Tag Archives: Steve Nakamura (JoeCool)

Are you recruiting your competitors?

A supposed “criticism” of Amway, and indeed of multilevel marketing, that I’ve seen turn up regularly is the idea that it’s inherently flawed because “you are recruiting competitors”. For example, Robert T. Carroll, in his “Skeptic’s Dictionary” says –

Why, you might wonder would you recruit people to compete with you? For, isn’t that what you are doing when you recruit people to sell the same products you are selling? MLM magic will convince you that it is reasonable to recruit competitors because they won’t really be competitors since you will get a cut of their profits.

Australian MLM critic Peter Bowditch (ratbags.com.au) says for example regarding his own business compared with MLM –

I am a certified consultant and an authorised reseller for several software and hardware products. I can open a retail shop to sell these things, I can sell them on eBay, I can walk door-to-door around the neighbourhood, I can ask retailers to stock them and computer builders to include them as packages with their machines …I am not expected to find and recruit competitors for my business

Anti-Amway obsessive JoeCool comments on one of his (many) blogs –

 you are very strongly encouraged to RECRUIT YOUR OWN COMPETITION. If Amway were a business where the goal was to make money selling products, it is a suicidal business plan

So, what are they on about?

Well, the claim has some truth to it because when you sponsor someone in to your business, that person is indeed now a potential competitor for a retail customer. For any given customer, you’ll make more money if you sell to them personally than if your downline does.

One flaw in this “complaint” is that the same thing applies in traditional business as well. If you owned a small clothing store, every time you sell something, you get to keep all the profit. But what if you employ someone? In the clearest example, if you simply paid them on a commission basis, then they are a direct competitor to you on each retail sale. They get that commission instead of you. The same really applies even if they’re a salaried employee. The money your paying them could have stayed in your pocket if you hadn’t employed them and sold it yourself!

Or how about Coca-Cola? If you buy a coke from an official coca-cola vending machine then are you’re buying it direct from Coca-Cola. Yet you could also buy it from your local corner store. Every time Coca-Cola reps try to get a store to sell their products, they’re recruiting competitors!

Or let’s take Pete Bowditch’s own software example. As he mentioned, he could sell the software directly himself, or he could ask retailers to stock them. In other words – he could recruit a competitor! By having a reseller sell to a customer, that’s a potential retail sale he is missing out on.

Why does Coca-Cola recruit competitors? Why does a  small business owner recruit salespeople? Why does Bowditch suggest recruiting retailers?

No “MLM magic” is needed to answer that. It’s because you can make more money that way! By recruiting resellers, you can hopefully get much larger total sales volumes than by trying to do all the sales yourself. Yes, you’ll make less money per sale than if you did a sale personally, but you still get a percentage on the wholesale sale to your recruit, and you should be able to get a lot more sales for the same time invested. Asmaller percentage of a larger volume can easily be worth more than a larger percentage of a smaller volume. What’s more, the larger discount you get thanks to your recruit’s volume means you get an even bigger profit margin on your own retail sales!

Unless the marketplace for your products is saturated, and there is no room for expansion, recruiting other sales people to increase your sales volume is a smart and sensible way to increase your profitability.

Amway critics and credibility – another one bites the dust

When you read stuff on the internet, it’s difficult to know what’s true and what’s not – generally all one can do is assess an authors credibility by what they say and how accurate it is. Everyone makes mistakes occasionally, but if people are making major errors of fact in their posts … well, it damages their credibility. If those errors are about what their entire post and/or blog is about, it damages the credibility of everything they post. Amway critics regularly try to damage the credibility of this site by attacking me (with often wildly inaccurate claims) rather than what I say and the information I present. It doesn’t matter, this site isn’t about me, I don’t care what you think about me – judge the credibility of what I write. Is it generally accurate? Do I backed it up by sources when I can? Judge what I write, not me. When someone resorts to ad hominem what it really does is reveal how little logical and factual basis the attacker has to try to discredit the other person – if you can’t attack the argument, attack the person. Continue reading

Anatomy of Deceit – an Amway Critic’s price comparisons

I was having a discussion about Amway products and to my surprise the other party cited “JoeCool’s website” as evidence that Amway’s products were overpriced and not competitive – in other words, a scam. JoeCool is of course a well known anti-Amway zealot. So I thought I’d have a look at JoeCool’s price comparisons, and he was his usual dishonest self. This is JoeCool’s comparisons Continue reading

Anatomy of Deceit – Analysis of an Amway Critic

Prolific anti-Amway blogger JoeCool recently did a post claiming to analyse “a platinum group” and prove using “simple math” that it’s impossible for an Amway business to be profitable overall. Let’s have a look at what he says, and what happens in the real world.

Amway Global – Analysis Of A Platinum Group

Many people who are in Amway, or were in Amway at one time is very likely to have seen the 6-4-2 plan. I understand some modifications may have been made in certain groups but the basic premise of this post will still hold true. An IBO who sponsors 6 who sponsor 4 who sponsor 2 would have a group of 78 IBOs. All told, this group would allow the platinum to earn about $47,000 (before expenses).

Here is where JoeCool begins his deceit. The “6-4-2 plan” is a model used to explain how the bonuses work. It is not reflective of a real Amway business, as is obvious with only a moments thought. So he claims to be analysing a platinum group, but in reality he’s analysising a simplified model used for explanation purposes! If the actual reailty was to sponsor 6 who sponsor 4 who sponsor2 – what happens when the “6” decide they want to be platinum? Are they not allowed to sponsor 6 themselves? What about the “4” and the “2”? Does the Amway plan stop there? Of course not. 6-4-2 in no way reflects a real platinum business. Oh – and even then this model has 79 IBOs, not 78. Continue reading

Amway/Quixtar Myths, Psycho-facts and the Internet Echo Chamber

The Internet is unprecedented in it’s ability to provide access to massive amounts of information to anyone who wants it. However, as a true “medium of the people” there is no editorial oversight. There is nobody fact-checking statements and claims. Anybody can write pretty much anything they want. In theory of course, if one person puts up a website making one claim, then someone disputing it can put up another website, and an independent observer can make their own judgements.

In reality though, few of us are truly independent observers. We each have our own background, our own experiences, our own biases through which we filter everything we encounter. One effect of this is what psychologists call confirmation bias - we tend to actively seek out and give more weight to evidence which supports the beliefs we already have, and we give less weight to evidence which contradicts our beliefs. For example, someone who already believes that UFOs are alien visitors is far more likely to accept a report of a UFO sighting than someone who does not hold this belief. A “believer” would tend to accept the report at face value – a skeptic would look for other explanations.

Another phenomenon of belief is the Echo Chamber effect. Like minded people tend to congregate in similiar places, and share similar ideas. Simply by virtue of the fact we each have limited hours in the day, this also means we inherently limit our exposure to other ideas. We talk to people who agree with us, they talk to us, we all tell each other we are right, and our beliefs are reinforced and strengthened. It has been said that if something is repeated often enough, most people will believe it, no matter whether it is true or not. Robert Samuelson, writing in Newsweek, called these beliefs Psycho-facts. In the world of logic, it’s a logical fallacy known as argumentum ad numerum - if it’s repeated often enough, it must be true!

The Internet provides an almost perfect arena for these phenomena to act in concert. Individuals can log on to Google and search for a subject they are interested in. Confirmation bias plays it’s role, and the individual will be more likely to read and believe articles that support their existing tendencies. Then forums, newsgroups, chatrooms, and sites like MySpace allow these like-minded people to congregate in virtual communities, reinforcing their beliefs in the Internet Echo Chamber. Using blogs and other web technologies, these beliefs can then be published in a variety of forms, with little or no editorial oversight or fact checking. As these sites and posts accumulate, “psycho-facts” are reinforced via argumentum ad numerum - it’s all over the internet – it must be true!

I encounter this phenomonen again and again amongst internet-based critics of Amway and Quixtar. A meme is somehow spawned, and then the critics repeat it amongst themselves and elsewhere. The meme is spread through forums and blog comments so that it appears ubiquitous. And of course, this very ubiquity reinforces the belief there is a factual basis in the meme – when often there is not.

One example is the myth that there has been no growth in IBOs in 30 years. This particular meme began with a post on September 1 2004 by Amway/Quixtar critic “lawdawg” on his website, LawBlawg. The post Zero Population Growth (site now defunct), seemed logical and reasonable and claimed that the numbers of Amway and later Quixtar IBOs had not increased substantially in 30 years. This is in fact false, something I address elsewhere on The Truth About Amway and Quixtar. The falsity of the claim did not, however, prevent it being spread throughout the internet.

Barely one week after lawdawg’s post, a comment by user “Doug_G” repeats the claim on Quixtar Blog. The following month, in October 2004, a poster by the name of “Roger” repeats the falsehood on the What About Quixtar forum as does jason on Sinking in Quixsand. Lawdawg himself repeats the claim often on QuixtarBlog (november 2004, June 2005, July 2005) as well as on his own site (now defunct). “Rocket” repeats it in October 2004. In December 2004 and May, June, and July 2005 “Imran” repeats the claim in posts on the Random Observations site, run by a Quixtar critic. In May and August 2005 it’s repeated by poster “dmm” on QuixtarBlog. In July 2005 it’s also repeated on the WorldWideDreamStealers site. In August, November and December 2005 it’s stated as fact by JoeCool18 on QuixtarBlog and other sites critical of Quixtar. Joecool18 repeats the claim again in February 2006 on the QuixtarBlog forums. WildHalcyon states it as fact on QuixtarBlog forums in October 2005. Ty Tribble continues the myth in April 2006 and in July of 2006 JoeCool18 is still repeating it on yet another site, despite him being aware of it being false through my discussions with him on QuixtarBlog.

So, one falsly constructed post in October 2004 is repeated elsewhere in less than a week and is still being repeated around the internet two years later. In just my brief googling I’ve discovered 10 different people repeating the myth more than 20 times on at least 9 different websites. How many other people have repeated it on how many other sites we’ll never know. And how many hundreds, indeed thousands of people have read this “psycho-fact” we’ll also never know.

The Internet is a marvellous tool for research, but as always, be wary of where the information comes from. We all have our biases, we all have our wish to be right. Something may be repeated by many people in many places – but that doesn’t mean it’s true!

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