A New York Times article this week reported that the most significant, and likely the most persuasive, advertisements on the most famous advertising platform of the year – the American Super Bowl – will be for Crypto currencies and NFTs. There will, of course, be the usual car, beer and technology commercials, but it is the crypto ads that shift minds and change the culture. The article refers to the event as the “Crypto-Bowl.”
Super Bowl commercials are bellwethers of cultural moods, trends and needs. This 2022 Super Bowl follows two years of quarantine, face masks, canceled events, loneliness, “remote” education, protests, violent insurrection, unemployment rates not seen since the 1930s, and “mass resignations.” There is talk of election rigging, voter suppression, even civil war. Fantastical conspiracy theories abound.
Into this cauldron of anger, disruption, polarization, mistrust and delusion Cryptos and NFTs emerge as financial saviors. They arrived not from government or any established institution, but seemingly from nowhere, a populist remedy. They are said to be decentralized, technically infallible, a new paradigm, and a pathway to the American Dream. For those riding the wave of rising valuation, these innovative “investments” are banishing the public despair that the corporate world, conventional jobs, and government arrogantly ignore.
As business writer, Tiffany Hsu states in the New YorkTimes piece, the 2022 Super Bowl ads are “the surest sign yet that the cryptocurrency industry has reached the mainstream.” She quotes a professor of advertising to explain the Crypto ads’ subliminal message: “We are a real company… we’re mainstream.”
This would seem to be a bizarre advertising event. An intangible, unregulated and, for millions of viewers, unfathomable entity whose very name is meaningless and contradictory (“crypto” literally means secret or concealed) is sold as “real,” mainstream, “here to stay.”
Roots and Precedent
In fact, the spectacle of the mainstreaming of Crypto, a baffling mass phenomenon presented as legitimate economics, awed by the media and unchallenged by government, is not without roots and precedent. Crypto and its new partner, NFTs or non-fungible tokens (also a meaningless and contradictory term) has lineage and a precursor that prepared America for its predominance. The precursor “industry” on which Crypto rests, is “Multi-Level Marketing” (another meaningless term), the “unique”, “life-changing” business “platform” pioneered by Amway, and then cloned as Herbalife, Nuskin, LuLaRoe, NXIVM and hundreds more. Each promises economic salvation, a safe harbor, and, most important, hope where desperation and distress prevailed. One in seven American households are involved in an MLM each year, but since 1980, the total number of participants, factoring a 50% or more churn rate, is incalculable. MLMs operate in a perpetual state of collapse and resurrection. MLM schemes excite wild hope, obsessive proselytizing, and they reshape views of millions of people on work, success, leadership and what is real and not real, teaching that reality is only what one believes it to be. Infinite expansion of recruits is therefore possible, for those that believe.
Super Bowl Déjà vu
When I read the NYT article about the 2022 Super Bowl being sponsored by Crypto, I experienced a haunting déjà vu, a flashback. It was the Super Bowl of 2009. Then the country had just experienced the largest financial disaster since the 1929 stock market crash. The housing bubble, fueled by Wall Street, exploded across the world. Millions lost jobs and had homes foreclosed. The US government quickly “rescued” not consumers but the banks. Public confidence in the “real” economy and in the government took a massive hit.
As the country reeled from these traumas, and tens of millions faced financial crisis, a strange ad appeared at the 2009 Super Bowl, signaling a way out of unemployment and financial despair for the average person. The ad was from Avon cosmetics, but, incredibly, it never urged viewers to buy Avon’s unremarkable commodities. Incomprehensibly, it urged people only to “sell” them.
As Marketplace’sKai Ryssdal reported at the time:
“As usual (Super Bowl) ads… gave us a peek into American culture. This year they were all about coping with recession, as in this one. Avon was calling — not for customers but for sales reps.
“Avon Commercial: I can’t get fired. I can’t get laid off. It’s my business.”
Avon’s ad, the most expensive in the company’s history, proclaimed the mainstreaming of the multi-level marketing “solution” to America’s financial and spiritual ills of recession, job insecurity, declining opportunity and demoralization. It is to become MLM “distributors,” to no longer turn to government or corporate employers but to “self-employment” in MLM, which authoritatively promised everyone they could “be their own boss.”
MLM had operated for decades on the margin of the mainstream economy. In the 1960s, some states enacted laws to restrict it. In the 1970s, the federal government sought to shut it down. A bill was introduced in Congress by Senator Walter Mondale to make it a felony to operate MLMs. But politics prevailed and MLM survived. It grew and spread virally, promising “the opportunity of a lifetime” to all who invested.
Despite gaining immunity from fraud prosecutions, MLM’s reputation never improved. From pyramid scheme to just garden variety scam, it remained in the public eye as shady, a trap for the gullible, a fool’s paradise. Some called it a cult. It famously never advertised but relied on personal, deceptive recruiting, withholding its hidden costs and relentless time requirements, exploiting friendships and family connections, while also claiming to hold ancient “secrets” for achieving “total success.” No verifiable data existed on losses, continuous churn, or levels of legitimate retailing in MLM, making due-diligence impossible. It functioned without government scrutiny, behind a benign-looking mask of “direct selling.”
Then, in 2009, it burst on to the Super Bowl screen. A seemingly trustworthy, attractive woman told millions of credulous viewers, “If someone asked me how to make money now, I say do what I’m doing, sell Avon.” She told millions of Super Bowl viewers, “Avon is everything to me. I can’t get fired.” The imbedded message: “Multi-Level Marketing can be relied upon. It is a way out, where all other avenues are closed. It’s real. It must be. It’s on the Super Bowl!”
A Dallas newspaper followed up by featuring one of the women in the ad. The article revealed a factor undisclosed in the commercial. It stated that she “runs herd on about 100 other Avon ladies”, that is, she gained money, not just from her sales, but from a hundred others. To duplicate her “success”, therefore, the “herd” would need to recruit 10,000 more (100 X 100) and those 10,000 would need to recruit a million more “Avon ladies” (10,000 X 100). The Super Bowl commercial had concealed the most important feature of the MLM “business,” the existential need for each to recruit, the pyramid scheme or “endless chain” factor.
A month following that 2009 Super Bowl, the New YorkTimes’ Sunday edition ran a feature article with color photo, headlined, “Direct Sales as a Recession Fallback.” Just as the NY Times now reports the “mainstreaming” of “Crypto,” the same paper uncannily announced the mainstreaming of the precursor phenomenon that offered financial salvation: Multi-Level Marketing, aka MLM.
It reported that in a time of long unemployment lines, ruined savings, and plummeting real estate, there was, miraculously a “fallback” for the average person. A paid spokesman for the “MLM industry” informed millions that the industry is “growing” at more than 4% a year, without divulging the enormous quitting rate. The story reported, without fact-checking, that nearly 7 million households in America, half of all the participants in MLM, were already earning $2,400 or more a year, the “median average.” It noted coyly, “those who recruit and manage others can earn significantly more.” Examples were given of some recruits gaining thousands in their first couple months of participation. Investment into the business, the article reported, was only “about $99. In other words, for less than a hundred dollars, the average return was at least 2,400% and, “significantly more” for those that “recruited.”
In the previous years when MLM was at the margin, such a statistic might have been fact-checked (the actual “median” income average is zero) and the nature of an “endless recruiting chain” (mathematically and physically impossible) might have been discussed. But with the 2009 Super Bowl having just “mainstreamed” the MLM recruiting scheme, no such scrutiny was deemed necessary.
Preparing Crypto’s Pathway
The pathway for Crypto to “mainstream” a decade or so later was now blazed – by MLM. The speculative model, the money transfer from later investors to earlier ones, and the lack of any underlying value were normalized and put on display without analysis. What had been viewed as a marginal realm of the economy for gamblers, financial professionals, risk-taking speculators or charlatans was now a Main Street “business,” a viable, reliable “alternative” for Everyman.
For millions, MLM is, tragically, the lone beacon of hope, only to be dashed, entrenching mistrust and festering disillusionment. In its wake, it has indoctrinated millions to disconnect from objective reality that governs saturated markets, limits to expansion of “distributors” and the lack of need for “personal salespeople” for commodity goods. It promotes blind obedience to self-appointed leaders, suspending critical thinking. Most important, MLM has normalized a speculative money transfer as legitimate, sustainable “business.” In this way, culturally, if not directly, MLM prepared the public to uncritically embrace Crypto.
Common Heritage
What essentially links the DNA of MLM and Crypto is not found in strict definitions of pyramid schemes or ponzi schemes, but a deeper common heritage. Crypto entered the culture, like MLM, as an incomprehensible yet electrifying new form of economics. Each has its mysterious economic formula. Crypto has its “blockchain” system in which invisible “coins” are “mined” and indelibly recorded.
MLM befuddles its followers with its hallmark “compensation plan,” graphically portrayed with unintelligible charts, correlating ranks, points, purchase volumes, quotas, and configurations of recruits, and calculating relative percentages of “commission” from purchases by later recruits, called a “downline.” It is said to be so innovative and dynamic that it is too complex to be grasped but also that it is unnecessary to understand. One can just “trust the computer.” The plan is said to “work 100%”.
The validity of both MLM and Crypto is asserted not by analysis, transparency, verified outcomes or due diligence but by the awe-inspiring images of a few becoming rapidly and effortlessly wealthy. Both claim the ground of economic populism, promising opportunity to all who are willing to invest. Both claim to be uncorrupted by government, established institutions or the sinister maneuverings of “elites.”
As with MLM, almost no one knows even what Crypto is, where it came from, or how it operates. Both MLM and Crypto have amassed enormous aggregate wealth, attracted the endorsements of the super-wealthy, celebrities, and sports stars. Both have captured the imaginations, the investments and trust of millions without need of transparency and while enjoying near total immunity from regulation.
PONZINOMICS
Underneath Crypto and MLM there lies nothing at all. Both are suspended by belief. The assumed identities of each, “direct selling” for MLM and “currency” for Crypto, are unfounded. No one actually earns income from “selling” MLM goods. Crypto is not a usable “currency.” As economic institutions, neither MLM nor Crypto invents, produces, creates or adds value, yet both are thought to be economic salvations. Both rely on group-think, sustained by promotions, endorsers, stadium naming rights, and now Super Bowl ads. Both are seen as pathways to success and happiness for the enlightened and intrepid and involve broader world views.
Holding up both MLM and Crypto are what I term “Ponzinomics”, a delusional ideology, pseudo-economics. MLM teaches the “pyramid scheme” as a viable and sustainable economic model. Crypto promoters do not require investors to recruit others but justify investment on the same principle of an ever-expanding base of buyers.
Just as millions of people squander savings, months or years of effort, and personal capital in pursuit of MLM’s pyramid, millions now place hope and savings in an intangible, invisible commodity, whose “value” relies on continuous expansion, lack of information, public mania, and compliant regulators.
Post-Game Analysis
Leading to the ad in the 2009 Super Bowl, Avon’s USA operations had been morbidly declining. The ad caused a slight bump in revenue, but the trend of downfall returned for five straight years afterward, as much as 18% in just one year. It later sold off its entire USA operation and then the rest of the company was acquired by a Brazilian MLM. Millions of shareholders and “distributors” lost. Yet, the “MLM” model continues to spread like a pandemic. Millions continue to join MLMs, mostly in poor countries, and a host of new MLM clones have been formed in the last decade. Mostly by inaction, MLM’s “endless chain” income proposition is treated as “legitimate” by US regulators, who, inexplicably, never examine the model or review the verifiably epic losses of consumers.
Avon still provides no “income disclosure” to new recruits. Overall average income for all who have ever joined is a virtual zero in Avon, as in all other MLMs, and 50-80% of all MLM recruits quit within a year. All MLM “distributorships” are worthless – until and unless others buy in later.
Crypto, still in its early stages of expansion, appears to be the hottest, smartest investment in the world, an economic miracle. Stories of Crypto millionaires are everywhere. Reportedly, 46 million Americans now own Bitcoin, the predominant Crypto.
However, just before the 2022 Super Bowl promotions, ominous tremors occurred, possibly portending an Avon trajectory and testing the blind belief of followers. From November 2021 to the near end of January 2022, in about 10 weeks, Bitcoin, for no apparent reason, lost nearly 50% of its value. As in all inflated commodities, when sudden drops in value occur, the last ones to buy in lose the most, and they are always the majority. It was only their recent purchases that had driven Bitcoin’s value to the earlier heights.
The founder of Bitcoin, the first one in, remains unknown. But whoever he/she is (or it could be a group) is said to now own as much as $60 billion in the “currency.” The total amount of Bitcoins is said to be finite, but the number of owners, the true determinant of “value,” is unlimited as the coins are divided into smaller and smaller denominations and new clones of Bitcoin emerge.
