Sunday, January 20, 2013

Two more opinions on Herbalife "1 billion dollar bet"

NPR's Planet Money, a podcast on money and economy, did an episode on Herbalife's "1 billion dollar bet" where it actually interviewed Bill Ackman, the guy who made the bet, and did a bit of background briefing. It didn't go into any specifics on MLM law, but it is good for some background material.

Go listen to the podcast.

Now read this report by a guy who went to one of those Herbalife "nutrition clubs"... and came away with a very different conclusion than you may expect.

Who's "right" and who's "wrong"? This is going to be one of of those "depends on how you view it" questions.

Mr. John Hempton, who wrote the blogpost for Bronte Capital, suffers from confirmation bias himself, even as he accuses Ackman of confirmation bias, i.e. can't see the poor due to "silver spoon in his mouth".

Why do I claim so? Because there's a bit not understanding the situation.

Mr. Hempton's conclusion is that Herbalife's main value is in its social function, the support system for weight loss, not mainly in its products.

There's one big problem... it assumed that the nutrition club had always been there. It had not.
The first nutrition clubs popped up in Mexico in 2003 in the homes of independent distributors, much like Tupperware parties.   [link]
In other words, Herbalife, founded in 1980, spend 23 years without "nutrition club", until it was invented IN SOME OTHER COUNTRY UNSANCTION BY CORPORATE. And now Hempton, after seeing ONE nutrition club, thinks that Herbalife's MAIN VALUE is nutrition club and its support system.

The problem with that conclusion is it basically admits that for the 23 years before nutrition clubs, Herbalife is really a pyramid scheme that exploited everybody, and only since the nutrition clubs did it became legal by adding some "real retailing" (that is, if it is indeed "legal" now).

So which is the truth? That's up to you to decide.

But gather all the facts BEFORE you decide.

Enhanced by Zemanta


  1. It’s about time that people know about the company so they can disregard the so called Herbalife scam. Every single network marketer that joins a particular marketing program has one of the following issues: not enough money to continue advertising various products, not enough cash, not enough leads, and so forth. Herbalife is different.

    1. And what exactly is different about Herbalife that allegedly solves these alleged issues that you claimed, "Reita Faria", who's using a photo of Indian actress "Neha Sharma" as profile pix? And how does that make them NOT a pyramid scheme?