Friday, February 15, 2013

Direct Selling is Not a Pyramid Scheme

A lot of attention has recently been focused on Bill Ackman's claim that Herbalife is a pyramid scheme. The arguments for and against are fervent. Just this past Sunday (February 10, 2013), my local paper, the Chicago Tribune, ran the following story at the top of their business section: "Legitimate Multilevel Marketing or Illegal Pyramid Scheme?" As the Founder and CEO of Paperly, the leading direct seller of personalized stationery & gifts, I feel it's vitally important to state emphatically - direct selling is not a pyramid scheme.  There are many reasons why, but in my opinion, here's the most important...

Direct Selling is Entrepreneurialism at its Best

Direct sellers invest minimally to start their business.  For their relatively paltry investment, they receive an enormous amount of marketing materials, samples, technology, training and support.  They then have the freedom to start and grow their business to the best of their abilities.

Absolutely, positively yes - most never become millionaires. But that doesn't mean the hundreds, perhaps thousands of dollars they earn each month isn't life changing. Maybe its the first time ever they've contributed to the monthly mortgage. Or maybe their earnings go towards their first ever Disney family vacation. Whatever the dollar amount, it's often meaningful to the vast majority of direct sellers.

And just because everyone doesn't instantly become a millionaire when they start their direct selling business doesn't mean the system is inherently flawed. It's the same system that every other small business owner operates within. Most fail. But we praise entrepreneurs in American society because we love and honor success based on hard work. The same holds true for direct sellers. They have to work hard. They have to take risks. They have to occasionally be lucky. But they are no different than any other small business operators and they should be exalted, not disparaged.

Direct selling is about selling to customers, not to distributors. Paperly follows a "party plan" model, which means our Consultants asks others to host friends and family members at their homes so they can experience firsthand the products Paperly offers. Successful Paperly Consultants sell more - it's that simple. Paperly eliminates all the headaches associated with operating a small business such as inventory management, website maintenance, accounting and monthly promotions. Instead, Consultants are merely asked to share the products Paperly offers with those they care the most about. Again, this is classic entrepreneurialism, nothing more, nothing less.

It's a shame that direct selling has received a bad reputation, because it truly is an amazing entrepreneurial engine. In 2012, it helped 16 million American generate $30 billion in domestic sales. That is not an illusion.  That is not a scheme. That is nothing more than an incredible entrepreneur success story... and I am proud to be a part of it.

- Jay Rudman, Founder & CEO, Paperly (
The leading direct seller of personalized stationery & gifts