Betting on Zero Page #5

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we went to in queens,

Loses $12,000 a year.

This doesn't seem to be

a particularly good business

model and this is before

Paying for the person

who runs the club.

How do they make money?

Well, tell them

it's not about shakes,

It's about something

they call duplication.

Let's hear it from

the horse's mouth.

Even right now because, guys,

where your money's made is

not serving smoothies.

Where your money's made

is having hundreds or tens

Or thousands of distributers

around the globe.

Here's a presentation of

how nutritional clubs work

From one of

the top distributors.

Important to remember,

operators need to realize

The end goal is not how many

$4 services they sell each day

As that is not the way

for them to achieve

their financial goals.

Rather it's upgrading

a consumer

to become a customer

And eventually a distributor.

And ultimately having

distributors become operators

who will duplicate

The nutrition club method.

Note the, "duplicate again

and again and again!"

This is previously

an herbalife nutrition club.

Yeah, so this is turned over.

So, the last four clubs

that were here

A year and half ago

are no longer clubs.

There's too many

in one neighborhood.

Reporter:
And what do you

say to your critics,

Who say, "yeah,

but the majority of

your distributors

"do not make any money,

"they make less

than 1,000 bucks

"in an entire year

and no commissions in a year?"

I'd say 1,000 bucks?

That's a lot of money

to a lot of people.

This is what these elitists

don't get,

That most people come in here

for part-time income

They're not coming in here

to recruit someone

or build an organization,

We know all the numbers.

Richard:
Herbalife's lawyers

will tell you that

Everyone gets pointed

to the disclosure

But when you look

at how it's sold,

person to person

There's a very clever system

that drove

A continually

renewed group of people

to come into the business.

--announcer:

Ladies and gentlemen,

Welcome to

the herbalife extravaganza...

Richard:
It's about a promise

that you would make it

to the president's team.

Man:
I promise you,

If someone that was homeless,

that was lost on

the inside can do it,

Every last person breathing,

With a beating heart

that was born from

a mother and a father

Can do the exact same thing.

And they see these

distributors put on stage

At these extravaganzas

and they have

Pins with diamonds on them

and that's the american dream.

And the president's team,

that's basically

Half a million dollars a year

for the rest of your life.

Those are the top thousand

out of about

3.9 million distributors.

Richard:
All right.

Muchas gracias.

Richard:
So,

this club that I went into,

they said to me,

"come back in two years

and I'll be on

the president's team."

You so want

the people that you meet

in these clubs to succeed.

You know, and they seem

so sincere and hopeful,

But you know

the clubs don't last

And I think they take

individuals' life savings

With them when

they were convinced

to believe in this idea

And this business opportunity.

This is a great opportunity

for anybody, everybody

And latinos grabbed

it a little stronger.

What other ceo gets

to walk into their job

every day, going,

"I'm improving lives today,

I'm making people

healthier and better."

Their stories

are real stories,

you know at disney,

We sold stories

and we told stories

and we're really good at it.

Here we create stories.

Keep:
The way an illegal

pyramid scheme works,

Success is based

almost exclusively

On the ability

to keep recruiting others.

A new recruit comes in towards

the bottom of that pyramid

And at any time if we stop

the recruitment process

We find that, those people

at those lower levels have

no way to earn income.

The probability

of success declines

as the number of people join

And we can prove

mathematically

That 95% of these people

literally have to lose

their money.

Fitzpatrick:

Multilevel marketing

presents this

As normal

business competition.

For example,

20 people enter a field,

they're all gonna

sell this product,

Only one will probably

be successful.

And the other 19

just didn't have what it took.

We all understand that.

You go through this in sports,

you go through it in school,

Then you enter

the business world.

Competition.

That's not what this is.

This is something

entirely different.

This is

a money transfer scheme,

In which the one managed

to get the 19

To give him or her

their money.

We are here

By the place where my office,

my construction office was.

I was sitting in

my office when the

Herbalife guy

came to knock my door.

He started showing me

the products,

He started

preparing me things...

Uh, teas...

Shakes...

And they are telling me,

they are making lot of money.

$20,000, $80,000 in a month.

So, that was something

to think a little bit.

Help a lot of people...

Do an easy work...

Not dangerous anymore,

so that's why

I started switching

my construction business

to herbalife.

So, I opened the club,

Buying thousands of

dollars of products.

I was feeling,

"I found herbalife,

"the best company

in the world."

And my upline,

miguel ruchiman,

He helped me to fix the place.

Anything that I need

to open the club.

Like anybody can dream,

you know?

Nice neighborhood here.

There is a lot of

hispanic people,

they were coming to my club.

I was trying to do my best

for the people,

I was not pushing them

To take the product,

I was just letting them to...

To taste... To rest...

To talk in my place...

To start liking the place.

This was my club,

nutritional club here.

So...

From here, all the way,

that was a big front

Of my business.

My upline told me,

"the more you spend

the more you will make."

That was the thing

That make me feel so sad,

Because I believed

this person.

That I thought

he was my friend.

Our business opportunity comes

from the sale of our products.

If I sponsor or

recruit 1,000 people,

I receive zero for that.

I only start earning money

from my downline,

as we call it,

Only based on product sales

or consumption.

Julio ulloa:
I realized

in four months that I was

not making any money.

He lied to me.

He was just interested in

Making me spend all my money

Because he was

getting commission.

That's what I realized.

So, one day what I did...

I turned off everything.

The hot water for the tea...

I put the blenders

in one side,

Everything,

I covered everything,

then I locked this door.

I locked this door,

And just got away.

I said, "no more.

No more herbalife."

I lost a lot.

I lost my money that I had

to keep my construction

company running.

This is miguel

ruchiman's club.

This is the one who told me,

this is the best business.

See, he's there.

Yeah, that's him.

They took my dreams,

My hope to be successful.

Narrator:
Just weeks after

bill ackman announced

He was shorting

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