YTB Scam?

Now, this one is thrown around a lot but I wasn't quite sure what people meant when they said it. So, I did some research.

What is a Pyramid Scheme
First of all what is a pyramid scheme, well the earliest forms of pyramid schemes where basically a pyramid 1 spot on the first row 2 on the second row, 3 spots on the third row. Each spot would be sold to a person for lets say $100.00 and whenever the pyramid grew by six the would pay the accumulated money to the top person and move everyone up one space. Sounds great if you get in early you can get 600% return on your money but because of the exponential growth of the number of people it requires to actually pay out would grow by six so if you're the 3rd person on the pyramid it would take 18 people in order for you to get paid not too bad but what about the 18th person that just help you get paid there would have to be 18*6 or 108 people. So eventually the pyramid breaks down because it takes far too many people to sustain the growth. Now, there are many other more advanced forms of pyramid schemes but as I understand it the pyramid scheme now refers to unsustainable business models in which a person is recruited into an organization in which they can never earn more then the person that brought them into the organization.

How and Why Pyramids Attached Themselves to MLM's
Pyramid schemes are illegal in the United States and many first world countries but the definition of the term, in the popular culture, seems to have attached itself to all MLM's or multi level marketing companies even if it is flat out false. During a time in which pyramids schemes were over staying their welcome here in the US, because of their inability to truly market a product or simply because many sold no product at all making them an unsustainable business model, new business model was also emerging. That business model which used the extremely effective word of mouth advertising and allowed you to not only be compensated when you shared the product but also when introduced others to the business, was growing with great success and because of this many pyramid schemes started calling themselves MLM's hoping to trick people into believing that they too were reputable.

Is YTB a pyramid
Now I found this all very interesting but as I started to look at the main criteria of what it takes to be a pyramid scheme in which you can't make more money then the person who brought you in, it started to sound a lot like most of Corporate America is set up just that way. From what I have seen since I joined YTB, is that YTB is not a pyramid scheme at all, I have seen numerous people that were willing to work hard far out earn many people in there up-line and it seems almost as if thats the rule not the exception.

I heard claims in forums of it costing upwards of $3000, which is about $2400 off of what it cost me.

Minimal Cost:
$449.95 initial sign up and activation of my travel booking engine and another $49.95 for my first months website up keep and I was up and running in 5mins.

Optional Costs:
$80 - Business Cards
$20 - Magazines for Marketing
$20 or free online - For DVD Presentations
$150 or audit for free - CRTA Cert class (not important to pay for until your business starts to really grow)

My Total Cost:
$600

WHY WAS THERE SUCH A BIG GAP?
Well The first thing I considered is that the person may have spent some money in expensive advertising or unnecessary startup costs. What I spent beyond the startup cost was about $20.00 for 4 magazines and $80.00 dollars for about 5,000 business cards. That was it!

Second reason for the discrepancy on the forum post could be that like most companies, especially companies growing really fast, there are going to be competitors and as most of us know that outside of graphic language and profanities you can say what ever you want about a company when posting on a forum and it doesn't have to be true. So, it is likely that someone from a competing company could have said it cost way more than it did.

Duplication, Not Sales
This one is really easy to answer and the answer is NO, salesmen have a high failure rate in this business because it is not a business of selling but of duplication and networking.

Not Enough Salesmen to Build on
Salesmen are less then 5% of the national population making it extremely difficult to find enough of them to build you business on them alone.

Who Does Well and Why
Historically most people that have done extremely well in an MLM are educators and organizers for they are able to create systems that continue to duplicate down many levels allowing for a solid business model and high retention levels. While on the other hand Salesmen can have great success with recruiting people but because of there lack of focus on training the people they bring in, they tend to have a similar drop off rate, causing great frustrations for the salesmen and any of his recruits.

Check the Financials
There are numerous reports showing that ytb is making most of its money on the selling of travel stores, not on selling travel, which is true according to their financials which you can check out yourself at: http://finance.yahoo.com/q?s=YTBLA.PK.

My Experience, Could Be Yours
I think that this is an issue of what a person chooses to do with there site once they have it. I personally earned around $462.00 on one sale because a close friend of mine was going on a cruise and our site happen to save him about $132.00 per ticket. Not bad for a company that doesn't sell travel.

Selling Travel by Marketing the Business
Now, it is true that a larger amount of money can be made sharing the business while not selling travel at all, because of the power of numbers and the leverage that brings, which also helps to sell large amounts of travel. Which from what I have gathered in my searching is that what makes an MLM function is the concept of selling a little to a lot of people, so even if everyone just booked there own travel on their sites the company can sell a lot of travel overall.

Could this be an issue? Not really, some of the people that came into my business love and only want to do the travel side, some people love and only want to do the recruiting side and most want to do both.

I find this one very interesting because I think it comes down to a pretty common fear that most people have, that there might not be enough.

Looking at the Numbers
Just looking at it logically it doesn't make any sense, last count that I got for number YTB reps was 134,732 and the current population in the U.S. is over 303,523,634 and YTB is Currently Expanding into Canada as of Febuary 8th, 2008 and Mexico by the end of the year. So, just looking at the numbers that doesn't seem to make any sense,

Where to Find People
As with most home based businesses people in certain industries will gravitate to them, especially in bad markets for that industry. Throughout most of the U.S., the Real Estate markets are down, leaving a ton of Real Estate agents, Mortgage Lenders, Appraisers, Etc... looking for greener pasture. Why not another business where they get to be there own boss.