Herbalife

0:11wait can i tell you my one piece of like fun and exciting news yeah so you know i moved recently and made a selection of where to live in the like fall slash winter. It's now spring and all of the plants in the yard have started blooming. And I'll tell you what's fucking fun, Michael. As it turns out, I have two blueberry bushes, a cherry tree and an apricot tree. Fruit for days. No more ultra processed foods. Only homegrown Flamin' Hot Cheetos. Flamin' Hot Cheetos. Yeah. When I was growing up, we also had a blueberry bush in the backyard. It's like a cherished memory from my childhood, like eating these homegrown blueberries.

0:53And then one day when me and my brother were like, I think five and seven or something, we beat it with sticks and then it never gave blueberries again. I was about to be like, oh my God, we also had blueberry bushes in the backyard. It was also a cherished childhood memory of mine. But then you really lost me at beat it with sticks and somehow killed a blueberry bush. But you were not a boy, a little boy, who was like, I need to inflict violence on this beautiful thing for no reason. I was a little girl who was drinking pond water and calling it magic potion. This explains so much about us. There's kind of no point in saying our names at the beginning of the show anymore.

1:37So we can just say I'm someone who beat a blueberry bush with sticks. I am someone who drank pond water. Absolutely. Okay, so I have a tagline. Oh, it's not about pond water and blueberry bushes? Well, it's potentially libelous, depending on what we decide in this episode. Can't wait. Welcome to Maintenance Phase, the podcast that wants you to recruit two of your own podcasters. And then if they recruit two podcasters, and they recruit two podcasters, you still don't go in with this. If you'd like to support the show, you can do that through Patreon at patreon.com slash maintenance phase. You can also subscribe through Apple Podcasts Premium.

2:15It's the same audio content. Same stuff. Michael. Aubrey. We are talking about a company that makes its own magic potions out of pond water. Ooh. Herbalife. Mike, do you know anything about Herbalife? Are you familiar? The thing is, I'm only familiar with this vaguely through, I guess it was like financial media. There was a whole thing with short selling this stock and the whole debate hinged on like, is this a real business or is this an MLM? Yes, that was a big part of it. Absolutely. And I think you're right that the way that the story gets told is like super investor V super investor. Yes.

2:56And that's the primary way that the story of Herbalife has been told. but they are a weight loss and wellness company. Yeah, this is okay. This is what I could never actually figure out is what does this company do? Great. Which is also one of my like telltale signs of an MLM. When you go on their website, you're like, sorry, what are you selling? One of the other telltale signs of an MLM is if there's, they don't tell you the prices of their products on their website. And if there's not like a buy now button, there's just a like, find a local distributor. you know you're done so yeah not something businesses typically do so herbal life sells supplements shake mixes protein bars vitamins energy drinks sort of the whole shebang okay they are as you noted a multi-level marketing company sometimes people describe them as a pyramid scheme in different countries there is a distinction there right between multi-level marketing and a pyramid scheme pyramid schemes are illegal and multi-level marketing is not wait what's the fucking difference between an mlm is a pyramid scheme i would agree with you colloquially right that i'm like whatever fucking same difference yeah there are distinctions in the definitions and i think the tipping point in a number of those is that a pyramid scheme is where you get officially that like your money is coming from recruiting other people way the fuck more that it's coming from actually selling the product.

4:26It's all bad, but fair enough. There's a difference. Okay. So their products, for folks who are unfamiliar with multi-level marketing, their products are sold by independent distributors who also recruit other independent distributors. This is like Amway. This is like Plexus. This is like Optivia. If one of the sister wives is selling you a shake on Instagram, just steer clear, buddy. Go to the store. and buy normal products when you need a product. I should say, they're all ex-sister wives now. Okay. There's only one wife left. Oh, really? I always knew he was a monogamist. And I'm like, this is very funny.

5:06Is that show called Sister Wife now? So in multi-level marketing, when you recruit someone else to become a salesperson, they become part of what's considered to be your downline. That's the term that they use. And when you have a downline, you get a commission off of their sales. Okay. So the sort of famous thing about multi-level marketing is that there are people who get super rich. It's just like the first 10 people who sign on. Yeah, yeah, yeah, yeah. And almost everybody after that gets a much shorter end of the stick than that. Because you're being promised that you're going to recruit a bunch of people, but these things kind of always top out because there just aren't that many people who want to do this.

5:48I don't want to hide the ball. around 90 % of Herbalife distributors make little or no income, which the company itself stipulated in 2013, according to the LA Times, right? So everyone here agrees, the company agrees, distributors agree, more than 90 % of people are making little or no money off of this and are actually in the hole because they had to buy some inventory to get themselves started. It's funny how like, I thought this was going to be like, is this a scam? Or is this not a scam? And you're like stipulated it's a scam. No, no, no, no, no, no, no. We're just starting out with 90 % of people making no money.

6:25I do not even want to leave any room for people being like, maybe it's okay. It's really not okay. Yeah. The other thing to know about Herbalife is that they've been around for over 40 years. They're about the same age as Whole Foods. I didn't know that. As a company. They're older than me. Look at her flexing. Look at her flexing. I'm young and spry. I'm as old as an MLM. Herbalife was founded by a guy named Mark Hughes, who was born on January 1st, 1956 in La Mirada, California. Mark's parents divorced in 1970 when he was about 14, and his mom had sole custody after that. It is clear that Hughes' life as a kid was not easy.

7:16By his own account, his mother had what he referred to as, quote unquote, emotional problems. And the family subsisted on public assistance programs. Hughes dropped out of high school as a freshman, so at around 14, and described himself as, quote, a little delinquent who got in trouble with the law. okay he said that he used drugs uh predominantly amphetamines and barbiturates so by the time he was 16 he was sent to a troubled teens boarding school well another another episode we gotta do it's a troubled teen incorporated shit so rough leak yeah this one the one that he was sent to is called CEDU, C-E-D-U.

8:02Oh, like the jet skis. Like the jet skis. CEDU is a troubled teens boarding school in California that was run by Synanon. Mike, do you know anything about Synanon? Yeah, I used to go there in the mall all the time. No, no, no. You get like one of the, you get a prostate one. You get the center of the roll one. Uh-huh. That's the one to get. You asked me the little question because you knew I was going to make that terrible joke. Oh, wait, CIN, is it like Alcoholics Anonymous? but it's synonymous. No. Synanon was an organization founded in the late 50s. Synanon was really unusual at the time. It focused on drug users helping other drug users move towards sobriety.

8:42However, over time and like not very much time, the organization really kind of curdled and is now widely described as a cult. Oh. See, the troubled teens sort of portion of it was famously absolutely no picnic. I can't believe being mean to teens is not a sustainable model. Unsurprisingly, there was a lot of abuse that happened at Sea-Doo, right? By sort of all accounts of people who went there. This is actually the place that Paris Hilton went. When she talks about like the abuse that happened to her when she was a kid. Holy shit. All that is to say Mark Hughes as a teenager is in a rough place.

9:23So one of the programs at Sea-Doo required him to sell raffle tickets. Okay. Also, everything is so scam adjacent. Everything. And Hughes proudly told the press for pretty much his whole life that he was the school's highest grossing salesman. And I was like, God damn it. If you ever catch me telling a reporter about how I was the best at something in high school, like put me out of my misery. You know what i mean were you voted anything in high school nothing not a goddamn thing you didn't get like most like most promising or anything i was at a real overachiever school oh and i was sort of like middle of the pack amongst kids giving themselves stress ulcers and that kind of thing i got most dramatic and most romantic gayest and gayest well yeah i it basically meant that i was covering up my homosexuality with misogyny but doing it badly those two things come together.

10:25So Mark Hughes went door to door in LA for the Sea-Doo program, selling raffle tickets. He claims that he managed to get a$500 check from someone who was then the former California governor, but not yet president Ronald Reagan. Oh, I mean, okay, whatever. It does tell you about that guy that he's like, you'll never believe who I met. Reagan. Yeah. Look how cool I am. Look how cool I am. Reagan. Right. Although I was once on a flight with Shakira and I do actually think that makes me cooler. What the fuck? Are you kidding me? I was like mega late for a flight and I don't know how it fucking works, but like, I think celebrities, they like get everybody boarded and then they're like whisk a celebrity on to first class.

11:08Cause Shakira can't be sitting there as everybody's filing past. Right. And like getting their luggage in the bins. So it was like, everybody was boarded. And then as they're like sneaking Shakira on, I like run up to the gate and I'm behind this like giant starburst of hair in this like very small human being. She's very short. And I was like, what the fuck? And then she sort of turned around and looked and I was like, oh my God, you're Shakira. But I didn't say anything. And then she got on and I got on my flight. But anyway, look how cool I'm. Do you say your estimation of me has expanded? I would say my estimation of Shakira has expanded.

11:41That she like flies commercial? She understands the stakes of climate change. She walks among us. So Mark really seems to find meaning and success in this raffle ticket sales business and gets really into it. When he is 19, he's still out at Sea-Doo and his mother passed away. She died in her apartment and her toxicology report showed that she had Darvon or Darvacet in her system. Her doctor acknowledged that she frequently abused prescription drugs and was engaged in some like doctor shopping. Oh, man. But also like this is happening in the 70s when there's just like way less literacy on substance use disorders in general.

12:25Right. And doctors are like, have you tried speed? Totally. You're trying to lose three pounds. Why don't you try meth? So Hughes had just completed this troubled teens program after being a pretty heavy drug user himself. And then his mom dies of what appears from the autopsy to be an overdose. Trauma wise, especially for a 19 year old, this is like an earthquake, right? Yeah. His mom passes away when he's 19. The very next year he started selling diet drugs professionally. Okay. So in 1976, he started selling something called Slender Now for Safe Worth Laboratories. and then moved on to selling diet products for a place called golden youth okay both of those were mlms nice both of those went out of business nice and that gave mark an idea what if he started his own cursed weight loss company right this is something me and peter find in these like grifty self-help books all the time and like financial scam books it's like Oftentimes the people giving grifty advice are like victims of grifty advice.

13:37Yeah, yeah, yeah, yeah, absolutely. In 1980, Mark is 24 years old, and that is when he founds Herbalife. He talks about starting the company, quote unquote, out of the trunk of his car, and then they pretty quickly get production space set up in an old wig factory in Beverly Hills. And when they said an old wig factory in Beverly Hills, I was like, we've been here in this era before early 80s beverly hills wig factory i hope that it is wigs today the establishment where richard simmons made friends with the proprietor of the wig shop is that true not to my knowledge okay wigs today kept operating but i like thinking that this place maybe had supplied wigs to wigs today i don't know i got really excited about it and then it wasn't anything.

14:29Also, what are they selling right now? It's pills. They are selling at this point, their main thing is like essentially just like a powdered shake mix. So this is another challenge of Herbalife, but honestly, a lot of MLMs is that they're selling like a shake mix and their shake mix is not like proprietary. It's not super different than other shake mixes on the market. But it'll be like$40 for a canister of shake mix when you can go to the store and get like a giant canister of Slim Fast mix for like 10 bucks or something. Right. Like, so that's part of the uphill battle here is that they're selling stuff that's like, you can also go get a lot of these things at the store.

15:20So you have to believe that there's like some magic beans in the, in the Herbalife stuff or something. Right. Right. His wife at the time, his first wife says that she was a co-founder of the company, but that when they split up, she was sort of scrubbed from any of the company's materials. Later, when journalists ask Hughes about her role, he says that she was actually just the first employee and acted as, quote, my first secretary, to which I say, get fucked, asshole. Again, this is all just five years after leaving Seedoo and after his mom's death. And by this point, he has started talking about his mom's death a little more publicly.

16:08And he's using it essentially as an origin story for himself. So I am going to send you a clip. Oh, OK. Now I'm very excited about talking about Herbalife because Herbalife has been something that not only that I wanted to do for a long time, but it's something that's very, very important for me. Just about everybody in my family's had a weight control problem, especially my mother's. As I was growing up, she was always trying to, you know, diet and trying some kind of goofy type of diets and so on. And eventually she went to doctors to try to get it cleaned up. And they prescribed to her a product called Dexamil.

16:46and for those of you who are not familiar with Dexamil, it's a speed, it's a narcotic, it makes you not be able to eat, it makes you not be able to sleep and from several years of using this particular drug, she ended up having to use sleeping pills to be able to go to sleep at night and from several years of doing that, she secretly behind doctor's back started getting her prescriptions spilled and she started seeing three and four and five doctors to keep her habit up and when I was 18 years old, she died from an overdose and it seemed to me at that time that there was a lot better things that people could go out and do to themselves and just destroying their lives to try to lose weight and because i've seen literally people do everything to themselves to try to lose a little bit of weight people are even joining mlms to lose weight it's funny i thought he was leading up to like she started on this drug and then she started taking this other drug and that's what we're selling at Herbalife.

17:38This is her. She lost 30 pounds. His father later told the LA Times that he was like, I don't know what this guy's talking about. His mom was not fat. She overdosed on painkillers. It's pretty straightforwardly just like a drug dependency story. That's actually really dark. Both versions are extremely dark, right? Either it's my mom overdosed on drugs and I'm going to figure out how to spin that up to sell weight loss supplements to people. Or it's weight loss drugs are responsible for my mom's death. So that's the business I'm going into. Yeah. Yeah. Neither one is like great news, right? As if the solution to his mom's alleged problem is like, well, there's a better weight loss method.

18:26Absolutely. Right. Like that's not the issue here. Regardless of all of that, Herbalife very quickly takes off. They very quickly build their ranks of distributors and their ranks quickly build their downlines. By 1985, Inc. Magazine was reporting that the company's growth from$36 ,000 in sales in 1980 to$423 million. Oh, wow. In 1985. Wait, really? That's insane. You have become a billion dollar company by today's dollars, right? Right. By the end of those same five years, Herbalife is reporting that they had more than 700 ,000 distributors. Wow. Distributors were encouraged to share their own sort of personal stories of using Herbalife.

19:15If they don't have a personal story, they are instructed to quote unquote, get one from a friend, which I think is very funny. Nice. I'm crowdsourcing my like memoir anecdotes. Great job. Everyone. There's a little bit of reporting from the LA Times in 1985. This is a longtime distributor whose last name is DeLacy. And I just sent it to you. Showing that she has learned her lessons well, DeLacy hiked up her white Herbalife sweatshirt to display the scar that runs the length of her chest and abdomen from a 1977 heart bypass surgery. I was on eight medications for my heart. I take no more drugs now.

19:51I take Herbalife. I've never felt happier and healthier in my whole adult life. DeLacy quickly added, Herbalife cures nothing. Wait, wait, wait. DeLacy quickly added, Herbalife cures nothing. We can't make medical claims, you know. That's a funny thing to include. It's so funny that she's like doing the thing and then it seems real, like it really seems like something popped up in her brain and was like, don't forget, reporter. And she was like, ah! Do you ever find yourself like talking to someone you don't know that well and then you say something and you realize as you're saying it that it's not true?

20:25She's like, oh my God, I'm like totally fixed. This is great. It's not great. I'm not allowed to say this. Okay. So we've been talking about this like exponential growth that Herbalife has been going through in these first few years of its inception, right? What we haven't talked about is the other thing that starts growing exponentially in that time. And that is FDA consumer complaints about Herbalife. You worked on that transition for so long. I did not. I'm so proud of you. It's not even written in my notes. If every FDA complaint gets five more FDA complaints. All the FDA complaints in the world.

21:06Yes. Within just one year of the company's founding, the FDA starts getting consumer complaints about Herbalife products. Perfection. Customers complained of taking Herbalife products and then experiencing nausea, diarrhea, headaches, and constipation. Distributors were reportedly instructed to tell people that that was all part of getting toxins out of your body? Ooh, yeah. I mean, when you think about it, pooping is getting toxins out of your body. Sure, sure. They're not incorrect. The toxins are just Herbalife products. There's this thing that your body does where it creates waste, and then you have to get rid of the waste.

21:41So the FDA focused on Herbalife's Slim and Trim Formula 2. Okay. Which Herbalife said could, quote, cleanse the digestive system and curb the appetite. sure as it turned out uh slim and trim formula 2 contained mandrake and poke root what the fuck mandrake is a hallucinogen that is famously toxic and can cause asphyxiation that is an enemy in dragon quest you are incorrect and every part of pokeweed can be toxic but none more than the root and that is what they use they're just like why would they even do this there's pretty random shit in there right they're sort of doing a thing part of the kind of origin story of the company is that mark hughes went to this like uh herbalism sort of seminar led by a group of chinese nationals and i'm just like sure man this is such deep early 80s shit where it's like i met a person from china once and they taught me about herbs and now i'm teaching you about herbs although it is interesting because it does indicate like some level of good faith that like he probably thought these were healthy and he put them in his product without really looking into it.

22:53It's not like he's like selling sawdust. It's sort of like he doesn't know it's a scam necessarily. He thinks that these are actually beneficial. Listeners, mark this moment down where Mike says he doesn't know it's a scam. Foreshadowing as a narrative device. Much of the notice of adverse findings from the FDA focused on what was called Herbalife's career book, which was its product guide for distributors to help them pitch products to customers. The career book said that formula two can also help with quote, venereal disease, arteriosclerosis, tumors, bad breath and bedwetting. I love this is another thing we see all the time where it's like, oh, this like this cures acne and like HIV, even if there's like no biological mechanism by which that would happen.

23:38It also claimed that a product called cellulose was a natural cellulite eliminator. And they were like, no. You don't hear that much about cellulite anymore. There were so many products for cellulite back in the day. You know what you hear about now is crepey skin. I am absolutely crepey skin years old. Are you really? I am a food truck outside of the Louvre. I am all crepe. So the FDA issues its adverse findings, its notice of adverse findings, in 1982. By 1984, Canada's Department of Justice filed charges for false medical claims and misleading advertising practices. Nice. The company just pleaded guilty to the Canadian charges and paid$8 ,000 in fines and kept on trucking.

24:25Oh my god. You could pay that a day and it wouldn't meaningfully cut into your revenues. Around this time, the company starts facing some questions and criticisms around its claims of expertise. So I mentioned earlier, Mark Hughes had an official bio with the company, which said that he had learned about herbs at a symposium hosted by a trade delegation from China. OK. When an L.A. Times reporter pressed him on it, he admitted that he had never gone, nor had he been trained in any kind of herbalism. no way what so you're just lying about that it's a symposium it's not a degree yeah it's not even like cool you did this right it's like i spent an afternoon doing a thing is what they're lying about and then as soon as he gets questioned about it he's like whoops never mind that's like i recently heard of a podcaster who lied about seeing shakira on a plane just to seem cool i know where i heard that did you did you not see shakira no i'm kidding i'm kidding i did actually see I was about to be heartbroken the thing is it was it would be a really funny thing to lie about because it's not impressive it's like yeah okay a person exists so in addition to mark hughes credentials coming under fire so did the credentials of one of his colleagues richard marconi was hughes right-hand man at herbalife and managed manufacturing of herbalife's products he also sort of acted as like the science guy to sort of justify the company's products from a scientific perspective and was frequently referred to as dr marconi right yeah get just get yeah now i know where it's going again context clues honestly even his role as science guy seemed to amount to a lot of hand waving at the time where he'd be like herbs nutrition science right yeah they're putting poison mushrooms in the fucking smoothies of course.

26:18Here is a quote from the LA Times. Businessman Richard Marconi, manufacturer of Herbalife food supplements and the man Hughes turns to for scientific backup, has represented himself in nutrition publications since 1983 as a doctor of nutrition. But Marconi, who operates out of two Orange County plants, got a mail order doctorate in 1984 from Dunsbach University School of Nutrition, an unaccredited correspondence course in Huntington Beach. I've been calling him doctor ever since we got started, Hughes said, adding, I got more credibility and so does Dick than anybody else in the weight loss business.

26:53That is true, but also bad because of our results. So I don't care about his degree. I don't care about anybody else's degrees. Great sign. I don't know why it makes it worse that the correspondence school is based in Huntington Beach, but it really does. He has a doctorate from the outdoor gym where buff guys go to do pull-ups. This is so close to the Simpsons, like Dr. Nick went to Hollywood upstairs medical school joke. The company's regulatory issues and legal issues just keep getting worse from here. In 1985, California's attorney general filed suit against Herbalife saying that they violated laws against essentially pyramid schemes and that they lied about the caffeine content in their products.

27:41Oh, that's dangerous. The company once again ultimately settled for$850 ,000 without admitting any wrongdoing. According to California's AG, that was the largest settlement with a diet or wellness company to date in the state's history. I mean, that's also kind of sad because you should be doing bigger settlements than that. And also they should be admitting wrongdoing. That same year, a U.S. Senate subcommittee called Mark Hughes to testify about Herbalife. And for context, we're going to watch a clip. A panel of medical experts had testified the day before. And then Mark Hughes comes up to testify.

28:27During six days of grueling televised hearings in which Herbalife was the main focus, Mark's confidence in his products and his dream never wavered And they should have been brought to this hearing Instead of the so-called expert weight loss people that were here yesterday I think if they're so expert in weight loss, why were they so fat yesterday? It seems to me, and I'm not trying to make any jokes But I do think that they ought to use our product We're gonna cut it there He seems nice What a blast I'm doing, I run a weight loss company because I hate fat people You're like a huge piece of shit if you're fat including fat i hate fat people and i hate doctors and there's no one i hate more than doctors who i perceive as being fat also why the fuck is this documentary being like he he never stopped chasing his dream or whatever oh honey this is herbal life shit oh this is like herbal life propaganda yes this is them being like look how good he did wait they chose this clip to fucking show they're like nailed it mark nailed it get those fat doctors my notes just say nightmare blunt rotation.

29:31In the hearing, they also discussed an internal study conducted by Herbalife based on a sample of 428 Herbalife users. That study allegedly found that 40 % of users had experienced significant symptoms as a result of using Herbalife products. Nausea, diarrhea, heart palpitations, headaches, all kinds of stuff, right? I will say those side effects didn't surprise experts who were familiar with the products, a number of Herbalife weight loss ingredients were just super strong laxatives and high doses of caffeine. When I think of my weight loss journey, I think of how I want to be jittery and pooping all the time.

30:14That's the life that awaits me. Well, Michael, I've got both a product and a business opportunity for you. That's how you recruit people. Have you thought about being jittery and pooping? So even amidst all of these charges and investigations from multiple jurisdictions and multiple nations, Herbalife just sort of soldiers on for years. It certainly takes some hits, both in its public perception on some level and in its, you know, having to pay these fines. But its sales remain in the hundreds of millions, right? In that same time, when they're facing all of these charges from all of these different countries, they expand into Japan, Spain, New Zealand, Israel and Mexico on top of their existing presences in the UK, the US, Canada and Australia.

31:07By 1996, the company was operating in 32 countries. Why let a little lying get in the way of growth? That's right. Hey gang, Editing Mike here. We recorded this episode in a couple different sessions because we were having some lawnmower issues over at Aubrey's house. And when she came back for the third little session, her mic input got switched from the microphone to the laptop. So that is why she is going to sound a little bit different for the rest of the episode. Just wanted to let you know and thank you for bearing with us. so herbal life keeps facing scrutiny and also keeps expanding in a pretty uninterrupted way until the summer of 2000 on may 21st 2000 mark hughes died in his home in malibu he was 44 and was survived by his nine-year-old son, which is just a real painful echo of the stuff with him and his mom.

32:14So initially they say it's natural causes, but when the coroner's office released its autopsy results, they attributed his death to alcohol doxepin intoxication. Doxepin was prescribed to Hughes as an antidepressant, but after his death, people in the company start telling, a really different story about him and his health. A few of his colleagues told reporters after his death that they had sort of hatched a plan that never got executed to take Mark Hughes to a Swiss treatment center for alcohol abuse. Also, as it turned out, he had been arrested twice for drunk driving in the few years before his death.