Are you in a Pyramid Scheme just because an MLM or network marketing organization is shaped like a pyramid? 

In this post, we're going to be talking about the difference between a pyramid scheme and a pyramid shape. 

Now, when you first look at the shape of a network marketing company, what do you see? 

 

 

 

 

Well, the average person is going to say, “Oh, well that's a pyramid scheme.” The reason they think this is because they are confused about the difference between a pyramid shape and a pyramid scheme. Did you know that this pyramid shape just happens to be the same shape as the US Navy Seal team?

 

I wrote an article about how to know if something is an illegal pyramid scheme or a legitimate, legal network marketing or MLM business opportunity, which you can read here

In this article I am going to discuss why network marketing and MLM use the pyramid shape as its business model.

So, let me break this down for you so that you can understand why both network marketing and the US Navy Seal Team use this structure.

In the US Navy Seal Team, the way it works at the basic level is that there’s a fire team leader and he has four “shooters”. That's the basic unit of all the special operations, whether seal team, explosive ordinance disposal or US Navy divers. 

 

 

Above this basic unit, you have the “squad leader”, and the squad leader has four “fire team” leaders. Above the squad leader, you have a “platoon leader” who has four squad leaders, and then it goes up another level with a company, which has four platoon leaders. 

That is the structure. Now, why is that the structure? It's really simple. It's called “decentralized command.” 

 

 

If you're planning on building an ever-expanding organization, then you wouldn’t want to have one “monarch” who is running everything and everybody reports to that one monarch because there's no way that a person can handle that much traffic.

And so the way it works is that this platoon leader is in charge of four squads. Squad leaders report to him, especially in a combat environment where things get very chaotic and things are moving very, very fast. There's no way that the platoon leader can know what's going on with each of the shooters. And so that's the reason that you want to delegate responsibility in certain amounts down the chain. That squad leader is responsible for all of his fire team leaders. And then the fire team leader is responsible for his shooters, and the shooters are responsible for the shooting. It's as simple as it gets. 

In network marketing, that pyramid-like structure is the foundation for expansion. Let's say that I come in, I get a team of four people, I train them how to get customers and I train them how to get additional representatives. And then each of my four people is in charge of his group, and the group can grow, but I'm still in charge of just my four.

I hope that helps you differentiate between a pyramid-shaped organizational structure and a pyramid scheme. 

If you have any questions, just leave them in the comments below and I’ll answer you. Or, if you want to just leave a comment, I'd appreciate it. 

 

Tim