Recent high-profile business implosions such as FTX and WeWork introduced the world to the notion of the business cult. In these firms, a charismatic founder created pressure-cooker working conditions where dissent was stifled and a grandiose business philosophy – such as the “We” in WeWork and the effective altruism of FTX – fueled employee devotion.
In her book, Little Bosses Everywhere: How the Pyramid Scheme Shaped America, New York magazine reporter Bridget Read excavates a much older, and much larger business cult: the cult of multilevel marketing. Multilevel marketing is a model whereby a network of independent “sellers” buy products from a manufacturer, for the ostensible purpose of reselling to end-users at a profit, but sellers also earn commissions based on the purchases of new sellers who they bring into the network. Beginning with its origins with the Nutrilite Company and tracing through to its modern form in companies like Mary Kay, Amway, and Herbalife, Read convincingly demonstrates that the model is, fundamentally, a pyramid scheme: sales to actual customers are negligible and rarely even tracked; profits accrue only to those very few members (in the vicinity of 1% or less) who have built a large “downline” of new recruits who kickback commissions when they make their own purchases.
The recruitment and retention tactics Read describes will be recognized by anyone who has ever studied cult behavior, from careful grooming with flattery and friendship, to revival-like meetings where members are celebrated and doubts are discouraged. Recruits are taught that success and wealth are entirely traceable to a positive mindset that excludes all negative thoughts – a philosophy that conveniently leads members to shut down their own critical faculties and thus ties them closer to the enterprise. Many turn over their entire lives to these organizations, eventually driving away friends and family in their pursuit of sales (or new recruits).
Yet despite the predatory nature of these firms, they often function out in the open, building out successful political and lobbying arms that protect them from government regulation. As Read tells it, the FTC and the industry created a set of standards that would be used to distinguish “legitimate” multilevel marketing organizations from illegitimate ones, which include promises that products would be sold to real consumers. However, Read demonstrates how loosely these requirements are policed, and how the multilevel form – ever adaptable – responded by creating offshoot products of instructional and motivational tools, supposedly necessary for success in the business, sold to members who might then resell them further down the chain.
In Read’s telling, multilevel marketing organizations blend religiosity, prosperity gospel, and an American-style work ethic, where financial success is treated as proof of merit – and the lack of success can only be attributed to individual failures rather than a systemically flawed business model. In that way, there is a close connection to the industry and a radically deregulatory form of conservatism that is deeply hostile both to the social safety net and to consumer and employee protections. Read argues that the false dream of individual entrepreneurship sold by these firms has ultimately penetrated the political system, undergirding much of what we see in government today.
The book is ultimately an enraging, and damning, account of our legal system, where to achieve “respectability” within the regulatory establishment, whether as an expert witness, a court, or a politician, one must at least accept as a basic factual premise the highly contestable claim that some multilevel marketing represents a legitimate business model, so that the task of a judge or a regulator is to distinguish the good from the bad. But that requires a buy-in to the fundamental philosophy at the heart of the industry: that individual failures must be traceable to lack of effort and skill, rather than a rigged game.
