Pyramid Scheme and Unethical Working Conditions

If anyone has had an annoying door-to-door sales person come to your door attempting to sell their own services to paint your house and/or stain your deck, it is a good chance it could be some lower of the pyramid employee of College Works Painting. This company attempts to give college students the amazing opportunity of an internship to run their very own painting business. What is attractive about this is that the company claims to supply everything the painter needs to start the business for free! However, what you not-so-quickly learn is that the company makes the student send the total revenue made off every house they have completed and send it to the headquarters of College Works Painting where the money is separated and given to every person higher up than the student, making the College Works Painting a pyramid scheme. Not to mention the student must pay for all of the paint and all of the supplies, the painters that they must hire, and any other added miscellaneous expenses after they have finally received the money that they made for the company. The student is assigned to a district manager in the company who oversees him and acts as his mentor, but in reality does nothing more than tell the student manager how to run the business by having virtually total control over what the student does and does not do in his “own” business. Basically, what it comes down to, the student manager is paying for a mentor to help him to complete the job as fast as possible and to increase revenue for the company to take advantage of the painters working under the student manager by sometimes paying them minimum wage. College Works Painting takes nearly 1/2 of the money earned from a job that the painters, under the student managers, have completed. Generally, the painter’s only received minimum wage, if not lower.

The way that the painter receives payment is by the student manager taking an estimate of how long the job should take and then pays the painter only for that. For example, if the student manager estimates a job to take 24 hours and two painters are on a house, then an individual painter will be paid for 12 hours working at minimum wage. If minimum wage is $8 then the painter will receive $96 for that house. However, if the painters do not complete the house in a combined 24 hours then that is just tough luck for them because they do not receive extra compensation for going overtime. The selling point that the student uses on the painter(who is almost always was an unemployed college student) to hire him is that they could make a lot of money an hour if they complete it fast enough. From personal experience, not one of the jobs completed ever took less time than expected. The student manager really pushes the painter to finish the job before the estimated time is up, including threatening to fire the painter which an encouraged tactic by the district manager. These business tactics cause for many, many, many mistakes.

I was a painter under someone who lived in my town back home whom was back from college doing this internship. He hired me when other people had backed out of the job and I had recently lost my job due to going away to college. Things seemed very skeptical, but I had no other source of income at the time. My student manager not only had issues with this company, but wrote the vice president of College Works Painting a letter about the deceitfulness and problems in the company:

Hello T,

I’m sending this email because I have a couple of concerns I need to run past you. I understand you’re a very busy man with a lot of things you need to attend to and therefore your time is valuable. So I’ll try to keep this as short as I can, however I need to address some issues.

I want to first start off by saying I highly respect you as an individual. I believe you’re an extremely hard working man with an already successful career and life. I’m very happy for you and your family and want to congratulate you again on your newborn son. I’m sure raising a family takes a lot of commitment, sacrifices, dedication, and most of all, love.

I think CWP is a great program / internship for young people. The idea behind this program is great. Teaching young adults at the age of 19 years old how to successfully run a business and every aspect that goes into it from marketing, sales, estimates, production, accounting, and most of all, managing not only your crews, but yourself as well, it is a very valuable privilege to have. I’ve already learned an incredible amount of knowledge that I would have never dreamed of at the age of 19. I’ve picked up on a lot of little things and now have a greater appreciation for those that try to run businesses themselves. This internship has also opened up many doors for me as well and given me opportunities that I greatly appreciate. When reading the book you gave us, I believe I truly have now gained significant prior experience and will only gain more throughout the summer.

However, like I mentioned earlier, I need to voice some problems that I have been having:

At the very beginning of this internship, I was told I would be running 2 crews of 4 guys each. My understanding was that the DM’s and yourself said that in order to push across the point that we should hire as many painters as possible. I’m guessing the thinking was that once our painters weren’t beating budgets, we’d fire them and just grab the next guy. Maybe that’s worked out in the past, however I don’t wish to manage that way. So anyways, I hired 8 painters like I was told to (naive of the fact I would only need 4, and 2 back-ups). As my first job approach, Justin came up to me and told me I would only be running 2 crews of 2. When I gave the news to my guys, they were extremely disappointed and nervous about who would be getting the painting positions.

I’ve grown up with these guys my entire life and known them for 10+ years and I have also played numerous sports with them (basketball, baseball, football, soccer, swimming, and in the band with them). Bottom line is that I’ve known these guys for a very long time and have built a really strong relationship with them.

So when I had to break the news to them I was really nervous because I didn’t want to have to look 4 of them into the eyes and tell them that although I promised them a summer job, I don’t have a job for them. The 4 were really mad because they needed a full-time summer job to make money and also they all came with me to Chicago. They have put in a lot of time with me (coming on the 9 hour round trip to Chicago and back, marketed with me for about a month now, etc…we also stayed at one of my painter’s aunt’s house in Naperville to shorten our trip to painter training – which only made him angrier when I told him I don’t have a job for him.

So anyways, because I was lied to, I unintentionally lied to my friends which really hurt our relationships. I had to individually explain for an hour to all of my guys what happened and none were too pleased. One of the mothers called me and we had an hour and a half long discussion (more like she was yelling at me). The entire time I was trying to calm her down, and she was furious at me because I said that her son had a job and would be working full time and we stayed at her sister’s house for a night, and additionally I booked her house as one of our jobs (2.2k). Either way, it seemed like a 10 hour conversation of basically me getting yelled at and extremely disappointing her.

Someone once told me, “Relationships are everything”! I completely agree with that! One of the reasons I said to Marc why I’d be good for this internship is because of my reputation within my community. I have been extremely active within my community and have had a very positive reputation with a lot of people.

I just don’t want this internship to jeopardize my reputation, my relationships, and most importantly, my friendships with other people. I don’t want it to affect my image within the community in a negative way.

Justin mentioned if I have too many painters to just give them to a nearby manager who needs them. But that’s also an issue because I didn’t hire my painters to work for Tim or for Dani or anyone else for that matter. I have the utmost respect for the other two managers, however, my painters know me and respect me, not another stranger. Additionally, the painters that I not only hired, but also trained, are now giving their leads to the other managers. I invested my time and my energy in training all of my guys to market and teaching them the ways of the business and now the other managers are reaping the benefits from my hard work. I not only gave them trained marketers but also trained and professionally certified painters of whom I have trained and invested time in, not just some of my random friends. The reason they have invested a lot of time (going to Chicago, marketing, paperwork, calling relatives for business, gathering equipment, etc..) is not only to have a job this summer, but also because they believe in me and want to work for me, their trusted, honest, and reliable friend.

Since it’s June 8, and now it’s harder than ever to find a summer job this late in the process, please tell me what I should say to the guys I had to let go who thought they had a job for the summer?

The 2^nd thing, is that on my first house, Justin pulled me aside and said, “oh by the way, your painters are not getting paid for today”. He said that it was their “practice house”. Now I have no clue on how I’m going to tell my painters they aren’t getting paid for their first day? Work is work, practice house or not. They completed the job and even Justin was impressed.

If there is one thing I’ve learned in business, it’s that communication is extremely important. I understand there are going to be tough times and disagreements, and at times we are going to push one another to be better. However, I believe the best way to limit these disagreements, is honesty. If we are truly running a “quarter of a million dollar business” – what Tananka always says, then we need to be honest with one another. In order for a business to run smoothly, you need good employee trust. If I keep getting blatantly lied to, and then consequently have to lie to my painters because I was misled, then that will not turn into a solid and smooth business.

We’ve already addressed this issue about Chicago payroll. But I just want to make sure we are both on the same page. It’s not that I don’t enjoy coming up and meeting with everyone and seeing my friends or listening to insights that you or Tom have to say. But my time is valuable and I don’t see the point in taking a 9 hour roundtrip to Chicago versus a 45 minute roundtrip to St. Louis. Not to mention, less gas money, less chance of an accident, ticket, or car breaking down just to get a paycheck. I don’t have a problem mailing the payroll in if I have to.

One of your guys’ big selling points in this internship is “This is YOUR business”! That’s actually one of the reasons I took this internship. Like I said I am very privileged to have this internship and an opportunity of this magnitude. However, I would kindly ask Justin to stop telling me how to run my business. There is no doubt in my mind, I wouldn’t be where I am today if it wasn’t for him and I do need him for help to ask a lot of little detailed questions. Yet, I don’t need someone making my schedule for me and telling me I have to go door to door marketing on Easter Sunday (when I only get sat / sun off to see my family after going to church), or on Memorial Day (when both of my grandfather’s took part in WWII / Vietnam), or around finals time. I know getting leads is important, however, studying for finals so I can get a good grade on my chemistry, physics, and calculus exams, so I can be accepted into engineering school, I feel in the long run is a little more important.

Short term, yes I may receive 3-5 extra leads and potentially grow my business.

Long term – I may not do well on my finals, not get into engineering school, and my life-long career be affected.

These 30 minute conference calls and drop-ins are very time consuming and always seem to interrupt my day. I am extremely busy throughout the day trying to plan, organize, and manage my crews in addition to growing my business, and these calls just slow me down and add more stress to my day. I don’t mean to be rude, but these conference calls and drop ins do me absolutely no good. I don’t take anything away from the calls and gain nothing from them. Again, all they do to me is add stress and consume my time.

I don’t want to keep having to lie to people because that just makes me look bad. I know a kid in my fraternity who did this internship last year and he did the same as I. He hired literally 20 guys because that is what he was told to do. He later had to fire 18 of them and lost about 10 friends in the process in addition to his relationships becoming damaged. I don’t want that to happen to me!

Yesterday, when I had to go to a home and tell a family that was already super tight with the budget that I was going to charge them another $400 to take care of the lead on their home they weren’t too happy. As a matter of fact, they were quite ticked at me. They said I should have known about the law because it came out in April and I gave them the bid in May.

They asked me, since we weren’t allowed to power wash or sand the home, then shouldn’t it be less money to do the job because it would be less labor if all we are doing is scraping the paint chips off which was already in the original bid. I had no idea on how to answer them.

Then, they asked me where I got 10% from because what about a 10 k job if all I needed was the equipment and material (lead suits and masks)? Would I raise the bid by $1,000 or just $400 like I did their job. ( I believe we just made 10% up ???) Once again I had no idea on how to answer them.

I thought we lost all credibility and my “honest” bid went right out the door. Then I thought, well… I still want the job but why should I have to eat the 10% and shouldn’t the company take some of the costs off me because I was never informed of this rule and should’ve known so when I go do an estimate I can truly give them an honest bid.

Whether my profit margin is 18% versus 25%, or whether the trip to Cancun is 7 days versus 3 days, I don’t care about the little stuff.

Yes, short term, if you tell a 19yr old kid he is going to make $20,000 if he runs an 80k business…that would be great. However in the long run, I’d rather make 15k and preserve my image within the community and maintain my lifelong relationships with my friends.

In 10 years from now, I’ll look back on this year and won’t care if I made 20k or 15k. I’ll care about the friendships I lost, trust that I lost, my reputation that was tainted, and my image within the community.

In summation, I want to make it very clear, I have nothing against you or the company. Like I said earlier, I highly respect you as an individual and believe your morals and values are similar to mine and therefore have no personal vendetta against you. I just need to get these wrinkles ironed out so my stress levels can decrease exponentially and I can start playing hard instead of always working hard.

Ever so respectfully,

Nino

8 Reasons Not To Work For or Hire College Works Painting:

1. Hardly did I receive minimum wage for the hours that I put in during jobs and mostly the jobs were nothing short of slave labor.
2. I always worked longer than my student manager promised I would get off by.
3. Constantly my job was threatened to be taken away if I did not complete the job site by a certain time. The certain time was always ridiculously too much work in the time frame given to complete the job.
4. Never once was I assigned by the student manager to put a primer on a house before painting it or even a second coat, however the house was charged for it many of times.
5. To cut time, rarely was their any sanding or paint scraping done before the new paint was applied.
6. When doing an estimate on my shed at home, the student manager estimated to paint the roof the total cost would be over $11,000 to complete. After calling around to other businesses, it was concluded that our entire shed roof could be replaced and painted for just over $3,000 and it would be guaranteed to last for 30 years. Just another way this company is trying to increase profits by scamming innocent people trying to get a quality paint job for a fair price.
7. If the student manager claims that he has professional painters, just know that they are 95% of the time nothing but inexperienced and unemployed college student with nothing to do over the summer.
8. Every job site I did the owners of the house would complain about the quality of the work that was done. This may seem like my fault, however, I was instructed to not to my best job and to go as fast as I could to get the job complete.

The student manager must do all the paperwork a lawyer or accountant may handle. They must learn to do estimates on houses, the marketing of a business, and how to perform a sale. These are all the positive things that a student doing this "internship" could take from this summer experience. However, unless you want to work endless hours to get a house finished, get paid below minimum wage, and not have a secure job booked all summer, then do not take this job if asked. Also, the quality of work will not be up to par as promised when the painting service was bought, and in fact you will be quite disappointed in the work you were expecting.

All in all, College Works Painting is nothing more than a pyramid scheme, a money scam, and poor, unprofessional work. Painting your house may just be easier to do yourself when you have time, especially if trying to save yourself money. If you do not have time then hiring the neighbor boy to do it for $10 an hour may be cheaper and of the same quality of work. Whatever you do, keep your nose and business away from College Works Painting.