Why MLMs Eat Themselves Alive
Modern MBA
Jun 28, 2026
Multi-level marketing companies are not product businesses; they are recruitment engines that externalize sales costs onto an unpaid, commission-only workforce. When the product loses its competitive moat, the company inevitably devolves into a pyramid scheme, relying on inventory loading and predatory recruitment to survive until the inevitable collapse.
Key insight: In a traditional business, you make money by selling to customers; in an MLM, you make money by recruiting people who become your customers. When the seller and the customer are the same person, revenue is manufactured rather than earned.
