What do you do when you learn that what you have been promoting isn’t
working? Do you simply complain about it? Do you keep telling everyone
that the good times are coming? Or, do you do something about it?

Let
me complicate it: What if you learn the supporting facts of this
business failure after you’ve invested 17 years of your personal life,
and your parents have invested over 35 years? What if you find yourself
financially dependent upon the business income; the basis of which was
built years ago? What do you do? This is the story of where I found
myself and why I chose to do what I have done.

First, some
facts: In 1982 Amway of N America did $1 Billion in volume
(interestingly, so did Wal-Mart). Twenty-five years later,
Amway/Quixtar of N America recorded approximately $1.1 Billion in
volume. Considering inflation, the relative volume has plummeted over
the past 25 years; most significantly in the last ten. Currently, out
of 10,000 people that register in this business, only 833 will remain
after three years. That is, 91.6% of people will be gone within 36
months of registering. From 1999-2000, 600,000 English speaking people
as a first language registered in the business in North America. By end
of 2005, of those registered business owners, only six have achieved
the Founders Emerald level (in 2005, the average income was less than
$90,000/year) or above. That is, 1/100,000 achieved an income of
$90,000/year or more. Nearly 50 years of community building for
Amway/Quixtar and the qualified Diamonds in North America fit in one
ballroom with tables. These are the facts. Perhaps, you relate to them.
How’s it working for you?

In addition to these horrifying
statistics, the business is riddled with litigation including very
significant court cases threatening the very existence of the company
in the US, England and India. The core issue in these cases is the same
core issue behind the current failure of the business—over-priced
products. Everything stems from this root problem. A very unfortunate
domino effect resulted in one negative thing leading to the next till
now we find ourselves in the current situation.

After years of
attempting to correct this within Quixtar, it finally became apparent
that if there was ever to truly be change, then a more dramatic stance
would need to be taken. As much as I felt like David stepping up to the
plate to meet Goliath, the time had come to take a stand for what I
believe in.

How did we get here?
When
I registered in Nov 1989 and really started building my business in May
of 1990, things were different. The big box stores had been building in
acceptance but the Super Wal-Mart’s hadn’t appeared yet. Furthermore,
the internet was not used yet for commerce so there were no consumer
options there. A product could be higher in price and still sell
because consumers didn’t have many of options. However, the big box
stores continued to grow in numbers and acceptance. The Super Wal-Marts
launched and in 1994 internet commerce began. As a result, the world of
shopping changed quickly. The Wal-Mart business model drove prices
down. The internet gave us a world of options without leaving our
chair. Entire web sites were developed to search the web and find the
best prices for various products. As a result, competition dramatically
increased. Suddenly in order to sell products in this world, clear
value had to exist. Businesses that survived responded to this
pressure. Businesses that didn’t respond or couldn’t respond, failed.
One exception to this the Amway/Quixtar business.

While the
rest of retail business struggled to survive through this sudden
increase in competition, Amway/Quixtar continued to increase product
prices more in alignment with inflation than with the changing market
economy. This caused the prices to get further and further from the
consumer’s “good deal” perception as it was easily noticed that they
weren’t keeping up with what was available in the marketplace.

So,
why was Amway/Quixtar able to survive when others businesses who didn’t
respond to the market failed? The products in the business were still
purchased by the business owners for personal use in order to achieve
bonuses. The primary reason the FTC looks for retail sales in our
business is to validate the price a product is selling for. If the
public is not buying our product but the people within the network are
buying it, then something is wrong. In such a case the people in the
network are buying the product not on the merits of product value but
rather for a compensation bonus. The FTC declares such an operation a
pyramid. Therefore, a legitimate business opportunity can slowly and
unnoticeably slide into a pyramid status.

The Dominos begin—one fall causing the next…

Pricing-Width-Failure:
A
person has a dream to make money and registers into the business. They
quickly realize that the prices are too high to successfully retail the
products. Consequently, they look to the compensation plan for profit.
Since the compensation plan is predominately a width-focused
compensation plan, a focus on sponsoring in width is the only remaining
way to initially profit. This leads to the philosophy of “get wide and
see who the hungry ones are. Register 9-12 and you’ll find your three.”
The other “less-hungry” ones fall out as they are not able to retail
products, and without anyone registered below them they see no reason
not to quit. With this ratio of fallout/failure, a negative image
grows. With a negative image (made very obvious by certain websites),
it becomes even harder to sponsor people while continuing to be near
impossible to retail the products. This reinforces the fallout, adds to
the negative image and the cycle continues.

Failure-Lawsuits:
Eventually,
after enough failure occurs, business analysis is done and lawsuits are
filed. This is the current situation of the Amway/Quixtar business.
Currently, the DTI in England has a court date scheduled to determine
whether Amway in England represents a legitimate business opportunity
primarily due to the fact that most people are not making money, retail
sales are not occurring and people are spending money on training. If
people spend money on training but still are not able to retail the
products, then the opportunity is questionable. Amway of India is in
court over similar challenges. A class action lawsuit seeking
significant damages has been filed in California (Porkony vs. Quixtar)
over the same challenges as well.

The continued erosion of the
product pricing over the years has put this business in a legally
vulnerable place, since a network without retail sales is deemed
illegal. Currently, Quixtar’s retail volume is approximately only 3% of
its total volume. Members of the IBOAI board have diligently worked
with the company to change this situation. However, ironically,
although they are the ones working the hardest to change the situation,
they now find themselves with the greatest legal liability given their
high level of knowledge and business influence.

Lawsuits-Lawyers in Charge-Reputation Focus:
As
a result of all the lawsuits that threaten the very existence of the
business, Amway/Quixtar attorneys are now running the show. Their
perspective is their legal position, and their decision making process
runs towards whatever makes the business more secure. Although this
sounds great initially (and to a certain extent it is), the general
reality is that the greater an institution’s regulations, the less an
individual’s freedom. For example, although some laws are very
valuable, each law limits our freedom. With no laws we would have
ultimate freedom (along with ultimate chaos—imagine no driving laws?).
With the other extreme of all law we would eventually have no freedom
(and yes, no chaos). The new rules with Amway/Quixtar will limit even
more freedom and make it even more difficult within an already
difficult business. And, unfortunately given their current legal
vulnerability, they need to. Consequently, the company’s primary
focuses is to tighten things legally and attempt to improve upon
reputation. Their key question is, “Is it better for the reputation?”
If it is, then it will be the course of action. Unfortunately, not all
reputation decisions lead to better results—especially for the new
person.

Reputation Focus-Amway Business Transformation-Increased IBO Difficulty:
In
order for the attorneys to secure the business, they continue their
movement towards whatever will decrease risk and improve reputation. As
a result, on September 1, 2007 the “Business Transformation” to a
global Amway will begin. Although I agree with the idea of decreasing
risk, the transformation unfortunately will be to the detriment of the
IBOs’ desired results. This will make a very difficult business even
harder. Consider the upcoming changes:

Quixtar name change to Amway
It
is a shame that the DeVos and VanAndel families made this decision
without any communication with the field, including the IBOAI board.
This name change creates obvious challenges to growing one’s business.
It is a hurdle that was placed in the in front of already struggling
people. Furthermore, the name change dramatically hurts the trust
between the field and the company—not a good thing. For the past eight
years IBOs have been telling people that this is not Amway; that it is
an independent corporation being a subsidiary of Alticor Corp and a
sister company to Amway. Many were told Quixtar is just Amway online
and we were all taught to point out that Quixtar is actually a unique
business model designed specifically for the internet. Although it
takes many aspects of the Amway business and incorporated them, it is
its own unique business. With Quixtar now folding back into Amway, it
makes everyone look like a liar. How do you tell those people that you
actually are in Amway online? What do you tell those people who asked,
“Is this Amway?” before registering, and you said, “No?” Now they are
in Amway. These uncomfortable and frankly unnecessary situations the
IBOs will find themselves in will be difficult. The feelings will not
be good. And, the trust with the owners for suddenly “changing the
deal” is definitely damaged.

Why would this decision be made?
Most all business owners are against it and the IBOAI board unanimously
voted against it. So, then why did they do it? I believe their answer
has a few platforms. First of all, it makes for a simpler business from
a world wide perspective with the use of one name—Amway. It will
eliminate the possibility of anyone misinterpreting what the
relationship of the business is to Amway once it just is Amway. This
clarity is good for risk and reputation even though it may be very
damaging to IBO results. However, when asked why the name change, the
company will regularly recite their research that yielded two findings.

The
first finding is that the Amway brand name is better known by far in N.
America than the Quixtar name. This, of course, is no surprise, nor is
the fact that the better known Amway name comes with a much lower
approval rating by the public. That is, Amway not only has a higher
“Awareness” factor, it also has a much higher “Bewareness” factor.
However, their research tells them that it is better to start with a
high awareness factor name like Amway, even with the negative
reputation, than to build the awareness factor of a lesser known
Quixtar name. Personally, that makes sense to me if it were just a
product that the company wanted to sell. However, when it is a business
that we are going to build involving friends and family, the conversion
is much more complex. Why would I choose a business with a negative
reputation as my business of choice when I have other businesses
(perhaps lesser known names) that I could choose? The company’s goal is
to end up with such a great reputation that you can just walk up to
someone and ask if they want to see the Amway business plan and people
would be positive. A great thought, but currently it is light-years
away from that point, if it’s even possible. Further, it isn’t
necessary. The original concept of Quixtar was to have a fresh start,
to try again to do it right—new business format (online), new name, and
a new result! Even the company’s research said that it would be
devastating to go back to the Amway name before making changes to
dramatically improve the business model.

The second finding
their research discovered is that the more they advertised Amway in the
state of Michigan, the slightly better approval ratings Dick DeVos
received during his campaign for the Governor of Michigan. In fact, I
was told that if they had been running the advertising longer, it might
have made the difference in winning the election. I can see where
advertising can contribute to persuading the general public during an
election. However, I certainly don’t want to believe that the name
change with which most everyone disagrees, and the timing of which
consultants warn about, could really have anything to do with votes
towards future elections.

New Mandatory Leave behind brochure (New SA4400). 
Starting
September 1, 2007 all IBOs will be required to give prospects a new
brochure that will replace the current SA4400. Although it is a nice
piece, it fully describes the return to the Amway name by 2009. (I
agree this should be disclosed since it is coming). Even though the
official name change is a matter of months away, the necessary dialog
about it effectively makes it happen now. At a board meeting I asked
the company about the situation since their own studies showed that it
would be “devastating prior to major business improvements.” I asked
what they expected the business owners to do during this potentially
“devastating time?” I was told: “They will need to be patient”. Patient
for how long? Two years? Five years? Ten years? Forever? What a
difficult position that puts the people in!

The brochure also
does a great job promoting the training and support provided by the
Amway/Quixtar company yet referred to the IBO training system more like
a warning on a pack of cigarettes.

New IBO Amway/Quixtar Orientation & First 120 day requirements
Starting
September 1, 2007 all new IBOs will be required to review an
Amway/Quixtar Orientation which currently explains to new IBOs the
history of Amway, the focus on product sales and the philosophy of
building the business around finding others who want to sell products
with you. Of course this philosophy takes us right back to the original
product pricing problem. In addition, new IBOs are required to sell 50
PV of products to documented customers three of their first four months
in the business in order to receive various benefits. Also, it appears
that Platinums will need a specific percentage of their new IBOs
(probably 10%) to achieve this in order to receive their year-end
bonuses. This unfortunately will cause the Platinums to have to become
more of sales team managers, likely to put excessive pressure on new
IBOs’ sales performance. This will dramatically change the chemistry of
the field from how it operates today.

In coming months all new
IBOs will have a specifically monitored first 90-120 days upon their
registration. The details are being finalized but if it is to follow
suit with other countries, we can expect several things including a
limitation of what business support materials a new IBO can purchase.
These limitations could include what information a new IBO can review,
whether they are corporate or field produced, as well as the amount one
could spend on them. Given that most new IBOs who quit in their first
year do so within the first 90-120 days of their registration, this is
by far our most coveted time with our new people. To have the company
involved and making decisions defining the new IBOs experience during
this period is alarming to say the least. All of the business effort
that leads up to the registration of a new IBO, and therefore the
growth of the entire team, can be totally lost if the company exercises
something with an adverse effect during this period. This program is
flirting with disaster at the point of all business growth. From the
Company’s viewpoint, having control over this period decreases their
legal risk as they can document their early emphasis on sales. It also
bodes well for net incomes of the new IBO if they choose to limit the
new IBO’s expenses; good for the Company’s reputation. However, without
products that are retailable, this process will only magnify failure to
a new IBO.

New “Stacking” Policy
Starting
September 1, 2007 this new policy takes effect. The implementation of
this policy is a dramatic representation of a corporate agenda without
apparent IBOAI board input. I was on the legal and ethics conference
call with the company discussing this policy, and after 2 ½ hours of
explaining IBO’s concerns to the company, it was as if the call never
happened. Without further contact with the board, the company sent an
email to the field explaining their new policy. Personally, I believe
that people should have a choice to build in width or depth as makes
most sense for an individual’s business. “Stacking,” as the Company
commonly refers to it, is simply the process of registering someone
directly below someone they don’t know before seeing the business.

There
are many examples where someone may not know their sponsor but it would
make sense to sponsor them. Example 1 – A person lives in CA and
registers a friend in Florida. They cannot fly out to Florida regularly
so they register a CA neighbor under the Florida business owner. These
people don’t know one another, but now the original business owner can
help their Florida friend by driving depth in CA. Since this wouldn’t
be permissible, the Florida person is left on their own without this
help. Example 2 – A person is as wide as they want to be but they know
someone that wants to register into the business. Since the person with
the contact doesn’t want to start any new legs, they register the new
person in depth. However, the contact and their sponsor wouldn’t know
each other before hand, so this wouldn’t be permissible. Example 3—The
Corporation sends me a new person “lead”, which they do from time to
time, so I can register them. But, I don’t know them, do I? Example 4 –
People don’t renew and now someone is registered by someone they don’t
know. Obviously, they aren’t in violation but that seems to be how it
is written. These are random examples of situations that would lead to
sponsoring someone without a previous relationship.

A
team-approach strategy to depth is a strategic focus of combining team
resources and talents to successfully drive depth while apprenticing
new IBOs. From all my research and after directly questioning the legal
team at the Corporation, there isn’t a legal risk with team approach to
depth. It doesn’t violate pyramid or security laws. So, why did the
company send out an email stating, “…our complaint history confirms
that the absence of a relationship [between an IBO and their sponsor]
often is accompanied by high-risk representations that trigger pyramid
and securities law issues.”? Their concern is not the actual
registration of people who don’t know one another, but rather forcing
someone to register people in depth when they don’t want to, or
prospecting people with promises of rewards without effort. Obviously,
if someone forces an individual to register people in a place that they
don’t want to, then there could be an issue—customer allocation laws.
If someone prospects people by suggesting team approach will allow them
to register, do nothing and still make money, that could also be an
issue—pyramid concerns. However, neither of these practices are a part
of the team approach to depth.

Most of the “complaints” the
Company is referring to are from people calling in wondering who the
person is that they just sponsored. They wonder because they receive an
email from the company notifying them of the new person and the
responsibilities of being their sponsor. Typically, their confusion and
fears of responsibilities are not actually a complaint but rather an
inquiry. This inquiry could easily be promoted positively since their
business just grew because of the efforts of someone in their business
support team. How awesome is that? Instead, the company records it as a
complaint and the new sponsor feels confused and often concerned with
the responsibility to “train, supply and motivate” as the rules state.

Years
ago, a sponsor had to supply all the products to their IBOs and pay
bonus checks. Today products are ordered online and bonuses are paid by
the Company. In addition, the training and motivation are typically
done by an education system and specialists in the business support
team. Times have changed. Think about it, how much does your sponsor
train, supply and motivate you? It is arguable that the business has
never really depended upon the relationship between and IBO and their
sponsor, but it clearly does not today. Relationships are vital for
success but not necessarily with one’s sponsor. In fact, the team
approach to depth actually allows the new person to build more
relationships and receive more support as they inherit a larger support
team than they would have naturally received. That is, the people
between you and the one who sponsors your original contact is an
additional support team of people who have an invested interest in the
new IBOs’ success.

Finally, the new policy is the first policy
or rule that I’m aware of where someone who has done nothing wrong can
be penalized. For example, say business owner A is crossline from you
within the same Platinumship and they violate this policy. The first
time this happens, everyone new in the Platinumship may be called and
questioned. No one will be allowed to sponsor until a re-training has
occurred. In this example, you would also have to pay the consequence
for business owner A’s actions. How is that right when business owner A
is neither in your upline or your downline? You just happen to fall
within an unlucky Platinumship. Furthermore, the Platinum may lose
bonuses and/or be terminated for something they didn’t do. Because
someone unwittingly violates this policy or because one simply doesn’t
understand who their “sponsor” is, innocent people will be hurt.

As
a side note, I also found it interesting, given such dramatic
consequences to violating this policy, how loosely it is defined. On
the conference call, Billy Florence repeatedly asked the Company to
define “to know” one’s sponsor. Since the entire policy revolves around
knowing one’s sponsor, Billy’s question seemed like a good one to me.
Does a phone call constitute knowing someone? Does it take a
face-to-face meeting? Is it a matter of a certain amount of time with
someone? The Company never answered Billy’s question and now has a
policy that can have a changing meaning at their discretion. Given the
policy’s consequences, that’s a scary realization.

This policy
is directly targeted to discourage the team approach depth philosophy
to building the business. However, since the team approach has produced
most of the results in the business since 1999 (five of the six Anglo
business owners who achieved Founders Emerald or above) and since it
doesn’t seem to create any legal risk to the business, why would it be
targeted? Team approach has shown to yield a lower average income at
Platinum than the traditional width approach. Given that so many more
people achieve Platinum with team approach, the average income
statistics are being brought down. This is not good for reputation. It
is a shame that the company statistics don’t include the fact that with
team approach it takes about half the time to achieve the Platinum
level when compared with the traditional approach. Team approach also
resulted in the majority of recent higher awards as noted above. Too
bad the statistic shared isn’t the total income over time earned by an
IBO. It should be. If that were the case, the reputation focus would
lead the company to promote team approach.

Mandatory Contracts between tool companies and Amway/Quixtar
Currently
there is heavy discussion regarding the implementation of a contract
between the tool companies and Amway/Quixtar. This contract would most
likely give Amway/Quixtar the position of licensing the tool
companies—and controlling/dictating what business support materials
(BSMs) (books, tapes, CD’s, meetings, websites) could be produced as
well as to whom they could be offered. Just as with any business, the
more governmental restrictions that are applied, the more difficult it
becomes for the business to prosper. I’ve always believed in
balance—some regulations are healthy but not too many. The global Amway
business will be in total control of all aspects of BSMs.
Unfortunately, since the company’s perspective is coming from their
legal and corporate marketing offices rather than from IBOs in the
field who are actually building the business, the content will most
likely change dramatically. Although it would be good from a legal
perspective, it could be devastating from the IBO perspective. The best
way to predict what will happen in N. America is to look at Amway’s
actions in other countries. Here are some excerpts from a letter from
Ben Woodward, Amway Branch Manager UK.

Effective immediately,
Amway will prohibit the production, sale, or promotion of BSM that are
not authorized and distributed by Amway; this includes any BSM that
have already been approved by Amway. They are now considered
unauthorized for use. Any meetings for which an entry fee is charged
are suspended until Amway has approved, in writing, the meeting and its
content…Failure to comply with the above will lead to a suspension
and/or termination of the respective IBO contract. Please also note
that Amway is in no way limited to these sanctions, but can impose
further corrective or punitive measures…These are important steps, but
in some ways, they are not surprising ones. Many of you know that for
the past 10 years, Amway has been moving to exert more control over the
way we do business globally.

Note: For the complete document, refer to:  http://www.webraw.com/quixtar/archives/2007/05you_wanted_changes.php

Mandatory Accreditation for QBI Bonuses
It
was announced that the new Quixtar Business Incentives (QBI) that are
being offered will only be awarded to accredited teams. This was a
surprise to many, because previously it was contractually stated that
accreditation was optional. When this was brought to the Company’s
attention they responded with, “It is optional. You only need to
complete it if you want to receive your QBI bonuses.” Jim Payne
responded simply with, “Contracts change.” Like the name change back to
Amway, unilaterally changing an optional program to a mandatory program
damages trust.

In addition, accreditation is a concern for IBO
leaders as many of its upcoming requirements are very unclear. A couple
of examples: What restrictions will apply from the contract that will
be required between Amway/Quixtar and the tool companies? A big
question mark hangs on defining the changes Amway/Quixtar wants to make
to business support materials. Next, what will need to be taught
regarding the positioning of the business? That is, will a person need
to lead dialog with prospects using the Amway name? “Do you want to
come to an Amway meeting?” Given the focus on reputation, the curiosity
approach (inviting people to a meeting without sharing the business
name) wouldn’t appear to have a long shelf life remaining. Some of
these unknowns could have a dramatic effect on the results obtained in
the business as a team conforms to the new accreditation requirements.

Given
the trust concerns established with the Corporation, the vagueness of
what future accreditation looks like, statements like ‘other
requirements and restrictions apply’ listed on the QBI awards brochure,
and hearing stories from diamonds in Australia saying that many of the
diamonds who qualified for 6-figure year-end bonuses didn’t receive
them last year due to various restrictions, there is grave concern and
uncertainty about the reality of QBI awards coming to fruition.

Amway advertising after Business Transformation
Two
hundred million dollars is a lot of money. However, it is not enough to
change the poor reputation of Amway through advertising. In a recent
IBOAI board meeting, Doug DeVos and Steve VanAndel acknowledged that it
would take a lot more than $200 million—and allowed that there was
probably no amount of money capable of changing the Amway reputation
through advertising. In fact, if the advertising happened now, people
would see a broken business model and it would only re-confirm their
poor perception. Consequently, the Company’s plan is to “change IBO
behavior in order to transform the business.” Once the business is
transformed, then advertising can begin. The biggest behavior change
desired, as it should be, is more retail sales. However, doesn’t that
bring us back to the core product pricing issue? Mike Mohr said, “You
can’t have competitive retail pricing and support an MLM structure!” If
that is so, than this may be a long transformation! The MLM structure
and an excessive owner margin.

New rule allowing certain establishments to sell to the public directly
Some
leaders are concerned that the Company is moving towards selling
directly to the public and going around the IBOs. They currently have
websites set up selling to the public directly (although they are still
awarding the PV to random IBOs). They have also recently purchased
companies such as Gurwich Products which sell products directly to the
public in competition with Amway/Quixtar products. I mentioned to Doug
DeVos and Steve VanAndel that it seems this business is heading towards
becoming an Avon type business. They didn’t make any comment to my Avon
reference. Avon’s recent business transformation included the
initiation of selling products directly to the public, around their
distributors. A new rule is also currently being incorporated that
allows certain retail establishments to sell products directly to the
public—interestingly, the Amway Arena and VanAndel Arena will both
qualify to do direct sales under the new rule.

My Personal Journey
At
a Diamond Club several years ago, I was informed that over 1,000 people
didn’t renew that year in my business. Even though my team had
registered a great deal more than that yielding a net increase in the
team size, I was still devastated by the thought of over 1,000 people
on my team losing their hope in the business. As I thought more about
it I decided that I needed to go on a quest to increase retention. Even
Rich DeVos said long ago, “We are in the business of keeping people in
the business till they realize the business they are in.” I realized
the obvious—that people who had something valuable to lose wouldn’t
quit. That value could come from solid relationships, great value in
the products and customers, and/or a team of registered business owners
in depth. Having someone registered in depth gives someone something to
lose and consequently can be an encouragement to stay in the business.

It
was then that I decided to call Orrin Woodward. We had been casual
friends for several years, enjoying Peter Island, BVI together. I knew
he and Chris Brady had been having phenomenal growth with a team depth
program. Orrin was gracious and shared his thoughts and insights. I
began the implementation of the team approach to depth and we had more
IBO success stories result the following year than had happened in a
long time. Even my own business qualified as a Founders Diamondship for
the first time.

Accreditation was soon brought to the table and
I eagerly choose to participate. I was continuing my quest to improve
things for the new IBO and felt accreditation would help the new IBO
have confidence in the value of our training system. I knew that our
system already had many aspects of balance that the Company was looking
for, including product training and an emphasis on retail. I had
personally made sure that a great deal of our material had been
reviewed by Quixtar legal and received a “content reviewed” stamp of
approval. Consequently, I was confident I could complete this program
without much change to our system. I also wanted to add a level of
security to the IBOs on my team. I had been hit with a lawsuit claiming
bad business practices citing things such as a missing refund policy on
our website and tickets, not reading the proper disclaimer prior to
beginning Hotel Open meetings, etc. In addition, the suit claimed that
most of the money was made by the BSM business and not through Quixtar;
retail sales weren’t happening; nor was Quixtar enforcing the retail
rule. I knew that accreditation would bring to light any of these
issues of which I was unaware or upon which I could improve, and bring
our team to a squeaky-clean status. More importantly, I knew that those
considering filing a lawsuit may choose IBOs that are not part of an
accredited team over those that are a part of an accredited team;
hence, more security for IBOs on our team. After over a year of effort,
we became Quixtar’s second accredited team.

As time continued, I
realized our system needed to continue to improve. The work effort
necessary to grow the business became excessive. People needed better
results. Once again, product pricing led the domino effect of
challenges that everyone was facing. As a result, I contacted Orrin
Woodward again and spoke to him about my thoughts. He was open and we
dialoged business philosophy, ethical and moral principles, as well as
the vision for the future. We talked about accreditation and the desire
to build a business that would stand the test of time. We agreed that
the greatest reward of the business, and indeed our greatest strength,
was helping people with personal growth. We all have so many stories of
people who claim that their success in some work outside of the
business came from what they learned through their association with the
training system. I kept thinking, wouldn’t it be awesome if these
people could apply their new personal growth to the Amway/Quixtar
business rather than something else? However, this repeating scenario
confirms that the training systems are working well but the
Amway/Quixtar business operates at too high of an effort level for
success.

As a result of understanding what we do best in our
business is to find and develop leaders, Orrin Woodward and Chris Brady
have built the best leadership development program that exists today.
One’s results from this training can be applied to anything, and within
this business it has yielded new IBOs with the majority of results in
the Amway/Quixtar business since 1999.

Over time, and
particularly while serving together on the IBOAI board the past couple
of years, I have really gotten to know the Orrin Woodward that most of
the world doesn’t know. Orrin Woodward is a man of character and
integrity. He is also a great thinker and a brilliant systems designer.
He is one of the most well-read individuals that I have ever met. His
decision making process always is based upon specific, solid principle.
He is also very misunderstood. When he believes something is right in
principle, he will move forward with his belief with unwavering
fortitude. Others will often see this without understanding the
thinking that is driving his decisions, and just label him as stubborn
or rebellious.

I spoke with Orrin for the following year until
it came to a point that I knew the best thing for our IBOs would be to
be a part of his leadership development program and be a part of his
vision to grow a team to 1 million IBOs. Of course this meant initially
leaving my system behind, including our accreditation status. I knew
that the quality and consistency of Orrin’s information combined with
the leverage created through teamwork would far outweigh any part of my
system including its accreditation. Orrin and I agreed on the
principles of accreditation and after fully reviewing the TEAM system
it was obvious to me that it was based on sound principles. Being on
the legal committee of the IBOAI board, as well as being one of the few
who had completed the accreditation program, I have a very good grasp
of the rules. In fact, members of the Corporate legal team have often
commented that I could “write the manual” when it comes to
understanding the rules as they are applied to BSMs. Consequently,
Orrin asked if I would head-up, along with Ron Simmons, CEO of Legacy
Inc., the enormous project of getting TEAM accredited. I accepted and
began working with Amway/Quixtar again on the accreditation process.

After
launching my efforts with Amway/Quixtar, I clarified that the main
point to work through was the positioning of the business.
Amway/Quixtar wants their name mentioned anytime the TEAM name is
mentioned. However, this is not a rule or law that currently exists but
rather an opinion that has arisen with the new legal team in charge.
Previous managing director of N. America, Ken McDonald had put in
writing the Company’s stance on positioning and it wasn’t to force the
Amway/Quixtar name to come out in front or even simultaneously with the
TEAM name. But, yes, once again, things change.

With the
company’s focus on reputation, they argue that saying the Amway/Quixtar
name up-front eliminates any potential misunderstandings. However, I
would argue just the opposite. People have preconceptions of what the
words Amway or Quixtar mean to them. Some people still believe today
that Amway is a door-to-door soap sales business. So, to say a company
name prematurely may, in fact, be misleading them by triggering
reference to their own inaccurate understandings. When I mentioned this
to lead attorney Mike Mohr he said, “I don’t understand what you are
talking about. My brain doesn’t work that way.”

Further, say
Amway/Quixtar to a prospect and you can start a stop-watch to time how
quickly they do a Google search and find a plethora of negative website
reading. Therefore, if the goal is to grow the team by allowing someone
to make a decision based on accurate information, wouldn’t it make
sense to educate the prospect and build a trusting relationship with
them first rather than prematurely flashing a name up that kills any
chance of moving forward? Currently, those leading with Quixtar/Amway
(or even simultaneously) have experienced devastating failure. Yes, it
looks good on the legal paper, but we have yet to find one
English-speaking as a first language team in N. America that is
currently growing that uses this approach.

I don’t want to
deceive anyone. I won’t. Yet, discernment of disclosure is a necessary
process to produce the best results. Why haven’t you told your
five-year old how babies are really made? I’m sure you have said
something on the subject but you have discerned that disclosing too
much information at the present time may not be your wisest choice.
Obviously this is an extreme example and not exactly applicable in
context, but the point is, there are times when some discernment of
what to disclose must be considered for best results. Don’t get me
wrong, TEAM would love to lead with the Amway/Quixtar name. However the
Company would first need to clean-up people’s inaccurate misconceptions
as well as its reputation online. This will become a larger issue as
all teams come to understand the Company’s non-negotiable stance on
this topic.

The other area of positioning that needed
resolving for accreditation was that Amway/Quixtar feels TEAM is being
positioned as the business opportunity and not Amway/Quixtar. The truth
is there is really more than one opportunity interlinked. We have
always said that we are not “in” Amway/Quixtar but rather we are
Independent Business Owners (IBOs) who are “powered by Quixtar.”
Personally, I always felt “powered by” was a bit strong since I have
not felt power from the Company as much as I have felt it from other
sources, but, nevertheless, there is an established independence of the
individual from the Company and the reality is that they do have
multiple opportunities available to them.

We have continually
requested that the Company allow us to share the income opportunity of
the system openly. They have denied us that ability citing that being
transparent with the potential system income is wrong, as it could be
considered “enticement” to register in the Amway/Quixtar business.
Meanwhile on many websites and blogs throughout the internet, the IBO
leaders are being painted as crooks by not being open about their
system businesses. How ironic is that?

In fact, Ron Simmons as
recently as June 5, 2007 emailed the Company attorney Gary VanderVen,
requesting that at least on Company blogs they share the truth that the
Company “has prohibited IBOs from being transparent about system
income.” Orrin and Chris Brady attempted to start this process through
their explanations in a book and online and, even without disclosing
incomes, were threatened with suspension by the Corporation. Orrin and
Chris disclosed that there are really multiple sources of income:
Amway/Quixtar products, sales of ticket events and BSMs, and speaking
at events. Each of these is based on a compensation plan where any
individual can achieve the same or more income than anyone in the
upline business support team.

An analogy they used was a car
dealership. Say you wanted to sell new cars and started a business
doing so creating income. As people wanted to trade-in their cars to
buy a new one, you found yourself additionally in the used-car sales
business, now with a second income. Next, people came in with their car
wanting service so you start a service business—income number three.
The service business needs parts so you start a parts businesss—income
number four. Certainly, there is nothing wrong with these other sources
of income. If you made more income in your service business than in
selling new cars (your original business) is there anything morally
wrong with that? Is your primary business selling new cars or are you
just in the car business with multiple businesses interlinked? Finally,
what if someone was considering starting a new car sales business and
you were to share your knowledge of it with them? Should you not share
the other interlinked businesses in the discussion even though they may
never get to that point?

Open disclosure on this topic is a
large battle between the field leadership and the Corporation. I
believe the Amway/Quixtar reputation suffers less when this knowledge
is hidden. They can then discredit the IBO leadership rather than allow
the public to learn the truth of how little profit margin remains in
the Amway/Quixtar products after the DeVos and VanAndel families take
their cut. However, as the Company takes over the BSM business with
their new contracts, this will be a moot point, as they will have the
power to regulate pricing and profits on BSMs as well.

For the
record, the Company stopped communicating with me about TEAM’s
accreditation. My last email on the subject was sent to attorney Sharon
Grider on June 4, 2007 (with copies to both Beth Hines and Gary
VanderVen) requesting direction on the next step regarding “meeting
content and positioning.” I never received a response. Only days after
that email, I was at the June IBOAI board meeting when the bomb was
dropped on us about the name change to Amway and the Business
Transformation.

As I began to put it all together and realized
the crisis point had come, I knew something had to happen NOW!
Amway/Quixtar had slipped into a pyramid status as the products became
non-retailable. After years of hearing nothing but “we’re working on
it” regarding their promises to provide retailable products, it became
obvious that it wasn’t going to change. I know for certain that the
Company heard our persistent requests the day I witnessed Rob Davidson,
Director of Sales, in a board meeting slam his fist on the conference
table, stand up and yell at Don Wilson, “We get it Don! You need those
10-15 retailable products. We’ve dropped the ball on it!” I couldn’t
figure out why he was so mad at Don. Don wasn’t the one who kept
dropping the ball.

It finally became obvious that either they
were lying (they weren’t really working on it) or they were totally
incompetent (no results after supposed years of effort). As nice as I
try to always be, that unfortunately was the case. There is so much
pending litigation against the Company that the attorneys are now at
the helm of the ship charting its direction. The resulting Amway
Business Transformation has so many unknowns and the Company’s
heavy-handed first steps toward implementation have already broken so
much trust, nobody is confident that they know what it will look like.

Finally,
the IBOAI board, that most everyone believed had significant power,
clearly displayed its lack of influence during this crucial time. In
fact, as a direct result of the IBOAI board sharing its disapproval
with the Company regarding the name change to Amway and casting a
unanimous vote of no-confidence regarding the upcoming Amway Business
Transformation, the Company responded by canceling the Board’s contract
with the company; turning it to a month-to-month contract! That’s
right. The IBOAI board was the one thing almost all of us were led to
believe provided the IBOs any security. It was the field’s voice and
most believed it allowed us to “keep the Company from changing the deal
on us.” That certainly was an urban legend. The board voiced an opinion
and the Company cut it off at the legs by taking it to a month-to-month
contract.

Furthermore, I realized that many “leaders” who knew
this information were not going to do anything about it. I heard people
who represented thousands of Independent Business Owners (IBOs)
commonly say, “I can spin it.” Each time I would think I know I could,
but I know that I wouldn’t—ever! I listened to these leaders whose
thinking was all about holding on to what they have. However, I
listened to others like Randy Haugen say, “If it’s not good for the new
IBO than I don’t care what it is for me, I won’t do it.” I heard
leaders say, “Well, what can we do? We have no options. We have no
power.” Others in private said, “Nobody has ever successfully gone up
against the company.”
Don’t get me wrong, it’s not like I didn’t
understand those folks who want to hold on to their success, spin the
situation to a positive perspective to everyone, be hopeful and
continue business as usual. Like Randy Haugen, I just couldn’t do it.
Do I want to lose everything I have worked for through this process? Of
course not. However, I don’t want success based on the churning of
other people’s failure. In fact, when speaking with lead Amway/Quixtar
attorney Mike Mohr about my concerns, he told me that he hoped we could
work it out since there is a lot of money on the table for me. I know
he meant it encouragingly. I was aware that I have one of only four
systems that has been accredited and I regularly qualify as a Founders
Diamond—the combination of which should result in a new QBI bonus of
$500,000.00. However, I responded to him saying that if I didn’t
believe that the new IBO starting today could ever achieve with the New
Amway what I have achieved with the previous business, then the money
felt more like a buy-off than a bonus.

My moral dilemma began;
do I stand up to the Giant regarding this disaster and put it all on
the line, or do I let things just continue as they may and let my life
stay simple? It became apparent that the necessary price changes
weren’t coming. The “Amway business transformation” wasn’t going to
make it easier for an IBO to succeed, and trust with the DeVos and
VanAndel families as well as with Corporate management was gone.

I
just couldn’t promote something I didn’t believe in, nor could I leave
people unaware of the facts just because I’m set and the company is
intimidating. As a result, I was compelled to step up to the plate and
make a change. I was willing to put it all on the line because I
believe so much in truly leading people to something that they can
succeed with. I keep thinking of all the people who need their business
to work—they’re counting on it!

I understood the current
condition of the business and why it was this way. I also understood
who was in charge, what their objective was, and the general direction
the business was headed. I knew that the IBOAI board had no teeth and
was barely alive. I knew that most people who knew what I knew wouldn’t
say anything but would rather just “make the best of it.” I knew that
it would expose those making the decisions as well as those who would
“spin” those decisions. I realized by sharing the truth that some
people would be hurt and leave the business. I knew that I would
potentially receive a great deal of abuse by those who were unhappy
with my sharing this information.

I realized that some people
would wonder how we had been promoting the business yet now announce
its flaws; knowing they don’t understand how we always have believed in
the business concept which we promoted and were diligently working
behind the scenes to invoke disparately needed change within the
Company all the while believing positive change was coming. The bottom
line is I knew that my life would be a lot simpler if I just stayed
quiet. However, I knew that I was asked to be on the IBOAI board to
protect and serve the IBOs, and I knew for the new people to have a
chance of achieving their dreams I had to expose the truth and invoke
change.

I was really hopeful that the Company would come to a
peaceful resolution. I was hopeful that it could just be talked through
and avoid anything public or mean. However, that wasn’t to happen. When
we suggested rolling back the non-compete rule to simply give people a
choice to either move forward with this new business transformation or
to choose another opportunity, Quixtar attorney Mike Mohr said, “Why in
today’s competitive environment would I open the door and let our crown
jewels leave?”

This rule (Rule 6.5) was implemented just three
years ago; 45 years after Amway started. Simply put, this rule doesn’t
allow someone in this business to be in another competing MLM marketers
out of our Quixtar camp since the rule would not allow IBOs to register
with another MLM business. However, the wall more significantly keeps
IBOs trapped inside the Quixtar camp giving the Quixtar Corporation the
ability to do whatever they want with their trapped audience.

If
the company won’t change, than at least give people a chance to choose
a different opportunity. If this business is really so great then
nobody would want to do anything else and it would have been a
non-issue. The fact that the idea of giving people an option is such a
big deal to the Company shows me that they understand that given their
freedom, people will go elsewhere. The freedom to leave should always
be available. That freedom allows competition to bring the best
performance out of each company and keep the focus on what’s best for
the new business owner.

Unfortunately, the Corporation won’t
allow such options to exist. They effectively have become the ultimate
“Hotel California” where “You can check out anytime you like, but you
may never leave.” Our lawsuit is not requesting any damages or
retribution. The suit is simply a request to the court system to let
free enterprise freely operate once again.

As a final note,
life has its irony. How interesting is it that approximately 50 years
ago, Rich DeVos and Jay VanAndel found themselves in a similar
situation with the MLM business they were sponsored in, called
Nutrilite. They couldn’t amicably resolve some company decisions that
they believed were wrong, so they and some others left and formed Amway!