Part One: Amway: The Gravedigger of Democracy

Episode Transcript
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Speaker 1 (00:03):
What's syphilitic? My eighteen seventies sailors, I'm Robert Evans hosted
Behind the Bastards. That introduction had really nothing to do
with the topic today. But I mean, sailors in the
eighteen seventies had a hell of a lot of syphilis.
You can't argue that that's just that's just fact, that's

(00:24):
just science. Here with me to talk about syphilis a
little bit more is my once and current and probably
future boss Jack O'Brien. Actually it ends after after this,
after that one more time over swan song. Yeah, yeah, No,

(00:45):
pleasure to be here, Pleasure to just be on a
zoom with both of you, Robert and Sophie. It's good.
What is more the American way than syphilis? You know?
It is, it is. It is the most American disease,
and I think one we ought to bring back. Let's
bring back everybody slowly losing their minds as worms eat

(01:05):
their brains. It's good for you. It brought us. There's
a bunch of art we got because of syphilis. You know, what,
what are we what are we losing now that we've
cured it? A lot? Is my contention, We're losing a
lot and possibly a Hitler too. Yeah, we might be
losing exactly, we're losing a Hitler or two and maybe,
uh well, okay, probably has nothing to do with what

(01:26):
we're talking. It really doesn't. It really doesn't, Um, Jack
O'Brien attack Jacktoberfest. This is every time I do this.
I'm continuing a series of jokes that are our colleague
Dan O'Brien did when I was like seventeen. It's funny

(01:47):
the things that stick with you, Um, Jack, how do
you funny? The things that stick with you? Like that
being a thing that everybody says to me. Also, people
thinking that I am a fictional character created by Daniel O'Brien,
aren't you. I did think that right up until you

(02:08):
called me about the internship when I was I just
I'm just somebody who saw a branding opportunity and reached
out to Daniel and said, Hey, I want to occupy
this character of Jack O'Brien that you invented. We should
really be nicer to Jack. He employed both of us.
He's employed me virtually my entire adult life. Jack saved

(02:30):
me from the tech world. He saved me from very
lucky and a teacher. Well, you're still still teaching people stuff.
I would feel more bad about that, but I feel
like you do a good job teaching people stuff, so
I appreciate that. Well, Jack, how do you feel about AMI?
I mean, I don't know a ton about it, and

(02:52):
that's good. I know it as a like door to
door sales thing, and I know it as sort of
the uh grandmother of multi level marketing that which has
turned into a massive thing. Now, yeah, yeah, that's that's
the basics, And the most important thing to know about Amway, Jack,

(03:14):
is that it is not legally a pyramid scheme, as
in never legally not a pyramid scheme. And the fact
that we have to say it's legally not a pyramid
scheme does say all that you should know about the
kind of business Away is as and it's the kind
of business where you have to specifically note that legally

(03:35):
it's not a pyramid scheme. A lot of lawyers. They
have a lot of lawyers and a lot of money.
If there's like a mathematical equation you can do based
on like the the amount of money you have and
then how much of that money you spend on lawyers
that just like attack people on your on your behalf. Um. Yeah, uh,

(03:56):
and so it is. It is not legally a pyramid scheme. Um.
But the Consumer Awareness Institute has calculated that Amway's loss
rates for distributors exceed ninety nine point nine percent, which
means virtually all of the people who are kind of
sort of employees of a way, of course, legally they're
not employees. They're independent, you know, distributors, um make zero

(04:18):
money or lose money. And and nearly all of the
profits that am Way makes come from its distributors and
are funneled up to a tiny group of people at
the top, while the vast majority of people at the
bottom make nothing. You can visualize the shape of that
arrangement in your head. But it's legally not a pyramid scheme. Yeah. Yeah,

(04:42):
Now the ninety nine point nine is not not great.
It would be a really different podcasting industry if well,
I guess that is like if you look at podcasting
as a whole. But that's not you know, a company. Um,
I'm just saying most podcasts are are are like my
favorite ever tell you about my favorite podcast? Jack? What's that?
Oh my god? I came across this before I ever

(05:03):
gotten to podcasting. But when people started talking about it
as a thing, I think around and I fell in
love with it because it was the most tasteless, tactless
thing I have ever encountered in my life. It was
a vaping podcast by like four four kind of chetty
dudes in South Carolina, and the name they picked for
their podcast was the Serial Vapists. Yeah, they shaped it

(05:29):
did um and the content was exactly what you'd expect
it was. It was horrible, but it was very funny.
I don't think they am fairly certain. They never made
Joe Rogan bucks off of that show, but it was
very funny to me. I was really hoping you were
going to name drop one of your own podcasts that's
your favorite. Were you were that that guy? No, no, no,
I don't listen to podcast Sophie, I just make them um.

(05:51):
I've actually never time to listen in my life. Exactly
tubiously making that Cassy making them um um. It's like
Dan Acroyds never seen one of his own movies. You
know that that can't be possible. Dan was the only
man who hasn't watched Ghostbusters. Probably watched that one, you'd
have to think. But he claims he doesn't watch his

(06:11):
own movies. Yeah, I mean that would be did you
did you just when you were discovering, uh, the Cereal vapists?
Did you just put is there like some cereal? It
was like really cereal and it was whenever whatever. Years
the first serial came out, So I was looking for

(06:32):
Cereal and I saw underneath it like and I had
to listen, um and it was amazing. Like one of
the episodes, the first like twenty minutes, was just a
guy talking about taking a ship at a vape store
and the fact that they were cool with the fact
that he took a giant ship in their bathroom. Like
it was an incredible moment in content history. If someone
can find their old episodes by all means do um.

(06:55):
It was amazing, So Jack, The first important thing to
know about Amay is that it's legally not a pyramid scheme.
The second most important thing to know about am Way
is the history of pyramid schemes, because once you learn
the history of pyramid schemes, why am Way isn't legally
one makes somewhat more sense. Now if you go into
this line of research, if you google for first ever
pyramid scheme, you will generally be directed towards the tale

(07:17):
of Charles Ponzi, who we've discussed a couple of times
on the show. In brief, he was an immigrant from
that perfidious peninsula, Italy who in nineteen nineteen hatched a
scheme involving what we're called international Postal Reply cupons. These
were essentially stamps that had been created for small international transactions,
and they were redeemable at post offices in the United

(07:38):
States for real stamps, which obviously have a cash value.
Ponzi got one of these international Postal Reply coupons from
a friend in Italy while he was in Boston, and
he realized that the coupon he had gotten had been
purchased in Spain because they were cheapest there um and
because of basically, to make a long story short, because
of how much stamps were worth in the US, and
how cheap these things were to get in Spain, you

(07:59):
could make a profit just buying these in Spain and
redeeming them for stamps. It was kind of a loophole
in the system. So Ponds he hatches this that that
sounds like basically the most honest way that somebody could
make a living today. At like a hedge fund or
like that just sounds like it's every financial job in existence. Well,

(08:19):
this is not what he actually does, um, but this
is how he justifed. Like So, his initial plan was
to do this at a huge scale, like getting a
bunch of basically giving getting people to give him money
to use to buy these international coupons that he would
then redeem for stamps which he would sell for cash
and then just redistribute the profits. That was the idea
on paper cover story. Yes, so he founds a company,

(08:41):
the Security and Exchange Company, which was not He wasn't
trying to do a thing with the SEC. The SEC
did not exist at this point, so he just came
up with the same name they did, which think of
that what you will. Um. So he comes up with
the SEC to facilitate this scheme, and he promises a
return to investors in ninety days, which is obviously bullshit.
Any what time someone tells you unless it's drugs. If

(09:03):
someone's telling you that they're gonna if they're gonna do
that with your drug money, that might be real, but
you know it's it's drugs. So um. It did well
for a few months, but Ponzi never really went through
like he got a bunch of investments, but he never
did the international cupon thing. Instead, he just lived the
high life for months, uh and would repay early investors
with money from new investors, which is obviously an unstable

(09:27):
situation that can't last forever. And eventually the Boston Post
found out what he was up to. They wrote a
bunch of expose a s on it, and the District
Attorney of Boston got all aggro about the whole thing.
In the end, Pond Ponzi was arrested and his name
went on to adore and countless other similar schemes. So
that's where we get the Ponzi scheme from you like
Bernie made Off did that and kind of over time,

(09:47):
the term pyramid scheme became the catch all term to
refer to a wide variety of cons that were all
descended from Ponzi scheme. So Ponzi generally seen as like
the first pyramid scheme, um but all. It's also worth
note that he wasn't the first pyramid scheme as a
matter of fact, if you want to look at the
real originator and maybe the person Ponzi was copying, um

(10:07):
as best we can tell, it was a woman named
Sarah How in Boston in eighteen seventy nine. So the
first pyramid scheme properly may have been the invention of
a of a lady in Boston in the eighteen seventies.
She just very rarely gets the credit for this um.
But but we're all about, you know, giving credit to
the women grifters, So I'm gonna talk about Sarah How
for a little bit. She created a con called the

(10:30):
Ladies Deposit Company, and the Ladies Deposit Company was ostensibly
a bank run by women, women and exclusively for women.
In the eighteen seventies, women weren't allowed to have bank
account open bank accounts on their own, Like if you
had a bank account as a one was because like
your husband or your dad had opened one for you,
and like they were would would have like a co

(10:51):
you know whatever on it. Um. So it was a
fairly huge deal that Sarah was creating a bank that
was like four women and specifically, Sarah's bank only accepted
deposits from women who were what she called unprotected i e.
They did not have a male guardian in charge of
their finances. So this was like a big deal, but
of course it was. It was a giant scam, right um.

(11:11):
So Sarah promised that an exchange for investments from these
unprotected women, she would give them an eight percent interest
on their like eight percent return on any money they invested.
So if you deposited a hundred dollars at the end
of the year, you'd have a hundred nineties six bucks
in your account. Um. And she was also giving out
the first three months of interest in advance to women
who started accounts with her. So even the day that

(11:33):
would sound like a scheme, right um, And it was
definitely a scheme back then. Um. So people at the
time asked how this could work, how the bank could
possibly profit doing this, and Shara Sarah ashared them it's
because it was not a for profit endeavor. She claimed
that her bank was funded by Quaker philanthropists, um, which
was a lie. Um. But it was a very successful

(11:54):
con And you can see why she picked this population
to con The fact that these women are unprotected means
like were they going to go to right, like they
don't have like they don't Presumably these are like kind
of these poor women, right if you're an independent woman,
you don't have like a man, either a father or
a husband. You're kind of in the least protected segment
of society. So she's going after these people in part

(12:15):
because she she figures they're not going to be able
to do anything right. Um. And the con is very
successful because there was a huge need for a bank
that would actually serve these women. And in short order,
Sarah gathered between two hundred and fifty thousand and five
hundred thousand dollars in eighteen seventies money from close to
a thousand people. Um a local paper. Yeah, she made

(12:38):
a lot of money off of that. That was millions
and modern dollars. Was just the first one to get caught. Basically, No,
she gets caught before him. But she's a woman, so
they're not going to name it a Sarah scheme. You
know that literally does seem to be like why um
so a local Also, I mean Ponzi scheme was larger,
but Sarah scheme was not small. This is not a

(12:58):
low level con. You know, you're making a quarter of
a million dollars or more in the eighteen seventies, you
have you have pulled off a good scheme. Um, as
with Ponzi, A local paper exposed this as a scam.
Sarah had been a fortune teller in the past, so
that was a big part of like the reporting on
her that like, this is not a banker, This is
like a person who you know, told fortunes and stuff. Um,

(13:22):
I picked all my financial advisors, is making sure that
they have a background and fortune telling. You could argue
that that's what any stockbroker is. I mean, yeah, I
just don't want to admit it. But yeah, there is
that fun article about how there's that hamster that has
outperformed the vast majority of humans in the crypto industry, um,

(13:42):
which I I do love. Um. They even made acute
little desk um. So yeah, and the the articles also
exposed that, in addition to having a background that maybe
was not the most credible basis for a someone who
founded a bank, she had uh you know, essentially created
I mean, she didn't create a Ponzi scream. She created
a house scheme, and Pondsi created a house scheme. But

(14:04):
I'm going to quote from a write up on long
Reads here, when a new depositor arrived, how would use
their money to pay out older clients. So the whole
scheme required a constant influx of new depositors to pay
out the old ones. Like every other Ponzi fraudster, House
Bank would have eventually run out of new money. The
run of stories in the Boston Daily Advertiser instilled enough
fear in the banks investors that they began to withdraw

(14:24):
their money, and eventually there was a run on House Bank.
It took two weeks in five days from the first
story published in the Advertiser uncovering house fraud before she
was arrested. The press extended her victims a modicum of sympathy,
describing their plights will also reminding the reader that they
deserved their pain for trusting a woman with their money.
I put every dollar I had into the bank, and
if I lose it, I am a beggar. One depositor

(14:45):
told the Boston Globe at the time. I wanted the
interest so badly that I placed a mortgage on my
furniture to secure the principle to deposit. Oh I wish
I hadn't now, for I shall have my goods sold
from under my head, said another. Those characters were made
up by writing that story because they yeah, yeah uh.

(15:07):
Also to a woman, I'm a journalist. Also, isn't it
true that women couldn't women couldn't have credit cards until
like the nineteen seventies, Like yeah, it's like a very
uh DP entrenched sort of myth about women. Yeah, it's
um it's it's like there's a lot of fund up

(15:28):
stuff about like what women were and weren't allowed to,
uh to do financially, but in the eighteen seventy it
was basically nothing. So she was going after the most
desperate people. Um. And it says a lot about society
that they were just like, well they trusted a woman
with that money, you know, even though like well they
weren't allowed to trust a man with their money, like
they legally couldn't. What were they supposed to do? Um? Right?

(15:51):
I mean that's also probably why I got picked up.
And like we still know the story is because it
like goes to prove a thing that every buddy, all
the white men in existence wanted to believe. So yeah,
it's funny, um and by which I mean it's sucked up.
So and I guess I mean it should be a

(16:11):
house scheme, we should call them house schemes and fairness,
but also a Ponzi scheme. Is just a great name.
Ponzi did have a better name objectively, for for calling
a scheme. Um, it's funny, it's Italian. We all know
the Italian scampie trusted. You know, it's just good. So
Sarah how and Charles Ponzi were the first of what
would become an American institution. Confidence games of one sort

(16:33):
or another have existed probably as long as economies have existed.
One could argue that most states and corporations are just
confidence games on a very grand scale, but I'm not
gonna get into that right now. What made the schemes
that how in Ponzi started different was the fact that
they were built to masquerade within the facade of reputable institutions, banks,

(16:54):
and other like financial investment companies. By the late eighteen hundreds,
capitalism was a very solid concept for most Americans, and
inequality was soaring. People were enticed by a scam that
seemed to offer them away out of wage slavery by
doing what looked on the surface to be the same
thing that all of the rich people around them were doing. Right,
They weren't promising anything like new and fantastic. They were saying, hey,

(17:17):
you know all those bankers are rich because of interest.
Here's a way you can get interested, you can get
out and like move up into the middle class and whatnot.
Right not, this is a you know, fanciful scheme. This
is an investment in its investment that unlike the other
investments that you know, the rich people are in, Like,
I'm letting you win on this, right. We talked about
this a little bit with a nessarist scheme. Um. It's
a big part of just saying like, hey, this, if

(17:39):
you frame your scheme as we're giving regular people a
chance to do the stuff rich people do all the time,
that's the best kind of financial scheme because you're building
it on a basis, well, people know there's some way
to make money with interest. People know some people get
rich off of investments. Why couldn't it be me this
one time? Haven't I worked hard enough? You know? Um?

(17:59):
And then kids of Bernie made off. He did it
to the people who were the financial inst which is like,
wait a second, nobody knows what how any of this
ship works. And that's why we're you're never going to
hear about made off on behind the bastards because I
don't have a problem with ye oh of course, Yeah, yeah,

(18:19):
avenging angel. I mean, I'm sure he did a lot
of but like, I don't give a shit. Um, his
victims were people like whatever. Um. So in Sarah's day,
for impoverished single women. Um, it's like the thing that
she was promising this downtrond group of people was like,
you know that rich people have number one, have bank
accounts and make interest. I'm going to give you that opportunity.

(18:40):
So it didn't see these were people weren't making a
dumb decision. They thought they were getting a chance to
do the thing that the people who have money have
been doing forever. In Ponzi's day, investments like the stock
market was starting to get to be a huge deal
and and he made people feel like, well now you
can get in, get in on that thing. Um. Both
schemes work because most of the targeted people sign tutaneously

(19:00):
misunderstood the real thing the scams were pretending to be,
but also knew enough about that real thing to know
that something like what the scammer was promising was how
all of the rich people they knew had gotten that way. Um.
So that's why these things work. Now, the exact origins
of the term pyramid scheme are unclear, but the term
certainly seems to have come into widespread use during the

(19:22):
early nineteen seventies thanks to a scam cosmetics company named
Holiday Magic Um, which if if you listen to the
podcast The Dream, which is a very good podcast, they
go into a lot of detail about this. I'm just
gonna give you the cliffs notes. So Holiday Magic had
started in the mid nineteen sixties the project of a
man named William Penn Patrick, and he old Billy was

(19:45):
a real character. He had he had had a bunch
of failed businesses. He apparently came upon he was like
walking past and smelled like or like solid like cosmetics,
stacked up in some guy's garage and bought the business
off of him. It was very like sketchy story. Um.
William Penn Patrick is a fascinating guy. He unsuccessfully ran
against Ronald Reagan from the right as governor of California. Um.

(20:08):
He was a one time vice presidential nominee of a
party called the California Theocratic Party, which just seems like
it's straight up fascism. And of course he was a
member of the John Birch Society. So yeah, you know
this guy. Right, everybody's got a picture of William Penn
Patrick in their hair in their head. Now, Holiday Magic

(20:31):
sounds like a like a name you would give to
actual snake oil, like that you would run that, you yeah,
Whereas like we're I feel like we're learning the importance
of names because like with Ponzi and uh am Way,
sounds like you know that they build fucking trucks or something.

(20:55):
You know, like it's like yeah, yeah exactly, or or
at the very least like a place to buy sturdy
groceries or something like that. You know. Um So, Holiday
Magic was a multi level marketing company. It was not
the first. In fact, by the time William Pennpatrick started it,

(21:16):
there was Avon, am Way, Mary Kay, a bunch of
other MLMs existed. We'll talk about what maybe the first
was in a little bit, but Holiday Magic was probably
was within the first generation of such companies, and it
was by far the scammiest. The basic idea behind Holiday
Magic was that women would become distributors and buy makeup
kits that they could then throw parties where they did

(21:38):
the makeup for their friends and they would sell them
makeup via this. The makeup was terrible and it was
so heavily marked up that you know, number one, it
was very much impossible for distributors to make money off
of it. And number two, William Pennpatrick made a shipload
of money off it. He was a very short order,
making like six million dollars a month um. He had
quite a few mottos for his distributors. One was tell

(21:59):
recruits that going to be happier, healthier, wealthier and receive
what they went out of life with the Holiday Magic Program.
Any person who fails in the Holiday Magic Program must
fall into one of the following categories lazy, stupid, greedy,
or dead. Yeah he's the best. Also is he a
time traveler from the nineteen twenties? Who? Okack? You know that? Okay, okay,

(22:25):
this is happening in the seventies though right the voice, Yeah,
this is happening in the seventies. I mean, that's the
voice that I pitched behind the bastards to you. One
we're gonna talk about like Jack, We're gonna talk about Saddam.
Who's saying it was because you were doing it all
with while doing a soft shoe and like taking your
hat top hat on and off, juggling a little Yeah,

(22:46):
that's the guy. So his personal motto was those who
condemn wealth are those who have none and see no
chance of getting it. Uh So again you see the
eye that he is. Um. Now, as I said, there
were other m l m s out there at the time.
What made William Pennpatrick special, and you really have to

(23:07):
say all three names, is that he was very astutely
married the kind of American dream style grift of the
pyramid scheme with cultic influence techniques. So he was kind
of the first to like, I'm not just gonna have
a money grift to get money out of people. I'm
gonna keep them there by kind of making my grift
into a cult. Right, because if you're just taking people's
money in a scam, eventually they'll figure it out and leave.

(23:29):
If you get them to like believe that they're getting
them getting scammed is like makes them morally superior, like
keys them in spiritually to something as part of some
sort of sacred you know thing, then you can keep
them forever. Right, Like that's the Church of scientology, you know. Um,
that's the way to to really make a grift last.
And William Penn Patrick is kind of the first MLM

(23:51):
dude to get it right. Well sort of, he went
a little far. I was gonna say that Holiday Magic
is too stupid a name for a cult, and then
you immediately disproved that by saying scientology. Uh, well of,
and you know the cult. He had another organization that

(24:11):
was the cult, and this was called It was a
series of course is called Leadership Dynamics, which were build
is like a training conference for Holiday Magic and other
MLM distributors. So like on paper, leadership Dynamics is of
course that you take in order to learn how to
run your own business selling MLM products. The reality of
the program is that people would pay like a thousand

(24:32):
dollars and again seventies money to hang out in a
horrible hotel getting locked in coffins and mentally abused. Like
it was all these like weird power games and ship
like quasi torture of people. Um. It involved a lot
of we've talked about sinning on and Chuck de Eric.
It involved a lot of the game where like you'll
sit around in a circle and everyone in the group
will harass one person for a period of time and

(24:54):
insult them. Like it was a lot of like fucked
up cult ship, you know, yeah, yeah, next Sea Vibes.
Everything that came after Nexium is very much descended from
this cult, from this cult pyramid scheme too. Now again,
if you want to learn a lot more detail about this,
because I'm really breathing over a lot, the podcast The
Dream has done an excellent series of episodes on this.

(25:15):
For our purposes, what you need to know is that
Chuck's Dream fell apart as a result of the fact
that he was just promising way too much and it
wasn't really a product he was selling. He was just
getting money straight from distributors to sell the product, and
like that's that. That was too much of a scam.
Holiday Magic generated enough complaints that it kept coming up
in the House of Representatives, and eventually the FTC took

(25:38):
him to task for being a pyramid scheme. And I'm
going to quote from the excellent book Cultish by Amanda
Montel here. Patrick's behavior was unhinged from all angles, But
when the FTC brought him to court, their most compelling
argument against him, and what eventually allowed them to shut
down Holiday Magic, was their points about his speech. Ultimately,
the court ruled that Patrick's deceptive, hyperbole, loaded buzzwords, and

(25:59):
gas lighting to guysed as inspiration were what defined him
as a pyramid schemer. This makes sense because in every
corner of life, business, and otherwise, when you can tell
deep down that something is ethically wrong but are having
trouble pinpointing why, language is a good place to look
for evidence. This is where the FTC turned to squash
Holiday Magic, and over the next few years, it's attorneys
sited the same kind of outlinedish, fraudulent messaging as they

(26:22):
prosecuted a litany of mL ms, including the biggest one
they went after, am Way. Now am Way, as we
started the podcast by stating, is legally not a pyramid
scheme um And to explain why the FDC blasted William
Pinnpatrick Scam scam to hell, but did not do that
to am Way, we have to talk a little bit
about the men who founded am Way. We're gonna be

(26:44):
veering back and forward in time here so they can
we cut in some of Cody's time machine noises here. Okay, well,
did you say no, No, it's horrible. Let me try.
Oh right, right, Okay, I know what you're talking like.
I think he'd be proud, Um, I feel smiling up,

(27:04):
smiling upon me from heaven. By the way, so you know,
I host the show The Daily Zy, So I'm not
just putting that in there as a plug. But we haven't.
We have been covering Um co host with Miles Gray,
former guest on the show. We've been covering a lot
of Amazon lately. And they also have coffins and like
scream at each other until they start weeping at work,

(27:27):
Like did you know about the about them? We're doing
this the holiday Magic scheme Amazon Amazon booths, which are
just these like booths I haven't heard and like they
are like you're good, you aren't worth it. It's basically
like a place you can a coffin you can cry

(27:47):
in for like fifteen minutes. That's God as hell, Jack, Yes,
I love it. I love to see a company respecting tradition.
You know exactly what it's all about. To me, embraced tradition,
reject modernity. Put your employees and coffins and scream at them.
Speaking of that, Jack, do you know who else puts
their employees and coffins and screams at them. I mean

(28:10):
it's going to be like an accidental Amazon at like
there's a decent JA that's a non zero. What happened
might be Chevron, you know, I really hope not. I
don't know. Look, I think one of the great things
about this country is that we all have a sacred
right to force our employees into coffins and scream at them.
It's the American way. It's the American way. It's the

(28:32):
am way. Yeah, that's what comes from right, Yes, yeah, well, yes,
the dead actually does. We'll be talking about that briefly,
but first products, Ah, we are bad. I don't know, Jack,

(28:58):
I don't know. It's my connection slower and split out.
We've been casting too many pods lately. I'm I'm I'm
overwhelmed by the amount of content of it. No, I
get it, man, I'm right there with you. We just
recorded our thousandth episode of Daily's Guys Jesus clost on
a cracker. But we realized that because somebody wrote it

(29:22):
into an a k Otherwise, Yeah, you never. I have
no idea how any podcasts I've done other than far
too many. Uh. But you know the nice thing about this, Jack,
is when we're both dead teenagers a hundred years from now,
we'll be able to make us say literally anything. There's
there's plenty of our voices. Yeah, we can finally immortality Jack. Yes,

(29:46):
and then my kids will finally be able to hear
me speak to them because uh yeah, yeah, you're famously
have never never speak around your children. Um, I only
speak cling on to my children. You're doing like a
Star Trek version of the experiment that one PopEd it.
There's actually a psychologist who did did a klingon thing

(30:09):
to his children. Don't only spoke cling on around them.
That's that's this hard, this beautiful mix of like kind
of abusive and also kind of mad. Like it's a
really unique area. Um okay. So am Way got its
start thanks to a company called neutral Light, which was

(30:30):
a dietary supplement business founded in nineteen thirty four. And
I think from the name Neutralite, you know it's a scam.
Um yeah, yeah, Now the founder was an American businessman
named Carl F. Rainberg, who, as far as I can tell, yeah,
I don't know the degree to which this guy was
a total con artist. Neutralite definitely sounds like a scam.

(30:50):
By some accounts, it maybe the first MLM company, but
also I think it was m l m's were not
quite as much of a of a bald faced at
that point because it was really just like a modification
of door to door salesman. Right. That was a big
thing at the time. The fact that the idea that
like someone would buy products and then go to door
to door selling them was like not weird, um like

(31:11):
it is now. Um So, I don't know. Rainboard had
been working for the steel industry as well as Colgate
and China when the Chinese Civil War forced him to flee,
and he claimed that seeing so much poverty and starvation
convinced him of the value of vitamins, and so he
got into the dietary supplement business next again. Neutralite maybe
the first MLM company. It's unclear to me how scammy

(31:34):
it was. Um. He sold his products wholesale to distributors
who eventually formed their own companies to sell it. Uh.
And two of the people who became independent distributors of
Neutralite where j Van Andel and Richard divorce They got
involved in nineteen forty nine. Yeah, we all know that
last name, yep. For the first men. Oh yeah, there's

(31:59):
a big old divorced. I feel like we need like
a horrifying sound effect. Yeah, let's uh hear no, not
that one. That's the good that's that's the Divos sound
was appropriate. So they become independent distributors in nineteen forty nine.
And there is not a tremendous amount that I found
of reputable information about these men's early lives. They both

(32:20):
did kind of write memoiry books, but there again mainly
existed to sell you on amways, so not the best sources.
Jay was born on June third, nineteen thirty four, which
is the same year that neutral It was founded. He
was the grandchild of Dutch immigrants um His parents were
extremely religious and members of the Christian Reformed Church. He

(32:43):
attended a Christian high school, and when World War Two
broke out, he joined the Air Force and trained bomber crews.
After the war, he became a door to door salesman,
where he met his wife. Jay had met Richard Divos
back in high school. They both went to the same
Christian academy. Now Richard DeVos will call old Dickie D.
Was born on March fourth, nineteen in Grand Rapids, Michigan.

(33:06):
He was a true child of the twenties, by which
I mean his mother was named Ethel and his father
was Simon Cornelius, which I know it's a name you
just have to punch. So his family, I think we're
fairly He would later say that like they had hard
times during the depressions, that was difficult for them. I'm
sure it was tighter than other times where they also
paid to go to a private school. I don't think

(33:27):
it was like like my grandpa had to leave the
family when he was seventeen because they didn't have enough food.
I don't think they were that kind of poor. But
he makes a lot out of how poor they were
there in depression. I don't know. I wasn't there. Um,
his family and Jays seemed to have been, you know,
more comfortable than most in this period of time. Again,
they're able to send their kids to a private school.
There is fairly little about the early lives of either

(33:49):
men and sources that are particularly trustworthy. When he was
eighty eight, Rich wrote a memoir where he described his
grandfather as a huckster um, but he meant that in
a positive sense and from a it up in Politico here.
Grand pod Decker had been an immigrant from the Netherlands,
Dutch in origin, like the word huckster itself. During the
Great Depression, he sold freshly farmed vegetables door to door

(34:09):
in Grand Rapids, Michigan. Rich Divos used to tag along,
noting the way the old man's neighborly demeanor and good
humor gave him an instant rapport with customers. At the
end of the usual roots, young rich had the chance
to peddle the leftover vegetables. The first thing to Voss
ever sold was a bag of onions. His father let
him pocket the profit. So that's apparently how Richard Divoss
claims he got and that may very well be a

(34:30):
lie because it's a very folksy story, you know. Um,
But rich is very very bullish about the trade, the
craft of being a salesman. He kind of builds his
whole life around that. Um. The official away account of
both men's life from the website Amway Global dot Com
runs just a few paragraphs long. They stayed up front
quote the founders of Amway, Rich DeVos and j Van

(34:52):
Andel first became friends in high school in Grand Rapids, Michigan.
They had no way of knowing that their individual lives
would become forever entwined, or that their combined would change
the landscape of business for good. But they don't give
a lot of detail about these guys. Again, it's kind
of hard to nail down on a whole lot about
their early lives. So, as I stated, Richard and j
started as independent Neutral Life distributors in nineteen forty nine,

(35:14):
right after World War Two. Direct sales were a big
deal at the time, and the concept of people going
door to door to sell things was still fairly common
and not really weird, right. Part of what's weird about
m l m's now is that like business doesn't work
that way anymore, where like a salesman just like buys
a bunch of products wholesale and like goes around selling them.
That did used to be a kind of normal. When
J and Rich got involved in Neutral Life, it was

(35:37):
fighting off an attack by the f d A who
accused the company of false advertising. So again I think
that their vitamin things were kind of a scam um.
J and Rich were very good salesman, but the blu
Ha hall with the FDA concerned them. So after ten
years as Neutral Life distributors, they quit and they spun
off their own company to sell different household products. They

(35:57):
called it the American Way, or am for short. Now.
A few short years later, Von Andelen Divos would buy
Neutral Life from Carl Rainberg, and it today remains one
of the staples of their product line. But the first
Amway product was a type of highly concentrated organic detergent
which they bought as a patent from a Detroit area
scientist who had fallen on hard times. The organic home

(36:19):
cleaner was called Frisk, and the men liked it because
it was the kind of product that they claimed anybody
could sell. Amway was successful early on offering Americans during
an unprecedented economic boom, the chance to quote own a
business of their own. And this is from the beginning
a huge part of the pitch, right, a lot of
people are getting rich. This is the biggest economic expansion
in history, and they're like, am Way is a chance

(36:42):
to own your own business. So you're not our employees.
You're starting their own business to sell these great products,
and like, that's how you're going to get your piece
of of the American Dream. That was the m Way
pitch from the beginning, and am Way wrapped itself in
the cult of the American Dream. Rich and Jay's most
quoted line on modern a Way company websites is quote,
we were just two guys from Ouda, Michigan, USA who

(37:05):
wanted to have a business of our own. The Amway
slogan is you can do it too, right, And you
see the the I mean the this is a little
bit of the evolution of the grift, right, these ponzi
and how these first schemes. It's you know, how rich
people are making their money, you can do that too.
And this is more of like a a an intimate

(37:28):
sort of thing. We're just two regular guys who started
a business and it got us rich, and you can
do that. They're selling entrepreneurship as a brand, right, Like
you two could be your own entrepreneur. You could start
your own business, be your own business owner, because that
is what all the rich people that you've read about
have always done. Like they really are like basically selling

(37:48):
the American dream, like the American way. Like that they
tell you in the title exactly what they're going to
do to you. Yep, that's exactly right now. Rich Divos,
I think was more than driver of the duo um
and he was first and foremost a salesman. He wrote
in a nineteen book quote. My own particular thing has
always been salesmanship. I am always amazed to see how

(38:11):
many people look down their noses at salesmanship as a
worthy occupation. Now to sell am Way, Rich had to
sell his own lifestyle, the fact that he was rich,
big house, nice cars, and he'd all learned it through
am Way. And if Rich could do it, you could
do it too. He would warn his new distributors that
A Way wasn't about making a quick buck. It was
about making your own slice of the American dreamer reality

(38:32):
through hard work from Politico quote. He helped his distributors
along the way with guidelines and best practices, but he
mostly saw himself as a cheerleader for people to realize
their own capabilities and to expand their ideas of what
is possible, all while undergirded by specific political and spiritual ideas.
He saw is fundamental to the American Way. And this
is again what separates this from these early pyramid schemes

(38:54):
are promising d return, you'll get rich. You know, you
do nothing but handing your money, you get rich. The
much more durable version of the grift is it's gonna
be hard work. It's gonna you'll get rich, sure, but
you have to do you know, you have to put
in this work. This is the you know you can.
This is your own business. This is not like a
quick return thing you'll get you'll be a millionaire if
you follow these steps. But you have to follow these

(39:15):
steps and it's gonna be hard. And that's a lot
more durable. And it also means if all you're doing
is handing in money being promised to return when the
return doesn't come, it's pretty easy to figure out who
to blame. If you have to do put in the
hard work quote unquote um, then if it doesn't work out,
because maybe it's close to impossible for it to work out,
the blame is on you, which is a much smarter grift.

(39:38):
You know, right, you're and like your family as you're
you know, taking out a second mortgage on your house
to buy like wheelbarrows full of fucking cleaning solution that
doesn't really work in your family is like don't do this.
You're like, don't you trust me? Like I'm going to
I Am going to make this happen because just through
sheer tyranny of will, because like that's what America it

(40:00):
treats teaches us as possible, and then you know, when
it doesn't happen, you're kind of fucked because you already
like kind of put it on your own shoulders. Yeah. Yeah,
that's exactly right, and that's brilliant. It's much smarter than
what Ponzi and how we're doing. But it's very evil,
but it's also legally not a scam. Yeah. So, for Divorce,

(40:23):
the American Way meant a country that embraced the free
enterprise system, exalted God, and held true to the conservative
Christian principles. This country was built on a religious heritage,
he wrote in his book Believe and We'd better get
back to it. It meant a country where the only
limit to what one could achieve was how hard one worked.
I think being poor is something many people do, he

(40:44):
said in a nineteen sixties six speech. It sort of
has to do with being poor by choice. And it
meant a country where personal responsibility and belief in yourself
were two sides of the same coin. In the nineteen
sixties and seventies, Divorce believed that those values were under
threat from the rise of the welfare state, that a
client of religion to the Soviet threat and the spread
of Communism in Southeast Asia. At the time, Conservative Christians

(41:06):
hadn't become yet a potent political force, but the makings
of the movement were there. The sexual Revolution, the Supreme
Courts rov Wade ruling, the pornography wars, the white backlash
to desegregation, the backlash to the women's lib lib movement,
the rise of the silent majority in quoth. It's all
from Politico's obituary of the Man, and it makes a
good point about like where where this guy is situating

(41:27):
himself very consciously, So he's from the beginning not just
a businessman, and from the beginning doing the kind of
thing that that William Pennpatrick did. This isn't just a
money making scene. This is wrapped up in in in
this cult of Americana, and it is wrapped up in
Christianity and this this religious belief in the free market um.

(41:48):
And again that makes it all much more durable because
it's not just a matter of well, if this doesn't work,
maybe it was a scam. It's a matter of like, well,
this must work, and so if it's not working, it's
on me, because this is what God wants you know now,
the religious right in the nineteen seventies, which is when
Amway really starts to make serious money, was not yet
an organized factor in US politics. That didn't come around

(42:10):
until nineteen seventy nine. But Richard knew the future was
in marrying conservative electoral politics with Christian fundamentalism and free
market ideology. By the early nineteen seventies, he was wealthy
enough to start spreading some of his money around to
deserving causes. He founded the Christian Freedom Foundation, which he shaired.
Now today there's an organization by this name that comes

(42:30):
to be an apostolic law ministry UM, but that is
not the the the CF that existed at his time.
According to a Mother Jones report from one the purpose
of the CF was quote was as stated by a
member during one meeting to elect conservative Christians to Congress.
Shortly after giving it twenty five thousand dollars, Richard Vos
took divorce, took control of the board of the CF,

(42:53):
and ran it. He used funds from the organization to
funnel money into yet another right wing theocratic organization, Third
Century publishers. These fund folks published a guide book for
conservative Christians who wanted to win local elections. They framed
this as returning to America quote as it was when
first founded a Christian Republic. Now, during the same period,

(43:14):
j Van Andel, the co founder of Amway, organized the
Chamber Citizens Choice Lobby, which agitated against government regulations that
he claimed reduced choice and that other people said reduced
the ability of corporations to like crush workers with factory equipment.
So both of these guys are are are seeing both
like the fight for deregulation and whatnot, in the fight

(43:35):
for um, you know, corporate rights as the same as
like fighting for a Christian republic, because obviously a Christian
republic would have no limitations on what capital can do. Now,
the Amway co founders established the Center for Free Enterprise
and Ada, Michigan as the and this is like kind
of like a museum, it sounds like. The lobby of
this building featured life size bronze statues of both men.

(43:58):
Mother Jones described the it has quote one of many
displays in the saucer shaped building that illustrate the rewards
of a capitalism stewarded not by the federal government but
by God fearing tycoons themselves. It's like a propaganda outlet
right this like this, this this museum dedicated to the UH,
the wonderful history of free enterprise and all that goes
great when the government stays out of the way of

(44:19):
Richmond and its first full year of business nineteen sixty,
a Way had made just half a million dollars. By
nineteen seventy seven, the company was selling more than three
hundred million dollars in products per year, mostly to its
own distributors. While Amway had started off as a multi
level marketing company, the focus was initially on selling products
to actual customers. It quickly became clear that this was

(44:39):
not the best way to make a fortune. If you
relied on selling products the normal way, you had to
worry about whether or not they worked oral marketed well
to customers. Instead, DeVos and Van Andel created a modified
cult dedicated to convincing people to buy more Amway products
in the guise of independent businesses that they would ostensibly sell,
but in most cases would just kind of accrue in

(45:00):
their house because they were unable to move them. Um
Mother Jones lays it all out quote. Am Way measures
a distributor success by how many products the person sells
and by the size of their distributors downline. Each time
the distributors get a new recruit, they add to their
personal salesforce and elevate their own position, increasing the amount
of money they get from people below them, while acquiring
ever loftier titles first Direct than Ruby, Emerald, Diamond and

(45:24):
so on. So you can are technically make money by
selling the products, but the real way to make money
is by selling Amway to new people, right, because then
you get a and in order to stay in it,
you're you're pressured to buy a certain amount of the
products a month. Most of most of what's bought is
distributors buying it just so that they can say that
they're continuing to quote unquote cell products. And if there's

(45:45):
people are in your downline, you get a chunk every
time they buy more Amway stuff, so they pressure them
to buy more Amway stuff. And if you have a
lot of people in your downline, you make a shipload
of money. You know, down means like so you get
somebody to join an Amway who like answers to you,
and then they get people to join them. All those

(46:06):
people are in your downline, their their money is rolling
up flowing as they buy the products too, then yeah, exactly,
And again you don't if you can think about the
shape that that would be if you were to dry
out the way that arrangement works. Um. But yeah, that's
all we can say on the matter. So triangular, definitely,

(46:28):
like a triangular is shape to the way the money
would be flowing. Um. Yeah. Now. William Campbell, a distributor
for the company, explained the traditional Amway sales pitch this
way for when he was interviewed for a nineteen seven article.
Ama is just the good old American dream. Everybody has
the idea to open their own business and see it
go and wait lets you And of course most AMIA

(46:51):
distributors either made nothing or lost money. This discrepancy between
the wealth made by Amway and the poverty of many
AMIA distributors lead to Vos and van Handle to earn
the nickname the gold Dust Twins. Um. I don't know
who gave him that nickname, but that's what people. I
am pretty sure they gave themselves that. Yeah, it does
sound like a nickname, give yourself. Despite all of their
growing propaganda operations, de Vos continued to prefer to deliver

(47:14):
his sermons on capitalism and Christianity in person to wrapt
audiences of Amway distributors. His speeches at regular Amway events
were said to drive the audience into a quote near
frenzy and always ended in a chorus of weepy God,
bless America's from the mostly husband and wife teams who attended.
And we purchased its own radio broadcasting system. In one interview,

(47:36):
Devas explained that purchasing the media directly was important to
Amway so that, quote, we can expose to a broader
audience the things we feel are important in the future
of this country. Keep that in mind, because that's gonna
come up again soon. Am We also increasingly published its
own cartoons, films, booklets, and audio cassettes. Many of these
were geared at training people to sell, but more were

(47:58):
pure ideology, aimed towards in their war words, objectively fighting
the unfair scapegoating of the profit motive by the left now.
DeVos and Van Andel also took the fight directly to
politicians in Washington, generally by you know, buying them out right.
When Gerald Ford took office in nineteen seventy three after

(48:19):
some unpleasantness with his old boss, the Amway founders had
been shotgunning money his direction and towards the Republican Party
for years, and so they quickly became regular guests at
the White House. This came in really handy for them
because in nineteen seventy five am we fell under a
Federal Trade Commission investigation to determine whether or not they
were a pyramid scheme. Um, but beyond speaking terms with

(48:42):
the president, when the FTC starts looking into whether or
not you're a grifter, but Jack, you know who the
FTC never looks into as far as we know, as
far as far yeah is it is it? The product
is the products products ever never EC isn't even aware
of them. We fly right under the FDCs right our baby,

(49:03):
that's the promise behind. The bastards didn't even know what
we're doing. We use a VPN. It's fine. Um, here's
ads Okay, These these are returns from Adverick sir. Yeah. Yeah,

(49:31):
we've never won anything. Yeah, we've I've never won an
award and never will not not not not a one.
We're you know awards, Jack, We're back. Uh you know what, Robert,
you just reached my Ruby level of podcast hosts. So
you you get that reward, You're you're certified Ruby, thank you?

(49:56):
Does that? Does that come with a car? Do I
get the Do I get the Cadillac? Yeah? Yeah, of
course the red, the red Cadillac, the bright red Cadillac.
I'm gonna man go cruising in the main drag. So
just a question on kind of what we've covered so far,
because they're you know, they have these people who are
like the foot soldiers, Like are they rewarding those people

(50:21):
based on how enthusiastically they like sing the praises of
Amway because that that does seem to be like part
of it, right, is Like I'm assuming they think by
kissing us and saying his uh speeches like throw them
into like you know, orgasms of fucking capitalist joy, that

(50:46):
they are then like kind of finding favor in the
Amway world. Yeah. I mean, obviously you have to praise
the boss, but also the people. Thank you, Sophie was
what I was getting it, and I appreciate it. The
people who like get to give talk for Amway are
going to be other successful distributors. So you do have

(51:08):
you have the people who are actually trying to run
a business and like sell Amway products who uh don't
make money uh and wind up broke uh and and
dying on the street. And then you have the people
who are really good at getting people to be that person,
and those people do make money. There's not a lot
of them, but those are the people who get to
like who when you go out for quotes and whatnot,

(51:29):
are representing Amway. Right, these big distributors who are not
Amway employees. Often we'll talk a little bit about that,
but like, that's um like it in A big part
of it is like building this this cult of personality
around the founders and around the successful distributors, And it's
this huge part of what works about Amway is the
worship of success. So when somebody does make money, you

(51:51):
put that person in front of crowds, you have them
deliver these and the kind of people who are capable
of making money at Amway are going to be good
public speakers because they're kind of people who are charismatic. Right,
They're good at getting people to buy in people. Yeah,
and I don't think. I don't think that audience is
faking it. That audience is cheering and losing their minds
because they desperately want to believe in what Amway promises

(52:13):
because it's the only hope they have of living a
life that isn't wage slavery. Um. And so they they
they they want the promise that Amway is making them um.
And so when they hear someone tell them it's possible
you can do this. You know, you can succeed, you
can have the big house and the boats and everything, um,

(52:36):
they don't question it. Uh. And instead they find it
like inspiring. Um. And I'm sure when they get home
that night to their house full of unsold Amway products, UM,
there's there's a crushing feeling of inadequacy and failure. Um.
But it's it's maybe even made worse than it otherwise
would have been because they've convinced themselves, well, this guy
was able to do it. And so as the Amway

(52:56):
motto goes, I can do it too. You know, it's
if I haven't done it, there must be something wrong
with me. Um. It's I mean, it's it's how America
talks about homeless people and poor people. Right. It's just
like a company that's bottled that that discussion of like,
if you're not succeeding under this system, it's because there's
something wrong with you. Yeah, Now, in nineteen seventy five,

(53:21):
as I stated, and we the FTC is like this
might be a pyramid scheme. Holiday Magic had just been busted,
and the FTC was at this point kind of going
bullish lee after other MLMs. Their argument against Amway seemed
pretty strong, despite Richard divorces strident claims that Amway was
a good way to build an independent business and get rich.
The average gross monthly income of distributors with sixty seven

(53:42):
dollars a month. Now, and you have to consider that's
average when you consider guys like Von ANDL and Divorce,
who are making millions of dollars a month. Right, that's
the average when you include the people who are getting
rich off of this stuff, which means the vast majority
of the seven and fifty thousand away distributors were making
nothing or loo using money. Right. I mean didn't you
say at the top the independent distributors lose ninety nine

(54:04):
point nine percent of their Yes, yeah, that's a more
recent number, but yeah, like that, this was the number
back then, right, with sixty seven dollars a month was
the average in nineteen seventy five. Um, we now know
based on again that when I started the episode with it. Yeah,
ninety percent of people lose money. Um, you know the
data on am Way obviously it's different throughout the years,

(54:25):
and you know, we know more now than we did
at that point. Um. So that same year, nineteen seventy five,
Van Andel and Richard de Vos met with President Gerald
Ford in the Oval Office for forty three minutes. The
same year that like this, this investigation gets underway. Next
from the Washington Post. A month later, Van Andel was
quoted in a Michigan newspaper is saying that Ford was

(54:45):
aware of em Ways travels with the FTC. Later, Warren
rustan director of fords scheduling office, and William Nicholson, his assistant,
were listed as stockholders in a Nebraska insurance company being
formed by Van Andel and Divos Wrestling. Nicholson dropped doubt
of the venture, despite White House approval of their participation.
Nicholson was later hired in Amia's government affairs office. You know,

(55:08):
there's ways of greasing things. Um. In nineteen seventy nine,
the FTC ruled that Emily was not a pyramid scheme,
but that the recruiting strategy. Yeah, amazing, a true underdog story. Yeah,
if you have a forty three minute meeting with the
president of the Oval Office. You two can make court stuff.
Maybe not not continue. Yeah. Devas's picture on Wikipedia is

(55:31):
him standing next to ford and at the White House
holding up what appears to be the Constitution, like I
don't know what, well, I don't know exactly what they're holding.
It's like a single page documents. Yeah. Interest very funny
and not at all corrupt. In nineteen seventy nine, again

(55:53):
the FTC rules and is not a pyramid scheme, but
the FTC the judge did note that the recruiting strategy
had the capacity to deceive spective marks because it heavily
implied they'd get rich, they were fine, and am we
had to agree to change their ads to more accurately
reflect what people could actually make. The reality is that
they just got slightly more cunning it promising the same
things to people while skirting right up to the legal line.

(56:15):
I found a book, Merchants of Deception, published by a
former am WI distributor named Eric schlib Scheibler. Uh. He
came into Amway well after the FDC case, and he
explains how it was sold to him. So this is
kind of how they've modified things since the case to
not make fraudulent claims so to speak. Quote. One of
the many analogies used by am Way distributor leaders to

(56:37):
illustrate this was a reference to the McDonald's franchising scheme.
Would you rather own one McDonald's or be Ray Kroc
and have the right to franchise or duplicate your efforts?
Isn't it far better to have ten percent of a
hundred businesses than a hundred percent of one. By helping
many people succeed in owning their own franchise, so to speak,
you could literally work yourself out of a job and
live comfortably on the residual income generated by the businesses

(56:59):
you started. This regidual income stream could even be passed
onto your children as part of your estate. There was
no way to lose money, that's end quote. As it
was the perfect business opportunity with no employees or overhead
because again, the people sales and no sales. When we
questioned them about the apparent pyramid nature of the business,

(57:20):
we were advised, no one makes more money off your
business than you. Carry later informed us this is a
legal requirement that keeps this business from being an illegal pyramid.
Am Way claimed that the worst deception found in their
marketing strategy was the fault of rogue distributors, individuals who
had made their own money signing folks up for Amway
and who had started posting, like pushing motivational tapes and

(57:42):
pamphlets at conferences to teach people how to become super salesman.
And this is not entirely untrue. All these things are
hallmarks of Amway today, but they actually started as independent
from the main Amway business. So all of again, everybody
an ami Way, These are all independent little companies, and
some of them are independent large companies. The people who
are really successful, the guys who are good at getting
people to buy an ami Way, those guys start selling

(58:05):
books and pamphlets where they're talking about how rich you
can get, and am Way claims like, well, that's that's
a big part. That's that's what the FTC had an
issue with. It wasn't what we were doing. We just
weren't keeping enough of an eye on these distributors, you
know of like gig workers almost like all the massive
like tech companies built on gig workers who are not
actually employees. It does seem a lot like what Uber

(58:28):
is doing. Um Uber the company that a lot of
people got rich for starting and has never made a profit,
which is fun um It's neat. So as I noted,
the way this worked in the beginning is that am
Way sold products to distributors, who often started their own
companies to sell said products, much in the same way
as to Vos and van Andal got into the business.
The money was in selling the products to distributors, and

(58:49):
the smartest Amway distributors made money by promising the good
life too smaller fish and getting them to buy a
bunch of Amway products. Thanks to a nineteen eighties court case,
we have a memo Richard DeVos wrote in the nineteen
seventies as FTC scrutiny of his company reached a height.
In it, he very bluntly laid out what the FTC
would later say was true and weight distributors were being

(59:10):
lied to quote and this is Richard devas widespread illegalities
inherent and am Way distributor designed systems of tapes, books
and rallies. While most of these systems were conceived of
in the late nineteen sixties and early nineteen seventies, is
genuine support programs to help and Way distributors developed their
Amway business entrepreneurial higher higher pins discovered and developed programs

(59:30):
for substantial, separate and additional income under the Amway umbrella. Again,
he was very aware of what was going on. Richard
outlined these support systems as a threat to the future
security of the Amway Corporation. He acknowledged to his subordinates
that the disproportionate to Amway sales, intensity and solicitation of
these tools systems are illegal per se under several US

(59:52):
federal and state laws. So he's aware and like the
early seventies, that a lot of his distributors are breaking
the law, but he he can't really like he's there's
not He's not going to do anything about this, because
those people are how Amway makes money, right, those big
fish distributors who are all breaking the law and the
promises they're making are also where his money comes from,

(01:00:13):
because they all have a bunch of people in their
down line. Um, but they're not Amway employees and they're
not uh yeah, none of them. Yeah, And he's not
the one doing the lying. So it's exactly feels like
he's good, yeah, yeah, he I mean legally he was good.
Um So, after the FTC decides that Amway is not
a pyramid scheme, a bunch of different state attorneys general

(01:00:35):
start investigating Amway to like try to figure out if
there's anything else they're doing illegal that they can because
you know, they're getting a lot of complaints. People who
like come out of the Amway culture like, well, I
lost a bunch of money. Something seems like they'd be
wrong here. Uh. In Wisconsin, the state attorney general sent
people into Amway meetings and he found these shady distributors
running conferences and hawking tapes that made promises about wealth

(01:00:58):
that am Way absolutely could not back up up. The
state filed civil complaints against Amway, which sent journalists undercovered
to poke around, which is when Richard DeVos finally started
to care. He proposed a number of possible solutions, perhaps
the funniest of which was to create what he called
a truth squad to ferret out big distributors who were
lying in their supplemental materials. But the very quickly realized

(01:01:19):
there was nothing am We could actually do without harming
like his ability to make money. As doctor Carol Juth,
a sociologist who studies Direct Marketing, wrote, the entrepreneurs of
the Amway Corporation, perhaps unwittingly, created an organizational structure which
evolved into two powerful symbiotic organizations. The survival of the
corporation and the distributor organizations are now dependent on and

(01:01:41):
constrained by the other. The Amway Corporation is constrained and
instability to garner desired profits because of the amount of
money it must allow for distributor incentives and the fact
that distributors are more inclined to sponsor rather than to
sell retail. After the FTC find a way for false advertising,
the company was forced to make change. Is since am
we couldn't actually do without these big distributor organizations, they

(01:02:04):
brought them in their propaganda into the whole deal. So
they actually like kind of merge these two. They bring
a lot of these distributors into like uh where, and
particularly the propaganda they're they're making, they just start selling
that as part of Amway um. These big distributors with
ranks like double Diamond became a key part of the
internal Amway business, and their motivational speeches and books were

(01:02:25):
rolled into the product line. The grift got slightly smarter.
Instead of saying this book or conference will teach you
to be a millionaire, it became if you want to
grow your business, this mentoring can help. I found one
story and a mother Jones article from nineteen ninety six
that relates the tale of two Amway distributors, Karen and
Craig Jones, and I think this illustrates that where am

(01:02:46):
Way moves after nineteen seventy nine in terms of like
how these promises are made to people. After paying about
a hundred dollars for a starter kit, the Joneses started
buying motivational audio tapes recorded by such Amway leaders as
Divorce Yeager and Bill Britt and other well known district eater.
Before long, am we pressured them to place a standing
order for new tapes, which cost six dollars a piece.
They tell you that the people who are serious about

(01:03:08):
their future in the business do this, Craig says. Soon
the Joneses were receiving two tapes a week by mail,
and we also expected them to buy at least two
hundred dollars in Amway products each month. You start believing them,
says Karen. You want to do what they did to
get to where they are. Karen quit her cleaning business.
The couple sold their three bedroom home in Charlotte and
moved their three young children an hour north to Concord
to be closer to their upline. They contacted every acquaintance

(01:03:31):
they could think of, trying to recruit new distributors. It
didn't work, Karen said, They lost friends and within a
year we're broke. We would eat beans all week long.
We sold our living room furniture and our TV. As
Craig lost interest in Amway, Karen says she received a
less than Christian response from her sponsors, who implied she
should file for divorce. They tell him, they tell me,

(01:03:51):
flush him, flush my husband, says Karen. If he's not
doing his part, then flush him. After Karen stopped showing
to meetings in April ninet, Craig returned to work full
time as an architectural engineer. And we'll squeeze the jones
is out. I know, right, business and architectural engine These
people had real jobs, like but it's again, a real

(01:04:12):
job is like hard and you yeah, you have to
do it for years. Maybe you get to retire today
and get rich. Yeah, like three kids eating means like
for every meal, because they wanted to live closer to
the person that they bought their giant boxes of soap

(01:04:32):
from that they would just end up storing at their
basement because they couldn't sell them to anyone because nobody
wants this ship. Yeah, their business peaked at revenues of
three hundred dollars a month um. And the couple claims
that A Way cost them fifty dollars in nineteen nineties
money and four and a half years of their lives.
And having people who are struggling financially who just keep

(01:04:56):
spinning their wheels blaming themselves. Uh, and than a group
of people in power also blaming them is the most
American thing that I can possibly imagine. Like, this is
just I mean, couldn't be a better metaphor for everything
about our country. Yeah, it's um, it's perfect, Jack, It's perfect.

(01:05:20):
Well that's gonna be the end of part one. A
A what A I don't know I was being Italian
Jack wildly offensive. You're the co host of the Daily Zeitgeist.
That's one of the geist. You can also find me
on Twitter at Jack Underscore Old Brian Uh and yeah,

(01:05:43):
that's those are the kind of the two man places awesome. UM.
I want to end this with a little plug for
something cool that a fan is making. Um. Those of
you who listened to our episode, our Christmas episode on
Nestor mack No, who is an anarchist warlord in a Ukraine. Um,
this is about a different anarchist revolutionary guy who actually
knew mock No and fought during the Spanish Civil War,

(01:06:04):
a guy named Buena Ventura. Do Rudy. Um, there's uh.
The Ringo Award nominated comic creator Brenton Lingle is creating
a new comic series called Drudy's Shadow of the People,
and he's looking for people to back it on Kickstarter.
Do you go to Kickstarter and you search for d
U r r U t I d Rudy. Um, you'll
be able to find it if you're back at the
book level or higher and comment bastards. He'll send you

(01:06:26):
a unique signed print free. It's a cool product. Uh,
do Rudy at Kickstarter. Um, and you'll find Brenton's Brenton's project.
So I think it's Nate. Check it out. Um anything else? Jack,
nothing for me, Robert, nothing from you. Well that's all
for me. Also, all right, I can't wait until next episode.

(01:06:47):
I I can I can't. I can't. Let's wait. Let's
wait like a day, Let's wait like okay. Okay, sounds good.
All right,

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Part One: Amway: The Gravedigger of Democracy