Is Ambit Energy a Pyramid?


If you ever heard that question or statement, Ambit Energy pyramid scheme, I’m willing to bet that the person asking doesn’t even know what a pyramid is. Actually, if you don’t know, don’t feel badly as most people don’t have the foggiest idea what a pyramid is. I investigated it, too, before joining. They just heard of a thing called a pyramid scheme or pyramid scam. Well, let me first say, it is illegal. Second, I must tell you that the definitions here are from the Securities and Exchange Commission. I’m just your color commentator to make this very clear. Also, a pyramid scheme just like a Ponzi scheme really should not be thought of or named by the pyramid shape, as truly everything is a pyramid. Let’s look at any company out there today and then revisit where Ambit Energy fits.

Every company has this pyramid structure. So then, what’s the difference with Ambit’s structure and why is this one ok?  This could be GM, IBM, Wal-Mart or any company.  Well, I’m not sure why it’s ok. I do know why it exists and why it works. But, if you are in one of these companies that have this structure, how do you ‘get ahead’. How do you get promoted or get more money?

You will only get ahead if someone above you dies or quits, unless the company grows and needs an extra body above you. Now, that is bad. In Ambit Energy, I can make more than the people above me. Actually, I do. I make more than 5 of the 7 people above me. And, since I like them all, I’m glad none of them either died or quit!

Ambit Energy pyramid scheme

Ok, we can now agree that a Pyramid Scheme is actually misnamed as everything is a pyramid in shape.

So, what is a pyramid scheme? Think a little bit of Bernie Madoff and the Ponzi Scheme. It is very similar according to the Securities and Exchange Commission (SEC). In the case of the Ponzi scheme, according to the SEC, “A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.”

The Pyramid Scheme has many similar properties. Think of it this way. Some people set up a system with the same evil goal as a Ponzi scheme, but tried to get around the law by trying to appear as a business. Again, the pyramid scheme is defined by the SEC, “the scheme typically does not involve a genuine product. The purported product may not exist or it may only be “sold” within the pyramid scheme.” That is, there really aren’t any “true” customers.


The pyramid scheme has taken various forms or meanings but really breaks down to the idea that it is really not commerce. Nobody is really selling anything to anyone that is a true customer. In cases where it involves sales, the customers are all really ‘in the business.’ That is, you have to join and must buy some product. The new purchasers in the business are buying from the people who were in before them, just like the new investors in the Ponzi replenish the fund to pay the people in before them.

The changes over time in pyramids can be explained as creative people trying to make them look like something they are not. A good thing to keep in mind is a little analogy and a reason that pyramids are illegal. If you have been around for a while, you may remember chain letters. You were supposed to send someone money and add your name to the bottom of the list and after 30 days or so, you were to receive money in the mail. This is the basic concept of the pyramid scheme. When chain letters became illegal, some people started businesses that really don’t have real customers. They only sell products to newer members. The law has been very strict with those companies.

So, where does all this put Ambit Energy? Ambit Energy’s success is all about customers. As I look at Ambit Energy, it is a top quality company with all the attributes that you should see in a company you would choose(see – Evaluating a Company. It has chosen network marketing as its distribution system. It clearly did not try to start a network marketing company as the focus.

Nobody has to worry about Ambit’s focus. It passed 700,000 customers a few weeks ago. From the perspective of income, Ambit business consultants get absolutely nothing unless they bring in a minimum of 3 households as customers, (in Texas it is 2 because of greater work in customer acquisition). Gradually the consultant is expected to get 20 customers in order to have full access to the residual income at any rank. Ambit Energy is clearly customer driven.

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About Thomas O'Grady, PhD

Thomas F. O'Grady received his PhD in Mathematical and Statistical Economics from the University of California at Berkeley. Since the age of 12 he's been interested in entrepreneurial activities. Full Details


Disclaimer: The analysis, views and opinions expressed in this blog are personally my own and do not necessarily reflect nor are meant to imply in any way they are the opinions of Ambit Energy.I am an Executive Consultant with Ambit Energy. Analogies used are to assist with general understanding of the postings and are only to be examples.

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