This past week while browsing YouTube I saw a video response made by Network Marketing Pro founder Eric Worre to Gary Vaynerchuk regarding comments Gary made during a Facebook live session. The comments were about Gary’s view of the Network Marketing business model…
Note: This article has been re-published from A Medium Corporation, written by Gary Miller
Normally I wouldn’t pay much attention to this because while I enjoy much of their work, I tend to enjoy Gary V. and Eric Worre in small doses.
I take Gary V. in small doses because he’s like ten pots of coffee, F-Bombs and all, and a little goes a very long way.
Eric because he represents a section of Network Working apologists that is zealous but still advocates a Network Marketing model that functions like it’s the 80’s.
Anyone that still can suggest with a straight face that the best way to launch a Network Marketing business in 2016 is by making a list of friends and family is difficult for me to follow as a loyal adherent. It’s just not my thing.
All that being said, they are both powerful voices in entrepreneurship, passionate about they do, and both have piles of people who love them and hang on their every word inside the Network Marketing world so hearing them both out isn’t a bad idea.
So what did they say?
According to Gary V? No it isn’t. His justification for this is as he puts it is “data”. He adds, “…There’s a small minority that make money, the far majority don’t….”
In his response Eric Worre handled this area well by asking a simple question that I’m paraphrasing here but the theme is intact, “In what business model is a high failure rate not the case?”
Solid point Eric.
The data on startups, franchises, you pick your small business poison is in fact brutal on all fronts. Always has been, always will be. Business is not easy no matter if you decide to be a networker or own a pizza shop. Gary’s throwing around of the term “data” to justify his position is short sighted at best and incomplete.
In fairness if you isolate it, to say that most people fail in Network Marketing is in fact a true statement. Look at any earnings disclaimer for any major Network Marketing company and you will find this to be the case. But even those numbers are incomplete telling only a portion of the story. However, if we’re going to play the “data” game then we need to pull data on small business failure in totality to have a sensible conversation. Gary loses on this one.
Worre sites that a major reason for much of the perceived failure in Network Marketing is the fact that is has such a low start up in many cases and virtually no risk to the new business owner. Because of this it’s easy to leave. Basically the formula looks like this; easy start up because you don’t need a lot of skin in the game, easy to leave when you realize it actually takes work. Because it does in fact take work, something Worre often makes a great argument for and I applaud him for it every time he does.
Eric is right but it poses an interesting and somewhat philosophical question…. What is a real business anyway?
If you pull the definition of the word business up on Google here’s the first thing you see.
If you put this definition up against the majority of Network Marketers you have a problem. Because by these simple definitions what a networker has is something but it may not really be a business.
There’s a false narrative in the Network Marketing space that’s been told for so long we’ve come to believe it as gospel and we really shouldn’t. It’s that if someone spends a $100 bucks for some product and signs a distributor agreement then they are a business owner. They may be many things; hobbyist, passionate consumer of a product, or just adding another potential stream of revenue not unlike someone driving for Uber or another side hustle project, but a business owner? I’m not sure about that.
Most networkers are not doing it as their “regular occupation, profession or trade”. It’s an alternative. It’s that thing on the side they are doing part-time. There is absolutely nothing wrong with that but to call it a business doesn’t fit the basic definition of the word.
Most networkers don’t make their living by “engaging in commerce”. While they may make a few extra bucks which is great, it’s not a business proper.
I share all of this because I think this understanding of what business is and is not is somewhere at the root of Gary’s comments and so in some way he’s correct. It also lends credence to what Eric is saying about the easy in/easy out model as well.
Both Worre and other well known Network Marketing leaders responded to Gary’s comments about the true viability of MLM as a business model by bringing up customer consumption. In other words, “Hey what about the products we sell to customers?” That’s viable right?
Yes and no.
If we arguing the merits of network marketing based on product sales we’re in kind of weird water. While in 2016 thanks to big legal cases involving Vemma and Herbalife it’s very hip and PC to talk product sales and customer consumption, the MLM model is still built for recruiting. Does that need to change? That’s a very big topic for another day. There are folks much smarter than me taking that on but if we look at the “what about customers” position on its face, it’s not the strongest argument for the MLM business model.
A person selling a bottle of cream to someone for a commission is a sales gig. If that’s your “business” then what you are in fact is a commissioned based sales person (great gig to have by the way, I’m a fan) but are you a business owner?
Does anyone get into MLM to solely to be a seller of products? If that were their goal they could sell products for a variety of non-MLM companies, get some benefits, maybe a little base salary and have a much more dependable income. Many don’t do that because they are enticed by the the possibility of having a large organization all doing a little bit of selling, creating residual income, bonuses, and ultimately big dollars.
When we talk about products though we MUST deal with the elephant in the room…
The short answer on the “what about the customers” argument is that the only reason most people use the products in an MLM is because they get them for cheaper as distributors and there’s a comp plan attached to them NOT because they think the products are so amazing. Most physical products in MLM have equivalents into the open market that are much cheaper and basically do the same things. I think we need to do better in defending the MLM model than the “But we have customers” position. It seems like an expedient go-to argument to bolster legitimacy but falls flat in light of reality.
Gary V. went on in in his comments to say….
… this idea any business that is predicated, any entrepreneur that is interested in the following model: I’m gonna get D-rock to do something, then D-rock is gonna get someone else to do something and I’m gonna make more money than they do because I’m at the top of the tree and started the process is a bad business model. This thought of passive income, I’m gonna get enough people to do shit and then I am going to be on the beach, pool-side all day and money is going to be flowing in, it’s just not a good model, it’s not sustainable, there’s a couple people that can pull it off, but, I’m just not a believer.
The fact that so many MLM purists were “shocked” by these comments is laughable. This is Gary V. Raw, off the cuff, and straight up. You can’t love him for that when he talks about other things with that kind of rawness then get offended when he brings some of that in the direction of our industry.
The fact that he’s done keynotes at MLM events doesn’t mean anything. He gets paid well to be there, he gets his message out, his gospel of hustle is spread, and his core philosophy is very applicable to ANY entrepreneur not just networkers. So hiscomments are not some betrayal. It’s not a good look when MLM’ers cry “unfair” when someone takes a shot. Grow up.
So what about this top of the tree stuff/sitting on the beach stuff that Gary is talking about? It’s referring to in my view one of the biggest lies in MLM, residual/passive income.
Now I can hear many of my friends saying, “Gary residual income is real. You earn it every month, are you crazy!?!”
Residual income is in fact real but it’s far from stable unless you have a giant organization. Putting that aside, when Eric Worre an others suggest there is this mystical space where one day after working really really hard you can in fact get paid passively in traditional Network Marketing is possible but HIGHLY unlikely.
And the reason it’s unlikely is a word few MLM apologists ever bring up… attrition.
Most of the people you sign up to do the “business” will in fact quit. That’s not a theory that’s a data driven fact. If you are constantly having to replenish your organization then a consistent and growing residual income is a bit far fetched.
I remember being prospected on the phone by a million dollar earner in a major company a few months back. He was talking to me on a Sunday afternoon. I couldn’t help but ask, “Why in the world is someone at your level phone prospecting on a Sunday?” The answer says it all, “I gotta keep people coming in man.” And there you have it.
In response to Gary V’s comments about sitting on the beach earning money because other people are doing stuff, many leaders such as Worre suggested that the industry as a whole has work to do to educate people on how things really work. It was also added that we have to collectively clean up our act so people have reasonable expectations about the business of Network Marketing.
Again… yes and no.
There has always been and will always be those who attempt to market to the lowest common denominator with slick marketing that promises easy, fast, and overnight. This is where Worre’s trepidation about the internet side of Network Marketing is understandable to a degree. People slam social media left and right with bad marketing. It’s ugly. I get it.
Gary V. and Eric Worre are both wrong on this one because in 2016 you can in fact do work once, set it up online, and get paid over and over again. That’s not a pipe dream that’s real and happens every day. It’s called leverage. When someone like Gary V. or anyone else attempts to say that’s not possible at all and that instead we all need to be working 80 hours a week on constant hustle mode, we don’t need to back up and apologize we do in fact need to educate. Leveraged income and systems do work when you work them.
It’s ironic that Eric Worre is always so fond of saying that we have a “better way” in Network Marketing. I believe we do but it involves changing with the times and leveraging resources that make inviting, prospecting, selling, and closing A LOT easier than they use to be in our industry. We need to embrace those ways because in 2016 I’m convinced they would produce a lot more results and success stories for new distributors.
Gary’s comments were in one moment, on one day… Let’s extend him some grace and keep our minds open to the idea that Network Marketing is in fact a great thing but it has some spots and wrinkles. To ignore those elements is bad business indeed.
For Eric and other apologists for MLM, while most of them are in fact “old school” in the way they choose to teach how to build a business in 2016, you can’t argue with their overall body of work and personal success no matter what era it occurred in. All of us in the “new school” of internet marketing need to keep our minds open to them as well because while our ways of building may in fact be shiny and effective, real wisdom trumps methodology, so we need to keep our ears and minds open when Eric and others speak about this industry.
All that being said I close with a word of caution.
I’m reminded in all of this of our propensity in Network Marketing for hero worship and how it’s not a sound practice. So many people love the Gary V’s, the Eric Worre’s, etc… so much that they never find their own personal voice, message, and business philosophy. Those people you idolize didn’t become great by copying everyone else. Sure they modeled success practices in many cases but they found their own voice, style, and mission. I would encourage you and I to do the same.
I think whatever industry we’re in, Network Marketing or otherwise, is better when we’re truly ourselves and not simply thought guru groupies waiting to be told how to think then we go and parrot it back on our social media walls and blogs.
So fellow networkers, old school and new, take the meat, spit out the bones, and drive on.