Jim Dornan – Amway Legend – passes

August 7, 2013

Jim Dornan, arguably the most successful networker in history, passed away at 2 PM yesterday.  He had been battling cancer for months.

For more than twenty years Dornan built and ran the largest, most cohesive network of its kind in the world.  He attracted crowds of 100,000 filling soccer stadiums and auditoriums in Europe, Asia, Africa and Australia.  As an Amway distributor, product sales topped a billion dollars in multiple markets.  But it was his own “educational system” that created hundreds, if not thousands, of millionaires worldwide.

In the late 1980′s, as Amway began to go international, other networking leaders, principally, Dexter Yager and Bill Britt, shunned foreign markets, even, for a time, teaching leaders that there was no money in them.  Since most income was then made off of the sale of tapes and the running of functions, the American leaders had less leverage and control in markets where their conservative, Evangelical culture was not understood and where they could not even speak the language.

Ken Pittman, a North Carolina former American serviceman was one of the first to step into this vacuum, building a large organization in Germany in the 1970′s.  Tim Foli was even more successful, building large groups in Latin America a decade later.  But what Dornan did towered over any other entrepreneur or company.

Network 21, originally founded as an alliance of 21 Dornan diamonds and soon named after the coming century, was founded in 1991.  The core of the group was formed out of an Amway organization that Dornan purchases from John and Gil Nuyten of Sydney, Australia.  The Nuyten’s were one of the fastest qualifying diamonds in Amway history.  They sold their group to Dornan and left as Christian missionaries to Israel.

I was immediately hired to speak and train for Dornan and sent to Australia to get things rolling.  I would be a speaker on the Network 21 circuit throughout the world for two decades.

More than any other figure of our generation, Jim Dornan, transformed the networking business.

1.) In an industry that was misogynist, where women were trophies, he made his wife an equal business partner.  Nancy Dornan became an outstanding spokesperson for their business.  Onstage she often stole the show from her husband.  And Jim, his ego secure in his own talents, was openly delighted by it.

The result was that women networkers were empowered worldwide and soon built legendary businesses of their own.  Beginning with Glenda Leonard and Angie Ross in Australia and then Enika Farkas of Hungary and Natasha Yena of the Ukraine.  Yena now leads one of the largest such organizations in the world.

2.) Dornan, who was trained as an engineer, recognized the need of an equitable compensation plan in his system, rather than the favoritism based on relationships that marked most other arrangements.  While he was unable to make it work in all markets and with all groups within N21, it became the goal and is now the ideal for all new systems.

3.) Dornan finally hit upon a method to take networking worldwide.  He recognized that only people with the same language and culture could find a way to relate to others of their own ethnicity.  And Dornan learned that it would take at least three couples, working together for a year, not two couples and not one.  It was a formula born out of time and error and it worked.  He saw Network 21 spread around the globe.

First it began in the ethnic communities of Sydney.   James Vaghy emerged and joined two others in taking the business to  Hungary.  Robert Angkassa, Paul and Linda Argus, S. R. Kristiawan have built huge groups in Indonesia.

When people insisted that networking educational systems would not work in Sweden, a modern socialist state, Dornan patiently subsidized the operation for two years and soon had leaders such as Matt Holmberg, speaking to audiences of 10,000.

Dornan’s European groups grew after a merger with Hans and Eva Nusshold of Vienna, Austria.  The Nusshold’s were longtime networkers who had worked with Max Schwarz.  They provided early leadership and direction.

Mitch and Deidre Sala emerged as two of the greatest Networkers in the world.

4.) Dornan, more than any other modern networker, made it socially acceptable to build such a business.  In a culture that was at times openly anti-educational and proud of it Jim Dornan was  a college graduate who offered cogent analysis on how and why networks grew or failed.  In a culture of unbuttoned shirts and garrulous gold neck chains Jim Dornan was a country club member, comfortable in a Brioni suit.  In a culture of greed, he was a major donor to charities.

Jim and Nancy Dornan’s business was inspired by a baby born with spina bifada.  The Dornan’s were educated, Purdue University graduates, with successful incomes.  But here was a crisis that only money, big money could solve.  They knew the challenges and struggles of network marketing but it had one feature that Jim’s lucrative engineering career could not match.  It had no ceiling on the income they could generate. If they were to give their baby a chance at life, they would need more than insurance or even a lucrative income could supply.

Jim Dornan has many achievements.  He co-authored a book on leadership with John Maxwell.  He was a great philanthropist.  Network 21 is the largest corporate donor to World Vision and other charities.  When we hosted a Charity Awards event, the Dornans were always front and center.  When I worked in the White House I brought Jim Dornan into the Oval Office to meet with the president.

But in the final analysis, his greatest achievement may have been that as a husband and a father.  He and his wife, Nancy, have three children, Eric, Heather and David.   Jim and Nancy built the world’s largest network, inspired by their love of a baby, born with a handicap, but fighting for its life.  That was long ago.  And from that love came hundreds of new millionaires and thousands of dreams come true.  That little baby survived its early battles for life and grew into manhood, helping others with his same handicap find hope for themselves and their futures. He will be there to mourn his father, the networking legend, when he is lowered into the earth this week.

(Note: For some corrections and added details please read the comments of David Steadman below.)


									

Bill Britt: Amway Legend

January 27, 2013
     Bill Britt, one of the most successful MLM businessmen in history and the man who built one of the world’s largest direct sales networks, died this week of heart failure.  He was 81 years old.  There will be a funeral service held in LaGrange, North Carolina and a memorial service next week in Raleigh.
 
 
     Britt was famous as a straight shooter, unabashed and uncompromising in his views.  While most entrepreneurs would advise against mixing the subjects of religion or politics with business, those were always the central themes of any of his speeches.  Britt’s strong patriotism and conservative political views were stated clearly – before crowds of thousands – without hesitation.  And his Christian faith was declared loudly and without apology.  If Margaret Thatcher was the “Iron Lady,” to her generation, Bill Britt was surely the “Iron Man” within the world of network marketing.
 
 
     The North Carolina businessman was seldom thought of as separate from his wife, Peggy.  It was always “Bill and Peggy Britt,” even though Peggy was a quiet, soft spoken, a contrast to her husband’s more bombastic personality.  Peggy could often be seen at large conventions, looking on adoringly as Bill gave speeches, like a Nancy Reagan, supporting her man.  And like Mrs. Reagan, Peggy was known to be alert to those who would take advantage of her husband.
 
 
     Likewise, when Bill Britt’s name was mentioned it was often in the same sentence with Dexter Yager, Bill’s upline networking colleague.  Bill made a career out of demonstrating public loyalty to Dexter.  It was surely part of the secret to his success at keeping together such a large, cohesive network organization, for such a long time.
 
 
     On Bill’s 80th birthday, at a gathering of several hundred networking leaders, Bill Britt brought back Dexter Yager to honor him and tell his leaders that “this is the man who changed my life.”
 
 
     Britt was a city manager in North Carolina when he was first shown the networking business by Dominick Coniguilaro, a downline friend and distributor of Dexter Yager.  As the Yager network expanded across North America, Bill Britt’s organization followed a close second.
 
 
     A major turning point in the history of networking took place when Yager and Britt were confronted by a young man with a big idea.  Richard Clark suggested that they build their own cassette tape manufacturing plant.  As networkers they already had a customer base that would justify the investment and if the plant were big enough they could make a fortune when massive orders for a hit song or a political candidate suddenly demanded it.
 
 
     According to the story widely accepted on the street, Yager declined the Clark suggestion and Britt said, “Yes.”  It was a decision that would soon make Britt and network marketers worldwide extremely rich.  Within a few years Britt’s company would be one of the major suppliers of cassettes in North America.  For a time, the Amway Corporation and Dexter Yager, himself, would buy their tapes from Bill Britt’s manufacturing concern.
 
 
     Britt was late to the international networking game.  He invested large amounts of money and fielded a superb staff but the formula of God and Country that worked so well in North America fell flat in other markets.  Not only did he fall behind Jim and Nancy Dornan who built Network 21, the largest worldwide network, but for a while he fell behind his upline, Dexter Yager, as well.
 
 
     Britt found his comeback in Kanti and Lata Gala, business persons from India.  They went on to build a huge business worldwide.  Arguably, the largest surviving remnants of the Britt organization in North America are led by Ron Puryear in the Pacific Northwest and Larry and Pam Winters in North Carolina.   Other domestic leaders include Angelo and Claudia Nardone and Paul and Leslie Miller.
 
 
     Joel Griffing says that Bill Britt came from a troubled home.  His father was an alcoholic.  In a rare moment, when asked when and how his life changed he offered a story that was seldom told onstage.  He was an enlisted soldier in Korea, he said, when another soldier came along and said “Bill, you’re officer material.”  According to Britt, that small exchange turned his life around.  He went to officer candidate school, found his faith in God, and gained the confidence to pursue his destiny.
 
 
     Bill Britt was not perfect.  In today’s world he would be labeled a homophobe and a misogynist.  It is the latter that sometimes hurt his image with fellow networkers.  One couple remembers him returning late at night from a large meal, including desert, and then ordering his wife to go to the kitchen to prepare banana pudding.  She obeyed.  Another remembers him suddenly, unexpectedly ordering his wife to step into the aisle of a restaurant and dance.  Again, she obeyed.
 
 
     As a city manager in Sanford and then Goldsboro he had his ups and downs.  And as a business investor he made some pretty big mistakes as well as some outstanding successes.  It was network marketing that worked for him and provided the steady stream of income to play with.
 
 
     Bill organized his leaders into an association that formed committees and created systems that allowed them to avoid many of the lawsuits and crisis that would come to other groups.
 
 
     If Bill was a showman onstage he always kept one foot out of the business as well.  He understood the reality outside the ballroom and the coliseum.  In 1989 I was working in the White House and arranged for him to come in to meet with the president in a Roosevelt Room meeting with twenty other leaders.  Britt wisely stripped the showy diamond rings off his fingers and blended in nicely.
 
 
     When it became apparent that they would not have children of their own, Peggy Britt wanted to adopt.  But Bill thought it was too late.   And so, his friends in network marketing became those children.  And they will be the ones who descend on the tiny little town of LaGrange next week to say goodbye to a legend.
 
 
 
     On short notice I couldn’t get to many of Bill’s friends and I am sorry for that.  Their comments and eulogies will follow in the days to come.  But here are a few loving thoughts from those I have been able to reach today.  Also see MLM Hall of Fame.
 
 
     John Crowe:  “Very few people have had an impact on me as deeply as he has.  He reinforced things I was brought up with.  Love of country.  He confronted me spiritually.  He was in your face.  Every one of us needs that sometime.
 
 
     Tim Goad: “People don’t realize that he loved to sing.  About a year ago we stopped by his place just to thank him for how he had influenced our lived and we ended up signing old hymns and songs and he sang too.”
 
 
     Bill Childers: “He was the star when we got in.  He was the one with the biggest organization under Yager.  He had John Crowe and Paul MIller and we were all were chasing them.
 
 
     Rex Renfro:  “He was very caring and tender hearted.  He could be tough but he could also cry.  I saw him go the extra mile, helping people, encouraging people. I have what I have today because of him.  He was strong.  When he believed in something he didn’t care who thought different.
 
 

MLM Hall of Fame

May 18, 2009

Having traveled the world for many years now and spoken at networking conventions and met and known many of its leaders, here is my own subjective list for a networker’s hall of fame.

I have not included many of the legendary founders, like Rich Devos, Jay Van Andal, David McConnell, Mary Kay Ash, Mark Hughes, nor did I include the popular speakers, Jim Rohn, Zig Ziglar, Billy Zeoli and Robert Kiyosaki.  Maybe someday I will do those lists.  But each one of the following men and women actually built their own significant, personal networks into the hundreds of thousands.

Many on this list have made mistakes but so to have most of the rest of us.  And some have done extraordinary things for their countries and the world. They work with different companies and each have their different ideas and personalities.  What they have in common is uncommon results.

Nowadays, there are many phony “trade lists” of income earners floated on the internet by shill websites.  Some of them list names of leaders who have been paid out huge sign up bonuses.  Some have never sponsored a single person themselves. But I have met most of the people on my list and spoken to their groups in coliseums or soccer stadiums and been in their homes and I can say that their accomplishments are real.

Doug Wead’s Networking Hall of Fame

Robert Ankasa: This former vice president of the Bank of America in Jakarta has built the largest network in Indonesia and has filled soccer stadiums and auditoriums across the fourth largest nation in the world.

Jeff Boyle: Founder of Jus, he is included in this mix because he actually built his company’s own networks. Young. brilliant, with a big heart.  No one knows the science of networking any better.  He is the Alvin Toffler of the industry.

BK Boreyko: He hailed from a family that built one of the largest organizations in the Matal Company and when a corporate crisis occurred he stared his own company, New Vision, which reached the $100 million sales mark in record time.

Bill Britt: At one time his organization may have represented half of all Amway volume.  He transformed the networking systems by being the first to build his own cassette manufacturing company.

Craig Bryson: He is Nu Skin’s biggest lifetime earner and one of the industry’s greatest storytellers.

Bill Childers: He built the largest, single, cohesive group in networking history.  His secret?  He insisted on always appearing as the second man to his upline, even when his own group was at times much larger.

Jim Dornan: The founder of Network 21 has the largest and most efficient system business in the world. His organization has donated $100 million to World Vision..

Tim Foley: He defied the accepted wisdom of all the other North America networking leaders and proved that system networks could be profitable outside the United States building giant groups in Brazil and Spain.

Attila Gidofalvi: This Hungarian businessman is the father of networking in the former Soviet Union, Attila built 120 Amway diamonds in two years and held meetings at Olympic Stadium in Moscow.

John Godzich: He built a network in France and then a company that reached $200 million in sales in two years and annually filled Bercy, the largest auditorium in Paris, four weekends in a row.  80% of the money was made from retail sales, allowing new people to make money too.  It is still an industry record.

Hal and Susan Gooch: They hosted some of the largest networking events in the United States, filling the 90,000 seat Indiana Hoosier Dome on multiple occasions.  While most wives of American networkers were limited to roles as “speakers,” Susan played an integral part in the organization of the business.

Bob Goshen: “Mr. Enthusiasm,” he was the first system’s person in Sunrider and drove its success.

Brig Hart: Already very successful in networking, he felt cheated by his experience and joined a new company.  Brig proved wrong the old networking adage that successful networkers are too soft to build it twice and took his new company, MonaVie, into the stratosphere, making himself a legend in the process.

Randy Haugen: He had a great run in the west.

Don Held: In his heyday he filled coliseums in Ohio and Canada, and launched an educational system, showing that a network can do more than just make money.

Dave Johnson: He is the giant of Nikken. Supposedly 99% of the company is in his downline.

Charlie Marsh: An early Amway pioneer. He organized the first events and functions. In some respects he is “the father of network marketing.”

Norman and Glenda Leonard: Masters of depth.  By some estimates there are 300 diamonds in their organization including all of Amway Russia, most of Eastern Europe, half of Indonesia.  They divorced in 2007.

Ken Pontious:  He was top earner with Enrich, was once taking home a monthly income which was twice the annual salary of the president of the United States.

Vladimir Pozdnyakov: He is nicknamed “The Poz” by his American colleagues, he is one of the new Russian millionaires, who developed a network out of trust, in a difficult environment.  His groups fill auditoriums.

Ron Puryear: He built one of the largest networks in the Britt system and for awhile, ruled in the northwest USA, filling the largest coliseums in Portland and Seattle to capacity..

Kaoru Nakajimi: He has more than 700,000 in his downline.  He built Amway in Japan.

Art Napolitano:  Top earner at ACN. Built  an organization to 500,000 customers that bill into the millions.

Nathan Ricks: The charismatic legend who helped build Nu Skin.

Mitch Sala: He is the great Australian networker who solved the problem of isolation downunder by exporting his business worldwide. Sala has one of the most geographically diverse groups in the world.

Max Schwarz has built networks east and west and has adapted to numerous changes in mlm systems.  He is a survivor.

Rick Setzer: He was once the third leg in the Yager-Britt stool.  Great systems knowledge.

Bo Short built all over again three times and each time  built a leading organization within his respective company.

Sherman Unkefer: A legend in XanGo, with an estimated $350,000 a month income off his XanGo business, Sherman’s simple prospecting package called “The Magic Wand,” helped him build a resilient networking business in only a few short explosive months.  No one has reached the top quicker.

Don Wilson: He succeeded by hard work.  Yager didn’t like flying on airplanes so Wilson soon owned the Yager system in the west.

Dexter Yager: The father of the so called “system,” he may be the greatest networker of all time, he has not only built one of the biggest organizations, he has maintained it big for the longest time.  His secret?  He keeps starting new groups and for years he has outworked everybody else.

Mark Yarnell: Formerly of Nu Skin, he is networking’s thinking man and its most prolific chronicler.

Natasha Yena: A wise and resourceful strategic thinker, Natasha is the mother of all Russian speaking networkers, Her events fill auditoriums across Russia and Ukraine and have spawned dozens of other networking women leaders with enormous businesses of their own, clearly disproving the misogynist declarations of some American networkers who insist that women can’t build the business by themselves.  Indeed, in Russia, it is mostly the women who do.

James Vagyi: He is a Hungarian whose business exploits put him on the front page of the Wall Street Journal.  He successfully launched networking in Hungary, Czech Republic, Slovakia, Poland, Ukraine, Russia, Moldavia, Belarus, Romania, Slovenia and Croatia, making him “the networking father of many nations.”  And while others have appeared and died in some of those markets, Vagyi’s groups continue.

Jody Victor: He proved that networking can survive and even thrive into a second generation. Victor has seen the dozens of seismic changes in networking and landed on his feet each time.

Orrin Woodward: He took the so called “systems building” to its ultimate extreme.

George Zalucki:  One of the world’s most inspirational speakers and trainers.  He built a $150 million business with 150,000 distributors for ACN  in
Europe.

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Amway Diamonds and their “tools”

May 17, 2009

After all these months I am still responding to the points that Tex has been making. This is my last post on this subject, before moving on. I haven’t been arguing with Tex, although he may think that, I am just offering explanations about how it happened. Actually, I agree with most of what he says, especially with what it has become.

I recently sat with one of the most famous diamonds and he was rationalizing his life of selling tapes by saying that what he tells the people is that “these tapes are good for you, they will build your life,” which is true.  He just doesn’t talk about how they relate to the business because while they will indeed build the business, the business may not offer as much money as the tapes. He knew that the tapes had bought his mansion, not his networking business.  So I think his conscience was bothered by that.

Now, in fairness, some network companies need CD’s badly and should be promoting them much, much more.  Their people are suffering for ways to build their businesses and a good system would solve it. And the difference is that if they build their businesses they will make money off of them because they have products that have a compelling narrative.  In Amway, we had a diversity of products, and that was our narrative and what we tried to sell.  I think if we had linked the tape bonuses to qualification in the business it would have solved a lot of problems.

Today we are experiencing a strong reaction to these types of extremes.  And Amway is cleaning it all up.

So here we go… my last answers to Tex’s comments, there is much, much more that he raises, I am just ready to move onto other things.

Tex: You don’t address whether ANY IBO’s below [Platinum level] were making a net profit with all of these tapes, books, functions, etc. THAT is my main point. It involves tool PRICES and system PRACTICES (unnecessary long distance travel in particular).

Well, in our group, I think we started giving a break at “Silver.”  We considered a break for everyone but it was so small at the lower levels that it wasn’t an incentive to anyone and diluted the power for a person who had made it to “Silver” or “Direct.”

As to distant groups?  Five of my six diamond legs came from groups that were more than 1000 miles from home.  In fact, they stretched from Seattle to Orlando.  I found out-of-town groups much more expensive but easier to grow and less high maintenance.  Even while I am retired from Amway and no longer an IBO, some of these groups are still going.

There is a whole science to starting out-of-town groups and they are expensive to get going but within a year or two they can be very low maintenance, self sufficient groups.  But I could never conceive of a way to build them without CD’s or tapes.

Tex: [ You talk of losing money.] How was money lost? Wouldn’t they sell them for at least the cost of producing the tapes?

Well, you had to buy and maintain the machinery.  It was always breaking down and so you were always buying new slaves or new machines.  There was no four year service plans from Best Buy back then.  You had to hire someone by the hour to do it and you usually had to do it yourself or have your kids because it was only hourly work and you were on the road sometimes.  You had to print and affix your own labels, which was a chore.

And even when tape duplicating companies started appearing you had the bookkeeping for all the different accounts and some never paid, which means you lost all of your profit and sometimes went in the hole.  What can you do?  You can’t kick them out. If you complain to the company they say, “That’s your problem, not ours.”  So sure, sometimes you lost money.

My White House experience

Let me give you an example.  I served on senior staff at the White House and my business was put in a blind management trust.  I couldn’t even contact my downline.  While I worked at the White House lawyers divided my group between Dexter Yager in the east, Bill Britt in the midwest and Jim Dornan in the west.  When I finally left the White House my Yager groups were very small, my Britt groups had transferred out, picked clean by the Diamond who had been assigned to “protect” them for me.  But my west coast groups had survived.

Now, Dexter was mad at me during this time.  I had gotten into “stacking,” it was something like the methods of today’s MonaVie and Dex had warned that it would not last and it would eventually destroy my group, that the newest people would be hurt. But I didn’t listen to him and I needed something to help my leaders survive and “stacking” creates excitement, you get a big group fast, even if the money only goes to the top.  No one in my group was making any money.  My business was collapsing.  In fairness to Amway, no one was retailing.  And frankly that was not so easy.  So stacking, or turning my Amway business into a hybrid binary caused some enthusiasm, at least for awhile.

But all of that is a different story. When I came out of the White House, with Dex upset at me, and my groups under Jim Dornan in the west surviving, I plugged into him.  Well, one of my Emeralds started to quickly run up a debt.  He was buying the tapes from me and selling downline to his group but he wasn’t paying me.  You don’t know what to do.  You love the people you are working for in your downline and they need the tapes to survive and build their groups.  And you care for the Emerald, who may be broke and making house payments.  And he thinks you are rich, that you don’t need the money, and he keeps promising that he finally has the money.  If you cut off the tapes you lose the whole group.  Well the debt climbed to almost $40,000. You ask how someone can lose money on the tapes?

Eventually, I could have gotten some of that back.  He would have had to pay something.  My new leader, Jim Dornan would have held his feet to the fire. We could have by-passed the Emerald and he would have lost his leadership.  But the Emerald went to Jim and cried on his shoulder.  This is a classic story, this happens all the time.  And the Emerald said, “Doug was in the White House, and now he is thinking about congress and he is too busy to help me.  We need to be transferred to another diamond.”  So a very big group was transferred, my tape money from the groups was cut in half.  And the debt of the Emerald was forgotten.  I was left holding the bag.

Tex: I think the “rules” in those days were based on favoritism; specifically, how hard the IBO pushed the tool system.

Sounds to me like you were in a very bad group with leadership that was greedy and not really smart. But again, I would want to hear it from their perspective too.  I never had any pressure at all.  Dex never pushed tapes on me.  In fact for a long time he gave them to me free but he started charging me for them, saying that it was bad for me to get them free.  And he was right.  I didn’t even listen to them until I had to pay for them.  You should never just give something away without a plan.  You can’t just go to Calcutta and throw money off of a rooftop.  You have to have follow up and responsibility or it is all a waste and can even do harm and make people dependent.

Tex: The question isn’t whether the tapes (or other parts of the tool system mentioned above) worked, it was whether the tail was wagging the dog, and whether the pre-Platinum IBO’s made a net profit.

Well, sadly, they did not.  And you are right that the tail was wagging the dog.  But again, did the fault lie with the selling of tapes?  Or the plan and the type of products and the price of those products?  At least the tapes kept people trying.

Tex: [You say you told everybody, everything up front.] What exactly did you tell them?

I told them that the suggested plan called for retailing the products.  I had learned from Jody Victor to do this and not immediately assume that they would not retail.  Of course, very few did retail. Like almost zero. And there was a danger in promoting it because when they tried and saw how hard it was you lost all credibility.  That’s why many would “dis” retailing from the beginning, not because they didn’t want it to happen but because they knew that no one really would do it and they had more credibility to say so up front.

Then, I would say that there was income from tapes and educational products at silver and above.   So they knew that it would be a lot of work.  And many still stayed with it, believing that they could get to the higher levels.  And I was one of those who did, and I am very, very grateful for what I experienced and grateful to the company and for my friends.

To start at the begining of this series read Doug Wead Amway Adventure

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How the Amway tools became a big business

April 21, 2009

If you are new to this series, start at the beginning, Doug Wead Amway Adventure or otherwise it will not make sense. And the follow each successive post. As many of you know, I am retired from Amway now, but my experience was a fond one and I am trying to share what I learned along the way.

And right now, that means responding to one of the newer and more prolific commentators on this blog by the name of “Tex.” This will probably be an exercise in futility, we experience and see things differently, but I am determined to learn from him and share a little of my own perspective too.

In the words of Tex: I and others have mentioned on numerous occasions the tool scam started out as being a help to the IBOs and later turned into THE primary source of income for the upline, and more significantly, results in most IBOs below Platinum to operate at a net loss. Does this sound like a moral and ethical business model to you, Doug?

They are operating at a loss at the pre-Platinum levels because they have decided that they cannot sell the product at retail, or they don’t want to. This is the problem that Eric Scheibeler raises, saying that the likely incomes at these entry levels are wrong. And it is a good point. But Amway doesn’t force people to sign up and it is certainly not the fault of the tool business.

For example, I was told to follow the corporate model in order to get my required ten customers but in the process I soon found it was pretty hard selling the products. Sure, it was possible, I could sell to relatives or friends who would help me out, but I could make more money spending my time doing something else. My sponsor, who was Dexter Yager, advised me to concentrate on sponsoring, to get to a bigger level where the income would be better, and I soon found that the only way to get that going was tapes. (Nowadays CD’s.) I indeed spent more than I was making but it was a calculated investment. The company didn’t make me and neither did Dex.

BTW, the purchase of tapes did not automatically result in growth. I had to use them and learn from them. It sounds absurd to say “learn” from them because they were not especially profound but then that is part of building a big network, it is going to appeal to the “average” person. And if it doesn’t work for the average person it will soon fail to work for the exceptional person. It is by its nature pedestrian.

Also, you don’t address whether ANY IBO’s below were making a net profit with all of these tapes, books, functions, etc. THAT is my main point. It involves tool PRICES and system PRACTICES (unnecessary long distance travel in particular).

Hmm, I’ll get to that last point in a future post. It is a good topic in itself.

At first no one made money off of the tapes, except indirectly because it helped build their groups, and more importantly perhaps, resulted in better retention. And even into the 1970’s, making tapes for your group was a drudgery which was passed off to a new diamond as soon as possible. Some ran it like a business and made a profit, but some lost money keeping it going only because it grew their group.

Then, a bright, young man, who will remain nameless, changed everything. He sat across from Dexter Yager and Bill Britt in the coffee shop of the Fontainebleau Hotel and told Yager that for a $50,000 investment he could buy the latest machinery and set up his own tape duplicating company. Dexter turned him down. Britt said, “I’ll do it.” And so the modern networking tape business was born.

According to this widely told story, Britt’s new company prospered and eventually, even Dex was buying tapes from Britt. Nobody could beat his prices. The rumor was that for awhile, anyway, Amway itself was buying their tapes from him.

It was beautiful. Large tape orders from rock stars or political campaigns were sporadic. A company could make a fortune off of them but how could they afford all of that expensive machinery that had to sit idle between elections and runaway musical hits? Well, Britt, with the steady demand from networkers, could keep them humming. And he got rich.

Soon, everybody wanted their share. Dex decided that since Britt was in his downline, he should be getting a proper share, after all, he was selling to “his” group. And so a pricing system developed and rules emerged and it all continues to evolve to this day. And it is a hotly debated subject with cries of “unfair, I should be getting a bigger cut.”

Now, here is the rub. This is what you must keep in mind as we pursue this. The tapes worked. That is, they helped recruit, and motivate and develop a culture that retained distributors, even those whom you say were not making money, could grow their group and some did exactly that. Indeed, I did that and eventually made money.

Second, and this is an important point, the “new” tape business that emerged did not take “new” money away from the distributors. The prices of the tapes were the same. All along they had been giving their money to distant, unknown manufacturers. Were those manufacturers raping the people? There were certainly no complaints about them for as long as the profit was going to a stranger far away, no one cared. But in fact, this new arrangement was only bringing the production in-house. The cost to the newest IBO was the same.

Now, among the problems this would raise would be the issue of a conflict of interest. And this seems to be at the heart of your angst. As long as they promoted tapes that were manufactured elsewhere, no one was upset. But when they started promoting tapes that they, themselves, profited from, people cried foul.

Was it foul? You can say, yes, this poor person would never have succeeded in networking so their investment was only lining the pockets of the manufacturers, who were now their own uplines. Or perhaps it was the wrong time to build, the marketplace was hostile. But then, who would have predicted the success or timing of Dexter Yager? He lived in a tenement and shared a toilet with people on the same floor. Or Hal and Susan Gooch, who had to sell blood at hospitals to get money to eat? Should the upline decide who should be allowed to buy tapes and who was only wasting their money? Sometimes, they actually tried to do this, out of kindness, but that wasn’t fair either or even legal.

I know that many groups kept this entire process secret. But my instincts told me that this was foolish. I told everyone, everything, right from the beginning. I never sponsored a person who didn’t know the whole story. Those who made a secret out of it only hurt themselves. At least in my humble opinion.

Next post in this series? Tools or products.

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