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Forbes - Climb To The Top - Orrin Woodward

Forbes - Climb To The Top - Orrin Woodward

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Published by: Troy Dooly on Apr 10, 2012
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04/15/2012

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Money & Investing
 
 
Climb to the Top
 Emily Lambert and Klaus Kneale07.17.08, 6:00 PM ETForbes Magazine dated August 11, 2008
 
Pyramid selling schemes are a dime a dozen. Orrin Woodward'sorganization is one step ahead of them all.
Near midnight on a recent June evening Orrin Woodward, cofounder of acompany called Team, took the stage at the Nationwide Arena inColumbus, Ohio. Music blared. Lights flashed. Seven thousand people,who'd paid $90 each to get in, cheered wildly."Struggle is a part of every great victory," intoned Woodward. "Leaders,"he went on, "are dealers in hope."Hope, for most of Woodward's audience, is a fruit juice gussied up in awine bottle labeled MonaVie and sold for $39. Unload enough of this stuffon friends, recruit them to do the same, and you can be rich.Woodward, by contrast, doesn't have to sell a drop of the concoction tomake a killing. Team, rather, sells things that help people sell things likeMonaVie. Team sells "tools"--$258 sets of motivational compact discs, $69
 
Team shirts and books like Woodward's
Launching a Leadership Revolution 
, all of which filled the Nationwide Arena's hockey rink. Outside,a black Mercedes-Benz gleamed next to a sign saying "Work hard, goblack diamond, get one of these!""Team is truth," declared Andrew Mey, who had traveled from GrandRapids, Mich. for the Ohio event.In the distributional art form known euphemistically as "multilevelmarketing" and more crassly as a pyramid, a seller attempts to recruitother sellers, who recruit still others, and so on. Members get apercentage of revenues hauled in at some or all points below them in thepyramid, so those close to the top can do very well for themselves. The Direct Selling Association, a tradegroup, pegs the collective revenues of multilevel vendors at $30 billion in the U.S. and $111 billionworldwide. Exotic juices, nutritional supplements and cosmetics are among the favorites of the pyramidcrowd.Team is one step ahead of all these juice selling schemes. It is a pyramid atop a pyramid. It is sellingmotivational aids to help MonaVie vendors move the juice. But wait. If you can't earn back the $258you've spent on the motivational lectures by selling $39 juice bottles, you could earn it back in anotherway--getting people to buy $258 motivational lectures. If you're good, you flog the lectures to otherpeople, who sell them to yet others. Everybody gets rich. Everybody, that is, except the last round ofbuyers. That's the theory, anyway. The reality is that a mere 1% of Team members make any money frominvolvement with the firm.Sounds rather like a chain letter, doesn't it? Woodward insists it's not. He says he's selling hope andsales skills.Team hauled in $42 million last year and boasts 60,000 mostly middle-class members. Last winter 15,000of them braved an ice storm to assemble in St. Louis for speeches on "Overcoming Obstacles." About90% of Team's sales tool revenues come from people who also sell MonaVie juice.
Orrin Woodward
 
 
Woodward's Web site shows the 41-year-old on his 72-foot yacht and grinning with Pastor Robert DickieJr. of Berean Baptist Church in Grand Blanc, Mich. Dickie speaks at Team conventions and gives Biblelessons on Team's CDs. His son, Robert Dickie III, is Team's chief executive."What I try to give most of all is hope and encouragement," says Woodward.Hope is an expensive commodity. Most Team members spend more buying its motivational aids andMonaVie's juice than they ever take in. Roger Lareau, a Michigan alarm company employee, says hiswife has rung up $20,000 in debt buying Team sales tools and Amway products and is now on to sellingMonaVie juice. Their marriage has fallen apart as a result. "She still thinks Team is going to set her freeone day," he says.Woodward is a product of America's rust belt. He was raised a half-hour from Team's headquarters inFlint, Mich., the town Michael Moore immortalized as a symbol of industrial decay in the film
Roger & Me 
.Woodward studied engineering at
General Motors
(nyse: GM - news-people)Institute (now Kettering
 
University) and later designed fuel pumps for the automaker. Frustrated with gm, in 1993 he began sellingproducts on the side for Amway, the granddaddy of multilevel marketers (2007 revenues: $7 billion). Fiveyears later Woodward quit gm to become a full-time distributor for Amway (now known as Quixtar in NorthAmerica).Woodward quickly realized how important sales tools are to multilevel marketers. Tools encouragerecruits to reject doubters and, if money fails to materialize, to blame themselves and keep trying. Toolscan themselves be a gold mine. That was a lesson Woodward learned from Dexter Yager, a former beersalesman and Amway distributor who set up a highly successful sales tools business.Woodward founded Team in 2001 and built it into one of the fastest-growing tool vendors associated withAmway. Senior management at Amway had long feared that tool vendors risked being tabbed illegalpyramids and dragging the company into a legal morass. Still, the company tolerates them because toolvendors generate sales for Amway. Woodward claims Team's tools generated Amway sales of $200million and net profits of $60 million last year.The relationship between Amway and Woodward began to deteriorate a few years ago when Teambegan promoting its tools as a money-making opportunity in themselves. That message has the potentialto get both Team and Amway in legal hot water. Amway, meanwhile, already had legal headaches. Thelaw firm of courtroom tiger David Boies is now maintaining a California class action against Amway in
 
which former distributors have accused it of being an illegal pyramid. The company faces similar claims inIndia.Amway's battle with Woodward came to a head last summer during a meeting at Amway's headquarterswhen, so the firm claims, it terminated Woodward; he says he quit. As the dispute spilled into court,Woodward trotted out what he says is a report Amway produced for a top distributor indicating that amere 3.4% of its U.S. products are sold to unaffiliated users. Amway says the 3.4% represents only a"fraction" of its retail sales.Woodward's claim could pose problems for Amway. In a 1979 regulatory action involving the firm, theFederal Trade Commission attempted to draw lines between legitimate and fraudulent pyramids. Theones that are legit focus on getting revenue from consumer goods sold to retail customers. The ftc didnot, however, define "retail" in that case. That leaves plenty of wiggle room for guys like Orrin Woodward;he counts the vast majority of people in his pyramid, who seemingly try but fail to make money, as retailcustomers.His Amway divorce left Woodward with motivational tools but no product to motivate people to sell.Members defected. Sales plummeted. Woodward tried selling his tools to customers like KetteringUniversity, a Michigan pizza franchise and a Phoenix car dealership.

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Rich Bennett added this note
what is your point? Amway Diamonds have been doing this for decades, keeping it a secret, then admitting that they make money from the tools, but unlike Orrin they never expose how much they make from the tools. Unless your in private circles and you learn they make more from the tools than the movement of Amway products. Amway is simply a front for the "real business" within the business.

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