The stuff of Tupperware parties and Amway salesmen sure isn't seductive. But sure as you can recognize the smell of Avon Skin-So-Soft, multi-level marketing—building a network of agents who sell, and get commission from both sales and signing on more agents—is a proven formula for exponential growth. Ask Warren Buffett, who counts Pampered Chef as one of his best-ever investments. Today, there's a new wave of savvy entrepreneurs bringing MLM back to the mainstream.
Hil Davis, co-founder of this young custom-fit menswear company, says: "my direct reaction to 'direct sales' was 'what kind of snake oil do you have?'" But after reading The Buffett Way, Davis came around, and decided to try to build a business that would disrupt the marketplace for high-quality, tailored, menswear. He mixed a compressed supply-chain with direct sales, and sprinkled in some inspiration from the franchise industry—"in which the brand is really important, because you want a Starbucks feel, not a 'my neighbor is selling me stuff' feel," Davis says. J. Hilburn's roughly 1,000 style partners have sales territories, and have attained a 93 percent annual re-order rate from customers.
Jessica Herrin, a founder of WeddingChannel.com, sought to create a company selling customizable jewelry, but the allure of direct selling with a multi-level model steered her business. Stella & Dot sells through a network of commission-earning stylists who host in-home trunk sales of the merchandise, and who can earn more by becoming coaching new stylists. It also incorporates a vibrant website and social-media presence. Stella & Dot is growing so fast as a business, it was No. 67 on the 2010 Inc. 500.
VisionSpring was founded by Dr. Jordan Kassalow, an optometrist with a passion for boosting economic opportunity in the developing world. During visits to Africa and India providing free eye care and glasses to people who otherwise could not get them, Jordan discovered that people without income could serve the community themselves with some of the services western eye doctors do. Today, this social venture works with 9,000 entrepreneurs selling affordable eyeglasses in the developing world. VisionSpring It has since won Fast Company's Social Capitalist award multiple times.
This start-up stationary-and-personalized paper-goods sales operation loves to party. Paperly's 150 "consultants" host at-home gatherings where they showcase the company's sleek stationary, stickers, and labels. The company started with just six agents three years ago, and CEO Jay Rudman says "it's growing in just the logarithmic fashion we expected." Now in 35 states, the company is not yet rationing off sales territories. "It's a bit Darwinistic in that point of view, but we provide them with all the right tools for a very low investment," Rudman says.
Fast-growing is an understatement when it comes to Ambit Energy, the company that topped the Inc. 500 list in 2010. Founded by Jere Thompson, Jr., whose grandfather Joe Thompson started the 7-Eleven chain nearly a century ago, Ambit is a $325 million company that grew more than 20,000 percent over three years. And it’s selling something highly unlikely, that the customer can't touch, can't taste, can't feel. It's not even aspirational: it's just wholesale energy to power homes. Actually, what it’s selling is the opportunity to reign in additional salespeople, for commission.
This isn't your typical door-to-door. That’s mostly because a lot of the transactions are between impoverished women in developing nations. This social venture is aimed at spurring entrepreneurship, and simultaneously selling affordable—usually below market-rate—medical supplies and family planning to people without previously reliable access to either. "Health promoters" for LivingGoods go door-to-door selling products shown to stop diseases with high mortality rates at low costs, such as malaria, worms, and TB.
Founded by three Colombian men named Alberto who joined forces in Miami, Zumba is a dance-inspired workout taught at gyms, schools, and yoga studios all over the world. Each instructor is a Zumba Academy-trained entrepreneur in their own right, using a fairly precise formula to host workout sessions—right down to the Latin-infused pop-music soundtrack. Instructors can earn extra by hawking Zumba clothing, shoes, and other merchandise to clients.