A Case For Why World Ventures Membership Is Not A Worthwhile Investment:

Here in this short essay I will present my views on World Venture and hopefully give you food for
thought around why I don’t think it is worthwhile. I will begin by explaining the business model of a
multilevel marketing (MLM) company, and then proceed to explain how it applies to World Ventures.
Secondly I will use some basic assumptions based on the before mentioned to model costs and income
so as to provide context and understanding of the business and its long term sustainability and earning
potential.

Multi-level marketing (MLM), also called pyramid selling, network marketing, and referral marketing, is a
marketing strategy for the sale of products or services where the revenue of the MLM company is
derived from a non-salaried workforce (representatives) selling the company's products/services, while
the earnings of the participants are derived from a pyramid-shaped or binary compensation commission
system. Typically there are 2 potential revenue streams for participants, a commission on sales of the
goods or services and a commission on getting others to join and become representatives (recruitment).

As an MLM sales rep you are, therefore, expected to sell products or services directly to end-user retail
consumers by means of relationship referrals and word of mouth marketing, but most importantly you
are incentivized to recruit others to join the company's distribution chain as fellow sales reps so that
these can become down line distributors. According to a report that studied the business models of 350
MLMs, published on the Federal Trade Commission's website, at least 99% of people who join MLM
companies lose money. Nonetheless, MLMs function because downline participants (people who join
later down the pyramid) are encouraged to hold onto the belief that they can achieve large returns,
while the statistical improbability of this is de-emphasised. MLMs have been made illegal or otherwise
strictly regulated in some jurisdictions as a mere variation of the traditional pyramid scheme. Below is a
diagram showing a typical structure of an MLM.

Figure 1:

Now lets apply this to World Ventures. You can join World Ventures and become a member. The joining
fee for membership is R2600 and you pay R600 every month after that for your membership and
discounted priced trips. The membership is said to get you discounts points on travel trips where 1 point
is $1 (R15) and a commission for recruiting others of $20 (R300), this commission is also promised for
new members recruited by your recruits. Despite the illusion that the company is about selling travel
trips this is where the money is actually made, through the monthly membership fees and continues
once off joining fees with minimum costs or effort. Lets take Figure 1 as an example of a minimum
monthly activity and apply the maths to it for 12 month period from inception to substantiate the claim
that the pyramid structure of the membership is the primary business model of World Ventures not the
discounts on travel trips. Key assumption is that every month you at minimum manage to recruit 2
people who also manage to……as seen in the diagram in Figure 1.

Figure 2:

Month (n) Companies Membership fees Your commission Your points

Income from this income income earned **
months joining
fees = 600 x 15(n-1) = 20 x 15 x 6 = 600/15

=15 x 2600

1 R39 000 R0 R1 800 40

2 R39 000 R9 000 R1 800 40
3 R39 000 R18 000 R1 800 40
4 R39 000 R27 000 R1 800 40
5 R39 000 R36 000 R1 800 40
6 R39 000 R45 000 R1 800 40
7 R39 000 R54 000 R1 800 40
8 R39 000 R63 000 R1 800 40
9 R39 000 R72 000 R1 800 40
10 R39 000 R81 000 R1 800 40
11 R39 000 R90 000 R1 800 40
12 R39 000 R99 000 R1 800 40
Gross R468 000 R594 000 R21 600 480
Total Costs R(7 800)* - (R9 800)

[600x12 + 2600]
Net Income R460 200 R594 000 R11 800 480

*costs of commission paid to members

** this is assuming your entire membership fee goes towards points

We can see that over for a whole years work and recruiting you will make a meager R11 800, this is not
counting the cost of your airtime, data, travel expenses needed to reach people and convince them to
join. Now contrast this with the R1 054 200 total net income World Ventures makes with no effort as
you are the one who does the marketing and recruiting.
A number of other points worth thinking about are:

Even if your entire membership goes towards earning points (I couldn’t find the terms and conditions)
and the points have no expiry or accumulation limits, at the end of the year the total value of your
points would be R7 200. This is the worst possible way to save or invest your money. It is trapped in the
form of discounts meaning you are forced to spend money on a holiday in order to retrieve its value. Its
time and labour intensive and there are no guarantees.

This venture is also very risky and leaves a lot to chance. If for example the people you recruit don’t
recruit anyone you lose a large portion of your commissions or if you are unable to meet the 2 member
minimum we used to theorise it would also cause you to make losses. Your income as member here is
highly volatile and susceptible to risks you have no control over. Whereas your joining fee and monthly
membership are guaranteed expenses.

Business is about return of investment i.e. how much money you get for the money you put in. For our
theoretical year you invested R9 800 (cost of your joining fee and membership, not taking into account
recruiting costs mentioned before) and got back R11 800. Meaning you made a gross profit of R2 000 for
the entire years’ work.

The economy is also in a recession and there are large numbers of unemployed people in South Africa,
not many people can afford to pay R2 600 joining fee and monthy R600 for travel discounts or anything
for that matter. So you will also have to consider who is your target market, how big of a pool is that
market and do you have the necessary time, resources and skills need to reach them.

The information above is meant to meant to be an informative guide to assist you in your decision
making and is not set in stone. Due to the unpredictable nature of sales and my limited knowledge of
World Venture there are a lot of assumptions used to go about reasoning through the business model of
MLM and this is a part of why they are so attractive, they provide overly optimistic and simplified
assumptions designed to lure you into joining and once you are in the money you paid/pay every month
incentivizes you to keep going.

Theres a lot a lot more I left out and wanted to discuss on this topic and related topics like what would
would be a much more secure and less strenuous way to save and invest R2 600 + all those monthly
R600s. I hope I have been of assistance and feel free to shoot me a text or take me for lunch and we can
chat further of this or other investments.