Thirty years ago, I had the rare opportunity to share my start-up experience and teach a full-semester, 3-unit course on network marketing, also known as multilevel marketing (MLM), at the Ateneo de Manila University. At the time, this subject had never been formally taught at the university level. I remain grateful to Rudy Ang, then chair of the management department, for trusting me to introduce and lead a course on a business model that, despite involving some 4 million direct sellers in the Philippines, was often misunderstood. Many equated MLM with pyramid schemes, and I believed it was necessary to correct that misconception through structured education.
Later, I was invited to teach the same subject at De La Salle University. Then, I authored a book on network marketing, which continues to be available at National Book Store. In my classes, I encouraged students to build websites to help distinguish legitimate MLM from illegal pyramids. I also developed an eight-point test to help assess whether an MLM business was operating legally and ethically, which was later adopted by the Direct Selling Association of the Philippines (DSAP). My involvement eventually extended to participating in regular hearings at the Department of Trade and Industry (DTI), where I worked with others to help companies shift from illegal structures to compliant compensation plans.
Why MLM is Relevant Today
Today, as global fuel prices rise and inflation pressures pinch household budgets, more Filipinos are searching for legitimate secondary income sources. In this environment, the principles of MLM, when practiced responsibly, are especially relevant: a low-capital, home-based business model that rewards effort and relationship-building.
Understanding the MLM Business Model
MLM is a structure where individuals earn income not only through direct sales but also by building a network of sellers, from whose sales they may earn a percentage. This self-replicating model allows those who enter earlier to benefit from the performance of those they help develop. What sets legitimate MLM apart from illegal pyramid schemes is the emphasis on actual product sales, not mere recruitment.
Accessibility and Opportunity
MLM opens doors for individuals who may not have access to large amounts of capital. Unlike traditional businesses, which require inventory, staff, and physical infrastructure, MLM offers a low-cost way to start and operate a business, often from home. It has been called the “People’s Franchise” because of its accessibility and relatively low barriers to entry. Many people succeed in MLM, some while working full-time jobs, others as an alternative to employment. Success comes not from shortcuts but from consistent effort, discipline, and the ability to nurture relationships.
A Level Playing Field
One of MLM’s strengths is that it does not discriminate. Traditional employment paths often require degrees or professional experience. In MLM, what matters is willingness to learn, ability to connect with others, and commitment to growth. Even age can be an asset, often bringing larger networks and deeper trust from peers.
Challenges and Misuse of the Model
Not everything in MLM is positive. Legitimate businesses continue to be undermined by illegal pyramid schemes disguised as MLM ventures. I have seen many variations, often characterized by overemphasis on recruitment rather than product sales. Some promise extremely high returns with minimal effort, or require multiple “business centers” or “headers.” Such practices are unsustainable and unlawful. For example, some “binary” structures fail to clearly explain how product sales drive commissions. Multiple membership fees or income claims based on recruitment are hallmarks of pyramid schemes, they are bound to collapse.
A Realistic View of MLM
MLM is not for everyone. Like any business, success requires hard work, persistence, and resilience. Many join without understanding the system and leave disappointed. Turnover rates are high. No system, however well-designed, replaces the need for commitment, consistent effort, and ethical practice.
A Qualified Endorsement
I continue to believe in the potential of MLM as a platform for entrepreneurship. When practiced responsibly, it empowers individuals to take control of their financial future with minimal startup capital. But it must be approached with caution and a clear understanding of both benefits and limitations. Education is the first step. In today’s economic climate, with rising costs and uncertainty, MLM offers a structured, legitimate way to supplement income, provided participants are informed and diligent.
For anyone considering joining an MLM, my advice is the same: do your homework, ask the right questions, and never be afraid to walk away from an offer that sounds too good to be true.
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Josiah Go is the former Chairman of the Direct Selling Association of the Philippines and the founder of Waters Philippines. He was the first professor to teach a 3-unit, full-semester MLM course at Ateneo de Manila University and De La Salle University. Please refer to my previous articles on MLM and pyramiding for a detailed discussion of terminologies and industry specifics.