Don't Miss a Thing
Free Updates by Email

Enter your email address


preview  |  powered by FeedBlitz

RSS Feeds

Share |

Facebook: Seth's Facebook
Twitter: @thisissethsblog

Search

Google


WWW SETH'S BLOG

SETH'S BOOKS

Seth Godin has written 12 bestsellers that have been translated into 33 languages

The complete list of online retailers

Bonus stuff!

or click on a title below to see the list

all.marketers.tell.stories

All Marketers Tell Stories

Seth's most important book about the art of marketing

ONLINE:

IN STORES:

free.prize.inside

Free Prize Inside

The practical sequel to Purple Cow

ONLINE:

IN STORES:

linchpin

Linchpin

An instant bestseller, the book that brings all of Seth's ideas together.

ONLINE:

IN STORES:

meatball.sundae

Meatball Sundae

Why the internet works (and doesn't) for your business. And vice versa.

ONLINE:

IN STORES:

permission.marketing

Permission Marketing

The classic Named "Best Business Book" by Fortune.

ONLINE:

IN STORES:

poke.the.box

Poke The Box

The latest book, Poke The Box is a call to action about the initiative you're taking - in your job or in your life, and Seth once again breaks the traditional publishing model by releasing it through The Domino Project.

ONLINE:

IN STORES:

purple.cow

Purple Cow

The worldwide bestseller. Essential reading about remarkable products and services.

ONLINE:

IN STORES:

small.is.the.new.big

Small is the New Big

A long book filled with short pieces from Fast Company and the blog. Guaranteed to make you think.

ONLINE:

IN STORES:

survival.is.not.enough

Survival is Not Enough

Seth's worst seller and personal favorite. Change. How it works (and doesn't).

ONLINE:

IN STORES:

the.big.moo

The Big Moo

All for charity. Includes original work from Malcolm Gladwell, Tom Peters and Promise Phelon.

ONLINE:

IN STORES:

the.big.red.fez

The Big Red Fez

Top 5 Amazon ebestseller for a year. All about web sites that work.

ONLINE:

IN STORES:

the.dip

The Dip

A short book about quitting and being the best in the world. It's about life, not just marketing.

ONLINE:

IN STORES:

the.icarus.deception

The Icarus Deception

Seth's most personal book, a look at the end of the industrial economy and what happens next.

ONLINE:

IN STORES:

tribes

Tribes

"Book of the year," a perennial bestseller about leading, connecting and creating movements.

ONLINE:

IN STORES:

unleashing.the.ideavirus

Unleashing the Ideavirus

More than 3,000,000 copies downloaded, perhaps the most important book to read about creating ideas that spread.

ONLINE:

IN STORES:

v.is.for.vulnerable

V Is For Vulnerable

A short, illustrated, kids-like book that takes the last chapter of Icarus and turns it into something worth sharing.

ONLINE:

IN STORES:

we.are.all.weird

We Are All Weird

The end of mass and how you can succeed by delighting a niche.

ONLINE:

IN STORES:

whatcha.gonna.do.with.that.duck

Whatcha Gonna Do With That Duck?

The sequel to Small is the New Big. More than 600 pages of the best of Seth's blog.

ONLINE:

IN STORES:


THE DIP BLOG by Seth Godin




All Marketers Are Liars Blog




Blog powered by TypePad
Member since 08/2003

« Clocks | Main | Yes Substitutions »

Ponzi, Pyramids, MLM, Ads and WOM...

Ponzi There's been a lot of angry mail about my mention of mmmzr the other day. "It's a ponzi scheme!" several people say.

Actually, no, it's not. It's a pyramid scheme. They're different, and it's part of a spectrum, one worth understanding.

A Ponzi scheme is a simple scam in which a bankrolled, charismatic individual persuades some people to invest money in a financial instrument. The investors do nothing but wait for a return. Soon, they get paid off! The buzz is incredible. New investors come in. The scammer now uses the new money to give more returns to the original money. This increasing return further increases buzz, which leads to ever more money coming in, which he uses to pay off newer investors, and so on, until finally there's a lot of money coming in and the scammer leaves town.

Everyone hates a Ponzi scheme. The only people who fall for it are the ones who don't know what's actually happening.

A pyramid scheme is different. That's a scheme where the investors actually have to do something. There was a classic pyramid scheme floating around twenty years ago. You started as a 'passenger' and invested $1,000. Your job was to find five new passengers, which made you a 'flight attendant' and then a 'co pilot' and finally a 'pilot'. I forget the specifics, but I think pilots ended up with $100,000 or so. Obviously, this can't last forever, but if you can recruit diligent passengers, you can make it work (for a while).

Most people shy away from pyramid schemes. They seem too calculated and unfair and risky.

The next kind of pyramid scheme is certain kinds of MLM (vitamins, often) and yes, mmmzr. In this case, in addition to having the attributes of a pyramid scheme (the investors have to work), there's also an attractive side benefit. You get the energy bars or the web traffic or the perfume or the herbs. The product often hides the underlying structure of the business, but in particularly loud versions, it's pretty clear it's just a pyramid scheme.

Once again, most people don't like this. You cringe when your sister-in-law brings it up. You hide in the conference room when your co-worker takes out his sample case. It feels wrong, and it largely is. It is because the motivation of the seller is primarily selfish.

Selfish because she's trying to build her downline. Selfish because the entire focus of the enterprise is to make the enterprise bigger.

I contrast this to more subtle projects like Tupperware or Avon, or various religions or things like Digg (when it's used right). In those cases, the 'side benefits' are actually the real benefits. The commissions are just a side light. The word of mouth feels a lot more real, because the person you're working with is obviously impassioned for the right reason.

Great real estate brokers already have enough money to retire. They're not selling you a house just to make a few percentage points. They're doing it because it actually gives them joy to get you into a better house.

Human kindness has always been in short supply. For millenia, you needed to worry when someone offered to do something nice for you. You needed to wonder what the ulterior motive was, what's in it for them. As a result, we're innately suspicious whenever we get sold something.

I had an interesting dilemma before I posted on mmmzr. I had a hunch it would work, especially if I pointed to it on my blog. Should I buy a bunch of boxes for some charities I support? After all, it would generate traffic for the charity, and probably pay off with money I could turn around and donate. But if I did, if I did that, then my newer readers would say, "hey, I knew it! You pointed that out because there was something in it for you..." So I didn't.

Word of Mouth is a really fragile entity. Someone asked me at a recent engagement what I thought about various agencies that are paying people to shill for their products. I said something like, "Well, for a long time the oldest profession has taken money for what other people do for free. How do you feel about the difference between the two transactions? Which kind of person did you marry?"

At some level, at a very major level in fact, the way we feel about a transaction is more important than the transaction itself. Some people like a sporting event more if they got the ticket from a scalper, other if they got the ticket for free from their boss. Some people need to feel like they've taken the system (whatever the system is) for everything it's worth. Others need to pay retail (especially on a wedding dress, cemetery plot or flu shot).

Marketers are working hard to corrupt the way we feel about our friends and the people we respect. I think, in the end, it's not going to work. We're hardwired to respect real authenticity, and at some level, that means trusting the motives of the person we're listening to.

Bottom line: just because the net makes it much easier to measure things, share things, create downlines and hierarchies and yes, scams, doesn't mean its the best way to make something that lasts.

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451b31569e200d8342c37e353ef

Listed below are links to weblogs that reference Ponzi, Pyramids, MLM, Ads and WOM...:

» Ethics of Business from Huey's World
I read a post today about pyramid and Ponzi schemes and it really got me thinking about the ethics of business overall. Most readers are familiar with the principles of Ponzi schemes and are, in most cases, clearly identified. However, [Read More]

» Bottom line from degree 360º
Seth Godins Blog : Bottom line: just because the net makes it much easier to measure things, share things, create downlines and hierarchies and yes, scams, doesnt mean its the best way to make something that lasts. ... [Read More]

» Internet Marketing Pyramid Scheme from Episteme - Belief. Knowledge. Wisdom.
Over at his always awesome blog, Seth mentioned MMMZR in a couple of recent entries. MMMZR (besides being a nonsense word like LURHQ) is quite an interesting idea for marketing - it brings the traditional "pyramid scheme" format to internet advertis... [Read More]

» Spectrum of Schemes Worth Understanding from Conversation Agent
I was approached by an acquaintance several months before buying my open ticket to the US. At the time I was attending university by day, bar tending at night and cramming study, fitness and life into a few short hours [Read More]

» Seth Godin on what lasts from Leading Questions
Seth Godin, the wisest marketer around, casts a clear light upon the various get-rich-quick schemes that fill the internet. Seth concludes:Bottom line: just because the net makes it much easier to measure things, share things, create downlines and hier... [Read More]

» Why Didn't I Think of That? from 2million - My Journey to Financial Freedom
Another pyramid scheme for the internet. mmmzr, created by Tadashi, has made another smart kid rich, leaving me in the dust :-). Seth Godin, a marketing guru, has a great article about MLMs etc and why he doesn't think they... [Read More]

» Why Didn't I Think of That? from 2million - My Journey to Financial Freedom
Another pyramid scheme for the internet. mmmzr, created by Tadashi, has made another smart kid rich, leaving me in the dust :-). Seth Godin, a marketing guru, has a great article about MLMs etc and why he doesn't think they... [Read More]

» Authentic Trust from Bill Baren Blog
How quickly do you trust? How quickly do you trust someone who is selling to you? The only way for you to gain the trust of your clients/customers is to have them experience that you care more about them then the $ they are giving you. Check out Seth G... [Read More]

» http://www.wherewire.com/leathern/2006/10/seth_godins_post_on_mmmzr.html from Leathern.com
Seth Godin's post on mmmzr is well worth reading (thanks Niki, who calls mmmzr "advertising chicken"). This type of link-freakonomics is awesome -- one of the things that true online commerce (and I don't mean buying books or DVDs online)... [Read More]

» Seth Godin on Word of Mouth Advertising from Blog from Software Trenches
A great post on marketing by Seth Godin: Word of Mouth is a really fragile entity. Someone asked me at a recent engagement what I thought about various agencies that are paying people to shill for their products. I... [Read More]

» TrackBack or TrekForward? from kiss2
This blog is only one month old. It’s my second typepad blog (see WYL FAQ for my first blog in typepad). Where the first one is purely business orientated: helping our Wood You Like customers in a modern online way, [Read More]

« Clocks | Main | Yes Substitutions »