Amway Diamonds and their “tools”

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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Published by Doug Wead

Doug Wead is a New York Times bestselling author whose latest book, Game of Thorns, is about the Trump-Clinton 2016 election. He served as an adviser to two American presidents and was a special assistant to the president in the George H.W. Bush White House.

19 thoughts on “Amway Diamonds and their “tools”

  1. I’d like to see a post about networking as a whole. A contrarian view as to whether the costs of network marketing (fallout, negative perception, difficulty in building) are worth the benefits (time freedom, residual income, little or small investment).

    Thanks for the honesty in the analysis.

  2. raleyb,

    Doug was FAR from honest with his “analysis.” The tapes are one piece of the tool scam pie. There are also the meetings, books, and more recently, web sites and voice mail systems.

    Doug often “forgets” (ignores) I am not against the tools, ONLY the insane profit derived from the tools.

    Doug, I don’t think you’re arguing with me, because I KNOW you are dodging the questions. Arguing would at least address the issues head-on.

    The production costs include the equipment breakdowns, etc. Again, you ignore the other tool scam profit sources, and focus on the tapes exclusively. The bookkeeping could be done by an MBA or accountant fresh out of school. It’s not rocket science.

    Didn’t Yager support your groups across the country? Perhaps you predate his country-wide support system. Why did you stop being an IBO, if you still had groups intact? They could change their LOA without changing their LOS. Something just doesn’t add up. If they didn’t charge so much for the tapes (and the rest of the tool system that you consistently ignore) in the first place, there would be no $40,000 debt.

    I was, and still am, in Dexter’s group. In fact, I was also in Don Wilson and Randy Haugen’s group, 3 of your “top” MLM’ers. The entire system was pushed VERY hard by Dex’s “underlings”, which allowed him to look innocent. I have never advocated free tapes or other parts of the tool system, just MUCH lower prices. I’m not against covering costs and making a reasonable profit. You don’t have to go from one extreme (tool scam) to another (free tools).

    Actually, I believe the tool scam allowed Amway to get lazy with product pricing, as the LCKs were perfectly happy with not rocking the Amway product pricing boat, or it may result in Amway also clamping down on their tool scams. Which is EXACTLY what did happen last year in the UK, except it was the government that had to step in and fix things on BOTH the Amway and tool scam sides.

    The “suggested plan” does not call for retail, the written Amway rules REQUIRE retail in order to earn downline volume profit, a rule the LCKs and Amway have ignored.

    I’m glad you’re stopping the tool scam discussion at this point Doug, because it’s getting pretty deep and smelly around here.

  3. Well, I agree with everything you say except I am not ignoring the functions and books etc. It is just too much to cover at once so I broke it down, post by post, responding to your first comments, line by line, and I just can’t seem to get caught up.

    Besides, I am getting a little bored with the topic. Everybody seems to agree that there is a place for a good system and that the systems have been abused.

  4. So you’re content to sit and watch the continued financial carnage? What is inside you? Do you care?

  5. Tex is a loser, but he’s right. The tapes are just one component of what he calls the tools scam. Then you add on website fees, KATE, functions, open meetings, book of the month, etc etc.

    And although there may be some times when a diamond gets shafted out of a payment, it’s not like they’re not making tons of money. If they weren’t, they wouldn’t have standing order.

  6. Well, I am not exactly sure what can be done. What do you suggest that I do? I have spoken openly about it. I am not in that business. Am looking at other opportunities that pay more on product.

  7. Doug, I really enjoyed reading your articles and the information is good. I think the issue that tex keeps pounding on, is that you have sort of given a “pass” to the diamonds who basically turned to greed and starting financially abusing their downline.
    I realize that may not have been what you experienced at the time, but the reality is that is has turned into a mess.

  8. Doug,

    Here’s what you do: Continue to use your blog as your “bully pulpit”, and join folks like me, Eric Scheibler, and others to develop a united and organized protest against the tool scam. The more pressure we apply on Amway and the LCKs, and the more IBOs and prospects that are aware of the tool scam, the sooner it will be done away with.

  9. What is the difference if an “LCK” rips people off in Amway or some other MLM? If the system was actually working it might be a different story but IBO’s are told they are almost assured of success by following the advice of the LCK’s. Where is there any proof that this advice actually works?

  10. About 25 years ago we were involved in one of Dexters legs. I remember Doug speaking at at least one seminar. We spent a lot of money on tapes, books and seminars& rallies. It was the best money we ever lost. The education we received and the folks we met were well worth the cost. It certainly was not a waste of money but an investment in our lives. Don’t we all waste money on a variety of things? We still have friends from that time and while we are inactive we still buy sa8 but that’s about it.

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