The MRR Viral Scam - My Hot Take

Hey everyone, this is Julie Chenell, and I gotta admit, this was not on my podcast lineup to talk about, so I am inserting this as sort of an extra podcast episode. And I want to start by giving a shout out to my dear friend and client Christina Sclera. If you don't know who she is, you go to christinasclera.com, find her on TikTok, find her on Instagram. She's hilarious. She is not afraid to say what people need to hear. She successfully exited her business, which was a digital commerce shop. She was actually one of the first to really kind of use Shopify for digital products. She ran the contract shop, sold that for a successful exit, and so now she's teaching different online business and social media. And she is the person who came to me and said, Julie, this is getting out of control. I said, what? She said, it's called MRR. Now, if you have been around in the business world or in the startup world, MRR MRR usually stands for monthly recurring revenue, and in the SaaS world, this is like the number one KPI that SaaS owners track. However, the term has been hijacked, or the acronym I should say has been hijacked. It now stands for master resell rights. And if you don't know what master resell rights are, I'm about to tell you. The hard part about this conversation is that I'm already getting kickback, as did Christina, get kickback about talking about this as being bashing. And I want to make clear that What I'm critiquing is the business model. I'm not critiquing any particular person. So I did a post on Facebook, which is starting to get a lot of traction. I thought, you know what, I'm gonna do a podcast episode on this. If you haven't heard about it and you are on TikTok or on Instagram in any sort of business capacity, you will eventually. So MRR is basically the idea that I can create a course. On any sort of topic. And when I sell it, I'm selling the course for skills, but I'm also selling you the right to sell it. So, you know, there are different, different arenas where other business models in the past have sort of ridden these gray lines. You know, we can talk about MLMs and network marketing and how some of those become very pyramid scheme-y. And, you know, there's the downlines and, and all of that kind of stuff. And so a lot of these business models there's nuance, right? I'm trying not to be very black and white here because, you know, I'm not going to say, oh, all MLMs are bad, but a lot of them have gone in a real negative direction. So when it comes to master resell rights, there's other business models that look similar to it. So I just want to attack each of those so that I'm clear what I'm actually talking about, what I'm not talking about. So affiliate marketing is where you sell somebody else's product and the person knows that it's the other person's product, right? I made a lot of money affiliate marketing back in the day, and we have a lot of affiliates who sell FG Funnels and our courses and they make money. So this is a legit way to earn money. It's got issues just like any other model, but I've made six figures doing affiliate marketing. A second business model that is kind of similar but not really is white labeling. And this is where it's almost, almost like wholesaling, you know. So HighLevel, for example, software company is white labeling its software. It's allowing people like us to purchase the software and then sell it as our own to our end users. Right. And so we, FG Funnels, Funnel Gorgeous, we run a software company. It's boutique marketing automation company. We're using HighLevel software. That's white label. Okay. In both examples, you are technically selling someone else's product. Now, PLR is private label rights, and this is where you can purchase something and then sell it, edit it, and sell it as your own. So I originally learned this from Russell Brunson, where he would say, you know, you can go into the archives and you can find public works like Napoleon Hill's, you know, How to Think and Grow Rich. You can, you know, modify it, build upon it, and you can sell it as your own. So these are all different business models where you are selling other people's products and they are all like legitimate ways to earn money. So when we come to master resell rights, it gets a little sticky because people are like, isn't this just similar? So the, the best way I know how to describe master resell rights is that it's like a chain letter. And because as an internet marketer, I understand conversion rates and I understand what gets people to actually get their credit card out. This sort of master reselling rights of digital marketing courses is creating higher conversion rates. Than normal. And what's happening is it's now going viral. So on TikTok, on Instagram, in Facebook groups, it is everywhere. So this particular viral course right now that's going around is on digital marketing. It's selling for $500. You own the course, you learn digital marketing, but now you can resell it as— you can resell it as your own product. All right. And that's kind of like what PLR would do, private label rights. But you can sell it to someone else as MRR. And that is the key difference. And that is the chain letter effect. So what's happening? Majority of students who are buying the product are now reselling it as their own. Okay. So before I even like jump into the chain letter effect, if I buy a course on digital marketing and then I, and then I turn around and sell that course on digital marketing as my own, but I actually haven't done any digital marketing. There's, there's some issues there, right? But I'm actually selling it as a course that you can sell. So now my conversion rate automatically goes up because someone who's watching me do all of this and they're, and they're like, oh, I wanna learn digital marketing. And I say, yeah, you can learn digital marketing and you can sell this course as your own. And not only Not only that, but you can sell it to other people who can sell it, right? So now in that student's mind, as they're trying to decide whether or not to buy, they're like, well, I'm going to totally buy this. I'm going to make my $500 back because all I have to do is sell it to someone else. And selling it to someone else isn't that hard because I can tell them the same, the same story I just heard, which was you can then go sell it to someone else as an MRR product. Okay. And so this is essentially the, the chain letter effect. Now, several years ago, I was involved, not involved by like participating, but I was around when there was this funnel that went viral because it was getting people to sign up for a software as affiliates, but then training them how to use the funnel to get others to sign up for the software. And it was this similar chain letter effect. In the affiliate marketing space. But the outcome was what happened is they were, the software company was getting thousands and thousands and thousands of signups a day because it was going viral. People were signing up simply to get that funnel to then turn around and get signups who were going to get that funnel. And the legal team that was involved said, this is by far the biggest liability you have with the FTC. You could get your entire multimillion dollar company shut down if you let this go, guys, this wasn't even the company that was doing it. It was an affiliate of the company that was doing it, which, by the by, if you are a company and you have an affiliate program, you should be careful who your affiliates are because you are responsible for your affiliate's behavior. I bet you didn't know that. So now you do. So this guy's like, this legal team that I was working with, when they said, you know, like these These trends are incredibly dangerous. Fines, jail time, setting your business, shutting your business down. And so when Christina showed me this MRR, I was like, this is exactly the same chain letter effect. And so I posted on Facebook, got lots of responses, and someone was like, I don't understand why you wouldn't just do this as PLR. And I said, because that is, because that will break the chain letter. That's why it doesn't quite go viral, because if this course owner had decided to use PLR, what they would have done is said, here's my course, you can sell the course as your own. And so I would have sold it to you, and you would have turned around and maybe sold it to other people, but you probably would have trouble selling it to other people. Why? Because you would not be able to say, hey, turn around and sell this to other people, right? It breaks the chain because the MRR is what is making that chain go. And the other thing that I think a lot of people aren't really thinking about is that the faster it goes viral, the faster it implodes, right? So if I'm bought into this idea and I start selling this course and I tell my students, you can sell it as MRR yourself. Well, I, the more students I get, I'm literally building a competitive army of people that are going to go do it. Eventually the market will get saturated, right? There'll be no nobody left because every time you get another student, you are essentially getting yourself another competitor. And so your market share will decrease, decrease, decrease as the market gets saturated and eventually someone will be left holding the bag. The other thing that it will do is will erode confidence in the, in the digital marketing and internet marketing industry in general, because you'll have a lot of people saying, I made so much money teaching digital marketing, but really all they did was sell somebody else's program. And the reason that it converted— hear me out— the reason it converted is because it was promising the product and the resale rights to the students. So that is why the conversion rate went up. So even if you wanted to make the case, oh see, I learned digital marketing because I was able to get on Instagram, I was able to get on TikTok, I was able to sell— try selling something that doesn't have resale rights. Try selling something that is a product in and of itself to the end user, or even sell something that has PLR rights. But MRR is like a special form of digital cocaine, you know what I mean, in terms of its virality. And it's bound to end badly. And a lot of these women who are doing it are making money, and it's hard— it's hard to crap on something where you're like, my butt, I'm making money, I'm making grocery money, and the economy's hard. And like, I totally get it. So I feel I feel badly in a way because I am like, yeah, okay, you're making money now, but like, don't change your lifestyle. Save that money because this, this chain letter will break. And when it does, you'll be left with kind of a little bit of a soured reputation. We'll also be left with an industry that's less trusting than it even is now. I mean, it already has problems. So I just, I wanted to bring it up because if you're seeing it, if you're at all tempted by it, I have very successful business owners who've even been tempted by some of the stories. There's a, it seems as if there's a type of scripts that a lot of these people are learning that are pretty compelling in terms of, you know, the story and the promise and people are, have their identity really wrapped up in it. So I don't know. I, I'm, I'm telling you all of this so that if you see it on TikTok or you see it on Instagram or you see MRR, it may not stand for monthly recurring revenue. It may stand for master resell rights. And from a legal perspective, even though I'm not a lawyer and this is not legal advice, there is a very large possibility that if the FTC were to get wind of what was going on, the entire thing would be shut down and a lot of people would be out a lot of money. So I'm going to go with this is not legal, even if the initial intent might have been legal. All of these people don't understand the law and it is not going to end well. So if this was helpful, please share, rate, review, send it to someone who might be caught up in this. And as always, appreciate you. Talk soon.