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Hedge Fund Manager Attacks Herbalife

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I just read a very interesting article on CNN’s Money website. Hedge Fund Manager, Bill Ackman, is making a big bet against Herbalife. How big, about a billion dollars.

Whether Ackman is right or wrong is not my focus here, but what Ackman said about Herbalife can be said about most network marketing companies. Basically stated, there is no true product value beyond the chance of making money. Here is a piece taken from the article quote:

Ackman says Herbalife is an “inherently fraudulent company.”

“We don’t believe there is any demand for the product by true retail consumers at the suggested retail price,” Ackman told CNNMoney in an interview Monday.

“Herbalife sells products,” Ackman said. “But what they really sell and what their distributors make money from is by selling a business opportunity, and the business opportunity is to sell the business opportunity to your friends, who in turn sell it to their friends.”

I am a network marketing and I have made a very good living within this industry. However, what Ackman proclaims is worthy of every network marketer asking about their company.

Are you providing value to consumers of your product or service outside of the chance to make money? It’s a dang good question and one that I hope you have a really good answer because network marketing companies cannot stay in business if everyone who buys their products makes money from them. Compensation plans fail if everyone took a bite of the apple. And by the way, that is the way with every business in the world. Those who sell the product make money when consumers by the product. If there is a value, people continue to buy it whether they are making money from it. They buy it because it has value to them not because they want a commission from it.

Do an analysis of your product or service and ask if you would buy it if it was at Walmart next to a competing product. If you are really honest with yourself and the answer is no, you better reevaluate what you are selling.

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Hedge Fund Manager Attacks Herbalife

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