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Big-name players join ‘Mary-Kay’ of telecom service

A chance to become a millionaire convinced William Faucette Jr. to walk away from a six-figure job at Rochester City Hall to become a partner in 5Linx Enterprises Inc.
Faucette, who left his post as chief of staff to Rochester Mayor William Johnson Jr. last month, estimates he will make a midlevel six-figure income in 18 to 24 months, and an eight-figure income in five years.
His goal is to create 500 millionaires through 5Linx by recruiting into his network hundreds of salespeople, who can in turn bring in tens of thousands of customers. Network members already include several National Football League players.
While the business model may sound similar to Amway Corp., the controversial direct-sales giant, 5Linx is different, Faucette said.
“Gone are the days when people see it as something of a scam,” he said.
Company officials call 5Linx, a Web-based start-up venture launched last March, a “Mary Kay” for the telecom sector.
The company’s management team consists of Craig Jerabeck, co-founder, president and CEO; Ronald Mastrodonato, co-founder and chief operating officer; Jason Guck, co-founder and vice president of training and development; and Jeb Tyler, co-founder and vice president of marketing and development. Faucette signed on as a part-owner earlier this month.
A multilevel marketing company, 5Linx is a distributor of long-distance phone services, cellular phones and accessories through a network of independent sales representatives. Products are sold through representative referrals on the Web.
Faucette said 5Linx sells several brand-name products, including wireless products of Nextel Communications Inc. and Verizon Wireless. 5Linx also sells Dish Network satellite television services and Buyers Online Inc. long-distance services.
Jerabeck, also president and CEO of Henrietta-based @Wireless Enterprises Inc.-a separate corporate entity but sharing the same office as 5Linx-said some 1,800 people in 13 states have signed up as independent representatives since last spring. Nearly 800 of the reps are in the Rochester, Buffalo and Finger Lakes areas.
Sales reps recruit their friends, and “that’s how it mushrooms,” Jerabeck said. The company held a rally session for 300 sales reps in early December.
Overall, 5Linx logged $600,000 in revenues from its launch in March to the end of the year, despite the recession, Jerabeck said. In January, the company brought in $80,000 to $90,000, putting it on track to top $1 million in revenues this year, he added.
“The growth has been fast,” he said. “We’re already cash-flow positive.”
He credits some growth to Faucette’s involvement. Faucette created a corporate entity, Invictus II Inc., that is contracted to sell products through 5Linx. He also created a leadership team, the Millionaire’s Club, under which he recruits salespeople and expands his network, also called a downline organization.
Approximately 300 people in more than 15 states are members of his network, Faucette said. He makes commissions on products he sells-25 percent to 75 percent on a cellular phone sale, for example. He also makes commissions on products members of his network sell, including 11 percent on sales of long-distance services and roughly 5 percent on sales of cellular phones and satellite dishes.
“The key is building an organization,” he said.
Faucette said there are several high-profile members of his network, but he declined to name them. The network includes two owners of multimillion-dollar businesses, three corporate executives at the vice president level or above, and 15 to 20 professional athletes.
Jerabeck said the network includes Oakland Raider tight end Roland Williams and seven other NFL players, as well as Eric Johnson, president and CEO of Baldwin Richardson Foods Co. Johnson could not be reached for comment.
“He’s bringing in some very high-profile people,” Jerabeck said of Faucette. “It’s a prominent group. We’re really proud of that.”
His success led Faucette to sign on as a part-owner. He joins 20 other original share owners.
“They paid for the right to be in,” Jerabeck said. “They paid for their share of the company.”
Those interested in becoming independent sales reps pay up to $349 to join, Jerabeck said. The reps are not employees.
On the company’s Web site, people interested in becoming sales reps type in their credit card number, paying $89 to sign up as a residential representative, $299 as a trainer, or $349 as a trainer with a personalized, private-label Web site.
Faucette said he maintains a dual focus on selling and recruiting, but finds that the “leveraging aspect works best.”
“For this type of opportunity, there are no limitations,” he said. “The benefit goes to those who are willing to put the effort in.
“My goal is financial independence.”
Multilevel marketing companies can be controversial. State attorneys general have sued several MLMs, including Nu Skin USA and Excel Communications Inc., in part for operating as alleged pyramid schemes. In addition, the Council of Better Business Bureaus Inc., the National Association of Attorneys General, and the Federal Trade Commission all have issued warnings about MLM plans.
Faucette worked as a part-time salesman for Excel for eight years while on Johnson’s City Hall staff.
Excel was investigated by the Pennsylvania Attorney General’s Office in the late 1990s. The state alleged Excel’s MLM plan, which required a person to pay to become a distributor, violated the consumer protection law. Excel settled with the state in 1998, saying it stopped that MLM plan.
Faucette knows MLM companies such as Excel and 5Linx can be controversial, but he dismisses any criticism.
“That’s a person who doesn’t understand the industry,” he said. “It is a viable industry. Billions of dollars of goods annually are sold through networking. It presents a legitimate opportunity.”
Jerabeck said any comparisons of 5Linx to controversial, “shady netherworld” multilevel marketing companies-some accused of being pyramid schemes-are unfounded.
“Pyramids are certainly illegal,” he said. “We actually sell real goods and services. Pyramids don’t sell anything of real value.”
Instead, Jerabeck said, he likens the company to well-known MLMs such as Mary Kay Inc., the direct-sales cosmetics giant.
“When you think of Mary Kay, do you think of a corrupt, nebulous sort of company?” he said. “There are very good multilevel marketing companies out there.”
(rbj@rbj.net / 585-546-8303)

02/22/02 (C) Rochester Business Journal

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