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Thread: So what's with Solavei?

  1. #1
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    So what's with Solavei?

    Hi, new here.

    I've been googling for information on Solavei. I didn't find this forum directly searching for it, but for MLM and pyramid information in general. From searching this forum, I see tangential mentions of it, and shady people related to it, but not much more.

    I dislike MLM in general, but I think that I can see where it goes wrong. I've seen herbal products and Rainbow vacuum cleaners being offered to me and others, and those scams are relatively easy to spot.

    I google for Solavei, and most of the stuff I see is completely uncritical articles on tech or mobile gadget blogs, and extremely shady stuff, like individuals who apparently set up whole websites to praise Solavei. And this is by searching explicitly for negative info, like "solavei sucks" or "solavei pyramid scheme". These sites are obviously set up to show up when you search for those phrases.

    But here's the thing. Their service even if you take out the MLM is very reasonable. $49 for unlimited talk, text and web (from what I've read there's a 3GB limit on HSPA+ speeds). This is on the T-mobile network. I'm trying to understand here what's the catch. From all I read above, there has to be one. Unless this is a take-the-money-and-run scam, I can't see it.

  2. #2
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    Re: So what's with Solavei?

    Two things to study:

    1) Their plan is pretty good (esp. if you already have an unlocked phone), but not THAT good if you have to buy a phone, and their network is out of date

    2) Their comp package is a bit iffy. It's NOT really an income opportunity, so any one selling it as such is... shall we say... mislead.

    Solavei Review: Cell phone service + affiliate cashback | BehindMLM
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    A MLM Skeptic (not a Cynic) covering scams, critical thinking, and psychology
    http://amlmskeptic.blogspot.com

  3. #3
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    Re: So what's with Solavei?

    Quote Originally Posted by kschang View Post
    Two things to study:

    1) Their plan is pretty good (esp. if you already have an unlocked phone), but not THAT good if you have to buy a phone, and their network is out of date

    2) Their comp package is a bit iffy. It's NOT really an income opportunity, so any one selling it as such is... shall we say... mislead.

    Solavei Review: Cell phone service + affiliate cashback | BehindMLM
    Pretty nice blog you got there in your sig kschang. As a blogger and developer myself, I was asked to design my friends' solavei team website and i have warned them about a method of approaching potential customers for the service (Solavei vs. mlm).

    Solavei could be a scam if they too actively promotes the customer affiliated program over the benefits of the cellphone plan it offers. For example:

    • If we are approached by a person with a flyer introducing a mobile plan that costs $49/mo for unlimited voice,message and data on a 4g connection, that is more like a regular and traditional marketing method. It could easily relate to TV commercial, ads on the news, etc..
    • But if we are approached by a person who promises a special job / money making opportunity by enrolling in a $49 cellphone service, we probably run. We probably run faster if the person tries to tell us when we recruit the customer and that customer recruits new customers we will earn massive income. More like a amway, primerica, cutco way to me.


    The customer compensation plan should be represented more like affiliate programs from companies such as amazon, newegg, ebay, walmart, clickbank, cj, etc...that are very popular in the blogging world.

  4. #4
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    Re: So what's with Solavei?

    Solavei Files for Chapter 11 – Bankruptcy
    Solavei Files for Chapter 11 - Bankruptcy

    Selling a commodity based service via MLM is a tough row to hoe.

  5. #5
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    Re: So what's with Solavei?

    Hehe, interesting how they gonna be proving with a straight face in court that they have a plan

    to turn $5m they have into $63m they owe :)

    from petition:
    SOL_BK_SCHED.jpg

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  7. #6
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    Re: So what's with Solavei?

    Maybe their game was to sell underprice mobile service, make a pyramid recruting with it, while they still
    did not pay T-mobile and others, trying to delay the collections, filling own pockets and hiding money, and BUM !! - Bankruptcy :)

  8. #7
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    Re: So what's with Solavei?

    I don't believe their reps have seen this information. $63 million in Liabilities against $5 million in Assets is worse than I thought. How can a person recruit someone into Solavei today knowing this?

    Answer: Only the naive and uplines trying to save their ever-decreasing override check.

  9. #8
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    Re: So what's with Solavei?

    This document shows $63 million in liabilities against $5 million in assets.

    I am a Solavei customer but will drop the plan this weekend because they don't let us use "short codes" and haven't paid the supplier, T-mobile.

    I wonder how many other "customers" will see the bad press (truth about their financial stability) and drop their service too.

    This will cause a chain reaction and major reduction in commissions and overrides to uplines.

    This will cause those full-time distributors to look elsewhere and move their teams with them (happens all too frequently in MLM).

  10. #9
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    Re: So what's with Solavei?

    They owe $22m to T-Mobile,
    the rest is to phone manufacturers, private startup investors, refinancing / lease / loan companies and various service providers.

    Looks like they never ever paid anyone - the total number of creditors is 620 and counting.

  11. #10
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    Re: So what's with Solavei?

    Niiiiice :)

    Even founder and CEO of Solavei - Ryan Wuerch claims Solavei owes him $3.6m :)

    SOL_CEO_CLAIM.jpg

  12. #11
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    Re: So what's with Solavei?

    Hmm , from their assets, they gave the biggest sum to their software platform - $3,530,798.21
    Are there any buyers ? or it is just their dream how much its worth ?

    only $1,423,060.96 in liquid assets (bank accounts)


    (full petition attached)
    Attached Files Attached Files
    Last edited by NikSam; 06-13-2014 at 09:00 PM.

  13. #12
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    Re: So what's with Solavei?

    As far as I can tell, the Solavei compensation plan could be described as a “hybrid mlm/affiliate model.”

    When they launched, you could “buy a six-pack” (most of the founders owned multiple positions) for $149 each. They would then “stack” them with one at the top and the others below the top position (double pay on same customer).

    Some of the more clever distributors put the first position at the top, the next two on the 2nd level and the remaining three positions went below them on the 3rd level. This way, a Solavei rep could get paid 3 times on the same customer.

    This was one of the programs with the initial calculations. Solavei distributors “gamed the system” and were getting multiple times on the same customers.
    NOTE: The company DID NOT pay commissions on these positions, so they were able to keep 100% of the “pay-to-play” fees. So, Solavei used a “coded bonus plan” but WITHOUT paying the commissions and overrides to their distributors. :)

    In the beginning, their $49 truly unlimited mobile plan was hard to beat. It now appears they were “buying” the business. Their rate was too low and on top of that, they were paying out too much.

    After several changes to the compensation plan (reducing commissions by 37%) the growth cycle reversed as indicated by their sales over the past 3 months.
    I bought the service but did not work the business. I was going to cancel the service this month anyway because Solavei does not allow access to “short codes” I will go with one of the big three for about the same price and be able to use short codes too.

    Based on the information now available on the Chapter 11 bankruptcy filing, the Solavei MLM Model is obviously Broken. Will they fix it? Excuse me for pointing out the obvious but there is NOTHING to fix unless they change their model. Plus, now that this information has been made public, only a small percentage of Loyal Distributors (those at the top of the heap and still getting paid) will stay. This is inevitable as the mid-level leaders are already positioning themselves and starting to move their teams.

    Solavei was built mainly by the social media method of marketing where information passes freely and quickly. The same Social Media conversations that built them will NOW work against the company. The old quote is still true: "Good news travels fast, bad news travels faster"

    “Bad news isn't wine. It doesn't improve with age.” Colin Powell

    Personal Note: I am not happy to see Solavei fail. The basic concept (bring in mobile customers with low priced mobile service then shift to marketplace platform) made a lot of sense but their Model (marketing/pricing) was just flawed, as it turned out.

  14. #13
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    Re: So what's with Solavei?

    T-mobile sucks in NJ. Just sayin'

  15. #14
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    Re: So what's with Solavei?

    Quote Originally Posted by Whip View Post
    T-mobile sucks in NJ. Just sayin'
    If AT&T did not conspire with FCC to delay frequency licenses for T-MOB
    (which looked like an attempt to push a foreign company out) T-MOB would be the only GSM-based service in US.

    They actually were, when they bought Omnipoint, the one and only GSM network, while americans were playing in kinder garden with their dream of now failed TDMA

  16. #15
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    Re: So what's with Solavei?

    WOW!! The truth is finally being told due to the bankruptcy filing. I was told the attrition rate for Solavei was in the single digits when in fact it is 60% folks!! Hello.

    Solavei's CEO: Bankruptcy has caused 'very little attrition' among MVNO's 101,500 customers - FierceWireless

    "The company has signed up a total of over 250,000 customers to its service since it launched, and as of May 31 it counted 101,500 customers. Around 35,000 of those current customers have built networks that qualify for commissions."

    How many "customers" who are actually distributors will leave now that they know the company owes $50 million + with less than $6 million TOTAL assets.

    Only the "loyal" distributors who have something to lose (like overrides) are still promoting the business. And now, when they approach a friend or associate about the business, they will have to overcome the objection, "Hey.....you didn't tell me the company is currently in Chapter 11 bankruptcy."

    I actually thought they had their act together initially. However, the numbers don't lie - $50 mil in liabilities against $5 mil in assets - - it's accounting folks!
    As it turned out, their Model Was Broke too.

    Solavei quickly became C'est la vie (that's life)!

  17. #16
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    Re: So what's with Solavei?

    Quote Originally Posted by MLM Broken Model View Post
    ...against $5 mil in assets - - it's accounting folks!...
    Correction , they only have $1.5m in liquid assets, $3.5m they attribute to their software platform which is real worth probably nothing.

  18. #17
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    Re: So what's with Solavei?

    Correction? .....against $5 mil in assets - - it's accounting folks! IS correct. You just broke down the 5 mil in assets in more detail, which is fine.

    Ryan Wuerch's comments, "He said that the company continues to add members every day, and is still providing service and making commission payments. "We continue to grow," Wuerch said.

    If the company has fewer actual customers today than they had prior, how can Ryan say "We continue to grow"?

    I understand he is trying to put the "happy spin" on what is actually an "only option left" scenario. They were able to hide the reality for awhile but with a bankruptcy filing comes full disclosure. And, with full disclosure, we finally learn the ugly truth. The company IS NOT growing.

  19. #18
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    Re: So what's with Solavei?

    I never thought mobile phone service has the margin to support MLM, ever.

    The prices can only go DOWN, not up. MLM, by its nature, needs high-margin products. And phone service is never *that* profitable. T-mob is spending money like crazy putting in LTE infrastructure after trying to get by HSPA+. The 100K alleged customers of Solavei are NOT worth the -20 mil that T-Mob needs. T-Mob needs customers in the MILLIONS, which is why it bought MetroPCS (9 million) and it already has about 34 million customers.

    This basically proved that Solavei is not even working as a "fringe" player. Even Republic Wireless, that launched only a year ago, has 100K customers and their prices are even LOWER than Solavei.

    Solavei's done. (IMHO, of course)
    ---
    A MLM Skeptic (not a Cynic) covering scams, critical thinking, and psychology
    http://amlmskeptic.blogspot.com

  20. #19
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    Re: So what's with Solavei?

    Will Solavei emerge from Bankruptcy and clean up their act AND balance sheet?

    Sure, it is possible but not likely IMO.

    I see some of their distributors (Tom McMurrain, Stacy Wallace etc) actually bragging about Solavei paying out $25 Million in commissions so far. Well, while that may seem like a noteworthy accomplishment, it also proves that management didn't have a clue about simple accounting.

    During this time they ran up debt of over $55 MILLION!!! And, it now appears they forgot to even pay T-Mobile to the tune of $21 MILLION DOLLARS!!! This proves they couldn't afford to pay their distributors but did anyway, which put their creditors at risk. They made this decision over a 1 1/2 period only to file for bankruptcy against their creditors last month. Is that fair to the creditors who trusted them to pay their debt? Think about it.

    Do the math. Solavei has a problem and the numbers simply don't add up. Well, they do add up except the result is a negative and no amount of words can turn that into a positive.

    They are also still actively promoting that they signed up 250,000 customers. Well, that was the gross number. When they declared bankruptcy the REAL NET NUMBER was discovered - ONLY 101,500. Why is it they NEVER mention the second number? The honest statement would be, "We signed up 250,000 customers but 150,000 of them are gone."

    "The company has signed up a total of over 250,000 customers to its service since it launched, and as of May 31 it counted 101,500 customers. Around 35,000 of those current customers have built networks that qualify for commissions."

    Solavei has changed their marketing plan 3 times over the last 2 years. Who wants to bet me that a 4th change is coming?

    I also believe they will HAVE to start marketing OTHER products and services because of the fiasco with T-Mobile.

    Most of this post is simply restating the facts that came out of the bankruptcy document.

    I notice that a handful of top distributors are still pumping the deal and some of them are secretly positioning themselves with other programs.
    One of my favorite old sayings is, "The roots are deal but the leaves don't know it yet."

    Watch and learn!

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