Herbalife International
Herbalife International, headquartered out of Los Angeles, CA, is a multi-level marketing corporation that is in the business of selling personal health care products. It was founded in 1980 by Mark Hughes, and today operates in over 95 countries and employs around 8000 people. The company stock (HLF) trades on the NYSE, currently at around $62, with a market capitalization of around $5.6 Billion Dollars.
The Business Model
Herbalife initially started out of the founder's trunk, much like Dish Network. As the business grew, it turned to Multi-level Marketing and distributing to speed up company growth. In this type of business structure, distributors generate profit from sales of the company products as well as earn commissions from sponsoring or bringing into the company other distributors and their sales. The more these downline distributors sell and/or recruit others to join and sell the company product, the more commission earned for the original "upline" distributor. When this chain of distributors is visualized, it looks a lot like the pyramid on the back of the U.S. Dollar (but that's another scam...errr ah I mean, story for another time).
The Big Bad Wolf
Herbalife and similarly structured companies tend to constantly run afoul of the law for their business model. From early in its inception, Herbalife had to defend itself in regards to the efficacy of its products several times, but it wasn't until 2004 when it first had to defend its multi-level marketing business model in a court of law after nearly 25 years in business. Herbalife was accused of unfair business practices and of being an "endless chain scheme". It settled this case out of court while never admitting guilt, wrong doing of any kind or changing their business model.
Then six years later, Herbalife had to defend its business practices in a Belgian court where it was again accused as a pyramid scheme. Herbalife was found to be a pyramid scheme by a Belgian court in November 2011. Upon appealing that decision, on December 3, 2013 the Belgian appellate courts overturned the original ruling and stated that Herbalife's business model was in full compliance with Belgian law.
The Billionaire That Cried "Big Bad Wolf!"
Meanwhile, in the United States of America, Herbalife had to also endure accusations of being an illegal pyramid scheme. In December of 2012, Billionaire Bill Ackman of Pershing Square Capital, denounced Herbalife as a pyramid scheme and took a short position of $1 Billion Dollars against Herbalife and its stock. Ackman was the loudest of Herbalife's detractors, finally getting the FTC to start an investigation of Herbalife and its practices in March 2014. In July 2016, Herbalife settled with the FTC. They agreed to pay a fine and to change their business model. The fine was $200 Million, with a large portion being refunds to the distributors of Herbalife, while the change to the business model revolved around paying distributors commissions based on product sales and not based on recruitment.
Herbalife has since continued to thrive and grow. The business model change was mostly semantics. People are still getting paid, the difference is that now its commission from sales rather than recruitment. Bill Ackman wound up losing several hundred million dollars going against Herbalife stock. And yet even today companies like Coinbase or even Citi Bank continue to use the sales tactic of paying for recruiting others to join, become members, open a bank (lending account because the bank will use your money to LEND IT OUT) account and/or make purchases.
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http://www.reuters.com/article/us-herbalife-probe-ftc-idUSKCN0ZV1F7
https://en.wikipedia.org/wiki/Herbalife
They shouted about wolfs but it endured and still thrives and grows. That reminds me of something hmm...
@yaan That right there hits the nail right on the head, you get a full 100% up vote on your comment..... tells us what exactly it reminds you of and I will do it again!!
I'm trying to remember. Hmm... hmm... Oh, It reminds me of Bitcoin!! :d
@yaan You are on the right track.
Upvoted and resteemed!
Our whole pension scheme is a Pyramid scheme... it will fail at some point in the near future
Nice one @nzfxtrader you get a 51% up vote for this insight. Thanks.
Much appreciated, I'm glad I could add some value to the already excellent post. The pensions is something that everyone needs to look into!
Upvoted. I'll be resteeming this now :]
Thank you @insiders
Well, Jim Rohn shared Herbal Life, and I'm guessing he had a pretty solid reason for that. After all, he did end up making almost $200 million from age 25. I'm glad they took that risk, and changed the model. They are a great company.
Not sure if you are pro or against the company after this article, as I see mixed emotions, but thanks for sharing :)
I gave you a follow. By the way, thanks for the 15% upvote on my latest post! Talk soon.
Thanks for the comment @enazwahsdarb And as for Herbalife, I have never tried the product myself, and as for the company, I am neither for it or against it. I wrote this more because it was accused of being a scam but in the end it was not and is not. Maybe their business model was not the best, but it is funny how I now even see my cable company paying for referrals.
I know it from the shakes. It are pretty expensive products to :) upvoted.
i have tried Herbalife chocolate shake i guess or may be something like that many years ago that was great.
another Amway... I was involved briefly in one in college called Equinox, I ended up paying for some crap I didn't want, lame
I have done a few of these myself even though I know myself and I am not really good at MLM, it just isn't my thing as they say. I have seen and know of some very successful ones though, and they do have a good product called youngevity. Thanks for the comment @clumsysilverdad
First of all, this was an excellent post from beginning to end. I think Herbalife went though growing pains of trying to identity what type of marketing campaign was best for growth. The fact that Bitcoin has no centralized leadership, no CEO, no executive board members, no marketing team, etc directly hinders mass social acceptance. But its those very attributes that make it special. The ocean has no flashy signs, no road maps advertising people to visit, but its so worth the journey that once you visit, you never want to leave...
Yeah it's a ponzi scheme, but legal because they have a product
I myself have never used their products, but i do know of someone who had a phenomenal experience using their products. This guy dropped some much weight it was unbelievable, and he didn't need surgery for the excess skin, which to this day still astounds me.
Yes besides physical problems, the scheme is made to avoid a real democracy in the scheme
I have tried it, a friend of mine sells it in belgium.
For that era the businesses with greater yields, were these systems of multilevel
I too heard about herbalife i bad light
Oh, man. This made me remember that I need to go watch this documentary that was made about herbalife recently. It's called Betting On Zero and is all about how they're a pyramid scheme.
I don't know what's worse, the large amount of people they lie to, or the large amount of people who buy into the lies and lose thousands of dollars. It's really astounding how many people actually believe in their products. I remember hearing about one of my girlfriends mothers friend buying their stuff, and saying she no longer needed to take medications because she was taking essential oil concentrate in pills everyday. I just don't get it, lol.
I heard of it too but have not watched it @deadspace and as for the products, I think they must work for them to be so successful. I do personally know of someone who lost a lot of weight, and I mean a lot and did not need plastic surgery for the excess skin. Amazing.
To each their own though, bro. I'm not gonna argue over opinions, we've both seen different things it seems like on opposite spectrum's in regards to their product. I'm glad to hear you've heard of a positive experience at least with their products.
i call it nerdalife really what a money making scheme there products are so unhealthy please follow me @rogerblu and kindly read and upvote my articles i will do the same
good work
upvoted
Yes, you can take it for weight loss. I took a product like Formula 1 nutritional shake, PPP and Afresh for an about 1 year when I was trying to lose weight and i lost nearly 16k.
You can find Herbalife product details
click here!This post received a 2.3% upvote from @randowhale thanks to @streetstyle! For more information,
I once had a friend that tried to recruit me for this product. I turned her down. She did not last much longer after finding out its not easy unless you are a great salesman.
It is difficult to sponsor members in such business. Thanks for sharing great info about Herbalife.
This post has received a 2.31 % upvote from @booster thanks to: @streetstyle.
The pit of greed
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