Thursday, August 11, 2005

How NOT to Get Screwed in Quixtar

Did you love my diatribe? Hate it? Not really care? Whatever the case, I am back to balance it out. If you'll notice, I didn't COMPLETELY condemn the business. The business model itself is sound... IF the Lines of Support preached it correctly. Unfortunately, many of the lines merely turn the legitimate business into a Ponzi scheme (a method where the bottom level pays money that reaches the top, and those who pay must find others below them to pay their dues). And, just a by-the-way, the FTC never EXPLICITLY found that Amway was a legitimate business in their 1979 ruling; they just found that it didn't violate the standard test for pyramid schemes... read the decision if you doubt me. You will not see them state word for word that they are satisfied with Amway's status as a business. Regardless of the legality of the business itself, I have for you, as told by successful IBOs, the three steps to survive Quixtar.

Step One: Avoid the tools! Many of the Lines of Support, all listed here (http://www.amquix.info/quixtar_los.html), require you to sign a contract upon entry, guaranteeing your purchase of a certain amount of motivational tools and tickets to functions. Notice the first, and arguably the most controversial, is BWW (Britt Worldwide). They require you to buy 2 tapes a week, 1 book a month, and attend 1 seminar a month. The tapes are $7.50 each. The required 2 tapes a week are $15.00, times 4 weeks a month is $60 a month. This is not including the book and the seminar, plus whatever you voluntarily spend. The next group, WWDB (World-Wide Dream Builders) has a formula so complicated I don't want to try to calculate it for you. Trust me, it's quite a bit (or calculate it yourself if you don't believe me). You could also look at Globalnet, which charges $70 a month for tools, not including whatever you voluntarily spend (or are coerced into buying). Basically, what I'm pointing out is that, no matter which group you join, you'll be shelling out the big bucks for useless crap. Check out the link to Standing Order Tapes (http://bwwsot.blogspot.com) to get the gist of what is in each tape. Like I pointed out in my earlier post, this is an unavoidable expense that ALL IBOs must shell out. The list goes on, and in every one you are shelling out some kind of money, far from the "one-time investment" that Quixtar supposedly offers. And because Quixtar won't hire you directly, you can't get around it.

So can do you do to avoid this? Don't join one of those groups! Or avoid buying the tools at all costs. Beware though, your upline will coerce you and (most likely) neglect you if you don't contribute. Or ask around for a group that doesn't have these tools, as they will most likely be an honest organization. The tools, as you see from the sidebar link, contain little of use. If you aren't feeling the "excitement" they say is required, with or without tapes, you need to get out. This business requires your devotion and fervor.

Step two: Don't Buy from Yourself! In the more controversial groups, the up-line encourages you to buy from yourself and tell your down-line to do the same. This is an unofficial Ponzi scheme, where you MUST have recruits to profit. They'll say at first "100-150 PV is enough to sustain the chain." So you buy that (a few hundred bucks a month), and you lose a little money. Then you start getting more down-line. They then say "step it up to 300 PV." So you buy and lose even more money. In order to make up for this loss, you will need many more recruits. That's one method of motivation: recruit or go broke.

How do you avoid this? Don't spend a dime on yourself! Not only is this the unethical way to establish a down-line, but it's dangerous as well. No one said you have to set an example for your down-line in this manner except your up-line, who most likely was sold on this method long ago. The worst part is that, if you do make money, it is not very much, and it is all at the expense of others who weren't so lucky. Once the market saturates, despite claims by up-lines that this would never happen (how many people do you really think will buy Amway when they have Sam's Club, Walmart, Kroger's, GNC, Walgreen's, etc.?), the people who joined late will be screwed. Do you want to get caught in or even support this trap? So the way to ETHICALLY AND LEGALLY run this business is to teach your down-line to buy only what they want and what they think they can sell. Or sign up clients and members who aren't business savvy and just want access to Amway products. You're not making the promised 250,000 a year this way, but you're not stepping on anyone or even taking a moderate risk to get to your level.

Step Three: Don't Quit Your Day Job! But don't take it from me; take it from the hundreds of thousands of people who got into Quixtar/Amway with the promise of easy money, then quit their jobs to make room for the 15/month STP, 4 functions a month, meetings twice a week, self-promoting, web-making... I can go on. Suffice it to say that the effort they originally promised, part-time work for full-time salary, is complete BS. Once you're in, they tell you that yes, you could work part-time if you want... part-time pay! They suggest full-time work to make more money, or even MORE THAN FULL-TIME to make the big bucks. So you put 50, 60, 70 hours a week into a business that has a low profit margin NO MATTER HOW MUCH YOU SELL. Selling the plan to strangers consumes every evening because your friends back off from your obsession. Eventually, after you mortgage your house twice and borrow against all your possessions, you MAY turn a profit. Calculate, based on the tools, the cost to keep a Standing Order of all your products, and your living expenses, all against how much you can borrow or save. 2-3 years is what it'll take before you break 5 figures a year, I guarantee. That's still only 10,000 dollars. Remember, any success stories you hear are from people who made their money from 2001 or earlier. The market is becoming saturated, whether your up-line admits it or not, and it's getting exponentially harder to turn a profit every year. Here's a number a Platinum IBO gave me. Less than 1%. That's the percent of IBOs that reach Platinum. Do you know what the average salary of a Platinum is? About $25,000. That's another number a Platinum IBO gave me. So over 99% of people never reach Platinum, where less than half at this level MIGHT make $25,000. Translation? Your chances of living off this business are slim-to-null. See above about your dwindling chances in a saturating market.

Update: I visited a site recommended to me by an IBO, ThisBizNow, a pro-Quixtar site with facts and quotes supporting the business. There I found the numbers from Quixtar itself for the number of Diamonds, Emeralds, and Q-12 Platinums (not to be confused with just Platinums, these are a higher level):
"*The following are approximate percentages of Direct Fulfillment IBOs of record in North America who achieved the illustrated levels of success in the calendar year ending December 31, 2004: Diamond .0176%; Emerald .0420%; Q-12 Platinum .2440%."
We'll crunch this a bit further. The average gross earnings of a Q-12 Platinum is $41,970, including all bonuses, cash payments, and earnings related to the business. It only includes expenses related to cost of product. It does not include other expenses such as advertising, support line expenses (tools, meetings, functions), or any "discretionary" business expenses. I've been insulted for my choice of a "job" over the Quixtar dream. If I get the job I'm aiming for, a professorship, do you know what the entry level salary is? $55,000. And I have a much, much better chance than 1 in 400 of making that. 1 in 400 is the chance of you or any other person becoming a Q-12 Platinum. Once I become tenured, a guarantee if I do even a decent job for several years, my salary would start at a mere $75,000, or $4,000 above the average earnings of an Emerald DD. The chance of you reaching Emerald is about 1 in 2400. And, of course, if I manage to make seniority or move to administration, I would break $100,000 and have many, many benefits at no additional cost, not to mention a complete retirement plan. So, sure, a Diamond would make $175,000, but they're paying everything out of their pocket. No stock options, no health insurance, the retirement plan is essentially how much they can save... and the chance of becoming a Diamond is about 1 in 6500. All these numbers are based off information from ThisBizNow.com. The odds are stacked against you, and certainty is anything but a part of this business.

How do you avoid this? If you want to keep this part-time, on the side of a real job, that's fine! I know of many people who set a goal of 500 a month, attain it, and maintain their down-line. That's a good amount of spending cash for little more than maintenance hours on your down-line. DO NOT expect to retire on this, or even live off of it. Just treat it as a source of cheap cash. Remember, this is if you conduct yourself ethically. If you break the system, make it to where you're selling tools, you will make a lot more, the amounts the big wigs promised. But those privileged few are maybe 1 in 10,000. Don't count on it happening to you.

So there you go. An honest look at the system. If you work your ass off, you might BARELY make enough to go paycheck to paycheck. And even then you depend mostly on your down-line to stay productive. Depending on this system has put many, many people in debt. A few have escaped with a decent living, but they all started well before now. If you've been in it less than a year, I wouldn't hope for enough cash to live. But it is your decision; I just researched your chances. This is all based on the advice of IBOs that have made money from the business ethically (and in the first couple years of this century, I might add), so I pulled nothing out of the air. Check my numbers, check my assertions, and prove me wrong if you believe I am.

Don't say I didn't warn you...

23 Comments:

Anonymous Anonymous said...

Interesting post for someone considering the business. Thanks

1:29 PM, August 13, 2005  
Anonymous Anonymous said...

I have read both ur posts, and I gotta tell u I have been bugged by those ppl too.. they just dont seem to give up.

I kinda lost couple of good friends to this too.

Its kinda like a disease.

2:44 PM, August 18, 2005  
Anonymous Anonymous said...

I would just like to throw my 2 cents in. As far as tapes/cds/seminars, in my area these things are all 100% optional, and they have a buy back program if you are not satified. I loan them to my group and them only buy them if they want more than I can loan them. And I find them extremely helpful and entertaining. And you are right, motivation comes only from within, but other peoples experiences are priceless.
I buy everything I need from myself, and I find that I save time and money by doing so, plus I like the products better, and I dont buy anything that I wouldn't normally buy.
And I 100% agree with not quitting your day job. Use what free time you have to build your business, and when you are at the income level you want, then go full time.
and as far as market saturation goes, we are at less than .0025% of the market, and with people like you spreading the negative I don't think we have to worry about saturating the market.
Thank You

11:20 PM, August 25, 2005  
Anonymous Anonymous said...

Hey Man,

Good job on getting the message you need out there.

SOme things I am unsure of, though. I agree with not quitting your day job. I'm in the military as well as an author, and just because my first book is coming out this year doesn't mean I'll be quitting my day job.

As for tools and seminars: I have been to writer's workshops and read Stephen King's book On Writing as well as others, and look forward to Kurt Vonnegut's. I've made money in Quixtar as well, and have to say that when I joined at 18 I didn't know a thing about business. The tapes, as well as the people upline, helped me learn about the specifics of networking, and I still buy them today because the principles of doing something productive everyday and focusing on where you want to be have helped me complete three novels so far, and a couple books of poetry.

Some confusion by IBOs is taht if you can build a netwroking business then you can build any business. This I disagree with and my upline agrees that when we want to get into other things like purchasing property, and I know that when I start my publishing company I'll seek much guidance and will probably take an entry level position at a publishing house first so I can learn the business first.

About people who joined after 2000 there has actually been a surge in growth coming from Canada and Korea. The US has been positively affected by this as well, but it won't show as much until the housing bubble bursts.

You said that 15 hours a week for $1400 is like $2 an hour. It's closer to $20. But now I'm nitpicking. I hope this helps your site.

Chris Pascale

1:59 AM, August 29, 2005  
Blogger Josh said...

Well, it is 2 dollars an hour. 15 hrs a week times 52 weeks in a year is 780 hours. $1400 divided by 780 hours is about $1.79/hour. I do agree, though, that SOME tapes can be beneficial to Quixtar. The ones that I've heard and that I've heard about, though, are more of either a cult-thought encouragement or empty promises of wealth (i.e. "Look at me! I have money. And I'm in Quixtar."). It will be interesting to see how the housing market affects the economy for sure, but I am sure that with the rate at which IBOs sign up there will be many, many people left out in the cold with no one else left to show the plan to. I really don't like how the branches in my hometown, Lynchburg, VA, target a lot of the kids right out of high school and tell them that they can retire in 5 years if they do all the methods in the tapes and books. In my experience, at least, there are very few people who will give up their career plans for a business that seems so sketchy. This is MY experience, though, and I appreciate the outside opinion you bring. Hopefully it's different in other parts of the world. Where I live, though, almost all IBOs are in debt and heading nowhere.

2:11 AM, August 29, 2005  
Anonymous Anonymous said...

I have read this post and I must comment also. When I first saw the business opportunity, I did not expect money because I was a full time engineering student. I knew that I saw this great opportunity through a good friend whom I respected for years. I am very analytical but definitely not stupid.
I do not believe after 4 years of engineering school spending $40,000 per year and additional $400-500/per semester that I am spending excessively in this business. I came out of a name brand prestigious school with no role models, advisors who can direct me in the right direction when I was still undecided of my career goals.
Every day, I praise God for my amazing uplines and awesome downlines. I strive to respect my parents, my sisters, and close friends who also support me while they see the positive changes in my attitude, self image, and courage to take on responsibilities.
If you feel that you do not have the self disicipline, willingness to learn, and focused goals, you will never succeed in this or any other business.
Peace and Love!

4:02 PM, September 13, 2005  
Anonymous Anonymous said...

I would just like to cooment that the uplines that i have in the business do everything they can to help you to succeed in this type of business. If some one does approch you and try to tell you that you can make money overnight in this business I would turn and run. This business does take some time and work. No one that I have talked to in this business has promised any type of sucess in this business or gaurenteed any type of definate income. I have been in the business for some time now and I personally have seen some of the sucess people have had as well as failure. What I have noticed most is that the people who fail, no fault of there own, are the ones who talk trash about this type of business. There is a business model put in place by sucessful business owners, who have proved that THISS SYSTEM CAN ASND DOES WORK if yopu are willing tyo follow the plan laid out for you. This DOES NOT MEAN THAT YOU HAVE TO BUY ANY OF THE MATERIAL THEY RECCOMED FOR YOU. I have not purchased one single peice of training matterial that was recommended. And if I did it would be a tax write off, as it would be a business expence. And as for the motivation, if your upline is making you purchase materials for this they suck, all of the people that are in the business, where I am (Canada) give you support, even the ones that don't even know you.

So, if someone does come to you to show you the business plan, and promise you will make thousands of dollars in your first month, these people should NOT be in the busines as they are the ones along with the people who have failed writting trash are giving this type of business a bad rep.

That's my 2 cents.

7:24 PM, September 15, 2005  
Anonymous Anonymous said...

Josh,

I have re-read your post, and must admit I overlooked most of it last time.

What professional experience did you have when you put this site together? Your research is limited, causing it to be weak and one-sided despite your not completely condemning the Quixtar Corporation, or it's sound--in theory--model.

1) You said: 1979 ruling did not say AmWay was legitimate, just not a pyramid.
Pyramids are illegal networking structures often involving bonuses for overpriced sign-up fees, and products (if any) that are grossly overpriced. Proof of overpricing is lack of outside sales. The fact that it's not a pyramid makes it legitimate. Illigitimate also means illegal.

2) Mandatory purchase of tools.
I have never been involved with Britt World Wide, but when a person registers with Quixtar there is a BSMA (business and support materials agreement) form that is extremely thorough in explaining that although the tapes, books and seminars have helped others, it is not mandatory, and that the person(s) who introduced the business plan to you are obligated to help you regardless of whether you purchase them. It also says that the purchase of audios are optional at the end of every tape/cd I've heard.

3) You said: Don't buy from yourself. . .in order to avoid being screwed by Quixtar.
The products are shampoo, conditioner, toothpaste. . . .and they all work. My teeth get clean every time I brush.

Hope this helps.

1:55 AM, September 16, 2005  
Blogger Josh said...

1) The ruling was specifically to determine if it were a pyramid scheme. They found that it was not, but they did not state AT ANY POINT that the business was legitimate. They merely said it did not fulfill all of the requirements of a pyramid scheme. Other businesses have been indicted and/or convicted for similar business models.

2) My friend (the one who originally showed me the plan) decided one day to stop buying the business tools. The day he told his upline this at a meeting he was pointed out as not strong enough to run the business to his peers. His upline began pressuring him heavily every time they saw him to reconsider this. In the end, he had to quit because he was getting more pressure to buy the tools than he was support for his business. It is not required by Quixtar, no, but if you decide to strike out on your own you will be punished by those above you in those support lines.

3) The model for buying from yourself, as my friend as well as other IBOs described it to me, is spending roughly 1000 dollars on yourself each month, keeping a large enough stock to keep your points high. This is the "get rich by teaching others to buy from themselves" method. It exists. Don't try to contradict me on this, because this is where much of the controversy lies. I've seen it first-hand.

And don't say my research is one-sided. I've read plenty from both sides, listened to IBOs, former IBOs, etc etc. This is my compilation and my conclusion from what I've read and experienced. I've gone in depth to research everything I can. So you are welcome to disagree with my conclusions; just don't attack my methods or facts. You won't convince me or anyone else to change their minds. You'll actually probably solidify the opposing argument if you take that route.

2:36 AM, September 16, 2005  
Anonymous Anonymous said...

I would like to know where Dan takes his estimate of 0.025% of market saturation... I live in Barbados, a tiny island in the Caribbean, where this "business" model is spreading like cancer... Is that market saturation estimate including the whole planet???... I didn't take the time to do all the research as Josh did (thank you there!) but my main concern is that this thing is precisely appealing to people of average/low income and education (I know I know there are a lot of platinum or whatever IBO's who left their highly paid jobs to dedicate themselves to preach their newfound Eden!!!). As an MBA student I got indoctrinated with so much marketing BS that I can barely tolerate to listen to any of the cliches and pre-packaged formulas from those sales "wizards"... The presentation of the business I was given shouted all along that one can simply be happy, free and fulfilled by becoming an IBO, out of the rat race... The people who have tried to get me into this (not even knowing me) are an average income mid age couple and a young low income couple with two babies... I get worried about these as much as the young kids out of high school that Josh was mentioning... If it's helping some people to fulfill some of the voids in their lives (be more focused, more people's people, I even had those couples saying that their relationship has improved since they are on Q etc) well be it... to be honest I find this "hopping just into another hampster wheel" rather pathetic!

5:11 PM, September 16, 2005  
Anonymous Anonymous said...

I've been involved with Quixtar for about 4 months and have never been required to buy or do anything. It's your "business" and you do what you want and sometimes those choices will reflect in how well you do. I do chose to buy the tools and I hand them out to people free of charge and I've made more than I've spent in tools. By not buying the tools, your team will decide they don't need to buy the tools and eventually, no one is buying them. When this happens, growth will slow down and possibly stop, then everyone gets screwed for one upline's poor choice. That's my reasoning and it seems to hold true. Honestly, I have more fun building this business with all my college buddies than I do at work. We have downtime days where we just hang out and do nothing, but we all have one common goal, to succeed and whether we progress slowly or very quickly, we're there for each other. If you miss that concept of the opportunity, you miss the whole point. Plus, with gas prices rising, I don't know too many people who are getting raises to compensate. It's getting harder for college grads to find jobs nowadays and with retirement options going down the drain, what is there for the current college student to look forward to? I respect the fact this business isn't for everyone, that's fine. But you can do well if you take advantage of it.

7:46 PM, September 26, 2005  
Anonymous Anonymous said...

Dear Josh,

In response to your very prompt response on Sept. 16:

I think it is obvious, even at your very young age, that you are extremely inteligent, which is why I was so surprised you seemed offended to what I did my best to offer as constructive criticism. However, despite your inteligence, I may be operating with different facts.

Personally doing 300pv:
Yes, this would be awesome if everyone did this much and more, and it is even expected, but not out of pocket. You'd need a very big family to need that much macaroni and cheese. This fits into members and clients. A long term business owner should even strive to have tens or hundreds of thousands of dollars in personal volume.
The proof that people do do this in the Quixtar business is regular qualification for something called Q12 (in which IBOs have 7500pv outside of legs that are already at the 25% level for 12 straight months) by IBOs who are at levels such as sapphire, but are not emeralds the following year or two.

As for changing people's opinions, I could care less. I'm just a guy that went to Iraq, came home and qualified for welfare--since they can't raise the defense budget they take it from the dept. of agriculture (fun fact for ya)--but went another route. Supplying daycares with wet wipes and toilet paper, and getting cleaning supplies to a local motel might not seem glamorous to a kid sitting in his dormroom, but in a house of five it sure makes a difference.

By the way, you failed to mention what professional experience you've had. Are you a professional student, software consultant, gas station attendant?

9:57 PM, September 28, 2005  
Blogger Josh said...

I took offense to you calling it weak and one-sided. I was indifferent to it until my friends all jumped into it. I was offended when the plan that was shown to me treated me like a child, I was offended when my friend accused me of not supporting her when I declined to join. I was offended when they started calling all my friends (how they got their number, I do not know) and pushing this on them. My professional experience is as much as anyone else who is requested to join Quixtar. If you mean my job, then I am a student who interns with an engineering company. And I never, ever said that running Quixtar legitimately (by supplying people who need to be supplied) was a bad thing. As for me? I will end up teaching at a college. Is that glamorous? If you can make a living from that, then I am glad. The problem, and I've stated this several times in this and other posts, is that there are non-legit lines of support, like the ones my friends were dragged into. People without business experience will buy into the hype and lose their money. THAT is the problem I have. If Quixtar were all IBOs like yourself, I would gladly support it. I just cannot support the whole company until they crack down on the lines that take advantage of others. That's the opinion I refer to.

10:26 PM, September 28, 2005  
Anonymous Anonymous said...

Josh,

I cannot argue with your summation of crooked people in the industry. I've heard of it from many. I'm sure you will meet crooked teachers. Some of them get cracked down on, some get by on their tenure. Sad but true.

Several IBOs have lost their businesses as a result of less than honorable management, and more will in the future. Most, like in any field, as you see among your peers, are mediocre.

9:44 AM, September 30, 2005  
Blogger Josh said...

So basically, I hope you see the purpose of this post, to raise red flags for those who still want to get into the business. I have not yet personally met someone who has been successful in the system. I'm an old-fashioned person, myself, and I don't trust people on the internet. I don't ask anyone to trust me, either. I just want them to think about what they're doing before they get in with the wrong crowd.

And I also want people to know that even if they do everything they are supposed to, they may not become successful. If it's a business as everyone says, then they should hear about the considerable risk much more so than the potential millions. But it seems you didn't buy into the "formula" for success, and it's good to know that there are people who avoid getting sucked into that still.

3:51 PM, September 30, 2005  
Anonymous Anonymous said...

I don't believe saturation as we understand it will happen to this business. However, I believe a combination of positive and negative saturation will happen. Positive saturation (according to my definition) is in which a % of the population become IBO's and the negative saturation is where a % of the population become anti-IBO. I believe the negative, may unfortunately, become larger than the positive and it may have already?! I believe the business is pure - by the way if the Kingpins forgot from AMQX 101 - Platinum is just volume... not the number of IBO's in a group. Unfortunately, these greedy, lasy Kingpins turned the motivation business into a ponzi scheme and it won't last.....

12:34 AM, October 20, 2005  
Anonymous Anonymous said...

quixtar is a scam and a cult!

6:07 AM, November 09, 2005  
Anonymous Anonymous said...

I think that you have about half of a clue about what you're talking about. All your well-put writing is gibberish to someone who actually knows about it. I can see how a person who is uneducated about it would think the way you do. But, when you go into something with your mind closed and your "let's see what we can find wrong with this business" hat on, it's hard to think anything other way. I do not need to argue precise points because it's clear that it will do no good. I am just tired of people babbling about things that they really don't know much about.

9:30 PM, April 12, 2006  
Anonymous Anonymous said...

There are crooked people in the White House, the banks, McDonalds, schools, churches, grocery stores. Let's just all boycott everything and become a bunch of stupid failures because there are indecent people around every corner. Just because someone has issues with a person in an organization doesn't mean that the entire business model didn't work for them. It means they didn't work the business model. The one's who really want it and will stop at nothing to get it...get it. The ones who don't want to put in a bunch of work, end up putting in a bunch of work over 30 or 40 years out in "corporate America"

9:34 PM, April 12, 2006  
Blogger Josh said...

It's very sweet of you to accuse me of close-mindedness when you don't even know me. Touching really. But thanks for reviving an argument that I stopped caring about awhile ago. Most of my friends have seen the "biz" for the failure it was and got out, cutting their losses. I suppose you can just (anonymously) call them lazy and me incompetent if it makes you feel better about yourself.

9:38 PM, April 12, 2006  
Anonymous Anonymous said...

I joined in Quixtar recently. I should have read this blog before making such decisions. However, this blog gives me better understanding on the happenings..Good work...Keep it guys

10:04 PM, May 16, 2006  
Anonymous Anonymous said...

This is a pretty old thread...but I just found it. Thanks for posting all the info. I have a friend right now just getting into Quistar and he will not stop talking about it! I am older than he is and already know the pitfalls of those scams. Personally I have never done it. I want to save his butt, BUT he sounds like the seminar, the preaching, the books, the tapes-- he will not break character. It's like the person I knew is gone and replaced with some cult-like recording. I've tried delicately to disuade him, but its not working. He just keeps talking over me and telling me I just "googled" it and have no idea what I am talking about. No sir, I've read all the press releases, articles, Quixar business plans, prospectus, and even some scientific research papers on the new product "perfect water"-- which by the way is a joke! He still believes he will be a millionarre selling someone else's "miracle water"! What do you say to your friend?

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