Welcome to the Treehouse Community

Want to collaborate on code errors? Have bugs you need feedback on? Looking for an extra set of eyes on your latest project? Get support with fellow developers, designers, and programmers of all backgrounds and skill levels here with the Treehouse Community!

Looking to learn something new?

Treehouse offers a seven day free trial for new students. Get access to thousands of hours of content and join thousands of Treehouse students and alumni in the community today.

Start your free trial


What is MLM (Multi-Level Marketing)?

I know Avon and Mary Kay (http://marykay.com) are successful and legitimate MLM businesses. All these MLM businesses have their own products and the popular 5+ ways to make $, but what is it really? Is it a get rich quick scam or a Ponzi scheme? I don't like one of their practices which is the "investment of money in which you have to recruit your downlines and earn a certain percentage from their membership fee or whatever they call it, and earn again from the recruits of the recruits" (someone's blog).

2 Answers

J.T. Gralka
J.T. Gralka
20,126 Points

Hey Paul,

Yeah. That's exactly what MLM is all about. A lot of people don't like to call them Ponzi schemes, but that's pretty much what they are. I wouldn't necessarily call all MLM businesses scams because the idea is that you are supposed to be able to leverage your downline referrals. Obviously, it's not a one-click system, and without the proper products, training, and support, you can end up spending a lot of money (instead of earning a lot of income).

There's a lot that goes into managing a successful and professional multi-level marketing campaign, but like I said, it can be very time consuming and very expensive. I wouldn't recommend that you invest any large sum of money into an MLM business unless you are very confident in the product or service you are promoting. If the product doesn't sell, or if you have to pull teeth to get one or two measly sales, then that's a pretty clear indicator that you're not involved in a very lucrative business.

I much prefer working with straight-up affiliate marketing services. For example, you can make a nominal commission off of somebody else's product by promoting an Amazon.com affiliate link. But, then again, it ultimately revolves around your ability to promote the product -- and yes, that probably means writing blog posts, placing solo ads, and optimizing your site and web resources so that they earn a creditable ranking with search engines.

It's hard work, and depending on the amount of time, money, and effort you're looking to expend, these types of money making efforts tend to fizzle into fairly fruitless endeavors.

Hope that gives you some insight!



Correct me if I'm wrong, but when you say Ponzi scheme I think you mean pyramid scheme. A Ponzi scheme refers to the practice of taking out loans to pay off existing debts.