The Great Pyramid {of Herbalife}



Herbalife is fucked … ask me how!

But seriously.

Don’t ask me how :: cause I was already going to tell you … keep your stupid questions to yourself.


... this button just changed your fucking life

Over the past three decades Los Angeles based {via the Cayman Islands} Herbalife has pretended to sell various products that pretended to promise to make you thin and pure or whatever … like a rainbow. The fake claims used to be bold enough to occasionally irritate the FDA into partial action :: but by now the product claims are more like … “comes in nine flavors including the all new Wild Berry™.”

The products don’t matter :: it’s always been all about selling the sell … and that’s never been truer for Herbalife than it is today. If they were to stop selling the sell :: they would immediately cease existing … which would be more than fine by me. But it might be a little awkward for the New York Stock Exchange which currently {and quite mistakenly} values Herbalife as a $3 billion non-scam company with a bright :: non-imploding … future ahead.

Last year Herbalife CEO Michael Johnson was one of the highest paid CEOs in America :: earning a totally ludicrous $90 million … I guess he must have come up with the idea for Wild Berry™ or something. Compare that to the average Herbalife “employee” :: who earns a multi-thousand dollar loss … and you’ll probably be irritated enough to binge drink like Herbalife founder Mark Hughes used to before he died a horrible hypocrite … and went directly to hell.

Herbalife is a pyramid scheme :: exploiting the many for the benefit of a tiny :: very undeserving … few.

I’ve mentioned it before …

Herbalife is a multi-level marketing company :: aka a pyramid scheme :: aka a waste of time.

More than once

That’s why they were both thrilled when they found out about Herbalife :: and how easy it was to pyramid your way to the top of a pyramid just by telling other people who love pyramids just how gosh dang fun pyramiding can be.

The corruption and awful of the Herbalife mega-pyramid trickles down to the rest of Scamworld. All the scammers in scamland benefit greatly from the implied legitimacy of Herbalife trading on the New York Stock Exchange :: from the aggressive actions of their high-priced attorneys :: from their regular appearances on financial television … and from their extensive lobbying efforts. According to :: Herbalife CEO Michael Johnson is a great supporter of Utah’s FOP {friend of pyramids} Senator Orrin Hatch.

Ending Herbalife’s reign of destruction could be a potentially huge victory in the fight against manipulation scams. But in spite of a deep loathing for everything they represent :: and an understanding of their importance within the hierarchy of the sick machine … I know well better than to start a solo war against piles and piles of Wall Street monies.

But last week everything changed.

Fucking everything :: I’m tellin’ ya … everything. Ask me how!


… and how! …

Bill Ackman :: semi-famous hedge fund manager and hero to troublemakers everywhere … gave a three-hour presentation entitled Who wants to be a Millionaire? which argued — scarily conclusively — that Herbalife is an obvious pyramid scheme with no real business model whose stock should be valued at zero.

No Doubt

Ackman and his hedge fund Pershing Square :: along with a gaggle of other seriously rich people who I’ll call “The Shorts” … have made enormous bets {like more than a billion dollars} that Herbalife’s stock is going to tank. Of course … that’s not unusual in the land of milk and money. It’s all handshakes :: polo :: and fancy hats down at the club one day … I’m betting that your company sinks into the mud and reporting you to regulators the next. But what is unusual is making a bold public stand in a way likely to accomplish some genuine public good.

From the L.A. Times

“I’ve never seen anything quite like it,” said Timothy Ramey, an analyst at D.A. Davidson & Co. “I’ve never seen an investor spend 3 1/2 hours of time at a major venue being webcast and then make TV appearances to make his point. It’s the largest orchestrated bull or bear case that I’ve ever seen.”

You can see the presentation in all of its awesome glory at Facts About Herbalife … a data-dump website posted by Pershing Square that they are hilariously publicizing via {you can guess the keywords} AdWords.

... just the facts

“I’m very fortunate to have the means to pursue this,” [Ackman] said. “I am independently wealthy. When I believe in something, I can say what I want and do what is right.”

A decade ago :: Bill Ackman started a big ol’ messy fight with another company that has no real moral right to exist … MBIA. It’s complicated :: but the bullshit bond insurance sold by MBIA was one of the primary culprits in the recent financial crisis … its undeserved triple-A rating used to sell undeserved triple-A ratings to billions of dollars worth of toxic derivative slime. Ackman’s zeal for exposing the problem went way beyond a desire to profit from his short position. He was basically kicking Wall Street’s biggest ever bubble {with its associated big bags of money} square in the nuts.

The Wall Street bubble kicked back :: and by the time MBIA lost its triple-A rating and helped spark the collapse of the credit markets … Ackman had himself been investigated by all of the important enforcers and regulators who pretend to protect the people by protecting the bubbles.

Thanks for nothing Eliot Spitzer … speaking of people going to hell as hypocrites.

You can read all of the :: so surprisingly not boring … details of Ackman’s almost religious crusade against MBIA in Christine Richard’s fascinating book The Confidence Game: How Hedge Fund Manager Bill Ackman Called Wall Street’s Bluff.

Compared to that epic {borderline insane} fight … Herbalife ain’t shit.

Herbalife str8 scams poor people :: that’s it … almost no veil. It’s not complicated like a CDO of CDOs insured by an insurance company that’s leveraged at 140 to 1.

Herbalife eats poor people

Look at that cat crap :: cashing in on America’s cachet to take money directly from the hands of the world’s poorest … the richest fucking exporting financial fraud to the poorest. Real nice … just what Bizarro Jesus would do.

The assholes most responsible for this unjustifiable moral outrage :: like Michael O. Johnson … should be held accountable in dull prisons for protracted periods … maybe ones that only serve half-cooked {generic brand} oatmeal.

Here’s the best/worst slide from the presentation …

Herbalife pay-to-play

Herbalife distributors must buy thousands of dollars worth of powdered product {at extremely inflated prices} each month if they want to receive their big bonus checks for having recruited others into the misery. A lawsuit between a former high level distributor and the company {please keep suing each other idiots} allowed analysts at Pershing Square to plot the correlation between this particular distributor’s alleged “retail product purchases” :: and the volume at which he was required to purchase the product in order to qualify for his misery bonus {aka his paycheck} at the various levels he’d occupied in the scheme. It’s laugh out loud precise … exactly like real retail sales are not.

If one is going to be paid $6000 for buying $5000 worth of overpriced vanilla latte protein powder :: then one is going to buy $5000 worth of overpriced vanilla latte protein powder … or maybe Wild Berry™ depending on one’s mood. They’re buying the products themselves so they can pretend like there are products to sell when they’re selling the sell to the uninitiated … or when they’re selling their sham business model to their ineffective regulators.

The only product is the unicorn … and the unicorn must die.

Destroying this or that pyramid scheme is totally doable :: but doing so does very little to slow the rampant proliferation of pyramid schemes in general … my regularly confronted dilemma. But I think this situation presents a very different sort of opportunity …

  • There’s a way to keep score {the stock price}.
  • Jackloads of important people will be paying attention to the issue because a billion dollar bet is fucking crazy interesting :: and because Bill Ackman is an intriguing and unrelenting pain in the ass … “shareholder activist” doesn’t do him justice.
  • A stock collapse under these circumstances would be very embarrassing for the stock exchange … the regulators … the auditors … and the dopey shills in the media. All of whom helped create this crisis with their embarrassing incompetence. Shame {sometimes} begets change.
  • Ackman has pledged to give his part of the profits from this trade to charity. The first $25 million to help fight pediatric cancer {which he’s kindly guaranteed even if the trade isn’t profitable} … and the remainder going to the sorts of causes that would help the multitudinous victims of pyramiding.
  • Fighting the corrupting power of money :: with the power of money … the American way motherfuckers!

I wouldn’t have expected to have my optimism for change rekindled by a hedge fund billionaire :: but it just happened … and I’m for sures not complaining.

I’m still on fake robot hiatus while I finish up a couple of other {hopefully kickass} pyramid related quests :: but I’ll be back soonish … and I’m oh so happy to pre-introduce 2013’s SaltyDroid target du jour …

... the bigger they are



>> bleep bloop

109 thoughts on “The Great Pyramid {of Herbalife}”

  1. Go, Salty! Go Bill!

    NOW the targeting is getting precise.

    I wonder what the chances are that this guy has been following SD for a while?

    I bet he has someone who has someone who occasionally checks the innerwebs for his name.

    Heh. Heh. Heh.

      1. @SD,

        I love me some Tracy Coenen. She’s been doing yeoman’s work documenting the crazy that is Mary Kay.

  2. I’d read about Ackman’s attack on Herbalife before Christmas, then promptly forgot about it. And this is something I don’t want to forget about, because there are a LOT of these pyramid schemes out there. Hell, I got sucked into selling Mary Kay way back in 1995 (didn’t go any further than getting the intro kit and I am so glad I dodged a bullet).

    So, yeah, GO GO GO GO GOGOGOGOGOGO. Get out the popcorn, this is going to be good.

  3. Herbalife has been used too many times as a lame excuse for a legit MLM company, and a multi-billion publicly-trading one no less.

    MLM schemes would still survive the eventual downfall of Herbalife, no doubt, but that would still be a great win for the good guys on the way for the final victory in a war that should have never been existed to begin with. And Frank Kern will return to sell cars or something.

  4. Like Mirele, I had heard something about this early in Dec and then totally forgot about it. Also, like Mirele, this is something I don’t wanna forget about.

    This is going to be very interesting. It took me quite a while after I started visiting this site for certain (retrospectively obvious) things to occur to me. Like how, despite what Dave Ramsey implied, MLMs are basically just pyramid schemes with delusions of being legit. And therefore, to the extent that any so-called business operates in this fashion, that operation is a scam no matter how counter-intitive that might initially seem.

    So I think you’re choosing a really well-deserving target, SD.

    Furry cows moo and decompress.

    1. @Wyrd ::

      Does Dave Ramsey support MLMs?

      I was about to talk to him about something the other day :: glad I didn’t I guess … prolly would have ended in fisticuffs

      1. @SD, Good God, Dave Ramsey is not someone you want to pal around with. The guy’s gotten rich (search Google for the 18 separate shower heads in his new house) off peddling financial freedom like it was the gospel of Jesus Christ to all these evangelical churches. In his own special way, Ramsey has taken advantage of the poor and cash-strapped to line his own nest.

      2. @SD,

        If you get the chance, please definitely talk to Dave Ramsey (with a recording device). I’d be incredibly interested to hear him attempt to answer questions regarding his stance on MLMs and Robert Kiyosaki.

        It’s been a while since I listened to the radio program. He’s an evangelical Christian. I’m a skeptical atheistic type. You wouldn’t exactly expect me to be listening, but I was really liking what he was saying about how to get out of debt and “change your family tree”. For a while anyway. (Captain Obvious statement here:) It is very easy to convince yourself something is true when you really, really want it to be true. Dave has that whole pull-yourself-up-by-your-bootstraps, can-do, just-try-harder message that all the gurus pedal and he’s a natural born huckster/salesman. I think he’s trying to use his dangerous powers for good, but it’s still kinda semi-evil on accident. Dave should check out what Bill Ackman is doing. IMHO, that’s how to do something selfish that might actually contribute to the greater good.

        From back when I was listening to Dave’s show, @mirele’s assessment is exactly correct. The only thing I could say in Dave’s defense is that he probably does provide real financial help to a certain specific sub-set of his audience. Specifically those that have medium-to-high-end salaries and not a lot of real obligations (like kids) just lots of accidentally created debt from laziness. Those folks can follow the Ramsey plan and be singing the “we’re debt freeeeee!” tagline in a year or so. … And that then can provide the (semi-false) social proof that you-can-too!

        But for all those folks listening that don’t fit that neat cookie cutter demographic, I don’t think they’re really receiving much more than a snow job, and a rather cruel one at that. You’d hear someone call in occasionally that just couldn’t get decent medical insurance due to pre-existing condition or who couldn’t save any amount of money due to ludicrous medical bills because of a dependent that needed copious care. Dave never really had much of a concrete answer for their woes. Just some vague references to religion and praying to find an answer.

        And as for MLMs, he added legitimacy to them by how he would talk about them. When the topic would come up his answer was always along these the lines: Yes, it is possible to earn a good living from multi-level marketing. But in order to do so, you must understand that you’re in the recruitment business and you’re always hiring.

        In other words, he basically said the only way to make money at an MLM is to convince as many people as possible to sell under you. He also talked about how there’d be high turnover/burnout etc. He says MLM is not for everyone, but for those that know how to do that thing–convince people to sell–it can work.

        The other damning thing about Dave Ramsey is, of course, his connection to Robert Kiyosaki. I never personally heard Kiyosaki on his show, I just understood that Dave occasionally caught flak for having that connection and I heard him try to defend Kiyosaki a couple times. IMHO, if you actually read (or in my case listen) to “Rich Dad, Poor Dad”, you can’t defend Kiyosaki afterwards.

        Furry cows moo and decompress.

      3. @SD,

        So, back on the Dave-supports-MLMs rant. From his very own site:
        Guide to Joining a Multilevel Marketing Company

        I haven’t read the whole thing yet. But it doesn’t start off with the Joshua-solution (“The only winning move is not to play.”) so it’s a fail.

        And in case something happens to that link, the Fraud Files blog has a .pdf of the article linked to in this page where Tracey says how Dave Ramsey sucks. (I’m inclined to agree at this point.)

        Furry cows moo and decompress.

  5. Burn, Herbalife, burn.
    My mom fell prey to this sham way back in the late 80s/early 90s, and it was awful…cost her thousands which she could not afford. She was a perfect target in that she needed money for helping support our big family, and was upper-Wisconsin-naive so believed it when you promised her the moon. She bit hard on this fairy tale. She tried like hell to make it work too, but of course it didn’t because the stuff was shit and no one wanted it, ever. She didn’t come to the products because they were so great – she came to the opportunity, and tried to adopt a love for the useless products they sold. But they NEVER became a part of our normal, no matter how much it was attempted. And she had to buy cases of stuff, too. I remember her rep being very present and helpful and energized right up until that first shipment (so many boxes!) arrived at our house. After mom had bought the products and jumped in, her rep was only over there every once in a great while (w/excuses of needing to keep recruiting of course), and would typically spin the fact that none of it would sell on my mother’s lack of proper effort (again, simply untrue). So typical sham, in that there are golden promises made simply to make the sale: each to be shattered as the check clears and dust settles.

    Eventually, like all other failed reps, we eventually carted cases of the “revolutionary” crap to the dumpster. Mom wrote it all off at a loss, and finally, after a few years of trying, went after something more substantial in a job. It remains in our family to this day as an example of the value in trying to think it all the way thru, before you commit to something, especially financially: we warn each other “Don’t go all Herbalife on it.”

    It was a serious setback for our family at the time, but it was also 30 years ago…much earlier in the evolution of this cesspool. We unknowingly seeded their continued festering.

    So I will enjoy a great deal of happiness to watch this specific pile of shit get washed out to the sea, once and for all. That I can have the droid hammering it thru the mountain like John Henry, makes it only more fun to read.
    But this post rules also, for that Regina Spektor song, and misery bonus. Looking forward to more hilarity as the Herbalife WildBerry(TM) casket grows more inclusive.

    1. @Jack,

      It’s not libel if it’s true. Stuff that in your pipe and smoke it.

      And a BBB rating means nothing in a court of law.

        1. @Jack, Oh. My bad. I’m not good at humor. I could tell you stories about my family taking advantage of that to pull my leg. We’ll just leave it at that…

    2. @Jack,

      60 Minutes did an expose about the BBB a while back.

      They got Osama Bin Laden listed as an A+ business.

      The Better Business Bureau is a scam. Just looking to get listing fees.

  6. @Salty

    Okay, great post — I just noticed today that Herbalife was a traded company and thought “how weird is that?”

    Still, I have a question for SD and all here: I just saw this Shawn Dahl video above and I don’t understand how they can show so much toys + the house. I understand this is a recruiting/promo video but . . . how is this couple able to show off so much?

    • Is everything on credit cards?
    • Is this person at the top of the pyramid?
    • What’s the deal here?

    Please explain the magic trick . . .


    1. @Wide Eyes, In the case of Shawn Dahl, he’s recruiting people for his Herbalife downline using the vehicle of “Online Business Systems.” OBS scoops up marks from people who click on Google links or call certain numbers. It then sends out information packets which are scanty on details, gets people to sign up for Herbalife, and then pressure the marks into upgrading from a mere starter to a supervisor. Oh yeah, and the OBS part is that they sell you their proprietary tools for x amount per month.

      What I’m curious about is if the Herbalife upline push other tools such as motivational lectures, as has been done by the bigwigs in Amway in the past.

  7. Some thoughts that may sound critical, but are intended as food for thought and a bit of playing Devil’s Advocate (or however you call it)…

    i) “But what is unusual is making a bold public stand in a way likely to accomplish some genuine public good.”

    The bold public stand is likely part of an orchestrated market manipulation technique called a “Bear Raid.”

    ii) Ackman was recently all over the news feverishly touting this idea that the Hong Kong dollar would be de-pegged from the US Dollar. Well reasoned arguments, tons of data to support his thesis, yet that prediction failed to materialize. Lesson learned? It’s a lot harder to manipulate currency markets. A stock with about 100 million shares? A lot easier to manipulate.

    iii) “The Frank Kern Rule”… You can be exposed as a straight-up fraud and continue to do business as long as you have raving fans. Isn’t it weird how even after blistering amounts of negative coverage, a dude like Frank is still up and running? And let’s be real… Frank has a small micro-fraction of the resources Herbalife has at its disposal.

    iv) Anyone who really believes Herbalife is going to $0 as Ackman is predicting is presumably rushing to short the stock or purchasing dirt cheap out of the money puts, yes?? The January 2014 puts look interesting.

    v) If an average dumbfuck juror (the same kind that acquitted OJ Simpson of murder despite mountains of forensic evidence or that acquitted Michael Jackson of whatever child sex crimes he was charged with) is asked to render judgment on Herbalife, odds are, Herbalife gets off. Sad but true. Those slides were extremely detailed and complex. Too detailed. Too complex.

    1. @some thoughts about this ::

      Some thoughts about your thoughts about this :: I’ll play the opposite-of-the-devil’s advocate …

      i) If it’s just market manipulation :: then why didn’t he buy options right before that amazing presentation? The stock went down 28% in May after Einhorn asked a couple of very basic skeptical questions … so it was obviously going to swan dive after a full force attack by someone like Ackman. He could have made a fortune on that :: then he could have ridden it back up with more options on the knowledge of the inevitable {somehow not considered manipulation} share repurchases … made another fortune … and then walked off into the sunset.

      I think he’d have been well within his legal rights to do just that :: given that the attack was based on truthful information … but he didn’t.

      Trying to put a simplistic label on a move like this is idiotic … or propagandistic.

      ii) Don’t care :: he also thinks JC Penny is a winner … which seems strange to me because that place is super lame. Is it manipulation if he goes on CNBC and talks about the good things he sees in JCP?

      Don’t answer that question if it will slow the process of you fucking off.

      iii) If Kern had to report his earnings each quarter :: and any downtick was liable to cause a panic implosion of his stock … then he would have been delisted more than a year ago. You can’t wipe someone from the face of the Earth with the truth … but a deep disruption of the scam dollars is more than possible.

      iv) Again … don’t care. This isn’t an investing blog … shove your puts up your alpha.

      v) Wrong. Pyramid schemes have a HORRIBLE record in front of judges and juries … go read the cases that they’ve posted. I realize that you’ve cited to the all important case of “Shit I Saw on CNN” … but there’s actually a little more to the legal system than that.

      Anything else?

      Tell the devil to send a better advocate next time.

      1. @SD,

        “Anything else?”


        I apologize. My comment must have tasted like urine in a bowl of cereal. Your slightly caustic tone was understandable. My urine tasting tone reflected the pessimism I often feel about anything changing. I’m sure there are days you wake up and feel like that Sisyphus character from Greek mythology.

        As a gesture of goodwill, here’s a good lead who can save you dozens of man hours of research regarding Herbalife:

        Rob is a good guy and has been in the trenches fighting the good fight against HLF for a long time.

        I hope that shows I am not the total asshole I seemed to be.

        But I’ll understand if you still insist on inviting me to fuck off. :)

        1. @some thoughts about this,

          There used to be a page here

          about ephedrine being in Herbalife nutrition supplements. Of course this info will have been old. But I thought it was interesting in any case. I mean–I think it would be interesting to point out that, at one time, Herbalife was totally selling nutrition supplements with ephedrine in them.

          But the page is 404ing now, and the one and only web crawl the Wayback Machine seems to have for it is from Jan 17 2013, and it was apparently 404 then as well.

          For the moment at least, Wikipedia has something on it

          Some of the original Herbalife weight loss products contained the active ingredient Ma Huang or Sida cordifolia, two herbs containing ephedra, an appetite suppressant. Herbalife pro-actively stopped using ephedrine in its products in 2002 after several U.S. states banned supplements containing botanical sources of ephedrine alkaloids.[23]:15[24] The U.S. Food and Drug Administration banned supplements containing ephedra in 2004.

          Furry cows moo and decompress.

    2. @some thoughts about this,

      Did you not read the “bear raid” article you linked to?

      “If everyone in the market knows that this hedge fund is trying to manipulate [the stock], then it will have no effect.”

      Reuters says, “Ackman said he has been building his short position in the company’s stock for several months.” Yet the stock didn’t tumble until Dec. 19, when the known activist shareholder publicly confirmed he was shorting it.

      Market makers know what’s going on, but the stock is still down 30% from Dec. 18.

  8. i got their intro kit way back in 2009 and then i thought ‘wtf. this is not business. this is being a consumer and paying them money instead of getting paid.’ they even have a clause in their terms of distributorship that you can not be part of any other mlm company at the same time. it’s not business. business is when you can buy in bulk and sell for market prices. and business is about selling products that people actually need and not protein shakes that nobody wants. sorry for the spelling.. for some reason my mobile browser stopped accepting shift key and wouldnt allow me to enter caps and special chars..

    1. @Lanna,

      Sometimes Scamworld tries to eat its own.

      Scamworld scammers have a (lack of) loyalty that always reminds me of drow elves.

      1. @Wyrd,

        I don’t recommend buying from the drow elves of Phaervorul unless you’re a ninth-level dark+infernal-pact tiefling warlock. Their refund policy is rubbish.

  9. I took a look at HLF stock…it’s trading near its 52 week LOW. It hit $73.00 in the last 52 weeks, but last week closed at under $30. Yes, that’s a bit of a recovery from the $26.06 it closed at on Monday, December 24, but it’s WAY down from the $42.50 it closed at on Tuesday, December 18. And remember, HLF had closed at $70.30 on April 30, and then it took a steep nosedive over the next weeks and had been trading in the 40s since. I bet we see HLF stay pretty much in the high 20s, low 30s for the time being.

  10. Also, it’s interesting to see where the established financial press comes down on this–pretty much on HLF’s side. The Wall Street Journal might as well be blowing HLF for money in some alley just outside the NYSE trading floor, they’re that shameless about it. Wall Street just doesn’t care that HLF and its many sisters have been bleeding Americans blind for decades just as long as HLF makes its numbers.

  11. It’s worth noting that another MLM stock (this one based in Provo, UT), that of NuSkin, has followed HLF in taking two similar nosedives this year. It closed at 45.68 on December 18, and dropped to 33.05 on the shortened December 24 trading day. It has “recovered” to 35.34 as of last Friday. It’s still an amazing fall from the 59.90 NUS was trading at on April 25.

    I went to Yahoo Finance and plotted HLF and NUS on top of each other–it’s interesting to see how both stocks move together in rises and falls (mostly falls) this year.

    I had the “pleasure” of spending most of the weekend lying flat on my back because I’d pulled some muscles and felt like crap. (I’m much better now, analgesics, heat and not straining my back helped.) I entertained myself by educating myself on ponzi schemes and “high yield investment programs”. I don’t know if it was so much an education as a constant OMG! over the scams being perpetrated. Mai Ghod, there are boards out there where people are pushing these “investment opportunities”. HLF and NUS are just the tip of the iceberg–I blame it on the rotten economic times, people are desperate to make a living.

    1. @mirele, “people are desperate to make a living.”
      Without effort, trying, or research all too often.
      Easy is a lie – opportunists prey on weaknesses, and our collective propensity to stay as lazy as we can. But easy is not accessible – it is earned.
      I am not about blaming victims…but when the going gets tough in society, the going is rarely going to get push-button easy for entrepreneurs or the general public as a natural defense. Logic should dictate some of it – but easy is so danged attractive, it gets in the way when people dangle it out there like a carrot in front of the desperate. Peg some success numbers on them (real or inflated), and any failure to perform becomes (psychologically, as well as financially)a personal one.

      So people see this company performing in the NYSE and remaining afloat and growing year-over-year, and as a result attach their own value assessment of it being legit. Snake, meet tail.

      But as I indicated in a comment above, my mom fell prey to it before they had these outwardly public signs of stability – yet the pitch was about the same, from what I see. Why? Because even back in the late 80s, Herbalife was never known for being a nutritional expert, providing outstanding products that bolster the nation’s health, one gulp at a time. Herbalife was then, and is still known as being a business opportunity – lose cash now, ask me how!
      Hope your back improves, Mirele. :)

  12. Mutli-level marketing schemes are fun, because they always have a horde of trained zombies following them around and clinging to their every word. Plus, their not-employer has already trained them to be slimy, dishonest, aggressive little salesmonkeys who’ll do anything for an extra buck.

    Just imagine the possibilities if Herbalife decides to mobilize its little reptile army! “Herbalife is now paying 5 cents per threatening email, harassing phonecall, or physical injury inflicted upon a critic of Herbalife. If you’re not willing to go this extra step for Herbalife, you’re a BAD SALESMAN and DESERVE the poverty that we’ve driven you into.”

    1. @somebody,

      Just imagine the possibilities if Herbalife decides to mobilize its little reptile army!

      Well yeah, but there’s limits to their power. What you describe reminds me a bit about what I once read of Scientology. I haven’t heard anything like that about it recently. And I’m given to understand Scientology got banned or something in Germany. How messed up is that? I mean–how bad do you have to be to get banned?

      So anyway, if the “I lost weight. Ask me how!” peoples want to go old skool scientology like that then they would undoubtedly face much greater problems than having someone try to drive their stock price to $0.

      1. @Wyrd, Scientology is not banned in Germany. However, it is not recognized as a religion and is treated with a good deal of suspicion by the German government. Some states (Bavaria comes to mind) are fairly open about the fact that they conduct surveillance of the organization. Scientology has bawwed about this for a couple of decades now. It used to (haven’t checked lately) come up in the annual US Human Rights report about how badly Germany was treating Scientology. These days, people mostly laugh at Scientology.

        Last Friday, brave little Belgium decided to go after Scientology for fraud, extortion and who knows what all. The link is from the Daily Fail, but it’s fairly accurate:

  13. Here’s another article from earlier this year, notable for the fact that the Grameen Foundation had opened up offices in Omaha and New York to make microloans. Guess who swooped in to take the money? You guessed it–Herbalife. If you have been through Ackman’s PowerPoint, there’s several pages devoted to Herbalife “clubs” in–guess where–Omaha and New York. Including pictures of these “clubs” in, shall we say, less than desirable neighborhood locations. I would hazard a guess that a chunk of the Grameen microloan money went to Herbalife.

    %^&*!@$#!!! rip off artists!

  14. I find myself wondering why this website even exists. Aside, of course, from providing a place for the perpetually disgruntled to come and vent their hatred of apparently everything and everyone on the planet.

    If you don’t like Herbalife, great. Don’t join. That’s how I’ve managed to deal with them and their ilk for the past 40 years of my life. But somehow, just ignoring them isn’t good enough for you guys. The irony is that it can’t possibly be because you’re concerned that people are being scammed by Herbalife- you vent just as much frustrated-virgin bile on the distributors as you do on the owners- so apparently, you just need something to hate, and Herbalife is handy.

    Now, despite what I’m certain every lunatic and weirdo that inhabits this particular ass-crevice of the Internet is sure to suggest, I’ve never worked for, distributed, or bought anything from Herbalife, Amway, or indeed, any MLM. That’s because I understand perfectly well how they operate. It’s not like they make a secret of it. So it seems to me that the endless bitching and moaning that you people do over companies like this is roughly equivalent to logging on to Rotten Tomatoes and complaining that the Twilight movies suck. First of all, you’re not going to convince anyone that wasn’t already convinced, and second of all, who gives a shit WHAT you think? Nobody if forcing you to watch them.

    1. @Mavent, You are pompous and callous. That’s like saying, if you don’t like being scammed, just don’t be scammed. Huh? Fact: you can’t always know you are being scammed when people are manipulating the facts and truth you depend on to make informed decisions! That’s why there is an important element of SOCIAL ORDER that enables CONCERNED PEOPLE to help others by piercing veils of lies and exposing them for what they are.

      Your malfunctioning moral compass is underscored by your vigorous blanket defense of the dark side, and your positioning yourself against “you guys.” You’re not somehow superior to the thousands who visit these pages, you are simply broken. The bad news is that you can’t be fixed. The good news is that this forum, and others like it, are springing up to help people avoid being manipulated by people like you.

    2. @Mavent,

      I understand where you are coming from. It is certainly difficult for those that have thought critically (or self defensively) all of their life to accept that other people can be stupid enough to get caught up in these things. But let’s step back a few places.

      If you grow up being told that a mystical invisible being is looking over and after you, and at the end of your life there will be a big reward for living “good”. Then your circuitry is already programmed to disregard certain parts of reality.

      If you grow up being told that conspicuous displays of wealth is what makes a person worthy of respect then your circuitry is already programmed to disregard certain parts of reality.

      If you grow up being told that marriage and children is the end goal of success then your circuitry is already programmed to disregard certain parts of reality.

      If you are human with a strong opinion on anything then your circuitry is already programmed to disregard certain parts of reality.

      If you grow up poo-pooing the plight, thoughts or opinions of others then your circuitry is already programmed to disregard certain parts of reality.

      Humans are fallible creatures that are stupid in crowds, but it only takes one to stand up and point out the emperor is wearing no clothes for the others to sheepishly admit they have been disregarding certain parts of reality.

    3. @Mavent ::

      Your concern is :: uhm … convincing.

      I’ve never worked for, distributed, or bought anything from Herbalife, Amway, or indeed, any MLM.

      Sure … that makes sense.

      You just came on to Rotten Tomatoes to complain about people complaining about movies on Rotten Tomatoes :: that’s totally natural and stuff … like I said … convincing.

    4. @Mavent,

      “It’s not like they make a secret of it.”,,,,, incomeathome37.comm incomeathome38.comm,,,,,

      and hundreds more of them tell us the different idea than yours – and don’t try to get me started on incomeforever.

  15. That’s because I understand perfectly well how they operate. It’s not like they make a secret of it.

    So you’re saying that MLMs are totally up front about the fact that it’s not really about selling product but that it’s actually about convincing your downline to sell product? Actually, MLMs are usually kinda not up front about that. Although, admittedly it’s something of an open secret. It’s still secret. It’s the kind of thing that’s staring you in the face, but since all the sales materials say exactly the opposite, it’s easy to convince yourself that the MLM is your Special Friend and not a money draining life leach.

    First of all, you’re not going to convince anyone that wasn’t already convinced, and second of all, who gives a shit WHAT you think? Nobody if forcing you to watch them.

    The fact that you were upset enough, even if only for a moment, to leave this angry screed suggests to me that on (admittedly rare) occasion it is possible to change someone’s opinion via a site like this.

    But your analogy is false anyway. A bad movie is just a bad movie. But a bad memeplex like MLM can actually hurt people.

    If you don’t like Herbalife, great. Don’t join.

    That’s a great idea. Gee, I sure wish these family friends of mine had, had you around to dispense your awesome wisdom a year or so ago when they went “all in” with Herbalife.

    I have no anger for these people. They happened upon Herbalife (but it could’ve easily been IM-MMO or some other high level cult-style scam) at a time when they were vulnerable. That’s how it always happens. “That’s how they getchya.” And if you think it can’t happen to you, then let’s talk. I’ve got this boffo business opportunity involving time shares that I only talk about with super smart folks just like you.

    Furry cows moo and decompress.

  16. If someone you know vaguely asks you to lunch to “talk about something,” watch out for “the napkin.” That’s where they pull out a pen, and draw a pyramid on the napkin. Before they can say another word, interject with, “This is where I am today” (point to the bottom of the pyramid), and then you say, “And this is where I could be tomorrow” (point to the top of the pyramid). Then say, “Sorry, not interested. Look where pyramids got the Pharaohs. Dead, in museums.”

  17. But this Herbal Life pyramid scheme is currently making money.

    It’s almost like he is trying to expose Herbal Life so no new people sign up.

    And people start ditching their stock since no one wants to be stuck with a plummeting stock.

    But he is trying to use and manipulate everyone after he made 7 months of put orders.

    See he isn’t really trying to get us to short the stock, (there may not be any major blocks of stock to short available).

    He is trying to get existing stockholders to dump their holdings at very low prices.

    Herbal Life has also been buying large quantities of their stock back prior to this.

    I’d love to see how all this plays out. I do hate MLM’s

    1. @Mike K-Negs,

      You’re saying this is a lie?

      Pershing Square currently maintains a substantial short position in the common stock of Herbalife Ltd. (“Herbalife”). This position does not include any options or puts.

      That seems like a dumb way for Pershing Square to get themselves into trouble with the SEC and CFTC.

  18. My sister in law now calls herself a “senior nutritional consultant” with Herbalife. She’s got a certificate to proof it as well. It seems to me the only thing that qualifies her for that title is buying a load of crappy overpriced milkshakes. I’ve had to block her on Facebook due to her constant pimping of this crap.

    The straw that broke the camels back was her assertion that fat is the bodies way of protecting itself from “toxic density”. That any initial weight loss results in a build up of toxins which then results in the body producing more fat to protect itself from these toxins!!! Guess what though? Herbalife has a product that can prevent this “toxic density rebound” Scientifically illiterate bullshit.

    I asked her where she got her information from and it was from Herbalife she produced “literature” that she’d been provided to by her manager that actually had this BS on it. I’ve forwarded it on to the Advertising Standards Agency in the UK but because it doesn’t have a Herbalife logo on it they can’t act.

  19. Salty and all other MLM haters, you must, must, must see the King of the Hill episode that lampoons Herbalife, or in their world, Metalife:

    Netflix Watch Instantly:

    Amazon Prime:

    It’s called Bill of Sales and it’s pretty great. The only failure is that they show that Bill actually CAN sell the bars, as opposed to the real scam of getting people to join the program being the scam, but it’s still a really funny glimpse at the MLM racket that is so despicable.

    Herbalife, Amway, Mary Kay and all the rest are just the most disgusting organizations. Moreover, the sub-industries of products that are sold as a way to “succeed” in the business are just despicable.

    I was particularly interested in the psychology and level of groupthink (bordering or veering directly into being a cult) that can happen with MLMs in college and even wrote a few academic papers on the subject. If I can find the links of JSTOR I’ll post them.

    1. @Christina ::

      Thanks … I’ll check that out.

      I think my favorite media representation of pyramid cat crap is Margene in the last season of Big Love. Her Bill tries to save her via the floor of the Utah Senate … EXACTLY where someone IRL would need to smack some heads around if they wanted to do something about the global pyramid scheme problem.

      Would love to read your papers … it’s relevant to my interests.

      It’s interesting about the “helps you succeed in MLM” part of the business. The “tools business” as they say in the lingo of Amway case law. It’s often the most important :: and most profitable … part of the business. You can think of Internet Marketing as the old “tool business” detaching itself :: and its unconscionable profit margins … from the mother ship.

      I haven’t read all of the financial statements and conference call transcripts yet like Ackman {although I will because I’m not going to be out hustled by some Harvard asshole} … but I don’t see much mention or influence from their “tools business.” Makes me wonder if management :: in reckless disregard for the interests of the shareholder … allow top level distributors to control those key portions of the business model directly.

      Just some thoughts from my upcoming one robot show …

      Herbalife 2 Death

    1. @MKR, it’s actually this:

      Robert Chapman v. Bill Ackman…

      “In a letter to his investors regarding Herbalife, Chapman said he has put 35 percent of his portfolio in Herbalife.”

      PLEASE O PLEASE O PLEASE Bill Ackman take this guy down. If you’re putting 35 perecent of your portfolio in a MLM, you deserve a wake up call!!!

      HLF has an “Analyst and Investor Meeting” on January 10 at 09:00 ET/06:00 PT. It will be webcast. It will be interesting to see what is (not) said.

  20. I’ve been waiting for you to start talking about these guys. I’ve been burned by them too. Let’s not forget Shacklee, Equinox (I think they collapsed a few years back) and countless other MLM/Pyramid schemes that are out there.

  21. Loeb is right, Ackman will loose his clothes is this battle and you are loosing credibility. MLM squemes will win … are not piramids squemes study and not lie about something that you do not know

    1. @Dilfredo,

      Yeah, Ackman will have to loosen his clothes from all the filet mignons he’ll be eating once the SEC investigation gets going full steam. Unless he’s vegan, and then it will be from all the vegan salmon steaks.

      MLMs/pyramid schemes are total squemes.

    1. @Matthew, Wow. How much a week? In what country? How long have you being doing it for? What in your mind makes Herbalife a pyramid scheme? Can you recommend any other Pyramid Schemes? Are you capable of making an honest living?

    2. @Matthew ::

      Well that shows what you know.

      If you are unlucky enough to be unencumbered by morality … you can make a boat load of money scamming pyramid style. But the present value of any pyramid {to a distributor not already entrenched at the top} is inversely proportional to its age and current size … making Herbalife one of the worst.

  22. Wow, you are all busting your ass to uncover something that just simply is not there. Rather than focusing on what you feel the problem is, why not recognize the issue that Herbalife is helping to reduce the weight problem in this country. If all you are comfortable with is pointing blame then please continue. Find real facts, don’t just spew what you read for the sake of “sounding” right

    1. @Chris W ::

      Alright then. Here I am waiting for some “real facts.”

      Why don’t you go ahead with your bad self and present some to me.

      1. @Christoph Dollis,

        New York Times chief financial correspondent Floyd Norris isn’t as optimistic as I was about the new auditors or the SEC demanding a second look at income classification and additional disclosures. “It is at least conceivable that an auditor might seek to force additional disclosures.” That’s it. Conceivable.

        I learned three new things about Herbalife from those articles and their comments:
        1. Herbalife is making plans to go private – fast.
        2. HLF prices may have been manipulated by Shaw’s “‘substantial purchases.'”
        3. Via WSJ commentator MarKon, in California, a 68-year-old retired general contractor is suing Herbalife in federal court under federal racketeering law and a California law banning pyramid schemes. Crazy New York Post article here.

        1. @Lanna Oberammergau,

          You’re research skills, as always, are awesome.

          So what I’d like to know at the moment is two things:

          1) Just how does a company go private?

          2) If Herbalife does manage to go private what in the world does that do to Ackman’s short position or Icahn’s long position?

          Furry cows moo and decompress.

          1. @Wyrd,

            1) Basically, after the board and shareholders approve going private, either the company itself or a private equity group buys all the available shares – at a premium to market prices. Then the stock is voluntarily delisted from the exchanges. eHow has an easy-to-understand explanation, and Investopedia goes into a little more detail – scroll down to “What It Means to Go Private.”

            Keep in mind that Herbalife has said they have an authorization to buy back $950 million dollars of stock and plan to buy back at least $50 million in the next few quarters even if they don’t go private, as reported here, a move that creates a short squeeze. You could dig through EDGAR Online to find out exactly how much stock Herbalife has already bought back. In January, Bronte Capital’s John Hempton said HLF shares on the market decreased from 140 million to 108 million over the last five years.

            2) If Herbalife goes private, the short answer is that Icahn and other shareholders (like Shaw, KPMG’s London’s buddy) will make money, and Ackman and other shorters will lose money. But really it creates a game of chicken for Ackman, to see how committed he is to taking down Herbalife and seeing his target price of $0.00 per share.

            To simplify things, let’s consider Icahn’s additional 322,716 shares bought at $41.45 in March 2013 (reported by Business Insider) and Ackman’s approximately 20 million shares shorted at around $45 starting in May 2012 (reported by Reuters).

            Herbalife closed at $37.38 on Friday. Icahn is down $4.07 a share, or $1.3 million. Ackman is up $7.62, or $152 million.

            Investopedia says Herbalife or a private equity group will offer at least a 20% to 40% premium over the market price if they make a tender offer. Using Friday’s closing price of $37.38 and a 40% premium, if the buyout happened, shareholders would receive $52.33 per share.

            Once the tender offer is made but before the board and shareholders approve it, the difference between $37.38 on the market today and $52.33 once the buyout’s approved creates an arbitrage situation that drives the market price toward $52.33 – but not quite there, because there’s a risk the officers and shareholders won’t approve the deal.

            Let’s say the arbitrage drives the price to $51.33 – a dollar less than the buyout price. Now Icahn is up $9.88 a share, or $3 million. Ackman’s down $6.33 a share, or $126 million.

            As explained by Yahoo Answers user zman492 (sorry my sources suck today), since the brokerage firm from which Ackman borrowed the shares will need the shares back to sell to Herbalife or the private equity group, they will require him to cover his short position at this point. So the unrealized $126 million loss becomes a realized $126 million loss.

            So Ackman could throw in the towel, admit defeat, and walk away with a $152 million profit by selling before Herbalife attempts to go private. Or he can stick to his guns, so to speak, and risk a loss of $126 or more while trying to drive the price to $0.00 for $1 billion profit.

            1. @Lanna ::

              Just for the record though :: if someone wants to take Herbalife private for a couple of billion … they are buying me in that package. Cause this won’t be over for me until it’s over :: regardless of what happens to Ackman … or the rest of the idiot media. I haz long attention span :: see e.g. …


              Ackman made a crack :: I’m gonna crawl up in it and fucking explode.

  23. Here’s the class action lawsuit filed in the Central District of California against Herbalife. It’s massive–350 pages. No, I have not looked through it all. I read about the first 50 or so pages (through the first few counts).

    What I liked about this lawsuit is that it’s something like a template that could be used for other MLMs, if successful. If.

    Also, Lanna, thanks for the explainer on stock buybacks. Lots to think about there.

    1. @mirele, Herbalife will never let this go to trial. This is going to get settled the moment they realized they can’t lawyer their way out of it (such as “motion to dismiss”)

  24. I watched the webcast. Well researched, clearly explained. I then pulled up the stock price hoping to see that they were desisted.
    Herbalife Ltd.
    NYSE: HLF – Aug 6 10:00am ET
    67.79+1.12‎ (1.68%‎)

    I am bummed but not surprised. I know these things take time. Hopefully some of these lawsuits get some traction or SD goes even more mid evil on their ass before HLF goes private and Akerman looses his money.

    BTW Can anyone give me a good reason why MLM should not be illegal?
    I have never seen a MLM that was not basically a criminal enterprise.

    1. @Dr.Duke,

      BTW Can anyone give me a good reason why MLM should not be illegal?
      I have never seen a MLM that was not basically a criminal enterprise.

      { Awkward crickets }


      What I mean is: I also wait forever without holding my breath that someone will show an MLM that’s not a pyramid scheme.

      … Oh ok, I guess maybe Pampered Chef? Maybe Tupperware? They might not be scammy frauds. I dunno, I’m not certain. But are they truly MLMs?

      See, here’s the thing–if most of your sales really do go to non-members/true customers.. then are you really primarily a multi-level marketing company?

      The way things got so bad is whatever lawyers were trying to make the case that Amway was “bad”, they let the other side win by defining things in a favorable way. When you’re lawyering, you simply can’t let the other side define words how-so-ever they choose. It’s important. Did the FTC lawyers not know this or were they merely out-maneuvered?

      Maybe I should check out the 1979 Amway case in depth sometime.. kind of like looking up an old sports game to see how the team that “should” have won snatched defeat from the jaws of victory.

      Furry cows moo and decompress.

      1. @Wyrd, I should have known, all roads lead back to Amway. Originators of such MLM tropes as: people will gladly pay twice as much for an off brand they don’t know than a brand name if it comes from a salesman, the “helpful” books,tapes and other “training materials” that are not officially from the company but you still have to buy them, revival style meetings, fanatical devotion to your upline, fake it till you make it positive thinking, cult like tactics such as separating you from outside influences and then giving or withholding love to get you to comply, a “foolproof” system, I could go on but I feel sick already.

        It has been comon knowledge since what the 70’s that Amway is a ripoff. Yet they are still around.

        1. @Dr.Duke, Speak of the devil
          Amway India Chairman, 2 Directors arrested

          Sounds good right?
          Then I read this:
          India’s corporate Affairs minister Sachin Pilot gave a statement that the government is looking to remove the legal ambiguities to differentiate between fraudulent Ponzi schemes and genuine businesses run by “reputed and law-abiding” entities (referring to Amway).

          And Kerala government ordered a probe into the circumstances that led to the arrests.

          “Oh no! Our law caused the poor Amway folks to get arrested. Quick lets change the law so that never happens again.”

          I like this line in the comments:
          the Chinese government labelled multilevel marketers “evil cults, secret societies and superstitious and lawless activities.”

          I don’t get to say this too often, I wish our government was more like the Chinese government. I probably won’t use that phrase again for a while. Now we have something to look forward to if China calls all their debt and we become the North American Provinces of China. All the MLM guys being told to go out of business or have your estate pay for the bullet we will put in your skull would be a silver lining.

    2. @Dr.Duke,

      I am curious how you would outlaw MLMs without accidentally outlawing regular distributor systems.

      Say I set up a company that distributes artisanal soaps. I buy the soaps in bulk from little farms that produce them, and then I sell them at a slight markup to gift and health-food shops that sell them at retail. The shops can prepay for the soaps before I ship them, or they can apply for credit so they have 90 days to pay. They fill out a credit application, and I run a credit report, which costs me $25. I want to cover this fee and my time for running the credit report, so I charge them a $35 fee to apply for credit. I am always looking for more retail shops to buy soaps from me, so I offer all my existing customer shops a $200 finder’s fee for each new shop that buys at least $500 of soap within its first six months of buying from me.

      It’s perfectly legit, but under this part of Belgium’s Article 99 the Droid quoted in Belgium v Herbalife, it’s illegal in Belgium:

      “It is illegal to set up, manage or promote a pyramid system where a company, upon payment, has a chance to receive income from either recruiting new companies in the system or from the sale or the use of products.”

      How does it work in Belgium? Do the courts just automatically know that this law wasn’t put into place to outlaw artisanal soap distributors? Will what works in Belgium’s 30,528 sq. km. scale to the U.S.’s 9,826,675 sq. km. – from the 141st-largest country to the third-largest country (according to CIA World Factbook) and all our myriad courts?

      1. @Lanna,

        (jumping in because I’m interested)

        I briefly tried to find the Article 99 in question. One would hope that the actual Article 99 itself is worded in such a manner as to not punish a regular actual distributor that has something like the finder’s fee you illustrate.

        It’s article 99 of “the WMPC” whatever that stands for. From the referenced .pdf, the WMPC must be “the Act concerning market practices and the consumer protection ”

        I for one would not want to outlaw distributorships. They’re not evil, they’re just an example of capitalism working in the let-market-forces-figure-out-the-best-way-to-do-it way that it’s theoretically supposed to.

        It might be that there’s some previous section of whatever the WMPC is that more explicitly defines what’s meant by “pyramid system” such that the distributor example you cited wouldn’t fall into it.

        Or it might not.

        1. @Wyrd,

          … or OTOH, it could be that the soap distributor setup you describe would be illegal in Belgium in an attempt to dissuade people from setting up other kinds of cheating oligopolies or monopolies. I have no idea.

  25. I don’t have a problem with distributorships and I am rarely they type to want to get government involved. Having said that the problem I have with MLM is I can’t see how the model is sustainable.

    One issue is if you are actually selling a product, why would you want to set up so many competitors in your market via constant recruiting?

    My biggest issue is the whole “I get money from the sales of who I signed up and who they signed up and who they signed up” thing. I can not think of any case that that is sustainable. I do not see how that is not illegal. I see no problem with paying a finders fee to set up new victims er, um partners. But when you get in to the cascading commission deals anyone who did not get in on the first 2 levels is almost guaranteed to not make money.

    Lets use a typical Manufacturer sells it to a wholesaler who sells it to a retailer who sells it to customers example. Lets say the Manufacturer sells buy the pallet load to the wholesaler. The wholesaler then sells buy the case load to the retailer. The wholesaler marks the items up wich is only fair, he has to front the money for the whole pallet load, has to pay for the warehouse and labor and bla bla. The retailer then marks the items up yet again but who wants to buy a whole case of widgets at a time or shop at a warehouse. There are multiple levels here but each level adds value. Also in most cases the retailer can choose whatever wholesaler he wants.

    In the classic MLM model all the salespeople order from the MLM yet your commission is based on what level you are in the pyramid. Some one five levels down gets no added value but gets a lower commission for selling the same product as some one at the top.

    Sorry that was so long. I hope it made some sense.

  26. @Lmanna, I don’t know how Belgium’s law would effect the hypothetical soap business but I don’t think it would effect distributorships in the US. If I am an authorized dealer of Brand X widgets, the last thing I will want to do is help set up a competitor with Brand X.

    1. @Dr.Duke,

      Re not wanting to help your competitor by setting them up with the distributor for Brand X:

      You’re right. But I think the finder’s fee thing could still work occasionally. But this fact underscores a critical difference between a stoopid-fake MLM setup and an actual distributor-retail setup.

      Location, location, location.

      Assuming we’re talking about the standard Real World with brick-and-mortar stores–if I’m a game shop and I’ve got a good deal with a DnD book distributor, then I might not want to recommend the shop down the street, but I might not have a problem recommending the shop in the next town. They’re not really my competition.

      Actually I might ask the local game store owner guy about that the next time I see him–which stuff does he get through a distributor vs. which stuff does he get directly?

      Anyway, finder’s fees notwithstanding, my (possibly naive) understanding is that most of the time, the distributor has made whatever money they’re going to make at the time that they sell stuff to the retailer.

      But probably now someone(s) will show me a lot of situations where the distributor manages to get an additional fee on the final sale. I dunno. That seems 1) a little over-complicated to me, 2) unfair–like the distributor is being paid twice, 3) greedy and therefore prone to corruption whether it’s MLM in nature or not.

      1. @Wyrd, In my limited retail experience the wholesaler makes what ever money he is going to make at the sale. There are some arrangements (Hallmark cards at Walmart for example) that the distributor (who is the manufacturer in this case) gets paid when the product is sold, pay per scan they call it I think. Stores also get credit for magazines they don’t sell. Some bakery items work like that too. An outside vendor comes in, stocks the shelves, counts the past date stock and removes it and the store is credited.

        In those situations a vendor could just give the store a lower price if they have no (or less)returns if they wanted to. You would get the same end result as getting a commission and the accounting would be easier.

        That might be a way for the hypothetical soap corporation to operate in Belgium. Refer us a good new customer and get $200 of your next order.

      2. @Wyrd,

        Your local game store (LGS) probably orders 45% of its stuff from Alliance and 45% from ACD, both at 50% to 60% off the cover price. The other 10% comes from a handful of smaller, probably local-ish manufacturers. Let me know if I’m right!

  27. “If one is going to be paid $6000 for buying $5000 worth of overpriced vanilla latte protein powder :: then one is going to buy $5000 worth of overpriced vanilla latte protein powder…”

    Wait a minute…if I buy $5,000 of your product and you’ll pay me $6,000, where do i sign up?

    Are you sure you don’t have it backwards? I know you’re trying to be snarky, but it sounds like I’m up by a grand. I would do that 5 times a day for 6 months then get the fuck out with my $5,000 x 180 = $900,000.00

  28. Its truly funny that in the corporat world a ceo or someone making millions a year with a ludacrative parachute package is praised. I have met menand women working hard to change lives this is the real problem is change. Herbalife forever.

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