Armchair Expert with Dax Shepard: Bridget Reed on Multilevel Marketing

Podcast Information:

• Title: Armchair Expert with Dax Shepard
• Host: Dax Shepard
• Guest: Bridget Reed, Reporter and Features Writer at New York Magazine
• Episode Topic: Multilevel Marketing (MLM)
• Release Date: July 16, 2025

Introduction to Multilevel Marketing (MLM)

In this episode of Armchair Expert, host Dax Shepard engages in an in-depth conversation with Bridget Reed, a seasoned reporter from New York Magazine and author of the insightful book, Little Bosses Everywhere: How the Pyramid Scheme Shaped America. The discussion delves into the intricate world of multilevel marketing (MLM), unraveling its historical roots, operational mechanics, and profound socioeconomic impacts.

Historical Origins and Evolution of MLM

Bridget Reed traces the genesis of MLM back to post-World War II America, highlighting the inception of the first MLM company, Neutralite, in the mid-1940s. She explains how MLMs emerged as a response to the burgeoning consumer economy and the desire for flexible, entrepreneurial opportunities, particularly appealing to women entering the workforce.

“[Neutralite] invented a scheme to avoid all the worst things that conventional sales had,” commented Bridget Reed at [14:26].

Reed emphasizes the influence of early MLM pioneers who intertwined their business models with prevailing social and religious ideologies, notably Calvinist Christianity, fostering a culture that equated entrepreneurial success with moral virtue.

MLM Mechanics vs. Pyramid Schemes

A central theme of the discussion is the blurred line between legitimate MLMs and illegal pyramid schemes. Reed articulates how MLMs maintain their legality by emphasizing product sales over recruitment, adhering to FTC guidelines that mandate compensation based on actual sales rather than merely recruiting new members.

“Multi-level marketing is definitely the official name,” Reed explains at [11:22], “And if you Google the FTC, what they say about multi-level marketing? It is the official name for this type of business where you're recruiting people and you can make money off your team.”

However, through meticulous research, Reed argues that in practice, MLMs operate similarly to pyramid schemes. The primary revenue often stems not from product sales but from the continuous recruitment of new participants, leading to market saturation and inevitable collapse akin to classic Ponzi schemes.

“[MLMs] are functionally a Ponzi scheme,” Reed asserts at [15:53], highlighting the unsustainable nature of their business models.

Impact on Participants: Success Rates and Personal Stories

Reed presents alarming statistics, revealing that over 99% of MLM participants lose money. She underscores the deceptive allure of MLMs, which capitalize on individuals' aspirations for financial independence and personal growth.

“The current figure in your book is 99% of everyone that gets involved with an MLM will lose money,” Dax comments at [30:23].

To illustrate the human cost, Reed shares the poignant story of Monique, a former Air Force member whose introduction to MLM through a religious networking group led her into a decade-long cycle of debt and unfulfilled promises. Monique's journey exemplifies the emotional and financial devastation inflicted by MLMs on vulnerable individuals.

Regulatory Efforts and Challenges

The conversation delves into the historical regulatory attempts to curb MLMs, focusing on significant cases like Amway in the 1970s. Reed explains how political alliances and lobbying by MLM founders, such as Rich DeVos and Jay Van Andel, thwarted stringent regulations, allowing MLMs to flourish despite their exploitative structures.

“They allow us to say, allow a bunch of claims through and as long as they just make those claims, they don't shut down the company,” Reed notes at [54:33], referencing the FTC's lenient stance on established MLMs.

Reed critiques the Federal Trade Commission's (FTC) ineffective enforcement, pointing out loopholes like the buyback rule that MLMs exploit to mask their pyramid-like operations.

Socioeconomic Implications and the American Ethos

Reed connects the proliferation of MLMs to broader themes of American capitalism, income inequality, and the myth of meritocracy. She argues that MLMs perpetuate societal inequities by promoting a "get yours" mentality, where individual success is prioritized over collective welfare.

“[MLMs] are a microcosm for our entire system,” Reed explains at [68:51], emphasizing how MLMs reflect and exacerbate systemic economic disparities.

The discussion also touches on how MLMs tap into personal insecurities and the desire for control, especially during economic downturns, making them particularly resilient and attractive during times of financial instability.

Gender Dynamics and Religious Influences in MLM

Bridget Reed highlights the strategic targeting of women by MLMs, leveraging aspects of community, faith, and personal development to recruit and retain members. She discusses how MLMs often align themselves with Christian values and prosperity gospel principles, creating a facade of moral and spiritual upliftment.

“These communities are ripe for the picking,” Reed states at [64:40], referring to how MLMs infiltrate religious gatherings to expand their reach.

The use of churches as recruitment grounds underscores the manipulative tactics MLMs employ, intertwining their business models with spiritual and communal bonds to foster loyalty and unquestioning participation.

Modern Resurgence and Digital Rebranding of MLMs

Reed observes a resurgence of MLM-like structures in the digital age, where remote working and online platforms have rebranded traditional MLMs to adapt to modern entrepreneurial trends. She draws parallels between MLMs and contemporary phenomena like cryptocurrency schemes, both exploiting similar psychological triggers and societal vulnerabilities.

“MLM just again, seeds on the ground among individuals in their living rooms, in their churches,” Reed notes at [76:19], indicating how these models evolve yet retain their core exploitative nature.

Conclusion: Insights and Recommendations

Bridget Reed wraps up by emphasizing the need for greater awareness and education about the true nature of MLMs. She advises listeners to critically evaluate MLM opportunities and recognize the inherent risks and exploitative mechanics.

“The faster somebody sees the reality, the faster they will get out,” Reed advises at [84:44].

Reed's book, Little Bosses Everywhere, serves as a crucial exposé on MLMs, shedding light on their deceptive practices and the widespread economic and emotional toll they exact on participants.

Notable Quotes:

• "It's both so informal. It seemed like the Wild West... but also these companies are traded on stock exchanges." — Bridget Reed ([10:06])

• "99% of everyone that gets involved with an MLM will lose money." — Dax Shepard ([30:23])

• "Multi-level marketing has been able to tell its own story for 80 years, which is part of why when I looked into it, there wasn't an outsider like a journalist or like somebody else telling that story." — Bridget Reed ([19:16])

• “These communities are ripe for the picking.” — Bridget Reed ([64:40])

• “The faster somebody sees the reality, the faster they will get out.” — Bridget Reed ([84:44])

Final Thoughts:

Bridget Reed's exploration into the MLM industry exposes the deep-seated issues and systemic exploitation embedded within these seemingly entrepreneurial ventures. By intertwining historical context, personal narratives, and critical analysis, the podcast episode offers listeners a comprehensive understanding of how MLMs operate and their broader implications on American society. Reed's insights call for heightened vigilance and informed decision-making to combat the pervasive influence of pyramid schemes masquerading as legitimate business opportunities.