Wednesday, December 01, 2010

Depressions Suck

Three things happened today that struck me as part of a pattern.

1. I received an email from American Express (with whom I have a card that I never use) promoting something called "Small Business Saturday":

Imagine a day when everyone comes together to support small businesses. A day when everyone helps boost our local economies and preserve neighborhood character.

That day is November 27, 2010, the first-ever Small Business SaturdaySM.

JOIN THE MOVEMENT, AND SPREAD THE WORD ABOUT SMALL BUSINESS SATURDAY ON FACEBOOK.

We will donate $1 for each "Like" on Facebook—up to $500,000¹—to Girls Inc. to help teach and empower young women to be the entrepreneurs of tomorrow.

GET $25² FOR SHOPPING ON SMALL BUSINESS SATURDAY.

As part of our commitment to supporting small businesses, we will give you a $25 statement credit when you make a purchase at your favorite local stores and restaurants on Small Business Saturday. Enroll and use your registered American Express® Card. Availability is limited, so enroll today.

2. I received a facebook message from the younger brother of one of my best friends from high school. After a brief how-ya-doin', friend's younger brother's (FYB) email proceeds:

Just recently, I obtained a dealership for an environmental-conditioning technology company that has been one of the fastest growing companies in America, [Company X]. For 23 years, they have been designing and producing cutting edge Environmental and Energy technologies . . . . Clean air, pure water, clean clothes, good nutrition and clean electricity provide long term benefits for not only the earth and the environment but also our loved ones.

The best part is our ability to provide healthy living technologies at your fingertips, without ever leaving the comfort of your own home. Please look over my new online virtual stores and let me know what you think. Right now we have some great holiday specials that you might be interested in. I'd love to hear your opinion and if you care to share it with those you love, feel free to do so.

Would you like to do your shopping online this year, from the comfort of your own home?

Would you like to give a Gift of Health to the people you love with some unique items you won't find anywhere else?

Would you like to skip the shopping traffic, crowds and check-out lines?

Relax in your own home/computer chair and simply browse through our online Healthy Living Stores to select items or gifts for special occasions all year long.

As near as I can tell, this company is basically network marketing.

3. At work today, we had a visit from a representative of an independent research institute that's a pretty big deal in the southwest (big enough for me to have heard about it back when I lived there). She was in town for an "industry day" sponsored by another division of the company I work for, but had secured an opportunity to make a pitch to us. Her own business card identified her simply as a "manager", but she brought up on the speakerphone an engineer who obviously worked in my own area of expertise. The two of us dominated the conversation for about twenty minutes, which wasn't hard since there were only three of us in the room.

Question: What do these three have in common?

Answer: Desperation.

Let's take item 2 first since it's the easiest. I remember my first introduction to modern network marketing. It was in the middle of the recession of the early nineties. I was living in the southwest, and I remember hearing about the pay scale at the research institute in item 3 and being appalled at how much lower it was than the engineering salaries of a few years earlier, and even then it was supposedly difficult to get a job there.

But anyway, I received several network marketing pitches from casual acquaintances in fairly short order. The first guy, before I knew how this thing worked, actually got me to attend a meeting, convened in a massive auditorium, wherein the host (who I swear looked exactly like Wayne Newton) invited everyone who had achieved the "Level 1" level of sales to stand. Hundreds of people stood. He proceeded to work his way up the levels until he arrived at the "full time" level at which participants earned the princely annual salary of . . . $20K. As I remember, only 3 - 4 people were standing at this point.

The second time was actually a personal sit-down. Someone at work, junior to me in the company hierarchy, asked to come by to discuss what I got the impression was a personal problem he was having. He showed up with a fellow network marketeer who made the bulk of the pitch; evidently, this was Training Day.

"So . . . ," I said at some point in the presentation, "this is basically a pyramid scheme."

"NO IT ISN'T!" he hotly denied. "WE HAVE AN FTC RULING THAT SAYS IT ISN'T!"

"Look, I'm not making a moral judgment here," I replied, "but it's mathematically tautalogical that everyone who succeeds at making the kind of income at this you're talking about will need hundreds of people under him also hoping to make this kind of income. At some point you will reach market saturation, and judging by the number of people I already know that are doing something like this, that point is already at hand."

Well, here we are in another recession. FYB originally friended me on Facebook early in the year and his newsfeed was already showing the network marketing symptoms. You know what I mean: the investing the project with quasi- (and not-so-quasi-) religiosity. The self-help jargon about overcoming adversity with hope. The kind of thing that makes a chronically depressive personality like mine think, oh sh!t, I hope this works out for him, but my expectations are low. Sure enough, he's now reduced to pimping his products directly to his real-life friends, friends like me who, were he to call and say that he had a job offer in my city and needed a place to stay while he got settled, would reply without hesitation: Come on up. You and your family are welcome as long as you need.

Now let's consider item 1. I don't have a lot of visibility into whatever scheme AmEx has cooked up here, nor do I know which businesses count as "small" and which do not. I have no idea how much of the promised $25 comes out of the AmEx end of the transaction and how much comes out of the merchant end, but I do know on the face of it that nobody can make money this way. So what's the angle? Incentives to try new stores? Incentives to start using AmEx? I can't imagine a thriving enterprise would be trying stuff like this.

Finally, item 3. What made the presentation so pathetic was that of all the recipients of the invitation, the only person (other than the meeting organizer) who bothered to show up on time was . . . me. We did have a couple of people show up about half way through, one of whom was my boss, but the fact is that none of us do development, nor do we have much influence over how money gets spent. The best the meeting organizer could do was to tell the research institute rep: here's the front door to our acquisition effort. Well, DUH! This manager, who was clearly trying really hard to sell her institute and its services, wouldn't be here if she didn't know where the front door was. I felt really bad for wasting her time.

But this is where the recession has brought us. An increasing number of people putting in an increasing amount of effort to achieve ever diminishing returns. The question crossed my mind, how hungry would I have to be to undertake this kind of work? Pretty hungry, I think.

1 comment:

ironrailsironweights said...

#1 sounds like a well-thought-out marketing campaign that American Express is orchestrating. It gets people to feel good about themselves by supporting small local businesses, while at the same time boosting its own revenues.

Now that I'm in sales I know what the woman in scenario #3 was doing: scheduling as many presentations as possible, knowing that most of them will go nowhere, in the hopes that a few will turn out to be highly productive. It's just the nature of the business. She's probably very annoyed with your company's meeting organizer for the latter's failure to do a better job at getting people to attend.

It goes without saying that #2 is a stinks-of-desperation pyramid scheme. These things have been around for ages* and undoubtedly will be around for ages to come. It could be that they've become more common, I really don't know.

* = allegedly, the Ku Klux Klan was the first major pyramid scheme in America

Peter