 Modern day Sheikh Chili (An insight on MLM Schemes)
Modern day Sheikh Chili (An insight on MLM Schemes)
- CA Pritam Mahure (Author is a practicing CA from Pune. He is also visiting faculty at many B-schools. This article is written purely for information and to educate. This is not a legal advice.)
Remember in childhood we had a lesson in Hindi in which a fool named Sheikh Chili who sits on tree & dreams that he will be a richest person by buying a hen. He thinks the hen he will buy will give 2 eggs. From those two eggs two chickens will be born. Then the two chickens will give two more eggs and From those two eggs two chickens will be born and so on…And soon he will own a Hen Farm & will be richest person in village. Suddenly he falls off the tree only to realise that he is dreaming
Now lets meet the modern day Sheikh Chili. Someday back I got a sms from my friend & it was “Want to earn Rs 44,44,444 in a month?” I was taken aback. I wondered what is he talking about till I called him. He told me to join him for a seminar where they will tell the Magic Plan of earning. Now I knew what he must be talking about because in past I been victim of such a seminar (where I was rather forced to come). I decided not to go but he called and requested me so many times that I had to go. I went to the hotel where seminar was arranged. When entered the hotel I saw people discussing in groups. Then all the people like me were asked to sit in a lavish room where presentation was to take place.
The presentations started with some questions like “Do you want earn 44,44,444 in a month?. Do you want own a bungalow & car?”. Every one from the audience said “yes”. Then the guy introduced himself as a veterinary doctor & he felt to help people to earn good money hence he joined this organisation. He gave audience two options to choose from,
1 crore after a month or
Re 1 today, Re. 2 on next day, Re 4 on 3rd day & like that till the end of 31st Day.
Many people choose the 1st option. Then he showed (what he called power of multiplication) as follows,
Date Earnings (Rs) Date Earnings (Rs) Date Earnings (Rs)
1 1 11 1,024 21 1,048,576
2 2 12 2,048 22 2,097,152
3 4 13 4,096 23 4,194,304
4 8 14 8,192 24 8,388,608
5 16 15 16,384 25 16,777,216
6 32 16 32,768 26 33,554,432
7 64 17 65,536 27 67,108,864
8 128 18 131,072 28 134,217,728
9 256 19 262,144 29 268,435,456
10 512 20 524,288 30 536,870,912
He told the audience that had they chosen 2nd option they would be richer as they would have earned more than Rs 53 cores (see amount on date 30). Well till this time I knew he is talking like a Sheikh Chili. But as a good mannered Indian I sat there listened the presentation & went home. Next morning my friend again called when I am paying the required amount and joining the scheme. I said I am not interested only to listen back from him that I am loosing on a opportunity where in I would have made fortune.
Did I really missed a fortune? Or made the right decision. Lets see. MLM schemes are nothing but Multi Level Marketing (Murga Lao Murga) schemes. All these schemes can be catagorised in to two parts,
Where they ask you to make member or
Sell products to your near and dear ones are usually MLM schemes
One can find variants of these MLM schemes. Many developed countries and some under developing countries (like Shri Lanka) have banned MLM schemes. Some years back there was a news that India too will ban MLM but still no action (thanks to our inefficient politicians, some of whom are member of such MLM schemes). If you “Think” then I am sure you won’t join such scheme. Do give a thought to the following,
Many surveys show that more than 99% of the participants loose their money in these schemes except the people who starts the scheme and are founder members.
Members are paid from money which the new members bring. Surely the chain of members has to each a level where after no one will join (also called saturation).
These schemes many times make tall & exorbitant claims. Such as earn more than lacs per day. Can you really think it will happen?
Don’t join because others have joined. People just emulate others. They join because others are joining. The person who is asking you to be a member is a victim of this system & has never taken trouble to really check ground realities.
Even when people loose their money in these kinds of schemes they don’t want to tell they lost their money due to greed. Hence many cases go unreported.
Keep in mind you can earn lots of money by doing right things in the spare time than cheating your near & dear ones by tall claims. Don’t be greedy and overconfident like the MLM scheme presenter. People who are entrepreneurs they know that best opportunities don’t come by sitting at home.
Next time anyone asks you to be a member of some MLM schemes do the following,
Search for the company’s name on Google.
You will find many cases against them.
Tell your friends about it.
If all the people who read this article tell it to other friends surely many people will be aware & don’t fal pray to such schemes.
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