Kevin Thompson - MLM Attorney Go Pro Speech (2014)

Ladies and gentlemen, please welcome to the GoPro stage, Mr. Kevin Thompson. Good job. Thank you so much. How you doing? Let's go. All right, ready? Love it. I wish my four kids at home were that obedient. That would be really nice. I am so humbled and honored to be here before you guys. I have so much respect for Eric Worre and what he's doing, and I have so much respect for all of you for what you're trying to accomplish out there. People always ask me, they say, how did you get in this business? How did you choose this field of law? And honestly, I was in college and I was selling energy drinks to bars to make whatever money I could. And I fell in love with the idea. And the idea felt right. The idea that if you produce, you get paid. If you don't produce, you don't get paid. Doesn't matter who your daddy is, who your mother is, doesn't matter your ethnicity or how you look. If you did the work, you got paid. And so for me, that was really important. I was. I'm very competitive. My wife and I met in college. We ran track. I told you folks last night, it was about £30 ago. And the idea of being rewarded for the work that you do is important. You know, we don't have a whole lot of that in this country anymore. Times are changing and, you know, look no further than what's happening with our kids. My son is a very gifted athlete, and field day, 50 yard dash, he just obliterates the field, you know, And I'm that proud dad. I'm trying to hold it in because I don't want to, like, embarrass him, but I was really proud. Literally ran out of the frame. People are filming it. You can't even see him because he's gone. You know what? It really broke my heart. And it broke his heart because when it came time to get the awards, everybody got a blue ribbon. And it was really hard for me to explain why somebody who lost got the same accolades that he got. And you know what? It's not just with young kids, it's with older kids, it's with adults. It's just culturally. And so this idea of capitalism is important. You guys are carrying the flag and I love being a part of that. I love what you're doing. Yeah, I'm here with my lovely wife Sharon and our four month old daughter. That kind of put a damper on the romantic plans that I had. But traveling with a baby. But when you have four, you do what you can, you know, in Vegas you can get whatever your heart desires. Except a babysitter, it turns out. So if you see a woman in high heels bouncing a baby, that's my wife, tell her hello. Oliver Wendell Holmes is a very well known Supreme Court justice. He sat on the bench in the early 1900s and he's quoted a lot. And he once said that a moment's insight can be worth a lifetime of experience. A moment's insight can be worth a lifetime of experience. The collective wisdom that you guys have here, it cannot be surpassed anywhere else in America. You guys are getting the best of the best when it comes to content. And what they're sharing with you is the result of literally years and years of work and pain and victory. Now what I'm going to share with you comes by way of 10 years of experience as a lawyer in this space. I've seen a lot. I've seen good, I've seen beautiful companies and I've seen a lot of bad stuff. I've worked with. We've represented distributors against companies, we've represented companies against distributors, we've represented companies against regulatory bodies. I've actually helped regulatory bodies understand the space. And through that experience, you get a sense of where we're going and you get a sense of what's good, what's not so good and what needs to change. And that's what I'm here to share with you guys today. I'm going to skip and just go right to the conclusion. The best days of network marketing are ahead of it. Seriously? Yeah. The best days are ahead of it. Now, before I start talking about the future, I want to talk about the past a little bit because I know you guys get hit with questions. Is this one of those pyramid things? You get it all the time. And so here's the thing. The ftc, the Federal Trade Commission, they recognize on their website that multi level marketing is a legitimate method of selling goods and services on the government's website.gov. so the concept is legal. It's legal on the as per the Federal Trade Commission, it's legal as per court cases throughout America. Now there are some bad apples out there, but candidly, the problem gets magnified. The FTC has sued two network marketing companies in eight years and they weren't really good. Now the SEC has done some things, they're getting involved, but I don't even consider the companies they sue as network marketing companies. So for the most part we're doing pretty good. But there's always room for improvement. Now I want to arm you with the truth. So when people say, is this one of those pyramid things? You know what to say. Okay, so first, what's a pyramid scheme? What are they talking about? Well, there's a case in the mid-70s, which was like before the Internet. And in that case it says basically it's illegal to reward people unrelated to product sales. So if you pay people and they recruit and you reward recruitment, that's bad. Okay, so what if you sell Thousand Dollar pencils, it's a product sale. Is it legal? Well, then it gets more complicated. Then that's the gray in the industry. So the rule is you can't pay commissions unrelated to legitimate product sales. If you guys love the products you're selling, if it meets those four criteria in Eric's video yesterday where it satisfies a market need, it's priced appropriately, has sufficient margins, and there's a fourth one somewhere. You guys are in good shape. I simplified, actually. I call it the grandmother test. If you can sell it to your grandmother with a straight face, that's a good sign that you're selling something valuable. Now that gray in the industry, as far as when is a product legitimate, when is it not legitimate? The courts, they use factors they say are customers buying the product, people outside of the plan. If you've got customers in your business, that's a really good sign. They look at what's the emphasis of the program, how is it being presented? Is it all about recruitment and the hype and the financial opportunity, which. Recruitment is important, by the way, but that can't be the main, main focus of what you're doing is the emphasis on product. That's important. And are there compliance measures in place to protect people? So if people buy product and they can't sell it, can they at least get some of their money back? Those are the kinds of things that regulators look at. So that's sort of high level stuff as far as what separates good from bad. Now you heard Joe Mariano yesterday, last night mention that it's been a tough year for the industry. Well, really, it's been a tough year for lawyers, politicians, but really the space is growing. You guys are experiencing tremendous success. Yeah. So when I talk to people, you know, I'm kind of in the mud. But it's so encouraging to see that you guys aren't breaking stride. See what's happened is the industry has attracted some attention from Wall street, which those guys are never scumbags, by the way, ever. And somebody invested considerable money to short a stock, literally betting that a particular company would fail, and they went on a campaign to bring that company down. And what's happened, it's been some bad. But I'm kind of encouraged because the marketplace is getting more educated about what it takes to be a good company. And with more education, with more understanding, it paves the way for a long and prosperous future. It's very similar. Well, first of all, there's a German philosopher, and he said that the truth evolves through three stages. First it's ridiculed, then it's violently opposed, which we're on the backside of that, by the way. And the third, it's self evident. And I think of franchising. Franchising today, it's pretty safe to say it's self evident. 50% of all retail sales runs through a franchise. It's close to 10% of GDP. The thing about franchises is that no matter where you go in America, you're in the same damn town, right? It's the same business. You got the McDonald's here, you got the Burger King here, you got this and that. But they're predictable models. Franchising is very similar to network marketing. Really all a franchise is, it's a license. You're buying the right to use somebody else's brand. You're renting a brand at tremendous cost, by the way. I think the average franchise fee is about $175,000. The average net income of a franchisee is $75,000. So when Richard Brooks says things and Eric Worre when they say things like, you know, the risk versus reward, it's really hard to beat network marketing. You know, for 60 bucks, $100, maybe $200, you have a license to sell something that people want, and that's tremendous. And Your exposure isn't $175,000. Your exposure is whatever you spend on product and your entry fee. So the risk reward is hard to beat, but. So franchising is self evident. But back in the 50s, there was a time when the entire concept was at risk. There was a Supreme Court case, and people argued that this thing violates some sort of antitrust law. Right? Leave it to a good regulator to mess up a party. It violated antitrust laws. And so the future of franchising wasn't really set in stone. Then comes the 60s, and it's still a scam. What was happening was people were saying that they were overstating the amount of money you could make once you bought a franchise. Hey, pay me $50,000. You can sell my widget. By the way, these Guys all across America, they're making a lot of money. Guess what? Those people across America, they weren't making a lot of money. So there was inadequate information in the marketplace. A lot of people lost a lot of money. But then comes Ray Kroc. You know the history. Ray Kroc sold milkshakes in California. He goes into a burger joint that's just killing it and buying a lot of milkshakes. And it was the McDonald's Brothers Burger business. And he says, man, I can do this. Didn't even have a college degree. I don't even know if he finished high school. Forgive me for not knowing that detail. And he showed what was possible. He showed the value that franchises had to the marketplace. And then you layer on top of that some smarter regulations. Sometimes you need regulations, you need speed limits on the highway. And franchising was no different. So once the disclosure requirements were clear, before you buy a franchise, you can talk to franchisees, you, you can see the earnings. Then all of a sudden it became a trusted component. So from being illegitimate in the 50s to being self evident today, what happened? It was one word. One word. It's the same word that's applicable for us, for you, for company executives, for reps. I'm going to ask you a question. Just think to yourself, what is your number one asset that you leverage to build your business? I'm not talking about a Kim Kardashian kind of asset. I'm talking non. Just to be clear, somebody said it over here, a non physical asset. I'll give you a hint. Education's important. It compounds over time. You can lose it in an instant. It's trust. It's trust. And I'm telling you, after working with over 200 companies in this industry, that one word is significant. And so in order to go from where we are now to where we want to be, we've got to improve trust. Stephen Covey wrote a book called Speed of Trust, and he talks about how trust, it's hard to quantify, but it is quantifiable. And there is economic value in trust. The more trust a brand has, the faster decisions get made, the lower the cost, the more revenue that exists. Think of Apple. Apple is an obvious example. We all went out, we bought an iPad, we didn't even know we wanted it, right? We trust them. On the flip side of the coin, you've got the federal government, where I'm not trying to be political, but they can't lead a silent prayer without it costing a billion dollars, right? There is distrust and so that's the principle in motion. Now, as an individual, amassing trust is important as you're building your business, where you do what you say you're gonna do. Like Eric Worre, he's gonna do the video, he did it. That's how you amass trust and honoring the small commitments. I'm not the most qualified person to give you that advice because you're gonna hear from some amazing speakers to give you advice in that category. But what I will talk about is the importance of marketplace trust, where as an industry, what we need to do to take this thing to the next level. Because I tell you, divided we fall, united we prevail. And seeing an assembly like this of people all across the world, reps from all kinds of different companies, with the sole purpose of elevating their game, and it gives me room for hope. So amassing market trust as a profession, it's a function of two things. Executive leadership number one, and then field commitment number two. Executive leadership. Leaders that are committed to a long term vision, leaders that act honorably, they're not looking to cut corners, they're not looking to cut aggressive deals to pretend to be successful. They, they're not trying to raid one organization to pretend to be successful. They are committed to a long term build. They're committed to integrity. I tell you, lately we've seen a lot of people enter the space with minimal integrity. And I don't pretend that network marketing is perfect. I do believe it's the best. Every industry has bad actors, so we have some bad actors in this space and they come in and they try to take shortcuts. So where some companies, it takes them 20 years to build to the level that they're at and these people want to do it in six months. And that's bad. The reason why it's happened, it's kind of like there's an analogy. If you're going 70 miles per hour down the freeway and that's the speed limit and there's no police officers, somebody goes 75. Okay, maybe I'll go 75 too. Somebody goes 80, maybe you go 80, no police officers, nothing happens. And all of a sudden somebody goes 90, then somebody comes 100 and there's no consequences. And so in this environment where there's been kind of, for the most part, very little regulatory activity, a lot of executives have gotten away with things that they probably shouldn't have. But those days are over. So long term, it's going to take executive leaders that are committed to building with honor building companies the right way, educating people on what to do. Not just saying, hey, you know, you can't make disease claims with your product and then turn a blind eye knowing that the disease claims are happening. That's imperative. That has to happen. The second one is field commitment, where leaders are committed to the long term. Where you hang in there, where you build with honor, where you build with transparency, where the opportunity isn't overstated in an effort to sponsor somebody. Here's the reality. If you watched Eric Worre's video, he didn't make any aggressive income claims. Who are you not going to sponsor once somebody has seen that video? He says, look, success takes work. For the most part, people know that. When I was an 18 year old kid being recruited, the coach said, you're going to be a national champion. He didn't have to give me disclosures. I knew, right. It's a long shot. It's important. So when it comes to field commitments, choosing a partner and hanging in there thick and thin. Here's the thing about my family. I love my kids, I love my four kids, but I tell you, I don't like them very much. Sometimes I'm walking around in a constant state of shock. It's like soldiers, when they come from overseas, sometimes they have post traumatic stress disorder. I've got pre traumatic stress disorder. I know something bad's gonna happen. I just don't know when. Right. I'm paranoid. I am so afraid of my kids in my house. So afraid. But I love them and I know they're gonna make mistakes and they know that I'm gonna make mistakes. And then together we, we have a life. And so find that company that you love and that product that you love and hang in there. That's important. There's too much back and forth. There's too many leaders in the profession that go from company to company. Yeah, absolutely. I know I'm over. I'll wrap up quick. First of all, again, remember that number one asset is trust. When you're promoting one opportunity as being a great thing and you jump ship and do something else, that trust is gone. You might make money for a few months, but it won't be there long term. So people that make the jump, they always regret it later. Commit. If I were to give you three principles and I got to go through these quick three principles for you, things that you can do right now to help with this market trust. Number one, use the video. The video is really good and I know you guys got to figure out how to use it. If you should use it with prospects or distributors. But somebody who joins your business after seeing that video, they can never claim, hey, I didn't know it was gonna be hard. You didn't tell me it was gonna be hard. Right? I mean, it's all right there in a very well done fashion. Number two, customer sales. Regulators wanna see customer sales. Customers are good for business. They're sticky, right? They don't come and go. So find people that love your product. That's great for volume and great for longevity. The production per rep needs to improve customer sales and you'll learn strategies about ways to help. And number three, transparency. When it comes to the opportunity, it's really tough to police so many salespeople, but companies are expected to do it. You guys, whatever you do in the field, that activity rolls up to the company. The company has to educate you, number one, and teach you how to, how to operate appropriately. And you have to actually go out there and do it. So when you make income claims, you're talking about money providing the income disclosure statement, which if your company doesn't have one, it needs one where you talk about the average earnings. That's very important. I'm going to close out with this. Ernest Shackleton, one of the toughest human beings ever to live. He set out to traverse across the south pole back in 1914, before there was Google Maps. So he didn't know about the ice that was kind of there. And he gets stuck. He was stuck for 18 months. 18 months. And through his leadership and his heroism and his sacrifice, literally everybody was spared. And it's a tremendous story. And the ship, he called it the Endurance. But he said, this life to me is the greatest of all games. The danger lies in treating it as a trivial game, a game where the rules don't matter much. In fact, the rules matter a great deal. And even to win the game is not the chief end. The chief end is to win it honorably. So here's the thing. The best days are ahead. If we commit to winning honorably together or if we're on the current track where instead of rising with the tide, we poke holes in each other's boats, that strategy isn't going to work. So cheers to you. I'm so happy to be here and good for you for being here and I've really enjoyed my time. Yes, take care.