My thoughts on LuLaRich (and MLMs as a whole)

Recently, Mr. FG and I, along with much of America (!) watched Amazon’s LuLaRich documentary. And after I watched it, I got the itch to talk about it with other people, kind of like you would at a book club.

(I get that itch to discuss whenever I read a good book too. But I would need to have a super frequent book club to keep up with all the books I want to talk about!)

I mentioned all this in passing in another post, and a number of you said you wanted to talk about it too.

So, consider this a blog version of a video version of a book club!

I’m going to type out my random thoughts about LuLaRich and MLMs in general, and then I’d love to hear yours in the comments.

First, a small explainer: an MLM is a Multi-Level Marketing company that enlists representatives to sell products. Tupperware, Mary Kay, Pampered Chef, Young Living, and LuLaRoe are all MLMs. They are not technically pyramid schemes because they do sell products, but many of them are set up so that you mostly make money if you refer other people to become sales reps.

Also, it’s common that to be a sales rep, you have to buy a certain amount of product from the company every month. So, yes, they are legal in the U.S., but they definitely share some features with actual pyramid schemes.

The “work part-time!” lie

Every time I see promotional material from an MLM (multi-level marketing company), there’s a promise is that you can earn a full-time living from part-time hours.

But based on what I hear and observe from people in MLMs, part-time work almost always earns you a part-time living.

And that’s in a best-case scenario; most people who put in part-time work earn almost no money, and a whole lot end up losing money.

Don’t make full-time income? It’s your fault!

This, to me, is one of the great ironies of MLM culture. The promise is always that you can work less and make more.

But if you don’t make money, the criticism is always leveled at the sales reps, not at the company.

This is such a conflicting message:

“Work less! Spend more time with your family! Stay home with your kids!”

Aaaaand:

“You need to hustle more! You get out of this business what you put into it.”

How can both of these messages be true at the same time?

The “be with your family more” message doesn’t seem to pan out

Multiple women in the LuLaRich documentary (people who were successful at earning piles of money) talked about how the LuLaRoe business completely took over their lives.

I have a friend who has experienced this with another MLM; she was making good money, but it had eaten up all of her time. She was seeing her kids and husband way less than before she started!

Several of the successful LLR reps ended up getting divorced, and more than one said that LuLaRoe was partly to blame. It’s not exactly the family-friendly business model it sets out to be.

I don’t think there’s ANY good reason to choose an MLM business model

Deanne (the founder) started out just making clothes and selling them, which was fine. That’s a normal business.

And when she sold some wholesale to her first sales rep, that was fine too. Totally normal business dealings.

But once she and Mark started paying people to recruit other reps, that’s where things seemed to go off the rails.

I’ve heard all sorts of reasons companies decide to go the MLM route. For instance, Deanne said it would be wonderful to have other people training new sales reps. I’ve heard Young Living reps say that Young Living uses an MLM model in order to make sure that the people who are selling the oils are also using the oils.

But none of the reasons I’ve heard make sense to me; they’re saying the MLM model solves all these “problems” that other traditional businesses seem to handle without needing to resort to an MLM model.

If your clothes are so wonderful, sell them the regular way!

If your oils are so fantastic, why can’t you sell them without levels and teams?

If your jewelry is awesome, open an online store.

If your health supplement works wonders, then word will spread without you needing to use an MLM to sell it.

I cannot think how the MLM model could have made practical sense for LuLaRoe if their goal was to make money selling products.

If the product was flying off the metaphorical shelves and that was the huge money-maker, then it would have made more sense for Mark and Deanne to warehouse it all and sell it themselves, hiring people to package and ship. That way they could make retail profit instead of wholesale.

But the huge money-maker for them was all these sales reps paying $5000-$10,000 to get started as a rep. And that’s obviously why they chose to do an MLM model, regardless of what they say the reason was.

Basically, the only “problem” that the MLM model seems to solve is the founders’ desire to make more money than they could possibly make by selling products.

The “It’s just like other affiliate programs!” message

MLM marketers seem to be told to use this messaging, and it is just patently untrue.

And I would know because I work with lots of affiliate programs.

For instance, I have an affiliate relationship with Vitamix. I bought a Vitamix, wrote about it, and some years down the road, Vitamix invited me to join their affiliate program. If someone buys a Vitamix through one of my links, I get paid a commission on that purchase.

However!

• I do not ever have to buy another Vitamix product in order to keep earning money from Vitamix affiliate links
• There’s not a minimum Vitamix spend I have to meet each month
• I don’t ever have to recruit other people to be Vitamix affiliates
• People don’t even have to buy a Vitamix in order to share a Vitamix affiliate link (although it would be a little weird to promote a product you haven’t tried!)

Like any other legit retail company, Vitamix makes money by selling its products, and that’s why its affiliate program is simple.

Requiring your “affiliates” and reps to spend a certain amount of money on company products each month is weird and not normal. It’s a sketchy way of earning money by turning your “affiliates” into repeat customers.

I don’t know what to think about Deanne

Obviously, she is a woman who has a lot of business savvy, and she’s been entrepreneurial since way before LuLaRoe.

But in her interview and in her deposition recordings, she gives off an, “OMG, I’m so clueless!” impression. I kind of wonder if she feels a certain amount of pressure to display a persona that is not reflective of her actual self (a self that is apparently very capable, and also sometimes quite unkind.)

If she does think it’s somehow not feminine to be smart and capable, that bums me out.

Whatever it is, it’s odd…she didn’t seem genuine.

It is impossible for lots of people to make lots of money in an MLM

There’s no way to watch LuLaRich and conclude that people were making their millions from selling clothing. When pressed, one of the earliest retailers flat-out refused to answer the, “Was there ever a month where you made more selling product than referring people?” question.

Obvious conclusion: she did not want to admit that her income was always skewed in the direction of recruitment income.

Because of this setup, reps who join later are never going to be able to earn like the early reps; there’s simply not enough population for them to be able to refer enough new reps to maintain high status in the company.

If the population numbers aren’t there, then no amount of hard work will make you successful.

I wanted to cry at the wasted money

You know how sometimes you hear of professional sports players who have made over a million dollars for multiple years, and somehow, they spend it all and end up penniless?

That always hurts my heart a little bit because if you made a million dollars even for one year and you were wise with that money, you’d be set up for your entire life.

I had that same sort of feeling when watching LuLaRich; there were women on there who had been bringing in hundreds of thousands of dollars per month, and they spent it all.

Courtney Harwood (who had to declare bankruptcy eventually) said there was major pressure within LuLaRoe to present a glamorous image, so she was spending the money as fast as it came in, living $300,000 paycheck to $300,000 paycheck.

GAHHHH!!

I suppose you could blame the reps for being unwise with their money, but when you are sucked into what is essentially a cult, it’s pretty hard to think for yourself.

Still. I can’t help but feel horrified at the wasted opportunity to save.

I don’t really blame the reps

I think the responsibility for the suffering caused by LuLaRoe should stand squarely on Mark and Deanne Stidham’s shoulders. They’re the ones who sucked the reps in and manipulated them, and while people love to hate on “boss babes” and “MLM huns”, I think the hate is misdirected.

People in a cult have been manipulated, and the blame should land on the people doing the manipulation.

LuLaRoe is no different than other MLMs

Jill Drehmer, the only still-active rep featured in LuLaRich, said, “LuLaRoe isn’t doing anything different than other MLMs. If you criticize LuLaRoe, you have to criticize all the others too.”

While she was saying this in defense of LuLaRoe, I took it the opposite way! LuLaRoe has done terrible things to its reps, and the business model sets them up to fail.

AND

other MLMs are doing the exact same thing to other vulnerable people; preying on people who want to believe the false promises.

_________

I’m at 1700 words now, so that’s probably enough thoughts from me!

Alrighty, readers. I want to know your thoughts on LuLaRich. Talk to me!

 

P.S. I know I came down kind of hard on MLMs here, and I know that there are people in MLMs who make money. But the facts are the facts: somewhere around 99% of MLM participants fail to make a profit. These are not good odds! You’re basically more likely to win the lottery. So, if you are wanting to make some extra money, it would be wise to choose something that is not an MLM.

P.P.S. On a related note, I wrote some very honest thoughts about why I decided not to become a Young Living rep.