- #0
Hey, hun. I know we haven't talked since high school, but this is D-Listers of History, a podcast about people you've never heard of who've changed the world. I hope I didn't scare anybody off in the first three seconds. I am Fega, and I am a public historian, tour guide, and definitely not a girl boss.
- #1
My name is Mazzal. I am also definitely, definitely not a girl boss. I don't think I could hack that. I'm a mixed media artist. I am a history enthusiast and I'm Vegas wife.
- #0
And if you haven't gathered this already, today on this auspicious occasion, we are going to be talking about the history of multi-level marketing. So for those who have been blessed. Like me, actually, to not have high school compatriots fall into these usually scams.
- #1
I have not been blessed that way.
- #0
You've had people contact you?
- #1
I've had people contact me. I also just have some friends who've just really fallen into it.
- #0
Yeah, so for those who are unfamiliar, multi-level marketing schemes are these companies that promise you the opportunity to run your own business. but the reality is the only real way to make money is through recruitment rather than through the selling of products and a lot of times the products are either very low quality or even if they are good products they are overpriced because they are supporting these like crazy bonuses and stuff which we will go into in greater detail later often
- #1
low quality but also just often just outright dangerous.
- #0
Yeah, that too. Yeah, there's a lot. So there's a lot of these sorts of companies. So there's Herbalife, there's Young Living, which sells essential oils. I think a lot of people know about LuLaRoe from LuLaRich, which was on Amazon. There was also one that is thankfully now defunct, I believe, thanks to the anti-MLM community on YouTube, actually, which is pretty cool, called Black Oxygen Organics, where they were literally selling dirt.
- #1
Yeah, and dangerous dirt.
- #0
Yeah, dirt for drinking and putting on your face that may or may not have been dirt from right next to like a dump. So like there's a lot of these out there, but the thing that connects them all are a couple of things. One is the compensation structure, which we will talk about in more detail. But the other, which is more what we're talking about today, is more the cultural side of it. So I think a lot of people are familiar with getting the hey, hon message from somebody you haven't spoken to since high school. So like your high school bully sends you an Instagram message and was like, oh, my God, your new baby is so cute. Do you want to? make money from home and stay home with your kids. And should you decide to take them up on said business opportunity, then once you are in it, it's a lot of, if you're not successful, you're not trying hard enough, you're not working hard enough, you're not working your biz.
- #1
There's a lot of toxic pull yourself up by your bootstraps sort of lingo that goes around in these MLM spaces. It's a lot of blaming you if you can't. make money in these schemas, I guess.
- #0
Yeah,
- #1
these ways that are designed to keep you from making money because all the money that you are bringing in is going to the people above you, upstream of you.
- #0
Yeah. So the person we're talking about today, this is a very long sort of winding way to get to, the person we're talking about today, which is David H. McConnell. And David H. McConnell. is the founder, was, he's not around anymore, was the founder of the MLM now known as Avon. And I bring that up because he's considered to be the father of the direct selling industry that became multi-level marketing. And I say direct selling specifically because it's going to matter in about five minutes. You could have come with me. You could go with me. David H. McConnell was born July 18th, 1858 in Oswego, New York, to Irish immigrant parents. I think that's how you say the name of that town. I don't know. I don't know. If you are from that place in New York, and I said it wrong, my apologies. In 1877, at the age of 19, he started working for a union publishing company to sell magazines, books, and greeting cards door to door. He worked up and down the East Coast and earned $40 a month plus commissions and expenses. So if you put that $40 through a straight inflation calculator, which if you've been a longtime listener, you know that I have issues with these inflation calculators. But I think there's some use to them. So the issue with them is that the percentage of what things like housing and food, et cetera, cost changes over time. So just doing the math with inflation doesn't necessarily tell you exactly what the buying power of $40 is, but it gives you a better concept than $40. So if you just put it through the inflation calculator, that $40 comes out to about $1,200 a month. So that's his base. And then he's making commissions and so forth over that. Then in 1886 bought half of Union Publishing for $500 and wanted to expand to other products that had a better profit margin than books. And so he started selling a number of different products like furniture, furniture polish and stuff like that, like cleaning things, which actually was not weird at the time. Like to us now, we're like a book company. I guess a book company selling whatever random stuff is actually not that weird because Amazon exists. But when Amazon started selling a bunch of different stuff, people were like, this is weird. You're a bookstore. Like imagine going into like a Barnes and Noble and buying like furniture polish like that's weird. So it seems maybe weird to us. in a modern sense, for a publishing company to start selling all this other stuff. But at the time, it actually was not that unusual. Because this was part of what was at that time was considered the direct selling industry, which was male-dominated. And what David McConnell would have been doing when he was selling these books was going door to door in towns and, you know, just literally knocking on strangers'doors. And usually... And the wife, because that's who was home, would open the door and he would do what he could to get invited in and then sell books to her, presumably. Because this was a time, especially like as you went further west through the North American continents, people had less and less access to what we would consider retail. and even on the East Coast, there wasn't retail in the way that we think of it today. So for a lot of people, these door-to-door salesmen were really their way of accessing the things they needed for life. This was how you bought your furniture polish, right? Like, this is just how you got stuff, was the traveling peddler came through town, and you would buy the things you need. As a result, there was actually some not very kind opinions about people like that, but we'll get there. I know what the gentleman wanted. What? You'll find it in balls, Zach. So David, when he was actually on the road, he found that what worked really well for him from a sales perspective was if he offered free perfumes to the women to let him come in and try to sell them books. And he started making these perfumes by himself, just like alcohol and essential oils, I guess, like just very basic. and he would just offer them these free little samples, and he found that the perfume was way more popular than the books. Mm-hmm. And also because he could make the perfumes, the profit margin was much better than the books. And so he basically just revamped the whole company. They renamed it. California perfume company and started selling not just perfumes, but also like household products and things like that. It's the California thing's kind of funny because he'd never been to California. The products were not made in California. Like it had nothing to do with California. It came from, well, the person he had purchased his portion of the company from had actually moved to California to like find his fortune or whatever and had commented to David that there was a lot of flowers in California. and so they thought it would be it would be appropriate since there's a lot of flowers in california and this is a perfume thing and also to a lot of people especially like on the east coast and in the midwest california seemed like this very exotic place but yeah but there's a lot of stories about all the riches of california and what have you at this time too oh and the the perfume thing i should say that's company folklore he might have made that up i don't know but that's the story so Anyway, so he switches over to selling these perfumes and just general like home products. And one of the things he was really particular about was he wanted to make sure that their products were superior. Mm-hmm. to competitors. So one of the things that was often leveled at traveling salesmen was that they would sell whatever it was that they were selling, put in the order, and the order would then be shipped to the people. Like, if anyone has seen The Music Man, you actually get a pretty good idea of what this all looked like. There's the song Will's Fargo Wagon. usually the salesperson is like out of town by the time the wells fargo wagon comes that means that if the product is not actually what was promised they're
- #1
not there yeah they they're gone they are long gone and you can't find them easily because it's the 1800s
- #0
Yeah, so he was he really wanted to like make sure that his products were what were promised. He also was really concerned about the general opinion of the industry. because of these well-earned stereotypes about traveling salesmen. So one thing, I bring up the music man because I feel like it's something a lot of people, at least in our audience, will have seen or be at least vaguely familiar with. And it really details all of these stereotypes about the traveling salesman. So the traveling salesman is a bit of a con man. Yes, sir. When the man dances, certainly boys, what else? The piper pays hell. but he doesn't know the territory. Perhaps fibbing at his products a little bit because he doesn't have to deal with the backlash. Should it not be up to par? They are in and out of town. They've got a girl in every port. When the cow with a touch of sin walks in, I hope and I pray for Hester to win just one more game. Right? So there's this sort of sexually deviant. aspect to the traveling salesman. And that's actually part of what, where Gideon Bibles come from. The Gideons got together to try to like make traveling salesmen more moral. And so that's why they started putting the Bibles in hotels, which now everyone, like actually it's less now. When I was a kid anyway, it was like every hotel you went to, there was a Gideon Bible.
- #1
Yeah.
- #0
I think that's less common now. But there used to be a thing. He was really... concerned about that, especially because Sears had come out with their catalog by this point. So people could order through the catalog instead of interacting with this like potentially morally bankrupt salesman and have this direct line to the company. So he had an idea. Instead of hiring traveling salesmen, he would hire women who are already living in the communities that they would sell in. The idea being that women were seen as not like morally bankrupt, like these itinerant.
- #1
More trustworthy.
- #0
Yeah. And they were moral. They were upstanding members of the community. And also they were in the community.
- #1
So like they knew all the people. They could talk to people, know all their life details.
- #0
And if they sold something and it wasn't up to par. the people knew where to go to talk about it. Like it was, it created this trust that was frankly, as far as Avon's products were concerned, well-earned because they didn't have to worry about these women getting people mad at them because their products were, and as I understand are pretty good. And so it seemed like a really good way to still have this very inexpensive business model. because compared to like having retail or whatever, you don't have to have brick and mortar stores. He made sure that his company was making all the products. So they were shipping everything direct from the factory. So there's not a middle company that's rising prices. And so even if these women are not selling that much, he's still making quite a bit of money on it. And so they build it as a sort of socially acceptable. female empowerment. This idea that women could still be based out of the home. They could still be in the sphere of the home and family and so forth, caring for their families and putting their families first, but still have time to make a little bit of money on their own terms. Because the idea is you could pick your own hours. You could work as much or as little as you liked. The whole thing was in your hands.
- #1
That's the story, at least.
- #0
Yeah. And this was especially important for women who had lost their husbands or had no or later on we talk about how they did the recruitment. They were the people doing the recruitment were instructed to find the women in town who had lazy or alcoholic husbands because they were the ones who would want to make some money because the husbands were not doing a very good job of their end of the bargain of patriarchy. okay yeah and so the women who would sign up had a pretty straightforward compensation plan as we call it now at the time so if they sold if they put in a wholesale order of over 30 they would get 40 commission and free shipping and then so everything would be shipped to their home and they would go deliver the product to whoever had purchased it If they put in a wholesale order between $20 and $30, they would get 30% commission and they would pay a flat shipping fee. And anything under $30, the products would cost a little more. They wouldn't get the wholesale prices. So they wanted to get together orders of $30 or more.
- #1
So not getting the wholesale prices is for when they are buying product that then they resell.
- #0
No. So they were not permitted to purchase product to resell. This is actually something that's really different from today.
- #1
Okay.
- #0
Not only were they not required to, they were not permitted to do that.
- #1
So what?
- #0
So they would put in orders for specific people. But those orders, so they would like, you know, Jane next door wants to get $10 of stuff. And like... Eileen down the street wants another $15 of stuff. Well, she doesn't want to put in those orders until she can find somebody else who wants to spend $5 or more. so that she can get the lower wholesale prices so that she makes a better commission.
- #1
Okay.
- #0
But she can send in that $25 order if she wants to. And all that stuff gets sent to her house. And then she goes, okay, I've got Eileen's stuff. I've got, I forget what I named the first person's stuff. And she then physically delivers it to their home.
- #1
Okay, so when you say the shipping price, she's paying the shipping price, she's paying the wholesale prices?
- #0
Yes, unless she puts in an order of over $30, then the shipping is paid for by the California Perfume Company.
- #1
Okay, so it just makes what she makes out of it less.
- #0
If she puts in less than $30, yes.
- #1
Okay, yeah, because she's paying that extra.
- #0
So the big encouragement here is to... wait until you have $30 worth of orders to put in. Women would be assigned an exclusive territory and to a certain extent, given the freedom to work that territory, how they saw fit. There wasn't 100% that way though. So if they were not putting orders in, they would receive like threatening letters from the company saying to her, like, we're going to give away your territory if you don't start working it. that said, she could put in any excuse in the world. If she just communicated with David McConnell, then she would keep the territory. So like if David McConnell sent a letter, and it was usually David McConnell sending a letter in those days.
- #1
Which is wild to think about nowadays. Yeah.
- #0
And saying like, hey, Sally in Chicago or whatever, you know, you haven't put in any orders in six months. what's going on? If you don't let us know, we're going to give your territory away to somebody else. And if she wrote back and said, oh my gosh, my kid had measles, he'd say, oh, okay. Do better going forward. Like it really wasn't that hard a thing to hold onto your territory. And so like in that regard, he was very paternalistic. He saw himself as like, like sort of the protector of these women. Like he was giving them this opportunity to make their lives better, especially these women who were in tough situations because women in especially rural areas, which was the focus of the California Perfume Company, oftentimes did not have any other ways of making money. So the California Perfume Company was actually not particularly successful in cities, in part because women did have other opportunities for like wage work in cities and other things too. but the, which included stuff like people in cities, even back then, we're not opening doors to some random person coming to your door.
- #1
It's rural, suburban.
- #0
Well, they didn't have suburbs yet, but yeah. And just rural. There's communities.
- #1
Yeah.
- #0
They, people were like, very happy to open the door for you. and everyone wants to know everybody else's business. Whereas there's, I actually didn't think to grab this quote I should have. There was a quote from the book I read. They, that McConnell, I think it was McConnell said, had a quote that was something like, people in cities had a, like obsession with minding their own business or something like that, that made it very difficult to sell to them. so they weren't very successful in cities in those early years. But that's okay because rural places loved this stuff, especially because they, like, didn't have stores. Or if they had a store, they had, like, the one store that was, like, a day's ride away or something, especially as you got out to, like, Wyoming and places like that. Women, they were given an exclusive territory. and to get started, they needed $5, which comes out to around $100 today, and that was to pay for the sample case and training. And that $5 started in 1918. There was some fluctuation before then of, like, it was free, and then it was, like, $2, and it was, like, $6, and, you know, it just went up and down. They eventually landed on $5, which was more than the company paid for the case and the contents. but the training would, so basically the training, the case, the contents, all that stuff per recruit cost the company about $4. So they were making a dollar basically off of every recruit. Women complained about the weight of the sample case. And so McConnell eventually invested in a full color plate catalog, which was a big deal at the time. How these women were recruited was actually, I found this group of people. the most interesting out of everyone. These were these traveling recruiters who were women. And they were women who had been successful sales representatives. And for whatever reason, their family situation allowed for them to be away from home for the bulk of the year. Some of them, a lot of them, I'd say most of them, their children were grown. Some of them, their children weren't grown, but they had parents who would take care of the kids or what have you. Many were older and widowed and that sort of thing. and they were on the road. They would go from train depot to train depot. recruiting for the California Perfume Company. These women got a salary. The only time we have numbers for how much that was was 1915 to 1925, and they made $100 a month, which was actually quite a lot in those days for anyone, certainly for a woman.
- #1
And I know you don't like the inflation calculators, but what abouts would that be?
- #0
I don't know. Hang on. I didn't do that one. Well, if $5 was $100, what's that math?
- #1
Times 20. So $2,000 a month.
- #0
So that's not bad. And then on top of that, she would get bonuses for recruiting people. And then if the people she recruited, if their first order was over $30, she would get a bonus. However, she was not compensated for her expenses. So remember David McConnell, back when he was a sales guy, was getting $40 plus commissions plus expenses. These women did not have their expenses paid for. And it was supposed to be, this is so obnoxious, it was supposed to be to like motivate them to... make more because they would make more money if they had cheaper lodgings so messed up yeah what the company did pay for is they had a trunk that'd be full of like all the you know like the the paperwork and the catalogs and all that stuff that they would pay for the the shipping of or whatever but anything that was hers she was responsible for and that's just you know yeah it's just it's just stupid because men that wasn't the standard of the industry It seemed good to them because it was really good compared to what the other opportunities were for women at the time. That doesn't make it right.
- #1
Yeah.
- #0
And they also were like these women were because of just the nature of gender roles at the time. And also the encouraging the encouragement at the time was to stay away from these male traveling salesmen. And this was this caused a couple of things. One, like it was a reasonable thing in those days. for her safety to stay away from these like who who knows who they are guys but the negative aspect of that was that a lot of those men were doing a couple of things. And this actually was really familiar to me as a tour guide because I've worked as a tour director, which is where you're like on the road with these tour groups. And a lot of what I've learned over the years, logistically, came from just chit-chatting with other tour directors on the road. And that's basically what these traveling salesmen would do. So they would chit-chat. with each other about, you know, the best sales techniques or whatever. And these women were completely missing out on that. And also, these men were working on creating fraternal organizations and trying to, like, get I don't think they ever had a formal union per se, but, like, professional organizations so they could, like, try to get better pay and stuff. Just, like, sort of labor rights stuff that these women were just completely excluded from. because they were encouraged to stay away from these men. But they didn't seem to care. These traveling agents saw their careers as a calling, not just a way to earn an income. A lot of the language was around this, like, we are empowering women. Now, I don't think they would have used the word empowering, but they would have used, like, terms that were like, we are creating opportunities for women. We are making it so that women can have a little more. freedom or whatever. And that sort of idea of seeing it as a calling still persists today. This is what I'm talking about, about culture stuff.
- #1
Yeah.
- #0
So while the compensation plan back in those days was honestly fine, right? Like you sell something, you get 40% done. And these traveling ancients got a salary. The fact that they had this idea of like we are changing the world.
- #1
Yeah.
- #0
Through selling perfume.
- #1
Yeah.
- #0
Has persisted into the modern day.
- #1
And you see that language persisting too. I mean maybe the words have changed a little bit. But the bulk of it, the essence of it is the same.
- #0
Yes. And one thing that has actually, I wouldn't say stayed the same completely, but similar. So the California Perfume Company representatives were predominantly white, married, working part-time, and living in a town of 2,500 people or less. They were usually only active for a few months. The turnover in the early 20th century was about 90 to 100% each year.
- #1
That's absurd.
- #0
Right. So while they didn't have this, like, predatory... structure that we're going to talk about exactly what that looks like later, it still clearly wasn't working for most of these women. Most women would put in a couple of orders. So they'd get their five bucks back usually, put in a couple of orders, and then they'd be like, this is too hard. and stop. And the traveling agent would come back in and recruit someone else.
- #1
Mm-hmm. Because a lot of, you know, they say you can work from home, but you have to also travel around.
- #0
Yeah, well, there's no working from home in those days. You had to go out and knock on people's doors.
- #1
Yeah.
- #0
I mean, it's the ding-dong, Avon calling, you know. Yeah. And black women were actively discriminated against. Like there was actual like, do not recruit black people or immigrants or anybody like that. If a black woman should be recruited for some reason, she would not receive a line of credit that the white people would. So if she put in an order, she would have to provide the money for those products, not just wait for the product to come and then get the money from the from the customer, which makes it all even harder.
- #1
Yeah. And not surprising, but messed up.
- #0
Yes. Once these representatives were recruited, they would get instruction and motivation from mailers. One of the famous one that started in 1905 was the CPC Outlook. Okay. Before then, David would send wordy letters to all the reps. But this was, I guess, kind of formalized things a bit. And so every CPC Outlook would have a couple of things in it. It would feature an outstanding representative working in an isolated territory of only 300 people. And here's a quote. We have no reason to suppose that the field is any different in business possibilities than hundreds of other districts of its type. And better, it isn't the territory that's different, it's the representative, end quote. So we hear that language of if you are not successful, it is not. something external. It is you. You are the reason you are not successful.
- #1
Yeah.
- #0
There would be a sales report of all the wholesale orders over $30, but reps had no way of knowing that these sales figures were actually quite unusual nationwide. So there'd be a list of all the women who had gotten $30 sales orders, but no information about what percentage of reps were pulling in these $30 orders. they would have lots of like what we all would now call toxic positivity like motivational quotes and stuff oh yeah that's a big thing in the mlm yeah like here's a quote quote give no place to i can't but plenty of room to i can think it be it live it and you not only can but will succeed. That's from like the early 1900s.
- #1
Yeah, and that could have been said yesterday.
- #0
I mean, can you imagine that with like a minion next to it? Like, that's all the time. There would also be information about who had earned various prizes or sales incentives, as well as upcoming opportunities for prizes and sales incentives. And one thing that was sort of interesting about these is that prizes and incentives existed in male-dominated sales companies, too, but they were usually competitive. It was like, you know, whoever sells the most of X product in the country or something like that. But Avon, or I'm sorry, they weren't Avon yet. CPC. It was non-competitive. It was things like anyone who sells 75 packages of furniture polish would receive a Rochester coffee percolator. So anybody could get these prizes. It wasn't, you weren't competing against the women in your neighboring territories. You were competing against yourself, presumably.
- #1
It's not who wins, who sells the most. It's if you sell above a certain amount. They do that with Girl Scouts with the cookies.
- #0
Oh, yeah.
- #1
You sell enough cookies, you, you know. you get a backpack or you get a free trip to Girl Scout camp or whatever. Yeah,
- #0
exactly like that. Fewer than a third of the reps ever received these prizes. And McConnell owned or partially owned most of the companies the prizes came from. So the cost of doing business in that way was extremely low for him. So it made the women really excited because they'd get their percolator or whatever. And it cost him almost nothing. The message from McConnell was that anyone who worked hard enough could achieve limitless success. I hear that, limitless success. And earn a living on commissions except in extraordinary circumstances, which was untrue. It was very, very difficult to make a living on the commissions. Here's a quote from McConnell. The pleasant people best succeed on life's journey, a sunny disposition, and a pleasant smile is a passport to all hearts. If you have unconsciously permitted unpleasant thoughts and discouragements to efface the more attractive lines from your countenance, set about at once to see the brighter side of life and try pretending to be happy. And almost before you are aware, life will bear for you a different and more desirable aspect. End quote.
- #1
Oof.
- #0
Right. So this is what I'm talking about, how, well, compensation plan, not the same. But that culture, that culture of pull yourself up by your bootstraps and if you aren't succeeding, it is your problem. And look positive. I mean, this is the secret thing, right? Like manifest your good destiny or whatever. This was all baked in to the California Perfume Company and it came from David McConnell directly. Representatives were also encouraged to go out and sell in any weather or situation. Oftentimes in the outlook, women who lived in like particularly snowy areas and things like that would be featured as, quote, doing their duty, end quote. And they would have pictures of them like in like several feet of snow. Like there were stories about women who would like do cross-country skiing to like.
- #1
Oh, my God.
- #0
To. like deliver their stuff, you know. And there would be discussion about the health benefits of walking outside in January and stuff like that. In fact, traveling agents, so this is one of the people who did the recruitment, Layla Eastman, she had suffered serious health problems right after being recruited as a representative for the California Perfume Company. And these persisted when she became a traveling agent. And this is a quote from her. I went on the road when they said they wanted me. If I would have had to crawl, I would have gone, end quote. So this is the culture that these women are in. Like, yeah, okay, theoretically, you get to pick your hours and stuff. But everything that you're getting from the company is telling you to ignore your health, ignore the weather, ignore everything else in your life. Go out and sell, sell, sell. and while you aren't going to get penalized in the way that people are today, there is a social, like a peer pressure that is very specifically being created. Because you don't have anybody else around you. You have an exclusive territory, which is a good thing, by the way, having an exclusive territory. That's something that we'll talk about as an issue with modern MLMs is you don't have that. But... because you don't have an exclusive territory, this is pre-internet, this is pre even like traveling being easy. You're not talking to other California perfume company reps. The only access you have is through this, this company issued magazine. So Great Depression rolls around. and the California Perfume Company actually did really well. This is an interesting thing we see. This happened during the pandemic, too. These direct sales companies tend to do very well in times of economic distress. As regards to the Great Depression, there are a few reasons for this. One was that they had really low overhead. They weren't having to deal with stores and stocking stores and things like that, so they just didn't have all that to pay. Right. Around that time, it became more socially acceptable to have colored makeup. because up to this point they're not really selling makeup because makeup was something that like working girls wore you know uh like sex workers and things like that like that was not what you know proper dignified housewives would wear like maybe some blush maybe that was it but as we get into the 1930s that in 20s really is when it starts changing but for for women living out in like Nowheresville, Iowa, it started changing in the 30s. This idea that some makeup, some colored makeup was actually socially acceptable. And so they launched their new Avon line, which then became the name of the company, which at first was actually a general purpose cleaner. That's what the original Avon thing was. But it became face powders and then these like lipsticks and compacts and things like that. Before the market crash. the company had already decided to launch a national marketing campaign and expand into cities, which also helped them a lot during the Great Depression. So they were not particularly successful with the cities thing, at least not until after World War II. But the national marketing was really successful. Now you've got things like radio. And so people will hear on the radio that there's this thing called Avon, and this person might come to your door to sell you Avon. And that's going to help the Avon rep because they aren't trying to explain to you what Avon is. You know what this is. You know who she is. And in fact, there are records of Avon reps saying that they would knock on someone's door and the person would say, oh, we heard about you on the radio. so this was working and on top of that during a massive market crash people can't afford new clothes and things like that but maybe they can splurge a little bit on a new lipstick right like a small thing to kind of keep the spirits up so they actually did super duper well and also a lot of women were looking for opportunities to make more money because men were laid off and you know just it was just a really good time for the california perfume company this is also when david h mcconnell is starting to slow down so he stepped back a bit from day-to-day operations he was always involved in some manner but he wasn't like the guy he's getting older at this point he was in his 70s yeah his son, David McConnell Jr., eventually took over, and he was really into newer scientific, quote-unquote, management techniques, which was in vogue at the time, this idea that business was a science, and he could apply this science to make a better business or what have you. But like I said, David McConnell Sr. was still around and so forth. He just was in a smaller role. But he did pass away at the age of 78 in 1937. So I'm going to kind of barrel through the 20th century because it's theoretically about David H. McConnell. And I think it is important to focus on him because he created this culture around this like women's business opportunity or what have you. They didn't call them girl bosses, but that's that's what they were doing. Like this was this was girl bossing in 1905, you know. So his son took over. Unfortunately, he died at a very young age. He died in his 40s of a heart attack.
- #1
Oh, wow. Yeah.
- #0
But. While Junior was in charge, he replaced the paternalistic language with a more like pseudo evangelical style of language. When I say evangelical, I mean like evangelical Christian churches, you know, bringing this idea of like the woman had a moral obligation. to serve the company because of the opportunity that they had afforded her. This is very much still in use today. But he's also having to navigate a lot of new market forces that actually Avon, they're now Avon, Avon was able to navigate pretty effectively. Though it took an amount of time that is really unacceptable, given that they are a company supposedly about women's empowerment, to get women in the C-suites, there was any opportunity for women to move up. after World War II. So after World War II, in an attempt to get more business out of cities and so forth, they created this whole other level of management that was exclusively women. And they were like, sort of like sales managers. While it's, today we're like, that's, it took them forever to get a female CEO, right? But, even today, we still don't see a lot of women in C-suites.
- #1
No.
- #0
So, I'm not saying that they should like, get a prize, but it is worth noting that they were doing better than a lot of places. They did, however, like, avoid women's lib language as we get into, like, the 60s and 70s. So this is, like, you know, the stuff with, like, the Equal Rights Amendment and stuff. They were, like, staying as far away from that as they possibly could. Because most of their customer base is fairly conservative, right? So they don't want to be anywhere near that. That said, though, I'm while their racial track record in the late 19th, early 20th century was abysmal, as soon as the civil rights movement took shape, they were on that train. Like they like did their own internal like audits of like racial polis, like what we would now call DEI. And they just they just did it like nobody made them do it. And they they like actually like started creating whole lines of makeup that was for black women and started actively. promoting, like, recruiting Black women. The Avon lady. Everybody knows her because she's visited in their homes, delivering products, taking orders, leaving brochures when they're busy. So, like, too little too late, maybe. But, again, it's one of these things where it's like, wasn't it enough? No. Was it more than what everybody else was doing? Yes. also I would like to note that all this information I got the book that I put is called ding dong Avon calling and like I said I'll put in the show notes that book came from a that the author was actually given full access to Avon's archives and they gave the they gave this author complete access and even gave them a office and desk in the Avon headquarters to do this work so like we're about to talk smack about Avon, but I do want to note that there, there, a lot of companies will not do that. And there, I want to give them a little bit of a, like good job to being willing to have somebody go through your history like that and to speak because this book is very Frank. shall we say, about the bad things in Avon's history.
- #1
Of which there are a lot.
- #0
Yeah. Avon, throughout this time, has stuck with a simple commission structure. You sell a product, you get 40% of the cost of that product, period. But there's something else going on.
- #1
That's not how it is now.
- #0
Right. So there's something else going on. There's something else brewing as we get into the 60s and 70s, and that something is Amway. Amway, which was started by the DeVos family, if anybody remembers Betsy DeVos, that's the head education person in the Trump administration, their money came from founding Amway. And Amway created what is now considered the modern multi-level marketing structure. And we're going to explain what that is and what is so awful about it right now.
- #1
so take it away so were you going to talk about emily or
- #0
that's all i have to say about anyway they they i mean Amway basically established this structure that we're about to talk about. And they were the ones that established that it was legal because they were sued by the FTC in 1979. The Federal Trade Commission, that is. And won based on this idea that they were not a pyramid scheme because there were products that were being sold. And there's some like percentages and stuff, but that bit's not really enforced.
- #1
So multi-level marketing, the way that it is set up is, as you can guess from the name, is multi-level. So we have at the top of the company, you know, the person who started it or whatever, their C-suite executives, you have the very first people who are onboarded, as long as they didn't drop out, of course. But you have them at the top. and their job is then to keep recruiting more people underneath them who will then sell. And when you sell, you get a commission, but a lot of the money goes upstream of you, as they use the words upstream and downstream a lot.
- #0
Or, oh my God, upline.
- #1
Upline. Yes, that's it.
- #0
upline downline now mizal don't all companies have a pyramid structure with one ceo at the top and lots of workers below what's the difference instead of having a you know your c-suite executive and then you have the middle
- #1
managers and then you have the workers and do all of guaranteed salaries instead of that you have the people at the top who are the, just the first people who are onboarding, of course you have like people running the business side of the company as well, but you have the people who are selling. It's not just a normal sales department. It's that's the entirety of the company basically is the sales department. And you have people who are. were the first people, and then they recruit more people under them. So the people that they recruit are usually paying a fee in order to be able to join the company as a member. They have to pay a fee. They have to buy some product in order to be able to join. And some percentage of that goes upline to their person who recruited them. and the person who recruited that person and the person who recruited that person and it keeps on going up and you're supposed to keep recruiting when you join you recruit more members so that they can send money up to you and they'll recruit members who will send money up to them who will send money up to you you send money up to your person it's it's and
- #0
and it builds into this giant pyramid and the thing is is could you theoretically just sell the products sure but that's not how you make money the real when you actually look at the compensation structures the real way to make money is through recruitment. Because honestly, selling these things is not easy. And when you look at the percentages of who's buying these products, the vast majority of them are being purchased by representatives of the company.
- #1
Because they have to. You often, almost all these companies say, you have to sell a certain amount of product per month in order to not lose rank or even be booted completely.
- #0
Your rank is like... if you are different ranks, you get different percentages of commission or different percentages of commission off of your downlines, purchases and things like that. So you want to keep your rank to keep your money coming.
- #1
Yeah. So for example, Avon, as of the 2022 compensation guide that I have in front of me right now, talks about the different levels of compensation that you can get. when you're a different rank. So the lower rank is called contender. And that's if you sell up to $4,999 a year of product, you're what they call a contender. And you get a certain amount of percentage of commission on these products. And if you're, so if you're selling under $40, and I think this is per month, it's a little bit unclear. And the thing, but I think it's per month, if you're selling under $40, you get no commission. If you're selling $40 up to $5,000, you're getting 25% commission on beauty and jewelry and 20% commission on fashion and home products. And the next level up is $5,000 up. You get that's premier and your commission goes up to 30% for beauty and jewelry, 20% fashion and home. And then it keeps going up from there. President's Club up to $10,000. Honor Society up to $20,000. Rose Circle up to $35,000. And it goes on and on and on up until you get to the inner circle, which they had set in 2022 at least. $220,000 a year. So like no one's getting that unless you are in these very upper ranks.
- #0
Do those numbers include like what the people below you sell? Because with other companies, how people get those numbers is because what their downline sales counts towards it.
- #1
The way they, what they call it is award sales. So I'm assuming award sales includes any of the money that you're getting from all the people below you. Because otherwise, I don't know how anyone would be getting $220,000 worth of things. You have to be getting that from your downline.
- #0
I mean, there's not a lot of people up in these upper ranks. And actually, that's a really low number of ranks for these companies. A lot of these companies have, like, way more ranks.
- #1
Yeah, well, there's a few that I skipped over. Yeah, well.
- #0
also talk about this a little bit like even even today avon is one of the less horrific of these companies. That's just the bars in hell, but they're above it.
- #1
When you fill this out, the structure is a pyramid. It is a pyramid. They are pyramid schemes. Let's just call it what they are. However, the FTC, Federal Trade Commission in the U.S., decides differently. And this is because of that Amway case. What separates a pyramid scheme from a pyramid an MLM is whether or not there is a product. And the way that the FTC phrases it is, are they selling a product? Which is very confusing because these companies are all claiming to sell products. It's just... is the money actually coming from the products or not?
- #0
And who's buying the products?
- #1
And the problem is, if you really look at it, there are some that are just, the FTC has won lawsuits against them and they have been officially deemed pyramid schemes. And then there's the rest of them where they have not been officially deemed pyramid schemes because there just isn't enough money. in going after these companies and the lawsuits, and it's so hard to win these lawsuits against them.
- #0
The FTC is an incredibly small commission, and they've got more to do than going after these pyramid schemes. They also have to like, I'm blanking on what the FTC does. Anything that has to do with making sure, they're the ones who have to deal with, is Amazon a monopoly? like, and they don't have the resources for it. I actually just saw an interview with the head of the FTC, and she was talking about how, she was on the Daily Show recently, and she was talking about how they have to think entrepreneurially. That was the word she kept saying.
- #1
Oh, that's awful.
- #0
Right, but what she means is they can't go, they have to prioritize. It's like triage. They have to decide who to go after. So just because they haven't gone after somebody doesn't mean that it's legal. it just means they haven't gone after them.
- #1
And a lot of these places are never gone after or they're gone after and they have enough money that they can just keep putting it off forever. Like Herbalife is a company, an MLM, pyramid scheme, whatever you want to call it, that sells what they call dietary supplements. It's like weight loss drinks, protein shakes, a lot of various products labeled for weight loss. They have a lot of fat phobia going on in Herbalife. And they'll often pop up as these like smoothie shops, I say with air quotes, or coffee shops. And they'll pop up and be very secretive about what their ingredients are. They don't want you to find out it's Herbalife. will just pop up, be there for a few months, and then disappear and you never hear of them again. And another one will pop up, you know, a few miles down the road and it'll keep going. Herbalife's been going on for a really long time. And their products have come under fire many, many times. For being outright dangerous, like I mentioned before, they have had so many lawsuits, especially with lead. So in 2008, for example, you know, They were sued after independent laboratory testing showed that their products had dangerously high levels of lead in them in excess of what is allowed under California state law. And I know that California is much more strict than a lot of other states, but they're strict because that is technically more correct scientifically.
- #0
Especially as regards lead.
- #1
About what is safe and not. Herbalife then privately hired a laboratory to do. testing and claim there was not enough lead in their products to require relabeling with a lead warning. But it's very suspicious. They've also had several complaints that their products cause permanent liver damage, which is a thing that lead can do, by the way. And that's been supported by a few different studies over the course of the last 20 years. But Herbalife has massive amounts of influence and power. They've avoided penalties thus far. Allegedly. Mainly by putting a lot of legal pressure. Like with consistent threats by very expensive lawyers, putting that pressure on different scientists and the journals, the science journals who have published these studies until these scientists and journals retract the studies. They've been sued several times on allegations that it's a pyramid scheme. Also, in 2004, they settled a class action lawsuit in the U.S. on behalf of 8,700 former and current. at the time, distributors for $6 million. In 2011, actually, this was a big thing. A court in Brussels in Belgium found them to be an illegal pyramid scheme. And Herbalife appealed and they won the appeal saying, no, it's not a pyramid scheme. We can stay in business. The FTC in 2014 opened an investigation into Herbalife in response to these huge number of requests. From both consumer groups and members of both houses of Congress, which is pretty impressive if you know U.S. politics at all. And 2016, in that same lawsuit, Herbalife agreed to change its business structure, which they haven't actually really done.
- #0
Allegedly.
- #1
And they agreed to pay $200 million in a settlement with the FTC. The FTC actually said in a press release about that settlement, and this is a direct quote, it's virtually impossible to make money selling Herbalife products. That is like... Why? it is considered a pyramid scheme, but they just can't, they can't get it to stick.
- #0
Because theoretically, yeah, you can sell stuff and make money, but it's almost impossible to do so. These things are priced so high compared to competitors. There's actually a thing that people will do looking for like, quote unquote, dupes of MLM products. And they're usually way, way cheaper. And like, it's, there's also the piece of Margaret's saturation. this is the like very key pyramid scheme thing of like, whereas Avon back in the day, you had an exclusive territory that was yours. That's not the case anymore. And that's actually partially because of that 1979 decision. That actually was sort of the beginning of the end for Avon because Avon at this point is actually fighting against a lot of this nonsense. They were part of starting a professional organization for direct selling that tried to establish standards for, you know, as how these businesses should run and things like that. It was before 1979 that it was back in the late 30s, early 40s, when the U.S. government said that independent contractors couldn't have exclusive territories because otherwise they'd be employees. But it wasn't really like actually enforced in any real way until the early 80s. And so now Avon's in a situation where they can't give people exclusive territories unless they hire them as employees. which they're not going to do because that'd be too expensive.
- #1
And that also defeats the entire purpose.
- #0
Right. So now what you get with these companies is instead of having your one Avon lady, like if you've seen, I love actually that it's in the Edward Scissorhands. It's one of the characters is the Avon lady. Avon calling.
- #1
Weren't you just here? No,
- #0
not since last season.
- #1
Today I've come to show you our exquisite new line of softer colors in shadows, blushes, and lipsticks. Everything you need to accent and highlight your changing look. My changing look.
- #0
Good.
- #1
Well, it goes without saying that I also have a complete selection of your old favorites, those tried and true products we've all come to depend on year in and year out. Come on, Peg.
- #0
I never buy anything from you.
- #1
You know that. I know.
- #0
Bye.
- #1
Bye, Helen.
- #0
she's the Avon lady. Now you can have 20 Avon ladies living in the same town, all fighting for those same sales.
- #1
And that's why we're getting so many Facebook messages from people you met, you haven't talked to since high school, because they have no one else to talk to. They've already sold to all of their friends who are willing to buy, all their family members who are willing to buy.
- #0
They've recruited as many of them as they possibly can.
- #1
And then they...
- #0
are just out of options. And so they start messaging people they haven't talked to in 20 years, creating these Facebook groups where they say they're just going to give away these free products and you play these games and you get free products and then basically pressure you to purchase things. And it is very uncomfortable. Back when I was young and didn't know much about MLMs. I had, you know, I had some friends who were doing this and made these Facebook groups and said, we're just going to play some games. And I joined, you know, the Facebook group to play the games for whatever product it was.
- #1
Support
- #0
Support my friends. Yeah, of course. And I play the games and all the games is just like. you know, you might win something, but if you buy something, then you win even more or your prize doubles or whatever. There are all these little tricks.
- #1
And they're able to do that because of what's called inventory loading, which is where they purchase product to keep, like we said before, their rank. Because they can't, if you're like 100 bucks under whatever you need to keep your rank for the month, you can just spend $100, buy it for yourself. And that counts for the vast majority of these companies.
- #0
I actually have a friend who used to join MLMs for the discounts on products. And that exists. And that is a thing. And she said that for a long time that she was just joining to get discounts on products. And then she got divorced. And suddenly she was no longer joining to get discounts on products. She was joining and actually trying to sell because she felt she had no other options. She was a stay-at-home mom. And she just... didn't know how to get back into the workforce. And so she felt that this was her only option.
- #1
These companies tell you, Bill of Goods, they tell you that you can stay at home, take care of your kids, and still work your business. That you can work your business on your terms, but your terms seem to be always, like there's, I've seen horrifying, like YouTube videos and TikToks of these people who are like working while in labor, giving birth to their children, or working on their vacations. Or there's one, there's this one guy who's like really high up and I forget which one, I think my Monet, but it doesn't matter. He's high up in one of these companies. And he went live from a family member's funeral to sell product.
- #0
That's awful.
- #1
So, I mean, and this is why I think it's pertinent. So Avon, did eventually switch to this structure in the early 2000s because their main competitors were Mary Kay and Amway. and both of those from Jump had an MLM structure. And if you don't know any better, which back in those days, especially before you had the anti-MLM movement on the internet and so forth, it was pretty easy not to know. You had one company promising you you could make a couple hundred bucks a month, and you had another company promising you you could make thousands a month.
- #0
And a car, and they'll give you a car.
- #1
You'll get a car. The car, by the way, the trick is you have to lease the car and they give you the money, so if you ever lose your rank. you're still stuck with the car. So that's what that's about, if you were wondering. So they couldn't compete with that. And so they switched. It was go under or switch. And it's really sad because it seems like for a really long time, they were trying to be a moral company. And they just gave in. I mean, moral is a strong word for it. But like more moral. But what they are guilty of. is creating this culture of what we now call like girl bossing. This culture of pull yourself up by your bootstraps. You can work your business on your own terms and there's unlimited potential for earnings. That you can be a stay-at-home mom. You can take care of your kids and your husband and your elderly parents or whatever and still work this business. that you can have it all before having it all was a thing that people talked about.
- #0
And I think it's worth also mentioning as we're talking about how people are working through all of these horrible conditions, labor, funerals, whatever. I think we should also mention these conventions. There is a convention during the height of COVID, like the very height of COVID.
- #1
So there is a creator named Savannah Marie, who is actually where I learned a lot about this stuff from. I went down a deep anti-MLM rabbit hole during the pandemic.
- #0
Yeah, it was like several months of spending a few hours a day learning about MLMs.
- #1
Because I had nothing. That and playing Animal Crossing. But she did a lot of coverage while it was happening. I believe it was in 2021. Paparazzi, which is the $5 jewelry company, had a convention. During, I think it was the Delta wave and people died. A lot of people died because of this convention. Allegedly.
- #0
because they felt that they had to go or they would lose their rank.
- #1
And not only that, if they had bought, so a lot of people bought tickets back after the vaccine had come out, but before the Delta wave. I'm sure we all remember that heady time of like, the world is back. And so a lot of people purchased tickets during that time. And then Delta wave started coming up and people tried to get refunds and they couldn't get refunds. So the choice was just give up your 200 bucks or whatever it was. or put yourself at risk for getting COVID.
- #0
200 bucks and whatever.
- #1
And airfare.
- #0
And airfare and hotels. These things are not cheap. They're really not cheap. And they really pressure you to go so that you don't lose rank.
- #1
And it's all a lot of brainwashing. I mean, anyone who's been to a convention knows it's very, like, exciting. Even, like, real professional conventions. It's a lot of, like, getting pumped up and stuff like that. Like, anybody who's been to, like, teacher conferences. Like, man, they're pumping you up like nobody's business. Those teacher conferences.
- #0
You wake up at the crack of dawn. You're going to bed super late. So you're super sleep deprived, which also contributes to. you're just there to hear whatever they're saying.
- #1
If you're staying in the hotel, you're like, it's fun. Like I'm going to a professional conference next week and I'm sure I'm going to have fun. And I'm sure also it's going to be like lots of like, yeah, we're going to change the world by being public historians. But the difference here being nobody's making me go. And hopefully it'll positively impact my career. But it doesn't really they say it will positively impact your career when you go to these like paparazzi or MONAT or whatever conferences that they have. But it's really just a whole lot of brainwashing. It's a lot of like watching one guy with one of those like face microphones talk at you about girl bossing and then maybe like a performance from like Taylor Swift or something. Not Taylor Swift but like somebody who's like very expensive and you're like, how can they afford this? And the answer is. a lot of their products are trash and they're charging ludicrous amounts of money for them. And like I said, they're not all their products are trash. I've heard Avon actually has really good products, but a lot of them are. And either way, they're overpriced because they have to be to pay for all this. So the moral of the story, don't join an MLM, don't purchase from MLMs unless you, for some reason, have absolutely no other option. Like I know there's certain situations that are particular to people. I'm not talking about that. but if you have literally any other option, don't. Just don't. Don't do it.
- #0
And if you do, keep on alert. It can go bad fast.
- #1
You might think you're helping your friend out, but really, this sounds really mean, but it's better for them to fail early because they're going to lose less money because if they fail in the first couple of months, they're out maybe a couple hundred dollars. but if they fail after a year, they're going to be out sometimes hundreds of thousands of dollars. it's really horrifying. And I will include a lot of information, a lot of YouTube videos and just various places. And also there's an article that gets passed around of how to get someone out of an MLM if you know someone who's in an MLM. So techniques to help get them out. It's very much like getting someone out of a cult or an abusive relationship because it is an abusive relationship. And it is, I think, interesting historically to look at. the first of them. And while Avon didn't originally have the payment structure that makes this so insidious, they did create this culture that allowed for companies like Amway and Mary Kay to come in and just make it worse. Like I said, just because you're clearing the bar doesn't mean much if the bar is in hell. So like I said, lots of resources down below. Take a look at them if you don't know much about this. This is, I think, a very one of the things we're really focused on this podcast is history that has modern pertinence. Like, obviously, both of us are history enthusiasts. We like learning about people from history just for the fun of it. But the focus here is history that has is still resonating today. And this is very much. that thanks for listening to delicious of history hope you enjoyed yourself please drop us a review on whatever platform you listen on it makes a huge difference so much and tell your friends tell your family whatever tell everybody delicious of history way to go people who have done a lot of that who are fantastic beautiful people are our patrons and people who also are do the the paid subscribers that's the word our patrons and our paid subscribers on substack substack is a place you can go you don't necessarily have to pay you don't have to have an account but you can go and read the newsletters that i put up every week that have primary source documents about whatever it is we're talking about and then the paid subscribers get access to other articles I put out later on in the week, as well as the same thing the patrons get, which are like stickers and stuff like that. And we couldn't do it without our patrons.
- #0
No, it is what makes us able to put aside the time.
- #1
to create all of our various social media things, etc. We're on Instagram, TikTok, etc. Everything except X because no, you can find all that at www.deliftsofhistory.com. And we are a weekly podcast. We have our biography episodes, which is what this was. And we also have sidebar episodes, which take a current event and look at the historical context behind it. And I will then insert what the next ones are going to be here.
- #2
Hi, this is Editing Faga. I am on a plane so forgive the robot voice. Our next Sidebar episode will come out next Monday, April 22nd. The next biography episode will come out Monday, April 29th and will be about John Havland, the architect who changed the way we view and build prisons. We will also chat about the psychological impacts of his design and how that has impacted modern mass incarceration.
- #1
Thanks so much.
- #0
Thank you for listening. See you again next week.
- #1
And now for an episode relevant audio drop. Choosing your fragrance as the Avon way makes you a woman of many moods. Your personality changes with each scent you use. Let's see what Avon's Forever Spring does for you. The magical touch of forever spring, puts you in the mood to sing.
