The success of Network marketing companies like Q-Net is that they are able to re brand themselves from being a product based company to a platform for enthusiastic entrepreneurs who hope to see their returns grow over time. All you need is an initial investment and enough heart to go out and find people with similar tastes for doing business. It, to me, offered a window of opportunity-financially as well as in developing my personality- especially in India, where youngsters who would risk 30K for some business ventures were not that very difficult to find. But something was not right. Something somewhere was being over looked. And I wanted to find it out.
It starts with the idea that Q-Net is a platform for doing business. I will be interested in doing business with the company only if I get some profit out of it(well that obvious, isnt it?). It means that I pay the company 30k and the company is happy to give me back more than what I had paid it! Why would any company be interested in doing that? Unless it is somehow making profit, a huge amount of profit! Even after paying me more than what i had invested, the company is still making profit! That sounded ridiculous to me. Then I realized that the secret is in the volume of new members joining. The more i have people joining under me, the more profit I will get. If I am able to add an infinite number of people in front of me, then every new member added to the end of that infinite chain would earn me a profit! The profit i earn is infact a part of the amount those new joiners had paid to the company.
So what fraction of that new joiners' money did i get? To make that calculation, I placed myself at the end of the line. So I am the person who just joined and is trying to find potential businessmen. Above me, there are infinite number of people, ready to help me find a new member and to share the profits with me. For me to get my first paycheck I need to add 3 each to both sides. Once they are added, thanks to these six new members I will get my first paycheck of 11.5K. Where did this 11.5k come from? Ofcourse from the investments made by my six new apprentices-each of whom had paid 30k each.
Now comes the maths part. So I being at the level just above the six new members, the whole of my 11.5k will be paid from their cumulative investment. But does it stop here? No. There are more people above me waiting for their share. So what happens to them? Lets take the person directly above me(let us call him Laloo and let me be on his A side). So for him, all six are on the his same side. So if Laloo need to make his 11.5k, he will have to find another 3 people to be added to his B side. That means, three from my six members and three new members on his B side will give Laloo his 11.5k. The converse would be that only half of Laloo's returns are paid from my six apprentice. If we go one step higher-that is to the person just above Laloo's, we will find that only one fourth of his return of 11.5k is being paid from the six i had added. You will find that as we go higher up, the share of the my six sheep goes on decreasing, and it decreases in a geometric progression pattern.
So if there are infinite number of people above me, then the total amount taken out of the investments of the six new members i had added can be represented using the following equation
Total Amount = 11.5k * (1 + 1/2 + 1/4 + 1/8 + .......) (G.M with r = 1/2)
= 11.5k * 1 / (1 - 1/2)
= 23k
It is this amount of 23k that came as a complete surprise to me. It meant that when i help the company to raise 1.8 lakh rupees(30k * 6), it takes 1.5 Lakh as its profit and 23k is distributed as returns for investors like me! Q-Net being a company based out of Hongkong, and with almost zero investment in marketing, almost the whole of this amount flows out of the country. So essentially what i do by investing in Q-Net is help 1.5Lakh rupees flow out of every six people added and in return, I get 23k as reward! I wouldn't have had any problem in such a massive outflow of money, had there been a reason. If Q-Net was being paid for a product that is in demand or for a service that is being sought after, then it would have well been fine with me. But here, the drain of 1.5 Lakh for every 23k is happening for absolutely no reason! I pay the money, not to buy product, but to give 10 percent of it to a few of my fellow men and the rest 90 percent is taken out of the country as profit for Q-Net; and this I cannot accept!
Venturing into entrepreneurship is always praiseworthy. Entrepreneurs have always been beacon of hope in the society and they form the engine that drives the country forward. But every business should have an underlying purpose. It is this purpose that should motivate us in our venture and not the prospect of making money alone. Money, like food, matters only when you don't have it!
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