Network Marketing: What It Is and how to think about it.
- Manny Joshua
- May 9
- 8 min read
Updated: May 9
In today’s economy, more people than ever are searching for additional streams of income. From Airbnb and stock trading to content creation, coaching, e-commerce, and affiliate marketing—the options are endless. But among the noise, one model is quietly emerging as one of the most powerful opportunities: network marketing.
At its core, network marketing isn’t a “type” of business—it’s a method of scaling a business. Rather than hiring a traditional W-2 sales force, an owner leverages independent 1099 affiliates. It’s a decentralized model where each affiliate is empowered to earn based on performance, not position. For many entrepreneurs, it offers a low-capital, high-upside entry point into ownership.
There's some nuance, so let's talk business.
Scaling: Traditional vs. Network Marketing
Since network marketing is a newer business model, it can often be counterintuitive, so lets's contrast it to traditional scaling. In a traditional business, if you want to grow, you typically:
Hire full-time employees (W-2, or T4A in Canada)
Provide benefits, office space, onboarding, and salaries
Manage people and performance internally
Carry the burden of all operational overhead
Pros of this are:
Greater control over each individual
Predictable structure
Clear hierarchy and accountability
Cons of this are:
High cost to scale
Slower expansion
Financial risk stays centralized
In network marketing, the approach flips. Instead of taking on high amounts of overhead, they opt into the process of building a network of independent owners. This means:
Affiliates are independent (no salary, only commission)
Each person is a business owner with full autonomy and no earning caps
The leveraged manufacturer provides the product, infrastructure, and retail systems
Affiliates scale through sales and team building
Pros of this are:
Scales faster and cheaper
No employee overhead
Every person can out-earn the one above them
Low startup cost
Cons of this are:
Harder to control brand/message consistency
Success depends on training and self-motivation
Often misunderstood by the public
Neither model is inherently superior to the other, they are just different and give the owner a different pathway to create leadership in their organization. Typically someone with a scaling mindset in business not only values money, but they also value their time. They just need to pick the path that is best for them. Many often combine the two (like Amazon).
Major Players and Their Business Model
Some of the biggest names in the industry—Amway, Mary Kay, Herbalife—don’t just exist; they’ve been thriving for decades.
What do these companies have in common?
They’re manufacturers that choose not to go through big-box retailers like Walmart, Target, or Ulta. Instead, they allow individuals to act as independent owners, giving them:
Access to premium products
Warehousing, fulfillment, and logistics
Digital storefronts
A revenue sharing/compensation plan that financially incentivizes entrepreneurs to leverage their platform
Full control over how much they want to sell and scale
It’s a win-win structure:
The company gets a performance-based salesforce without salaries
The owner gets enterprise-level infrastructure without the overhead of being a traditional middle man.
This is where network marketing gets its strength: decentralized performance and unlimited upside.
Can You Earn Lots of Money in Network Marketing?
Top earners to exist, many of which earn six, seven or even eight figures annually. However, they create success after much time and much effort. There are things that separate them from amateurs, such as:
Building profitable storefronts, not just partnering alone.
Developing leadership skills.
Building large, sustainable and effective networks over time.
It's good to know that most people earn little income. FTC and company income disclosures often show:
Majority of owners make less than $1,000/month profit (or less).
High earners are typically in the top 1% or less
Let's get this straight...It shouldn't surprise you that the majority of people who do anything don't reach it's full potential. That's how life works. Whether it’s network marketing, tech, real estate, medicine, or corporate leadership, there are separators between low and top earners. What's important to know is that these statistics are common among all businesses across all industries. In the U.S. (as of 2024 data):
Top 10% of earners: ~$160,000+ per year
Top 5%: ~$250,000+
Top 1%: ~$650,000+
Top 0.1%: $3M+ annually
What's more important than seeing information is understanding the why behind it. Most people simply look at data and see that as indicative of how they will do, versus looking at underlying reasons, and deciding to take an educated approach to their business growth. Some reasons why people don't succeed in a big way include:
Lack of training or consistency.
Unrealistic expectations.
Focusing solely on team building and not on customer sales.
Modest goals that are satisfied with little income.
So what separates the winners from the amateurs? Heres a non-exhaustive list:
Business literacy: They treat it like a real business, not a hobby.
Mentorship: They plug into systems and follow proven strategies.
Revenue focus: They sell real value, not just the business opportunity.
Duplication: They build systems others can follow easily.
Long-Term Thinking: They are okay with success taking multiple years, and with seeing modest returns early on as they make adjustments and improvements.
The “Pyramid Scheme” Accusation: Let’s Break It Down
A common and emotionally charged criticism against network marketing is that it’s a "pyramid scheme." This accusation often comes from a real place—but it’s important to unpack why some feel this way, and what’s actually true, because pyramid schemes have a concrete definition, not an emotional one. For example, let's look to the Federal Trade Commision.
Federal Trade Commision (FTC) Definition (View Here):
A scam where participants make money primarily (from the simple act of) by recruiting others rather than by selling Products to consumers.
The FTC also says (View Here):
[network] marketing plans [are not inherently] illegal. However, if a plan compensates participants primarily for [the act of] recruiting others rather than for selling products, it is likely to be a pyramid scheme, which is illegal (in any business model).”
Note: It's important to know that companies like Amway do not have any money attached to the act of opening a new storefront. They are purely driven by retail sales personally or through a network. Which is why the FTC loosely adheres to something called the "Amway Rules" when vetting a network marketing company.
Basically, if you build your business thinking, "I make money when I sell products, and I make X amount of money when revenue is created through my team," the FTC is okay, because that's how every business (like Amazon, AT&T or Apple) work. They want you to build teams, it's just abut how the money flows.
But if you build your business thinking, "I make X amount of dollars for the act of getting someone started, so that's my focus, forget customers," the FTC sees that as a red flag, because there is no value added to the end user. So it's in essense an in-house money laundering machine. Technically this is how Costco operates, but the FTC doesn't mind because it's "members" are also a logical end user (plus they make so much money nobody wants to mess with them).
So what are the main drivers for this criticism?
1. Ignorance of Organizational Structure
Many people have never been taught how organizational structures work. Ironically, most are already in a pyramid—and don’t realize it. If you were to draw your corporate job’s org chart, you’d likely see a few people at the top, managers in the middle, and many employees at the base. That’s not a bad thing—it’s just how healthy organizations operate.
When network marketers show people that their model also has levels of leadership, referral, and performance-based earnings, it can feel “pyramid-like.” But here’s the truth: that structure alone doesn’t make something illegal. It’s simply a way to scale through people instead of payroll.
What’s foreign often feels wrong. And because this model isn’t taught in school or normalized in most career paths, skepticism naturally shows up.
2. Bad Experiences with Amateurs
Network marketing is one of the most accessible business models in the world. That’s both a strength and a weakness. Because the barrier to entry is so low, it can attract people who haven’t developed proper business or communication skills yet.
When people are desperate to succeed, they sometimes resort to manipulation, hype, or pressure—not out of malice, but out of ignorance or fear. They may push people to join their team even when it’s not a good fit. They may hard-sell products with little education behind them.
This isn’t a problem with the model—it’s a problem with training and leadership. Properly run network marketing organizations emphasize empathy, education, and ethics. The bad experiences are often due to a lack of those, not because the model itself is flawed.
3. Legitimate Pyramid Schemes Do Exist
Just like crypto, real estate, solar, and virtually any hot industry, there have been real scams that disguise themselves as network marketing.
In these cases, companies emphasize recruiting over product. They push people to “start a business” without any real customer focus. The “product” may be nonexistent, overpriced, or never even delivered.
These models are illegal, and rightfully so.
Fortunately, systems are in place to regularly shut these down. But bad actors do pop up—and that’s not unique to this industry. It’s a human nature problem, not a network marketing problem.
If you believe you’ve come across a scam, report it directly:
• FTC Consumer Response Center: 1-877-FTC-HELP (1-877-382-4357)
• FinCEN (Financial Crimes Enforcement Network): 1-800-767-2825
Don’t let a bad apple spoil the whole basket. The key is knowing how to evaluate a company properly, which we’ll break down next.
How to Vet a Network Marketing Business
If you’re considering network marketing, here’s how to do it right:
Learn from experts: Avoid open-source forums like Reddit or Quora, where anyone can post anonymously (behind an alias). These often contain rants, half-truths, or personal biases with little context.
Get around elite communities: Get around successful people in the space. Observe their strategy, mindset, and long-term vision. The best way to learn is proximity. Often you will find that experts are trying to see if you will be a good ROI, they're in no rush with you.
Skill-Up: Learn how to retail first. Don’t try to scale a team until you know how to generate real customer demand and value.
Be knowledgable: Study the company’s background. What’s their track record? Do you align with their values, mission, and culture?
Take your time and approach it like an investor—not an emotional buyer.
Endorsements and the Future of Network Marketing
Some of the world’s most successful investors and business minds have backed the model:
Warren Buffett has called network marketing “the best investment he ever made” after buying a stake in The Pampered Chef.
Grant Cardone, a real estate mogul and sales expert, regularly encourages people to learn from the model because of its aggressive sales education.
Paul Zane Pilzer, a former economic advisor to two U.S. presidents, predicted that network marketing would fuel the next wave of wealth creation in the wellness economy.
Many experts agree: this model is just getting started. As tools, systems, and education improve, the performance curve will rise. What used to be chaotic and inconsistent is becoming streamlined and strategic.
Final Thoughts: Is It For You?
Network marketing might be the right model for you—or it might not. But either way, one thing remains true: building anything worthwhile takes time.
Whether you run a franchise, a YouTube channel, a fitness brand, or a network marketing business, you will face doubt, resistance, and growth pain. That’s normal.
What matters is your ability to play the long game. Nothing worth having comes free. No business is “get-rich-quick.” Everything takes effort, focus, and resilience.
Network marketing simply gives you a path with leverage—if you’re willing to walk it.
Want to understand the difference between professionals and amateurs in the network marketing space? Check out this related blog post: Network Marketing: Amateurs vs Pros.
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