A quick thank you to Bill Ackman

My visit to a Herbalife club in Queens inspired me. If those guys could lose weight on a protein shake meal replacement diet so could I.

So I started mostly with local Australian brand products (but a few Herbalife products, notably the tea). Anyway I am now 9kg (20 pounds) lighter and I can fit into trousers I purchased on a trip to New York in 2004. [They have sat unused in the cupboard for about six years!]

And so the new svelte me (well not really svelte - this is relative) is off to Claudes - a Sydney dining institution - and I suspect I can knock off the evil even that will do to my waistline.

And not just the dining performance that has improved. Going long the stock has rather helped my stock picking performance.

And so Bill Ackman,

Thank you.





John

The distinctly cooler Mr Hempton is the Odd Man Out

Nick Hempton (far cooler than your blogger) has a new recording out:




This time he is paired up (for four tracks anyway) with the great Michael Dease on trombone.

I won't repeat the expletives of this review - but it is accurate.

Buy it at Positone - and you too can be up with the hippest jazz.




J

Strange stock assessment from a value investor I kind of admire: a note on the transition of Apple into a "value stock"

In my email today I received a missive from a value investor I kind of admire - a peon to the value in Apple shares. To quote:

My mother-in-law had an Android tablet, and it quickly turned into an expensive paperweight on her kitchen counter.  Six months ago she got an iPad mini, and she is inseparable from it.  She won’t be buying another non-Apple phone or tablet.  There is a lot of bearishness on Apple in the media and blogosphere, but if these headlines start scaring you out of the stock, just visit a few Apple stores and your fears will all go away – the one we dropped in on recently in Denver was swarming with Apple fanatics, while the Microsoft store next door and the Samsung store at Best Buy were almost empty.  These folks will be buying whatever comes out of Cupertino for a long, long time.

Value investors must be the only people who assess tech stocks by what the grandmothers like. And they do it without any trace of irony.

Just like the classic Samsung advert but without the humour:




But of course my value friend does have a point. What with increasing longevity Apple will be here for a long time. I am not killing granny off yet - and the trail of some declining tech stock is clearly worth a lot of money.

What is Microsoft worth?





John

(No position in either stock - but generally I want to leave declining tech alone. Someone pitched me Blackberry the other day based on the qualities of their latest phone. You can make a pitch for Blackberry - but it is a patent-installed base pitch, not a pitch on the future...)

The bad guys won one this time...

Jeff Matthews has a funny blog post about how someone bought call options over 760 thousand shares of Booz Allen Hamilton (NYSE:BAH). The strike price for these options was $20.

This is an enormous trade - over seven times the open interest in all options of all stripes for BAH.

The next day comes a headline:

Accenture in Talks to Buy Booz & Co.  An Acquisition Would Beef Up Strategy and Operations Consulting

As Jeff Matthews tartly notes Booz & Co is not the same company as Booz Allen Hamilton - they separated years ago.

And so our want-to-be insider trader has blown his dough - 760 thousand times 85c worth - or a little over 650 grand if you include brokerage. This was a costly error, but less costly than the criminal trial and almost certain conviction for insider trading if our imbecilic crook had been right. I mean he didn't think he could get away with that did he?

As luck would be Booze Allen Hamilton "crushed" earnings estimates. Here is the stock chart:

And so our asinine aspiring insider trader has made quite a decent profit proving once again that it is better to be lucky than good on Wall Street.

Notch one for the bad guys.

In my darker moments I imagine there is enough inside information around that someone knew about both the Booz & Co takeover and the Booz Allen Hamilton earnings beat and were Machiavellian enough to know they could trade this information aggressively and not get pinged for insider trading. But that couldn't possibly be true... could it?





J

A little Herbalife red-herring

Here - linked - and from the SEC's Edgar database is the original Herbalife IPO prospectus. This document was filed on 1 October 2004.

Remember back then. George Bush was President yet to win his second term. Barrack Obama was a Illinois State Senator and you needed to be a political junkie to have heard of him. Almost nobody could have identified his family in a photo.

And so - lurking - unnoticed in the prospectus - is this photo presumably representing Herbalife customers or distributors:

The photo is there - you can go check it.

It occupied my mind for a while - but it is alas not the First Family much as I wish it were. It is just one of life's little coincidences.

Then of course I may be wrong. Been wrong before. Appearances might not be deceiving...




John

Herbalife is addressing Bill Ackman's concerns...

Bill Ackman spent eight pages of his presentation (100 to 107 inclusive) covering the issue of shipping surcharges. His argument was that the retail margins were misstated because customers had to pass along a 7 percent shipping charge.

The issue Bill Ackman raised concerned me.

It is pleasing to see that the company is addressing these head on. From page 28 of today's 10Q:

(1)

During the second quarter of 2013, we simplified our pricing structure for the North America region by increasing suggested retail prices and reducing total shipping and handling revenues by a similar amount, eliminating a “packaging and handling” line item from our invoices to distributors. We do not expect these changes to materially impact our consolidated net sales and profitability. We anticipate extending these changes to additional markets in future periods.

As a long investor it is encouraging to see perceived deficiencies being appropriately addressed.



John

Bronte is hiring - a follow up...

APPLICATIONS ARE NOW CLOSED. We received 270 plus - and we are finalizing a short list...


As many know - Bronte Capital - the asset manager - has advertised for their first employee.

I have gone through my email fairly carefully and I should have replied to every single application although more than 200 in the negative.

I found five applications in the "junk mail folder" and I fear I may have missed a few others.

If I have not replied to you please resend to brontecapital@gmail.com and make sure you get a reply. If you are interested enough to consider working for us and devoting a good part of your life to Bronte then we owe you the courtesy of a reply.

=======

We are currently about half way through a "preliminary round" interview where I ask some questions testing

(a) basic science and a scientific understanding of the world,
(b) thoughts about how you may build our computer systems [targeted at our quite unusual needs], and
(c) business analysis [mostly for looking at longs].

We have found nobody who answers all three sets of questions well - but a few who answer two of the three well.* [Some of these people are very high quality - just not entirely on our needs...]

This means that eventually we will need more than one employee though we are at the moment very focussed on the computing problems and we would prefer doing those things really well. [We are not much into compromise...]

All of the people who do "two out of three" well are expensive: they have good jobs, are aged over 30 and I would need to promise them a lot to make them move. [And I am reluctant to promise a lot for a compromise employee...]

I will consider someone who does the computing part well but is cheaper (which probably means younger). I would probably hire a young, entrepreneurial computer geek who wants to be taught the business analysis stuff - especially if they were Australian based already... If I get someone like that I can spend more on the next employee.

Above all else I am interested in intellectual firepower (I want to hire people smarter than me, especially in the computer task) and the ability to actually implement this stuff.

Still I have another 20 or so preliminary interviews to go. Who knows what I will find...




John

*I have high standards. One senior Silicon Valley executive I tested on the questions suggested that he knew several people under 30 who meet my criterion - but they are mostly going to wind up worth 100 million dollars - and that a surprising number worked at Facebook. He thought I was being unrealistic.


J

Good and bad MLMs: Pampered Chef, Herbalife and Nuskin

Aalaya Walker (Florida - Aged 18) was shot (but only slightly injured) when she pre-heated her friend's oven. She was wanting to make waffles.

Her friend, who obviously did not cook much, kept the ammunition in the oven because it was safe there.

There are lots of people in America who don't cook or can't cook and have never learned how. Real estate agents tell stories of people with beautiful appliances who keep all the manuals in the oven because they too never cook.

Many of these people eat a lot of fast-food, are overweight or modestly unhealthy and they miss the family or social aspects of sitting down with a nicely cooked dinner and a couple of bottles of wine and for that matter - perhaps getting plastered.

Enter The Pampered Chef.

Here is The Pampered Chef shtick at its best. The Pampered Chef "consultant" finds a man or woman (usually a woman) who does not cook much if at all - and would never hold a dinner party. She gives them a shopping list...

Two loaves of good bread
A couple of onions
4 small carrots
Some rosemary
Some olive oil
Some chicken thigh or breast fillets
Some cayenne pepper
A bulb of garlic
Any other herbs you like (parsley, sage, rosemary or thyme, whatever you like)
Couple of tins of lentils, Puy lentils if you can find them
Couple of ripe tomatoes
Bag of frozen spinach or fresh spinach
Some bacon
Some asparagus
Some yogurt 

8 friends
4 bottles of wine

It is of course the 8 friends and four bottles of wine that makes this really work. This lot makes one of those wonderful French provincial dishes (peasant food) that all my hedge fund manager friends have presented to them as Haute Cuisine.

The whole thing can be cooked in twenty minutes (see Jamie Oliver's 15 minute version below).




But the "consultant" takes thirty five minutes to cook, giving friendly cooking tips along the way - and sloshing down a little wine. Also they explain the cookbook has lots of other wonderful and easy recipes.

Then they sit down and eat it. To someone who holidays in the South of France and eats in French Bistros this is just a darn nice meal. But to someone whose diet consists of fast food its a revelation - exotic beyond belief. Just so tasty.

And as the wine gets consumed, cook, books, fry-pans and other things are sold.

If all is going well desert gets cooked, mostly at the table. Some eggs are separated and whipped up with sugar. The meringue is dumped in the oven (after the ammo is taken out). Some cream is whipped, strawberries crushed to make a coulis, and Eton Mess is served in nice glasses. All that cooking equipment is sold too.

The consultant becomes friends with two or three of the other guests and organizes another two dinner parties...

This is a real business, it really adds value and it is fun. Hell I would even go but I suspect I have enough frying pans... it is far less exploitative (and far less unreasonable) than a Tupperware Party.

==============

It is hard to argue that the above scenario is exploitative even if the frying pans are sold at three times fair value. Indeed Doris Christopher who founded the Pampered Chef originally just purchased the kit at The Merchandise Mart in Chicago and marked it up three times.

Walmart cannot sell frying pans this way because they can't get into peoples homes and explain how they are used. In this case what is being sold is "community" - and it can't really be sold any way other than MLM. MLM is a pathway into the community that is not available to a conventional corporate.

The dumbest part of Bill Ackman's presentation (and for a smart man he can be so stupid) is where he complains that Herbalife products are unreasonably priced - and describes the product as a commodity.

Doris Christopher purchased commodity frying pans at Merchandise Mart. What she sold was something else entirely.

==============

This is all fairly instructive on what makes an MLM a societally value accretive business. Its a good business if it works out how to create value out of community. In that case the MLM really is doing something that conventional retail can't do - and if they capture profits - even considerable profits - doing so - that is just normal business.

And I am going to make a strange argument - MLMs - at least to the extent that they create value out of community - should trade at a premium to traditional retail rather than a discount. Conventional retail is vulnerable to the internet - MLMs doing this sort of business are far less vulnerable... 

==============

But MLMs are not all good - and the critics do have something to say. MLMs do leave a trail of disappointed distributors - and they are not hard to find.

The Pampered Chef "consultant" who runs the above party may or may not be disappointed if the parties only make her a few thousand dollars "supplemental" income a year. After all she probably likes to cook, likes parties, likes meeting new friends and has a good time doing it. The fact that she does not get rich - or even earn minimum wage per hour for this - is not really material. It may be lightly profitable but good fun. My guess is that the profit share belongs disproportionately to Berkshire Hathaway - and that is the way Uncle Warren likes it. But it is also the way the world is.

There is a problem however if the consultant has to buy tens of thousands of dollars worth of frying pans to sign up as "consultant". She may never recover her investment. I have not talked to many "consultants". There may be a few out of pocket - but I doubt it is tens of thousands of dollars.

Still even Warren Buffett has been in the game of misleading consultants. The forward to The Pampered Chef Cookbook is written by WEB. To quote:

When you read the profiles of The Pampered Chef's Kitchen Consultants in Chapter 8, you may wonder what you are doing in your nine-to-five cubicle while these folks are happily cooking their way to fame and fortune.

Warren: despite your (well deserved) reputation for integrity this is BS and you know it's BS. You are vanishingly unlikely to find "fame and fortune" as a Pampered Chef Kitchen Consultant.

==============

But misleading consultants is only one of the things wrong with MLM business models. The main other thing wrong is decentralized law avoidance.

Let me give you an example. Nuskin - another listed MLM - sells a variety of vitamin pills through a multi-level structure. Their main product is some exotically packaged pills called "lifepak nano" (punctuation as on the pack). Here, photographed on my desk in Sydney, are some pills...

They are just vitamin pills - there is little that is "special" about them - well except that as the pack says - they have "enhanced molecular delivery" whatever that is...

Here is a list of ingredients...

On the Nuskin website they make some strong claims...


BENEFITS

• Nourishes and protects cells, tissues, and organs in the body with the specific purpose to guard against the ravages of aging each day of your lifespan*
• Superior bioavailability with CR-6 LipoNutrients™ enhances uptake from the gut into the bloodstream and body for maximum anti-aging benefits*
• Advanced anti-aging formula helps protect the body with key nutrients such as NanoCoQ10™ and nano carotenoids*
• Helps maintain normal inflammatory responses in the body*
• Feeds and helps protect the brain with DHA and EPA (two CR-6 LipoNutrient™ softgels contain the same amount of EPA and DHA as two MarineOmega softgels)*
• Offers superior DNA protection against damaging free radical attacks by providing the body with important antioxidants and phytonutrients such as alpha-lipoic acid and catechins*
• Protects cell health with an antioxidant defense network*
• Helps protect cardiovascular health with a comprehensive blend of omega-3 fatty acids and other nutrients
• Provides comprehensive bone nutrition support*
• Promotes healthy immune function*
• Supports normal blood sugar metabolism*
• Corrects nutritional deficiencies*

 You will note that every one of these claims is marked with an asterisk. The asterix is as follows:

*These statements have not been evaluated by the Food and Drug Administration. this product is not intended to diagnose, treat, cure, or prevent any disease. 

The company is careful on its website not to produce any literature that violates Food and Drug Administration law. You can't sell pills in America in breach of FDA rules without risking unpleasant legal complications.

But this is an MLM - and you can bet the distributors are not so careful. These little pills are sold as miracle cures - and Nuskin distributors are the snake oil salesmen of old - blithely violating FDA law and desperately difficult to prosecute because the sales force are not employees of the company.

Decentralised law avoidance is a feature of many MLMs. To my knowledge it is not a feature of The Pampered Chef. The Herbalife sales people I have visited have stuck extremely closely to the company provided (and legally vetted) sales scripts. In the cases I saw that sort of decentralised FDA avoidance was not an issue.

But the Herbalife clubs did not always have cash registers and they did not always have the little A+ or similar to indicate that they had complied with health laws (even though they sold food). In other words there was some low-level decentralised law avoidance.

A ranking of MLMs

I am happy to concede that The Pampered Chef is the gold-standard for MLMs. It makes its money because it packages community - indeed community rather than frying pans is the product.

At the other end Nuskin makes a good proportion of its money because it decentralises FDA non-compliance. [And I am not getting anywhere near the China business of Nuskin which other people have commented on widely...]

Where is Herbalife in this? I haven't seen much decentralised legal non-compliance with Herbalife. Maybe a little around the edges - but it is not the reason the business works. The reason the business works is that diets require community to sell. In that sense Herbalife is far closer to the gold-standard Pampered Chef than say to Nuskin.

In my neighbourhood you can buy your diet protein shakes from the discount shop, the (far more expensive) GNC shop or from the hot fitness or yoga instructor. And the hot fitness or yoga instructor is a better product. (S)he will ring you up and ask how your diet is going... That adds incentive to diet and thus adds value. Its a long way into The Pampered Chef gold-standard territory...

I have more than a few problems with Herbalife - not the least is the (huge) amount paid to the CEO. But Herbalife is fast growing and deeply embedded in communities selling products that need communities to sell.

Relative to The Pampered Chef it is easy enough to find disappointed Herbalife distributors - especially in the Hispanic Community. However there are few around here - and the Herbalife business is growing again in Sydney (despite Bill Ackman's claims of pop-and-drop collapses).

Speaking as a shareholder here - Herbalife has been plenty happy to pay dividends and buy back stock. Over the years it has repurchased (literally) billions of dollars in stock - and the share count has reduced considerably. The shareholder-friendliness is - CEO pay notwithstanding - at the better end of America. And Herbalife is growing.

I am not a lover of the MLM business model and I was (very) surprised when Berkshire purchased The Pampered Chef. However why Bill Ackman chose Herbalife to fight to the death - that escapes me.




John

An incomparable business opportunity allowing men and women to build a home based business of their own...

Herbalife is regularly criticized for selling the "business opportunity" rather than nutrition products. Indeed Bill Ackman (Herbalife's loudest critic) has used the following statements as evidence that what Herbalife sells is a "business opportunity" [which is a pyramid scheme] rather than products for end consumption. Herbalife is - in these statements:

"An incomparable business opportunity allowing men and women to build a home based business of their own", 

"An approach that has a lot to teach anyone who is reaching for the American dream", 

"Truly loved by its customers because it has found a need and filled it exceptionally",

"When you read profiles of the consultants [sales people] you may wonder what you are doing in your nine-to-five cubicles whilst [the consultants] are on their way to fame and fortune".

These statements of course are ample evidence that Herbalife is not really selling product but selling a fraudulent "business opportunity" and is in fact a pyramid.

Except that I am playing a game of misdirection here. These statements are not about Herbalife and they have not been criticized by Bill Ackman.

They are the statements about another multi-layer-marketing scheme - "The Pampered Chef" and they are made by none other than Warren Buffett. Warren Buffett (through Berkshire Hathaway) owns The Pampered Chef and its 60 thousand plus "consultants".

In a future post I plan to talk about why The Pampered Chef is a business worthy of being owned by Berkshire - why it meets Warren Buffett's (very high) business quality hurdle - and how Herbalife has some, but not all of the properties of The Pampered Chef.

But for the moment I want to note a few things.

(a). Herbalife and The Pampered Chef were both founded in 1980. Bill Ackman criticized Herbalife for being a recent company founded in 1980 - see this screen shot from Bill Ackman's presentation.

(b). Herbalife is much bigger than The Pampered Chef and more deeply embedded over the world, and

(c). Herbalife is growing at a high rate both relative to its past and relative to The Pampered Chef. Indeed if you look at Google Trends data Pampered Chef is in a slight decline but Herbalife has more interest than at any time in its history. In the following chart (courtesy Google) Blue is Herbalife searches, Red is "Pampered Chef".

(d). Herbalife is taking off in some large important markets. This for example is the UK:

This is the (potentially vast) market of India:

And even in markets that were once declining is re-emerging strong. (This is Australia...)

Pyramid schemes are expected to collapse under their own weight - and so if Bill Ackman is right it shouldn't matter what I say. But if Google Trends data is right then Herbalife is likely to beat estimates maybe offset a little bit by the strong US Dollar.





John

Multi-level-marketing schemes and their distributors: notes on disappointed distributors at Herbalife and elsewhere...

When I was in my twenties I lived in outer North-Western Sydney for a year - mostly around Kurrajong. Multi-level marketing schemes were part of the environment - but two stood out: Amway and Avon.

Amway sold stupid and overpriced products which were direct substitutes for things that you could buy in a supermarket. I remember overpriced washing powder - and that is still there. (Check out this link where you can buy washing powder at 27 Australian Dollars per kilogram!) The Amway sales people (at least the ones I met) were a collection of drug dealers and no-hopers. I think at least one used Amway for (im)plausibly arguing that they money they had in their pockets was clean (when it came from dealing drugs). You could probably buy weed from many of the local Amway dealers.

I only met one Avon lady, a cheerful lesbian in her late 20s. She was (relative to the neighbourhood) quite prosperous and had an acre of land and horses. I briefly lived in a room attached to her stables. She was also (on her say-so but I have no reason to disbelieve her) the most successful Avon Lady in Australia.

Her shtick was simple: Western Sydney is a land of long commutes. Wives were stuck at home 11 hours a day (8 work, 3 commute) with the kids, lonely and getting depressed. The cheerful Avon lady would drop by and the women would play like 14 year old girls putting make-up on each other but without the cattiness... and the Avon lady would with all the (considerable and genuine) enthusiasm a lesbian could muster tell the housewife she was beautiful. And it was - like all good sales techniques - entirely plausible.

And she sold a lot of product. She sold (current dollars) well over quarter of a million dollars worth of product per year.

Now lets take Bill Ackman's rhetorical question about Herbalife and apply it to my Avon lady. Why would any customer buy protein shakes or cosmetics from a Herbalife or Avon sales person when similar products are available online much cheaper?

With the Avon lady the answer is obvious - which is that she was selling the service of making the customer feel good about themselves through lipstick, eye-liner and finger nail polish... she was not selling mere cosmetics. Multi-level-marketing provides a for-profit community support group and its name was Avon...

With Herbalife there is also clearly some of that. If I start a diet I am (statistically) not likely to stick to it. If I start a diet and exercise with a personal trainer (in this case preferably an attractive and cheerful individual who makes me feel good about myself) then I am probably more likely to stick to it (though still statistically likely to lapse).

Now the average Herbalife sales person is probably less inducement than the hot personal fitness instructor (except where the Herbalife sales person is the hot personal fitness instructor) but the effect is real. I described the Herbalife club in Queens as like Alcoholics Anonymous for fat Hispanic men: "my name is Jose and I am fat". And like AA Herbalife adds value through community support.

Indeed I suspect community support is actually more effective in weight loss than any individual supplement. Its the thing that keeps the dieter on the straight and narrow...

Failed and successful Herbalife distributors

McDonalds has a reasonable business. Being a McDonalds franchisee is also not a bad business - and the franchises trade hands for real (and sometimes considerable) money. McDonalds would however never franchise four restaurants (if you want to call them that) within one city block. If they did they would all be unprofitable.

McDonalds have a vested interest in their franchisees being profitable - profitable enough to keep the store clean, comply with labour and food safety laws and have toilets that don't stink. If the toilets stink and the food poisons customers McDonalds would fail.

Because McDonalds have a vested interest in the profitability of franchisees a franchisee of ordinary skill can make a living with a franchise - probably even a good living. That is why the franchises change hands for real money.

Multi-level marketers are different. MLMs simply do not have any control over the number of distributors. I might think that an area is saturated with distributors and that any more is foolish - but that is not going to stop you from recruiting - especially when you are paid as a percentage of distributor sales rather than distributor profits. MLMs will recruit until the profits of distributors go negative - sharply negative perhaps. If you find a profitable area as a Herbalife distributor (that is an area with lots of customers and limited competition) it will not remain profitable. Come back in five years - and there will be nine distributors none of which are making any money.

The MLM structure almost guarantees that most distributors have terrible businesses.

But it is worse than that. Your upstream distributor gets paid for recruiting you. And they get paid as a percentage of your sales - not as a percentage of your profit. They have an incentive to recruit you even if they know your business will be loss making. And they have an incentive to deceive you as to your prospects as a downstream distributor.

And if one of them (ethically) decides not to deceive you other upstream distributors will not be so honest. And so the network of an MLM - any MLM - is - simply by incentives - driven to the point where most distributors make losses and are recruited on false promises.

MLMs - all MLMs - are businesses that create and shatter the dreams of their distributors.

Herbalife does this too. There are many failed distributors - indeed the majority of people who try to make a living being Herbalife distributors fail. That is a feature of MLMs. Everyone who looks at MLMs closely brushes up against the failed dreams, the lies, the overly-slick and deeply unethical upstream distributors. This is true of Herbalife - and the rest of them - Amway, Avon, Tupperware, Nuskin, Pampered Chef and all the rest. [I am not accusing the MLMs of being disingenuous - just many of the distributors...]

High distributor failure rates does not make MLMs illegal. Indeed finding lots of failed distributors does not prove anything. It is to be expected - and there is no law that requires that everyone who opens a business - or even a majority of those that open a business make a profit. It does require however that a profit is possible because otherwise it would be misleading for the corporate to imply that the profit is possible.

And in most MLMs a profit is possible. Just ask the Avon lady above - who made enough money to keep land and horses in outer Sydney. But the Avon lady had a shtick. It was a good shtick and hard to duplicate. It meant she succeeded where others failed. And it was clearly an exception.

I have in looking at Herbalife found several profitable distributors. Indeed most the distributors around where I live are profitable albeit in a very small way. If you go down to Bronte Beach at ten o'clock on a Tuesday morning you will find fitness instructors keeping the local housewives in shape. The guys are bronzed and good looking. The women are the attractive thirty-something second wives of men rich enough to afford a house in Bronte. They are desperately conscious of their weight and appearance as they fear being traded in on a still younger model. And the fitness instructors not only sell fitness instruction and social reassurance [as in this bronzed guy tells them that they are attractive] but they sell weight loss products as well. Being a Herbalife distributor provides incremental revenue and little incremental cost. Its a good addition rather than being a good gig. And as noted above, a hot fitness instructor provides worthwhile assistance in weight control.

Distributor/customer failure rate

Losing weight if you are 40lbs too heavy is hard. Most people who try it fail. This is true of weight watchers, being nagged by your spouse, having a personal instructor or being on Herbalife. Its true of all diets.

One of the dumbest arguments I have heard (made insistently by StocksDD amongst others) is that the turnover in Herbalife customers/distributors is enormous and therefore Herbalife must be evil or at least burning the customers.

I would love to see the customer retention rate scatter amongst Herbalife distributors (my guess is the average is low and the spread is wide) and say Weight Watchers (probably with a similarly low average and wide scatter). The people I have met who are the most convincing Herbalife sales people have lost a lot of weight and kept it off for several years. These people are I expect the exception. Turnover and failure would be the norm.




John

PS. I am not so sure how you can be profitable selling washing powder at $27 per kilo. Herbalife products may be overpriced compared to generic competition - but the amount that they are overpriced is relatively small. Amway is ludicrous - just look at this link. And for the life of me I can't work out how "community" adds value to "washing powder". This is obvious for dieting, cosmetics, and cooking equipment.


J