i’ve been doing some research but i don’t understand it fully
In: 4
I have a widget. I sell it and make some money for each sale. I recruit you and three other people to sell widgets and get paid for recruiting you and also make a percentage of each sale you make. You recruit four people and make money from their sales. Some portion of that gets passed up to me too. So now I am making money for each of my 4 recruits as well as everyone that my recruits recruit. Pretty soon I’m making more money from recruiting people to sell widgets than from actually selling widgets. I then require everyone who sells widgets to buy a certain amount of product each month, regardless of what their sales and inventory are so that I and other people with many recruits beneath us make lots of money. People who are near the end of this chain (or at the bottom of the pyramid) don’t have enough recruits to make good income without selling widgets but as it becomes obvious that the widgets are poor quality it becomes harder and harder to sell them. These people have to buy stock in order to maintain their salesperson status but they can’t actually find enough buyers to actually sell it.
If you map out the shape of this kind of recruit commission strategy, it makes a pyramid shape, which leads many to accuse these businesses (rightly or wrongly) of being illegal pyramid schemes.
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