S1 E3: Yes, I Would Like To Swim In Cash

Hey, I'm Paige DeSorbo and I'm always thinking about underwear.

I'm Hannah Berner and I'm also thinking about underwear but I prefer um full coverage.

I like to call them my granny panties.

Actually I never think about underwear.

That's the magic of Tommy John.

Same, they're so light and so comfy and if it's not comfortable I'm not wearing it.

And the bras soft, supportive and actually breathable.

Yes Lord knows the girls need to breathe.

Also I need my PJs to breathe and be buttery soft and stretchy enough for my dramatic tossing and turning at night.

That's why I live in my Tommy John pajamas.

Plus, they're so cute because they fit perfectly.

Put yourself on to Tommy John.

Upgrade your drawer with Tommy John.

Save 25% for a limited time at tommyjohn.com/slash comfort.

See site for details.

Ever feel like you're carrying something heavy and don't know where to put it down?

Or wonder what on earth you're supposed to do when you just can't seem to cope?

I'm Hesu Joe, a licensed therapist with years of experience providing individual and family therapy.

And I've teamed up with BetterHelp to create Mind If We Talk, a podcast to demystify what therapy is really about.

In each episode, you'll hear guests talk about struggles we all face, like living with grief or managing anger.

Then, we break it all down with a fellow mental health professional to give you actionable tips you can apply to your own life.

Follow and listen to Mind If We Talk on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcasts.

And don't forget, your happiness matters.

Hey, dream listeners.

If you like this podcast, you're going to love the book.

Yeah, I wrote a book.

It's called Selling the Dream, and it's coming out March 12th, 2024 on Atria.

It's about all of your favorite characters from MLMs and some that you've never even heard of, I hope.

Check it out.

Previously on The Dream.

Can you just tell me a little bit about yourself?

I know a lot about you because you're my grandma.

I live in Corona, Michigan, and I'm 81 years years old and I love every morning.

Mary Kay, Malaluca, Pro Tandem, Herbal Life, Ladara,

Young Living Oils.

I always told myself that I could do better with my money than some other people could.

We miss the significance of what these organizations are doing if we only look at them in financial terms.

It may look like a small opportunity to some people, but for her, it was a way for her to use her graciousness and be able to communicate that.

It's really impossible to separate questions of gender from questions of business strategy, right?

They weren't selling products, they were selling women's products, and they weren't just using salespeople, they were using women.

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Ever feel like you're carrying something heavy and don't know where to put it down?

Or wonder what on earth you're supposed to do when you just can't seem to to cope.

I'm Hesu Jo, a licensed therapist with years of experience providing individual and family therapy.

And I've teamed up with BetterHelp to create Mind If We Talk, a podcast to demystify what therapy is really about.

In each episode, you'll hear guests talk about struggles we all face, like living with grief or managing anger.

Then, we break it all down with a fellow mental health professional to give you actionable tips you can apply to your own life.

Follow and listen to Mind If We Talk on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcasts.

And don't forget, your happiness matters.

Hey, I'm Paige DeSorbo, and I'm always thinking about underwear.

I'm Hannah Bruner, and I'm also thinking about underwear, but I prefer full coverage.

I like to call them my granny panties.

Actually, I never think about underwear.

That's the magic of Tommy John.

Same.

They're so light and so comfy.

And if it's not comfortable, I'm not wearing it.

And the bras, soft, supportive, and actually breathable.

Yes, Lord knows the girls need to breathe.

Also, I need my PJs to breathe and be buttery soft and stretchy enough for my dramatic tossing and turning at night.

That's why I live in my Tommy John pajamas.

Plus, they're so cute because they fit perfectly.

Put yourself on to Tommy John.

Upgrade your drawer with Tommy John.

Save 25% for a limited time at tommyjohn.com slash comfort.

See site for details.

And now, a next level moment from AT ⁇ T Business.

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I've told you that multi-level marketing can be super secretive.

These companies go to great lengths to not reveal much about themselves.

And yet, the whole point of this business is to get the word out, exploit your social network, you know, get people preaching about how joining the company will change their lives.

But what happens when you actually join?

Whenever we've tried to find that out, just as regular people on the outside, you know, folks who aren't signed up with any sort of MLM, the answer we get is,

we'll tell you once you sign up.

I mean, all we want to know is how few people actually make money or why it's so hard for them to make money or how much money can they make or all, you know, the things that you would ask if you're trying to get a job.

So in order to get a real sense of what it's like to join an MLM, we joined an MLM.

One of our producers volunteered for the job.

Mackenzie Kassab started out in public relations, working for the kind of beauty brands you find in a high-end department store.

Yeah, so I used to work for Bumble and Bumble in-house, and then I also worked at an agency where I had clients like

Ferragamo, Max Mara, a lot of fragrances.

It was really fun.

So my job was to pitch stories to magazines for the product.

So to try to convince them to write about the perfumes.

And then hopefully they would write about it in their magazines.

And then you got to work on the other side of that.

Yeah, and then I switched at some point and started working in editorial where I was writing about those things.

So writing about the retail industry and writing about fashion collections and makeup and trends and, you know, that kind of thing.

And then also my cousin sells Rodan Fields.

And I see...

She's skincare, right?

Yeah, skincare.

And she's always posting about it on Facebook.

Really, the only interaction I see is between her and her mom,

my aunt.

Yeah.

So, I mean, I haven't asked her about how her business is going, but I'm a witness to it on Facebook and it doesn't look easy.

But I come from a PR background.

I know how to pitch and sell trends and brands.

I feel like if there's anyone in this office who can get out there and make this work, it's me.

I'm Jane Marie, and this is The Dream, Episode 3.

Yes, I would like to swim in cash.

So we started looking around for an MLM that would play to Mackenzie's strengths.

Yeah, so what did we look at?

We looked at It Works,

which you kept describing as saran wrap, and I thought you literally meant to wrap food up.

But it turns out it's actually to wrap your thighs.

Mm-hmm.

For what, slimming?

Mm-hmm.

Okay, just to slim your thighs.

And then there's like vitamins and stuff.

Great.

Day one of the it works system is your wrap day.

Start your results in just 45 minutes with that crazy wrap thing the powerful botanically based cream formula gives tightening toning and firming results So we looked at that

But we ultimately rejected that one because it seemed a little too over the top just gimmicky and not believable.

Yeah, and it's claims and

I would say that I have refined tastes when it comes to beauty products.

And also my experience and work is

more on the luxury side of things.

Yeah.

So I kind of wanted to stick with something that was more on brand personally.

Right.

So that if I started pitching this stuff in my Facebook feed, my mom wouldn't be like, why are you selling saran wrap for your thighs?

And we looked at a bunch of other makeup companies and some more vitamins.

Yeah, a lot of health.

Yeah.

Forever Living was another one.

Right.

Based on aloe.

And Unique.

Unique.

Yep.

We ultimately went with Limelight because I think it felt the most legitimate just in terms of,

I mean, if we're honest, the way it looks.

Limelight is something that I could see myself being attracted to.

It's like modern packaging, really contemporary design, clean, minimalist.

The products look decent.

There's nothing.

crazy about it.

There's no saran wrapping your thighs or anything like that.

It all looks like pretty much regular makeup.

I mean, they do some crazy eyeshadow palettes, but for the most part, it looks like regular makeup.

And then they have some trendy things.

They have like that collection of black-ish lipsticks.

Yeah and no no crazy claims, no hard, I mean no blatantly hard sells on anything.

It's just like it looks very much like other makeup websites, except you know you scroll a little bit more and there's a big section about recruiting people or

joining.

But other than that,

it looks very much like...

like Sephora.

Yeah.

Yeah.

I mean, in terms of the pictures are really professional looking.

You go on some of these websites and pictures are like low-res.

And so, yeah, in terms of, in terms of professionalism, it looks pretty professional.

I mean, it is, if I didn't know that it was an MLM and I kind of missed that part, that large part at the bottom of the website, yeah, it's something I probably in everyday life would think, cool, this looks.

Like makeup.

Yeah.

Yeah.

Great.

Yep.

Not only did this brand seem sort of classy, it had a storied history as well.

To give you a little more background on Limelight, we need to go back in time to the 1950s on Broadway.

You don't know it, but right now, Manhattan is getting itself dialed up for the evening.

Chorus kids are checking in backstage.

Box offices are getting busier.

This company was birthed by another company called Alcone, and Alcone got its start as a theater supply company in the 50s.

The owner was a guy named Al Cohen.

Get it?

Al Cohen?

Al Cone?

They supplied almost everything you'd need to put on a good Broadway show.

Lighting and some hardware, but also eyelashes and makeup.

And then in the 80s, this other Broadway hardware store, owned by the Mullardy family, they bought Alcone.

And their first big claim to fame is that they supplied makeup to the original production of the Blue Man Group.

That is some serious makeup.

After running a successful makeup store in Manhattan, they got into TV, selling products on QVC and HSN.

And then in 1996, they launched their own line of makeup.

Meanwhile, they're still killing it on Broadway as the exclusive makeup suppliers for The Lion King and some other shows.

I'm not really up on my mid-90s Broadway.

But through the magical alchemy of both the popularity of their makeup and the HSN success, it seems they get the idea to start an MLM, Limelight by Alcone, in 2015.

Here's one of the founders of Limelight, the daughter of Vincent Millardy, the guy who brought Alcone to fame.

Her name is Michelle Gaye, and she's speaking directly to you from one of her many, many,

many Facebook videos where she pumps up her sales force using her sleepy children as cheerleaders.

Hello, vampire!

Hi, guys!

We are just jumping on.

We're about to go to bed.

These are my kids.

But before we put everyone to bed and before I go to bed, we have a a big announcement.

What happened, guys?

You broke the sales record.

You broke the sales record.

You broke the sales.

Yay!

You guys want to say good night to them, the awesome vempire?

Good night, everyone.

Bye.

The limelight vampire is now tens of thousands of women strong.

We don't know exactly how many distributors there are because that would be like like a normal business practice and that's not what these companies do.

And the French beauty brand, Loxitan, recently acquired a 40% stake in its U.S.

business.

One more thing for clarity.

During production of this show, Limelight went international and became Lime Life.

But because we started reporting the story before the rebranding when everyone was still calling it Limelight, we'll keep calling it Limelight.

Once we started looking deeper into this quote-unquote opportunity, we found that one of the most appealing things about Limelight is how normal and likable the owners seem.

The co-founders are this duo of pretty ladies, Michelle and her niece Madison Millardy.

They dress in like anthropology and you could picture them shopping at home goods just like us.

We found this YouTube video that made them feel really down to earth, like they were aware of the stigma around MLMs and it did not apply to them.

But for those who don't know me, my name is Madison Millardy and I'm one of the co-founders of Limelight.

I have an amazing opportunity for you that is going to change your life.

I'm just kidding.

That's how most direct sales companies start their pitches when they're trying to get you to join, but that's not what I'm here to do.

Despite what Madison just said, the company does run a lot like every other MLM nowadays.

There's recruiting, there's parties, weird price structures, etc.

We hadn't heard of Limelight before our research, which is weird seeing as how both McKenzie and I were deeply involved in the beauty business for many years.

I was a beauty editor as well.

But if you've seen it anywhere, it was probably in your Facebook feed.

Like most MLMs these days, the business is social media based.

On their website, you can see the products and retail prices, but nothing else about how the business really works.

There are no details about

what happens after you become a seller.

So there's like a firewall.

Pretty much.

Like, give us your social security number and then you can see.

Literally, because they need it for payment.

Oh,

it just tells you like once you once you sign up and you have access to like the back office kind of um

then i guess you would see what the wholesale prices are because you don't have access to that so you actually don't even know um

i mean you know the 168 or nine dollars for the starter kit right um but aside from that you don't know what the wholesale prices are So you don't know that the lipstick is listed for $20 on the website

as a beauty guide.

What would I be buying them for?

I have no idea.

A lot of times people say to me, Well, I love the idea of limelight.

I just don't know how to sell.

Every one of our top salespeople has said that to me at some point.

And the reason why they're successful is they don't sell.

We are all about sharing.

We're shares people.

So it's really for

all the beauty guides.

They know that just sharing the product is all they really need to do to be successful.

I am hoping to find out that it's as easy as they make it sound.

I can't wait to hear what actually happens when you get past that firewall.

Yeah, me too.

I mean, I hope I get in.

What if you log in and you spend the $169 and then like the face of the Wizard of Oz comes on your computer screen and it's like...

You've unlocked the secrets to eternal life.

And then

like millions of dollars still out of your keyboard.

Well, right until you get to the millions of dollars part.

If you've ever looked at any of these other businesses like that, that is the type of language that they use and the visuals.

So it's not that far-fetched.

But I will keep you posted.

Okay.

We sent Mackenzie off with the company credit card and a tape recorder to capture the beginnings of what will surely be an amazing, life-changing journey.

So I'm here enrolling to be a beauty guide in training for Limelight by Alcone.

I've already gone through step one, which is to pick a basic starter kit based on my complexion or three choices, light, medium, and dark.

So I chose mine.

Now I'm filling out my information.

They're asking for things like three different phone numbers.

They're asking for my email address.

And I actually went and created another email address just in case this all goes south.

Now into this part, set up your website.

Okay,

so

signing over my life right now along with my credit card and my home address

okay so now we get to review my order and the basic starter kit is $169

tax is $16

and then I need to choose shipping so I'm gonna go with regular

which brings my total now to $196

to click

and complete enrollment.

Okay, I just got a notification saying your amazing journey starts here.

This company and your limelight business is all about you.

Shortly, you will begin your online training through emails sent from our company at Limelight by Alcone.

Okay, it then tells me there's a lot I can do while your starter kit is in transit.

I can announce this new venture to the world through social media and email.

I can begin my online training.

I can start planning a grand opening party.

I have no idea what that is.

I can contact my leader for tips on how to, and this is in capital letters, start strong.

And then the two co-founders, Madison and Michelle, say, we can't wait to see how you grow this simple step into one of the best decisions of your life.

With love and limelight, Madison and Michelle.

Okay, so tell me, so you signed up this weekend?

Okay, so I signed up this weekend and it's now day four.

I've had 21 emails from them so far, not including like your package has shipped, your order's gone through.

That stuff's separate emails.

Yeah, I'm not counting those.

I'm talking emails that are like

motivational

announcements of new products.

Are you feeling motivated?

I would say motivated is probably not the word I feel right now.

I got this packet today.

I I was only able to print out 39 pages before we ran out of paper.

So I don't know how long it actually is.

But like by the time I go through the emails, click through all the links, print out the material, even in terms of just acquainting myself with the brand.

I mean, this is almost a full-time job.

Maybe not in terms of tasks, but in terms of sort of mental commitment, because my uplines contact me and they'll send me text messages to ask how I'm doing.

You know, I'm getting contacted at night.

I'm getting contacted at 11 o'clock on a Saturday night before a deadline.

Oh my God, another one.

I'm a beauty guide in training and I,

until I hit $1,000 in sales.

So once I hit $1,000 in sales, I get promoted to beauty guide and I can do that over any time period.

But there's something called the Fast track program, which they really encourage.

And that is hitting the $1,000 goal in 40 days.

Okay.

Which sounds like challenging from the beginning.

Well, you're like four days down already.

I've lost four days.

Having just having to read all this shit.

Right.

And I haven't received my product yet.

I don't even know what I'm selling yet.

I haven't seen anything.

But the clock's ticking.

The clock is ticking.

Yeah.

And so I started looking through.

This is actually probably the most interesting and I guess useful, but also intimidating packet that I've received.

I'm not sure what this one is called, but it's sort of like what you need to do to make that thousand dollars in sales.

In 40 days.

In 40 days.

Oh, it has a table of contents?

Yeah, apparently it was 44 pages.

And the suggestions.

Wait, why do you need to do the fast track?

Do you get some sort of special balance?

You get,

I don't even know.

I mean, I'm trying to wade through.

There are tables and graphs and charts and so many numbers.

I'm not a numbers person, and they certainly don't make it easy by just having lists of numbers everywhere.

But

yeah, I don't know.

If you do it in 40 days, you get like discounts on products or like free samples or I don't know what, but there's something.

There's some incentive.

Okay.

So they outline what they suggest you do to get through this fast track program.

And just to give you an idea, they are suggesting that I make over 30 faces in 30 days.

Do you even know 30 people in LA?

First of all, no, I don't.

So unless I go sit in Starbucks and offer free makeovers, I don't know how this is going to happen.

But on top of that,

the other snag is that I don't have products.

Oh, right.

They haven't arrived.

Well, even if they do arrive, I'm not giving you a makeover.

I picked the starter kit for my own complexion, and we do not have the same skin tone.

We don't have the same eye color.

So what I got for myself is not going to work on you.

We can try, but

but I don't think you look like a mime.

Like an ICP, a juggalo.

You can make me over and do a juggalo.

But they actually do, because apparently not everyone knows 30 new people a month to make over, they outlined some potential quote unquote faces that you could reach out to.

I don't know.

Your baby.

Yeah.

The waitress or checkout clerk who wishes to earn more than she is currently.

Oh.

So it's recruitment.

Oh, oh, oh, oh, okay.

Sorry.

Yep.

I hadn't gotten to page 37 yet.

The challenge is to the purpose is to build your business.

And then the intention, though, is to let people know about your business and your skills as an educated beauty guide and as a business leader.

And then you should be using that opportunity to share

your success story.

and recruit new people.

Well, doesn't that seem like something for next year?

You're not successful yet.

You're in the hole.

Well, I actually am in the hole because I've spent now $200.

If I get through this 30 Faces in 30 Days challenge, I earn a 20% commission on my $1,000, which is $200.

So I break even.

But that's not taking into account the fact that I have to buy other products to make over people like you with different skin colors.

And that I have to host parties where I need to serve people food and drinks, I assume.

They also suggest all of these theme parties, like one is My Ties and Makeup, where I'm supposed to give out Lays to people.

So I've got to go buy some Lays and stuff to make My Ties.

I don't even know what's in a MyTie, but a lot.

A lot.

So I need a lot of liquor.

Just get them drunk enough that they can't drive to CVS and buy regular makeup.

Get them drunk enough so they don't notice that I can't do their makeup and I'm not a good makeup artist.

In addition to the $196 we spent on the $169 starter kit, there are other mandatory expenses we didn't see coming.

There's a $10 monthly website fee, a $75 annual member fee, and then the optional cost of marketing your business, as if marketing a business is optional.

They don't really supply you with much in terms of catalogs or flyers.

Those you have to buy from them.

Nor do you get business cards, but they've got that covered with a Vistaprint partnership prominently advertised on their website where you can buy them.

And then there's also the cost of shipping, the cost of hosting parties, the cost of replacing discontinued and expired items in your kit.

But there was at least one way to save money, and that was by getting products at wholesale.

Or so we thought.

The other thing that's that's not transparent is they tell you in the beginning, you know, you get things at wholesale prices, so, but they don't ever tell you what the wholesale price is.

So I'm sitting here, I did a bit of research in advance, and the figure I found was that on average, most cosmetics are marked up 78%.

I was kind of assuming it would be something like that.

So I log into the back office after I've paid my $200 because I don't have access to any of that information until I pay.

And the markup is 20%,

meaning I'm getting a 20% discount

on

the retail price.

So they're having you eat the difference, basically, of what a cosmetics company would normally make.

Yeah, exactly.

So they're offering me a retail price.

Like, they've definitely already marked it up at least.

I mean,

we can have someone look at the quality of the products but I don't think it's costing them $10 to produce this two inch portable lipstick

to find out we called a friend of mine who recently finished up a ton of research and development for her own makeup company Julie Fredrickson has a marketing background and she just launched stowaway cosmetics When she was getting ready to start her business, she traveled the world looking at factories and processing plants and talking to distributors and branding people.

We sent Julie a handful of limelight products to analyze, and she said that this makeup was all very standard.

Middle-of-the-road ingredients and packaging.

Nothing horrible, but nothing amazing.

Julie said that lipstick we were curious about, it probably cost the company about $2 a tube to make.

So what about the prices then?

We compared Limelight to other brands, and the retail price tags look a lot like the high-end collections you see at like Bloomingdale's or Saks.

There's a $24 lipstick, an $84 eye cream, a $36 foundation.

And then there were also some wild cards, like an eyeshadow palette that retails for $188.

What?

Some of this makeup is crazy expensive.

But the company actively denies this in its literature, as if calling something a good deal makes it a good deal.

Buzz marketing is so important for us because it helps us keep our prices low.

What?

Right.

What?

This is a feeling we had over and over again as we learn more about this business.

Like this company seems to be gaming us at every opportunity.

You have to buy catalogs and business cards, as I said.

And there's a mandatory website fee, as I said.

But perhaps most galling of all, they pay you through a proprietary visa debit card, which has the following fees attached.

There's a $1 monthly service fee, a $5 fee if you don't withdraw anything for 90 days.

It's a buck fifty to use any ATM, but you can only take out 500 bucks at a time.

If you want cash back at a store, that's a $5 fee.

There's a $1 transfer fee if you want to put money into your own bank account.

$20 will make that a wire transfer.

And if you lose your card, it's $6.95 to replace it.

And that's an abbreviated list.

We didn't want any of you to die of that fatal combination of boredom and fury.

We're going to pause this conversation with McKenzie for just a minute so that I can turn to my producing partner, Dan Gallucci, and ask a few questions.

He's been looking into the legal side of this for a long time, and we'll be hearing a lot from Dan this season.

But I keep getting the hunch over and over again as we dive into what happens behind the scenes at MLMs.

I keep getting the hunch that something is weird here.

I mean, not necessarily illegal, but wrong.

So Dan, something just came up in our reporting.

Okay.

In a discussion between Mackenzie and I about the pricing of this makeup from Limelight by Alcone.

Okay.

So Mackenzie's selling makeup through this company and she,

as a distributor, gets the makeup at a wholesale price.

And what we noticed is that the wholesale price is in a lot of cases.

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Hey, I'm Paige DeSorbo, and I'm always thinking about underwear.

I'm Hannah Bruner, and I'm also thinking about underwear, but I prefer full coverage.

I like to call them my granny panties.

Actually, I never think about underwear.

That's the magic of Tommy John.

Same, they're so light and so comfy.

And if it's not comfortable, I'm not wearing it.

And the bras, soft, supportive, and actually breathable.

Yes, Lord knows the girls need to breathe.

Also, I need my PJs to breathe and be buttery soft and stretchy enough for my dramatic tossing and turning at night.

That's why I live in my Tommy John pajamas.

Plus, they're so cute because they fit perfectly.

Put yourself on to Tommy John.

Upgrade your drawer with Tommy John.

Save 25% for a limited time at tommyjohn.com slash comfort.

See site for details.

The same or around the same as the retail price of comparable products in the marketplace.

Okay.

In addition to that, the markup at limelight between the wholesale price and the suggested retail price

hovers around 20%,

which is way, way, way, way, way lower than industry standard.

So

we looked at some numbers and let's just start with the eyeshadow since this is the one that people say is closest to Urban Decay.

Okay.

For a distributor to buy a six shadow palette from Limelight, their wholesale cost is $51.20.

Okay, so $51 wholesale.

That seems like a lot.

Now, compare that to Urban Decay, which the product does get compared to often.

Their six shadow palette, the highest price, like if it's not on sale or anything, what you're going to pay is $29 retail.

Got it.

So Line Light's wholesale price is way higher than Urban Decay's retail price.

So my question for you is: since the company is basically building in like a crazy markup into their wholesale price,

they're making all the profit they would ever need to make off of selling everything at the wholesale price to their own distributors.

Is there a name for for what they're doing here, like making the distributor the end consumer?

Yeah, there is.

It's called a closed system.

Dan, in his research, spoke to an attorney named Doug Brooks.

He'd been working on franchise law for about 35 years and class action lawsuits against MLMs.

And he described what a closed system is.

That type of closed system where all of the money is coming from people who are trying to participate to earn money in the system.

You're just transferring money from the later entrance to the earlier entrance.

And that is the classic definition of a pyramid scheme.

And that's illegal.

If anyone's making a profit, you're making it from within the pyramid.

So I'm assuming they have a way of getting around that.

Right.

And you can't necessarily prove that the distributor is paying the retail price or the wholesale price.

Is there an incentive for the distributor?

There is.

Yeah, according to the compensation pack, you get a bump in commission when you hit a certain retail amount.

Right now,

so while Mackenzie's building up her kit, it would behoove her to purchase items from her kit at a retail price to reach the level of an activated beauty guide.

So if she spends $1,000 on her kit, but she buys all the stuff through the retail site, there's absolutely an incentive.

So there's an incentive for the distributor in order to try and squeeze money out of this any way that they can, which we know is objectively difficult.

There is an incentive for them to pay retail pricing, as opposed to if you were doing the same thing for Chanel and the wholesale was 40 bucks and the retail was 65 or something.

There's a huge disincentive to buy retail.

Right.

You know, if you could buy wholesale.

Right.

So Doug and I were actually talking about a case the FTC brought against an MLM called Burn Lounge.

It was in 2007.

They were an online music store.

And believe me when I say their business model was complicated.

I was going to guess they were a vape company.

I thought they did like workout stuff.

None of the above.

Yeah, exactly.

Complicated music store.

And so the FTC was

Can I just interrupt you?

Don't we have enough of those?

Well, apparently not in 2007.

Oh, okay.

Okay.

Yeah.

Or

the case was brought in 2007.

So, yeah, no, they were early.

They were early.

So the FTC was trying to prove that they were a closed system and that all of their sales were internal.

That if there weren't commissions being paid to the distributors, their sales would drop.

Early on, Burn Lounge was ordered to stop paying this multi-level compensation, and the demand for its products plummeted.

And the Ninth Circuit was able to use that fact to say, you really don't have retail demand for these products.

Once you took away the recruitment incentives,

no one was buying these products.

That was strong evidence that this was a pyramid scheme and not a legitimate company.

The other thing that we know about this put limelight up against urban Decay.

They're right next to each other in the store.

But Urban Decay costs roughly $29

and Limelight costs $64.

Yeah, half as much.

So who's going to buy Limelight?

Nobody.

Okay.

So how do they stay in business?

And what I would say is they stay in business by selling to their distributors because they make all their money through wholesale, which is what you originally said.

Okay.

All right.

So what the hell?

I feel like if I were honestly trying to sell this makeup and I'd invested the the 200 bucks and then I saw all this nonsense going on behind the scenes, I hope I would be the kind of person who would call it a day at this point.

And then I probably wouldn't tell anyone how I got suckered and then I'd delete my Facebook and then disappear into obscurity, which is what most people do.

But now we have a lot more questions than answers about what's going on in this world.

So we can't call it quits just yet.

I think the easiest way to fast track and get promoted from Beauty Guide and Training to Beauty Guide in that 40 days is to just buy your own product.

If you invest $1,000 in your business by way of samples, brushes,

they have makeup remover, things like that, then you can be promoted.

That's the easiest way to do it.

So the first thousand dollars doesn't have to be sold to like people that are going to use the makeup.

You can actually achieve your next level.

None of this has to be purchased by outside people.

Well, we keep seeing posts on the internet and people talking about how much debt they're in because of MLMs.

And

when you read stuff like that, where it's like, I put $3,000 into this makeup thing and I'm in debt and I couldn't sell it and it's a scam, you're like, well, yeah,

we all knew that.

Right.

You know?

Right.

But are you starting to have any sympathy for those folks?

Yeah, it's funny because, okay, so last night I was thinking about it from the perspective

of a small business owner.

So I started thinking, again, $200,

investing $200 in a small business is nothing.

I mean,

that's nothing.

That's your custom stationery.

Investing $1,000, if I am legitimately thinking of this as a small business, as an actual business venture, investing $1,200 or $1,500

is really reasonable.

I mean, that's not...

an exorbitant amount of money to kickstart a business.

Plus, they tell you, like, you do have to do all of of this stuff in order to make this work.

And so you kind of have to tell yourself, well, I can either give it my all,

which requires me to invest a lot more than I thought I was going to because they're not upfront about it.

Both in time and money.

Is it ever, I just want to see on a piece of paper, like, is it mathematically possible to make any money?

To make money.

Maybe we're going to get it and be blown away and wonder why this is like the world's best kept secret.

Okay, so it's been 11 days since McKenzie signed up to be a beauty guide, and finally her kit has arrived.

Suspense.

This is gonna be like the first audio unboxing

tape.

In the box, we found two lipsticks, a mascara, and a few blushes, a beauty blender, a cleanser, a face cream, a stack of catalogs, and then an errant USB cable that puzzled both of us until huh?

What is this?

That's like an iPad.

At the bottom of the box, we found this shitty iPad-looking thing that was made out of cardboard, and it was preloaded with some exclusive content.

When I got involved with Limelight, I didn't know anything about direct sales.

All my friends, after they got their Limelight products, and they loved them so much, and every single one of them called me saying, I've never felt more beautiful.

After playing with the makeup, I bet you're dying to know what it's like.

Here is my personal and professional opinion.

It's gross.

I hate it.

It smells bad.

The packaging is unhygienic and cheap looking.

And the foundation actually felt like wearing noxima all day.

But according to them, Mackenzie's all set now to start living the dream.

She has access to this site.

She has her box of gross makeup.

Nothing can stop her now.

Okay, so you just got off the phone with your upline.

Yes.

What did she tell you to do?

She told me me to treat this as a brick and mortar business on Main Street.

First, you would have an open house where you invite your friends and family.

Then you would encourage them to use word of mouth to expand your business a bit.

Then you might start investing in marketing and PR for yourself and your business.

I did voice some concerns about the cost of doing the parties as they suggest them.

She told me, People aren't coming to buy wine and appetizers.

Don't spend money on that or decorations.

Invest in products to show them because that's how you're going to win them over.

I got a list of products that I should be investing in.

I need to look at the prices because this is not cheap, but she suggested getting several shades of foundation based on what skin tones my friends are.

Eyeshadows, a finishing spray, the primer,

and then she also does this really cool demonstration.

I'm actually into this.

So she asks everyone to bring their dirtiest brush to the party.

Then they vote on who has the dirtiest brush.

And then she uses this magic cleanser.

Soap?

Um,

I use soap.

Well, I mean,

okay, Martha Stewart,

why don't you start a blog?

I did.

Oh, I used to have a beauty vlog where I showed people how to clean their brushes with soap.

With soap.

She, she, she really just instilled upon me the importance of building up my kit so that I can demonstrate on people.

But she just sold you a shitload of product and she's going to get a portion of that and

her work is done for the day.

I actually forgot about that part until you just mentioned it.

I really

I really forgot that she does make money off of

I really

for a minute was like

it didn't occur to me as it was happening that that's what was happening.

Truly, it it really just felt like she was giving me pointers so that i could just be my best hashtag girl boss um

i feel like you just got conned i also feel like i just got i have a grocery list of a thousand dollars worth of product i need to buy you know and the funny thing is i went into this knowing that that's how she makes her living and i still fell for it

it is really disappointing embarrassing All right.

Well, I wasn't embarrassed until you brought it up.

I would be embarrassed if I were you.

Fine, I'm embarrassed.

It's true.

She just made like a couple hundred bucks on this phone call.

Yeah, and that sounds really easy.

I mean, she literally was doing, unloading her dishwasher and playing with her child as we were speaking.

She did tell me that

the real money comes from recruiting people.

That is way more lucrative than selling a couple hundred dollars worth of products at a party.

I asked Mackenzie how she was feeling as she tried to get promoted from beauty guide and training to beauty guide to whatever comes after beauty guide.

Yeah, I'm feeling

sort of like I'm already failing in a way.

I know it's ridiculous because I know why we're doing this, but at the same time, I mean, I don't fail at things.

I keep doing things until I succeed.

And this is something where

I feel like a hamster in a wheel.

I just keep running in circles and nothing is, it's not getting better.

And at the end of the month, when I'm $5 short or $9 short of making my goal, I'm reset to zero.

So it really does constantly feel like it's an uphill battle that I'm just not cut out for, which is just not a good feeling.

We're doing this for fake, for the show.

But we know a lot of you are doing this for real.

And we see you.

Next time on the dream.

Occasionally it gets dark and the finger gets pointed at you and you're told that if you fail, it's your fault.

You know what?

If people are making money in your company and you ain't,

it's not your sponsor's fault.

It's not the system.

We don't have a very good system.

It's not your product's fault.

It's not the company's fault.

It's not customer service's fault.

It is your fault.

The Dream is a production of Little Everywhere and Stitcher.

Written and reported by me, Jane Marie, Dan Gallucci, Mackenzie Kassab, Lyra Smith, and help from Claire Rawlinson.

We are edited by Peter Clowney.

Our fact-checker is Michelle Harris.

The Dream is executive produced by Laura Mayer, Chris Bannon, Dan Gallucci, and me.

We appreciate you subscribing, rating, and reviewing the show wherever you listen.

And we're back live during a flex alert.

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And that's the end of the third.

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