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May 30, 2004
Globe Magazine says "Beware"
By QBlog in
Globe Magazine reporter David Thompson writes about Quixtar saying that "hundreds of thousands of hardworking Americans are being duped by the latest so-called 'get rich quick' program..."
Thompson explains how former Quixtar Emerald Eric Scheibeler (from the Dateline exposé) was left with "broken dreams and a busted wallet."
According to the article, Quixtar is a "cult-like" business that makes participants more and more dependent on their "how-to seminars and motivational books and tapes." The money from those motivational books and tapes (and not product sales) is how a select few at the top get rich while those at the bottom often end up in the red.
Of course, Quixtar denies these claims. Ken McDonald is quoted as saying that "we may not be perfect, but we do a lot of things right." Who's right? Decide for yourself.
The Source Yes, Globe Magazine is a supermarket tabloid though it's less sensational than some of its tabloid sisters. The Globe is more about celebrity news and less about "Aliens abducting the three-headed lizardboy." But does the fact that this story about Quixtar comes from a supermarket tabloid mean that nobody should read it? Absolutely not. Information from any source must be critically examined and if it passes your personal "credibility test" then who cares where the information came from as long as it's true.
We should scrutinize everything we read, whether it's a front page article from the New York Times, the witty musings of an Internet blogger or a press release put out by some corporate PR department. Sure, some sources have proven to be more trustworthy than others but my point is that we should never turn off our brains when reading (or watching) news. The day we stop being critical thinkers is the day Aldous Huxley's vision becomes a reality.
The Article From what I can tell, the Globe doesn't offer any of its articles online so I'm including a scan of the article from the June 7 issue as well as the complete transcription below. If the Globe does not want this article posted here then please contact me and I'll take the appropriate action.
------{ The Article }----------
Beware Of 'Get Rich Quick' Program
Hundreds of thousands of hardworking Americans are being duped by the latest so-called "get rich quick" program that promises annual earnings of $250,000, charge critics and former members.
Shockingly, they say, most people who sign up are lucky to earn a paltry $1,400 a year, leaving shattered dreams and families destitute.
The company at the center of the growing storm is Quixtar Inc., which raked in $1 billion in sales last year. It's owned by Amway, the marketing firm previously fined by the government for its business practices.
Rodney K. Smith, author of Multilevel Marketing: A Lawyer Looks at Amway, Shaklee and Other Direct Sales Organizations, tells GLOBE, "Companies like Quixtar can wreck people's lives. They can be left with nothing."
'Millionaires'
Eric Scheibeler, 42, a former government auditor, believed in the Quixtar promise of being able to say "goodbye to your 9-5 job." He tells GLOBE that the most he ever made in one year was just $34,000.
"Quixtar claims that people can become millionaires," says Scheibeler. "But I've heard of some unfortunate people who signed on and lost everything they had. Some ended up over $100,000 in the red."
He says he realized too late that the big bucks at Quixtar - which sells home-care items, brand-name appliances and electronics goods - were being reserved for only a small number of lucky company owners and senior staff.
"Now we're destitute financially," says Scheibeler. "We have nothing as a result of this."
Scheibeler also charges that when he tried to quit, members spread false rumors that he was a child molester and a drug addict.
"The techniques used by some members to subtly recruit and indoctrinate the masses are the same as those used by mainstream cults," he says.
Critics say the company acts "like a cult" by making individuals grow more and more financially dependent on their costly how-to seminars and motivational books and tapes.
They accuse Quixtar of encouraging joiners to "front load" - stock up on products to sell before they know they can sell them.
Books & Tapes
Another Quixtar insider reveals, "In reality, people don't make money from selling the products, they make it by selling the motivational books and tapes.
"But, of course, the company doesn't tell them that."
Quixtar managing director Ken McDonald denies the critics' claims, saying that they represent a tiny number of Independent Business Owners (IBOs) and not the hundreds of thousands of IBOs who are achieving their goals. "We may not be perfect, but we do a lot of things right."
But Vicki and Lindy Mack call the company a "scam." They say they blew more than $35,000 in five years traveling to Quixtar conferences around the country and buying the self-help books and tapes.
"It hurt us," says Vicki. "It's hurt a lot of people."
- David Thompson
Comments
Man, if only this were published in a more widely read periodical. The Dateline story was great, and to me, this seems to be an omen of sorts. Perhaps it'll catch on, maybe in time be exposed. We can only hope and wait.
"FREE THE AMQUIX ZOMBIES"
You be the judge. There is good in the mix if you see it. Like anything you as the end user have to be aware of the good and the bad. If you feel like going to seminars everyweek then fine other wise talk to people and buy what you need thats the simple formula for anything you do in business. All MLMs work its the people who follow blindly that make the others take advantage of them. Learn to say no and ask WHY at every corner and then you will be successful. And to those that quit I have to say why. When all they had to do was continue to renew the membership at 40 per year. If they were successful then the 40 would be nothing.
Funny, when I started asking questions like why and started saying no, my uplines attitude towards me quickly changed. It's not as clear cut as just asking questions. In fact, in one of the documents I was given, it stated "NEVER QUESTION ANYTHING".
We should scrutinize everything we read, whether it's a front page article from the New York Times, the witty musings of an Internet blogger or a press release put out by some corporate PR department. Sure, some sources have proven to be more trustworthy than others but my point is that we should never turn off our brains when reading (or watching) news. The day we stop being critical thinkers is the day Aldous Huxley's vision becomes a reality.
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Yes, all sources and statements must be scrutinized, including those that are in agreement with your disposition. The day we stop being critical thinkers is the day we have an NWO.
When you're investigating a business, what's the only question you really care about--what can I get in return for my time and money.
Does Dan Yuen(tm), an executive diamond in WWG, strutting on stage saying he make glob of money after 2.5 years, does that influence your ROI?
Does Vicki & Lindy Mack in Dateline calling "it's a scam" and bemoaning that they lost $35k in 5 years, does that influence your ROI?
The critical thinking answer is nada. Neither provide enough info to evaluate ROI.
Making $250k+/year sound impressive until you find out that only 0.014% of all IBO achieved that income level. But 0.014% of all IBO doesn't look that bad when you find out 95% of all IBO put in less than 20 hours per year (yes, YEAR).
Losing $35k in 5 years sound absolutely horrible. But where's the context? How many IBO loses that much? 99.9%? 90%? or 0.014%? If only 0.014% loses money, that's not bad. Some people are not successful. Where's the data which may be independently verified?
Even the above 2 doesn't influence the only questions you should care about. How does knowing 0.014% making $250k+ affect YOUR return on investment? It doesn't. How does knowing x% lost $35k affect YOUR return on investment? It doesn't.
Scrutinize these statements. Apply your critical thinking.
People running around saying "90% of non-platinum loses money". Scrutinize the statement. Where's the data supporting this statement? Can the data be independently verified?
People running around saying "I'm going to be free in 2-5 years". Scrutinize the statement. Where's the data supporting this statement. Can the data be independently verified?
Critical thinking mean understanding that just because there's no data supporting a statement, that that statements must be false is fallacy. Critical thinking mean that when data are lacking (the usual case for all argument for MLM and against MLM), then it's CAVAET EMPTOR. Do your due diligence. Assess the risk. Assess the reward. And determine if the reward is worth the risk.
If someone say it's worth it, ask them--where's the beef?
If someone say it's not worth it, ask them--where's teh beef?
The information is out there, Jennifer. We know the average yearly income for each IBO. We also know the average incomes for diamonds, emeralds and platinums, and anyone good with standard deviations could take this information and make a guess at what a non-pin IBO really makes. Since the IBO average income is only about $1,400/year and emeralds and above all average more then $29,000/year (source Larsen's Amquix.info site), the actual income a non-pin takes in is probably no more then $1,000/year. If tool costs are even just $100/month, the average non-pin IBO on the street is losing -$200, and this is before you add in any money for travel, food, babysitters, etc.
The information is out there, and all you have to do is take the raw data and do the math. It's not an opinion that over 90% of all non-platinums lose money. It's a fact supported by the numbers released from Quixtar itself.
Where's your critical reasoning? Where's your scrutiny?
Let's see how good you're really with "standard deviation" and understanding data analysis and "average".
When one talk about "average", one is abusing that word to really mean "typical", by typical one mean the majority. The reason for that is that if the data distribution is gaussian, then 68% of all data point are within 1 standard deviation of the average.
But guess what, the income distribution of IBO is anything but gaussian. So to infer that the "average income" is "typical" is to show your lack of understanding of data analysis and standard deviation. (If you're really interested, the "typical" IBO gross annual income is a ZERO, not even the $1k you're showing).
For your income vs expense "analysis", do you have any data to support your $100/month assumption? Seem like you're just pulling that out of your ass.
As for your "average" showing 90% losing money, you had made a fatal mistake of not analyzing the correlation among the data. So far, all you thrown out are "average"--ave ibo make $1,400/year, ave IBO monthly volume is 38.5 PV, 87% of all IBO within a 12 month period does not sponsor anybody, 68% of all new ibo do not renew.
Sound bad? On the surface. But you haven't shown how any of these average correlate to activity. All you are saying is if you're an IBO and are alive and picking your nose, that these averages are reflective of your business. Total nonsense.
Let's extend these averages based only on the correlation of being signed up: over the period you're talking about, there had been increases in the total # of IBO. Now if 87% do not sponsor anybody and if 68% do not renew, in order to have the increase in total # of IBO seen, then each IBO that did sponsor somebody, will average 5.7 IBO within a 12-month period.
Now, if you're an average IBO, you'll have a 13% chance of being the one to sponsor at least one IBO. And on average, you will sponsor 5.7 IBO--average IBO--87% sponsoring nobody & 68% quitting after the first year. After 12 months, on average, you will gross $86. Pitiful, not even close to the $1,400 average annual gross income.
So like everybody else, you are average and 68% of the time quit. But let's say you have one tiny brain cell left and put your business on automatical renew. After all, the $86 gross will cover the $46 annual renewal fee and the cost for the previous 12 months had already be spent, so no big deal renewing going forward. Since you stop working the business, your expense going forward is a big fat ZERO.
Now the IBO's you had sponsored, being the average Joe IBO that they are, 87% will not sponsor anybody, 68% will quit after the first year. That still leave 13% to sponsor somebody, all of whom are average. Extend this out and 10 years later, your average annual business revenue would be $35k with an average gross income of $5k. Since your average expense is zero, your average profit is $5k. Not bad. You get $5k raise (inflation-protected) for doing nothing for 10 years. Have you received a $5k raise within the lat 10 years? (Job holder average $840 a years raise over the last 10 years). Look like the average IBO is coming out ahead.
If all the IBO continue to be "average", then 20 years later, your business annual revenue will average $755k with a net profit of $172k. I like to see any investment plan you got out there that will yield $172k in annual cash flow after 20 years. Sure not your "average" pension or your "average" 401(k) or even your "average" broker-directed investment plan. Look like the average Quixtar business is really kicking butt.
Let take it to 30 years later, you're at retirement age. Based on the first year of your being average and sponsoring average IBO and then you stop working the business. 30 years later, your business will average an annual revenue of $16 mil with a net profit $4.8 mil. Game over. Average Quixtar business is the only game out there.
Let's extend this a little further. If you want to achieve the "average" net profit of $172k/year after 20 years, what's the mean # of year you must be in business. Taking all the averages and shaking it up, it's 6.7 years. So if you're willing to suck it up for 6.7 years, half of you will realize that $172k/year income.
This is not a bullsh!t data torturing exercise. It's a logically accurate extrapolation of the "information out there". The reason why you see the profit is because I didn't pull info out of my ass (like ave expense of $100/month, for which there are no info out there).
The reason why the data extrapolation is meaningless is because there are no correlation between the activity of "signing up as an IBO" with that IBO achieving any of the "averages" mentioned.
Don't give me this crap about "The information is out there, and all you have to do is take the raw data and do the math. It's not an opinion that over 90% of all non-platinums lose money. It's a fact supported by the numbers released from Quixtar itself."
It's a fact that based on the info out there and taking the raw data and doing the math, that an average IBO will take 6.7 years to lay the foundation to earn $172k/year.
Thanks for the ad hominem attacks, Jenn. Always makes me smile when a pro-AmQuix person resorts to attacking me, saying things like I pulled numbers out of my butt. Why? Because ad hominem is the last resort, and I know I have gotten to them.
So Jenn, do we or anyone for that matter know just what number Quixtar uses when it states the average income for an IBO is $1,400. They they use total IBO's? Total active IBO's? We also know that Quixtar paid $343,000,000 in IBO bonuses (from their own press release), so we know that to figure out the average, Quixtar used 245,000 IBO's. Sounds to me, Quixtar used active numbers to figure out the average, because if they used all IBO's, the average income, as we all know, would be even less then $1,400.
Now, if anyone who is better at math then me wants to, please figure out the standard deviation using the numbers published on Scott Larson's site that shows the frequency of high pin hit and their average incomes. Again, math isn't my strong point, but if I had to take my best guess, again, I would say the average non-pin income for an active IBO would be $1,000 or less. And no, Jenn, this does not include the nose-picking IBO who does nothing with their business!
Now, as for average tool costs, I did not pick this number out of my butt either. $100/month is actually a very low estimate. Just read all the personal stories on several web-sites including this one, Scott's, MLMSurvivor. Just ask any active IBO what their average tool costs are, and look at the information on Scott's site about how much tools cost. Most estimates are $150 - $200/month. And this information is very easy to find nowadays, and by me using just $100/month (including tapes, books, functions), I was low-balling to prove the point that it is easy to say why over 90% of all non-platinum IBO's or below are losing money on their business!
If you're going to say "anyone good with standard deviations " & "do the math" and then conclude "[it's a fact that] over 90% of all non-platinums lose money", your character and knowledge with regard to math & statistic is fair game. Yeah, you gotten to me. Why try to apply logic and critical reasoning to a critic? Yup, you gotten to me. [Another low-blow by me, I should be ashamed]
SA-4400 is pretty clear about what data they used for the $115/month gross income by active IBO.
"Active" is defined as an IBO which 1) attempted at least one retail sale 2) show the sales & marketing plan 3) received a bonus check or 4) attended at least one meeting. 66% of all IBO are found to be active. (2002 SA-4400)
"Income" is defined as retail markup plus bonus retained.
It's really, really, really difficult to generate income when one don't have any retail customers nor any IBO. It's reasonable to say non-active have a gross income of zero. Why would you want to include non-active IBO in your income calculation? That's fairly deceptive and misleading to say for all 34% those of you who do nothing but pick your nose (non-active IBO), that you'll average $924 annual gross income.
I agree with you on the retail markup. That shouldn't be included. My estimate on the retail markup is that it account for 40% of the gross income (I derived my retail markup estimate by taking the sweet 16 pv/bv/ibo price/suggested retail price and try to do some math gymnastic to guess at the income based on $1 of sale (21% retail markup, 22% bonus payout--yeah, I know, none of the number used are hard data, just WAG). A more representative income is $840/yr for active IBO.
I'll take that further. Based on 2001 ILD Profile of Success and 2001 Quixtar financial result, the active non-pin gross $89/year.
But again, so what. There's no expense data. No one can answer the question: how much do I expect to reap based on the time & money I put in?
You say $100/month is a low estimate. That's nice, but where's the data showing the percentage of IBO which spend this much? Is it 99.9% or 0.01%? Case studies doesn't mean jack. If you claim it does, then AQMO case studies of people hitting diamond in 2-5 years working 10-15 hr/week would carry the same weight. To both of them, bullsh!t. It's meaningless without the context of the % of ibo doing such.
QBlog said it best: "We should scrutinize everything we read, whether it's a front page article from the New York Times, the witty musings of an Internet blogger or a press release put out by some corporate PR department. Sure, some sources have proven to be more trustworthy than others but my point is that we should never turn off our brains when reading (or watching) news. The day we stop being critical thinkers is the day Aldous Huxley's vision becomes a reality."
Have you scrutinize your data, apply your critical reasoning to see if the conclusion is reasonable?
When will Jennifer Lee start spell checking? I can't get through her posts b/c of all the errors... plus all her posts are exactly the same...
I have a brother who broke a record and went 90 day platinum. how do you explain that? He worked on it obviously. My husband and i went silver in 4 months. The business works and we have the paycheck to prove it. If you believe it works and you put in the effort and build it the you should it will work i am living proof. we spend $8.12 a week on tools which eqauls $32.48 a month thats no $100+ and thats optional. You all need to find better things to do than bash a a business you OBVIOUSLY know nothing about. Maybe you should spend your time trying to positivly influence people instaed of talking sh!t on things you dont even understand. Forget the math and just realize its working for those "few" people who are actually diong the work. and FYI my uplines have NEVER been negative towards me or anyone else on my team even when I did not attend a major function. They hugged me and said they missed me at the function, so whatever bull your talking about uplines your wrong, again. Maybe you should see how a REAL team works not what a magazine generated altered story of what they think "on average" a team works like. Magazines write anything that sells no matter who or what they are affecting so maybe you should SEE it to believe it your welcome to attend one of our meetings, lets see where you stand then!!!! You would feel SOOOO dumb seeing how wrong you were.
Well amber then Im surprised with how active your upline have been bringing you to motivational talks, rallies and functions. I was at a Winter Convention at Michigan Grand Rapids just over the past weekend and I blew about 180 on lodgings, admission, gas, food. =) The Business might work, but its going to take a lot of capital :P
I was just approached by an IBO in this quixtar program. I really know nothing about the program except for all the positive things the IBO has told me and how rich I can get if I follow the program. I would like if someone had more info/advice that he or she could give me. I have just graduated from college and I do not have the time or money to get involved with a scam.
We had eight years in Amway/Quixtar. My wife and I were very loyal. We went to all the meetings, seminars, rallies, bought the tools, showed hundreds of plans, and when we gave up a couple of years ago all we had to show was many thousands of dollars spent and no group and no income.
Truth be told, I think Quixtar could be OK, it is the big pins "systems" that is the scam, along with Quixtar being unable or unwilling to put the clamp on the big pins.
Posted by: Larry J Voegtle | May 31, 2004 6:00 PM