Ends of the Earth

I walk into Bill Ackman’s offices at 888 7th Avenue, alone.

I’m gonna march straight up the elevator and tell him that he’s doing it all wrong. Billionaires love that shit, I’m assuming.

The Pershing Square offices are bright white; like a surgical suite for plucking the kidneys from pharmaceutical companies. There’s an expensively executed aviation theme for reasons that are never explained, and park views that make you think you should speak with the Devil’s representative, maybe work out a soul selling deal of your own.

Ted Braun, later to direct Betting on Zero, is in the PSQ lobby… he’s going in with me. My mate Christine Richard was crazy/brave enough to arrange this, she’s already inside.

It’s medium intimidating.

I had various points to make, but only one of them really mattered: You have to attack the whole business model, the whole industry, the whole idea of organized cult frauds. It’s not morally, or intellectually, credible to just attack the company that you happen to have a billion dollar bet against. It doesn’t create a narrative that regular people can get behind.

But Ackman wasn’t having any of it. He has this way of respecting you while simultaneously dismissing you. Should you be flattered or offended? By the time you decide, he’s already off in a puff of silver rich guy smoke.

But this big Herbalife huff he made brought out the doubters, the haters, the senators, the activists, the experts, the enforcers, the researchers, and the documentarians - even if he botched the execution there was bound to be an interesting result.

Scams are susceptible to scrutiny. Not “to zero” susceptible, of course - don’t be amateurish and ridiculous - but still, susceptible. Dissent is forbidden. Doubt is forbidden. It’s easy for the lid to pop off that witches brew and spike scam revenues temporarily downward. Sudden catastrophic loss of revenue is a normal part of operating a mature scam. The closer a scam is to running at its max, the more vulnerable it becomes to a sharp downturn.

But that didn’t happen here. Never a tick, never a blink, never a stutter… just billions rolling in unabated. It felt wrong, feels wrong, feels impossible.

The massive internet lead generation business that was the backbone of Herbalife’s American operations vanished between 2009 and 2013 - but the billions kept rolling. The company kept growing, and predicting future growth.

That’s what’s kept me interested all these years. It’s not whether Herbalife is scamming people in America, but rather, if they are scamming enough people in America.

Here’s a slide from Ackman’s first, and best, anti-Herbalife presentation.

It compares Herbalife to other ginormous consumer products companies with roughly equivalent revenues; companies whose famous brands are in every American home. The implication being that Herbalife is actually selling a business opportunity because no one has ever heard of the products they are supposed to be selling at volumes sufficient to count them among the most popular products in the country.

Herbalife sells as much product as Energizer? It was a good point.

But I feel the same sense of shock and disbelief when thinking about Herbalife’s revenues in comparison to the other evil companies who sell false hope biz ops.

Christine Richard and I started having long conversations about confidence scammers months before Ackman’s opening slavo. When she mentioned Herbalife’s revenues in our first conversation, I almost swallowed my tongue. More than a billion per year? How is that possible? That makes them bigger than all the other scams I’ve ever written about combined.

Where are all the victims? Where’s all the buzz? How are they generating sufficient leads to sustain those kinds of numbers? I have my ear to the ground and both hands on the pulse of this specialized underworld. I know as much about it as anyone ever has. I see Herbalife’s footprints all over the place, of course. But they ain’t that big … they ain’t nothing like that big.

During my first two years of writing about Herbalife I was contacted by between five and ten journalists… all of them wanted to talk about Vemma (which maxed at approx $250 million in scam revenue). Nobody cares about Herbalife. Herbalife is just not that big a deal in America, or in Scamworld America (assuming there’s a difference between the two).

So if they’re not a billion dollar scam, and they’re not a billion dollar consumer products company… then where the hell are all the clock consistent billions coming from?

It’s a delicious mystery. I’ve probably already solved it; but it’s one of those situations where you have to wait until the final scene in the parlor room.