Cloud 2×2 Review: $125 matrix entry pyramid scheme
There is no information on the Cloud 2×2 website indicating who owns or runs the business.
The Cloud 2×2 company domain (‘cloud2x2.com’) was registered on the 7th June, 2012 with the domain registration information set to private.
In Cloud 2×2 training videos however, Todd Hirsch is named as a co-owner and co-creator of the company. No other co-owners or co-creators are named.
Todd Hirsch was a member of the recently stopped $600 million Ponzi scheme Zeek Rewards and is also a self-described “top earner” member of Bidify. Hirsch currently claims to be the “#4 top earning” affiliate in Bidify.
Bidify, a penny auction (Bidsson) attached to an MLM business opportunity had a similar Ponzi points compensation plan to Zeek, which was immediately changed following SEC action against Zeek Rewards.
Hirsch (photo right) recently claimed in a video that he was involved in promoting Zeek Rewards and recruiting new investors knowing full well it was a Ponzi scheme.
Hirsch also recently claimed on Troy Dooly’s MLMHelpdesk that he is a member of the suspected Ponzi investment scheme, ‘Banners Broker’.
Describing himself as a “program jumper” on his blog, Hirsch claims he’s
in about seven different programs at this time and (that he’s) joined and been apart of maybe over 50+ programs since (he) started in online marketing in early 2010.
In non-official company marketing material, I came across Cloud 2×2 members mentioning ‘Mike Lavoie’ as being the other co-founder and owner of the company.
Back in 2010 Lavoie previously launched “Revolutionary Matrix”, a now defunct 2×2 matrix recruitment dependent MLM opportunity.
In 2011 Lavoie launched a similar and also now defunct matrix opportunity called “Social Power Network” (the Social Power Network domain now redirects to something called “ricishares”).
Averaging the launch of one matrix based opportunity a year, Cloud 2×2 appears to be Lavoie’s 2012 MLM matrix company attempt.
Read on for a full review of the Cloud 2×2 MLM opportunity.
The Cloud 2×2 Product Line
Cloud 2×2 has no retailable products and services. Rather prospective members are only able to purchase membership to the company, which Cloud 2×2 refer to as “e-pins”.
Bundled with each Cloud 2×2 membership is
- ‘xSky’ email marketing suite
- advertising credits (where these credits are redeemable is not specified)
- access to a cloud-based data backup service
None of these products or services are available for purchase via Cloud 2×2 members at a retail level.
The Cloud 2×2 Compensation Plan
Cloud 2×2 use a 2×2 reverse matrix system to pay out commissions to their members.
A 2×2 reverse matrix has seven member positions with new members to the matrix being fed into the bottom:
The basic idea is that when the matrix fills, the person at the top (indicated “you” in the matrix illustration above) earns a commission and the matrix splits. Effectively the two member positions on level 2 of the matrix form the level 1 of two new matrices.
This clears the bottom level of the matrix with the members still remaining in the two new matrices then seeking to recruit new members to fill the bottom levels again.
Under this matrix structure there are five levels of matrices in Cloud 2×2. Along with their respective payouts they are as follows:
- 1st Matrix = an e-pin and entry into 2nd Matrix
- 2nd Matrix = $500, an e-pin and entry into 3rd Matrix
- 3rd Matrix = $1000, an e-pin and entry into 4th Matrix
- 4th Matrix = $2000, an e-pin and entry into 5th Matrix
- 5th Matrix = $7000, an e-pin and re-entry into 5th Matrix
In order to qualify for commissions on the 1st and 2nd matrix, Cloud 2×2 members must personally recruit at least one new member into the matrix before it fills. Failure to do so I believe results in re-entry into the same level matrix with no commissions being paid out (e-pins, cash or otherwise).
Note that an “e-pin” is an entry ticket into the 1st Matrix, however it’s not bound to the member it is assigned to. Whilst a member can use the e-pin they are assigned to personally re-enter the 1st Matrix, they can also sell or give it to another person to use.
Cloud 2×2 also offers a recruitment commission of $25 per new member signed up and a 10% matching cycle bonus on these members (you earn 10% of the matrix commissions paid out to anyone you personally recruit).
Joining Cloud 2×2
Membership (an e-pin for matrix entry) to cloud 2×2 is $125 with a $10 admin fee.
Cloud 2×2 claim that they’re members are ‘paying for Software & Advertising‘ however it is impossible to actually purchase software and advertising directly from Cloud 2×2 or its members.
This is evidenced by the company’s refund policy, which states:
NO REFUND can be given because that would leave a dead spot in someone’s board with no one inviting.
If members were indeed purchasing software and advertising, refunds would be wholly possible on return of said software (or cancellation of a license key) and unused advertising credits.
Rather the only thing purchasable in Cloud 2×2 are membership positions which, when analysing the compensation plan, amount to nothing more than $125 buy-in matrix positions.
“E-pins” not being attached to members simply means they can be used as a marketing tool to rope new members into the scheme, however this is problematic in that they themselves haven’t contributed any money to the scheme (Cloud 2×2 has no revenue source other than members buying matrix positions).
To get around this the company requires members to recruit at least one new member on the first and second matrices, which I believe have to be paid positions and can’t simply be e-pin giveaways.
Note that this recruited member must cycle the first and second matrices before the recruiting members is able to cycle into the third matrix (this can happen simultaenously if the recruited member is in a second level matrix with their recruiter and the matrix cycles).
Thus each member entering the scheme, whether they pay for their initial entry or not has the requirement of bringing in at least one new member into the scheme, to cover the cost of their initial e-pin payout upon cycling the 1st matrix.
Sustainability wise this is nothing more than a Pyramid scheme that is dependent on new members. E-pins will sustain the scheme but ultimately Cloud 2×2 members are still going to find themselves running out of new people to recruit and fill up the 1st level Matrices with.
Once those matrices stall the effect trickles up and the scheme collapses. The giving away of e-pins will stall this process but not for long, as e-pin entry members still have to personally recruit to advance in the compensation plan.
With no retailable products or services being sold by members, Cloud 2×2 winds up being nothing more than a shallow 2×2 matrix Pyramid scheme that like all pyramid schemes, will fail once members run out of new people to recruit.
Additionally all Cloud 2×2 members must consent to receiving spam from the company and its members:
By signing up for the Cloud2X2 program, Member is opting-in to receive other special offer emails fromCloud2X2 (sic) and its Cloud2X2 members.
Cloud 2×2 doesn’t elaborate on what this spam is, but given the email marketing product bundled with membership and non-specification of how members use their supplied advertising credits, I suspect members can redeem their credits to
spam market to the existing Cloud 2×2 memberbase.
Prospective members would do well to take Cloud 2×2 founder Todd Hirsch’s own advice, as published on his personal blog:
There are a lot of programs that do not last very long. They are called a “flash in the pan”.
I do not recommend joining those types of programs.
Wise words indeed.