Episode 144- The Pyramid

The Pyramid

Personally, I don’t think there is a better time to be in business than right now and for those that are scared of it, think about it for a minute. You got a phone in your pocket where you can start a business in no time. There are teenagers and younger that are starting businesses with their phone, with their computers and truly anything is possible. It doesn’t matter what you look like or how old you are. No matter how old or how young or what color you are or you’re from, you can start a business and earn income and even when you think people might discriminate against you, they won’t even know who you are to discriminate against. So, I find all this very exciting because there is nobody to hold you back anymore. 

When I graduated high school and I looked for jobs, I literally have to write out a paper application and bring it into a place and hand it over and wait for them to find my phone number and call me back and offered me a job. That was pretty much the option I had aside from mowing lawns. So, the excitement I get from seeing the possibilities for everybody, for you, for your kids, for my kids fires me up. But there is a downside and the downside is that a lot more scoundrels than there used to be. Maybe there’s not more but there’s more opportunity for them to be involved. So if you get a legitimate business that solves problems for people and is helpful, there is no better time than right now. But it’s so easy now for the scammers to get a quick fix to get in there to take your money to under deliver and then get out without anybody knowing who you are. I am starting to notice people getting a lot more suspicious and a lot more tired of people that are scamming them or just trying to make a quick buck. 

My friend John notices recently when he jumps into different Facebook groups and he adds value and he answer questions. He just tried to be helpful and what he found is people become very wary of even being helped. And he learns that people are wary to even get helped because there are so many people that go on there to help then immediately try sending them request and sell them something. So even the people that need help and are to get legitimate help from an honest person are becoming wary of it and this is where the trust factor comes in such a big way. Between this and the episode that I did a couple of weeks ago where I answer the question about something that I was worried about being scammed, I thought about the time that I trusted somebody and I thought about painful lesson I went through years ago. And I am sure you’ve heard of a pyramid scheme and it’s been blended into multilevel marketing where it’s a pyramid scheme but it’s not but there’s products so it’s kind of hard to tell always what it is. 

Back in the 90s, before the Internet, my brother came to me with an opportunity and it was this thing that I’ve never heard of before but he drew out this pyramid and the pyramid had four levels to it. In the bottom I believe it was the secretary. In the next level up is the treasurer and above that was the vice president. At the very top was the president. He explains this to me and he said “okay this is how it works. We each put in $1,500 and I was like “What? $1500?” He said “Yeah, we put in $1500 and when we put that money in, we are in the secretary spot. So, what we need to do is we need to find other people to put in the $1500. When they put it in, we get jumped up to the treasurer spot. There were four spots in the secretary, 2 spots in the treasurer and one of the vice president and one in the president. I am not sure if I am totally explaining the structure right but hopefully I am close enough. What happens is when you bring other people, they go below you and you go up a higher notch. So then when those spots are filled, because the people below you will now bring other people in to underneath, we then get bumped up to Vice President. Here’s the best part, when those people bring in the bottom group then we get elevated to president and when we get elevated to the president, we get all of that money. So, I don’t remember the exact numbers but I think it is going to be $12,000 that we would get when we cashed out. So, I was young and obviously really smart and said “okay, let me get the money.” 

So, I went to the bank and withdrew $1500. Now I don’t know how much money I actually had but it couldn’t have been tremendously more than that. Not only did I get the money out, but my brother did as well, our friend Ben and I think one other person did and then we drove together to this party. It was this weird party because it was a really nice home. These people are dressed really nice. They got fine wine out. They got food and we totally didn’t fit into this. But I remember handing over an envelope with $1500 and thinking this is legit, this is going to happen. So, I went gung ho trying to recruit friends to do the same thing because you know I need to go from secretary to treasurer and I need people below me to bring me higher. 

So, as you can imagine, most of my friends either thought I was crazy or blew me off. They thought I was trying to rip them off. I got one person to say yes, this guy Scott. I got him to say yes and he went to the next party. He brought $1500 and I jumped at the secretary or treasurer whatever the next one was. So, the excitement between all of us that invested in this is pretty high and I remember going out the bars and going to the pool and talking about when I cash out and when I get the vice president and when I get to President, I would do this with the money, I am going to do that with the money. We all felt like we are going to hit on something big. But over time, we stop talking about as much because nobody is really finding anybody and nobody committing to be a part of this. I’ll be honest I didn’t even know who the people were that we give the money to. I didn’t even know where the house was. So, about a month later, none of us even have the guts to bring it. It was now a joking manner that when I become president and we just laugh and it would all go away. 

It was around that time that I realized that we’ve been totally ripped off and it is embarrassing to realize that you just gave way $1500 to somebody that you never met, you didn’t know and you never even talk to before. Not only that, you and your brother and some friends also did the same thing. It was a hard pill to swallow. It was a lesson I had to learn that I need to be a lot less desperate for quick money and also to be a little bit more cautious about who I went to business with. As much as I was frustrated because my other friend didn’t invest in the stupid thing, they were the smart ones because they weren’t desperate and they weren’t going to trust somebody who they’d never met to give away a pile of cash to.  The pyramid scheme back then, which ironically after a couple weeks after we realize we lost all that money became a major thing on the news about these different pyramid schemes that were going around. They describe exactly what we just went through and I wish I have seen that a little bit earlier. It was a great lesson to have to deal with. But I think it is really the caveman version to what could be going on today. Because like my friend John experienced even when he’s trying to help people, people are so wary of being sold to because so many people are trying to sell something without earning trust first. And what happens is a lot of them get away with it because so many people are so desperate for quick fix just as I was with that $1500 looking for a quick $12,000. It seems so easy now to prey on people that are also looking for that quick fix. 

Now you’ll hear me often saying I’m a proponent of investing in yourself but do your homework. Make sure that the people you’re investing in are trustworthy, are reliable and have your best interest at heart because unfortunately not everybody is. I don’t want to see you do what I did, which is handover a lot of cash for false promises and a pile of disappointment. So, do your research, study the history, look for the testimonials, trust your friends who have gone through it to give you the right information and don’t wind up like a sucker like I was who was left with nothing but a depleted bank account and a lesson to share with you. 

I will talk to you tomorrow.

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