Is Solavei a scam or a legitimate opportunity?
Dear readers,
A new cellular telephone MLM company is launching in the United States as we speak. It’s called Solavei and a lot of people are going to be asking “is Solavei a Scam?”
I was approached by someone pre-launch that wanted me to look into it. They had some friends involved and wanted to know my opinion of Solavei. Was it a good opportunity or not? Being someone with a reputation in the MLM industry they wanted my opinion (and of course were secretly hoping I’d want to join them.)
I know some people in the industry and within my own Send Out Cards team won’t want me to make another controversial post about a new MLM company. They prefer for me to keep my mouth shut. However I don’t believe people should be misled. I’ve pointed out several other bad opportunities in the past. I will continue to do so and warn as many people as I can.
I’m not here to call Solavei a scam or not. I’m simply here to point some facts out to you that you may want to think about before you get involved.
- At the time of this writing the Solavei CEO Ryan K. Wuerch has 5 lawsuits pending from 2011 when he was CEO with Motricity, Inc.
- Several MLM based cellular phone companies have tried the same thing before, and have failed. (Global Verge, and Wow Mobile for example.) One of the problems is they really don’t own the cellular network. Solavei claims to be an actual cell phone carrier but in fact they use the T-Mobile network. That means they are dependent on another company and if something happens and they lose their contract you lose all your customers! If you read the link I posted for Wow Mobile you’ll see that their contract with T-Mobile actually bankrupted Wow Mobile.
- The compensation plan. Look at the Solavei compensation plan. I’ve seen a lot of MLM companies and when you start looking at what you can make from 5000 customers on Solavei it’s pretty bad. Their goal is to make “millions of thousandaires”. Uhm, so what? Thousandaires? Big deal. I know a company that wants to make more Millionaires in the next 5 years than any other MLM has ever done. THAT IS A BIG DEAL, not thousandaires.
- Deceptive marketing practices. Watch the launch videos where the CEO Ryan Wuerch talks about his great track record… but this is the same guy being sued in 5 separate lawsuits for his poor track record as CEO with his last company! In another video they claim to be an actual cell phone carrier. That statement that implies that somehow their different than other MLMs that rent time from a cellular network. That statement implies they own their own network. The answer is no they don’t. They’re network provider is T-mobile. They don’t own their own network.
- The cell phone industry is a commodity industry. The more people that use cell phones the lower the rates go. The lower the rates go the less profit their is for you. I saw this happen 10 years ago in the long distance industry. There were lots of companies making Billions selling 10 cents a minute long distance through MLM. But now you can get flat rate unlimited long distance for $20 (or less) a month. There’s no profit left! People used to pay on average $60 a month for long distance but now they get their local phone and long distance for $20 or less a month! The same thing is happening to cellular. What once cost $100 a month now costs $49. What is going to happen when you get the same service for $19 a month? How much profit is going to be left to pay YOU the distributor?
I’ve seen enough from Solavei already to say that I wouldn’t want to get involved.
I don’t think Solavei is a scam… but I certainly would think twice before investing time and money into building an organization with Solavei. I don’t see it lasting more than a 1-3 years. Would you really want to build a large organization with a company that is doomed to failure, only to have to start over in a few years? What would that do to your reputation if this does happen? Is it worth the short term income you could make?
This is just one person’s opinion. One person who has been in the MLM industry for 10+ years. One person who makes a full time income from MLM and has for awhile.
If I was going to do a cellular telephone based MLM I’d join a solid reputable company like ACN. They not only sell cell phones but lots of other technology and services. They’ve been around a long time and they’re not going anywhere. You could build a buisness there and know they’ll still be around 5 years from now. (I am not, and have never been an ACN rep but I have respect for their company.)
- Ben Fitts
NO affiliate links here at all. I’m not trying to do one of those reverse sales pitches where someone calls Solavei a scam and then tells you it isn’t and tries to recruit you! In my opinion I don’t like this company and wouldn’t recommend it to others.сондажи
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You my friend are an idiot. You have no facts to support your theories. You’re just a monkey who likes to hear his lips move! You should do some further research on the lawsuits and the future of T-mobile before you start acting like you matter and people will listen to you!
Have a good day!
Thanks,
Doosh Bagge
I have done research. I’ve also been around the industry a long time. I personally wouldn’t want to get involved with a company like Solavei. There are too many risks involved.
I have built a large organization and stayed with one company for 8+ years. (I’m one of the top 20 people in my company.)
I totally agree with Doose Bagge,you’re an idiot….fk’n say something thats positive n wholesome,why the hell would you start talking about something you don’t know about.I don’t give a crap if you were around the communation industry…its dickface like you who gives the MLM bad names.We all should work together as a family in this MLM industry,meaning we should always be saying things that are uplifting and psoitive.
You people who want to scam and mislead people just to make a quick buck.
I’m the one telling you the CEO of this company has 5 pending lawsuits and you think I’m giving MLM a bad name?
Well he clearly gives us a link right at the beginning of his spiel… and clearly tells us “no links here” LOLOLOLOL sorry a lie is a lie is a lie! Thanks but how many health and wellness companies go down before one stands tall… Think for yourself people!
Ryan Wuerch was very upfront from the beginning about lawsuits. See http://www.ryanwuerch.com for more information. You mention in this post that prices go down the more people who purchase the product. My cell phone bill has never gone down but continued to go up, especially with the addition of data. AT&T was another company, besides T-Mobile to bid on this and AT&T couldn’t compete on the price…because of advertising dollars already spent. No offense here, but I would trust the business leaders that have surrounded Ryan Wuerch before I would trust your 10 years of experience in the MLM industry. Personally, unless you’re involved in the business, your opinion is just an opinion. BTW, I also have friends in the Sendoutcards business. I love the concept but I haven’t gotten involved so I have no opinion on whether that business is legit or not. So I’ll keep my comments to myself.
Hi Judy,
Thanks for posting. I spoke with one of the top income earners in the ENTIRE INDUSTRY about this issue on Saturday September 8th. This is a 7 figure income earner from two previous MLM companies. He makes multiple millions a year currently just from his MLM business, no training or coaching. (He does do some speaking gigs but I think the proceeds go to charity.)
Anyway he and I were talking about this very issue. $49 for an unlimited cell phone plan. How can the company afford to pay out commissions and bonuses by being the cheapest cell phone provider out there? (They can’t.) They can’t pay out 30-40% on $49.99. That means they’re actually paying T-mobile only $35 or so per customer for UNLIMITED usage. It just won’t work.They have to make money some how and why would T-mobile let them get away with charging so much less? Some people are speculating T-mobile is only going to do it temporarily, cancel the Solavei contract, and keep all the customers for themselves. Just like T-mobile did with WOW Mobile.
And you’re right my opinion is just that. An opinion.
- Ben
Now that I think about it… Let’s see…
Solavei customers pay $49.99 a month
You get paid $20 for every 3 customers, so that’s roughly $6.66 per customer.
You also have fast start bonuses, leadership bonuses, etc. How much potentially can you earn per customer? $10? $15?
If it’s $15… then how much is left for Solavei to make a profit AND still pay T-Mobile. It’s got to be less than $35 that i mentioned. Probably more like $20-$25. Why would T-Mobile let them get away with that? T-Mobile’s own customers probably pay $80-$100 on average.
Doesn’t that seem fishy to you?
- Ben Fitts
Hi Ben,
Thanks for your article. I think it is good to look at all sides of a business. I for one am excited about Solavei. I have already signed people up for it with very little effort. It is a fresh approach to MLM and working from home and I actually think they will change people’s opinion about what some believe to be “pryamid schemes”. Their payout is sustainable because the FAB bonuses are only paid one time and in the first 60 days of joining only. Also, there will be incomplete trios where no money is being paid out for these people. If you think about the billions of dollars that is spent by cell phone companies to advertise then you can see how this money will be put back into the pockets of consumers rather than being spent on paid advertisements. It is basically a form of affiliate marketing. I can’t guarantee that Solavei will be here forever but I definitely think they have a good chance. Solavei has had over 27,000 people become customers in just the first couple of weeks, and they expect to have over 200,000 within the next few weeks. I considered joining Send Out Cards because I think they have a good service, however I think they are somewhat of a pryamid scheme because they charge distributors hundreds of dollars to join so that they can distribute this money to upline distributors. If they ever change this part of their business I might be interested in joining. Thanks for letting me respond, all the best to you.
Hi Excited,
I hope for everyone involved that Solavei works out. What you’re doing isn’t actually new. It’s been done twice by previous cell phone MLMs and they actually either went bankrupt or were bought out by MLMs they do more than just cell phones. No cell phone only MLM has survived so far. It’d be awesome if you guys can be the first to do it. I’m just skeptical is all
As far as what makes a pyramid scheme a pyramid scheme is NOT startup costs. Look at franchises. They were thought to be a pyramid scheme but they went to court and the courts ruled that franchises are legal. Franchise owners pay as much as $500,000 (Dunkin Donuts) to $50 million for a single (Hilton Hotel) franchise.
What makes a pyramid scheme is that you need genuine customers who don’t partake in the compensation plan. You need customers who just use the product. According to the FTC you need to maintain a 2/3rd customer to distributor ratio. Meaning for every distributor you need 2 customers. That’s why a lot of MLM compensation plans require you to get 2 (or more) customers to qualify for commissions.
- Ben
I stumbled on Solavei a few days ago.
I’m not a Solavei distributor and don’t really have any plans to be one, but since I used to be in telecom MLM too I was curious about what the company was doing.
In just a short time I read a lot of information about the company and watched a boat load of their videos: webinar videos, the “vision” video from the CEO, comp plan videos and the videos from the launch meeting that distributors filmed from the audience.
One thing I noted was at the launch meeting the CEO said they plan to move into other services like electricity, cable, financial services, etc. So at least their *plan* is to become more than a cellphone-only company and thus give them a better chance to survive. (Those plans for multiple services reminded me right away of the MLM company Fortune High Tech which offers multiple services already–but come to think of it, so do some others. By the way, I’m not a FHT distributor either.)
At first glance I was impressed with the experience of the executive staff they have brought on board and impressed with some of the investors that the company has. Staff experience and investors don’t guarantee the success of a company, per se, but at least I think they have that going for them as as a start-up company.
Their back office and how it seemlessly connects to facebook, twitter, etc. looks pretty cool. On the other hand, I’d caution distributors about putting a lot of business stuff on their personal facebook feeds because other friends can pretty quickly get sick of seeing someone promote their business all the time.
As for the commissions, the same thing that “Excited” mentioned was something I was thinking of too–that commissions are only paid on complete trios.
Incomplete trios lowers the average monthly commission paid per customer to something lower than $6.66. Some trios will take a long time to be completed and some will never be completed and so Solavei will get some customers for free and some free for a long time.
And actually, I would *really, REALLY* be interested in knowing what their accountants used as an estimate of how many incomplete trios there will be in any given month. Whatever that estimate was, it was, of course, a key component when they were figuring out their comp plan and in what they thought the “actual” average monthly payout in commissions per customer would be (a.k.a., average cost to the company).
Anyways, it remains to be seen how the company will do. And like you said, Ben, one big factor is probably based on whether they remain a cellphone-only company or not.
-Brian
P.S. For the sake of the customers and especially of the friends who sign them up on the service I hope all the provisioning ends up going fairly smoothly–because there is nothing worse than signing up a friend who runs into all kinds of trouble trying to switch over their service–I know from experience! Some provisioning problems will be inevitable (like the CEO already mentioned there were some), but hopefully they will work out any bugs quickly.
Hi Brian,
I appreciate your responses. I hope it works out for everyone involved!
- Ben
You could use Solavei which doesn’t have the iPhone…
Or you could join Send Out Cards which is releasing our iPhone and iPad app this weekend. (which can also track downloads back to you so any customer signups get tracked back to you!)
Already over 5 million iPhone 5′s have been sold since the announcement a couple weeks ago. Around 85 million iPhones have been sold in total. iPad sales are pretty similar having sold over 28.8 million so far in 2012, not counting sales in 2010-2011.
Which is more exciting? 250,000 people buying old fashioned phones who are envious of all the people with iPhones… or being able to sell to the 150+ million people using Apple devices?
Good luck with Solavei.
Number of iPads sold:
http://finance.yahoo.com/news/number-ipads-sold-apple-quarter-201153619.html
Number if iPhone sold:
http://www.washingtonpost.com/business/technology/how-many-iphones-has-apple-sold/2012/08/10/97c360e4-e2e4-11e1-a25e-15067bb31849_story.html