In December 2012, Pershing Square Capital Management’s William Ackman gave a presentation explaining he was shorting Herbalife stock because the company is essentially a pyramid scheme. A PDF version of Ackman’s 300+ slide presentation is available on FactsAboutHerbalife.com and it is a thorough takedown of the company and its business model.
Herbalife’s stock price fell almost 10 percent the day of the presentation (Ackman has pledged that any personal profits he makes off the Herbalife short will go to chairty).
In a press release, Hebalife CEO Michael Johnson responded that in no way, shape or form is Herbalife a pyramid scheme,
The allegation that Herbalife is a pyramid scheme is bogus. Make no mistake: Today’s announcement isn’t about Herbalife’s business model. It’s about Bill Ackman’s business model.
And, if you believe that I’ve got some diet pills to sell you…
Herbalife is like any other MLM company, legit and attacked. They get advertised by people (not by themselves) as being easier than reality to make money when in reality it’s like any business anyone starts and you have to work really hard to make money.
You can join any MLM and work hard consistently and become a success, you can join any MLM and not work hard enough and never become one and wander off looking for something to blame… usually that it was a “scam.” I’m not promoting Herbalife but I am a distributor, I don’t use it to make money, I sell people products if they ask me for them at my cost.
Herbalife is a good company and so is every MLM I’ve studied.
@Jacob Barlow wrote:
It is a pyramid scheme. Did you check out the slideshow?
I’ve been through a Herbalife marketing presentation. The pitch is that they are a company that sells nutritional supplements, but as the slideshow documents (and anyone who has been to one of these presentations quickly realizes) the real money is made in selling product to their internal distributor network.
Or, basically, they trick you into thinking you’re a sales person when you’re actually the customer.
If you scroll on down to Slide 114 on the presentation, you’ll note that Herbalife is so focused on using new distributors as its money maker that it doesn’t even attempt to track what percentage of its products actually end up being sold to consumers outside of its distributor network.
The bottom line is if you are someone who is good at a sales-type job, there are going to be much better opportunities for you in legitimate sales positions. If you are not, you are going to be wasting your time and money in MLM schemes.
Well I’m not one to argue, but I can say they’re in no way a pyramid scheme, I didn’t have to do any “salesman” type stuff to make money with them, I had people begging me to sell them products every day, and I left because I found an MLM I wanted to be a part of more, I still respect them as the best MLM.