00:00:09.320Whether we like it or not, we're in bed with the right.
00:00:13.300So, Adrienne, today we are lucky enough to be joined by the esteemed writer for New York Magazine, Bridget Reid, who is the author of this really cool new book called Little Bosses Everywhere, How the Pyramid Scheme Shaped America,
00:00:28.900which is a history of the MLM in the U.S.
00:00:34.300And it became, for me, like this kind of crazy Rosetta Stone
00:00:39.260that unlocked so much about ambition and gender and money
00:00:46.280and how we think about the future and the good life
00:00:49.680in ways that can, of course, bring us further from the object of our desires.
00:00:56.140And I thought it was just such a fun ride for being such a densely informative book.
00:01:01.540So, Bridget, I really want to thank you for being here because I'm so excited to talk about MLMs with you.
00:01:09.620I'm so glad that it was fun and dense.
00:01:11.920Those are, you know, the two things we want to hear, right?
00:01:14.580Well, it's a book that like you move through so many of these scams and you show how this idea of the pyramid scheme sort of had this germ in American culture and then mutated as more and more people copied the same scam and brought it in different forms to different parts of the country and different demographics.
00:01:34.600My favorite part was a chapter on Mary Kay and the analysis you bring to how MLMs offered a kind of work that managed to merge second wave feminist ideas about ambition and paid work as a mode of self-fulfillment with really that simultaneous backlash about attempts to preserve women's role in the home.
00:01:57.180But this is a book that does so much more than that.
00:02:00.140And it's just a really, really useful like cipher to me for a lot of the ways that, you know, these hopes for the future and these desires for a better life can get weaponized against people in these ways that are sometimes really brilliant in a dark way and also frequently just like so very cruel.
00:02:19.200And so maybe I'll out myself as not having read the book yet.
00:02:22.260And our story with this book is that I think I sent it to Moira being like, we have to do this because like MLMs are a thing that have cropped up on our podcast, like in weird places and constantly.
00:02:35.100So I was aware of this as like a through line that we encountered and like had never really delved into like, oh, how does this keep coming up?
00:02:42.880And then she's like, oh, I'm way ahead of you.
00:03:28.840Because it's just there's a lot to say, but the sort of shortest answer is direct selling, door to door selling existed in the United States all the way back in the colonial era.
00:03:39.960Right. So as long as the United States has been around, there's been people selling things door to door.
00:03:45.200And in that early period, direct sellers were very important, you know, bringing goods, ceramics, you know, books, candles, whatever, when the United States was quite rural, right?
00:03:57.060So when we were an agrarian society, and that's really honestly when door-to-door selling peaked ever since.
00:04:03.740It's been something that sort of just declined.
00:04:06.000Obviously, as the United States industrialized and we became an urban society, someone going door-to-door selling was very quickly something that was outdated.
00:04:15.200And yet it persisted through the 20th century. And it was not until 1945, in the very beginning of this post-war moment in the United States, where these two men meet. They're working at the Douglas Aircraft Factory, which is in Southern California.
00:04:33.120And they kind of come upon a third guy whose name is Carl Renborg.
00:04:38.300And he was one of these door-to-door salesmen who was having a rough time.
00:04:42.800He had a homemade vitamin operation, which was itself a sort of nascent industry.
00:04:47.940He was selling an alfalfa vitamin where he was making all these outlandish claims about how it could, you know, cure cancer and make you thin and all this other stuff.
00:04:56.680Alfalfa, a weird, really recurring theme in the book.
00:04:59.480Like, yeah, like alfalfa comes up kind of a lot.
00:05:20.020Known for charlatanism, for being exploitative.
00:05:23.320And then the other man was a Stanford-educated psychologist who studied under Lewis Terman, graduated in the 30s and was a member of these prominent eugenicist circles in the 1930s out West doing research among incarcerated youths.
00:05:41.240And then started his own kind of self-help Dr. Ruth eugenicist pop psychology thing where he was going around and and doing occupational counseling, counseling couples and worked actually with Paul Popeno, another prominent West Coast eugenicist.
00:05:56.540So I just I love an evil Stanford cameo.
00:05:58.780It's like another recurring theme on our podcast.
00:06:01.500And like in the history of gender conservatism, we also have to talk about the role of our employer.
00:06:24.100The vitamin maker, despite him being a salesman.
00:06:27.020Renborg was not a doctor, has no advanced degree, in fact.
00:06:31.300But there's an endowed professorship in Stanford's Disease Prevention Research Center.
00:06:35.480So you can make a campus pilgrimage to his endowed chair.
00:06:38.300Anyway, okay, to make a long story short, these two men, they see this aging vitamin company, and they both sign on as salesmen at a certain point, and they see basically a vehicle for taking door-to-door selling, which exists as this kind of antiquated industry.
00:07:02.900No one really makes that much money, but it's around.
00:07:04.800And they decide instead of doing what normal direct selling outfits do, which is they sell people products at a wholesale discount and sell it at profit, right?
00:07:17.520They say, actually, we are going to allow people to buy the products and sell them like a normal company, but also bring on others under them in what's called their downline.
00:07:28.960So recruit a team in this business opportunity, and we're going to reward them based on what they buy and what those people who bring in under them buy rather than in the typical way giving commissions based on sales.
00:07:43.380So they basically take the worst part of door-to-door selling, which is the selling part, which is that nobody really wants to buy something door-to-door.
00:07:50.360It's always been this like weird kind of scammy and sort of unctuous thing that nobody wants to do, and they're going to get rid of that.
00:07:57.640So it doesn't matter whether you're actually selling to a customer because we're going to reward you based on what's called purchase volume, what you are buying, and then what everyone else under you is buying.
00:08:07.880And they say, you know, the genius thing is you're going to be able to make a team and as big as it gets, you will get a cut from what everyone is buying.
00:08:19.260Well, this is a point you come back to again and again, which is like the core of an MLM and what makes it different than another kind of business.
00:08:27.640is that it does not make its money from actually selling the product to consumers of that product,
00:08:33.480right? It makes its money from selling the product to people who are then going to sell
00:08:37.240the product, right? So it's not always clear that anybody is using the end product of an MLM,
00:08:43.600which in this like original case that you outline with our Stanford scammer is like an alfalfa-based
00:08:49.460vitamin, right? But then this can get sort of iterated over and over again and does as like
00:08:55.660the plan, as they call it, gets mimicked by other businesses, right? So it can be makeup. It can be,
00:09:02.840I think, in like the paradigmatic post-pandemic example, it's leggings, right? But like,
00:09:06.980it doesn't have to actually get used, which means it doesn't actually have to be very good.
00:09:13.580Right. And that's the number one misconception, which is because people describe MLM and they
00:09:18.420say you're making sales and you get a cut off of other people's sales that you bring in. But it's
00:09:22.820not sales. It's what everyone is buying, which, of course, is a problem and ends up being a problem
00:09:27.400once MLM has been around for a few decades, because what you're describing is a Ponzi.
00:09:32.000It's just a Ponzi scheme where instead of one guy saying, I'm going to take your investment
00:09:36.340and getting new investors, right, which is, of course, what Charles Ponzi did and how we get the
00:09:40.540name of a Ponzi scheme. But it's doing the exact same thing under the cover of selling a product.
00:09:48.180But the product is just exactly that, a cover up for an investment scheme.
00:09:56.960And this, for many reasons that the book gets into, has been covered up for years by misinformation and propaganda and political influence.
00:10:03.780And so it does feel it is a hammer that I hit over the head constantly in the book because it's so important to, like, remember that no sales are really happening here.
00:10:12.860Can I ask about the sort of gender politics of all this? Because it seems to me the prototypical sort of 19th, early 20th century salesman was a man preying on housewives, right? I mean, I don't remember what Willie Loman sells in Death of a Salesman, but like you're imagining it's something that like the lady of the house might want.
00:10:31.540And like the 19th century kind of Yankee figure, right, was often someone who was selling while the man of the house was away, basically, and came home to something that he didn't feel the family needed, but there was.
00:10:43.620But what you're describing now, where in some way the product isn't the makeup or the vitamins or whatever, it's the downline, it's more marks.
00:10:55.580that really seems to open the system up to affinity fraud, right?
00:10:59.020Whereas the salesman is someone who comes to town and is out of town
00:11:01.860by the time everyone figures out that that tincture doesn't do anything.
00:11:05.980Now we're talking kind of things that really are endemic in certain communities
00:11:10.400and don't almost leave those communities.
00:12:41.300In this post-war moment, women are going to work, not these women.0.90
00:12:44.220And then at night, the husband comes home and closes the sale. So they're working together in tandem and they really do offer it as a sort of way to move into this new modern era. You know, the post-war abundance Eisenhower era is happening and these people are going to take advantage of it, but it's not going to upend their gender relations.0.93
00:13:05.360In fact, it's actually going to bring them together and help, you know, quell some of the nervousness that is lingering from the actual war era where women did go to work and women became the heads of households when men were gone.
00:13:19.780And there was all this sort of tumult that maybe would have led to a bit of unrest, right, among women and particularly white women and white married women, which are very important in keeping the nuclear family unit intact.
00:13:32.720And so that's really absolutely a huge part of how they start MLM before it really becomes dominated by women.0.79
00:13:39.460The family that scams together stays together.0.91
00:13:42.040Truly, you make a really good point, Bridget, which is that, you know, during the FDR presidency and the New Deal, there was a fairly strong U.S. labor movement.
00:13:50.560And there were all these new protections for employees and new entitlements for employees.
00:13:55.840You know, if you are an employer of capital E employees, then you have to be paying into Social Security for them. Right. And one thing that direct selling offered was a way to get out from those kinds of obligations for employers. Right. And to create this other class of workers who didn't have the same entitlements.
00:14:20.320Yeah, the role that direct selling, so those door-to-door companies before MLM was invented in the 40s, the role that they played in solidifying independent contractor status as something that exists was not something I knew about before doing the research in my book.
00:14:37.420You know, independent contractors existed, but mostly in terms of tort law.
00:14:42.740So there was this way to keep people you worked with, you contracted with from being your full-time employees.
00:14:47.500But as you said, Moira, during the New Deal, this became a huge existential crisis, right?
00:14:51.900Because so many of these workers were at risk of becoming a huge burden financially to the companies that employed them.
00:14:57.880And the direct sellers were a big part of marching down to Congress and saying, no, no, no, you'll ruin our business.
00:15:03.180And you'll ruin, more importantly, the rhetoric was you'll ruin their livelihoods because these people, we rely on a huge amount of like low cost workers who are independent contractors.
00:15:17.140So turning this, what was very much marginalization into something positive or independent. And then you could argue that because of that marginalization, direct selling was already something that was kind of feminized in that it was this insecure workforce that was kept out of the typical Fordist sort of wage labor protections.
00:15:35.860And that's what also made it ripe for Mittenger and Castleberry, right? Because they're working with people who are lacking federal oversight, lacking protection. And then they planted this seed of like, no, no, no, this is going to be better for you. You're not being kept out. You're not being left out. You're not being marginalized. You're being empowered to build your own empire.
00:15:57.020And from the very beginning, it is in reaction to the New Deal.
00:16:02.080And then it becomes actually explicitly anti-communist, anti-socialist, anti-feminist project.
00:16:18.160It was like the, what's it called, Pepe Silva meme of the guy like drawing all the connections.
00:16:23.260I'm like, MLMs actually touch on all of these kind of like nefarious developments in the wage labor economy.
00:16:29.280Yeah, I'm feeling kind of the same way.
00:16:30.880Can I ask, is this also kind of a delayed reaction to the end of the Lochner era?
00:16:34.880Because it seems to me like the right to contract was this like big way in which labor organizing was forestalled for much of the first third of the 20th century in the United States.
00:16:44.080And then with FDR's court packing threats, that sort of ends.
00:16:48.800And then it sounds like five seconds later, people sort of fastened on to this.
00:16:54.920Is that also what's going on here to kind of preserve a more individualistic form of collective money making vis-a-vis what you would get through a union?
00:17:07.220And the way that MLMs operated then and today are almost a weird funhouse mirror, like demon version of a union because you do have these relationships that are incredibly personal and that are very much indebted to each other in the same way, say, a union steward is to a member, right?
00:17:28.740the way that a union uses affinity, an MLM uses, but it is the opposite of collective bargaining
00:17:35.240because the hierarchy is so strict and every single person has a boss and every single person
00:17:40.180has underlings. No one is really aligned on a collective struggle. You're actually forbid
00:17:46.860from talking to people who are at your line, like sort of at the same place as you in the MLM. It's
00:17:52.480called cross-lining and you're not supposed to do it. You're only supposed to complain
00:17:55.700upward to your upline who can tell you keep going it's fine and downward you're only supposed to
00:18:01.760pass positivity so it really is like the opposite it's a very it's a dark union you know yeah
00:18:08.480truly and the politics of the early mlm operators were very explicitly republican and then they
00:18:16.020dabbled in this sort of like free enterprise-y pseudo-libertarian stuff that was kind of bubbling
00:18:23.580in the 30s and 40s, you know, they were associated with Leonard Reed from the Foundation for Economic
00:18:29.540Education. They but they were also interested in Nixon. And then they really become aligned with
00:18:34.560Reagan once Amway comes into the picture. So that's their that's when they really start
00:18:38.560mobilizing politically. But before that, I think it is a reaction to not just the New Deal, but what
00:18:44.480the New Deal came out of, which was the Depression, which was this incredible crisis moment where
00:18:49.440people really did start thinking, how are we organizing society? What is our duty to each
00:18:55.460other? It was such a bad moment. It got so bad that, you know, everyone agreed that capital
00:19:01.080needed to be reined in and that for the collective benefit, capital needed to have controls. And
00:19:07.380that seed very much, it is a reaction against that right away. And how do we re-articulate?
00:19:14.500We can't go back to the Robert Barons. We can't go back to the Gilded Age because those guys are
00:19:17.900responsible for the depression, they have a bad rep. We need to somehow rebrand very individual
00:19:24.160Darwinistic capitalism, free enterprise at its most pure expression. But we need to do it from
00:19:30.340honestly a populist lens, right? That this is going to lead to democracy and to the greatest
00:19:35.720amount of benefit for free individuals. And that's what they're doing. Whether they sort of
00:19:39.900are as entrenched politically as you might think or not, they're doing that on a rhetorical level
00:19:44.440by empowering every single person to be the leader of their own Ponzi scheme.
00:19:48.020Yeah, there's a conflict at the center of MLM's rhetoric, right?
00:19:51.680Which I think speaks to its like ambiguous or like maybe malleable gendering,
00:19:56.860which is that on the one hand, MLMs are a idea for making money
00:20:01.540that makes you very, very interdependent on other people, right?
00:20:04.560And sometimes they will pitch this like mutuality,
00:20:08.420like we're all going to get rich together.
00:20:10.000We're all going to share in this prosperity.
00:20:13.260where in our own, you know, connections and hard work and our friendships will become a source of
00:20:18.740our wealth, right? And then on the other hand, there is this intense individualistic messaging
00:20:24.760as well. It can be like shifted between like one and the other, depending on which like gender or
00:20:29.860like which kind of a style they're looking to further their appeal towards. But there's also
00:20:35.560this very individualist, like a lot of pioneer rhetoric, a lot of military rhetoric, a lot of
00:20:40.820sense of the individual salesperson as the master of, I think in this case, usually his
00:20:46.040own domain, his own fate that can undercut solidarity independence because its pitch
00:21:09.400So there is this total contradiction between the growth that will enable us all to change our circumstances and what happens when you join an MLM, which is you are literally choosing a place in a fixed hierarchy where you have people above you who will always be above you no matter what.
00:21:25.540And your only consolation is that you can try to build your own little empire under you, which is why it's also like incredibly monarchical.
00:21:33.300Like it is it is a little dynasty kingdom. And yet it's all this free enterprise, you know, America, rah, rah, talk.
00:21:41.760And meanwhile, the downlines of some of these MLMs have been around for now 50 years.
00:21:46.140They are literally dynasties and you can pass it on.
00:21:48.660You can die and give your spot in the hierarchy to your offspring, just like inherited wealth.
00:21:54.800You know, it couldn't be further from democracy.
00:21:57.100What is that line from Homer Simpson? They look deep inside my soul and assign me a number based on the order in which I joined.
00:23:27.120But these are scams that have been around for a long time. What are the numbers? How many Americans are in these? How ingrained in American life are they? Do they exist everywhere? Are they really because they come out of these affinity fraud situations much more present in certain areas?
00:23:44.120I know that Provo, Utah is famous for being kind of scam capital USA, but is that just because they do a little bit more in percentages or are we really talking about certain areas of the country where this is far more endemic than in others?
00:24:04.880They're very underreported, underexamined.
00:24:07.340All the data we have is self-reported by the industry itself.
00:24:10.460And there's actually a battle in the industry, you know, because they're fighting against the perception that they are pyramid schemes, they really want to underplay how many people are involved because they want to seem like they have real customers.
00:24:23.160So there is this fight over like demarcating customers from participants, because once you understand that almost all of the people who participate are the customers themselves, which is why you've never seen an MLM product in the wild, then that's really more evidence that it's a pyramid scheme.
00:24:38.520So, you know, at certain times in the 1970s, one in eight Americans had been involved in one of these pyramid companies.
00:24:48.060Now they'll say maybe it's around seven million, six million people a year.
00:24:51.580But again, I think a vast undercount because also so many people churn in and out and they'll try it and immediately understand it's a pyramid scheme and stop.
00:25:00.420And there's a lot of shame and sort of embarrassment associated with that.
00:25:03.300And then that's just the United States.
00:25:05.960And MLM has actually been, the majority of participants have been overseas since the 1980s.
00:25:12.240So global south, eastern Europe, and now China and India, which are the biggest kind of gets for the industry since those countries have huge populations and had at one point exploding middle class populations, which is kind of where they go in.
00:25:24.280You know, MLM really expanded with U.S. imperialism, honestly, and the sort of march of the kind of American capitalist order.
00:25:35.100You can follow MLM like literally going into the Soviet Union once it collapses like that.
00:25:39.740That's how much you can kind of track it.
00:25:41.620And so, unfortunately, it is all over the world.
00:25:44.400It is an untold amount of people not to be scary.
00:25:48.300We sold them a Big Mac with one hand and a vitamin supplement with the other.
00:25:53.380Yeah. Something I loved about the book was like reading along and figuring out where you found a lawsuit because like so much of your research and so much of the information you're getting because these groups are incentivized to be kind of secretive about their actual operations.
00:26:10.720So much of the information you're getting is from like FDA and like FEC lawsuits against these companies and attempts to regulate them to which they will have to like tweak or they'll have to stop making a certain claim or they'll have to like adjust their compensation structure in some way.
00:26:29.140And it's clear that, like, it's not that there has been no attempt at, like, a regulatory enforcement.
00:26:36.920It's that the line between what is a legitimate business and what is an illegal pyramid scheme seems to be quite blurry and perhaps something that, like, some regulators are incentivized to, like, keep blurry.
00:26:52.020Yeah, by the time MLMs had been around long enough, because this really was an invention.
00:26:57.060Like no one had paired the Ponzi with a direct sales outfit so elegantly before.
00:27:03.600And the plan really did just get copied all over the country, which was another big part of the book is for decades, these companies sort of presented themselves with the kind of ingenious origin story that we get for Apple or for Facebook or whatever, that it's these mavericks and they come up with this amazing scheme, whether it's Amway, whether it's Herbalife or Mary Kay.
00:27:26.420And what I was able to do was track how these people, just like a virus spreading or a map, you can actually just trace how they pick up the plan in one company and bring it to their own.
00:27:38.080It really is just like this web of people doing the same fraud.
00:27:41.840And so by the time we get to the 70s when they've been around long enough, it's clear that this is something very harmful.
00:27:46.740People are spending a lot of money and they're not making it back.
00:27:50.120What they're told about how easy it is to recruit and grow never works the way it says it does.
00:27:56.420And some of the companies are scammy enough and they become actually quite masculine during the 60s and 70s.
00:28:03.660They do this kind of like alligator shoe gangster thing.
00:28:08.200The get rich quick kind of skeevy guy.
00:28:10.700Those companies are being built that way, primarily in California, and they attract a lot of regulatory attention.
00:28:16.760And so what's happened on the other side is the more conservative companies, which are Amway and Mary Kay, and they're also very explicitly conservative and Christian.
00:28:25.040they've been sort of seeding political support and basically building up this false divide where
00:28:32.140those are the bad Apple companies and we're the good companies. And so by the time the FTC is
00:28:36.540ready to crack down on the biggest MLM companies in the country, Amway is the most politically
00:28:42.120influential and powerful. And if people don't know, Richard DeVos and J. Van Andel are the
00:28:47.760founders of Amway, DeVos as in Betsy DeVos's father-in-law. And they by then have become
00:28:52.820huge members of the GOP, like funneling millions of dollars every year. They've helped start
00:28:58.600Heritage. Jay Van Andel is the head of the U.S. Chamber of Commerce. And they are extremely
00:29:04.020powerful and influential people. And the FTC basically says, OK, we've shut down some of
00:29:09.180the worst offenders. We're going to allow Amway to continue its business model. They don't even
00:29:14.120really open Amway's books and they just take Amway's word for it that it has these rules in
00:29:18.940place that keep it from being a pyramid scheme. It's called the Amway rules. They make that
00:29:22.720decision in 1979 against a huge backlash, this right-wing reactionary backlash that we now call
00:29:29.200the new right, much of it focused on the FTC itself. So the agency actually making the decision
00:29:33.460against Amway, which I go into in the book in detail, basically the FTC kind of puts its hands
00:29:38.420up and says, okay, fine. This business model, we'll let it go through. Legitimate multi-level
00:29:43.180marketing exists. And that is a moment that unleashes MLM across the world through Reagan
00:29:49.640And Bush won. There's not a single prosecution against a pyramid company. And that's when it literally spreads everywhere like a horrible virus. And so that's the only reason that it's, quote, legal. MLM's never been on trial. There's not a SCOTUS decision. There's no legislation. Right. It's just legal in this gray area.
00:30:07.280You say that there's really no numbers on this. The IRS can't know this kind of thing. Like, what are the reporting rules around this stuff?
00:30:14.480The IRS could actually, you know, tell us maybe how many people are reporting themselves as direct sellers on their taxes if they're doing their taxes.
00:30:23.220For many years, MLMs have been accused of teaching people basically how to do tax fraud.
00:30:33.060So in the 80s, actually, right after this decision, the next scandal for the Amway founders was being hauled in front of Congress to testify that they weren't doing tax fraud.
00:30:42.880And of course, in Congress, J.V. Nindal is testifying and they play a tape recorded secretly by agents who had observed a former IRS agent, current Amway distributor, telling people, put your kids as your assistants, write off your dog as your security, you know, basically teaching people how to keep as much money from going back into public coffers as possible.
00:31:04.880All of which, maybe just very briefly, because this is also a financial service podcast. No, it's not. All that's tax fraud, by the way. It's very important.
00:31:16.220I mean, one of the things I love about the book is that because MLMs are so exploitative and because so many of their sort of internal mythologies rely upon this like genius founder or genius inventor figure, it's got so many of these characters where you're just kind of reading and just like slack-jawed at the audacity of these fucking people to like commit these extreme frauds.
00:31:43.280and, like, wildly lie to and exploit gullible members of their downline
00:31:48.440and all the way up to, like, members of Congress, right?
00:31:51.600And there's all these, like, little asides in your book where you're like,
00:31:55.540well, here are the six frauds he committed before he founded MLM.
00:32:03.340And MLM is, to me, in these moments where—
00:32:08.240and I feel like we're in one now, not to, like, bring it all the way back to the present,
00:32:11.200But like, for example, it's like abundance discourse and this sort of like, where are we on the left? What can we do here in this moment where it's like, how how much do we need to confront capital? How much do we need to abandon this system that we have? And if you look at the history of MLM, it's deployed at every moment where that question comes up.
00:32:29.240And so the guys that come out in front are these like extreme figures because the movement does need somebody that's going to tell a story because it comes at a crisis.
00:32:40.260Right. Like that's why the 70s are such an important moment for MLM, because stagflation is so bad.
00:32:45.500The world economy is so bad where these questions of maybe we will become communists, maybe we will become socialists, maybe we will become feminists like young people, housewives, you know, the consumer movement, the civil rights movement.
00:32:59.240These are building against a backdrop of real uncertainty.
00:33:04.220And so you need these figures, the people that are going to come out and recruit people to the other side, like, no, we're going to fix capitalism with more capitalism.
00:33:11.640They have to be these like incredibly charismatic and sort of deranged figures.
00:33:18.040They're the ones who are going to help tell the story to smooth over the contradictions of capitalism.
00:33:22.660And MLM really actually makes you pause and say, wait, are they contradictions or are they lies?
00:33:28.140And there's this other side to it, right? Because while the people who are telling the story that is supposed to smooth over the contradictions of capitalism are often very charismatic and endowed with this quasi-pathological confidence or just dishonesty, there's also the other side, which is the people who fall for MLMs.
00:33:47.240are I think often they reminded me often in your account of the people who get like recruited to
00:33:52.740extremist organizations or the people who get recruited into like religious cults. It's like
00:33:58.400people from demographics or who are personally just being sort of like tossed around by the
00:34:03.980tides of history, right? Like people who are of a demographic that is getting exploited or having
00:34:08.720their status changed in very quick succession. And I think like the beautiful merger of these two,
00:34:15.480the charismatic leader and the vulnerable demographic comes to us in Mary Kay, who is1.00
00:34:21.860such a psycho, Bridget. I did not know anything about this woman before. I just knew it. I knew0.97
00:34:28.600the pink Cadillac like a lot of people do. Full psycho. Tell me about Mary Kay because I was so0.88
00:34:33.500fascinated by her. Mary Kay is a crucially important figure in MLM because I really think
00:34:40.600women helped sell MLM in a way that proved existentially, it made it existentially viable0.95
00:34:46.520in a way that I actually think that if you only had Amway, the like weird conservative0.51
00:34:51.800Christian Michigan Calvinists, and then the like scammy guys in San Francisco was a big one
00:34:58.200called Holiday Magic and another one called Coscott, the California sort of slick suited guys,
00:35:05.160I think it might have collapsed because you don't have like a good avatar. You don't have a
00:35:10.000sympathetic figure at the bottom to sell this like populist story that you're telling they really1.00
00:35:15.720needed women to sell the story that it was a populist way to transform people's circumstances1.00
00:35:23.100who deserved it you know single moms widows housewives that they were turning these sort of1.00
00:35:31.120powerless figures into powerful you know american entrepreneurs and mary kay was an early company1.00
00:35:38.520She started her company in the early 60s.
00:35:41.260And again, with this story that was just like, oh, she was in regular old direct selling and came up with this amazing method.
00:35:49.680And it just stuck with me because it was like, OK, if she really did come up with this on her own, maybe MLM isn't just this copied fraud all over the country.
00:35:58.780She loved telling her origin story, which is that, you know, she was going to start her own makeup company.
00:36:30.020You know, it's very obvious, sort of her kind of cultural politics for sure.1.00
00:36:36.000But she's also a little modern in that she is a female CEO.1.00
00:36:41.740She starts her company and is telling women, like, you can make your own money.1.00
00:36:45.560And she rides that line really effectively.
00:36:48.060But what I was able to uncover was that her husband simply trained in another pyramid company before he died and just learned the plan.
00:36:56.500That twist at the end of that chapter.
00:36:58.120It's like, dun-dun-dun, he worked for Nutribio.
00:37:00.680It was so, like, because it looked in the history as if Mary Kay had sort of sui generis, like, reinvented the wheel all by herself.
00:37:09.280And then you discover that the breakfast table dead husband had, in fact, been working for one of these vitamin companies, like, just six months before he died or something, right?
00:37:16.980And he had very clearly just, like, brought home the plan, this, like, scam model, and, like, delivered it to his wife.
00:37:24.960And then after his death, she ran with it.0.80
00:37:27.200And they're so smart to go to women because women are even less, you know, the idea that they're going to scam each other.0.65
00:37:33.200And the early coverage of Mary Kay is so telling because even the New York Times is comparing it to Avon, which Avon is at this point regular direct selling.
00:37:42.240And the headline of the article is something like they held a morning party to try on makeup like it couldn't be more frivolous.
00:37:49.920And so no one looked at Mary Kay, who was this grandmother, you know, talking about God and the bumblebee, which is her sort of avatar for like a small creature that like does more than it should biologically or something.
00:38:12.080There's an amazing, robust Mary Kay truther community called Pink Truth.
00:38:16.300And they long ago uncovered other birth certificates that I was able to fact check and also bring up that she was constantly marrying guys, which just means that she always had another source of income.
00:38:27.220So from the very beginning, the idea that she was making an actual livable income and paying for her children with direct selling alone was never possible.
00:38:34.560You know, no one was ever really making money.
00:38:36.280One of her early recruits wrote this amazing expose where, you know, Mary Kay is like, she's the ultimate sort of like, we could have metooed Mary Kay for, you know, this woman says, I'm going to get pregnant.
00:38:59.040So in sort of suppressing the fact that these MLMs all learn from each other, basically they rely on a story.
00:39:05.960I must admit that I don't know how they self-present at all, but the legend would be something like Mary Kay Ash, I guess is her name, right?
00:39:13.160You know, had a store that was so successful that she had to share with the world.
00:39:17.140Is that sort of the way they frame it?
00:39:19.220I'm just trying to sort of understand what the fake story even is.
00:39:21.860Yeah. The plan wise, it's always just that they realize it's the compensation system that's this incredible innovation that's almost on par with like the Internet.
00:39:32.980And truly, in terms of they've figured out a sales tactic, or they'll even call it a science.
00:39:38.260The idea that the compensation structure itself is the innovation.
00:39:42.540And usually it follows that same story that the original guys were telling, which is like they're sitting around talking about sales and how, oh, these are all these problems with sales.
00:39:51.100And wouldn't it be great if, you know, instead of salesmen, they bring people in, salesmen are really good.
00:39:56.520And what always happens is, you know, your salesman that you train is so good, but then they get promoted out of your team.
00:40:01.720And so you're not getting the credit anymore.
00:40:03.820So wouldn't it be amazing if you could keep those salesmen forever?
00:40:07.000So it's always some version of that.0.96
00:40:08.240And with Mary Kay, it was like all about empowering women who were working at home.
00:40:12.480It was giving them flexible work and they were incentivized to build a team who were really good.
00:40:17.920And of course, that story makes sense if everyone's good at actually selling things.
00:40:21.420But if the only thing you have to be good at is inducing other people into the scheme, uh-oh, we're back at a pyramid scheme.
00:40:54.000Yeah, it's fascinating that you note in the book that Mary Kay starts her cosmetics company the exact same year, 1963, that Betty Friedan, friend of the pod, publishes The Feminine Mystique, which is a book about getting women out of a psychically oppressive housewife role and into more meaningful and dignified, like, paid work outside the home, right?
00:41:15.580That was Betty Friedan's prescription for solving the problem that has no name.
00:41:19.880And there's a way in which Mary Kay is taking that advice, right?
00:41:24.520It's women's entrepreneurship, women as this kind of like pioneering, acquisitive, self-reliant model that we often see ascribed to like the American man.
00:41:35.420But at the same time, Mary Kay's gender politics are very, very conservative in this other way where the woman as the capitalist entrepreneur is being merged with the woman as the like object of beauty, the object of like superior grooming and decorum.
00:41:51.540And this is really on display at something that you do see like sort of manifesting at some other MLMs, these like large group gatherings where the ideology of the company is sort of like drilled in in this like quasi-religious ritualized way.
00:42:06.540But I think Mary Kay does this in a way that was like insane to me. Right. Which is these they're called seminars in which the top sellers are basically paraded in a beauty pageant. Right. It's like an insane little performance that they put on.
00:42:22.920Yeah, I love the term seminar because it's so deliberately sort of academic almost, right?
00:42:28.740But it's a pageant and they're wearing furs and ball gowns and sashes and they're getting awards just like a pageant, which in Dallas, where Mary Kay started her company, would have been, right, like very culturally salient, like something people really understood and wanted to be a part of.
00:42:44.660And, you know, the women being celebrated, right, they're top buyers, but we're calling them saleswomen.
00:42:50.760So it's also just transforming what they do and literally turning their exploitation, how much they're buying, which for many of them is like literally credit card debt, you know, nowadays.
00:43:03.600And back then would have just been buying, buying vitamins that they maybe stashed in their basements and calling them sales, which, like we've just discussed, was previously this masculine identity, right?
00:43:13.540So to be a saleswoman is very exciting.
00:43:52.680His face is like crumpled into disappointment over the course of this conversation.
00:43:58.240But so one question I had about the seminar is like that's self-help stuff, too.
00:44:02.260I feel like our friends over at If Books Could Kill always make this point that half the self-help books seem to like come or 90 percent of self-help books seem to come down on like,0.98
00:44:10.520hey, if you really want to be rich, give seminars for other idiots.0.84
00:44:15.720And then they also, I mean, it's the same downline idea, except with like The Secret or something like that.0.99
00:44:21.660So I'm guessing that that sort of evolves in tandem?
00:44:25.260Oh, yeah. I mean, MLM actually helped fuel the self-help movement as we know it today.
00:44:30.580And also, on the other side, tapped into the self-help movement as it existed.
00:44:35.340So the alignment between multiple marketing and how it takes up from the positive thinking movement is huge. And by positive thinking, I mean the sort of new thought movement that comes out of the end of the 19th century.
00:44:51.340one of the most important female figures of that is mary baker eddie who founds christian science
00:44:56.980right after the civil war and that really comes out of this like anxiety about middle-class0.99
00:45:02.480americans but specifically middle-class women like as rapid industrialization and you know
00:45:07.080all these changes in american society are happening women like don't have the same prescribed role0.99
00:45:13.240that they once did um obviously if you're a working woman and you have to like go work in1.00
00:45:17.220a factory to support your kids. You have a role and it sucks. But for middle class women, like,1.00
00:45:22.460what are they going to do? Who are they going to be? And Christian science, this idea that you can1.00
00:45:26.480actually change your physical environment with your mind and that all of this unrest inside that
00:45:32.260you can, the answer is within you. We don't have to do anything to change society. We just have to
00:45:37.320go inside. Like, that is where that comes from. And the way that that then leads into a kind of
00:45:43.840sales version of that self-help one of the biggest books at the time that did this and again new
00:45:49.560thought has a huge resurgence after the depression when there again is all this unrest um and one of
00:45:54.260those is called think and grow rich yeah by napoleon hill which is of course like he's a0.98
00:45:58.760charlatan abuser like crazy piece of shit also like starts some companies that start to look0.96
00:46:05.300like mlms because they're based on recruiting but anyway think and grow rich like some of the early0.98
00:46:10.720MLM guys, just take that book and copy it and do their own little tweaks. And those are early MLM
00:46:15.660books. Mary Kay does the same thing. They take his concepts like calling sales sharing. That's
00:46:22.060Napoleon Hill, the go-giver rather than the go-getter, which again is this amazing rebrand
00:46:27.920of sales. Like, oh no, I'm not a go-getter. I'm giving. I'm not like a creepy salesman. I'm
00:46:33.540sharing with you. You know, they take that from her. And then of course, in the fifties,1.00
00:46:37.660Norman Vincent Peale when he writes The Power of Positive Thinking. That's a huge bestseller.
00:46:43.380He's really closely associated with MLM in different ways. And of course, he becomes
00:46:47.500Donald Trump's childhood preacher. And that is where Donald Trump learns positive thinking.
00:46:52.680Fucking A. I told you. I knew we were going to get there and I was like, fuck. God damn it.1.00
00:46:58.680And Mary Kay, Mary Kay in the 70s, again, another moment, like truly it tracks over like every time0.99
00:47:06.240we have a bust where it's like an uh-oh moment in the global capital order the self-help movement0.89
00:47:13.780really explodes and the mlm people are huge on that circuit they call them positive mental
00:47:18.860attitude rallies and the devos and van andel people the amway people they pay for it they
00:47:24.500team up with robert schiller who's this california televangelist and mary k is big on these circuits
00:47:29.820and they're just like keep going keep going nobody question anything very specifically don't join
00:47:36.040a political movement. Don't join a union. Just keep your nose to the grindstone. And she's a
00:47:42.580big part of that. And now that, of course, has exploded. Like, you know, the world of podcasts,
00:47:47.900audiobooks, speeches, seminars is its own cottage industry. And you can directly connect the lines
00:47:54.880and I can do it if you want, or people can buy the book. But Tony Robbins, directly connected
00:47:59.800to MLM. Keith Ranieri from Nixxiom, directly connected to MLM. Est, Werner Erhard, directly
00:48:05.460connected landmark forum could keep going but i won't but anyway that's how big it gets jesus
00:48:11.760bridget i think your lunch hour might be wrapping up so we should let you go but i really want our
00:48:16.600listeners to buy and read your book so i have more people to talk about it with because it is
00:48:23.380so densely researched it is so propulsive it is so weird at times and it really did just unlock
00:48:30.240so much about this like nefarious network of American capitalism and the psychology behind
00:48:36.740it for me. It feels like when you're at the eye doctor and they like click the lens into place
00:48:42.080and suddenly you can like see everything. That's kind of what reading your book felt like for me.
00:48:46.280So I really recommend people to pick up Little Bosses Everywhere. It's a great read.
00:48:50.780I initially got the feeling that like, oh, well, the other thing that reminds me of, of course,
00:48:55.000is investing in Silicon Valley, which often also has the feeling of affinity fraud. But then I
00:48:59.800realized, and we're also, frankly, the first thing any founder is supposed to do is do a friends and
00:49:05.280family round, which feels a lot like this. On the other hand, you've just described this awful kind
00:49:12.320of maze that these people have to navigate and this sort of nightmare sort of hamster wheel0.97
00:49:17.200scenario, which is horrible when it happens to middle class people and deeply funny when it
00:49:20.920happens to the rich. So I do think Silicon Valley at least has a decency to do an MLM on the mega
00:49:27.080rich which is in its own way funny uh so thank you elizabeth holmes yeah yeah in a rare tip of
00:49:33.920the hat to silicon valley thank you for not doing this to america's lower middle class but just
00:49:40.580doing it to people with a pool right if they weren't also making things that are gonna ruin
00:49:45.320the world that might be even more funny i'll just say like i do think there is this this feeling of
00:49:52.000like, how can a pyramid scheme be useful to us in terms of, you know, being a paradigm?
00:49:58.140How can we use it to sort of make parallels?
00:50:00.200And, you know, Elon Musk recently and lots of lots of conservatives do this.
00:50:05.200He called Social Security a Ponzi scheme, right?
00:50:25.800Now, that's where we can draw a line with maybe not the way necessarily Silicon Valley is actually funded.
00:50:32.220If there really is a product that one could argue has a utility and has a customer base, right?
00:50:37.600That market, the demand and the supply, maybe it really exists.
00:50:41.560But it does rely on this like constant gesture to the future and constant gesture to growth.
00:50:46.980And that we if we allow mega, mega, mega growth by individuals, that it will trickle down to us all and deliver this future for us and that any attempt to impinge on that growth is detrimental.
00:50:59.920Right. Like that story with which Silicon Valley justifies all of its harms, that that growth will one day we will feel the benefits of all of it.
00:51:09.140that is the ideology of MLM. When you get to the end of the day and you look at the structure that
00:51:15.960you've created where a huge amount of wealth is kept by a tiny group, MLM is what teaches you to
00:51:23.420say, I'm not going to get mad about that. I'm going to just build my own under, right? And even
00:51:29.420as more and more evidence that none of us have time to build our own Amazon, to build our own
00:51:35.640Facebook, you know, it's eating us all. The idea that we're all going to be able to have equal
00:51:41.020chance to do that is so laughable. Right. But that's like really what MLM has truly embedded
00:51:45.940in people's hearts and minds for 80 years and now has escaped containment. And I really think is
00:51:51.200what keeps people from getting mad. Right. And taking to the streets when they look at a Bezos
00:51:55.620that they look at those, you know, true oligarchs standing behind Trump. You know, it's like, no,
00:52:00.780no, don't worry, I'm going to be my own girl boss.
00:52:03.500It teaches people to quash their own inner dissent
00:52:06.820and to really keep from seeing brighter futures.
00:52:11.600This has really been eye-opening and terrifying.