MLM defenders – Justin Janovich

Here is a response that a Justin Janovich posted on Facebook that was largely in defense of Balazs W. Kardos and the MLM company the two of them are recruiting for. As far as online statements go this is fairly polite and reasoned so there isn’t a lot to counter here. Yet it does contain a few common rebukes from MLM-supporters that I’ll outline after you read the comment.

Joel Milne might want to rethink that. balazs and myself are involved in a company that has been around for 40 years. I cant argue with your ignorance if you choose to keep pushing it , but the products are proven and are maintained to last 25 years all with a 5 year warranty. Yes some mlms have shady products and some are not that great, but any company can produce shit products. Including exploding note s7’s, segways that catch on fire, and not to mention welch’s putting arsenic in juice. lol. Grant Cardone built a 500 million dollar real estate business “not in an mlm” “Quoting him ” many mlm products are great and even if i haven’t really ever made a ton of money with one, i know people who have had success with them.” A biased review is like an asshole everyone has one, but a quote off of a man who has made 500 million dollars in real estate and isn’t involved in any mlm is legit and holds more ground than a man who is angry because he had a bad experience. Understand the industry and fully understand it before making rash statements.

Justin Janovich, MLM defender and juice with added arsenic critic

 

Let’s start with using the length the company has been in business as an argument for it’s worthiness as a seller of products and business opportunity. This is a common but flawed premise, used commonly, at least in the MLM’s that have a long history. I’d argue that means they’ve earned more ill-gotten gains for longer, but that’s besides the point. If a company operates legally (not as a pyramid scheme) can it exist in the long-term despite poor business practices, or a failing business model in terms of what it delivers to MLM recruits? Of course! Investigations into Amways and Mary Kay both long-standing MLM’s, each showed all the problems that we speak out about regularly here at MLM Task Force. The insinuation Justin Janovich makes is that he’s not with some fly-by-night company that was founded just a few years ago and may be gone just as quickly. Yet that is a bit of fuzzy logic also because a company founded yesterday could have a good business model and be based on the highest standards of ethics. Still the perception of a track-record as indicative of supporting recruiter claims, would only be the case if that company actually publishes financials with details on it’s activities including sales to consumers, earnings by distributors. I challenged Justin to showcase exactly that in my follow-up reply to his defense of MLM.

Pointing out that traditional businesses are sometimes terrible, or have a bad product is a common misdirection tactic that MLM recruiters use. If Samsung can make a phone that explodes, if a segway can catch on fire (that one was new to me!!) and if Coca Cola can cause diabetes (I’ve add that one myself!) then why not buy crap in a bottle from an MLM that preys on recruits lack of understanding of business fundamentals? The fact that MLM recruiters and MLM defenders have to make comparisons regarding the worst example of traditional business give you a hint at the problem. Remember that real businesses deliver trillions of dollars of goods globally everyday, or thousands of times what MLM’s deliver. Yet when it comes to examples of fraud, deception, business losses and unhappy customers the MLM industry with it’s tiny percentage of sales manages to actually compete toe-to-toe for most pain caused.

MLM recruiters love to focus on endorsements by individuals that are successful or have the perception of success in various businesses, especially if they haven’t actually been in the MLM business. It’s certainly a better corner for them to fight from, than to look over actual financial statements and talk about earnings, sales and recruit losses. Anytime somebody prefers the abstract arguments over the real numbers, that’s a sign they are trying to be clever rather than factual. A lot of these types of supposed “endorsements” are limited statements, sometimes taken out of context. And certainly as Justin Janovich says himself opinions are common. The perception most people have is that an opinion from a notable person who is highly successful (read that as rich when it comes to the MLM industry) then it must be worth more than say, a person earning less. This isn’t actually true though, the analysts for think tanks, government agencies, accountants, people who analyze and study the numbers from the MLM industry might not be rich, but they are honest and competent. Also these supporting statements are almost always about the potential to make money, they do not touch on the actual business model or whether the products actually appeal to consumers. And that’s important because if we’re looking through that narrow lens of “can anybody make money in MLM” the answer is clearly yes. Somebody can make money in MLM. All it takes is a willingness to be in a business where all or most of your money comes from the losses that other people endure because you told them (falsely) that it was a good business opportunity. The argument that is okay, is an ethical one. Because if Justin Janovich is not bothered by the ethics, and he goes out and is the less than 1 in 100 that makes a profit in his MLM business, then certainly anybody that knows him will look at him and say “yes I know at least 1 person that makes money in MLM”. Personally I’ve met over a dozen people that have made some profits in MLM, many of them having becoming rich through it. That doesn’t change the reality of how numbers work. Well over 90% of profits in MLM come from the losses of other recruits.

It’s actually true mathematically that pyramid schemes, as in the actual illegal pyramid schemes that involve no product and are certain to at some point collapse, provide a better return-on-investment than legal MLM businesses. If that’s a head turner for you, understand this, pyramid schemes actually do provide a profit for about 10% of participants. And in many of these schemes, the people at the top actually made massive amounts of money. Now because their illegal (for obvious and good reasons) people can easily say today well of course I would never be involved in a pyramid scheme, their unethical and illegal. But the fact is if we made pyramid schemes legal, and just offered “spots” in a scheme in return for a buy-in, a person with zero concern about ethics could buy in, recruit lots of people, make millions, and live a presumably happy life. All it takes is not being concerned or ignoring the plight of many other people. Because of course, in a pyramid scheme for a few to become rich, many people lose smaller amounts. In some ways pyramid schemes are actually more merciful however than MLM’s. Because in a pyramid scheme usually it was a quick buy-in for a few hundred dollars that got the recruit into it. But in an MLM, often there is a buy-in, followed by quota’s. And MLM’s are masters of stringing the failing recruits along to extract maximum purchases from each one. After all, that’s the entire key to their business – how much they can sell to each new recruit. Hence the reason for minimum order quota’s, forced buy-ins and other strategies that MLM’s use to maximize the losses by MLM recruits. And do these methods help people like Justin Janovich make money? Of course they could, though only time will tell if he is the money maker or the money loser in his particular MLM business. What we do know however, is the actual business owners of the company he’s defending, will make profits off of Justin whether he does or not. And if he burns through his goodwill with friends and family (a common side effect of engaging in MLM) then he’ll need to reincarnate to get that back.

In his final retort Justin Janovich writes this excerpt:

Understand the industry and fully understand it before making rash statements.

Someday Justin you’ll understand the industry, at which point you’ll probably be doing something else, and hopefully something better with your life and skills. People not understanding the MLM industry, not reading the reports, not knowing the numbers, and especially not understanding business fundamentals is precisely what MLM’s feed off of. That’s why the greatest weapon against MLM recruiters is facts and numbers. And as I often point out as we lobby for better legislation to protect consumers from the dubious claims of MLM’s and from this toxic business model, if similar principles were applied to MLM’s as to franchises including mandatory reporting of financial figures, the entire MLM industry would quickly be brought to it’s knees. Lack of verifiable facts and figures is the only thing that the MLM really has going for it, and that’s being undercut increasingly by independent studies, the reporting of public MLM companies that paint a dismal picture of the reality of MLM finances.