My Experience with an MLM Pyramid-Scheme Company and Why I Quit and Went 100% into eCommerce Dropshipping
Trevor here from eCommerce Paradise.
This time I'll be going over my experience with an MLM pyramid scheme company and why I quit what?
Let's get into it.
My experience is really interesting. I actually made a video on a YouTube channel not too long ago about the World Financial Group MLM Pyramid Scheme company in early 2013. I kind of have a bad experience with that company. I realized that the company isn't what they say they are and that they're MLM. Their scheme has all these weird, intricate rules. Once you get into it, you think you're going to make money. It turns out, that it does all this other stuff in order to get anywhere. They take a lot of your money upfront and don't leave you any kind of good guidance after you get past the first steps. They kind of let you on the go.
They really screwed me over.
I was doing eCommerce drop-shipping before that. I started in 2011. I had a couple of years of good drop shipping experience, and I wanted to quit my job. But drop shipping wasn't a full-time income for me yet. So I wanted the extra side of income. So I started looking for other things.
It happened to be that my friend from Los Angeles was from WFG. I got interested in MLM because I read the book Rich Dad, Poor Dad, by Robert Kiyosaki.
He said that MLM is one of the best ways to start as an entrepreneur because you'll learn how businesses work, and you'll learn how marketing and sales work. It's true.
You do learn a lot about marketing and sales through an MLM, and you also learn how to not market and how to not sell to people because you'll piss a lot of people off doing what WFG and other MLMs want you to do. I like what a pyramid scheme is.
A pyramid scheme is basically a company where the products are not sold over the counter. You can't really buy them in a store anywhere. They're only sold through distributors, which happen to usually be your friends. Pyramid scheme do network marketing. You market only to your network. You're not supposed to market outside your network, online, or anything like that. You call up your friends, have a meeting with them, and try to sell them the products and recruit them.
The one I was part of WFG and Transamerica, as it's known as WFTDA World Financial Group. It's a financial services MLM. They also deal with life insurance, which happens to be cash value, life insurance for their model. But there are other models like them that sell term life insurance and mutual funds. There are a lot of different types. Some MLMs out there are beauty products, and some are health products.
The one I was with was a financial services company. It was the closest thing to what I was most interested in doing, which is making money. Here's the thing about the MLM. They want to recruit people into their business model. They want to sell. But selling comes second from recruiting. Their main focus is recruiting. So whoever they sit down with to have a sales presentation with, they actually can sell the life insurance at the end of the presentation. They offer the business model as well if they're interested, and they really try to pitch him on that.
The person who comes in is recruited by somebody and then that somebody calls all their friends for them and invites them to a business meeting, and they come out and then hopefully out of like ten people, you'll get one or two, maybe three people to actually join the company. And for WFG, the joining fee is one hundred bucks. And once you get in, you get this little book of information if you're lucky.
A lot of the people that I recruit were under me actually didn't even get the booklet because they just happened to be out of the office. But once they get past the basic stage, then you have to have them call their people and recruit three and three and three and three. So it looks like a pyramid.
That's why it's called a pyramid scheme.
The basic essence of it is to sell people on the business model. Recruiting people close to you, like your family, into an entrepreneurial venture. And having your family into it is the worst possible idea you can ever have in your life. It will make them look at you and act and treat you differently in the future for the rest of your life.
My story started with my friend. He was an adult, WFG. And so I got interested in what MLM is were because of Rich dad, Poor Dad. And so I started looking them up, and I found one near me on it through a Craigslist ad, and it was called Synergy Insurance Services. I ended up learning is that the guy who started that company used to work with WMG, and he was making a lot of money but got pissed at the other leads in the company.
The other people at the top decided to break off and create a copycat company. They called it Synergy Insurance Services. It's just like all these people making all these different pyramid schemes within pyramid schemes that are outside of pyramid schemes - a new pyramid scheme. They do it because you get so much of a bad rap after running one, and you end up getting all these negative reviews online that you have to change your name or else you're not going to be in business anywhere actively recruiting people. They're always going to look you up and find negative reviews and not want to do the business model. So they'll always have to be changing their name all the time.
I ended up trying to look them up. No reviews. It wasn't that bad. I actually got a little bit of good education from that one. They did a good job in that office. But, I was screwed from day one. Once I realized that that was the main business model that I couldn't recruit outside of my network, I realized there was no way I would make it in there because my network just wasn't the right people. I decided to quit that and then get on with WFG, which my friend, my skateboarder friend from Los Angeles is actually in. He was a sponsored skateboarder and got badly injured and couldn't do that anymore, so he needed something, and he kind of got really lucky.
He was recruiting outside of his network and got lucky and found the person. They only want to recruit through your network. So when it worked out for him, he found somebody and that guy happened to have a really good network and he got lucky there. So I mean, that's how it is. Like the people at the top, they just got lucky.
The only reason I really wanted to join the first was because I wanted to get out of my day job.
I wanted to quit, and I wanted to become free. It was this one summer when I had an epiphany during a backpacking trip. It was out in the woods in the North Cascades because I go out there every year with my dad to go backpacking, and I realized I could start my own business. I've seen my friends do it before. And it's actually not as difficult as I had it figured out, not as far off. It was more within reach.
Once I saw a friend doing it, my friend started a skateboard brand, and I was like, if he starts skateboarding, I can start a skateboard brand. I want to start one. I want to join with that energy. And so I did that, and it worked out pretty well at first. And then it slumped because I don't know what I was doing.
I went back to some classes. I went to take business at the local community college. During that time, I learned a whole lot about business, personal finance, marketing and sales, and advertising and accounting. All these different things in business law. I learned a lot.
I started my first drop-ship business while I was in school back in 2011. We made fifty thousand sales that year. In 2012, we made seventy-five thousand sales. And in 2013, one hundred thousand sales.
In the same year, I made 100k sales, I joined an MLM.
January 2013 is when I got fired from my job. I 2012, I started reading all these books, in a four-hour workweek. I read How to Win Friends and Influence People and Think and Grow Rich.
All these books are essential entrepreneur books, and you have to read them if you haven't yet. You're an entrepreneur, and you want to grow your business and your lifestyle. I think the essence of those books brought me to believe that I could do it. And that was the beauty of it. My attitude and my belief system changed about what was possible in life. That was the key.
I knew I could do about it, know how to do it, or what to do exactly. I had to keep reaching out in different places because dropshipping was great, and I was working but it wasn't a full-time income yet. Making a few hundred extra bucks a month wasn't enough. Los Angeles is a very expensive city.
If you're living somewhere like Chiang Mai, Thailand, it's very cheap. You can make it on, five hundred thousand dollars a month drop ship shipping out here, but if you want to live in the Western world, you're going to have to make a few thousand dollars a month at the minimum to survive and get by. So that was the key. And I needed extra income.
I wasn't planning on getting laid off from my job. I was planning on quitting my job. I would need a full-time income before I could do that. So I made plans, and I had the drop-ship business part-time. And I really wanted to get this MLM going. I have a couple of extra thousand dollars a month coming in from commissions there. But through that experience and through the whole process of getting integrated into the business, I started changing the way I looked and changed the way I acted. I started losing any kind of drive. Before that, I was like the hardest working salesman at the company. I was always taking the phone calls as soon as they came in. I was working diligently to get people the correct solutions to their products. If there were any problems, I was the first one to hop on it.
I was doing big quotes. I was doing everything I could to max out my potential at that job in the workplace. I went through a couple of different yearly exams where the guys were just blown away at what I was doing at the company, and they promoted me to salesman. They promoted me to have my own back office cubicle, and then I own my own office. At that point, I was learning new things. There was always downtime. What my coworkers and other salespeople at the company do, was watch a lot of YouTube videos like a funny cat video or a fail video on their downtime where I am there sitting and learning things.
I started taking action while I learned and actually created an eCommerce site. I started adding products from a supplier that I got, and I start making sales. It was pretty amazing that during the same downtime that they were using to just doing whatever to relax, I was actually building a business.
I was actually working on that business before I went to work in the morning. I wake up an hour early to work on the site for an hour, and I do it every night. After I got back after school, I would work on the website. And then all weekend long, I was just working on the website. My life became less about party and skateboard and more about building a business. And it was really fascinating going through the learning process.
I didn't have any particular courses or mentors. I was learning a lot just by reading blogs and taking action. I read about content marketing, and inbound marketing was Seth Godin's books. He was a huge influence in my life. Purple Cow, was the best one that made me realize I had to make my eCommerce business different and stick out from the rest of the eCommerce businesses out there by creating a story and telling a story and connecting people.
Reading all those books together taught me how to do all these things in a concerted effort to create content marketing, bring in social media, do email marketing, and didn't have to wait for the search engine traffic to get sales. I could bring sales through social media traffic. The content marketing eventually did post to the organic search results.
I got a ton of search results traffic to my product pages and start making tons of sales there. But that wasn't until 2013. When we started on the website, we started gaining attraction with it. So. That was where the MLM came into play.
I started going to work wearing a full suit and tie. The boss would walk around with polo in some jeans, and I was all suited up. He didn't like that. I started going to my office, actually just closing the door and working on the eCommerce site full time. I didn't really care, I didn't answer the phones. I was so burnt out because he was showing favoritism to a lot of the other employees at the office when things needed to be done, he would give them to me, not the employees. And when the employees wanted to take time off, he'd give it to them. And when I want to take off time, he wouldn't give it to me. There was a lot of favoritism going on, a lot of office politics. I really didn't dig.
I decided to do what I could do, which was just to ignore it. I worked on my own thing because I knew I wanted to build my own thing to get out of that situation. And it worked out really well. It got under his skin so much. By the time they actually had a business meeting early January 2013 to introduce to the company that they were to move the next building over again because I helped them move from one building to another. It's a big pain in the ass.
I was a big part of that process. I really wasn't interested in being a part of that. It was a good time for me to get out anyways. I didn't show up to the meeting because they had the meeting before work started, and they didn't want to pay overtime. I got in there, and they just said, Trevor, you're fired. You can go home. I said, fine. I grabbed the couple things I had left because I actually cleared out my office almost completely every day that week because I was planning on quitting anyway. That was it.
It was then from there that it's really cool because I went home and called my wife and she said, all right file for unemployment immediately. And I said, okay, fine, I'll file for unemployment. And I did. I got a call, 20 minutes later from the boss saying, "Hey, would you be open to not filing unemployment if we pay you for these next two weeks?" I kind of laughed and said, "Sorry, man. That's really nice of you guys. But I've already filed unemployment."
I knew California has a great law with unemployment. I was really lucky there because I was able to make half my paycheck for the next year. That was a part-time job for me and the dropship in business that made a full-time income. And I even had connections with locksmiths that were the customers of where I worked and needed people to work for them on their Internet businesses. I had part-time work there, too.
I was able to make ends meet, and I was able to build my business and relax.
Finally, I was able to work from home, and it was the most amazing experience of my life. I was able to do this MLM stuff, but I learned so much going through the MLM, and it was just ridiculous.
I really wanted to let you guys know why I chose eCommerce dropship over doing multi-level network marketing.
I chose eCommerce dropship because I know that some people out there do this stuff and like it. Unfortunately, I end up getting a ton of comments from these people. They're super harsh. I've never known any other company with agents willing to go out and name-call people who leave review videos of their business model online. It was just blowing my mind because it's the agents who represent the company. And so for World Financial Group, to have all these agents coming after me, leaving me negative comments and calling me names and stuff like that on a YouTube review video, was so disappointing. If you watch these videos, it's just ridiculous nonsense. A lot of it is just straight brainwashing, and that is the essence of their business, brainwashing their agents into becoming pretty much slaves.
You pretty much have to give them so much information about the business model. And financial education is something that literally blows their mind, makes them say, OK, screw it, I don't care. Just whatever you say is true, and I'll follow your lead because they tell you you have to be coachable and all that stuff. And it's just part of the plan of making you one of their slaves, telling and making you do what they want you to do. And that's pretty sad.
I fell for that for a few months there, and I was trying to recruit. I feel kind of bad because the products aren't even that great.
WFG and Transamerica sell life insurance. The type of life insurance they sell is two different types of life insurance. There's cash value life insurance, and term life insurance.
Cash value life insurance is a really weird investment combination of life insurance plus a cash value investment. The way it works is that you actually have to buy the insurance life insurance normally, which costs a lot more than term life insurance does. A small percentage of that goes into a cash-value account. And as you put in money over time, you'll finally get a good chunk in your savings account in the ratio will go up for your savings and down for life insurance. And by the time you go to retire, you have this huge chunk. But the key is you still you can't take the cash out. You'll get taxed on it. It's a taxable investment when you take money out. What they do is they take loans out from that investment. You take loans every single month for the rest of your life until you die. And then when you die, the loan pays itself off. It's like the weirdest investment vehicle, but that's how they pitch it because it's like a tax-free loan. But really, it's basically avoiding tax, and there's a big problem with it.
The problem is that it's an extremely expensive investment for what it is. And there are way better investments that will get higher return on your money. It's made for extremely rich people. It's not made for the people that WFG sells it to, which are friends and family of middle-income families.
The term life insurance is bundled with mutual funds. And while it's a lot better for the target market, still term life insurers is not something you really need unless you have a family that you're trying to protect, and you're the sole breadmaker breadwinner in that household.
You need some life insurance in term. Life insurance is much better because it's much cheaper. Term life insurance, you buy it and it's gone. So you pretty much spent money and that money is gone. But trust me, it's a lot more expensive.
And then, of course, there are mutual funds, which, if you know anything about investing, mutual funds are more of a way to hedge your bets than a way to make money. There are high fees on those, and they really don't make that much margin compared to direct investments like real estate investments.
Obviously, the margins are much higher there. It's not really a place for investors. It's a place for middle-income families, hardworking individuals who don't make investments, who don't know how to invest. It's a place for them to put their money for the future. And it's not even the best way to do that because, you know, IRA rays are the best way to do it.
A Roth IRA where, you know, you put money in after taxes and you pull it out, and it's tax-free. And then even an IRA where, you know, your money is tax-deductible when you put it in every year, and then you take it out the end of when you're retiring and then it's taxed. Mutual funds have a downside. And just like anything else does, a Roth IRA has a downside, too. But it really isn't for retirement.
Mutual funds are a good way to hedge your bets.
They don't teach people enough about these products. When they go to sell them, they just sell them on the emotional and the triggers that we all have when we're going to buy something. If you're ever going out and buy this kind of stuff, buy mutual funds or life insurance, do your research first and learn what you're buying all the way, especially if it's something expensive.
I'll get onto the next thing. Moving beyond that review video in 2015. In 2014, we did half a million dollars in sales. My eCommerce business was taking off. And in 2015, we were able to sell that business. In early 2015, we took an entire year off after that. We traveled the world. We came back. We got married. And then, in 2016, we settled back down again in Long Beach, California, started a new dropshipping business. I took a Dropship Lifestyle course, and it taught us how to make it way better converting website and sales funnel and then use paid traffic to start getting sales right away. It totally worked. It worked amazingly. I have a review video on my channel about that as well. You can watch it.
We did 300,000 in 2016 and another 500,000 in 2017. So it's really incredible what we were able to do with our dropship in business in late 2016. I started reading a lot of blogs about becoming more location independent, becoming a digital nomad. Around October, we sold all our stuff and left to Thailand and settled in Chiang Mai for a few months. We started traveling around. I went to Bali. Then we went to Europe and visited Europe for a while. We came back to the states for the summer, hang out with family and stuff like that on the East Coast, and then went back out to Chiang Mai. And we're in Chiang Mai. Now it's late 2017.
I plan to do Bali again. Pretty soon, we're going to Vietnam and Cambodia. We're going to visit Malaysia and the Philippines. We're going to visit Hong Kong and Seoul, South Korea, Japan, Australia, and all these countries. And then we're going to go back to the states again. And then from there, we're going to go to Eastern Europe and go check out all of the Eastern European countries. And it's just going to be an amazing trip. And, you know, it's our lifestyle. Business is way better.
The biggest problem with the MLM and stuff like that is that it's not location independent. Your success with an MLM pyramid scheme is being physically located where your network is and always recruiting those people. Then you have to be consistently making sales or recruiting, or else you're going to be kicked out of the business structure. No matter how high up you are, even the highest company person in the business.
Like this one WFG guy, this guy owns so much land out in California. And whatever he has, he has to have these seminars at his house all the time to train the upper management. They're the top leaders in the cult and the company. And he has to even himself has to be recruiting people into his business line, which I'm assuming he probably just pays to have a few people recruited because it's only a hundred bucks, right? You just pay three bucks a year, and you have three people recruited. But technically speaking, you have to be recruiting people every year or else you lose your position in the pyramid. And it's crazy that I actually found myself doing that exact same thing. I wanted to recruit my friend. He didn't want to go. And I said, well, I need one person to join us that I become, you know, the next level up, the senior director, whatever the heck. And I actually paid for his recruitment for a hundred dollars so that I'd get him on my books. It was the most retarded thing. And I realized at that point that this was a pyramid scheme that I had to do that. And that's what a lot of people get sucked into these pyramids.
Well, that's it.
I hope you learned something from this.
Listen more to our podcasts to learn more. Subscribe to our YouTube channel, eCommerce Paradise. Comment on our videos, and like it, if you learned something.
Step-By-Step Training for High-Ticket Drop Shipping
Here are the next steps you'll need to take to start your high-ticket dropshipping business:
- Research the market and choose a niche
- Start Your Shopify Website and Legal Business Structure
- Get Suppliers
- Optimize Your Shopify Website and Sales Funnel
- Launch Paid Traffic
- Run Your Business
- Automate and Outsource Your Day-To-Day Work
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eCommerce Paradise was created by Trevor Fenner of Seattle, Washington in 2015 to help you, the entrepreneur, to start and scale your own eCommerce business selling high-ticket products online with the drop shipping fulfillment method so you can make more profit per sale, have a sustainable and evergreen online business, get started with very little upfront investment, and live a location independent lifestyle. Trevor owns multiple 7-figure High-Ticket Drop Shipping eCommerce stores and is a digital nomad, traveling the world while working remotely with the help of his team of over 10 virtual assistants from around the world. Trevor is currently located in Bali, Indonesia. Trevor is also a passionate skateboarder, surfer, scuba diver, photographer, environmentalist, outdoorsman, fitness and tattoo enthusiast.
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