Jason – is this who you meant?

Hi Jason:

I always enjoy reading your insightful and witty stuff, but you surprised me today with two statements.

1. On 3.31.06 you wrote, “Quality folks don’t do MLM stuff.”

As someone who’s been in and connected to the “mlm/referrer” business for the last 15 years, I wonder, what did you mean by “quality folks”?

Did you mean folks like the “Oracle of Omaha” Warren Buffet,
whose Berkshire Hathaway recently bought The Pampered Chef, an mlm-type/referral company that Fortune raved about?

Or did you mean Ripplewood Holdings and
Activated Holdings LLC, which together
bought the Shaklee Corporation, another mlm-type/referral company?

Of course these people just bought the mlm companies, they’re not personally doing the “icky” thing themselves. You might respond that they’re taking advantage of a bunch of low-enders, but I’d ask why either one would spend big money and invest major time in buying a scammer-filled business.

Anyway, here are a few folks who are actually doing it themselves. Do they fail your quality test?

John Gray, PhD., Men are from Mars, Women are from Venus is personally doing an mlm,

Jack Canfield, coauthor of the Chicken Soup for the Soul series (over 90 titles and over 100 million copies sold in 39 languages) who’s personally doing an mlm

(Thanks for these two links to the Editor of the new The Network Marketing Magazine)

Robert G.Allen, New York times best-selling author (Nothing Down), is also doing an mlm himself.

2. You also state that “Real experts command real money, contingent money draws the weak experts” and that “the best [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][people] will never “show” up [for Seth Godin’s Squidoo], where I have a lens, because they will be getting paid regularly by folks like [Weblogs, Inc., your company, or others].”

Does this mean your definition of a “best” person excludes entrepreneurs? Most of them, as far as I know, only have “contingent money” to look forward to.

Sir Richard Branson, Steve Jobs, or Bill Gates for example, all showed up for “contingent money” when they started their now successful empires. No one was paying them at first. Were they not talented? Were they not the “best” people?

How about you? Didn’t you start your first publishing venture in New York on contingent money too? Although now, a few companies later, you’ve sold to AOL (congrats!) and you probably have no more of those old contingent money hassles, like me, for example.

Perhaps it’s not about talent and expertise, but more about the personality and style of the one with the talent/expertise. How comfortable they want to be (i.e. work for you and be paid regularly) versus how big they want to get and how important it is to be chief of their own website/enterprise. Less risk, lower visibility (e.g. which visitors even know or care what the names of the Engadget writers are?), versus contingent money, with its much bigger rewards and personal recognition, if one is successful that is.

I do think there’s a perception problem with the mlm/referrer programs, though. And that’s this: When done up close and personal (i.e. among people one knows), the listener can never be sure what the motivation of the person singing the praises of the product or business is. Is it because they really like it and want to be the first to tell you about something cool? Or is it because when you buy, they benefit financially? What’s the real motive? Are they in it for the money or not? And yes, I want to know up front. Seth is doing that with his Squidoo site. So everyone knows.

This need-to-know is not a problem for Amazon.com which fueled its astronomical growth in its early years through the affiliate referrer program they created. Millions of websites with Amazon.com links today get paid a little referral fee for each product sale generated by their websites. Same for the Google Adsense program. The site owners get a referral fee from Google, just like your Engadget does from its Google ads. But with those companies, there are no personal side effects. No one loses money or face if they don’t like a book or CD they bought. They send it back to a faceless company, get a credit, and that’s that.

Not so if it’s a family member, colleague or friend, where returning products will cause someone they know to lose a little commission that they might need, and all the parties know it, adding stress to the relationships.

So I think with mlm/referrer programs: If the person is not immediately forthcoming that they’re getting fees on the sale of the thing before they start extolling its virtues, then they do create trust problems and the “icky” feelings you described. Especially if they continually nag people they know about it.

And with Seth’s referral program, everyone knows that’s the model. One advantage: such programs bring out hidden talent – people who don’t fit the world view of more established Internet outfits, like perhaps yours. You know, now that you’re all established with your own ideas of what an expert is. Who knows what new talent Seth will discover that will take the world in a new direction?[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]