What is a pyramid (in corporate or business sense)?

Question

Ever heard of the phrase, "that company is a pyramid." They don't say its a "pyramid scheme", but they say its a pyramid. What do they mean??

Do they mean where one person does work and not only he/she gets paid, but the person who hired/recruited him/her also gets paid? If this is what I think it mean, then what's the big deal? All businesses are a pyramid!!

I know what a "pyramid scheme" is, I just want to know what is a "pyramid" in business/corporate sense. (Not those Egyptian things or the food pyramid)

Answer 1

Frankly, I don't know what a "pyramid" is in the business world.

But I assume your definition is correct where if one person does work and gets paid (either a salary or commission), someone "above" him/her (usually the boss or the owner or both) are making profits.

But when people use the phrase, "that company is pyramid", they usually mean its a pyramid-scheme.

Answer 2

A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered. Pyramid schemes have existed for at least a century. Matrix schemes use the same fraudulent non-sustainable system as a pyramid; here, the victims pay to join a waiting list for a desirable product which only a fraction of them can ever receive.

There are other commercial models using cross-selling such as multi-level marketing (MLM) or party planning which are perfectly legal and sustainable. Most pyramid schemes take advantage of confusion between genuine businesses and complicated but convincing moneymaking scams. The essential idea behind each scam is that the individual makes only one payment, but are promised to somehow receive exponential benefits from other people as a reward. A common example might be an offer that, for a fee, allows the victim to sell the same offer to other people. Each sale includes a fee to the original seller.

Clearly, the fundamental flaw is that there is no end benefit; the money simply travels up the chain, and only the originator (or at best a very few) wins in swindling his followers. Of course, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves. To embellish the act, most such scams will have fake referrals, testimonials, and information.

Although pyramid schemes have been declared illegal in many countries, they still persist in various forms, nowadays usually by having a cover business, a product or service.

http://en.wikipedia.org/wiki/Pyramid_scam

Answer 3

its all a scam dont waste money

Answer 4

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