"Listen, nobody's more responsible for what's been said about these products and Herbalife than me. I'm responsible for the claims it makes, the products it sells, and everything else.I've got more at stake in this company than everybody sitting in this room.
"And let me tell you something. If I didn't think we were going to make it, if I wasn't here to fight, I would be running to the hills."
The rhythm is familiar: call and response, appeal and exhortation, the cadence of the tent, of sawdust and miracles. He has always been a fighter, and he won't let Herbalife go down without a struggle. All he needs is their help. Use the product. Wear the button. Spread the faith.
By the time he reaches the end, the auditorium is awash in adrenaline, men and women on their feet, ready to march together. They were fat, and he made them thin. They were poor, and he showed them riches. How can they not believe?
Hughes exits, stage left, to applause and music that, it turns out, was specially composed to sound like the theme from Rocky. It makes great TV.
Rocky" almost fits Mark Hughes, except that the denouement of his fight is still in question. Indeed, the story of his exotic career would make a wonderful TV movie, if not a full-length feature film. Teacher, exemplar, and redeemer to the faithful, he is also an entrepreneur extraordinaire, the latest in a long line of fast-talking hucksters to hit pay dirt by catering to America's national obsession with weight loss and fitness.
Hughes's own redemption story is at the core of the company mythology. It is a California tale, beginning in a broken home some 15 miles south of Hollywood; Mark's parents separate before he is born and divorce soon thereafter. By ninth grade he is a dropout; by age 16 he has drifted into drugs. Then comes the break: Hughes is ordered to Cedu School, a private residential school for troubled teenagers. There he discovers his gift for selling. Handsome, increasingly enthusiastic, he works his own rehabilitation selling raffle tickets door-to-door to raise money for the school, and eventually becomes the school's youngest staff member ever. It is there, so the story goes, that he meets his destiny. The death of his mother leads to years spent exploring the mysteries of herbs, then to the creation of Herbalife.
In fact, Herbalife was not Hughes's first endeavor. He served an apprenticeship selling a diet product called Slender Now. When that disappeared, he sold one called Golden Youth. It was not until February 1980, when he was 23, that he decided to try his own line, developing the Herbalife products with Richard Marconi, a manufacturer of Slender Now tablets.
The Herbalife diet itself is simple. Want to lose from 10 to 29 pounds a month? Without exercise? Just replace two meals each day with two glasses of juice or skim milk doctored with the company's protein powder, and take a dozen or so different herbal formulations. Herbalife works, the company says, by "burning excess calories," and it will "naturally cleanse the digestive system." Other products promise additional help for various problems: Cell-U-Loss, for example, is guaranteed "naturally to attack cellulite." Nature's Raw Guarana (N.R.G.) is sold as a natural energy enhancer, a "nervine, tonic, slightly stimulant aphrodisiac, febrifuge." All products are sold "100% Satisfaction Guaranteed Or Your Money Back."
But it isn't the diet that made Herbalife such a phenomenon, it's the marketing plan. Herbalife products are not cheap: The weight loss program alone costs about $30 a month, and purchased at list price, the full line would cost about 10 times as much. But no one has to pay list price. Many customers become distributors instead, accepting a minimum 25% discount on everything they buy in lieu of the widely advertised money-back guarantee. That's only the beginning. With that discount, you can make a profit selling Herbalife yourself. Recruit other salespeople, and you can earn a commission on everything they sell as well. Recruit enough salespeople, or sell enough volume on your own, and you can become a supervisor, with a 50% discount on products. You earn royalties based on the orders filled by everyone you recruit, and on the orders filled by everyone they recruit. The higher up the pyramid, the bigger the payoff. Hughes himself sits at the top, with 54% of the equity and one of the largest distributorships in the company.
Multilevel marketing is a tough game, but Hughes has played it well, borrowing tools like his evangelical pep rallies from such giants as Amway Corp. and Mary Kay Cosmetics Inc., then turning them into media productions. And the company has always tried to help its distributors succeed. Besides the product discount, the glossy Herbalife Journal, the TV shows, and ads in the likes of USA Today, each distributor has the Herbalife Official Career Book to show the way to riches. "Whom Do I Know?" the book asks, suggesting some 60 potential customers, everyone from "the best man at your wedding" to the person "who sold you your dog" or "who runs your delicatessen." Basic selling techniques are explained, although the new distributor is reminded that "nothing in the world can take the place of persistence." The Career Book also offers a full list of the Herbalife product line, and explains the purposes of each product. The 1982 edition -- which has since become a bone of contention -- suggested that the Herbal-Aloe drink could be valuable in the treatment of "ulcerations of the kidneys, stomach or bowels," while Herbalife Formula #2 could help with 75 different conditions, including age spots, herpes, jaundice, cancer, bursitis, lumbago, and impotence.
People who follow the Herbalife diet will lose weight. Of course, most people who cut down to one meal a day will lose weight anyway, with or without Herbalife's help. As for the rest, many academic nutritionists believe that Herbalife's products, which contain herbs, diuretics, and mild laxatives in various combinations, are medically useless, except perhaps for their placebo effect.
The company suffered no serious consequences from its representations until 1982, when it first tangled with the FDA. That summer, the agency sent Herbalife a "Notice of Adverse Findings" citing violations of the Food, Drug, and Cosmetic Act. The agency pointed out that mandrake and poke root, contained in Herbalife's Slim and Trim Formula #2, "have been considered as unsafe for food use," and questioned whether "food-grade linseed oil" in the same product" actually exists." The agency also charged the company with misbranding, false representation, and "meaningless and misleading" declarations.
