S1E9 - The Flight Plan (MLM Primer)

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Kayla: How do you want to start this today? Do you want to banter? This is not part of the podcast. Do you want to banter? Do you want to talk?

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Chris: It probably will end up being part of the podcast. No, whenever you say this won't be part of the podcast, it always ends up being part of the podcast.

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Kayla: Yeah, well, you were the one last episode who was talking about, like, authenticity.

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Chris: How did that go?

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Kayla: Authenticity.

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Chris: I don't even know if people are gonna be able to hear that word that you just said.

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Kayla: Authenticity.

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Chris: Jesus Christ. Yeah, I mean, I don't really have. Well, okay, so I have a lot for you today. It's gonna be hard to jam. Pack it all in. Before we get started on today's topic, I do want to say one thing that's a little bit serious time. Yeah. So just because we spoke about. And again, a content warning here for you guys just for the next minute. But we spoke about suicide quite a bit in our fifth and 6th episode about teal Swan. And, my parents just lost a. A close friend of theirs to suicide. So it's just. It's a really. It's a really big problem. I remember in our. In doing some of that research. Well, you did most of the research, but when I did some follow up research afterwards, you know, it was just really interesting seeing some of the statistics.

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Chris: Apparently, it's the 10th leading cause of life in the United States.

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Kayla: Right.

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Chris: And, And it gets almost no research funding.

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Kayla: I forget. If we said this on the podcast.

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Chris: We might have already said this, but.

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Kayla: Just, like, it gets the same amount of funding as, like, polio.

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Chris: It's. Yeah, it's some. It gets the same out of. I'm not sure. Was it polio or something?

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Kayla: Like, something that was some eradicated disease?

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Chris: Yeah. So, you know, so I don't really know what my point is, other than just kind of, like, calling that out and saying that, you know, I guess, like, with. With the teal thing in particular, too. The researcher that was on the gateway that they were talking to about this topic, right. Said that even as dangerous and unregulated and reckless as teal is, she's also providing a service to, essentially, a group that is underserved. So that's part of what's so compelling about it. So I'm not saying that's like, oh, you should go talk to teal if you're feeling bad. I'm not saying that, but I am saying that just for awareness, I guess, reach out to people, donate to the national suicide hotline. I don't know. I guess. I don't know what I'm saying. I don't really have anything prescriptive other than it sucks.

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Kayla: And it's good to always kind of. Yeah, awareness is always key and just kind of, like, piggybacking off of that. This is only tangentially related, but I went to a panel about gun violence in our country, and I think it was two thirds of all cases of gun violence are suicide related.

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Chris: Wow.

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Kayla: Yeah, two thirds.

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Chris: Wow.

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Kayla: It's just. It's a. It's a massive problem kind of across.

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Chris: All arenas, and you never hear about that either. Like, the only gun violence you ever really hear about is it's homicide and mass shootings. Yeah, exactly.

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Kayla: And homicides make up, I think, a third. About a third?

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Chris: About a third.

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Kayla: It's like a third to two thirds, and then there's, you know, random stuff, and then that two thirds, a large portion of that is, like, middle aged white men. So it's just. Yeah, I don't really know what the answer is. I don't think there is an easy answer. I think having more researchers, like the researcher that was on the gateway, like, more funding. More funding. So I think.

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Chris: And just taking mental health seriously, you know, like, it's. It's. It's a serious thing. It's. It's. It's actually health related. It's not, you know, don't stigmatize it in your everyday life.

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Kayla: Right.

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Chris: You know, try to catch yourself when you do. I still do, despite trying to be as positive about it as I can. You know, I have a therapist. I go see a psychiatrist, and I don't feel bad about that. But, you know, even with that, sometimes it's hard to catch yourself still in the stigma space. So, anyway, we should probably move on from that because that's super sad. But I just wanted to say a word about it because we had talked about that topic on our show, so we'll get to something much more light today.

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Kayla: Well, first, introduce yourself.

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Chris: Me? I'm Chris. Oh, right, we do.

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Kayla: We haven't done it.

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Chris: I'm Chris.

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Kayla: I'm Kayla.

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Chris: And this is cult or just weird.

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Kayla: Thank you.

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Chris: Yeah, I just wanted to see how long I could go. Kind of like we talk about wanting to do with the Parmesan cheese thing at Olive Garden.

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Kayla: You have to explain the Parmesan cheese thing.

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Chris: One day. One day, when I have courage, I want to just see how long I can get somebody to do the Parmesan cheese on your pasta. On my pasta. Without saying anything, just as like, a social experiment.

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Kayla: How much cheese will they go through.

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Chris: Abusing some poor minimum wage worker?

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Kayla: Just call it performance art and you're fine.

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Chris: Oh, okay.

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Kayla: Yeah, it's a performance art piece.

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Chris: Right? Then it's. Then everything's okay.

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Kayla: Are we getting into the topic now?

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Chris: Oh, we're. Yeah, we're getting into it.

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Kayla: Like, I know what your topic is and I know nothing about it. I guess it's unfortunate in some ways that I know what the topic is, but, like, I. We live together. Together and are married, sometimes these things are going to happen. But I know literally nothing. I am so excited.

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Chris: We should have thought about that before we got married. We should have thought about this podcast format.

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Kayla: I know.

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Chris: We didn't even think about it.

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Kayla: We should probably divorce.

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Chris: Yeah. Or at least live in separate houses or apartments. Houses. Oh, that's funny. Good one. Anyway, before we. Well, actually, this is. This is not. Before we get started. This is getting started. So I'm letting you and our listeners know that today's episode is a little different. And I guess, I don't know, we kind of say that every episode, like, this episode's different, right?

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Kayla: Different from what?

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Chris: But if I say that is, are any of them really different? Are they all different in the same way? Anyway, whatever. So today's episode is actually going to be the first in a series of episodes about this category of topics. The series won't necessarily be sequential, so it's not gonna be like, you know, eight in a row about this stuff, but it's a category of cults or just weirds that is going to come up repeatedly. So this first episode in the series is actually laying the groundwork for understanding them. Ooo, the very next episode after this one is actually going to be the number two in the series wherein we will discuss the first of these such groups.

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Chris: So not only is this the first episode in a series, it's also the only episode we will have done up to this point where we talk about a category of cults rather than a specific organization.

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Kayla: All right.

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Chris: Oh, and yes, this means. Oh, sorry, I interrupted you.

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Kayla: No, I was literally just gonna say I am excited.

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Chris: Yeah.

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Kayla: I did not have anything good to add there.

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Chris: You never do.

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Kayla: True.

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Chris: And be even more excited because this means you're totally off the hook doing research for two episodes in a row now. You're welcome.

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Kayla: Oh, thank you.

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Chris: Okay.

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Kayla: This is why we're married.

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Chris: Yeah.

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Kayla: I knew you were good for something.

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Chris: I don't know. Let's withhold judgment until you hear the rest of this.

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Kayla: Before we jump into the topic, can I just. I just want to tell our listeners that we are currently recording with no power. This is basically a pioneer episode. Our power is out the entire day, and we are.

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Chris: It's very hot.

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Kayla: It's extremely warm in this room. We are still here recording on schedule to bring the episodes to you, our listeners.

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Chris: That's right.

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Kayla: There's nothing we wouldn't do for you.

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Chris: Yes, we will walk through the snow, uphill both ways. And what's the mailman mantra?

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Kayla: Oh, rain or sleet or dead of night. Something.

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Chris: Something culture. Just weird. Yeah, got it. Okay, so it is time to dive into this absolute mess.

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Kayla: Oh, my God. Oh, my God.

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Chris: I'm going to start peeling back the layers of this onion way zoomed out as I do. Okay, I'm starting today by asking you the question, where does money come from?

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Kayla: I don't. I hate that question. I don't know what that means. I don't know. What are you talking about?

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Chris: Where does it come from? And I'm talking not about the physical currency. So I don't think about. You like, the concept, not like dollars in your wallet, but, like, you know, it gets printed at the mint, pretend that doesn't exist, and it's all just credit cards and computers. Right. So where. Where does that money. Where does the. Yeah. The concept of money come from?

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Kayla: Like, I don't know. We've talked about this before, and you've made fun of me, and I was like, I just wish there was. Yes. I was like, I just wish there wasn't any money. And you were like, there's always money.

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Chris: There's always money. You can't escape it. Well, okay, I guess I probably said those things to you. That sounds like me. But the reason I guess that I say that is that money, if you think about money, it's not really a thing, right? It's only a value in reference to something else. It's a placeholder.

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Kayla: That's why the end of fight club works. You just blow up, spoiler alert, the credit card companies, and then all the way up.

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Chris: Oh, what about people having seen fight club?

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Kayla: All the debt is erased.

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Chris: Yeah, that's totally how that would work, for sure, but, yeah. So where does that come from, though, right? Like, where does.

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Kayla: I don't know.

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Chris: Because if money is just a placeholder for value, then what we're really asking is, where does the value come from?

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Kayla: Basically, I think that it all is just meaningless.

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Chris: Well, everything is meaningless, as we know on this show.

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Kayla: It's just something we make up. Right? Like, gold doesn't actually have value. We have just assigned it value. Right?

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Chris: Yeah, but again, I'm not talking about the currency. I'm not talking about money as a concept anymore. Now I'm talking about value, right? I'm not asking, where does the money come from? The money comes from us saying, well, it's worth this much. I'm asking you, where does the worth come from? Where does the actual value that money represents come from?

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Kayla: Deep within our monkey psyche brains, right?

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Chris: Kind of. So, what I'm actually talking about here is what some refer to as the value exchange principle, okay? Which is really shockingly simple. You basically already know what it is. It goes like this. I have an apple, which I think is okay, but I really like oranges. You, on the other hand, have an orange, which is okay for you, but you really like apples. You and I meet up, and since I value your thing more than mine, and vice versa, we make a trade and we both gain value, this situation.

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Kayla: All fell apart for me because I hate both apples and oranges, so.

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Chris: Yeah, but apples and oranges are, like the default sort. It's like Alice and Bob, you know, you just always use those in your examples.

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Kayla: Gotcha.

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Chris: So you're just gonna have to deal with, what do you like? What could I. Okay, let's say that. Let's say you have God of war and I have Skyrim, and I value God of war and you value Skyrim. And then we trade.

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Kayla: Makes sense. Okay, now I get it.

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Chris: Is that better?

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Kayla: Now I get it.

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Chris: Okay. But we're gonna keep talking about apples and oranges because that's what I wrote in the script. So. Sorry. So, yeah, so it's like I said, shockingly simple. And you can put some math behind this to make it more rigorous, which is exactly what economists do. So, for example, just real simple numbers, we could say that I give my apple value. Let's call it a two. I value it roughly like a two.

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Kayla: Okay?

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Chris: Right. And it's arbitrary. But maybe it just means that I have, like, a one to ten system, and, you know, ten is, like, the most delicious pizza of all time, and one is like a turd. Right?

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Kayla: Okay.

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Chris: So I value it at a two on that scale. But I value oranges at a ten.

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Kayla: Right?

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Chris: And you vice versa, right. You value oranges at a two, and you value the apple at a ten. So right now, the total value in the economy of you and me is four. Right? You value your thing at two, I value my thing at two. Two plus two equals four. Pretty simple, right?

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Kayla: Right.

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Chris: If we make the trade. However, now you have a thing that's valued at ten to you, and also I have a thing that's now valued at ten to me. So now the economy of you and me is actually worth 20. So we gained 16 value points just by making that trade.

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Kayla: I hate this.

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Chris: This is what economics is.

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Kayla: Yeah, and I hate economics. It's the only class that I got a two on my AP test.

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Chris: Well, you should have traded it for a ten value orange.

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Kayla: Yeah.

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Chris: So when I ask where does money come from? Or really, actually, where does value come from? This is where it comes from. Value in a free market comes from basically trading things. Now, there's a bunch of other stuff, too. There's like scarcity and. And whatnot. So, yeah, this undergirds a lot of what we think of as market economics. Now, our complex modern economy has a lot more nuance to it than this simple scenario, of course, and these trades are mediated by money. So, yeah, back in the day, maybe I was trading my actual apple for your actual orange. But of course, we introduce money into this situation, because in the real world, it's like, maybe you don't want oranges, but the third person does. But, you know, he's making textiles. And then the fifth person is a farmer and the 6th per. So that's.

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Chris: So money basically makes it easier for you to barter with people that don't necessarily make the thing that you want.

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Kayla: Got it.

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Chris: But this simple scenario is very powerful and instructive and again, foundational to economics. It's basic and understandable. It makes sense, right? Of course, we didn't talk about why. So this is a little bit more about econ, and then, trust me, we'll move on.

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Kayla: Are you going to test me at the end of this?

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Chris: Because I'll start. There will be a quiz for you and our listeners, if there's any left at this point. Now that I'm like, doing an economics lesson, but we didn't talk about why I might value an orange more than an apple, so this gets a little bit deeper into it. And economists have defined a variety of reasons for these value differentiations. The simplest example is just that I have a different preference than you. I just prefer oranges. But it doesn't have to be that. It could also be that both fruits are equally tasty to me. Or maybe I actually even like my own apple better, but I own an entire orchard of apple trees and I haven't eaten an orange in like ten years, because I just, I grow apples all the time and I just don't have access to oranges.

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Chris: So this value differentiation can be based on what you and I are actually able to produce just as much as it's what our individual preferences are. Or what if we could both make either fruit equally skilled? So, like, there's no reason for me to necessarily specialize in apples and no reason for you to specialize in oranges, but we simply decide to specialize anyway just so I can do it more efficiently. Because let's say, you know, if I buy apple tools, then, you know, I can use them for my whole orchard. So then I only have to buy one set of tools, and then you only have to buy your orange tools. So there's just efficiency that you get from doing a lot of one thing, right. And that can be another reason to trade. Again, we get value from trading regardless of personal preferences.

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Chris: So there you go. Econ 101. Easy, right?

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Kayla: That's why I failed that class.

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Chris: Just to recap, value comes from people creating things and then trading, to trading them to each other in a way that makes sense. And since money is just a stand in or a measure for value, then if you're making money, then sort of by def. By this definition, by this strict definition, then you must have been creating value. This is the best definition of a business that we have. They exist to make money by creating value. Not just to get as much money as possible, but to create value. If they don't do that part, they're not businesses, they are scams.

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Kayla: Okay, can you say that again?

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Chris: The best definition of a business according to me here right now on culture, just weird. But I think a lot of people and even economists would share this, is that they exist to make money by creating value. And that second part is the important part. They don't just exist to get as much money as possible. They exist to make money by creating value.

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Kayla: Got it? Okay.

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Chris: If they don't do that part, they are not businesses, they are scams.

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Kayla: Got it? Okay.

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Chris: Right. Right. Does come up. So you might object. You might say, well, making money isn't always good. I would contend that it is. I would say that it's when you're not making value, it's when you are doing other things in order to accumulate more currency that things start to go awry.

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Kayla: Got it?

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Chris: Right. Then it starts to be theft or fraud or insider trading or whatever. The Enron did all three, I don't know, but. And you can see where that would happen too, right? Like, obviously, you know, once you get so far removed from the. From the product that you're. That you're creating, from the value that you're trying to create for the society, or at least ostensibly you're supposed to be doing.

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Kayla: Right.

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Chris: You know? Oh, well, I would just rather get more money because then I can buy more things. We're more powerful. But if you're not creating value, then that's. Then what are you even doing with your life is basically what I'm saying. Okay, we're done with the econ lesson. Sorry.

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Kayla: Thank God. No, that was really interesting.

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Chris: But the next thing I want to do on the episode today is play a little game. I made it up. I'm a game designer for a living, so that makes sense. Right.

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Kayla: But you know how much performance anxiety I get being forced to play games in a group setting.

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Chris: So don't actually worry about the performance anxiety because we're not actually playing the game. I'm just going to describe it to you.

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Kayla: Got it.

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Chris: So I know you've been sitting here looking at this thing I drew on the whiteboard for you. I'm calling this game. I made up the cruise ship game.

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Kayla: Okay.

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Chris: We start playing with me as the captain of a cruise ship. So you can see that's like that topmost dot there. I need to build out my cruise ship with personnel. And the way that I do that is as first I need two ship officers. So I need to find and recruit two other people who are interested in playing this game with me to fill those roles.

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Kayla: Cool.

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Chris: So you can kind of see on the board, there's the captain at the top, right? And then I drew two arrows, and those two. Two dots down there are the officers.

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Kayla: Okay.

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Chris: Then those two ship officers need to recruit two crew members each. And then each of those crew members needs to recruit two passengers each. So if we succeeded at this round of the game, where a round is defined as building up our cruise ship personnel, then what we'll wind up with is one captain, and that's me, two officers, four crew, and eight passengers. You can see that on the board, right?

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Kayla: Yes.

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Chris: Since everybody's recruiting two people underneath them, what this is really just powers of two. Right? So once our cruise ship is full, this round of the game ends. Follow me so far?

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Kayla: Yes.

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Chris: Great. Do you want to be one of my officers?

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Kayla: Sure.

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Chris: All you need to do is go recruit two crew members and make sure that they themselves recruit two passengers.

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Kayla: I feel like I can do that.

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Chris: Yeah. All we need to do to succeed at this round, of course, is to fill our cruise ship. But let me tell you, kicker number one first, after this round, we actually are gonna keep playing as much as we want. But in round two, everyone graduates up one level.

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Kayla: Okay?

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Chris: The captain, who is me, graduates off the ship because I won. I won my ship. I filled it out. I won.

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Kayla: Got it.

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Chris: Then each person who was an officer becomes a captain of a new ship. And then each of their two crews, crew members graduates up to officer, and each passenger under them graduates up to a crew member. Are you with me so far?

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Kayla: So I am the captain now, is what you're saying?

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Chris: Yes, I am the captain now. We're definitely going to put that meme in our instagram for this episode. So now, in this next round, we've already filled out, actually, most of the ship, right? So all that needs to happen is all those passengers that graduated to crew need to now go recruit their own passengers. They only need to recruit two each. And then once their team gets a full cruise ship, then that round wins again. And now the captain of this new ship, who I guess is you, since you said you wanted to play, now that you've won that ship, now you win, and it keeps going.

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Kayla: Okay.

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Chris: And actually, you're free to join a new ship as a passenger when you graduate. Like, once you're back in the pool of just, you know, regular ass people that aren't playing, you're free to. Like, if some crew member says, hey, do you want to be a passenger? You can jump back in.

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Kayla: Got it.

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Chris: With me so far?

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Kayla: Yes.

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Chris: Cool. These rounds are repeated, and basically until ships can't be filled. Any questions?

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Kayla: I don't think so.

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Chris: Okay. Does it sound fun?

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Kayla: Not really.

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Chris: Yeah. Oh, wait, sorry, I forgot one more rule that might spice this up a little bit for you.

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Kayla: Okay.

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Chris: Each passenger has to pay real money to get on board the ship.

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Kayla: Got it. Okay.

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Chris: They each have to pay $10 to board the ship. And those $80 collected from the eight passengers. Right? There's eight passengers times ten. That all goes to the captain when he graduates off the ship. So when he fills his ship up, he gets $80.

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Kayla: Sweet, right? What about all the people in the middle?

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Chris: They don't get anything until they're the captain, and they graduate off.

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Kayla: Got it.

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Chris: So they have to keep playing and keep recruiting until they're the captain, and then they get their $80. So you just need to get through some basic recruiting. But it's pretty easy, right? Because each crew only needs to recruit two passengers each.

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Kayla: Right.

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Chris: And the return is crazy high. Turning $10. So, like, pretend you're a passenger that works your way up to captain and wins. You turn $10 into $80. That's an 800% rate of return. That's crazy.

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Kayla: That's pretty good.

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Chris: Yeah. So, are you in?

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Kayla: Sure.

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Chris: I mean, for us, it's also even easier because we started the thing as captain and you as officers, so we don't even need to do a buy in for the first round.

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Kayla: Right.

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Chris: But we can keep going as much as we want, and every single time that we go through this process, we gross $80 on a $10 investment. Every single time.

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Kayla: That's. I'm down with that.

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Chris: Pretty great, right?

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Kayla: Yeah. What's the catch?

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Chris: Well, the catch is math, as we'll discuss.

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Kayla: It always is.

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Chris: Yeah, math. Math kind of smacks us in the face here. So I lied again, as I, you know, tend to do on the show. I didn't actually make that game up, unless you count the name change. The game I was describing is a game that was played in the US and got really big in the seventies and eighties, and it was called the airplane game.

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Kayla: What? Wait. Are you being serious right now? People played a game called the airplane game.

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Chris: People played a game called the air people. Like. Like, yuppie white people, basically.

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Kayla: Like, they just would go to dinner parties and, like, theorize about precise.

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Chris: No, not theorize. They would play it. They would exchange money.

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Kayla: What's the playing? There's no playing.

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Chris: There's making an $800 investment.

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Kayla: So, literally, it's just.

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Chris: Or. Sorry, 800.

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Kayla: Call it a game.

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Chris: Let me go back. There's an 800% return on investment, so that's a pretty good game.

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Kayla: So you're not playing a game. You're just convincing a bunch of people to give you a bunch of money?

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Chris: Wow. That is a very crass way of thinking about it.

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Kayla: That's not a game.

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Chris: Well, they called it the airplane game.

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Kayla: Okay, well, they were all Patrick Bateman's, and they all probably axe murdered each other after.

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Chris: We'll get into it. There's no axe murder.

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Kayla: What?

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Chris: Sorry. Let's. Sorry. Sorry. Let me be clear. No axe murdering. But we'll get into why your conception of what these people were like is not actually the case. Okay, so people would buy in as passengers. They would move up the ladder, recruit, and then get a bunch of money when they graduated as captains of their airplane. Or maybe it was pilot. I don't know. I forget the exact terms.

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Kayla: I don't think that's how the real world works. I don't think the pilot is collecting fares from the.

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Chris: It was a metaphor. It wasn't really about flying, but people did this, and it was very popular.

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Kayla: I don't understand what the this is.

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Chris: What do you mean, what the this is?

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Kayla: I just described it for a dinner party. I just go, okay, I'm hosting the dinner party. I'm gonna be the captain. I'm gonna call up two of my friends and be like, hey, I'm hosting an airplane party. I'm the captain. You guys are my officers. Go get employees and then tell them to get passengers, and then all people are gonna bring us money.

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Chris: Exactly that. Except just remember that you're not necessarily kicking yourself off as a captain because this was played continuously. It was a continuous chain. Because remember what happens after this. This. I described this ship, this one ship. After that, captain, graduates, they all move up a level, but nothing ends, right. Each of those two co captains there, or co pilot, whatever we call them, I think we call them officers. Each of those two now has their own plane. And then it keeps going and going and going. So nobody's like, there might have been, like, one person that started this. I don't know who they were, but it only takes it, like, you just have to catch it on, and then it's just. It goes by itself.

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Kayla: There was way too much drugs in the seventies and eighties and way too little to do. This sounds bizarre.

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Chris: It is. It's very bizarre, but it actually gets a little more bizarre. So hold onto your butts.

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Kayla: Are we going to host an airplane game party?

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Chris: No, because it's illegal.

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Kayla: What? Why is it illegal? Okay. Why is it illegal? Why is it illegal?

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Chris: Well, let's. Let's talk about that. Can you describe for our listeners the shape that the captain dot and the officers and all that onto the passengers? Can you describe the shape that makes on the board?

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Kayla: Do you want me to say what it is, or do you want me to make a joke?

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Chris: It is up to you, my co host.

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Kayla: It's a triangle.

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Chris: It's a triangle. Exactly. This is about triangles. What's another word for a triangle, though? It starts with a p, ends with a d, and rhymes with beeramidgesthe.

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Kayla: It looks like a pyramid, guys.

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Chris: Yeah. Oh, see what I did there? But the point is I wanted you to describe the shape because that's important. And that word is important as we know.

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Kayla: So pyramid schemes are illegal even if it's a game?

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Chris: That is correct.

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Kayla: I'm. I'm gonna have one just because I.

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Chris: Don'T think that you should do that.

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Kayla: You heard it here first. I'm gonna commit a crime.

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Chris: But the reason I brought up the airplane game is because it's sort of your quintessential pyramid scheme makes it for really, it's a really good way to kind of, like, understand what they are and how they work, which we're not done talking about. Oh, my God. But, yeah, the reason. I mean, again, we'll talk about this more, but the reason they're illegal is because they hurt people.

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Kayla: Right?

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Chris: They're not illegal because, like, the government's trying to get into your business. They're illegal because they are fraudulent and they involve. They're essentially a transfer of money from the bottom of the pyramid to the top of the pyramid. And people get hurt. People just lose money. It's not. It's a fraud.

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Kayla: Okay. So are people who are passengers who join the airplane game, are they unaware of the game?

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Chris: No, they know.

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Kayla: Well, then it's not fraudhead.

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Chris: Why? Just because their eyes wide open.

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Kayla: Yeah. You're not being swindled. If you're being like, I know what's happening here.

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Chris: That's not necessarily the case.

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Kayla: I'm gonna throw up. Keep going.

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Chris: If I swindle you based on false promises.

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Kayla: But what's the false promise if it's a game?

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Chris: That you're definitely gonna get an 800% return on your investment.

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Kayla: Okay, so people went into the airplane game thinking, ooh, I'm gonna.

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Chris: That's the whole reason they did it. The whole reason they did it.

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Kayla: That's a fun thing to do.

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Chris: The whole reason they did it is because they were gonna turn their ten into $80.

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Kayla: Okay.

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Chris: It wasn't just a fun thing to do. This was, like, a social phenomenon.

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Kayla: This is the weirdest thing I've ever heard. Please keep going.

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Chris: Also, it wasn't ten and $80.

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Kayla: Tell me the amounts, please.

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Chris: Do you want to guess?

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Kayla: No. Because I'm sure that there was, like, a. Was there a variety of amounts or was it.

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Chris: Okay, there was a. There was a. I'll tell you the sort of the average or the median. I'm gonna say $100 buy in, $1,500.

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Kayla: $1,500 buy in for every passenger.

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Chris: And then the captain would make $12,000. Starting to sound a little less. A little less on the up and up, right?

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Kayla: Yes. If you had started with that, I would have gone, oh, that's bad. Like, ten and 80.

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Chris: Sure. But what I was doing with ten and 80 is trying to keep the numbers smallest to understand how it worked.

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Kayla: Yes, I get it, but that's why it seemed like this is just fine.

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Chris: I mean, it's. You're still stealing from people, but it's.

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Kayla: Just gambling money, though, right?

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Chris: Right. It's just. It's just playtime money versus, like, real motherfucking money. Yeah. Yeah.

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Kayla: I hope none of those people who airplane partied each other are friends anymore.

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Chris: Well, some of them definitely aren't, but yes. So it's your quintessential pyramid scheme, which are illegal, but for reasons that we'll sort of talk about and sort of already have talked about. And folks playing it back in the eighties eventually did get in trouble with the feds for it, but not before some of them made a ton. Or actually, this is sort of a key theme of this episode, so I should be careful with my word usage here.

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Kayla: Okay.

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Chris: They didn't make a ton of money. I would say they collected a ton of money.

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Kayla: Yeah. Okay. Yeah. Yes.

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Chris: Right. Or transferred. Or scammed. But if you recall back to our apples and oranges economics lesson, they didn't make it because nothing of value was created and traded. The only thing that happened here was a transfer of currency.

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Kayla: Okay.

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Chris: But, yeah, so this game got super popular for a bit.

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Kayla: That's the weirdest thing I've ever heard.

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Chris: People would have airplane game parties, kind of like you just posited, where the whole point would be just to, like, recruit people and advance their planes. They'd have drinks and hors d'oeuvres and everything. These quote unquote planes didn't advance levels at single events either. This would maybe be a multi day or multi week thing. It took time.

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Kayla: We are going to have one, and we'll figure out a way to do it. Not illegally. It'll be like, okay, maybe.

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Chris: Maybe if we do it without money or something.

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Kayla: Yeah. It'll just be like, written tallies. But I want to have this. It sounds insane.

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Chris: It is insane. But keep in mind that it wasn't necessarily, like a single event thing. Right. So this would be something like, maybe at a single event, you would recruit some more people to your plane, but you wouldn't necessarily go through a whole iteration in one event.

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Kayla: Okay.

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Chris: Right. This was an ongoing meta game in the real world that was just happening.

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Kayla: I have to ask, is this where pyramid schemes started?

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Chris: It is not. Pyramid schemes have been around, like, for.

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Kayla: How long do you get into it?

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Chris: I do not get into that, but we can try to answer it at some point. But one of the things I found fascinating. In my research about the airplane game is how into it people got.

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Kayla: I get it.

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Chris: Now, I have a question in my script here, but, like, you sort of already. You sort of already hit on this, but I was gonna ask you, I mean, are you picturing a bunch of sneaky, sleazy scammers in trench coats doing this?

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Kayla: No, I'm picturing, like, swinging couples.

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Chris: Yeah, it's definitely more like that.

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Kayla: Yuppies and, like, people with cute clothes on that are, like, drinking whiskey.

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Chris: You're exactly correct. This was middle and upper class people having fun parties, believing that what they were doing actually was good and right and even spiritual in a way.

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Kayla: I'm gonna throw up. What? We're having one picture.

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Chris: That party they had in get out, minus the creepy horror stuff. Right. Just a bunch of yuppies getting together and being weird.

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Kayla: Right.

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Chris: And also, maybe you picture them as, like, knowing full well they were participating in a pyramid and just wanting to exploit their friends to get rich quick in a bunch of money grubbing wolves of Wall street in their pinstripe suits. Nope. These airplane game players were true believers. One of the interviewees.

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Kayla: So, is the airplane game the cult here?

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Chris: It kind. I mean, like, really? We could just do an episode on the airplane game.

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Kayla: I'm like, my mind is already upset. There's too much happening.

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Chris: Yeah. So I listen to a podcast that I'll talk about in a sec when I do my. My references. It was an excellent podcast, but one of the interviewees on that podcast sounded like he was almost describing a religion or a self help movement when he was talking about this, he and his friends thought that this was like some kind of magical stone soup, like, secret esque magic trick. They had figured out that if they just put the positivity out there in the universe, they'd get paid back Eightfold. And after all, isn't that how it's supposed? If I'm generous with my friends, then isn't the exact thing that my pastor or priest has always told me that will see me rewarded if I'm generous, and I'll get back everything that I have coming to me?

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Kayla: This sounds exactly like Marianne Williamson's platform for how she's gonna fix the economy.

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Chris: Great.

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Kayla: Topical humor.

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Chris: Zing. While the airplane game was happening, it wasn't just a game. It was a way of thinking and relating to others, as Jane Marie says in the podcast I just referenced. And we'll talk about in a second if pyramid schemes were all sleazy, dirty situations where you were just getting worked by, like, a slippin Jimmy type, we wouldn't even be talking about them today.

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Kayla: Right?

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Chris: They only work to the degree that they do precisely because it's a bunch of well meaning, ethical, hardworking folks that get involved.

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Kayla: I'm getting very upset right now.

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Chris: So I just mentioned the secret. Kind of need to talk a little bit about that whole thing.

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Kayla: I don't want to. Please.

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Chris: Well, it's very relevant.

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Kayla: Oh, man.

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Chris: So, yeah, in case you're not aware of the secret, it's that book that came out, what, like, 15 years ago now or something? Yeah, everybody knows about it now. But just in case it's, you know, it's. You put your positive thoughts out into the universe and you manifest your desired outcomes. So as long as I have, like, this positive thinking and ways of doing stuff, then the universe will give me what I want.

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Kayla: But let's be clear that it's not saying if you think these positive thoughts, you change the way your brain works. Then you take actions to reach those things that you envision, which is real. That's a real thing?

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Chris: That's a real thing.

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Kayla: It's saying specifically, if you put these desires out into the universe manifests them and returns them magically.

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Chris: Right.

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Kayla: And I don't know if they use.

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Chris: Or karmaly, but it's like they don't.

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Kayla: What you put out in the universe will return to you. That's, from my understanding, not real.

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Chris: No.

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Kayla: But if the secret works for you, sure, then it works.

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Chris: By the way, though, the secret was far from a new thing in America. Far from it. Clearly, the secret got beat by, like, three decades by the airplane game because they had the exact same mentality. If I put this positivity out there, then I will be rewarded. So, of course I'm going to get 800% return. There's nothing skeezy or there's nothing weird going on here. That's just what's happening. Why are the feds even going at us for this?

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Kayla: I just. I.

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Chris: But. But the airplane game was also pretty late to the whole power of positive thinking party itself. This is something that I virtually guarantee will come up again and again in our podcast. But there's a uniquely american religious, mentality movement foundation, I don't know, socially ubiquitous thing called new thought.

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Kayla: Are you saying capitalism is a cult again?

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Chris: Capitalism, contrib. It's all sort of munged together, but sort of.

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Kayla: Wait, is munged a word?

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Chris: I think so, yeah.

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Kayla: Isn't that a sex act?

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Chris: I don't know. We'll look it up and cut it if it is. But new thought is. It's basically exactly just the secret, only older.

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Kayla: Okay.

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Chris: According to Wikipedia, it got started in the mid 18 hundreds. And there was actually a guy. There's a whole thing. There was like a guy that started, that gave its name and everything. But really, the overall idea of it is something that's been with us as a country evolving basically since the beginning.

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Kayla: Good to know.

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Chris: It is a unique combination of combining the secular worship of material wealth and advancement with theistic worship of your standard protestant God and Jesus. It's very american.

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Kayla: So it's like that, like, evangelical. Those evangelical guys that are like, buy me a plane. God wants you to.

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Chris: Those guys are direct descendants of new thought prosperity churches are. You can draw a very straight line from that to new thought.

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Kayla: Okay.

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Chris: And it's also very influential in America being. Oh, actually this is in my script, being the foundation for things like Joel Osteen and his prosperity theology.

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Kayla: Right.

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Chris: It's also sort of a foundation for the secret and of course, for the airplane game. The airplane game would not have been the social phenomenon it was without the american cultural jet fuel provided by new thought jet fuel. Get it?

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Kayla: Yeah.

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Chris: Like I said, I know we'll talk about this topic more in the future. After all, we briefly touched about it already in the very last episode that I researched. That's right. Cargo cults, or at least the american perception of them, have been characterized by anthropologists as a type of prosperity theology. Interesting, because you put out, you know, you put out your positive thoughts into the universe and expect the cargo back.

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Kayla: Right.

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Chris: It's exactly kind of like that ceremony. So that's going to come up again on the show. I know it will detour over. Now about new thought and prosperity theology. Back to math and economics. Sorry. Because we got to talk about why these things don't work. Because it sounded pretty cool, right?

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Kayla: No, I need to understand because, like.

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Chris: Why not get 800% return?

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Kayla: I can totally see that. Like, we're just making money. We're just like, we're increasing everyone's abundance. We're increasing everyone's wealth, helping our friends out.

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Chris: But remember. But math, no apples for oranges. Nobody created any value and exchanged it. So therefore there wasn't any increase of wealth. There was only a transfer of wealth.

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Kayla: Right.

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Chris: So math. Yeah. So starting with geometry, since you called the shape a triangle pyramid. But that's the basic reason why schemes of this nature are called pyramid schemes, because if you draw it, that's what it looks like.

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Kayla: Right.

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Chris: But now we need to talk a little bit about the exponential growth of that type of recruiting scheme in order to understand what's predatory about pyramid schemes and why they're against the law. So check out the whiteboard. How many dots are there? Yep, 15 dots. One captain plus two co pilots plus four crew plus eight passengers equals 15. So, like, what's so hard about getting 15 people to get in your airplane? Why? That's easy. Right. But remember, you can and do keep playing the airplane game. It doesn't end with one airplane, right? I mean, you make 800% return every time. Why not? Right. So, in fact, if you haven't become a captain yet, you are compelled to keep playing. So those new captains, they want to keep playing, right, because they want to get their return back.

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Chris: And actually, so do the people underneath them instead of the people underneath them, right. Ad infinitum. Because if you don't, you just lost your $10.

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Kayla: Right, right.

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Chris: But that should still be easy. I mean, the next round, you only need to recruit, what, like eight people, right. In fact, you just need to recruit. Yeah. All you need to do is recruit the passengers. So what's hard about getting eight people? Well, remember, I'm like, I don't have any friends, so making friends, yeah, that part's tough. Well, but that's the thing is, like, each, you know, each crew member only needs to recruit two people.

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Kayla: Okay, I can do that. I can do that, right?

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Chris: So that's only eight total people for the plane. But remember that each plane, when it completes, splits into two new ones with each officer becoming a captain, okay? And each of those two new planes needs eight passengers. So that's actually a total of 16 fresh people. You need, not eight. And what happens when you do that? Again, each officer in those new planes, now they get two new planes, and so now we're at four planes from the first one or 32 fresh new passengers.

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Kayla: So basically what you're saying is that it stops working after a while.

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Chris: That's exactly what I'm saying.

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Kayla: Okay.

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Chris: Yeah. So because we're dealing in powers of two, this grows extremely quickly. Next round, there are eight planes, so we need 64 passengers. Next round, we need 128 passengers and so on. And in fact, we only have to play 32 total rounds of the airplane game until we exceed the total human population on earth.

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Kayla: Please say that again.

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Chris: We only have to play 32 rounds total of the airplane game until we exceed the total human population on earth.

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Kayla: We have to be done recording this podcast. That is too much.

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Chris: 32 rounds. That's it. Once you play 32 times, that's it. There's no more people.

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Kayla: Okay.

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Chris: This went on for years.

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Kayla: No one said Dana went.

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Chris: Some people did. Some people just willfully didn't. Some people weren't mathematically inclined or mathematically educated. I mean, you can be pretty successful in this game. You can. You can be a weird white yuppie and not know that much about geometric progression.

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Kayla: Right.

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Chris: It can happen. Especially for white people.

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Kayla: Right.

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Chris: Yeah. So you run out of people. But of course, this went on for years. So how. They obviously played way more than 32 rounds.

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Kayla: Right.

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Chris: So the only way that's possible here is that people played into more than one airplane. There are people that, like, went through multiple. Multiple. Multiple iterations of this.

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Kayla: Oh, my God.

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Chris: So what's the problem then? Aren't these folks just trading money back and forth between their weird yuppie friends?

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Kayla: Right. It's not that big of a deal.

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Chris: Well, let's just look at this single airplane. What does the money flow look like here? It starts at the bottom, and these people lose money until they become captains. But the only way for each of those people to get their money back is for each of them to filter up to the whole. They have to basically go through eight planes, or more than eight planes because of the intermediate rounds before they even get their money back. Now, if this game was played infinitely or if there were an infinite number of humans, then, yeah, we could keep going and we'd magically get paid for nothing. That would totally work.

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Kayla: Right.

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Chris: But unfortunately for the airplane game and other pyramid schemes, there isn't an infinity of either thing. So eventually it has to run into a wall, and then everyone at the bottom is screwed.

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Kayla: Right. Like, you just don't get any money back and you've paid a bucket because.

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Chris: Of math, because of the geometric progression, it has to stop. And then the people that were at the top, that actually got through to become a captain, they made off like bandits, and then a shit ton of people at the bottom just lost money.

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Kayla: Okay, that makes sense that it's not a lot.

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Chris: No big deal, though, right? Like, that's only what? So we said, there's a captain, there's 15 people, but there's one captain. So only 14 people lost money. Right.

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Kayla: Right.

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Chris: Except that the game got played over and over again for years. So the bottom of that pyramid was actually enormous. Remember the exponential growth? Yeah. The only way for pilots to make that much money to get that eight x return was for others at the bottom of the pyramid to lose it a lot of others. That's the only way you get the insane return that you do from this pyramid. I want you to keep that structure in mind as we dig deeper into today's topic.

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Kayla: You haven't even said what today's topic is.

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Chris: I haven't. I'm going to talk about the research here in a second. But before we do, I was thinking, now that we know how this works, right, we should totally make culture just weird into a pyramid scheme. So all we have to do is just, like, not exploit our audience for cash, and then we can just turn our. We can just turn them into our own little airplane recruiting army. So if you're listening right now, all you have to do is go get two more people to listen to the podcast, and then get two of them to listen to the podcast, and then pretty soon, everyone on earth will be listening to cult or just weird in just a few short weeks.

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Kayla: 32 rounds.

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Chris: Yeah. Then we blast one mid roll ad and rake in millions of. Hear that? Tell your friends, everyone.

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Kayla: Do it.

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Chris: Tell them to recruit. Just recruit, recruit culture.

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Kayla: Just pyramid scheme.

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Chris: I thought that would be pretty effective. Right? Like, it'll build our listenership. So, anyway, with that detour back to the research, I want to summarize the takeaways for pyramid schemes here before we move on. These are the key elements. Very few at the top collect money.

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Kayla: Okay.

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Chris: Most people in the pyramid lose money. And then this one is crucial. The most people that lose money all, you know, the people that I was just talking about, they only need to lose a little bit for the few at the top to make bank, right? Like, you only need to lose, like, in the example, you only need to lose $10 for the captain to make $80. All those people weren't losing that much for them to make their 800% return, right? And the next. Sorry, I don't want to say that. That's terrible. Transition key element number four. Pyramids are fundamentally scammy in this way, not because of any weird dystopian capitalist reason. They are this way because of hard mathematical troops, hard mathematical truths behind their model.

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Kayla: Mathematical troops.

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Chris: Now I'm like, that was very evocative. And remember, airplane captains are not making money. By our definition, making money is creating and then exchanging value. This is not that.

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Kayla: Right?

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Chris: Nobody is exchanging money for a delicious apple to eat here. Pyramid schemes do not exchange anything of value with end consumers. They are simply a scheme for the transfer of wealth from many to few. So they make no money at all. Any profits that the airplane game captains made were essentially theft, not income.

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Kayla: Do you think that there were airplane captains that were cognizant of this?

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Chris: Hold on to that thought.

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Kayla: Oh, no.

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Chris: And because pyramids. Because these schemes are essentially theft schemes. That is why they are illegal.

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Kayla: Right. Cool.

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Chris: Case closed. See you next time on cult or just weird.

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Kayla: I feel like there's more.

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Chris: Oh, yes, there is.

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Kayla: I feel like you have more.

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Chris: We are literally just getting started.

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Kayla: I don't want to do this anymore.

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Chris: Don't worry. It's still 2019 and everything is still fucking upside down. Hang on to your butts. You know what would be awesome for those airplane game captains that were good at recruiting and perpetuating their schemes? The ones that were, like, really high energy and could really get people into their planes and sell that dream of 800%. If it wasn't illegal, they could keep doing it. Right?

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Kayla: Right.

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Chris: That'd be great. If only there was a way to, like, I don't know, whitewash the whole thing so they could keep doing it. Well, turns out at least one enterprising lady did just that.

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Kayla: Pooh. What lady?

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Chris: And again, I got this story from the same podcast I mentioned before. And I'll probably mention again, this is sort of like the gateway with TL Swann. I use this podcast quite a bit. It was excellent. Got it. I'll cite it here in a minute. Just hang tight. Don't worry. But for one particularly successful captain, once word started going around that the feds were snooping around, monitoring, she just had a simple and ingenious solution. Instead of a simple transfer of money, instead of a simple, hey, buy in for $1,500, she started giving some token little thing in return.

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Kayla: What little thing?

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Chris: A simple flower.

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Kayla: What?

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Chris: Yeah. So you weren't buying into her airplane. You were purchasing a rose from her for $1,500.

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Kayla: Okay, I know flowers are expensive, but they're not that expensive. If someone is charging you $1500 for a rose, you need to go to a different.

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Chris: This is such a special rose, though, because if you buy this rose, who knows? Maybe in a week or two, you might just get a bunch of money randomly because they were still buying into the airport.

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Kayla: Right, right.

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Chris: But if somebody came snooping around, they could be like, no, no, it's a rose. I'm selling these roses.

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Kayla: Okay. I feel like that while that is, like, a great little idea to get around the laws, that's also very transparent.

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Chris: Yeah. I don't think she got away with it.

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Kayla: Okay.

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Chris: But the concept of the $1,500 rose brings me finally.

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Kayla: Oh, God.

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Chris: To the category of cults that I'm going to be talking about today. Mlms.

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Kayla: What. What does MLM stand for? Pratil.

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Chris: Well, the very next sentence I have written is MLM stands for multi level marketing, where the multiple levels refer to the layer upon layer of recruits in the triangle that we drew on that board. You take that token system with the flowers in the airplane game, you dress it with all the trappings of modern consumer capitalism, supercharge it with modern marketing practices and lightly social media, and you have an MLM. MLMs are efficient, predatory, in the opinion of this podcast, extremely powerful.

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Kayla: And both of us have definitely had a brush.

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Chris: Huh. Well, I talk about that. Wait, what was your brush?

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Kayla: Oh, like, I definitely looked into the ones about, like, selling jewelry, I think, like, even while were together, like, right after college and I didn't have a job, and I was like, maybe I'll start selling jewelry with this. With these people, because that.

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Chris: With cutco. Yeah, I had no idea.

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Kayla: Same. I was like, oh, it's. I knew people who sold, like, makeup and jewelry and shit, like, worked out for them.

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Chris: So let's talk about them.

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Kayla: Oh, God.

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Chris: But first, we are long overdue for me talking about the research sources I use for this episode, because we had, like, a. Probably the longest cold open into this topic of all time.

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Kayla: We're about an hour in.

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Chris: Yeah. Oh, boy. Okay, well, here we are. For this episode, I use the following sources as research Wikipedia to get my feet wet, like always. And then the podcast I mentioned several times was called the Dream. It is amazeballs. They do real journalism, not just aggregating stuff like we do. It's hosted by Jane Marie, this american life veteran producer of ten years.

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Kayla: I've heard of this.

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Chris: And she just puts together a great program with the dream. Last year in 2018, it was on a bunch of podcast top ten lists.

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Kayla: Got it.

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Chris: So they sort of do like, oh, no, Ross and carrie type stuff because they have one of their producers herself join an MLM called limelight.

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Kayla: Oh, I've heard of limelight.

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Chris: And they try to go through the whole process. And they also talk to a bunch of real world people who have done mlms in Jane Rhee's hometown, and they even get an interview with the spokesperson for the DSA, which is the direct Sellers association, which I'll talk about more later. But direct sales is yet another MLM euphemism. There's a few. They like to call themselves direct sales because multilevel marketing evokes the picture of a pyramid.

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Kayla: There's some sitcom from the nineties where somebody gets involved, or maybe it's not. It's the office, I'm pretty sure, where somebody gets involved with an MLM, and they're like, no, no. It's not a pyramid scheme. Let me draw it out for you. And then it's. I think it's like an upside down pyramid.

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Chris: Yeah. But this podcast, it really is great. I mean, the production quality is awesome. Their research is just stellar. It's. And they. The narrative that they paint is.

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Kayla: I can't wait to listen.

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Chris: The hands right now telling kiss hands. But one of. I want to say this just because it's the only place where it really makes sense to say this. I read an article on Vanity Fair about the dream, and the title of this article is this podcast legally can't tell you amway is a pyramid scheme. So just to start giving you a little taste of how creepy all this stuff is, I also used to continue my research sources. There's a website called pinktruth.com, which we'll talk about more.

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Kayla: I've heard of them.

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Chris: The next episode.

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Kayla: All right.

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Chris: And then there's too much to cite here directly. There are a ton of articles online, such as that Vanity Fair article. There's a bunch of videos about this online. We'll link to some of them in the show notes and on Instagram and Twitter. There were two recently, actually, during. While I was doing this research, not one, but two former Daily show correspondents did a segment on MLMS.

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Kayla: Oh, geez.

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Chris: Yeah, it was done on the John Oliver show. He had a great segment about it, and so did. And Samantha Bee did an equally awesome segment about it as well. Oh, I also looked at quite a bit at. There's a subreddit called anti MLM that has a. It's pretty active. And then finally, not one, but two live interviews. Now, technically, these are for the next episode, but I just wanted to mention them here because I sort of lump all these sources in together for both of these episodes.

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Kayla: Right.

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Chris: So one of the interviews was with someone who was in that episode's cult du jour, and one of them was with someone who runs one of the web resources I just listed. And next episode, we will play both for you on the program. Occult or just weird? First live interviews. We're pretending to be journalists, sort of.

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Kayla: You are.

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Chris: We're aping it.

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Kayla: I'm here.

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Chris: Yeah. But before we get there, this episode, we have a lot more MLM table setting to do, so I'm stressed out mlms, you should be. Mlms, like the airplane game, have a relatively simple. I refuse to call it a business model, maybe a scam model. I could call it. It's a model. They have a simple model. They ostensibly have products to sell and a network of distributors to do just that. For example, Herbalife sells health food air quotes and health shakes. Air quotes.

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Kayla: Herbalife sucks.

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Chris: Okay, cool. But they're a regular ass company, right? They're selling food and shakes and whatnot, right? So what's the fuss about? Well, let's talk about how the flow of these products actually goes down. The fuss comes from the fact that mlms have a lot less in common with, say, target than they do with that airplane captain who was selling the $1500 roses.

471
00:55:16,874 --> 00:55:17,258
Kayla: Right.

472
00:55:17,354 --> 00:56:03,610
Chris: Help me follow this bouncing ball. This is not nearly as complicated as cicada was, so this should be easy. Using, again, target as our ongoing example, their business model is as follows. They are a retailer. They buy products wholesale from manufacturers and from wholesalers, and then they provide a way of distributing those products to end consumers. So what is the apple orange equation for them? How are they creating value? Well, if it weren't for them or companies like them, like Walmart and whatever, you'd have to purchase all of your goods directly from wholesalers or manufacturers. But Target provides the convenience of having a wide variety of goods under one roof. They may be selling items, but the thing that they are creating, the value. We talked about value creation. The value they're creating is convenience.

473
00:56:04,150 --> 00:56:14,486
Chris: They sell products for more than they buy them at wholesale. And the reason they're able to do that is because you, as the consumer, gain value from the convenience of not traipsing all around town to buy everything you need.

474
00:56:14,558 --> 00:56:17,182
Kayla: I never thought about that, but that makes a lot of sense.

475
00:56:17,366 --> 00:56:31,402
Chris: Yes, they create an excess of convenience, which is their apple, and they sell it to you for whatever it is you do for a living. Your orange, apples for oranges. Target gets your money and you, the consumer, get their convenience. With me so far?

476
00:56:31,466 --> 00:56:31,962
Kayla: Yes.

477
00:56:32,066 --> 00:57:00,556
Chris: Cool. Here's what an MLM does. While it is technically correct that they sell products, and I'm sure they would agree that technically correct is the best kind of correct. But rather than focusing on selling those products to end consumers, people who will actually use and value those things the way we say, buy paper towels from Target and then use them, their focus is more on recruiting salespeople. What's wrong with that, though? Doesn't every company hire salespeople to sell their product?

478
00:57:00,628 --> 00:57:01,240
Kayla: Right.

479
00:57:01,820 --> 00:57:52,842
Chris: Well, yeah, they do. But there are two key differentiators. First, MLMs aren't actually hiring anyone. So target is hiring a sales associate, right? They're actually hiring them as an employee, but MLMs are not hiring their distributors. If you start to sell Avon or herbalife, you are actually, quote, owning your own business, right? So benefits in healthcare, of course, are, like, totally out of the question. But you're not even really, like, an independent contractor working for the company because there's no, like, them paying you for a contract, right? There's. It's literally just, here you go sell our stuff, right? And if that wasn't sketchy enough, you're also not even really technically earning a commission on selling company product. A typical commission gig basically just says that, like, part of your salary comes from what is essentially a bonus, depending on how you sell, right?

480
00:57:52,866 --> 00:58:37,520
Chris: So if you're like a vacuum cleaner salesman, you sell enough vacuum cleaners and you can boost your salary, but mlms aren't even that. In order to obtain the product you sell, and this is a key point, you are paying the MLM company to buy the product from them wholesale. And then it is up to you as an independent distributor, quote, unquote, to sell that product at a markup to make your money. Notice how this is different from a commission gig? Rather than sharing risk between the company and the salesperson assumes all of the risk upfront when they buy wholesale, and the company gets all of the monetary reward, right? So that's the first way mlms differ from normal, non sleazy companies. They don't hire, they don't contract, they don't even really pay commission.

481
00:58:37,820 --> 00:59:09,858
Chris: They actually sell their distributors, their stuff, and then basically, financially speaking, couldn't care less whether a consumer ever sees the product at that point, right? Second key differentiator from a normal employee hiring situation is the emphasis on recruiting and the chain of recruiting. When target hires a sales associate, they don't say, all right, now you have to go hire two more sales associates and encourage them to hire two more ad infinitum. That would be weird. They simply hire someone to assist in their retail business.

482
00:59:09,954 --> 00:59:10,354
Kayla: Right?

483
00:59:10,442 --> 00:59:42,270
Chris: Not so for mlms. Go watch any video put out by MLM companies to try to get people to join their companies. Excuse me. And all of them place a heavy emphasis on recruiting. And in fact, there's a whole vocabulary that has grown around the industry to talk about this kind of thing. The folks you recruit and the folks that they recruit and so on are called your downline. So if you are a distributor for Avon or whatever. And you recruit people. And they recruit people. Everybody that's under you in the triangle shaped thingy that we're totally not allowed to call pyramid.

484
00:59:42,310 --> 00:59:43,290
Kayla: Not a pyramid.

485
00:59:44,510 --> 00:59:48,942
Chris: All of those people are called your downline. So there's this whole vocab around it.

486
00:59:49,046 --> 00:59:56,918
Kayla: That vocab word choice, though, feels like. It feels like they should have picked something different. Like. That sounds predatory.

487
00:59:57,054 --> 00:59:59,910
Chris: I know what I mean. Right. Like, they're your buddies.

488
01:00:00,030 --> 01:00:05,556
Kayla: Yeah. Call them your buddies when we start. Oh, so for our listeners are our buddies.

489
01:00:05,678 --> 01:00:06,192
Chris: Right. Of course.

490
01:00:06,216 --> 01:00:06,776
Kayla: That's what we're saying.

491
01:00:06,848 --> 01:00:19,620
Chris: Yeah, you guys are buddies. But it gets to the point with a lot of these companies that because the emphasis is so much on recruiting that you can, like, barely even tell what their product is. Do you even know what Amway sells?

492
01:00:20,240 --> 01:00:21,640
Kayla: I don't know what Amway sells.

493
01:00:21,720 --> 01:00:27,976
Chris: Yeah, that's. That's not a coincidence. It's because the selling of the product is, like, not the important thing.

494
01:00:28,048 --> 01:00:29,024
Kayla: What does Amway sell?

495
01:00:29,072 --> 01:00:39,860
Chris: They sell. Don't miss, like, every just as damning. They sell, like, everything. Like, everything from, like, home goods to insurance to, like, I mean, just wildly different things, like. Like makeup, food.

496
01:00:39,940 --> 01:00:43,480
Kayla: Like, don't they also have everything, like an arena?

497
01:00:44,100 --> 01:01:00,674
Chris: Oh, yeah. Well, yes. So we'll do an episode on Amway because there is at least an episode's worth of juicy, gory details about Amway, but, yes, one of the things they have, well, they don't have an arena. It's like, you know, like Staples center.

498
01:01:00,722 --> 01:01:01,026
Kayla: Right.

499
01:01:01,098 --> 01:01:16,510
Chris: There's, like, amway arena. Is the arena in Orlando? Because that's, like, there's a lot of, like, amway money in Orlando because the DeVos family. The DeVos family owns the Orlando magic. What? Yeah. And the DeVos family. Yeah. Like, Betsy Devos.

500
01:01:17,170 --> 01:01:17,986
Kayla: Ooh.

501
01:01:18,138 --> 01:01:43,390
Chris: Yeah. Betsy DeVos is like the granddaughter or niece or someone of rich DeVos. Who's the Amway dude, this is bad news. It goes to the top, my friend. You just. You wait. But anyway, yes, so they. They have named an arena because they have the money to do that. But also, do you remember that company that we heard about some years ago on the radio and we, like, listened to a whole radio show about it and it was called wake up now.

502
01:01:43,470 --> 01:01:47,702
Kayla: Yeah. They're literally on my list of things to do, but clearly I can't do them anymore.

503
01:01:47,806 --> 01:01:50,086
Chris: Well, no, that's why I said this is gonna be a series.

504
01:01:50,158 --> 01:01:50,630
Kayla: Okay.

505
01:01:50,710 --> 01:01:55,236
Chris: Right. And I. Trust me, the stories are not all the same.

506
01:01:55,348 --> 01:01:55,812
Kayla: Right.

507
01:01:55,916 --> 01:01:59,252
Chris: They all share the same fundamental. But they're all predatory math.

508
01:01:59,316 --> 01:01:59,636
Kayla: Right.

509
01:01:59,708 --> 01:02:00,548
Chris: But they're not all the same.

510
01:02:00,604 --> 01:02:07,604
Kayla: But, like, amway, you can say they sell home goods. Wake up. Now, I. From the research that I've done, you still can't really say what they.

511
01:02:07,652 --> 01:02:13,068
Chris: I think they sell. Like. Like, financial something advice or products or. I don't even know.

512
01:02:13,124 --> 01:02:13,844
Kayla: Yeah, exactly.

513
01:02:13,892 --> 01:02:30,268
Chris: But that's the whole point is that I'm bringing this up is that, like, we listen to this whole radio show about, and we're like, what the fuck is wake up now? Like, we had to go home and, like, research it and still couldn't even figure it out. But this is because MLMs only sell products in the technical sense. They're selling, actually, $1,500 roses.

514
01:02:30,364 --> 01:02:31,076
Kayla: Right.

515
01:02:31,268 --> 01:02:36,308
Chris: And if you can't resell that rose yourself, I guess you're shit out of luck.

516
01:02:36,484 --> 01:02:40,132
Kayla: Can I bring something up that's probably jumping the gun a little bit?

517
01:02:40,236 --> 01:02:43,846
Chris: Definitely. That's what we do on this show. And then I say, we'll get to it.

518
01:02:43,958 --> 01:03:13,742
Kayla: What about TM, MLMs or MLM style groups that do sell things that are, like, specific and ostensibly have value? Like, I'm thinking about, like, the jewelry company. Like, they sold nice jewelry, or, like, I had a friend that did. I think it's called cook in the american way, and it sold, like, kitchen supplies. And, like, I have some of those kitchen supplies, and, like, everything that came out of cook in the american way was, like, very high quality stuff.

519
01:03:13,926 --> 01:03:18,950
Chris: So that's a good question, and I don't have a good answer for it.

520
01:03:19,070 --> 01:03:23,742
Kayla: Other than, like, are there degrees of likeness to badness in terms of.

521
01:03:23,806 --> 01:03:33,710
Chris: I think there are. Jane Marie and her. And her crew did either was an AMA or an interview. Like, they've done a bunch of interviews now since their podcast took off.

522
01:03:33,750 --> 01:03:34,310
Kayla: Right.

523
01:03:34,470 --> 01:03:43,638
Chris: But they were asked that question, like, are there some mlms that are better than others? And their answer was actually no. Is that the business model is fundamentally scammy.

524
01:03:43,694 --> 01:03:48,486
Kayla: So even if you're selling something that is value just because of the way you're doing it.

525
01:03:48,518 --> 01:03:53,450
Chris: Exactly. Exactly. Well, it doesn't negate it like that. Like, the products, like you said, could be valuable.

526
01:03:54,870 --> 01:03:56,918
Kayla: The cook in the american way stuff we have is good.

527
01:03:57,014 --> 01:04:18,398
Chris: Yeah. Now, a lot of the products for a lot of these companies aren't valuable, but some of them are. And to the extent that the products are valuable and they're going to end consumers and not being, which we'll talk about in a bit, but not being accumulated in some poor person distributors, basements then, yeah, there can be mlms that are less predatory or at least more legit.

528
01:04:18,454 --> 01:04:18,934
Kayla: Right.

529
01:04:19,062 --> 01:04:30,894
Chris: But it's that recruiting model that creates the pyramid that we have on the whiteboard that makes it just fundamentally dangerous. It's fundamentally dangerous at minimum, and exploitive at worse.

530
01:04:30,982 --> 01:04:35,282
Kayla: Got it. So even if you're selling something of value, you're still not, the company is.

531
01:04:35,306 --> 01:04:50,690
Chris: Still playing around value. Well, that's not. I won't say that. Because if you're creating. If. If the company is actually producing these products and they are going to end consumers, right, then they are creating value because they're making something, and then there's a value exchange.

532
01:04:50,770 --> 01:04:51,130
Kayla: Right.

533
01:04:51,210 --> 01:05:23,538
Chris: The problem happens when, because there's so much recruiting and the emphasis on recruiting and necessarily selling that all of the, or a large portion of the profits that these companies make are not from going to end consumers, but rather from internal to the company. So even though some of the product will go to an end consumer, a lot of these companies, most of them, the money that the company itself actually makes is internal to their distributor network. And that's what makes it pyramid.

534
01:05:23,554 --> 01:05:24,626
Kayla: Yeah. Okay.

535
01:05:24,738 --> 01:05:40,242
Chris: If that wasn't the case, right. If they, like, if all their distributors were all selling the product and making money themselves and whatever, then, you know, then it would be fine. Then it would be like a normal thing. But because it all comes internally or a lot of it comes internally, that's where the problem is. That's what makes it scammy.

536
01:05:40,346 --> 01:05:40,906
Kayla: Got it.

537
01:05:40,978 --> 01:05:52,522
Chris: So there's still a bunch of little details I'm leaving out, such as, like, the limelight mlms, insanely thin margins. So actually, this is what were just talking about, like, limelight's margins. So, like, basically the value that they even.

538
01:05:52,546 --> 01:05:53,338
Kayla: What does limelight sell?

539
01:05:53,394 --> 01:06:03,382
Chris: So limelight sells makeup. And on the dream they had, I think they had someone, like, evaluate some professional, like really good professional, like makeup evaluator or something.

540
01:06:03,446 --> 01:06:03,966
Kayla: Okay.

541
01:06:04,078 --> 01:06:16,918
Chris: Evaluated the quality of it and basically said, like, where this would roughly price out and the amount that the distributors were suggested, like a suggested retail price, because don't forget, they're buying it from limelight to then resell.

542
01:06:17,014 --> 01:06:22,154
Kayla: Right. If you are, if you work, quote unquote for limelight, you have to pay. Pay for the products you sell.

543
01:06:22,242 --> 01:06:24,098
Chris: Yeah. And you're technically not working for them.

544
01:06:24,154 --> 01:06:24,442
Kayla: Right.

545
01:06:24,506 --> 01:06:27,706
Chris: You're. That's why I said, quote unquote taking an opportunity.

546
01:06:27,778 --> 01:06:28,810
Kayla: You're investing in a business.

547
01:06:28,850 --> 01:06:54,556
Chris: You're investing in yourself. You are pursuing your own american dream, which is why it's called the Dream podcast. But, but, yeah, so, and basically what I'm saying there here is that if you look at the price that limelight suggests compared to the price that the person that evaluated its makeup said it should be roughly at, it's, like, tiny. It's very thin. So that's another thing that makes it hard for distributors.

548
01:06:54,668 --> 01:07:02,724
Kayla: I've gotten some really good makeup, though, from limelight. Not from limelight, but from, like, other makeup, potentially mlms.

549
01:07:02,812 --> 01:07:05,404
Chris: Yeah. So, like we just said, like, some of them are more than others.

550
01:07:05,452 --> 01:07:05,948
Kayla: Right.

551
01:07:06,084 --> 01:07:45,846
Chris: We'll actually get into that a lot in the next episode as well. Yes. But hopefully you can kind of see now, though, like, structurally, how mlms work and how just by the simple mathematics of exponential growth, they are designed to funnel money up the pyramid to the proverbial airplane captains, leaving the airplane passengers with, like I said, garages basically full of $1,500 roses. And just to level set us again, remember, you can always think back to the apple and orange example. If you're not sure if something is sketchy, if you can't figure out the value exchange, then it's not creating value, and someone is getting swindled. And mlMs, to the extent that they might provide quality products to people interested in actually using that product, could theoretically be making this value exchange.

552
01:07:45,958 --> 01:08:00,558
Chris: But since they are less interested in doing that than they are and pushing wholesale product on a pyramid shaped chain of recruits, ultimately that value exchange doesn't happen a lot of the time, and distributors are stuck with their inventory.

553
01:08:00,654 --> 01:08:00,910
Kayla: Right.

554
01:08:00,950 --> 01:08:16,131
Chris: Which I guess we sort of just talked about because you asked. But from the MLM's point of view, that's working exactly as intended. Now they'll say it's not. And I think I talk about this later, but a lot of them have buyback programs for unused inventory or unsold inventory.

555
01:08:16,236 --> 01:08:16,880
Kayla: What?

556
01:08:17,260 --> 01:08:31,844
Chris: Yeah. Well, so it's, and that's MlM. Buyback programs are a whole thing, but ostensibly it's to say, no, no, we're not going to leave you with that inventory. Don't worry. We'll buy it back from you if you can't sell it. Right.

557
01:08:31,892 --> 01:08:35,740
Kayla: That's almost more predatory than just, like, sticking somebody with a bunch of product.

558
01:08:36,439 --> 01:08:42,264
Chris: Why? Because you think that they don't actually buy it back or they make it difficult to buy back?

559
01:08:42,312 --> 01:08:45,500
Kayla: I'm sure they make it difficult, and I'm sure they don't buy it back at, like, face value.

560
01:08:46,479 --> 01:08:51,979
Chris: I'm not sure about the second. I don't think they always do but the first. Yeah, they don't make it easy.

561
01:08:53,479 --> 01:09:01,380
Kayla: Well, and also, it, like, it helps. It's like a fake thing to help make it seem more legit or less predatory.

562
01:09:01,960 --> 01:09:05,086
Chris: Oh, you are the spoilers.

563
01:09:05,158 --> 01:09:05,638
Kayla: Sorry.

564
01:09:05,734 --> 01:09:07,613
Chris: Future podcast episode.

565
01:09:07,662 --> 01:09:08,450
Kayla: Oh, God.

566
01:09:11,390 --> 01:09:17,678
Chris: I might talk about that a little bit here, too, but I want to call back to the airplane game again because I want to talk about another aspect of mlms.

567
01:09:17,734 --> 01:09:18,261
Kayla: Okay.

568
01:09:18,366 --> 01:09:32,613
Chris: You remember how I said the captain was making 800% return? So another example is only. It was $80. But whatever. The point is the passengers only had to pay $10 a piece. Or in the real example, the passengers were only paying 1500 for a $12,000 return.

569
01:09:32,702 --> 01:09:33,261
Kayla: Right.

570
01:09:33,406 --> 01:09:51,613
Chris: Okay. But the point is that compared to the payout for the top of the pyramid, the low level buy in is relatively cheap. And this is a feature of mlms as well, which actually winds up with even more disturbing implications, if you can believe it.

571
01:09:51,702 --> 01:09:52,805
Kayla: No, I can't.

572
01:09:52,957 --> 01:09:57,840
Chris: So let's talk about these quote unquote airplane passengers. Kayla?

573
01:09:57,960 --> 01:09:58,464
Kayla: Yeah.

574
01:09:58,552 --> 01:10:15,260
Chris: What type of individual is someone with the following three qualities, only needs to put in a little bit of money, is desperately interested in an 800% return, and believes, via highly motivated reasoning born of desperation, that such a return is even possible?

575
01:10:16,240 --> 01:10:18,380
Kayla: I feel like everybody, every single person.

576
01:10:18,800 --> 01:10:27,048
Chris: They only need to put in a little bit of money, are desperately interested in an 800% return and then believe that's possible because of said desperation.

577
01:10:27,104 --> 01:10:30,432
Kayla: Somebody that, like, needs in other circumstances.

578
01:10:30,536 --> 01:10:41,580
Chris: Would go to a loan shark, doesn't have much. Yes. So what type of group is that? Desperate, disadvantaged people are absolutely the bread and butter for most mlms.

579
01:10:42,360 --> 01:10:43,680
Kayla: That's horrible.

580
01:10:43,840 --> 01:11:08,610
Chris: Yes, it is. Lower income people are one group that mlms appeal to the most because they're looking to buy what mlms are actually selling. No, not protein shakes or whatever the fuck. Wake up now. Sells mlms. Really, at the end of the day, are not selling their products. They are selling the fantasy of financial independence, and they are selling it to their own distributors.

581
01:11:08,690 --> 01:11:12,550
Kayla: I'm scared. Can we not talk about this anymore? This is terrifying.

582
01:11:13,090 --> 01:12:07,080
Chris: If you're wondering why people at the bottom of the pyramid get in, if you're wondering why they're willing to pay a $1,000 or $1,500 for the proverbial rose, it's because they're not buying the rose. They're buying the financial fantasy that mlms are selling. Exactly like the airplane game. You're not really buying the flower. You're not really. It's. It's more about the scheme that promises 800% returns. And if you go watch some of the recruiting videos for basically any major MLM out there, like herbalife, it's probably the most prominent thing in the video. The constant message is you can be your own boss, set your own hours, be financially independent, and help your family. Did you ever want to own ten cars? Did you ever dream of, you know, financial independence? They're all selling that. They are pushing that message constantly.

583
01:12:07,200 --> 01:12:25,312
Kayla: Do you know, and do you talk about, like. And granted, I live in this world as a woman, so I have a biased experience for what I'm about to say. I feel like a lot of mlms that I've encountered in my life have been very focused on. You're looking at me really weird. Focused on, like, recruiting women specifically.

584
01:12:25,336 --> 01:12:26,496
Chris: Give me, like, two minutes.

585
01:12:26,648 --> 01:12:27,500
Kayla: Okay?

586
01:12:30,200 --> 01:13:01,386
Chris: So no matter what token product the MLM is technically selling, they're all really selling this financial fantasy message, right? And most mlms also have conferences, again, in quotes, which are a lot different than your average business conference. They function a lot more like pep rallies. And some of these get truly crazy. Like, there are some, like, MLM CEO's out there that are like, you should watch the John Oliver segment. I forget the name of the MLM that he shows this pep rally thing, but it is.

587
01:13:01,578 --> 01:13:04,194
Kayla: It's like watching mod non Sheila cult are just weird.

588
01:13:04,242 --> 01:13:05,746
Chris: It is definitely cult.

589
01:13:05,858 --> 01:13:06,746
Kayla: Oh, man.

590
01:13:06,898 --> 01:13:45,866
Chris: So, yeah, some of these get really crazy, and they hammer that message over and over again that your success is just around the corner and keep going at it. They typically trot out their success story. Folks who go up on stage and give inspirational speeches about how you can be just like them if you keep at it. And these pep rallies are highly ritualistic. And I talked about this. The company CEO usually runs the show, and very charismatically, one might say, but doesn't stop with lower income people. Oh, no. One of the biggest groups of MLM victims is women. Many, many mlms target women. Avon, Lularoe, limelight, Nuskin, Tupperware. The list goes on.

591
01:13:45,938 --> 01:13:49,550
Kayla: Candles. That's one.

592
01:13:49,970 --> 01:13:55,722
Chris: I mean, essential oils. I mean, there's just a. I mean, it's a large chunk of the industry, right?

593
01:13:55,746 --> 01:14:03,522
Kayla: That's what I was talking about. It's like, we think. I think about mlms, and I immediately think about makeup, jewelry, candles, tupperware, cooking supplies, clothes.

594
01:14:03,666 --> 01:14:10,266
Chris: Not a coincidence. That is a feature of the industry. And they actually really get into that in the dream.

595
01:14:10,338 --> 01:14:11,190
Kayla: Interesting.

596
01:14:13,010 --> 01:14:59,188
Chris: But you might wonder why. And it's because women traditionally have had a harder time being in the real workforce, both for overt, discriminatory reasons and also because of being locked into a society that gives them traditional roles like childrearing and homemaking. So that's what makes them great MLM participants. In this case, it's less about making a ton of money for them. It's still a fantasy, but it's less about financial independence and buying that mercedes and whatever. But it's more about filling in that psychological void from not participating in the workforce, which, just an aside here, because it's relevant. I think we talked about this, but a few years ago, I read a really interesting article about how your salary is only one small piece of what you get out of working.

597
01:14:59,284 --> 01:14:59,732
Kayla: Right?

598
01:14:59,836 --> 01:15:10,160
Chris: It's only one little bit of it, actually. There's a whole slew of other things, like contributing to a cause with a team, satisfaction of accomplishment, social glue, friends.

599
01:15:10,700 --> 01:15:11,492
Kayla: Structure.

600
01:15:11,596 --> 01:15:22,520
Chris: Structure. And these are the exact types of things that mlms can deliver, or at least claim to deliver to women when they are lacking that from the traditional workforce.

601
01:15:23,660 --> 01:15:27,796
Kayla: I want to know the amount of college kids that get into mlms. I want to know a percentage.

602
01:15:27,828 --> 01:15:30,092
Chris: I actually don't talk about them as a disadvantaged group, but.

603
01:15:30,196 --> 01:15:41,012
Kayla: Yeah, I don't even mean as a disadvantaged group because you're already graduating college. I just mean when you're graduating college, and it's like, for a lot of people, especially when you go to college, that might be the first time where you're hard up to find a job.

604
01:15:41,196 --> 01:15:45,476
Chris: Yeah. And in fact, that's sort of the common theme is, like, when you're hard up to find a job.

605
01:15:45,548 --> 01:15:46,160
Kayla: Right.

606
01:15:46,500 --> 01:15:50,084
Chris: Mlms suddenly are attractive, and they know that, and that's who they go after.

607
01:15:50,132 --> 01:15:53,460
Kayla: Is it bad that, like, I still want to work for an MLM?

608
01:15:53,920 --> 01:16:17,032
Chris: Definitely. You won't in a couple paragraphs. But actually, going back to. We talked about women, but going back to the lower income folks as well. Remember when were watching when they see us the other day and I brought up mlms during the scene when the guy gets out of jail and just, like, cannot find any work because nobody wants to hire a felon.

609
01:16:17,096 --> 01:16:19,638
Kayla: Right. We make it very difficult for people to reinforce the.

610
01:16:19,784 --> 01:16:24,270
Chris: Yeah. So guess what fills in that gap for people.

611
01:16:24,650 --> 01:16:26,490
Kayla: Oh, the airplane game should be illegal.

612
01:16:26,570 --> 01:16:29,418
Chris: It's gross, right? Yeah. Well, the airplane game is illegal, so.

613
01:16:29,434 --> 01:16:34,350
Kayla: I'm just saying, like, as a metaphor, like, this shit is bad.

614
01:16:34,770 --> 01:16:35,266
Chris: Yes.

615
01:16:35,338 --> 01:16:41,282
Kayla: Oh, there's one. There's one mlm that I know of that specifically targets college students.

616
01:16:41,466 --> 01:16:42,310
Chris: Cutco.

617
01:16:42,610 --> 01:17:04,092
Kayla: I mean, Cutco might be one of them, I think it's called, like, vector, or something like that. Like there's whole threads that go around the Internet where they. I don't know how they find out. Kids that have, like, just graduated, and they send them letters being like, congratulations. Like, we want to hire you for a company, basically. Yeah. And then kids are like, ooh, a job. And it's really this.

618
01:17:04,196 --> 01:17:23,792
Chris: Gross, gross. And finally, of course, any discussion of disadvantaged groups. Wouldn't be complete without talking about ethnic minorities. So, for this one, I'm just going to give you the go to example when talking about this, because it's so well documented, which is herbalife. Herbalife is notorious for targeting the Latinx community.

619
01:17:23,936 --> 01:17:26,296
Kayla: That's bizarre and interesting.

620
01:17:26,368 --> 01:17:47,098
Chris: Notorious why? They go so far as to put blatant product placement ads in telenovelas. You should go watch John Oliver's segment on MLMS, because he goes into a lot more detail about this. And believe me, we are doing an episode on Herbalife at some point, because they. There's a lot more really juicy story nuggets to tell about them. Oh, yeah.

621
01:17:47,154 --> 01:17:56,202
Kayla: Is herbalife the one when were at Olive Garden that one time, and we heard the, like, person eating at Olive Garden, selling to their server? Was that herbalife?

622
01:17:56,226 --> 01:17:58,538
Chris: It was an MLM for sure, but I don't remember.

623
01:17:58,594 --> 01:18:00,298
Kayla: It was like fitness shakes. It was either.

624
01:18:00,394 --> 01:18:00,938
Chris: It could be herbalife.

625
01:18:00,954 --> 01:18:02,562
Kayla: It was probably herbalife or beachbody. It was one of those.

626
01:18:02,586 --> 01:18:22,212
Chris: I mean, we live in southern California, so there's a good choice chance that it was herbalife, but, yeah, so that, so, I mean, the re. And again, the reason they target the Latinx community is because, again, disadvantaged groups. Right? Like, there's a bunch of ambitious, hardworking, high energy people that don't necessarily have the same opportunities to enter the traditional workforce.

627
01:18:22,276 --> 01:18:22,884
Kayla: Right?

628
01:18:23,052 --> 01:18:31,956
Chris: And ambitious, too, right? Like, you know, you want to provide for your family, you want to be financially independent. So, again, that's. That's why they get targeted as well.

629
01:18:32,028 --> 01:18:32,554
Kayla: Question.

630
01:18:32,692 --> 01:18:33,054
Chris: Yes.

631
01:18:33,102 --> 01:18:34,702
Kayla: Do you talk about Beachbody at all?

632
01:18:34,766 --> 01:18:35,206
Chris: No.

633
01:18:35,318 --> 01:18:40,406
Kayla: Beachbody is the company that does p 90 x and insanity. They're also an MLM.

634
01:18:40,478 --> 01:18:41,310
Chris: I did not know that.

635
01:18:41,350 --> 01:18:42,710
Kayla: Like, maybe I'm talking out of my ass.

636
01:18:42,790 --> 01:18:45,118
Chris: No, mlms or tentacles are everywhere.

637
01:18:45,174 --> 01:18:59,406
Kayla: But I'm pretty sure that, like, the other side of the business is, like, you become a, like, beachbody, whatever the word for not employee is. And you, like, sell their other products, like their shakes and supplements and clothes and whatever the fuck.

638
01:18:59,518 --> 01:19:00,462
Chris: It's so insidious.

639
01:19:00,526 --> 01:19:30,300
Kayla: So it's like, it's Beachbody's really legitimized by insanity and p 90 x. And, like, this slew of workout regimens or workout experiences you can buy that aren't mlme. Like, I can do insanity. And Shanti not going, like, okay, now get 17 of your friends to do insanity, too. Like, it's. I'm literally buying a product as a service. But then the other arm of the company I'm pretty sure is, like, interesting people selling supplements.

640
01:19:30,340 --> 01:19:32,840
Chris: So there's, like, companies with, like, a dual identity.

641
01:19:33,940 --> 01:19:36,300
Kayla: Before we publish this, I'll make sure to look that up and confirm it.

642
01:19:36,340 --> 01:19:41,492
Chris: But I'm pretty sure that's super interesting. So remember, like, a minute ago when you're like, I want to do an MLM.

643
01:19:41,556 --> 01:19:46,404
Kayla: Yeah, I don't want to do an MLM, but there's, like, a. My lizard brain is, like, totally.

644
01:19:46,532 --> 01:19:51,748
Chris: It's because they are very good at targeting your lizard brain in that way.

645
01:19:51,804 --> 01:20:02,640
Kayla: And also like, to be 100% fair. Like, the people that I know in my life that have participated in companies like this haven't had nightmare experiences. You know what I mean?

646
01:20:02,980 --> 01:20:10,788
Chris: Right? Yeah. And people's experiences vary, but now is when we're going to talk about the statistic.

647
01:20:10,844 --> 01:20:13,316
Kayla: Oh, God. Oh, God.

648
01:20:13,388 --> 01:20:41,196
Chris: Do you want to take a guess at what percentage of people that get involved with an MLM actually make money? And just for your clarification, this is taking into consideration business costs. So, like, you know, if you have to not just buying the inventory, but also, like, you know, you have to do the parties to put makeup, and you have to buy the food, and you have to advertise. So if you count all of that, do you want to try to guess what the percentage is?

649
01:20:41,348 --> 01:20:44,760
Kayla: I don't want to guess. I know it's an insane. Just guess.

650
01:20:45,756 --> 01:20:52,004
Chris: Just guess. Nah, you're not even close. You are still off by two x or more.

651
01:20:52,092 --> 01:20:52,720
Kayla: What?

652
01:20:53,340 --> 01:21:01,732
Chris: Yeah, it shocked me, too. What the percentage of. And this is, like, a documented study by, I think, the FTC, but I'll check on that.

653
01:21:01,756 --> 01:21:02,640
Kayla: Oh, geez.

654
01:21:03,540 --> 01:21:15,420
Chris: And I think it's from data from the industry, because they have to, like, give some data to the FTC to, like, keep functioning. If you get started with an MLM, your chance of actually turning a profit is. Is less than 1%.

655
01:21:15,720 --> 01:21:16,816
Kayla: That's upsetting.

656
01:21:16,968 --> 01:21:23,304
Chris: And some say that it's 0.10.1% chance.

657
01:21:23,352 --> 01:21:24,480
Kayla: Of making a return on.

658
01:21:24,520 --> 01:21:39,376
Chris: There's different. There's different. There's a whole wide range within that last 1%. Some are like, oh, it's like 99.2%. And some people are like, it's 99.9% that don't make money, but I think that's kind of splitting hairs.

659
01:21:39,448 --> 01:21:40,140
Kayla: Yeah.

660
01:21:41,460 --> 01:21:49,412
Chris: Yeah. So contrast that with, like, a typical, I don't know, slot machine in Vegas.

661
01:21:49,476 --> 01:21:50,164
Kayla: Oh, God.

662
01:21:50,292 --> 01:21:56,356
Chris: Your chances of coming away with a profit from that is between, like, 45% to, like, 49%.

663
01:21:56,548 --> 01:21:57,716
Kayla: Wait, seriously?

664
01:21:57,868 --> 01:22:01,276
Chris: Yeah. In fact, 45% is, like, terrible.

665
01:22:01,348 --> 01:22:02,212
Kayla: I didn't realize it was that high.

666
01:22:02,236 --> 01:22:05,252
Chris: 45% is like, the sleazy, like, airport slot machine.

667
01:22:05,356 --> 01:22:06,130
Kayla: Oh, shit.

668
01:22:06,220 --> 01:22:11,486
Chris: Yeah. Slot machines are. And actually, most games in Vegas are like this.

669
01:22:11,638 --> 01:22:12,678
Kayla: They're slightly favoring the house.

670
01:22:12,694 --> 01:22:25,270
Chris: They're just slightly favoring the house. So, like, for example, your odds of making money back in roulette are. It's like, just south of 50%.

671
01:22:25,430 --> 01:22:31,254
Kayla: We have to do Vegas on this podcast. Vegas has to be done well, season.

672
01:22:31,302 --> 01:22:38,870
Chris: Three and Vegas would be, again, a much better investment than an MLM.

673
01:22:39,210 --> 01:22:43,002
Kayla: That's upsetting. I'm gonna say that about 400,000 more times.

674
01:22:43,066 --> 01:22:46,194
Chris: I know, I know. And that number totally shocked me when I read it.

675
01:22:46,242 --> 01:22:46,618
Kayla: Right.

676
01:22:46,714 --> 01:23:03,700
Chris: I checked it in a bunch of places. I mean, it's widely cited statistic. Jesus, I would have guessed, you know, if you said before I was doing this, if you're like, oh, guess the number. If you were saying that to me, I would have said, like, I don't know, 30, 20, 30%. You know, like a normal startup.

677
01:23:03,740 --> 01:23:05,580
Kayla: I said 10% as a low ball.

678
01:23:05,740 --> 01:23:13,840
Chris: Yeah, I know. So how exactly does this happen? Yeah, how do so many people lose money?

679
01:23:14,940 --> 01:23:16,000
Kayla: Please explain.

680
01:23:16,940 --> 01:23:54,712
Chris: Oh, I will. Mlms don't actually care. Now. They say they do, but they kind of don't really care if those proverbial roses they sell to their own distributor network actually go to an end consumer who really, truly wants that rose. They say they care because that's key to maintaining their legal status, is not pyramids, but barring rare exception, they do not. So the distributors, in order to hit quotas and thresholds and tiers and everything these MLMs set up, which we haven't talked about that yet, I kind of can't go into it without, you know, making this podcast, like, way too long. But a lot of these companies have these, like, thresholds.

681
01:23:54,736 --> 01:24:09,272
Chris: Like, if you sell this much or if your network sells this much, or if your downline buys this much from you, then you're in the diamond tier, and now you get even more percentage of money or whatever. So a lot of them have that stuff set up, which is really shitty.

682
01:24:09,336 --> 01:24:09,940
Kayla: Right.

683
01:24:11,120 --> 01:24:24,424
Chris: So a lot of folks will buy a lot of the product just to hit their thresholds and maintain those incentives and benefits and whatever, they'll just buy it and stick it in their garage because they know they're going to sell it later.

684
01:24:24,512 --> 01:24:24,992
Kayla: Right, right.

685
01:24:25,016 --> 01:24:40,056
Chris: Because that's what the MLM is. Of course I'm going to sell it later. I'm a high energy individual. I'll just recruit some more people next month. I'll make it up next month and then the next month, like, oh, God, I wasn't able to sell it, so I didn't hit the threshold again. I'll buy some more and I'll totally make up for it the next month.

686
01:24:40,088 --> 01:24:41,376
Kayla: I don't want to talk about this anymore.

687
01:24:41,488 --> 01:24:52,368
Chris: And yeah, a lot of the MLMs will actually say that. That, yeah, this product, not just the MLMs, but even like, you know, people that are above you and you're in your line, it was called your upline.

688
01:24:52,464 --> 01:24:53,056
Kayla: Right.

689
01:24:53,208 --> 01:25:01,648
Chris: Will say, yeah, it's, you know, you're, it's not, you're not buying wholesale. It's an investment in your business. So they're assuming they'll be able to sell it.

690
01:25:01,704 --> 01:25:02,352
Kayla: Right.

691
01:25:02,536 --> 01:25:07,800
Chris: But you see how that happens. It's like this. Continue cost and more sunk costs and more sunk cost.

692
01:25:07,840 --> 01:25:10,140
Kayla: And you have to keep convincing yourself that you will be able to sell.

693
01:25:10,180 --> 01:25:42,644
Chris: It until suddenly you're in a massive amount of debt and you have a garage full of lularoe pants or whatever that nobody wants. A very common tale of woe you hear from MLM participants is that they wind up having these whole garages full of inventory from the company. They kept buying and buying to hit quotas and can't get rid of now. And now they're in massive amounts of debt. Sometimes it spills out of the garage and to the rest of their houses. It's bad. And I mean, you'll even see in some of these horror stories where it's like, it'll impact their family, too.

694
01:25:42,732 --> 01:25:44,720
Kayla: This is. I don't want to talk. This is awful.

695
01:25:45,100 --> 01:25:55,460
Chris: Well, because one member of the family will be doing it and the other one will be saying, please stop doing this. This is horrible. I mean, it's kind of like at that point, very cult like where it's like, please leave this cult.

696
01:25:55,580 --> 01:25:56,316
Kayla: Right?

697
01:25:56,508 --> 01:26:01,820
Chris: It's destroying us financially. And then eventually it's like, you know what? I'm leaving you because you won't leave it.

698
01:26:01,860 --> 01:26:04,524
Kayla: There's also like an addiction element. Absolutely.

699
01:26:04,692 --> 01:26:15,318
Chris: Absolutely. Yep. Yep. Now I think I mentioned this before, but most mms have an inventory buyback policy. But of course, it's not super easy to get full refunds on that stuff.

700
01:26:15,374 --> 01:26:16,846
Kayla: Yeah, I want to hear about this.

701
01:26:16,998 --> 01:26:26,982
Chris: Yeah, well, I mean, I'm not. I don't have details about that now, but I do have more later about what you speculated about that being sort of like a. Don't worry. We have a.

702
01:26:27,046 --> 01:26:27,862
Kayla: Right, right.

703
01:26:28,006 --> 01:27:05,666
Chris: Don't worry. There's more on that later. Okay, just to be clear, I'm not saying that all of those 99% of people who don't make money, all of them are losing thousands of dollars and getting divorced. A lot of people, all they waste are time and friendships. You know, like, time and friendships are totally expendable. Infinite resources. Right. Like, those aren't valuable, but. Yeah, but there's also plenty of more horrific stories that, you know, have massive loss and marital strife and all sorts of nasties and. Yeah, and the MLMs encourage that because they say, hey, your success is just around the corner. So they actually encourage that. Exactly. You know, stick with it behavior.

704
01:27:05,858 --> 01:27:08,070
Kayla: This is horrible. I don't wanna.

705
01:27:08,930 --> 01:27:16,194
Chris: By the way, I don't wanna make it sound like we're talking about rubes and dummies that decide to become MLM distributors.

706
01:27:16,282 --> 01:27:17,178
Kayla: Right? Of course. Not.

707
01:27:17,234 --> 01:27:27,186
Chris: Far from it, actually. Most of the makeup of the MLM population is actually highly intelligent, highly motivated, which is part of what's so scary about this stuff.

708
01:27:27,258 --> 01:27:27,870
Kayla: Right?

709
01:27:28,260 --> 01:27:38,764
Chris: And by this stuff, of course, I also mean, like, every other cult we've talked about on the show so far, right? Like, it's, you know, when we talked about Ramtha, like, there's intelligent people that believe that stuff. Right?

710
01:27:38,772 --> 01:27:52,716
Kayla: Well, if we can do nothing else with this podcast but kind of, like, dispel the myth that to become involved with groups like these, that there has to be something, like, wrong with you. Like, no, we're all susceptible to, like, tactics.

711
01:27:52,788 --> 01:28:14,952
Chris: Right? And in fact, again, like, particularly with MLMsen, it's not. It's almost correlated the other way. It's almost correlated with more, like, passion and energy and intelligence and, like, yeah, I want to be my own boss. It's correlated with people who are. And this is back to the script, but it's not correlated with being a dummy. It's correlated with motivation.

712
01:28:15,056 --> 01:28:17,816
Kayla: That's why no one's ever tried to recruit me to an MLM is because I'm dumb.

713
01:28:17,848 --> 01:28:18,800
Chris: You're not motivated.

714
01:28:18,960 --> 01:28:20,720
Kayla: Passionless and demotivated.

715
01:28:20,880 --> 01:28:36,666
Chris: Perfect. That means you're. You're a well protected skeptic that's great. But yeah. The thing that MLM distributors have in common is motivation. They tend to be high energy, high achieving folks for whom the financial independence fantasy really resonates.

716
01:28:36,738 --> 01:28:37,282
Kayla: Right.

717
01:28:37,426 --> 01:29:03,172
Chris: And with a general lack of information from the MLM companies themselves. God knows they are not giving you that 99% statistic when they are of course not showing you a video about how you too can have ten cadillacs and whatever. So that general lack of information when all you have to go on is the pitch of be your own boss, make your own hours. Who in America doesn't want that? That's literally the american dream. I want that.

718
01:29:03,236 --> 01:29:03,644
Kayla: Yes.

719
01:29:03,732 --> 01:29:25,100
Chris: Do you know how close I. This is less surprising now, but this is in the script. But we've talked about it a few times. But I came really close to selling Cutco during one summer in college. Like I went to a meeting and I was like, oh my God, this is great. I'm gonna do this and recruit these people and get all this money and I'm just gonna be like rolling in dough when I go to, you know, junior year, next year or whatever.

720
01:29:25,180 --> 01:29:26,720
Kayla: Cut co. Sells knives.

721
01:29:27,060 --> 01:29:27,484
Chris: Yeah.

722
01:29:27,532 --> 01:29:33,060
Kayla: So I like, I think Cutco is honestly one of the funniest ones. Cuz it's like jewelry. I can see a lot of people need.

723
01:29:33,100 --> 01:29:33,444
Chris: Right.

724
01:29:33,532 --> 01:29:36,700
Kayla: Makeup. Everybody needs makeup. Lularoe pants, you gotta.

725
01:29:36,740 --> 01:29:37,440
Chris: Everybody.

726
01:29:38,020 --> 01:29:40,060
Kayla: I'm just saying like knives are like.

727
01:29:40,140 --> 01:29:43,330
Chris: They'Re not like killing people knives, they're cooking knives that should like.

728
01:29:43,370 --> 01:29:45,786
Kayla: But like makeup you use and it goes away.

729
01:29:45,898 --> 01:29:49,650
Chris: Knives run out of they. Knives get worn out, man.

730
01:29:49,690 --> 01:29:53,674
Kayla: Not as quickly as makeup. Well, or candles. Yeah, or protein shakes.

731
01:29:53,722 --> 01:29:54,138
Chris: You're right.

732
01:29:54,194 --> 01:29:54,802
Kayla: It's weird.

733
01:29:54,866 --> 01:29:59,234
Chris: Right. It's, it's less expendable as a good. But again, doesn't matter.

734
01:29:59,322 --> 01:30:00,390
Kayla: Right, right.

735
01:30:00,850 --> 01:30:07,322
Chris: But yeah, I mean, like I. So with cutco, like I had basically signed up. Like I was. I think I even like filled out some paperwork.

736
01:30:07,386 --> 01:30:08,216
Kayla: Oh my God.

737
01:30:08,378 --> 01:30:21,108
Chris: Yeah. And then like my, I told my parents that I was like, hey, go to this thing. And they were like, oh, here's the thing about that. And, yeah, like I was all excited when I came home and whatever, and they're like, don't do that.

738
01:30:21,124 --> 01:30:23,444
Kayla: And then I probably hated to burst that bubble.

739
01:30:23,572 --> 01:30:28,444
Chris: Yeah. And then I ended up working for my friend's parents who are lawyers that summer. So that was cool.

740
01:30:28,492 --> 01:30:29,564
Kayla: That was probably better.

741
01:30:29,692 --> 01:30:35,616
Chris: But yeah. Cutco targets young people, by the way. They sort of target the like that college age type person.

742
01:30:35,688 --> 01:30:38,496
Kayla: Oh, I know somebody who did cut co. I think in high school yeah, actually.

743
01:30:38,528 --> 01:30:46,688
Chris: We should probably just stop talking out Cutco, because I think they'll maybe get their own episode at some point. Like, I don't know. I just wanted to come clean about how enticing this stuff is.

744
01:30:46,704 --> 01:30:47,760
Kayla: Oh, yeah, absolutely.

745
01:30:47,840 --> 01:30:56,792
Chris: I super fell for it. And I think there's even more. There's other times where I, like, I remember seeing some pitch online, like, oh, man. Yeah, I do want to. I'm an entrepreneurial person.

746
01:30:56,896 --> 01:30:57,264
Kayla: Yeah.

747
01:30:57,312 --> 01:31:06,348
Chris: Yeah. So it's. It's just so insidious. So you might be wondering by now, how the fuck did they get away with all this?

748
01:31:06,404 --> 01:31:08,240
Kayla: Yes, I am wondering that.

749
01:31:08,580 --> 01:31:16,556
Chris: Ha ha. Short answer. We live in a villainous world, but you're here for the long answer.

750
01:31:16,628 --> 01:31:17,308
Kayla: Yes.

751
01:31:17,484 --> 01:31:35,822
Chris: The way I see it, there are two major categories of air cover that mlms run. First, propaganda, or how they convince the public that they are legitimate and even desirable business opportunities. Second, lobbying, or how they convince the government that they shouldn't be prosecuted.

752
01:31:35,966 --> 01:31:37,910
Kayla: God, lobbying is the worst thing.

753
01:31:37,990 --> 01:31:39,118
Chris: Let's talk about both.

754
01:31:39,214 --> 01:31:40,730
Kayla: Lobbying is bad.

755
01:31:41,230 --> 01:32:07,006
Chris: First up, propaganda. We already talked about some of the propaganda, specifically the way that mlms appeal to distributors and potential recruits by selling that fantasy of financial independence. And this is why they find those few success stories that they do and put them on display at conferences, is because they want to keep. Keep all those distributors on the hook and keep them saying, like, no, I can do it. If he can do it, I can do it. And they need them to continually believe that success can be theirs.

756
01:32:07,118 --> 01:32:07,582
Kayla: Question.

757
01:32:07,686 --> 01:32:08,222
Chris: Yes.

758
01:32:08,326 --> 01:32:25,220
Kayla: For these success stories, do you know, or can we speculate about how those success stories people are treated? Because it's making me think about, like, how Tom Cruise's experience in the Scientology church, it's exactly like that than other people's, because the church specifically engineers his experience.

759
01:32:25,300 --> 01:32:46,932
Chris: Oh, that. I'm not. I'm not sure whether it's chicken or egg. Like, I don't know if it's like, roll the dice, and the 0.1% person that actually, you know, comes up aces. Like, roll the dice, comes up aces. Whatever. Point is, I don't know if it's like, you know, the people that happen to succeed, they kind of bring them in and cultivate them, or if it's vice versa, I'm not sure.

760
01:32:47,036 --> 01:33:00,330
Kayla: Like, it's creepy that we're even entertaining the possibility that, like, MLM companies could possibly be engineering experiences in order to create high achieving, high successful team members.

761
01:33:00,710 --> 01:33:09,806
Chris: Yeah, but there's actually a converse thing that they do here, too, which is also super insidious. And they do this to throw you off the scent.

762
01:33:09,878 --> 01:33:10,534
Kayla: Oh, God.

763
01:33:10,662 --> 01:33:19,566
Chris: Don't you know, Kayla, that if you fail at making money, selling this desirable product with all the help they give you have no one to blame but yourself?

764
01:33:19,718 --> 01:33:21,918
Kayla: Yeah, that's definitely real.

765
01:33:22,094 --> 01:33:55,460
Chris: Yep. Go listen to some of these, quote, motivational speeches that some of these guys give. Right there in the middle of it. They say to your face, it's not their fault if you don't make money, it's yours. By using motivational language, of course, you know, they don't say, like, you suck. It's more like you have. You know, it's like, you can do it. You have every opportunity. If you don't make it, you have no one to blame but yourself. Now go out there. So they just. They kind of, like, hide that, like, hey, it's not our fault. It's yours. If you don't make money, it's the diet industry.

766
01:33:56,080 --> 01:34:00,536
Kayla: That didn't make any sense. It only makes sense in my head. Yeah, that's fucked up.

767
01:34:00,608 --> 01:34:15,528
Chris: Yeah, it's pretty fucking sick. And while we're talking about propaganda, I do want to talk a bit about one of the things that we actually always talk about on the show with charismatic leaders. I think the CEO's of these companies probably drink their own Kool Aid.

768
01:34:15,624 --> 01:34:17,368
Kayla: You don't think that they're evil? You think that they're.

769
01:34:17,464 --> 01:34:28,728
Chris: I mean, there probably are. There's probably some, but, like, I think so. Cause I think that's true of a lot of these cult leaders, too. Like, you know, I think that teal probably really believes that she can see your DNA or whatever.

770
01:34:28,784 --> 01:34:40,038
Kayla: I mean, that's the thing. Like, at the end of the day, I ultimately think that people are generally good at heart, but we can convince ourselves to do some pretty evil things, and I still convince ourselves that we're good.

771
01:34:40,134 --> 01:34:42,782
Chris: Right. Which is scary.

772
01:34:42,886 --> 01:34:43,622
Kayla: Yeah.

773
01:34:43,806 --> 01:35:01,966
Chris: Right. It's almost more scary because I think about, like, if they were just, like, evil darth Vader being like, let's see. On the list today is kill people and be evil, then, like, it would be much easier. But I don't think a lot of these people are like that. I think a lot of them are like, no, no. This is totally legitimate company. What, 99% of people don't make it? I'm not a math guy.

774
01:35:02,038 --> 01:35:02,246
Kayla: Right.

775
01:35:02,278 --> 01:35:03,334
Chris: This is about the opportunity.

776
01:35:03,422 --> 01:35:04,114
Kayla: Right?

777
01:35:04,302 --> 01:35:10,714
Chris: Right. I mean, like, honestly, I wouldn't even be surprised if a lot of these CEO's didn't even understand the mathematics of why their businesses are pyramids.

778
01:35:10,802 --> 01:35:11,430
Kayla: Sure.

779
01:35:11,890 --> 01:35:35,964
Chris: Like, so if you don't understand the math that we talked about on this program today, then of course it's easy for you to be like, what, 99%? Don't tell me the numbers, never tell me the odds. Right, right. Mathematical understanding is definitely not a requirement for being a CEO. I can say that for sure. Just in case my CEO ever listens to this. That's not try. I know you understand math, but in.

780
01:35:36,012 --> 01:35:37,820
Kayla: General, who are you insulting here?

781
01:35:37,900 --> 01:35:42,212
Chris: I mean, like, half of corporate America. Like, look, being a CEO is not about math, right?

782
01:35:42,276 --> 01:35:42,500
Kayla: Right.

783
01:35:42,540 --> 01:35:43,940
Chris: It's about a lot of other things.

784
01:35:43,980 --> 01:35:45,800
Kayla: Isn't that why you have a COo?

785
01:35:46,260 --> 01:36:13,576
Chris: Like, that's operational CFO. CFO, kind of. Yeah, yeah, exactly. So they're the evil ones, but. Yeah. No, but I think a lot of these guys probably just have that, like, hyper wealthy white guy, warped view of reality. Right? It's like those airplane game players that we talked about earlier. Part of participating in something like this is the mental gymnastics to believe with every fiber of your being that you deserve this reward. God damn it. Otherwise, I don't know how a lot of these folks could sleep at night.

786
01:36:13,608 --> 01:36:34,460
Kayla: Sure. I think that what you said about people having to, like. I don't want to use the word deluded, because I think that's an unnecessarily insulting word, but, like, when you have the sunk cost and you have to convince yourself that you must continue sinking that cost, or else you have to face the fact of, like, the shitty things or damaging things that maybe you've done.

787
01:36:34,540 --> 01:37:17,550
Chris: Yeah, well, what we'll call it is what we always call it on this program, motivated reasoning. So, yeah, there's another bit of insidious propaganda that mlms use that I haven't talked about yet. And this is something I saw a few different times in my research, but most memorably, and I'm going to cite the dream again, it was most memorably in an interview that the spokesman for the DSA did with the hosts of the dream. This is the thing I mentioned before. And again, that's direct selling association, not democratic socialists, but, yeah, just. They like to brand themselves direct sales because the association is a lot less negative than mlms. Anyway, the dream had this guy on, a man by the name of Joe Mariano, and one of the crazy things he claimed was.

788
01:37:17,730 --> 01:37:44,048
Chris: And he claimed a lot of crazy things, but one of the things was just how many people are involved with mlms simply so they can buy the product from the company to discount all of these, a lot of these distributors, they're not trying to like start their own business and make money, even though that's literally what all of our recruiting material and propaganda videos say. They just really like our product and they're trying to get it at a discount. So they want to buy it at wholesale.

789
01:37:44,174 --> 01:37:47,188
Kayla: Right. Because somebody, one person definitely wants to buy 100 necklaces.

790
01:37:47,284 --> 01:37:52,428
Chris: Yeah. Of course. They even have a word for them that they made up called preferred buyers.

791
01:37:52,604 --> 01:37:53,720
Kayla: I hate this.

792
01:37:54,060 --> 01:38:25,040
Chris: Yeah. So if you think about this longer for than like 1 second, you'll get how insidious it is. Because it's, what it is it's a way to cover for distributors that wind up with that garage of inventory right now, the industry gets to say, no, no, they're not losing money on this thing that we thought was an investment upfront. No, no. They're preferred buyers. They're just trying to. They're just trying to get all this wonderful product that they love so much and use it at a discount. Right. Okay. Yeah. Yeah.

793
01:38:25,080 --> 01:38:26,160
Kayla: That's so fake.

794
01:38:26,320 --> 01:38:34,824
Chris: Seems to me that the last time that I used a coupon to buy something at a discount, at Best Buy, they weren't asking me to go out and recruit best Buy salesmen afterward.

795
01:38:34,912 --> 01:38:37,456
Kayla: So that's so fake.

796
01:38:37,568 --> 01:38:39,544
Chris: Not sure I agree with this whole thing.

797
01:38:39,592 --> 01:38:40,180
Kayla: No.

798
01:38:41,230 --> 01:39:24,336
Chris: So anyway, but the whole interview with that guy, by the way, was really crazy. You have to listen to it. The guy was a legit word wizard. I mean, he deserves every penny that he's getting paid to be the pr guy. And to boot, I actually kind of respect him for going into the lion's den to give that interview. My guess is that he did it because the podcast started getting a lot of traction culturally last year. So I'm guessing that the association figured they needed to do some damage control. But I mean, I do respect that he went on the show, but if you listen carefully to the content of what he says in this interview, it's a whole lot of discussion about motivations of participants in mlms, as if somehow that's material to whether the participants are being scammed or not. Right?

799
01:39:24,368 --> 01:39:32,104
Chris: He's like, oh, they're not necessarily motivated by business reasons. They're motivated by wanting to consume the product. Right. As if that matters.

800
01:39:32,152 --> 01:39:37,942
Kayla: It's still victim blaming, still like, well, we're taking advantage of them, but they want to be taken advantage of.

801
01:39:37,966 --> 01:39:39,142
Chris: Yeah, exactly.

802
01:39:39,286 --> 01:39:43,670
Kayla: The gazelles want to be eaten by the lions. That's why they keep jumping into their mouths.

803
01:39:43,750 --> 01:39:51,530
Chris: Right, exactly. That's right. Which in this case, they are jumping into their mouths because the lions are saying, do you want a great opportunity? Jump into my mouth?

804
01:39:52,790 --> 01:39:54,810
Kayla: That puts way easier than hunting.

805
01:39:55,630 --> 01:39:56,750
Chris: Yeah, well, it would be.

806
01:39:56,830 --> 01:39:57,670
Kayla: Listen up, lions.

807
01:39:57,750 --> 01:40:19,360
Chris: Yeah. It's luring, fishing, not hunting. So there's more propaganda techniques used. But let's move on from that for now and talk about the other big pillar of how they get away with it, which is lobbying propaganda. If that's how MLms manage to keep the flow of new airplane passengers coming in, how do they simultaneously not get busted by the feds for being illegal? Pyramid schemes.

808
01:40:19,400 --> 01:40:19,624
Kayla: Yes.

809
01:40:19,672 --> 01:40:21,560
Chris: How are they allowed to operate?

810
01:40:21,640 --> 01:40:22,700
Kayla: Please tell me.

811
01:40:23,240 --> 01:40:46,970
Chris: Oh, and by the way, actually, I will tell you. But here's another interesting thing about people that are involved with and support mlMs, because we've talked about this a few times now with, like, pyramid. Totally not pyramid, but, like, if you ever talk to someone who's, like, in MLM, like, they will volunteer this. They'll say, no, no, this can't possibly be a pyramid scheme, because pyramid schemes are illegal. So what it really is.

812
01:40:47,270 --> 01:40:47,966
Kayla: Right.

813
01:40:48,118 --> 01:40:52,254
Chris: Always saying that. They're always saying, like, oh, no, I'm not in a pyramid scheme because those are illegal.

814
01:40:52,342 --> 01:40:55,210
Kayla: We have to find that clip from the office or whatever it is.

815
01:40:55,350 --> 01:41:35,446
Chris: Yeah, we really should. And put it on the show notes. Yeah, yeah. So they'll say like, yeah, first things first. We know the thing that I'm doing is not a pyramid scheme, because if it was, it wouldn't exist because of the law. Which, if you think about it, is like the police letting a suspect go because they say, oh, officer, I can't possibly have stolen the painting, because stealing is illegal. There's a whole ton of duth protesting too much here, methinks. But, yeah, and that's the thing is, they'll like the protesting too much. Like, they. They will offer that. Like, you don't have to ask them. You don't have to be like. They will start by saying, first of all, not a pyramid scheme, because if it was, it wouldn't exist because it's illegal. Because that's totally how law works, right?

816
01:41:35,598 --> 01:41:48,652
Chris: Anyway, I won't spend that much time talking about lobbying, but don't worry. Next episode, we will talk about a key turn in the MLMs in America story that occurs at the highest levels of government.

817
01:41:48,796 --> 01:41:52,972
Kayla: I don't want to. That's upsetting to hear, but safe to.

818
01:41:52,996 --> 01:42:10,260
Chris: Say the industry spends a lot of money on lobbying. In 2018 alone, Herbalife spent $500,000 on lobbying. Amway spent $615,000 on lobbying, and Nuskin spent $240,000 on lobbying.

819
01:42:10,340 --> 01:42:11,068
Kayla: Excuse me.

820
01:42:11,164 --> 01:42:15,182
Chris: And that's according to the lobbying spending database, Opensecrets.org. Dot.

821
01:42:15,276 --> 01:42:17,602
Kayla: What is. What. What is new skin?

822
01:42:17,666 --> 01:42:20,914
Chris: Oh, it's just another MLM. It's like. It's like a. Another beauty product thing, I think.

823
01:42:20,962 --> 01:42:21,418
Kayla: Okay.

824
01:42:21,514 --> 01:42:24,074
Chris: Oh, is that the lotions and shit? It's one of the bigger ones.

825
01:42:24,122 --> 01:42:30,714
Kayla: It's where it, like, convinces you that you just put some stuff on and it's gonna give you a facelift, I think. So I'm gonna google it, but I'm pretty sure that.

826
01:42:30,802 --> 01:42:40,258
Chris: But, yeah. So I just named three companies. Now, granted, they're, like, the biggest ones, but we're already looking at, like, $1.4 million spent in lobbying just from three companies alone.

827
01:42:40,314 --> 01:42:41,454
Kayla: That's upsetting. Setting.

828
01:42:41,622 --> 01:42:52,982
Chris: And MLM heads are, like, all up inside Congress and all up in Washington, DC. And, oh, you might have guessed it, but also the White House.

829
01:42:53,126 --> 01:42:53,810
Kayla: No.

830
01:42:55,790 --> 01:43:01,718
Chris: Our favorite president has in the past promoted several mlms, including Amway.

831
01:43:01,854 --> 01:43:02,930
Kayla: Oh, jeez.

832
01:43:03,230 --> 01:43:09,942
Chris: And had his hatter has. I forget, but his own Trump branded one as well, called the Trump network.

833
01:43:10,046 --> 01:43:11,330
Kayla: Right. I remember that.

834
01:43:11,760 --> 01:44:05,308
Chris: And if there's something that is, like, itching your brain about that right now, you can't quite put it into words. Allow me to assist by quoting this article from pyramidschemalert.org. Dot, my friend worried that Trump's politics of deceit and division and requiring followers to profess loyalty and obedience to him and contempt for others would spread virus like, from Washington to Main street. Actually, it is more likely the other way around. It is on Main street, where Donald Trump learned the tactics of absolute authority, deceptive propaganda, and division. He learned it in multilevel marketing, the movement that laid a grassroots foundation for Trumps candidacy and his style of politics. Let that just percolate a little bit.

835
01:44:05,324 --> 01:44:12,356
Kayla: I don't want to let it percolate. And also, you were saying before that the DeVos's are involved with amway.

836
01:44:12,468 --> 01:44:14,572
Chris: Mm. There'll be an amway episode.

837
01:44:14,636 --> 01:44:23,292
Kayla: Well, I'm just saying, like, the person you are talking about in the White House has appointed a DeVos to a very high level position.

838
01:44:23,356 --> 01:44:24,000
Chris: Yes.

839
01:44:24,580 --> 01:44:25,956
Kayla: That's not a coincidence.

840
01:44:26,108 --> 01:44:51,628
Chris: Just to be clear, this is not, like, solely a republican thing. There are mlms, like MLM lobbying dollars get spent with democratic candidates. And there's this is. They go into this in the dream. Not like they go into this a lot in the dream that. Yeah, that. It's pretty not partisan. Well, so, yes and no. Like, it definitely has much more of a home in the Republican Party.

841
01:44:51,724 --> 01:44:52,524
Kayla: Okay.

842
01:44:52,692 --> 01:45:23,810
Chris: But both parties have been remiss in doing anything about this, largely because of the influence of these companies. In any case, the industry has its cynicals and not just trump, but it's all over Washington, which were just talking about. And we'll talk about a little more next episode. The last bit I want to say about lobbying is that there's nothing to worry about with the MLM industry because there's also a bill in Congress right now that's going to put an end to all this. It's called HR 3409, the Anti Pyramid Scheme act of 2017.

843
01:45:23,960 --> 01:45:24,598
Kayla: Okay.

844
01:45:24,694 --> 01:45:25,630
Chris: Pretty great, right?

845
01:45:25,750 --> 01:45:26,450
Kayla: Yeah.

846
01:45:27,750 --> 01:45:33,574
Chris: Just kidding. Well, not about the bill. The bill's real. I'm just kidding about it being anti MLM.

847
01:45:33,702 --> 01:45:35,530
Kayla: Wait, say the name of the bill again.

848
01:45:35,950 --> 01:45:40,270
Chris: Hr 3409, the Anti Pyramid Scheme act of 2017.

849
01:45:40,430 --> 01:45:41,398
Kayla: Oh, God.

850
01:45:41,534 --> 01:46:29,224
Chris: It's basically a congressional bill that was written by a professional gaslighter. The bill is worded like it's protecting consumers from illegal pyramid schemes. I. But all it really does is draw those borders of technicalities between illegal pyramids and legal mlms in ways that are advantageous to the industry and will immunize it against legal pursuit in the future. Call your reps. HR 3409, the anti pyramid scheme act of 2017. They talk about this in the dream as well, and that comes back to, you were talking about the buyback stuff. One of the things that they do to immunize themselves is say, like, all we have to do is have a buyback. If you have a buyback policy, you're not a pyramid. You're an MLM. It's okay. They don't specify what you don't have. They don't specify that you have to sell all.

851
01:46:29,272 --> 01:47:05,720
Chris: You have to buy back all of the product at 100% rate or how easy you have to do it or what the hoops are that you have to jump through, just that you need to have one, and then you can't get prosecuted because you're totally. You followed the act. You followed the law. Okay, so propaganda and lobbying, that's how this is not only still going on, but getting worse over time. And it's definitely getting worse over time. The industry is bigger than it has ever been. And let's just say that the worse over time theme is actually going to feature heavily in next episode. Speaking of next episode, we are rapidly drawing to a close on this one.

852
01:47:06,020 --> 01:47:19,498
Chris: I want to recap, just because it's so important to have this base of context and understanding of mlms, since, again, this is sort of kicking off a non sequential series of episodes about them on. Cults are just weird. It's like a mini podcast within a podcast.

853
01:47:19,594 --> 01:47:20,306
Kayla: I love it.

854
01:47:20,378 --> 01:47:36,622
Chris: Cool, right? Anyway, about that recap. So, first, normal businesses exchange their quote, unquote, apples for your oranges, increasing value for you both, right? You create something of value, and then you exchange it, and that's how money or wealth is created.

855
01:47:36,706 --> 01:47:37,550
Kayla: That makes sense.

856
01:47:37,670 --> 01:48:01,294
Chris: Mlms transfer wealth up and down the pyramid, using those proverbial roses tokenize the process. And again, you brought this up, but it's, you know, it's not 100% roses tokenizing, and nobody ever sees the product. Some companies more than others, but because a large percent of it, percentage of the product winds up as just being transferred between the top of the pyramid and the bottom, that's what makes it bad.

857
01:48:01,382 --> 01:48:02,230
Kayla: I have a question.

858
01:48:02,350 --> 01:48:02,982
Chris: Yes.

859
01:48:03,126 --> 01:48:08,374
Kayla: Who makes the products that these companies sell? Do the companies themselves make it?

860
01:48:08,462 --> 01:48:09,102
Chris: I'm not sure.

861
01:48:09,166 --> 01:48:12,142
Kayla: Like, where is the factory that makes the herbalife shakes?

862
01:48:12,286 --> 01:48:49,080
Chris: I don't know. I mean, if I had to guess, there's probably some factory that just makes shakes and then, like, sells them to different brands, like, based on the modern economy. Like, a lot of these, by the time you and I know what the company is, it's probably just a brand, and they're probably pretty far removed from the manufacturer. Okay, if I had to guess, I don't think that's true. For our topic next episode, my understanding is that they employ some chemists and stuff to maintain their product and research and stuff, but in general, I think they're probably pretty far removed. So, yeah, so normal businesses exchange, create value, and exchange it. MLMs transfer.

863
01:48:49,120 --> 01:49:02,558
Chris: Well, second thing to keep in mind is that MLMs emphasize recruiting, which the exponential nature of the recruiting both gives the pyramid its name and also is the thing that makes it mathematically, inescapably fraudulent.

864
01:49:02,654 --> 01:49:03,326
Kayla: Got it.

865
01:49:03,438 --> 01:49:42,746
Chris: Less than 1% chance to do better than breakeven. As an MLM distributor, MLMs employ lots of crazy psychological techniques to maintain the flow of people into the scheme, including selling the financial independence dream using pep rallies, carefully constructed language, and bully tactics. And finally, MLMs use a combination of propaganda and lobbying, one, to maintain the illusion with the populace, and two, to also maintain the illusion, but with the law, to keep getting away with what they're doing. And now, you know, which, as GI Joe tells us, is half the battle. But where do we go from here.

866
01:49:42,818 --> 01:49:44,474
Kayla: Is that really a Gi Joe thing?

867
01:49:44,642 --> 01:49:45,858
Chris: Yeah. Isn't it?

868
01:49:45,994 --> 01:49:46,910
Kayla: I don't know.

869
01:49:47,740 --> 01:49:52,428
Chris: Now you know. And knowing is half the. You don't. Well, I guess you're probably. You're younger than me, so maybe you didn't see those.

870
01:49:52,484 --> 01:49:53,532
Kayla: Also, McGirl.

871
01:49:53,676 --> 01:50:32,906
Chris: Oh, yeah. You're playing with Barbies and getting targeted by mlms. So where do we go from here? Well, now that you know about mlms, it's time to try and decide whether one of them in particular is a cult or just weird. Next episode, as I mentioned, I have for us not one, but two expert interviews, a first for the show, having a guest interview. So make sure you guys tune in on Tuesday, July 23, when we will get pink and talk about the legacy of one of America's great businesswomen of the 20th century. So that's it for this episode.

872
01:50:33,058 --> 01:50:36,338
Kayla: I feel weird not being able to, like, answer criteria.

873
01:50:36,474 --> 01:50:42,584
Chris: Well, I mean, we could, but doesn't really fit. Right. It's like the criteria would be about the category.

874
01:50:42,672 --> 01:50:43,112
Kayla: Right.

875
01:50:43,216 --> 01:50:48,864
Chris: It's something like. I think all of the information we talked about today is something we'll have to keep in mind for future criteria. Right.

876
01:50:48,912 --> 01:50:49,408
Kayla: Right.

877
01:50:49,544 --> 01:50:51,820
Chris: I mean, or we could go through it. What do you think?

878
01:50:52,440 --> 01:50:53,888
Kayla: I don't think it makes any sense to.

879
01:50:53,984 --> 01:50:54,368
Chris: Okay.

880
01:50:54,424 --> 01:51:08,784
Kayla: I mean, I think we can, like, predict how we'll talk about future ones. Like, if an MLM has a charismatic leader, like, I'm sure that there are some mlms where, like, the quote unquote CEO is very visible and somewhere they're nothing.

881
01:51:08,822 --> 01:51:12,708
Chris: Right. And somewhere the harm is more and less. Somewhere the percentage of life, consumers more or less.

882
01:51:12,804 --> 01:51:16,484
Kayla: Right. Anti factuality is probably about the same for all of them.

883
01:51:16,612 --> 01:51:23,116
Chris: I'm gonna say for the most part, they're almost to a. I think to a company, they pretty much try to obfuscate information.

884
01:51:23,228 --> 01:51:37,576
Kayla: And our classic controversial question is going to be really interesting here, because the question about population, which we've kind of diverted into being about, like, niche or nothing. Mlms aren't niche.

885
01:51:37,648 --> 01:51:38,280
Chris: No, they are not.

886
01:51:38,320 --> 01:52:00,944
Kayla: They're very accepted by mainstream society. Like, everybody has known somebody that's done an MLM, wanted to stay in an MLM, been in an MLM themselves. Like you said. They're part. Like, they're in our government. Like, they're very much embedded in society and, like, a weird personification bastardization of the american dream. So it's gonna be. It's gonna be complicated.

887
01:52:00,992 --> 01:52:17,416
Chris: I feel like speaking of cult or just religion, I don't have this on the script. But aside from having talked about new thought and how that's sort of tied into prosperity theology. But there are a lot of mlms. Mlms tend to be pretty heavily tied with Christianity.

888
01:52:17,488 --> 01:52:17,984
Kayla: Right.

889
01:52:18,112 --> 01:52:47,590
Chris: There's a lot of mlms that are actually specifically, like, christian mlms. So, like, we're selling you christian goods, and we're a christian company. The company we talk about in the next episode has, like, a focus on faith. Interesting. And also this. I didn't include this either, but let's talk about it real quick. Almost every MLM got started. There's a few notable exceptions, but, like, the vast majority of them are headquartered and started in Utah.

890
01:52:49,090 --> 01:52:49,830
Kayla: Why?

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01:52:50,290 --> 01:53:19,310
Chris: Well, they speculate on the dream that the reason for that is that because Utah is full of Mormons, and Mormons have sort of, like, a cultural. They're sort of raised from birth to be, like, evangelicals or, you know, like, proselytizing. You know, they have their missions. That they do. They're trying to, you know, they're out there pounding the pavements, you know, speaking in favor of Mormonism, that it's just, like a natural next step for them to do the same thing, but, like, with a company.

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01:53:19,480 --> 01:53:28,962
Kayla: And haven't Mormons also, like, as a group, haven't they been somewhat, like, aren't they somewhat marginalized in larger society? Like, isn't there probably.

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01:53:29,146 --> 01:53:32,386
Chris: Well, I mean, yes, but that's. That probably has something to do with it.

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01:53:32,538 --> 01:53:33,226
Kayla: Interesting.

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01:53:33,298 --> 01:53:38,506
Chris: Yeah. So there's a tie into religion as well.

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01:53:38,578 --> 01:53:41,530
Kayla: All right. I'm very much looking forward to our next episode.

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01:53:41,610 --> 01:53:45,970
Chris: Yes, as am I. Anyway, again, thank you for going on that journey with me.

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01:53:46,010 --> 01:53:47,138
Kayla: Thank you for taking me on it.

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01:53:47,154 --> 01:53:49,810
Chris: Into the deepest recesses of our current hell.

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01:53:49,890 --> 01:53:52,470
Kayla: I still kind of want to do an MLM.

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01:53:53,170 --> 01:53:59,670
Chris: Really? You think you're going to be the 1%? I could be, yeah. That's exactly what they bank on, Kayla.

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01:54:00,370 --> 01:54:01,178
Kayla: I won't do it.

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01:54:01,274 --> 01:54:15,310
Chris: We are doing an MLM because. Oh, right, this is an MLM. So, like, this time, instead of liking sharing and subscribing, don't even bother with that. Just get two of your friends to listen to our pyramid cast. Trust us, it's a once in a lifetime opportunity.

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01:54:15,800 --> 01:54:17,736
Kayla: And get them to get two friends, and then.

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01:54:17,808 --> 01:54:18,704
Chris: Yeah, that's key.

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01:54:18,752 --> 01:54:19,024
Kayla: Yeah.

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01:54:19,072 --> 01:54:24,936
Chris: Yeah. It's gotta turn into a pyramid by next episode. I want the entire planet listening to this podcast.

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01:54:25,008 --> 01:54:26,152
Kayla: Just takes 32.

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01:54:26,256 --> 01:54:27,900
Chris: Yep, 32 rounds.

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01:54:28,800 --> 01:54:30,016
Kayla: All right. Thank you for that.

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01:54:30,088 --> 01:54:36,920
Chris: Yeah. So I guess this is Chris and this is Kayla. And this has been cult for just weird.