alcstradamus
Par Member
in a pyramid, yes. all pyramids are MLM but not all MLM's are pyramids.
the difference is if they are (actively) selling a product. in this case, an all inclusive $50 cell plan is pretty good and they are piggybacking off TMobile so it's looks legit on the surface.
After reading your response, I decided to read a little deeper into it and think about it a bit harder and I have now come to the conclusion that calling this an MLM is doing a disservice to MLM's. This is a straight up pyramid scheme.
The key is this piece of information:
But White said the "genius" of Solavei is the marketing arm, which allows customers to earn $20 per month on every three mobile-service members that they or someone in their personal network adds to Solavei
They key phrase here is "or someone in their personal network." This means that as more and more people sign up, those at the top of the pyramid are double, triple, quadruple dipping into the $49 per month fee to pay the people above.
Let me explain a bit further for anyone who isn't following:
Let's say I join Solavei. I get 3 people to sign up under me, people A, B, and C. I now receive $20 per month because I signed up a trio. This means that out of the $49 that person A pays for service, $6.67 of it is paying me (1/3 of $20).
Now, lets say that person A signs up 3 people, people D, E, and F. Out of the $49 that Person D pays per month, $6.67 is going to person A and ANOTHER $6.67 is going to me since someone in my personal network signed them up. So now, $13.34 out of $49 is paying the people above them.
If you continue to extrapolate this out, this will very quickly eat up the entire profit that Solavei is making off of person D. Essentially, Solavei will lose money on every single person that signs up, and after a while they will be losing HUGE money.
The reason they remain in business is because they can continue to pay the people at the top of the chain as if nothing is wrong due to the constant influx of new customers at the bottom paying their $49 startup fee.
Without warning, the influx of new customers will one day be too small to pay the people at the top and the company will fold. The people at the top will be rich, and the people below will be left with nothing but a worthless phone and broken promises/dreams/relationships