The Marketing Report
“State of the M.L.M“
From the Desk of: Thomas Prendergast
Why it matters which type of M.L.M you promote
I have been involved in the m.l.m industry for over 20 years, both as a participant, as a m.l.m company owner and as a 3rd party provider for many m.l.m companies that have come and gone over the years.
I believe this depth of experience makes me an objective expert in the m.l.m market.
Service Driven vs Product Driven
Terms: You will hear about market driven and product driven companies in the realm of marketing. This is not the focus or definition of this article. I am discussing the contrast between companies that offer tangible consumable products in contrast to companies that offer a virtual service where there is no tangible component.
I have been in the network marketing industry for over 20 years. My first company I joined was named Powernet (run by Paul Booth and Dan Garlick). They were a service driven m.l.m company selling Internet access. Though the service was the first of its kind and I built a huge organization of consumers and distributors (60,000+) they did not last long. This was my first experience. Looking back now, I known why they failed. They were an amateur operation with little capital invested and underfunded for such an enterprise. This was to become the hall mark of the typical service driven m.l.m and I will explain this in more details as we go.
As I grew to understand the Internet, the unique opportunities it offered regarding marketing, automation and lead development, I began to develop systems to automate self-replicating sites, online application forms and genealogy software. I started to attain new ‘service oriented m.l.m’ companies as clients. Most of them startups.
BBc co-op was the first one. Run by a nice man named Sam Samson. We built his site for him, self-replicating, lead generating, and genealogy systems. He was terribly under funded with a great idea. Launched it prematurely, was overwhelmed by the growth and less than a year into it, it collapsed. (sound familiar?)
All we were was a vendor for clients that hired us and we trended towards the clients in m.l.m because they knew us and we had a good reputation and thus they sought us out and hired us. We were very naive in regards to any kind of due diligence. In my earlier years in the 80s I ran an ad agency and pre-qualifying a customer, much less due diligence just was not necessary nor was it done. If the checks cleared and the invoices got paid and the projects we developed where legitimate, well business was business.
We produced systems, self-replicated front sites, lead systems, back office management systems and genealogy systems for around 90 different companies from 1996 to around 2003. In the beginning the following groups come to mind, that being bigsmart.com, km.net, le club previe.com, PRSI, and Skybiz .
Of particular note, the checks from Bigsmart always bounced, KM.net always had an excuse and we stopped production on them because they never paid, Skybiz never paid and we stopped work on them, and PRSI held off on our payment until I flew out there to appear before their audience, which was just more subterfuge and I was not happy with William Caudell manipulating me to appear in front of 500 or so people at his big pre-launch convention in Florida. I never got the check. We were supposedly being hired to build the entire front end, back office and tools for this company. William Caudell wound up sentenced to 11 years in prison.
There are a lot more of these companies our sales guy Clay Parker would drag in with promises of great earnings for our work, but none really panned out. I am only mentioning the ones that were particularly rotten to the core, but every one of the service driven companies never lasted and we got a good perspective of how they worked with their vendors, bouncing checks, avoiding payments owed under signed contract, making grand promises with incredible bravado, but in reality, these people running these companies had no sense or business running them much left the wreckage they would leave behind with broken promises
At that point we shut our system off to them and within a few months they went out of business. I was becoming very cynical with these so called professionals who would cook up some good story, wrap a comp plan around it, launch with never any intention of building a business for the long haul.
FFSI is another service driven m.l.m that dropped the entire system within months after we finished building it. Kelley Reese decided he didn’t want to offer an m.l.m opportunity anymore with his financial freedom service after 1000s of my Veretekk people signed up, built down lines in expectation of a financial return, not to mention leaving us un paid after completing all the work. This site is still up for viewing, however, it is not active. http://www.paid2bfree.com/ Kelly did build a significant database of my Veretekk subscribers with this site, then after his 180 degree turn to drop FFSI as an m.l.m, used them to market to build his Trivita business then cross recruited them into his GBG business. Is there no honor among m.l.m service driven business owners?
SuccessUniversity, Jaguar Marketing and Bigco-op were not clients of ours, but we became aware of them as they arrived on the scene and used Veretekk to promote their companies and recruited a lot of Veretekk subscribers into their folds. Again, these companies were nothing more than rehashed digital information wrapped around some proprietary compensation plan and failed miserably hurting a lot of my friends and subscribers who built their hopes and dreams on their promises. Bigco-op wound up prosecuted by the feds and many of the founders went to prison, Al Turnquist just walked away from Jaguar Marketing leaving 100s of people unpaid and SuccessUniversity touted as a success and development mentoring, was nothing more than that good ol snake oil vaporware. In 2009 they merged with World Ventures, a travel agency like m.l.m selling memberships (more vaporware). Money is made by selling memberships and travel discounts are not nearly as deep as commercial alternatives like Expedia. See the trend here?
A note about JangleFish
JangleFish was owned and operated by Chris Chandris and Paul Booth (former Powernet Vice President). Consider this paragraph a foot note in the big scheme of schemers. Paul Booth called me one day and introduced me to his new company, JangleFish. Now remember this is the guy who crashed and burned Powernet, so I listened with a distant interest. I have no respect for Paul Booth. One thing particular, he uses his Salvation Army Christian involvement to build trust in business.
Anyway, JangleFish, in typical m.l.m style, did not own their technology, they used Streamwaves, (which was similar to today’s Rhapsody music subscription service. Rhapsody actually bought Streamwaves, see http://web.archive.org/web/20050511025512/http://www.streamwaves.com/), and by violating their agreement(s) with StreamWaves, the relationship did not last long, because Streamwaves blocked JangleFish’s access and well JangleFish collapsed. A typical scenario that continues to be played out time and again.
The Big Deal
This was Clay Parker’s last deal he brought to our table. The written contract between MarketDepot (Barbara Hill, Rick McCracken and Tony Walth) basically set out that Marketdriven would pay Veretekk a small fee for each of Market Driven’s paying subscribers to have access to Veretekk’s proprietary automated marketing system. After many months of building the Veretekk custom system into the MarketDepot system, we launched it. After 30 days, according to our agreement, we were expecting our first license fee check. When I called to find out when we could expect our first payment I was informed by Barbara that they would not be sending the money, she also claimed they never agreed to anything and that we had offered to give them a full Veretekk Gold system (at this time we had 1000s of direct subscribers at $19.95 per month) for their subscribers to access for free.
This was not what we had agreed upon. What we gave MarketDepot was a fully functional Veretekk Gold system and they refused to pay us for it. Clay Parker our salesperson was allegedly in collusion with the MarketDepot principles on this, and was immediately terminated from Veretekk during this period of disagreement.
Here was my quandary. Thousands of the MarketDepot subscribers had gotten to know me and us them. They were my friends, Heck I even met my future wife in MarketDepot (Annette). Many would become lifelong friends. So what Mike Darling and I decided to do, was convert the full Gold Veretekk custom system for MarketDepot into a free demo version called Silver (which has no real function) other than to demonstrate the power of Veretekk. Basically, without the full power of Veretekk as part of MarketDriven’s portfolio of services, the company collapsed within 3 months and went out of business.
This is typical of almost all service driven m.l.ms. Most of them do not even own their own technology, but find a free script, free version, or somehow hook or crook some other companies technology as theirs, slap a comp plan on it and launch. Remember JangleFish?
Then came Greenzap.
A good friend of mine Lynnabeth Martinez, called me and wanted to introduce me to a new payment process company called Greenzap. By this time, being somewhat suspicious of new startups in m.l.m, I insisted on going to meet the owners in their office in person. It just happened they were in the same city I lived in, San Diego. So we did. I meet the receptionist, waited in the waiting room then received a badge and was escorted to a conference room where I met Alan Sonkin and Damon Westmorland. I toured their small IT department and though the entire office facility was on the small side, all seemed very legitimate. After several weeks of meetings, Alex Sonkin and I agreed on a mutual joint venture where we would build a marketing portal (greenzap.it) powered by the Veretekk system and in turn Greenzap would promote Veretekk to their alleged 500,000+ active members.
You can still see what we built on archive.org
Here is the archive of the corporate Greenzap site for your interest.
To make a long story short, Greenzap managed to produce 25 new Veretekk subscribers from their alleged 500,000+ members, (statitically that is a big fat ZERO percent) Greenzap eventually got shut down for running a scam, got me and my partner subpoenaed by the SEC for depositions and got my house raided by the FBI looking for some type of inside connection with Greenzap (there was none) and Damon Westmorland is in prison for the rest of his life. What went wrong?
Damon had the opportunity in his hands to actually deliver a legitimate alternative to Paypal. Obviously underfunded, lacking real investment capital and a serious lack of integrity, Damon choose to deceive, and steal from the many people who trusted Greenzap, with false account withdrawals, stock schemes and the list is long.
It doesn’t take much capital to launch a service driven company. Just a fancy site, a fancy video, promises and some compelling testimonials, etc. Nauseating isn’t it?
That was the final straw. After getting involved with Greenzap just as a vendor/provider, we came under attack. Besides getting deposed by the SEC in regards to Greenzap as well as an early morning raid by 38 federal agents to my house, because of Greenzap, we stopped offering our services as a 3rd party vendor. Scam.com still has a thread there from 2006 where we came under critical accusations for having a vendor relationship with Greenzap and it caused us peripheral damages as well.
All said and done, we went and launched our own m.l.m opportunity for Veretekk in 2005. It never really transpired into much, other than to make Veretekk just another m.l.m which actually prevented many people who needed our services from using it or promoting it because many m.l.m companies have strict policies against joining another m.l.m company and then there is the very real truth that inviting your existing down line into another m.l.m, regardless of how great those services are, is a bad decision. Why? Because you risk the possibility of your existing organization getting sidetracked promoting the new service and losing focus. This is the major reason, after long deliberation and consideration, which I realized that Veretekk being an m.l.m company was a major stigma preventing our services from reaching out to those that really need them. Our mission has always been to help the little guy and gal achieves success with their primary business. Therefore, we discontinued the m.l.m part of Veretekk beginning in 2013.
Just today, one of our clients from many years ago called me when he discovered we had terminated the m.l.m option in Veretekk. He was relieved to hear this and is now preparing to promote our services to his down line in Send Out Cards for the reasons I just stated above. Talk about confirmation.
And the beat goes on…..
Zeek Awards, Banner Brokers and Empowerment Network.
Zeek Awards just recently got shut down by the US Federal Government. Controversy and rumors abound, but the point is, it is another service driven m.l.m and it got shut down by Legal Enforcement for being a pyramid scam. Yes it had a pretty website, fancy videos, a trademarked comp plan, etc. All the typical trappings of yet another monkey trap on the Internet.
The next two are in the throes of going down.
Banner Brokers has investigations in many countries in process. The pyramid claims are growing. Scandal and accusations are growing. Many distributors, like Dr. Lieven are claiming Banner Brokers owes them millions and refuse to pay. The scam sites about Banners Brokers are highly active. This is exactly what you see right before the Legal Enforcement rounds up the owners and shuts the company down. Will people ever learn. Look at me talking.
Now we see Empowerment Network dealing with being banned on YouTube. Banned on Facebook and the scam sites are running at full speed regarding claims of being yet another pyramid scheme. The product driven company Visalis terminating distributors for cross promoting Empowerment Network. What do you expect? The comp plan is an Australian 2 step (If I read the laws correctly that in itself is illegal), the product is a self-replicated WordPress site (you can get the same system from WordPress for free) and over hyped mentoring videos as an upgrade product produced by the two Davids? Will this never end? I mean, when I first heard about Empowerment Network from Stuart Levi it took me about 3 seconds to see it as yet another pyramid scheme. But Stuart Levi has pitched countless pyramid schemes to me over the years, with Futurenet being one of his big claims to success. Oh yes Futurenet, another technology repackaged pyramid scheme run by an ex con who has a life time restraining order on him from ever being involved in any m.l.ms for life. But that didn’t stop him.
So there you go, my brief summary of my personal knowledge of the service driven m.l.m arena for the past 20 years. What a disgusting scenario brought on by the invention of the Internet and a culture of crooks. What an education I have learned.
Don’t misunderstand what I am edifying here either. I believe that m.l.m is a great market when men and woman of character and integrity put them together. I believe that only product driven m.l.m companies stand the test of time for the long run. Not all m.l.ms are corrupt or destined to die. Just almost all of them in the service driven market. Not all of them, for instance there is Legal Shield (Pre Paid legal) but that is an exception to the rule. I tried to think of others but even had some reservations with Pre Paid Legal to be honest.
In contrast is the product driven m.l.m companies.
A service driven m.l.m can launch itself with very little investment. Look at Empowerment Network for example. The cost of a few servers, free WordPress software, a few compelling videos, a huge email blast and you are up and going. Maybe a couple thousand dollars invested? Maybe $10,000?
So let’s build a product driven company for contrast.
I will draw upon my personal knowledge of three companies; Shaklee, Organo Gold and Trivita.
Shaklee has 100s of products. Like their Vivix (resveratrol) that they developed, patented, manufacture, bottle, label, package, warehouse, fulfill orders and ship. They do this with 100s of products from toothpaste to vitamins, house cleaning products to skin care. All marketed with a legitimate unilevel compensation plan as well as a professional in house marketing and public relations department. To build a system like this takes hundreds of millions of dollars, planning and long term strategies and investors.
Trivita has a large corporate headquarters in Arizona. One of their hallmark products is Nopalea Juice produced from the Nopal Cactus fruit. They contract with Nopal Cactus farmers all over the South West. Ship the harvest to their facility, Juice it, blend it, bottle and label it. Warehouse it and ship it. They run infomercial and commercials worldwide (they produce in their own studios) on their own cable network and others. Just this one facet among 100s of their products is a multimillion dollar operation.
Organo Gold developed a patented coffee blending the Ganoderma Lucidum mushroom with Arabic Coffee. They contract for this mushroom and the Arabica coffee, ship it to their plant, process it, package it, warehouse it and ship it. They have dozens of other products like this. To set up a similar company doing this would cost hundreds of millions of dollars.
There are many product driven companies this scenario applies to, not all, but most. Don’t be fooled by manufacturers of dubious claims with products that don’t require the same investments as above. Take BioPerformance the manufacturer of the gasoline pill that increases gas mileage with incredible results (or so it was claimed). Lowell Mims and Gustavo Romero where shut down by the Feds, fined and forced to return millions of dollars and barred from running any similar type of company.
When building a business, regardless if you have decided to get involved in the m.l.m market or not, requires a good helping of humility, a large portion of common sense, a focus on building expected stability, and a pursuit of long term legacy. If you want to be successful, you must work long and hard, be disciplined, have confidence, seek guidance both spiritually and from experts in your field.
It makes no sense chasing or following the leaders and the crowd that jump from one new launch to another. Most of them being shallow service driven (hyped) m.l.m opportunities that will and always are short-lived. I ran a legitimate service driven m.l.m myself for 7 years (that being Veretekk) and just recently discontinued the m.l.m aspects (as illustrated above, a service driven m.l.m actually works against itself in the long run).
Interesting to note, that since I terminated the m.l.m aspects of Veretekk, some of our older customers who had faded away years ago are returning. So I asked them why. They all said, ‘because you terminated the m.l.m aspect to your great company. Now we can safely and with confidence promote you services to people in our down lines without the fear they are going to be seduced by yet another m.l.m potential income.”
I have been a vendor for over 90 service driven m.l.m companies (not a distributor a vendor), for over 20 years I have watched these type of companies explode onto the Internet, wowing the masses to eventually wither and die, flame out or get shut down by the legal enforcement and many sent to prison.
Scam.com is filled with the threads of a new star being born, defended by the deceived masses and then dying. Greenzap made scam.com famous. It had to have been the longest running and biggest thread there. Damon Westmorland is facing spending the rest of his life in prison.
Folks, if you’re going to build a business, remember your greatest asset is your word, your reputation. Hold others you do business with to the same standards of honesty, integrity and good character. This is also true if you become a distributor for an m.l.m company. Make sure that company holds these values very high and abides by them.
Veretekk has been in the business of supporting small business endeavors, building leads, expanding marketing success, and delivering dynamic tools for the entrepreneur since 1996. Before Google launched, before Facebook, before Youtube, however Al Gore did beat us to the punch inventing the Internet and Yahoo was launched before us as well in 1994. Darn!
April 01, 2005 we announced our 3 level multi-level opportunity. We accredited Paul Stanton for constantly bugging us to become an affiliate opportunity. After Mike Darling and I agreed to do it, Mike called me back within an hour to tell me the entire m.l.m genealogy system, compensation tracking, database payment tracking and such were all done. It took Mike less than an hour to complete a compensation system I had watched other companies take months to do. After testing it for 30 days, it launched. It gave us some growth for several years, nothing great. But Mike and I always hesitated to hype the comp plan and continued to just deliver and excellent system, great results and excellent training.
April 01 2011 we launched V2 making Veretekk a dynamic live social network for the home based business. At that time we removed all mention of an affiliate program. As of January 2013 Veretekk no longer offers an affiliate program.
Today Veretekk funds come from our ad banner system and several licensing agreements with more to come.
What this means for the average Internet marketer is they will find the most advanced and comprehensive suite of tools on the Internet to build their primary business. If they advertise, their monthly subscription fee is waived.
Alternatively, if a Veretekk subscriber belongs to one of the groups of one of our licensee sponsors, they get the Veretekk system for free as well.
To find out more about Veretekk go to our main site at http://veretekk.com
To find out about the groups you can join under the licensee program and therefore get a free Veretekk system, go to
The Marketing Pro
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