Betting on Zero Page #2

---

They sought

and found a new leader.

Michael o. Johnson.

Johnson had risen

through the ranks

at the disney corporation

To become president

of disney international.

Announcer:
The eyes

of the world are on herbalife.

We will be faster, better,

stronger than ever before.

Narrator:

A competitive triathlete,

Johnson's passion for fitness

perfectly mirrored

his new company's image.

At herbalife,

he had a midas touch.

Revenues grew

at astonishing rates.

From $1.3 billion

to $4.8 billion

in his first 10 years.

Oh, we're just

getting started.

We're just scratching

the surface of what can be.

We haven't penetrated

the markets and communities

Anywhere close

to what we're gonna see.

Narrator:
Johnson did well

by herbalife and himself.

In 2011, he was

the highest paid ceo

in america.

His compensation package

totaled $89.4 million.

Mexican sales, up 31%.

Asia pacific, up 29%.

India, 121%!

South, central america, 44%.

This company seems

to be unstoppable.

You know, my mother and father

were incredibly

strong influences in my life.

And integrity was the name

of the game in our house.

Um, you know,

if you did something wrong,

own up to it.

Just never tell that lie,

you know,

Because you're gonna

lose the trust.

And I think

what we've done here is

We've built an integrity

and a trust

in our organization,

In our people, in our product.

And if I'm the one

out in front,

leading that, okay.

You know,

I'll take that responsibility.

Scott wapner:
John desimone is

sitting here with me.

John, it's good to see you.

John desimone:

Thank you, scott.

Wapner:
At this very moment,

bill ackman and

more than 500 people

Are inside a theater

in midtown manhattan.

Bill's getting ready to give

his latest presentation,

And they're watching

this interview live.

In his words, he's gonna

expose incredible fraud

at herbalife today.

What do you expect?

Uh, we know this mo.

This is not the first time.

As a matter of fact,

this has been 18 months

of always... The guy here...

It's always "the bark

is worse than the bite."

Uh, he's made some

outrageous statements.

He's made 435 accusations

over the last 18 months,

Each one is

the latest and greatest

until it's proven not to be.

First of all, what are you

accusing herbalife of?

Of being a pyramid scheme.

We believe herbalife

is a pyramid scheme.

Explain,

what do you mean by that?

Well,

herbalife sells products,

weight loss products,

Nutritional supplements,

vitamins, things like that,

But what they really sell

and what their distributors

make money from

Is by selling what they call

a business opportunity.

And the business opportunity

is to sell

The business opportunity

to your friends,

Who in turn sell

the business opportunity

to their friends.

You sign up to become

an herbalife distributor,

You spend $55 or $100

to get a starter kit.

And then eventually

you're convinced

to spend $3,000

To buy the minimum amount of

inventory you need to acquire

In order to become

a supervisor.

And you got

a business in a box

that can make you a fortune.

And that's when

you're entitled

to get royalties

From people beneath you

and your so-called downline.

These are the people

you recruit.

William keep:

What generates income

are purchases.

As products are purchased

from herbalife

by those in your downline,

They generate

a commission upline.

So, as you build

your downline,

And you recruit others,

friends, family members,

co-workers,

It's their purchases that

generate your commissions.

The secret is to get

five other people

To do the same thing

every month.

And teach them to get

five other people

To do the same thing

every month.

Before you know it,

not only will you

be a supervisor,

But you'll have

five supervisors under you

Who'll have five supervisors

underneath them

Who'll have five supervisors

under them.

That's 155 supervisors.

And if they're each doing

about 2,000 to 2,500

volume points a month,

You're gonna be making

somewhere in the neighborhood

of $42,000 a month.

Keep:
In fact, building

the downline and product

purchases are required

In order for you

to be eligible for income.

So, only about 17%

of all distributors

Are eligible to earn anything

from herbalife.

According to herbalife's

earning statements,

of those 17%,

We know for sure,

30% or so will earn zero.

And approximately

48% will earn

$1,000 or less gross

earnings for the year.

Once we deduct expenses,

And consider the fact that

they have to maintain

a purchase volume,

The net income is negligible.

Ackman:
You're deceived

into believing that this is

a good business opportunity

When, in fact,

you're selling a shake

For three or four times

the price of slimfast.

People can buy that

in their supermarket.

And those $3,000, $4,000,

$8,000 inventory purchases,

Inventory that's sitting

in your garage

that you can't sell,

Are fueling paychecks

for people

At the very, very top

of the pyramid

Who have hundreds of

thousands of people

beneath them.

The top 50

herbalife distributors make

Three, five, seven,

10-plus million dollars

a year.

Hence it is robin hood

in reverse.

Wapner:
But he claims today,

He has hundreds of

hours of video, audio,

Documents to support

his claims.

On some level,

you must be worried.

Desimone:
I'm not worried

about the substance

of what he has.

This is anecdotal,

it's very propaganda based.

What he's missing is that,

fundamentally,

We've got

millions of customers

that enjoy the product,

That use the product,

that's indisputable.

We actually had a release

today from a former ftc...

Keep:
What we don't really

have good information on is,

Do herbalife purchases

translate into sales

To customers

who are not also distributors

of herbalife?

Or are herbalife purchases

a mechanism

for sustaining recruitment

And sustaining commissions

that have little to do

with outside customers.

What the research shows is

that the majority

of our distributors

Come and become distributors

Because of their affinity

with the product,

And they want to achieve

a product discount.

So, effectively,

what they want to do

Is become distributors

almost like members, right?

Club members,

just like in costco.

The lack of evidence,

In terms of

what portion of products

Ever leave herbalife's

distribution channel,

Is part of the criticism

And part of the wonder

about whether or not

This company can

be a pyramid scheme.

Here's the reality.

Our core training is

for a new distributor

who wants to build a business,

If they talk to

10 customers today,

10 people a day,

About the products

and the business opportunity.

I have never spoken

to any distributor,

Who is doing that,

who is actively engaged,

who is not making money.

Richard:
Multilevel marketing,

mlms, just tap into beliefs

we have in america

That you really can accomplish

Rate this script:0.0 / 0 votes