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Coming Soon: A Whole New Generation of Multi-Level Marketing Companies

Multi-level marketing companies acquired a shady reputation in the 1970s and '80s.
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Multi-level marketing companies acquired a shady reputation in the 1970s and '80s, as firms like Amway, Herbalife, and others recruited millions of Americans to sell vitamin supplements, cosmetics, and the like to their neighbors—while also recruiting their neighbors to become salespeople themselves. The firms promised riches but seldom delivered them, and were seen as coarsening social ties. Now Silicon Valley is giving rise to a whole new generation of multi-level marketing companies like Stella and Dot and Ruby Ribbon, which are catering to high-end markets with stylish cachet. Just how different are these new ventures from their predecessors? And why have they been greeted with such comparatively little skepticism?

Helaine Olen's Pacific Standard economics essay is available to subscribers—in print or digital formats—now, and will be posted online in full on Tuesday, September 09. Until then, an excerpt:

During the hour I spend with the Stella & Dot saleswoman Naomi Perkins Rosenstein, she pitches me at least twice. Rosenstein and a recent recruit named Sabrina Clark have set up open meetings at four coffee shops around Manhattan to discuss Stella & Dot accessories—the virtues of purchasing them, yes, but also of selling them—with any interested parties.

At Think Coffee in the uber-hip East Village, the two women—“stylists,” in the company’s lingo—have covered a table with jewelry. They are wearing more jewelry still: earrings, bracelets, silver-colored necklaces; a barrage of statement pieces. But it’s a rare gorgeous sunny day during a less than pleasant spring, and business is slow. Unless you count me, the reporter.

The first pitch comes as I’m rummaging through my elderly tote, hunting for my tape recorder. Rosenstein suggests the Stella & Dot Madison Tech Bag, the red handbag that Clark is carrying. It’s $158. I decline.

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