Sawbones: A Marital Tour of Misguided Medicine - Herbalife

Episode Date: September 7, 2021

If you’ve seen a new smoothie shop or “Nutrition Club” open up in your area, take note: It may not be a smoothie store at all. This week on Sawbones, we explore the history of Herbalife and why this multi-level marketing weight loss company is opening smoothie shops with no smoothies for sale.CW: Discussion of dieting and weight lossMusic: "Medicines" by The Taxpayers

Sawbones is a show about medical history, and nothing the hosts say should be taken as medical advice or opinion. It's for fun. Can't you just have fun for an hour and not try to diagnose your mystery boil? We think you've earned it. Just sit back, relax, and enjoy a moment of distraction from that weird growth. You're worth it. that weird growth. You're worth it. Alright, talk is about books. One, two, one, two, three, four. I'm not a sense the escalant my cop for the mouth. Hello everybody and welcome to Salbo and to Marital Tour of Miss Guy to Medicine.

Me, I'm your co-host, Justin Tyler McAroy. And I'm Sydney McAroyer, are you excited Justin? I'm excited to talk about business. Finally, something that I know everything about MrBusinessBoy.com. You were a award winning business writer, weren't you? I was an AP award winning business writer. I was the best business writer.

Best business boy. Nationwide, yes. In Ohio. In 2007 or something like that. I was very proud. You got to plaque and everything. I'm plaque and everything. It's still probably displayed in my home because it's a real achievement. The grandpa Dan can appreciate. It's something tangible. He wrote in a they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable.

They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable.

They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable.

They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable. They're tangible, they're unbelievable Well, you know, you get emails, you get emails about grammar. I don't get emails about grammar. Yeah, I don't know what the difference is between us. So sit with this week's episode of Out. This week's episode, okay, I've gotten a lot of emails over time about, not just grammar, but about various products that are for sale that may or may not be real. There's a new one out there. I haven't gotten to that one yet. I've got a ton of articles, a ton of emails that are all just subject line boo, so we'll

get into that. I know. We'll get into that eventually. This is an older one. And there are lots of these companies, some of them MLM, some of them not, that sell things that are pseudoscientific, right? Like they're making claims that either they intentionally don't really mean anything so that they can skirt FTC regulation or they say things that definitely mean something but aren't really true. And this is one that

I could have, I have let slide and could have continued to let slide because there's so many of these, right? I can't talk about all of them. And that wouldn't be very interesting if our podcast was just devoted to, here's something else that doesn't work. There are lots of MLMs. There's lots of pseudoscience. But not all of them show up in my hometown.

Yes, here. In Huntington, and open up a physical location devoted to that product. This product, right, it's here in our home. And the thing that I find really interesting is it might be in your town and you may not know. I didn't. I have to thank Riley, my sister, for recommending we do a show on this, because she was the one who called to thank Riley, my sister, for recommending we do a show on this

because she was the one who called to my attention, hey, do you know what this place is? This new place in town is and I said, no, I don't know what it is. I had no idea. And then I started looking into it and realized that there are many, many places that might have similar nutrition clubs and not realize that that's what they are. So because of that, I had no choice.

It was out of your hands. It was out of my hands. And it gave the opportunity for Justin to do a little investigative journalism. Oh my, well, Sydney, that's calling on those skills. Yeah, you've heard a lot of people have been talking lately about my sort of investigative journalism background, and I think it's, you know, high time that we're we're finally talking about it. That's right. Said I did a little investigative work of my very own on this one. I did a little, little kind of like a gum shoe. Sluthing. Sluthing. Kind of a Nancy Drew thing. Yeah. I uncovered a lot of dirt. Not really. But I just went to this place and got a milkshake. Justin went and got a milkshake. We'll tell you about that. But first, let's go through the history of herbal life. Okay. So herbal life was originally conceived by Mark Hughes. This was a California native born in 1956, who from a young age was just the kind of guy

who was like a good salesperson. Like that's part of his sort of bio is that he was good at selling stuff to people like raffle tickets in school even, like just always had a knack for sales. I envy people like that. I do not have that. Totally. Totally, not a single skill in that area. But he always did. And he was particularly motivated. And this story is one that has been sort of, I don't think it really matters if it's true or not. But I should say, I always like to put that caveat in there when I'm kind of giving a little bit of a biographical history that maybe has been called into question.

And you'll find this, you know, when we talk about some of these products, these over-the-counter, pseudo-medical kind of health wellness products, we've talked about this before. You get these sort of stories about how the founder, like what led them to come up with this product, you know, some of the ones we've talked about before, this might be in that realm, or it may be true, but the story is that his mother used a lot of unsafe diet pills while he was growing up, and eventually she unfortunately overdosed on diet pills. Oh my God. And because of that, he was particularly motivated to try to find safe, healthy diet supplements so

that he could use his talent for salesmanship to sell those to people instead of a lot of the dangerous diet pills that were out there. Especially if you consider the time period in which he's going to start entering the working world in the 70s. A lot of the diet pills of the time would have contained like very samephetamines that could have been dangerous, you know, that are definitely were dangerous that we know that have been banned. We've talked about this in the past. A thing's got a while there for quite some time in the Diet Pill world. Absolutely. And so he first entered into sort of the diet industry by working for a company called Slender Now, which sold Diet Pills.

He did pretty well except it was found to be a pyramid scheme and shut down. This is going to be a similar, this is going to be a theme. And a lot of the companies back then, like, we're in the time period before, like, the idea of it being a pyramid scheme automatically, you know what I mean? Like, people were still getting away with it. We're just entering into where, like, there was all this regulation being created to be like, hey, look, if you're running a business that is solely based on getting other people to buy your stuff and then recruit other people to sell it and then they recruit other people to sell it and nobody

ever sells anything to anyone. They're just endlessly recruiting people. That's not okay. Like this idea is just being sort of put out there. So he went on to another company called Golden Youth. This was another one that was eventually closed down. I tried to find like, man, I tell you, some of these names, you start trying to Google to find like, are this company still around? Yeah, Golden Youth also seems like I could get pretty sketchy, pretty luckily.

Exactly. Luckily, there's like a band. And so that was mainly what I kept finding was a band. Thank you. Thank you. These would be closed and he would eventually decide he needed to venture out on his own. And he got some partners from these other companies, by the way. That's part of why I mentioned these other places that he worked is he pulled the best and the brightest, I guess you could say, from these other companies to help him

form his own. I want to give you an idea of who some of these partners were, just to give you a feel. I mean, here we are. It's the end of the 70s. This company is going to launch in 1979. You've got Mark Hughes, who I've already told you, has this motivation to find a better diet pill and who is great at sales. And then you have his team, Richard Markoni,

who for a long time said that he had a PhD in nutrition, that was not true. He eventually had to admit that what he had was a male order certificate from a correspondence school. Perhaps in nutrition, but. And maybe a very good correspondence school. It could have been. I mean, not certificate with some gold leaf or fancy handwriting.

And let me tell you, as somebody who looked at the MD path and the PhD path and decided PhD seems much harder, I think I'll stick with MD. I doubt that it was equivalent to the work you would get put into getting a PhD. That is my, that's my two cents. Lawrence Thompson, who previously worked at Golden Youth, and before Golden Youth, he had worked at Best Line Products, which in 1973 was find $1.5 million for being a pyramid scheme. And then also Larry Steven Huff,

who was involved in what would be called... Steven Huff is the last name. You're not talking about three people named Larry, Steve, and Huff. No, no, Larry, Steve, and Huff. I'm really fixated on this Huff character, and I want to know all about him. Well, he was once involved in what was called

the Father of All pyramids games. Holiday Man Magic Inc. Right. Yes. Okay. What was this? Holiday Magic Inc. That was in the dream. A podcast about MLM. Was it? Yeah. Well, this guy was involved in that. I was sort of like the Er. The Er pyramid scheme for the ear multilimunding. Yeah, back in 73, his distributors

were defrauded out of $250 million. That's in 73 money. Yes. So anyway, this was, so with his team, so now we have assembled our oceans, 11. Yeah. Our oceans, four, I think I have here. And I'm sure there were some other people involved.

But the company launched in 79, Urban Life. And it was an instant success. It pulled on, and I'm like, why was it such a success? I mean, I think you have to, like, some, one of the themes we've talked about on this show is that when you give people the idea that something is more natural, that something is from Mother Earth, as it is intended to be, that it's safer, it's better for you than intrinsically that product is superior. And Urbalife, I think, was one of the first companies to jump on that in a big way and

really push that. And so the herbal life plan was kind of the foundation of this company. And the herbal life plan was you eat one meal a day, you take like 20 or so pills that they sell you. Of course. A lot of pills. And then they also had protein powders that you could make into shakes and things like that, right? So that was kind of like the, that's how they launched.

So already, by the way, if, if, if from a medical standpoint, if, from a health standpoint, if you're thinking encouraging people to only eat one meal a day and take lots of pills doesn't sound good, I would agree with you. No, it doesn't. But we're, we're also in a time period where especially the diet craze was, you know, it was really taking off as we go into the 80s. So a lot of people were attracted to this plan. And also, it was a multi-level marketing company. So not only could you buy their stuff and use it to, I mean, the big thing was to lose weight.

It had this whole air of like, it was like the precursor to the wellness industry, this whole air of being better, but also, you'll lose weight was the idea. And you could also become a distributor and sell it to other people. And what do they say? Be your own boss. become a distributor and sell it to other people. And what do they say? Be your own boss. Be in charge of your own destiny. Make some money. Have a side gig.

So they also got in early on the infomercial craze. They were one of the early companies to take advantage and get one of those big hour long infomercials. Nice. And back then, you know, you got an hour of TV time. There's only so much on TV. A lot of people watched it. They even had their own magazine at one point. Well, really?

You could subscribe to, yeah, to just tell you about the Urban Life life, I guess. I had comics. I didn't look to see if it had comics. My Disney World magazine has comics. It's got Wally D, the scroll that lives at Walt Disney World, and it gets in all kinds of scrapes. So I figured if the Walt Disney magazine can have that, why can't the Urban Life magazine have like, Erby, Erby the Erbors. I really appreciate what Wally D is doing

because it's so aggressively unfunny that it has to be intentional. And then it makes me question it as art. Like, is this art all the sudden? And it really, it's magical. I mean, no, it comes all the way around the other end where it starts to make me think. This is so mean.

What if the Wally D guy's like listening to this? You're a thought about that? No, what? What if he's like a big salt-moner? Okay, well, how about this? I don't think as a 38-year-old adult, I am the target audience for Wally D. Charlie and Cooper laugh every time.

Yeah, they get, they love this guy, this girl. I, as a cat person, I'm also not the target audience for Marmaduke, but there are people out there who love Marmaduke. That's true. And that is fine. And I celebrate you and your Marmaduke love. So anyway, the magazine was also, by the way,

filled with testimonials. Testimonials was a big, and this is such an old patent medicine theme. If you don't have scientific proof because you didn't get any, then just get a bunch of testimonials for people who say, hey, this worked for me. So you could make, like, as much as $200 for riding a testimonial in that they could use and prep. That is a very common ploy with businesses that are less than reputable. So there's slogan which you probably have heard before,

lose weight now, ask me how. And that's how you got new distributors, right? You recruited them to the company by, I mean, back then everybody was, I guess, trying to lose, I don't know, I hadn't been born yet, but that's the impression I get when I look at work out videos from the time. By 1985, the company appeared on ink magazines list of fastest growing private companies. It was huge. So in just those few years, it went from 386,000 to 423 million. went from 386,000 to 423 million. Yes, they had like 700,000 distributors

from the US, Canada, the UK, Australia. They brought in like 500 million a year. I mean, it was huge by 1985. And Hughes was doing really well at the time. He was enjoying his success. He actually bought this big giant like Beverly Hills mansion and it used to be I fight by Kenny Rogers.

Whoa! The gambler himself! Sorry, my mind. It is quite the prestige symbol. Yeah, but Just as all of this was happened as early as 1981. So I told you this company started in 79. Well, even as it it skyrocketing to success In those early years you start to see another theme

Which is that the FDA and eventually the FTC and a lot of other people start taking a really hard look He's killed joys at what herbal life is doing. Yeah come root of the party So I'm gonna tell you the the story of the health and truth concerned authorities. I mean, that's why they're going after them. Well, yeah, who, yeah, who they just don't want you to have the secret who ruin the party. But first, let's go to the billing department. Let's go! You don't get it very much people doing dip dip dip Whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, turn on the lights at the at the prom, kill

all the fun. I know that's the parade. That one's lit. That one's literal. Sydney's canceled parades in Huntington before. That one's literal. If that is in a description of you and me, you threw an unauthorized parade in Huntington. And I canceled an authorized parade in Huntington. There we are. So that show. So despite all the success, the FDA had been looking at the company's earlys 81. There had been reports of some various adverse GI effects

from the different things that they sold, the supplements, the powders, whatnot. And then the Urbalife official career book was published a year later, and it had ingredients of everything in it. Just so you can make your own at home. It was mainly for, well, it was for the distributors, right? Is your career book. That's what you gotta remember.

These companies aren't just selling whatever the product is. They're selling the idea that you could make a ton of money selling the product. So they're selling the business as much as they're selling whatever the business is selling. You know what I mean? That's the whole thing. So they released this book, had ingredients, the FDA got upset because there was a lot of stuff in it that they thought was made false claims and ingredients that they had problems with. There was an herbal aloe drink that was said would help treat stomach and kidney and

bowel things. They have these formula one, formula two, formula like different numbered formulas that they sell. That's still true today, by the way, you can still find those formula one things, like formula one pies or something But they had like formula two which they claim treated 75 different conditions including cancer And they had some ingredients that specifically the FDA was mad about one was poke root

We've had poke root poke weed actually growing out back to our house before I only know because I took a picture and then put it on the internet once and said, what is this, growing out back in my house? I'm finally figured out it was poke weed, don't eat it. Because it can cause nausea, vomiting, diarrhea, abdominal pain, bloody bowel movements, bloody vomiting, low blood pressure, seizures.

So they had some of that and some of them, some had mandrake in them, which if red fantasy of any sort, you may know, mandrake is dangerous, it can cause all kinds of very dangerous symptoms, blurry vision, dryness of your mouth, dizziness, vomiting, your heart racing. You can have hallucinations. That's part of my mandrake, that's sort of it's mystical connotation because you can hallucinate while you're on it.

And then they also had what was maybe not food-grade linseed oil. I guess linseed oil can definitely, like the food grade definitely can be in things. You can eat that, that's fine. But there's also like not food grade, which is used for like, I think varnishing wood or something, you put it on that, that's fine. But there's also like not food grade, which is used for like, I think, like, varnishing wood or something, you put it on wood, something to that. You might know this just in this maybe in your wheelhouse. Yeah. So maybe it wasn't.

Oil and Ced oil is typically what you look. It's nice. You get a nice sort of aging, it gets nice patina. Well, Flax Ced oil is another is another name. exactly. And there was a question as to whether or not it was indeed food grade the oil they were using. So um because of all this the company agreed to to try to back off some of their claims um that were not backed by any science. Um even and to remove the ingredients that were deadly. This didn't stop the Canadian Department of Justice who brought suit against them the next year for misleading advertising false claims.

And Hughes didn't like all this because he felt like all this stuff from Canada, all this it was unfair. Like basically the FDA was trying to make him an example. He felt like he was being targeted, his company was being targeted, because this was in the middle of the diet pill craze, and that they were trying to make an example out of him, basically. He kind of went on the offense against the FDA and accused them of all this stuff, publicly went out and said, none of this is true. They're just after me because I'm successful

and I don't know, they're jealous. But as soon as all this happens and it culminates, just as we see this like meteoric rise, it sort of tops off in 85, you see a crash because of all this bad press. And so people start to get nervous. And then there was a lawsuit that was brought against them in California.

Congress started investigating after that because of this big lawsuit in California. As a result, like I said, they stopped selling so much. They had to lay off a bunch of people. They had to discontinue a bunch of products. They had to pay a lot of settlements. And so things weren't going so well in the US, right? The FDA, Congress, everybody was paying attention to them.

So they took their company and went overseas and tried to make up their losses, other places where they didn't have so much bad press yet. And it worked. They expanded to Japan, to Israel, to New Zealand, to Spain, to Mexico, to France, to Germany, all over the place, selling their products and selling the MLM structure, selling the business. And everywhere they went, they would eventually run into trouble with the government. They had this kind of common theme where they would go somewhere, have explosive sales,

do really well. The government would get involved and things would kind of peter out, right? So like in France, they got accused of being tied to some sort of religious organization. I don't know. There was something weird there. And then in Germany and Canada, they got in trouble because they had a fedron in one of their products. And that was being banned at the time, slowly, place by place.

They got in trouble for various times for being a pyramid scheme. They were accused of that a lot. A lot of different countries had different sort of definitions of that, and they kept having to try to tweak the model to avoid being labeled that based on the law and different parts of the world. I get the sense that they're kind of like adjusting to whatever the law of adjusting to whatever the law is. Like building like a kudzu, just sort of like growing around the law in sort of a law like shape. I have to imagine, and this is just me guessing,

I don't know this to be fact, but I have, because I'm a doctor, I'm not a lawyer. I have to imagine they had a really good, effective legal team as they moved around the world who really understood this stuff and was able to sort of mold the company into something that was legal everywhere they went. You know what I mean? Like a really effective legal team.

I don't know that. That is my guess based on what we saw. But anyway, they kept selling. There were distributors who started to file suits against the company, basically saying like, hey, we did this and we followed the rules and we followed your career guide and we gave you money and then we never made any money. And yeah, it's worth noting, I think it's said you would probably agree to this, like there, there are a lot of multi-level marketing companies

that you would hear very similar stories from. And we're not Sydney and I here in a position where we can like fully to say whether or not they're there, there would be a successful enterprise or not. Like on the business end of it. Oh no, I, we don't have a lug to stand up there. No, and all I'm telling you in terms of the legal action is stuff that happened.

I don't know the ins and outs or what anybody actually did. I know what the, what the late, what the case law or what the cases were, what the suit said, what people claimed, the actual things that are, I mean, this is all just document. You can read this all over the internet. This is not the result of any investigative journalism on our part anyway. So Hughes had actually taken the company public back in 1986 and he tried, he made it attempt in 99 to pull it back to a private company. And I think like his board was fine with it, but the shareholders threatened lawsuit because they felt like they weren't gonna get

I guess if you take the company back private each shareholder would get some sort of money in return. Yes That is my guess and and they didn't feel like they were getting a fair deal. Yeah, so it it didn't happen. Yeah But by Yeah, so I think the shareholders get to vote on that kind of thing. Yeah. So, but with all this, they're still selling. So like you're hearing all these like rumbles of legal trouble and all this kind of stuff, but like they're still growing. Like there is no doubt that at that point the company was still growing.

By 2001, 50 different countries were selling herbal life products and bringing in new distributors. And even at that, that year, the unfortunately the founder of the company passed away. But that didn't stop the momentum. There was like a brief dip in activity, but they still continued to grow even with all that kind of tumult surrounding it. New people got involved in the company changed hands. Some things did change over the years, like throughout the 2000s, if Fedron would be removed.

As was true, Herbalife was not the only company throwing ifedron and then, you know, stimulants and infetomines and things into diet products. Yeah, that was again, that was a rough, that was rough. Yes, lots of companies were doing that and being shut down one by one

until finally it was banned everywhere because it was dangerous and it could kill people The business models would keep being tweaked in response to these accusations of you know the MLM actually being some sort of Either pyramid scheme or what was called an endless chain? Mm-hmm. Have you heard about those like basically? It's just an endless chain of distributors that never ends at a customer. I guess was sort of the impression I got that is a different structure. Same sort of idea. I mean, I think we're just, they're all different terms for the same idea. It's the idea that there is a person at the top who's making all the money and everyone else involved never makes anything.

It's there's a sucker born every minute and now let's profit off of it. Yes. And also I'm the sucker, but the sucker and the sucky. But they would keep growing. They would even have their own processing facilities eventually in China that they would make to like gather the herbs from different places and like they pride themselves on like you can trace that. You can ask where each supplement, each herb that goes into all of their different things, they can tell you where exactly they source it and where they process it and how it ends up.

So a lot of that started to become baked into what their thing is, what their pitch is. The lawsuits from distributors and from customers and everything eventually sort of culminated in 2016. They got in big trouble with the FTC in 2016. They got in big trouble with the FTC in 2016. And actually leading up to that, by the way, there was a settlement in California, a settlement in West Virginia. That was a precursor to this. In West Virginia, they were accused of violating the Telephone Consumer Protection Act. They were doing like robo calls.

All right. Anyway, the point is the big lawsuit was in 2016. There was a huge settlement and the FTC declared them not necessarily not a pyramid scheme. Not not not not necessarily not not necessarily not necessarily not a pyramid scheme. Okay. Yeah. Got it. Really hedging your bets there. Yeah.

Made them pay out millions to distributors and they made the claim Okay. Yeah. Got it. Really hedging your bets there. Yeah. Made them pay out millions to distributors and they made the claim at that point. It was put in writing that like from their standpoint, it was virtually impossible for a person joining the company to make money, like as a distributor working for them. Along with the FTC issues, there has also been these claims that have hounded the company throughout the 2000s about liver failure, that there were certain ingredients in some of their products that had caused this liver toxicity and liver failure. There was a warning that was put out about that in Spain. There were some papers published in the US.

There was a lawsuit in Israel related to these claims. None of it was ever completely substantiated though. The various journal articles that were published kind of said we can see how these ingredients, this specific here there might have been toxic to the liver. We can see how this might have happened, but they couldn't prove a definitive link between the product and the patient. Does that make sense? So they never proved that, but there definitely were concerns about this that were raised

throughout the years. But this didn't, again, this didn't seem to slow them down. They continued to sell new pills, new powders, new shakes. And I've seen some of the breakdowns for like, because this company, of course, is still around today and eventually into this new form that Justin will give you his insiders you want. But the big breakdown, one of the big breakdowns for this as a multi-level marketing company

that I saw in terms of like, who makes the money? Because like, the idea with these is that everybody should be making money, right? Right. Everybody. But what they found when they looked at it once was that the bottom 30% make nothing, the next 48% made on average about $292 a year. The next 14% made about $2216 a year, and the remaining 8% were kind of divided up into

the upper levels of earnings. So I mean, it's that similar structure that you see a lot when you get involved with these companies, and this is just the truth. This isn't that me accusing them of anything illegal. This is just how the companies are structured. The people at the bottom usually don't make that much. There are some people who will climb to those higher levels, but a lot of people don't. And in some cases, in some of the companies we've covered before, and I've seen this accusation

level to herbal life, although I didn't find the numbers to back it up. But we talked about this when we talked about the essential oil companies. Right. In some of those companies, the bottom tier distributors actually lose money. Not only do they make zero out, but they're buying product. Yeah. So I've seen that. But again, this is one of so many companies that are structured this way, not just in the wellness and health space, but in every space. So, herbal life is just one more of them. One interesting side note before we get into the nutrition clubs, in 2012 Bill Ackman

tried to publicly short the company. Yes. Basically, he came out and said publicly. He didn't just, and you can explain what a short is, but basically, he came out and said, I'm going to do this thing that Justin is going to describe to you called a short for this company because I believe they are a pyramid scheme. This is his belief. And I believe that because of that, they will eventually go to zero. And he said it publicly. And he gave like a talk list in all his reasons why. Now, Sid, is this the same Bill Ackman that runs

Pershing Square and recently tried to buy out a significant portion of UMG with its back? I don't know. He's like a famous guy who does short. Yeah. So yeah. It is. I was retarquing. Okay. Bill Allen, he's kind of a superstar.

I mean, there are many of his. Bill Allen. He's no like, he's no more about Fetter. He's not the workable. The people like him. What? It's like terms like, once you get into people who are this rich, terms like like it is like to the loser.

Okay. you get into people who are this rich terms like like it disliked, did the lose their meaning. Okay. He sounded like a super rich guy who took a really big bet against herbal life and lost. I mean, that's the, you know, yeah, pay your money and take your chances. That's the big, that's the game that we call finance. The reason I, the reason I wanted to bring this up is because his attempt to short the company. So like, I mean, can I just say he bet against them using the stock market, he bet against it.

So you said I was going to explain it and then you actually decided you don't want to use a portion of the show for me to explain shortings. Can't they just watch the big short? Do you need to go ahead? Can you do it in 30 seconds or less? Oh, interesting question. I don't know.

Yes, I can. Yes, I can. Yes, I can do that. What did he do to the company? Okay, if you're long on a company, that means you buy a share of it and say, this is going to get up in value. And so I'll have more money later. When you short a company,

you buy a socket and say, this is gonna go down in value. And basically what you're doing is your borrowing shares, okay, to sell now. And you tell the bank, I'll pay you for these shares later. With the hope that you will have to pay less for them because the value of the company will have gone down when you actually have to pay for these shares. Okay. Sold. So let's say Google is worth, I don't know, three grand per share.

You say, I heard Google is going to go downhill. So I'm going to short it, which means I'm going to sell a share that I don't have for three grand. And when the price does drop, then I'll pay the bank back for that share. It loaned me. So I'll have, but you won't have to pay the bank three grand. But I want to pay the bank through the grand because the share price fell to $1. So I just made $2009.

Okay. The difference. Well, Bill Ackman tried to do that. But the problem that you get into is this, if the stock doesn't do what you think it's going to do, if it goes up, then you just sold a $3,000 share that you are now going to have to pay the bank $4,000 for it because it's skyrocketed. And you can really end up in hot water. That's what happened with GameStop recently and some of the days called the short squeeze

that happened. So he did this, but it didn't work. And he supposedly lost a lot of money because of this. You can get in trouble with that. And he manages the hedge funds, which are like big buildings full of money of other people's money, basically. Anyway, so.

You indulged me and so I will let that slide. Anyway, so he went out publicly and did this. And then he was losing, right? Like he was losing on this bet. It was becoming very obvious. The stocks were continuing to climb. They were definitely not going to zero. And because of this, this all plays into the sort of the mythology behind the company,

sort of the story that evolved around it. When negative stuff came out about the company, a lot of people would say, well, that's just Bill Ackman. They're just basing it on what he, and it's to support his stock position. Right. And then it began to make you question everything you would hear about it, because if you heard something negative, is it just somebody trying to manipulate the stock market, or is it true? Right.

And that plays out to today, like even to today when anything negative, like last week tonight with John Alver did a thing about it, and the response was like, well, they're just basing it on stuff that Agman put out there. I mean, because of that, it's perpetuated this life.

It's set up an antagonist, basically. Right. So anyway, now they have nutrition clubs. So they started doing this life. It's set up an antagonist, basically. Right. So anyway, now they have nutrition clubs. So they started doing this actually prior to the FTC settlement in 2016, but because of that, there are tons of rules around these things that are called nutrition clubs. If you, if you, you would think it was like a smoothie place or like a shake place. Certainly. A healthy shake place is what you would assume that these places are.

But they only sell herbal life products, and they have really strict rules because they're not restaurants, they're not cafes, they're not shake shops, they're smoothie shops. So they're governed differently, like legally differently. And they can't like, there are certain rules around like what they have to put on the walls, they have to tell you what they are on the walls, I can very clear signage. As far as I can tell, I can have very clear signage. As far as I can tell, I found nutrition club rules from 2019 and I don't know if they've changed since then,

but they talk about things like, you can't from the street, you shouldn't be able to see any signage and you shouldn't post like prices anywhere. That's, you're not allowed to do that. And you can't really like, and they have very specific naming constructs, how you can name them and what is okay and what isn't okay, and what you're allowed to talk to your customers about and what you're not allowed to talk to them about.

You're not really supposed to advertise them, you're just supposed to use social media and word of mouth, basically. I don't know, but you can, I mean, it's all transparent. Like you can read about it online. It's just that you might not know your local whatever shakesmuthy shop is this unless you looked into it. Now, my assumption is Justin, you can tell us about your experience that walking in and looking at all the products on the walls, like you would figure this out pretty fast. Um, I don't know that I had a pretty normal like it would not have seemed off to me like if I was a layman and just a regular AP award winning business reporter, I would have walked in there and not

really thought anything was a rye. I mean, you break the argument that it's not right. I walk in there's a bunch of difference through these or energy teas that they will sell me. Oh, yeah, they have energy teas also energy teas. Yes, and though the You know, there's lots of different flavors and I got a smoothie that was Snickers flavored That it was it was a very nice interaction and the lady working there was nice and and they don't and you this was your Experience nobody tries to recruit you to be a distributor. You didn't have to join a club. You didn't have to join a club.

I was very excited. I thought it would be very like, now we got, you know what I mean? Because they're just weird. There are weird clubs like that. Like there's weird stuff. I thought this would be a lot more than it was. No, it's just, it was just a place

where I bought a smoothie. Right. And I think I got a little card that said if I bought 10 of them, I could get one freak or something like that. It also had something about a free wellness check or free wellness consult. So there is, if you can log on to the website, if you go to like the, I think the woman running was a distributor for Herbalife, and if you go to her website, you can plug in your information, and it tells you what your plan should be for eating, which ironically, which will go as a great shock,

includes a lot of Herbalife products. It reminds me of the VIX thing that we talked about, where actually the best plan for fighting cold is, this that the VIX thing that we talked about, we're actually the best planet for fighting cold is this is a VIX. It did recommend for me 160 grams of protein per day, which seems like so much. It seems like a lot of protein. So I think at the end of the day, if you go into these, if it's anything like ours, these sorts of places, these nutrition clubs, technically what they are, you're just going to buy a smoothie and you might like

it or you might not, I don't know, it just depends on your palate. And that'll be that. I looked through the herbal lifeline of products, which is like the way that they make these smoothies and teas and shakes and things using their products, right? I think they're only allowed to use their products at the place. And it's like anything else. I mean, there's no worse or better than any of the other sorts of companies that do this, I think, right?

There's a lot of proteiny things. There's probably a lot of, they don't want to do sugar, so there's probably a lot of fake sugars in there, which whatever your feelings on those, that's fine. Some of them give me headaches, some might give you diarrhea. I don't know. But, like, that's true for a lot of different products that are supposed to result in weight loss or promote, like, be meal replacement. That's the other big thing, right? Meal replacement type things.

They have tons of different flavors, and then they have all kinds of pills and all the different like supplements have the same kind of idea like, here's one for digestive health and here's one for if you're going through metapause and here's one to help you relax and all kinds of, you know, things like that. There's an ultimate prostate formula, Justin. Perfect. What a wild sentence to say to me, Sydney. There's an ultimate prostate formula. Justin is how you punctuated it all the time.

Well, you have a prostate, I don't. Oh, okay. That was the only reason I said that. I just don't have a prostate. I mean, it would be of no use to me. They have skin products as well. Like I said, the formula stuff is still in there. And I don't wanna sit here and act like

that they are a standout in terms of their claims. There's all kinds of things I guess. This is the wellness industry. It's just a bunch of stuff that is probably harmless now. Like, I mean, probably, maybe, they also probably won't do a lot of the stuff you might want them to do because there is no science to back it up, right? Because if somebody had created a pill that gave you like a perfect, like the perfect sports complex and a pill that would make you the best at all sports all the time, then

it would be selling for lots of lots of money. You know, you wouldn't put it in a shake that you can get for $8. So I mean, I don't know. I will say this. I do the reason I thought this was interesting is I do think it's worth knowing that if you see a smoothie store, it may be a basically a front for a real life distribution. I think that that's something that's worth, if you get something out of this podcast episode,

that's something that you could know that maybe if you see a place that has smoothies or a nutrition club that maybe it's just a front for our life distribution. Front, it makes it not even get you. It's not, I mean, it's really like, it's not a front, it is, it's not something. It's not, I mean, it's really like, it's not something. It's not something.

It's not something. It's not like a secret. Right. They don't want it. They're not being very direct about it. No. I mean, I think if you ask them, like, do you sell herbal life products? They say, yes.

Do you distribute herbal life products? Yes. Like, they're not going to, nobody's lying about anything. They're just also not putting that on the front of the building, right? Like they're not making it clear that that's what it is. And this place absolutely did. Again, though, the one in H like products of the counter, not in any way trying to like pull, pull a fast or whatever, but I do think it's worth knowing that

like other places may be more discreet than that. I got the sense for reading the rules that you sent that like herbal life would maybe prefer that you're not super clear about, hold on, I'm reading too much into their motives with that. I would just say that like my impression of it is that herbal life would prefer that you maybe conceal the source of these. In the rules that were published in 2019,

it says signage may not imply that herb life nutrition products are available for purchase. So yeah. I'm not reading into that much. I think, yeah. I mean, it just says, and I mean, their rationale is not here. Like it doesn't, I can't tell you why they would want you to think, you know what I mean?

But anyway, I don't know. I think that I am a proponent of eating a well-balanced diet that provides you with all of the nutrients you need. And that is difficult to do for a lot of people because of financial reasons or because they live in areas where it's hard to get all the foods that they need. I don't necessarily think that shakes and powders and pills are the answer there. I think the widespread availability of all the various types of foods for a well-balanced diet is what everybody needs.

That's always my proponent when it comes to nutrition. And I'm also, you know, we have talked about on the show before. I'm not a fan of these diet companies and weight loss plans at all, period, any of them. So that includes any company that will tell you we have the secret to weight loss. And it's a really dangerous culture that you perpetuate with that. And there have been lots of products in history that have been dangerous because of that. I'm not saying that these are certainly, but I also think that again, nobody has this secret formula that's going to make you feel great and perfect and be the answer to all of your health and

wellness dreams. They just don't. Because way more complicated than that, we all know that. So that's your experience, my experience with our boys. There you go. Do with that, with that wealth. And again, just to reiterate for our boys lawyers, this is program is for entertainment purposes. Only nothing and it should be outdated. Again, everything that I have read is freely available to anyone. We didn't do, there was no, there were no FOIA requests. There was no Justin went in and bought a shake. The proprietor was very nice and pleasant to you right.

Like you had a very wonderful experience. It was a good shake. You enjoyed it. Yes. I don't know if you're healthier for it, but I don't think you're less healthy. I want to say, I won Shake More Just. That's it.

Yummy experience for you. Yes, Shake, and I've been one. And I knew that was my life. But that was that. Thank you so much, Melissa. Thanks to the taxpayers for using use their song medicines is the intro and outro of our program and thanks to you For listening we really appreciate it. Oh We're gonna be doing a lot a live show a virtual a virtual live show If it were opening for a hit podcast coming up,

my brother, my brother and me. What is that now? That live show is going to be September 24th, starts at 9 p.m., tickets are on sale now for $10. Go to bit.ly4thslashmb.comm virtual and you'll be able to watch that for two weeks after the show. So check it totally out. Bit.ly4thslashmbnbam virtual.

That's going to do it for us this week. So until next time, my name is Justin McRoy. I'm Sydney McRoy. And it's always don't do a hole in your head. Maximumfun.org Comedy and Culture Artists don't? Audience supported. Hey podcast fan, we'd like to get a better idea of who you are and what you care about.

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