Sunday, February 08, 2009

MLM Success: Fool Me Twice, Shame on Me
Lessons from the Zrii "Meltdown"

MLM Success

According to the Salt Lake Tribune two days ago, 7 of the top distributors and "a group of top management and co-founders of Zrii LLC, including over 35 key employees" were either terminated or walked out last week after an attempt to remove the company's CEO William F. Farley from his post failed.

You can read the details that are public to date at The MLM Whole Truth, Network Marketing Super-Site on the Zrii page. As always, there will be more details that will emerge over time that reveal the whole story.

The now very public allegations claim it is about Farley's character (or lack thereof), specifically that "Farley has saddled the company with unnecessary debt while using it as his personal piggy-bank."

I am sure there will be much argument about the facts and motivations of people on both sides of the fence. But one sad fact is clear, the hopes and dreams of thousands of distributors have just been crushed. It is virtually impossible to recruit into any MLM when the news about it is this public and this negative.

Who is to blame?

Is it Farley's alleged greed and mismanagement? That would seem to be the most obvious answer. But what were the motivations of Domingo and the other top distributors when they made the move to Zrii? Did they have the best interests of all that would join them when they selected a company with Farley as the founder and CEO?

I don't know the answers and I don't like to make harsh judgments anyway - particularly with such a dearth of inside information.

Here's what I do know. There are lots of short-term-thinking, fast-buck-chasing companies in the MLM world, as there are in every industry, particularly newer ones. And, while I have met some of the most caring and giving people that I have ever known among network marketing leadership, there are lots of short-term-thinking, fast-buck-chasing leaders in the distributor forces as well.

So, what can all of us learn from this tragic set of circumstances that are disrupting the lives of so many people who looked to Zrii, Farley, and their leaders for true opportunity, guidance, and principled leadership?

For the last few years I have been refining and teaching what I call the "12 Critical Success Factors" that must be present in a company if it is to provide the most sought-after reward to its distributors.

Reward? Reliable, long-term, leveraged residual income.

At the top of the list of those "12 Critical Success Factors" are three that deal with whether the company in question has a prayer of a chance of delivering that reward:

1. Track Record
2. Financial Strength
3. Ownership/Management

As with any new startup company, Zrii had no track record when they officially opened for business in October of 2007. I have always recommended that people not join new companies for that very reason. It is just too hard to know the financial strength of the company or the character, motivations and abilities of the new owners and management - particularly for distributors with very little experience in the 'industry."

If you wish to disregard that advice, then you better look very hard at the track records of the founders of the company. Bill Farley did have a track record. In fact a very well publicized one. I posted some of the easy research on Bill's past at The MLM Whole Truth, Network Marketing Super-Site early last year.

Here's what the Salt Lake Tribune said yesterday:

"Farley was formerly the chief executive of Fruit of the Loom. According to a Wikipedia entry on that company, he was forced out in late 1999, after having piloted the company into massive debt and unproductive business ventures, including structuring the company into an off-shore entity in the Cayman Islands to avoid taxes.

"Farley has been the subject of other legal proceedings, including an ongoing case in Illinois federal court. That case includes allegations that Farley "intended to enrich himself by diverting for his own use" various assets, including contributions to a pension fund for retirees. Farley also has a track record as the owner of Body Wise which settled charges with the FTC in January of 2005."

Would any of that information have affected a reasonable person's decision to trust the company with their dreams of "reliable, long-term, leveraged residual income?"

As the saying goes, leopards don't change their spots. It is certainly no big surprise to me that the same allegations that have been made about Farley before are surfacing again.

So, to be clear, that is Lesson 1: always, always look at the track record of the company and/or its founders and management before you join. If there are red flags, be extra cautious or just plain turn tail and run!

Lesson 2 - The Greater Lesson

The greatest lesson that I have learned since joining my first network marketing company twelve years ago is one of accepting personal responsibility. It is a great lesson. Only by accepting complete and total responsibility in life for our current circumstances can we ever be fully empowered to change them. If nothing else, we were the ones that made the decisions to be where we are. We either chose, or failed to choose a different course. As long as we are blaming others we cannot be fully empowered to make better choices from this moment forward.

It is a hard lesson to learn, but a fully freeing one.

Clearly, in the case of Zrii and Farley, there was ample warning that there might be mismanagement or worse. Why did the distributor leadership push that aside? If you did your homework before joining, why did you? If you didn't do your homework, why not and what will you do next time?

Fool me once, shame on you!
Fool me twice, shame on me!