month so that they order on a monthly basis.
There are 3 types of income.
1. Active income. The one we're used to as employees. We trade time for money. We work an hour and get paid for an hour. We work a month and get paid for a month. We get paid for our time, not for our activity or our results. This is where you are no matter which company you work with. You earn active income in the beginning.
2. Leveraged income. It means that if you've learned how to get customers you can teach it to someone else. If you recruit someone who also gets the chance to earn money from getting customers, you can earn a few percent on that person's sales if you help them get going. You have an active income as long as you're sitting in meetings and helping with the training. Once that person is out working, it turns into leveraged income for you. That's the whole idea, that the networkers in the field recruit and train new people. If you're after leverage you can get it in all of these companies that sell fantastic products with a lifetime guarantee. From my perspective and with my definition, though, you can't get passive income in a company like that.
3. Passive income. It means you sit at home and money comes in without anyone actively doing anything at all. Bank interest. If you put 100 kronor in a savings account you get 0.84 kronor a year. That was an educated guess. If you want more interest you have to find better investments, but that's always tied to risk.
When customers keep buying month after month without you or anyone in your team having had a meeting, you have a passive income. Your personal customers do need a little customer care, though. They might call and wonder how to buy something more, change the flavour of a product or change their payment method. I don't consider your own customer base to be entirely passive, customer care is needed. But if you've found 10 partners in your organisation who have found 10 customers each, then you have 100 customers in your organisation where you don't have to do the customer care. If you've taught the team to do it, this income becomes more or less passive.
If you and your team find 10 partners you might as well find 100 partners, and 100 partners with 10 customers each who buy 1, 2 or 3 products often creates an economy that lets you do this full time, but not if you're selling something you only get paid on once.
I wouldn't choose a company that sells something that isn't consumable, because I'm after more than just active income and leverage. That said, I'm not interested in promoting the passive income, because it should never be the reason anyone starts. We want active and engaged people on the team, and the passive income should come as a consequence of us doing what we want to do.
Category 4: The commuters
Here we have the "salespeople" within network marketing. It shouldn't be confused with direct trade or direct selling, since that's the whole parent profession to MLM and network marketing.
The salespeople are the ones who buy stock, build inventory, play shop and try to sell products for more than they bought them for. There's nothing wrong with that kind of company. "The old guard" buys goods for 20,000 kronor, then they have things at home that they use and sell to family and friends. Then they find someone who also buys a load of stock so they're set for a while: scouring agents, car shampoo, toothpaste and frying pans. The difference here is that you become a salesperson.
You find customers who want to buy things from you just that month, and then you can have good turnover, and the next month you don't hold anything like the same volume because you didn't get enough orders that month. Some months might go really well, other months not nearly as well. Most companies have considerably lower turnover in July than in, say, October.
If you're then in a company that maybe hasn't built systems to make it systematised, automated and scalable, and instead you buy goods to sell them for more, you become very exposed to exactly this. Or if you sell a service that brings in a customer you then lose a month later. Then you spend an awful lot of time getting someone in, and after that there's no more turnover until you actively manage to sell again.
Worth mentioning is that the salespeople may well have products that run out, but there's no clear plan for supplying products month after month. Instead they sell individual products when the opportunity comes up… The challenge with this is that they can't scale the business as effectively as when you have consumable products on a monthly basis. Then you can scale it times 10, 100 and 1000. It can be services, make-up, essential oils, depending on how the company builds the system.
If you haven't built a system you don't have a process that works step by step. You're looking for presentation material that works. You're looking for the approach that will make it work, and you have to get the system to work for you. Only then does it become scalable. If you want to build a big organisation you can't end up as a salesperson…
Category 5: The holy grail
This is the ideal company: not brand new, but not fifty years old either. A strong financial base and plenty of capital, ready for expansion, like a teenager ready to conquer the world. They launch markets the right way, they have a consumable product the market wants and they care about their distributors. Often founded by networkers rather than "corporate people". They also build a culture of personal development. They train a lot in the system and in scalability. The leaders work with mentorship, which permeates the whole organisation.
I met Randy Gage in Rome in 2010 when we were going to bring a new company to Sweden, but for more reasons than I can think of we didn't pull it off.
When a company is going to enter a new country they should start a local subsidiary, an office, a warehouse, translate materials and register products so they're approved for sale in the country… We never got that far, and the company probably hadn't realised how small the Swedish market was and how many different languages we speak in Europe.
Beyond that, it came down to our engagement again. We had 3 events in Sweden during 2010 with Randy, and at the last one we had over 300 people in the room. Even though not everyone belonged to our team we were very happy, but the engagement between the events was too low to build momentum, and secondly we didn't have the experience to build it bigger.
Whatever the case, I've carried these categories with me through the years, and when I finally looked at the company I'm building today I asked myself the question: is this my holy grail?
My question to you is: have you found your holy grail?
