For the sixth year in a row I went to FinCon – fourth time in person, two times virtually. Fortunately I don’t have the impostor syndrome I once did about the whole thing. Why did I go even though I’ve been inconsistent here at CMO Central these past few years?
Well I’ll share more in another post about what I’ve been doing and what’s next, but overall, I came to get inspired and re-invigorated. The past two years have been rough for me on this site. I’ve kind of lost my way, unsure what to write about, and suffering writers block and burnout in the crazy days of Covid.
I was lacking time, energy and mind space to do anything other than just cling on and survive. Now that we’re emerging from that time, I would love to pick financial content creation back up again. After all, I never lost my passion for helping working moms achieve financial independence. Also, I was up for another Plutus award in Family Finance, and although I assumed I wouldn’t win (and I was right!) I thought it would be fun to go and celebrate the winners.
You can check out my husband and my middle son battling with their “Magic The Gathering” style Plutus cards (which my seven year old was obsessed with!) here.
FinCon Energized Me And Showed I Wasn’t Alone
Going to FinCon I found that I wasn’t alone in feeling lackluster, burnt out, and uninspired. The past few years have been tough for many. But also I found excitement and inspiration. I found new companies, fun people doing new things, smart people who have been doing this a long time. I reconnected with long-lost friends and made new ones. And everyone loved my blog name, even people who had never heard of me before. (I do too but I know I’m biased, so it was nice to hear)
At the hotel-Orlando World Marriott – there was another financial conference going on at the same time. But that financial conference was not for money nerds, financial content creators, or personal finance enthusiasts like FinCon. No, instead it was for an MLM – a much different way to try and make money.
What is an MLM? And Why Isn’t It A Pyramid Scheme?
Many of you are well aware of this, and if that’s you, go ahead and scroll on down for more of the details on this particular MLM. But when I was sharing this story with my kids I realized that they weren’t familiar with the term. So it may be new to some folks, and if it’s new to you, read on.
MLM stands for Multi Level Marketing. In simple terms it means a company where you make money by recruiting other people to join. Then once the people you’ve recruited recruit more people, and you recruit more people, you make more money.
If you’re thinking “well isn’t that the same thing as a pyramid scheme” you would be half right. The difference is an MLM also involves the selling of a legitimate product. Like supplements, wraps, candles, makeup, or leggings, as some *cough* “random” examples.
The more you make from the product and the less from the so-called “down line”, or people you recruit the more the MLM is like a real business. But if it goes too much the other way, it can lean more to the pyramid scheme. Every MLM is different.
Ever hear of the old riddle, would you rather have a million dollars or a penny that doubles every day for a month? Spoiler alert, it’s the penny that ends up being worth the most, thanks to the magic of compounding. Well this concept works against you in an MLM, because eventually you run out of people to recruit. You would have recruited everyone on earth in 15 cycles.
The Two Conferences
It was only the last day or so I realized what the other conference was about. You had to walk through the display for the other conference to reach FinCon, and at first I was very, very confused. Why were their pillars covered with the images of very well dressed people with “millionaire” in giant letters? Why were there stars on the ground with peoples names and “three star director” or “four star director” written on them?
FinCon, by contrast, has a fun and upbeat theme. “Money nerds unite” is the tag line, and although plenty of millionaires attend, there are no giant pillars covered with their images. In fact, the millionaires who go to FinCon are likely to be more “millionaire next door” or “millionaire women next door” types.
Maybe they’re dressed in thrift store or consignment shop clothing. Not because they can’t afford new clothes but because they care about the environment, or they simply don’t find new clothes worth the cost. They often drive practical, cost efficient, environmentally friendly cars. They don’t show off trappings of wealth or practice “big hat no cattle” types of showing off.
Don’t get me wrong-FinCon is about making money (Create, Grow, Profit). But it’s about legitimate ways to make money, helping you understand the various ways to create, grow, and profit in a financial content creation business. There are plenty of attendees for whom this is a hobby and just do it for fun, others for whom it’s a side hustle, and some where it’s their main job.
Lots of FinCon attendees were pitched. Let’s take a closer look at the “great opportunity” they passed up, shall we?
What a great opportunity! Or is it? Critically evaluating an MLM
Many MLM’s disclose their income averages. Like most averages, you can skew the numbers by say removing those that made nothing. Or by taking advantage of the fact that the average gets skewed way upwards by a few people who make (or have) a lot of money. After all, the average net worth of Warren Buffett and a room full of broke people is pretty darned high.
I have to hand it to this MLM-their income disclosure is easy to find (linked clearly in the footer of their website) and includes the number of people who were “members” paying at least $240 per year, who made zero dollars. Like most income statements it doesn’t include expenses but it does refer to them in the bottom of the income statement.
Also it includes the number of hours worked. There is an unspoken implication that if you work over 60 hours a week in this “business” you too can be successful. However, it also makes it possible to calculate an approximate hourly wage. I appreciate their openness – many MLM’s go out of their way to make it hard to find those details
Here’s some of the facts I found interesting:
- 92% of people make an average of $45 per year. That’s just about $3.75 a month. A person at this level works an average of 2 hours a week, and so earns under 50 cents an hour
- 78% of people in 2021 made nothing, zip, zero. Zilch
- The minimum cost to be part of this organization is $240 a year. This cost isn’t factored into the income. So most people are losing money
- The $240 doesn’t include books, courses, conferences, etc. Those are additional costs
- The average income for everyone, including both the people who make nothing and those that make a million dollars a year, is under 1k. That’s less than $84 a month. If you take out all the people who made nothing, the average rises to 3k.
All this is actually pretty typical for an MLM. Many make nothing, lots make a little, a few make a lot.
Overall MLM Statistics
Based on my observations and my fellow content creators posts on the topic, I deduced that this particular MLM targets church going African Americans. The attendees looked to be primarily women, although men were targeted for recruitment as well. Their attempts at recruiting FinCon attendees were about as successful as you’re thinking it was for a conference of self-proclaimed money nerds.
This is not uncommon. According to AARP 60% of MLM participants are women. Only 25% make any money and half of those make less than $5k. According to the FTC, 99% lose money overall. I couldn’t locate statistics on how many were members of churches, but there are plenty of anecdotal accounts that churches are a popular place to recruit people. According to this set of statistics it looks like fewer African Americans are involved in MLM’s than are in the general population.
The pitch is often that you can work small amounts of time, usually from home, and in a fun way and the money will just roll on in.
The Reality For Both FinCon and MLM’s
The reality is that building a successful business – whether financial content creation, an MLM, a retail store, financial coaching, or anything else – takes work. Long hours. Dedication. Sure you can likely find some people who were accidentally successful. But you can also find people who won the lottery. And there’s people who inherited large sums and became wealthy overnight. That doesn’t mean it’s a typical way to success and wealth in a business.
In any business with a low barrier to entry it’s really easy to get started for low or no money spent, and to put in only a few hours a week. But more than likely that’s not going to get you a successful business of any kind. If you have a vision of a really successful business and not just a hobby you do for fun, you have to put in a lot of long hours at low or no pay.
You need a business plan, to promote your business, and to offer something of value (whether entertainment, or advice, or something else) in exchange for earning money. You need to be consistent over a long period of time. And you have to be willing to pivot and change to something else if your original idea doesn’t pan out.
Have You Ever Joined An MLM?
I’m curious as to whether you’ve ever joined an MLM – or known someone who has? What was your or their experience? Let me know in the comments or over on social media. I’m on Twitter, Facebook, Insta, TikTok, Pinterest, and email firstname.lastname@example.org.