I know the term but I’ve never actually been able to understand what it is and what happens in one
In: 2
It goes like this:
Person A recruits two people — call them “B” and “C” — into a “unique business opportunity.”
B and C pay A $20 each. They each agree to recruit two more people. Each of the people they recruit have to pay $20 – half goes to the recruiter and half goes to A.
B recruits D and E. C recruits F and G.
The four newest recruits all kick in $20. Now B and C have made their money back, and A has $80.
The business is only sustainable as long as you continue to add people at the bottom.
Inevitably, it falls apart. A, B and C have made a bunch of money by that point, but the last group in never gets a return on their “investment.”
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