I love when billionaires fight, because they do it with money, which is the third best way to fight, after Jell-O wrestling and dating your ex's best friend. So I got very interested when hedge-fund manager Bill Ackman bet $1 billion that Herbalife is a pyramid scheme and Carl Icahn, who hates him, argued that it so totally isn't and set out to prove it by buying $1 billion worth of the company. To put that in terms non--Wall Street people can understand, it means that whatever Herbalife is, there is more than $1 billion of it.
Ackman, after lobbying Congress, persuaded the FTC to investigate the company and has posed one question to audiences that I find very convincing: Have you ever bought a product from Herbalife? Almost all of them say no. I too have never bought anything, or met anyone who bought anything, from Herbalife. Then again, I've never met anyone who bets $1 billion on companies. So I decided to try not only using/eating/drinking/smoking/driving/watching Herbalife, depending on what it is, but also selling it.
I started on Redondo Beach in Los Angeles, where I met Herbalife wellness coaches Mark and Jill Addy, who are impossibly good-looking and drive a BMW, which made me both interested in Herbalife and pretty sure it isn't a car. We joined about 150 people on the beach, where we played dodgeball and did an obstacle-course workout before driving to a beautifully designed warehouse space for a "shake party." Music blasted, a few women danced, and we listened to a speech about nutrition, just like at any other party.
Then I found out what Herbalife is: its main product is a delicious, very sweet protein shake. I still didn't know if Herbalife was a pyramid scheme, but I felt pretty sure it was a cult. I could tell because as soon as I'm around that positive cult energy, I want to join; it's a problem I've had at Burning Man, Google and meetings of people who are sticking with print journalism.
So I told Mark to sign me up as a tea and shake salesman so I could start calling people. He told me it wasn't that easy. "You know how hard it is to convince someone to lose weight? It's miserable," he said. Instead, I had to get my own results and share my experience. It was only when I went home that I realized what they were selling me.
For $59.25, I could become a distributor and get 25% off my $39.10 monthly canister of shake powder, which I could then sell at full price. There were also a lot of dubious-sounding Herbalife supplements I could sell, such as Relax Now, Sleep Now and Tang Kuei Plus for PMS. My lovely wife Cassandra has 50 kinds of herbal tea from Whole Foods with similar names. And I worried that I was joining a company where most buyers aren't like the people I met on the beach but instead are low-income people who pay $5 a day for their drinks at storefront nutrition centers. At one, I saw a toddler sucking a shake from a bottle. If there were a pyramid, she would definitely be at the bottom.
Most of the distributors I met started off by selling to their parents, so I called my mom and casually mentioned that I was drinking a delicious mint-chocolate-chip Herbalife shake. My mom sighed. Apparently, a friend of hers had gotten to her before I did and focused on the making-money part instead of the minty-goodness part. Also, a neighbor had tried to sell her Amway, and another friend tried to sell her Longaberger baskets. The reason this keeps happening to my mom is that she has this horrible habit of listening to people when they talk.
Then I remembered that in the 1970s, my mom started a company called Plants Alive. She'd grow plants in our basement, persuade people to invite their friends to host a party for their friends and then drive over in a station wagon filled with plants to tell them about how much better their lives would be if they transformed their house into a fun maze where they were always ducking around plants hanging from the ceiling in crochet nets. The host got 20% of all sales, but--and this may have been the flaw that kept Plants Alive from IPOing--they had to spend that money on plants.
I asked my mom if her business had been, in fact, a pyramid. "No! People came because they loved plants!" she said. I'm sure that's true. But it's a whole lot more likely that people like to lose weight by eating sweetened, flavored soy powder that gives them 20% of their daily molybdenum needs. I'm going long on Herbalife. At least until I finish all these canisters of shake powder in my garage.