There is some recent interest online in a book donating program that seems to share some similarities to traditional pyramid schemes and it is getting negative press. Since I have a slightly unpopular opinion about pyramids in general, I decided to share my thoughts on the matter.
While I’m not participating in the book exchange and have no actual knowledge of how it works, I’ve looked into it enough to get an idea. Assuming that I’m the one joining, here is how it goes down. I am recruited by a friend with 5 other people, we all send our favorite book to the person who recruited our friend. Then we recruit 6 people of our own, who send their favorite book to our friend. They recruit 6 people each who then send their favorite book to us. Now this particular pyramid is pretty unsustainable once you get a few levels down because of the mass of people that will be involved. Most people will not be able to find 6 people who are interested in the plan enough to recruit their own 6 people.
All that being said, I’m not opposed to this scheme. The simple fact is that I would be spending $6-12 to share my favorite book with a friend of a friend, something I would do with no guarantee of any kind of return. If I did manage to recruit people who sent books to the friend who recruited me, I know she would share them with me regardless of if the next line down even got new recruits. Since I’m a crazy bibliophile (usually powering through a book every week), I get the purest joy out of sharing books that I like with other people. But I also understand that I’m in a different financial position then other people who may not have the luxury of spending $6 without any returns. For me this ‘scheme’ would be a way to share a love of mine with other people, regardless of what I got back for it. Sometime I’ll shoot out a post about some of my favorite reads for you guys to take a look at.
Now back to pyramids, the general idea is that someone on the top recruits people and gets them to spend money (or goods) on them, then that level recruits people to do the same and on and on. This is illegal, and the book scheme mentioned above fits this definition, and is thereby illegal. However popular opinion of pyramid schemes is not the legal definition. Popular opinion is that someone at the top is recruiting people and making money off of their hard work, which is basically the way that every large corporation works in this country. The CEO is at the top and while they definitely work, they often do less work then what they are getting paid for, because they are partially getting paid for the work that their recruits are doing.
Many people believe that the Amway business model is a pyramid scheme, but having been a part of that in the past, I can tell you that it isn’t. Everyone in the pyramid must work in order to get paid and in that model, the more you work, the more you get paid. You will make a small amount of money if you bring in people who work hard, but you will make more money by working hard yourself.
While I will not be participating in the illegal book pyramid, I think that it is important for people to understand that the shape of most successful businesses are pyramids and that doesn’t mean that the shape is scary or wrong.