A unique business, Amway.  A mass movement more than a 
corporation.  It has made a very few people very rich
while paying its foot soldiers more in inspiration than
in cash.


By Paul Klebniov

Sneered at in the media, investigated and fined by the
authorities, Amway Corp keeps growing.  The world's
second largest door-to-door sales operation was
conceived in a basement in Grand Rapids, Mich only 32
years ago and today boasts $3.1 billion in retail sales
($2.6 billion at wholesale prices) from around the globe.

To this day Amway is owned almost entirely by its founders
- Richard DeVos, 65, and Jay VanAndel, 67 - and their
immediate families.  Forbes estimates the company earned
$300 million last year after tax and that DeVos and VanAndel
are each worth close to $3 billion - although it is admittedly
difficult to value a business that, like Amway, is based on
ephemeral human relationships.

Amway manufactures and sells soap, cosmetics, vitamins, food
products and other household products and sells water filters,
Coca Cola machines, MCI service, clothing and thousands of
other items through its catalog.  There is nothing unique
about these mundane products.  What is totally unique is the size
of Amway's sales force, close to 600,000 strong in the U.S.,
500,000 in Japan and several hundred thousands more in places like
Germany, Mexico, Korea and Malaysia.

Although the average Amway distributor sells barely $1,700 worth
of goods a year, the sheer size of the sales army and its enthusiasm
ensure success.

In an interview with Forbes at Amway's headquarters for its 300
acre manufacturing and distribution center just outside Grand
Rapids, Mich., DeVos spoke at length about the marketing phenomenon
he and VanAndel have created.  "Amway is more than just a company,
it's a movement to help people help themselves," says DeVos in a 
pleasant, low-pitched voice.  "Nobody has ever traveled down the
road that we have traveled."

The road has taken some odd twists.  This year, for example,
Proctor & Gamble successfully concluded the last of four suits
against Amway distributors for spreading bizarre and damaging
rumours that P&G and its products were instruments of Satan.  
("Whenever you deal with a million people you're going to have
people who overstep boundaries," says DeVos, defensively.)

Perhaps he can't keep his eye on a million distributors, but he
does know how to inspire almost every last one of them.  The
underlying principle is simplicity itself: Persuade the
distributors that their interests and Amway's are exactly the
same.  One must turn outside the world of business - to religion
and politics - to find people who work as hard for as little
financial reward as most Amway people do.

Cynics would compare the system to a chainletter; here's how it

Distributor A recruits distributors B, C, D each of whom recruits
three more distributors to work for them.  If this recruiting 
pattern continues ten times - that is, there are 11 levels in
the distribution chain - then the fellow who started the network,
distributor A, would have 88,572 distributors working for him.
If each of these people sells, on average $1,000 worth of
products, you've got an $89 million marketing organization
stemming from that one distributor A.

At offices, health clubs, beauty salons, churches, Amway recruits.
The basic pitch: Whatever your dream is - a boat?  a fancy car?
kid's education? - it is within your grasp if you just devote
some of your spare time to selling Amway products and recruiting
other people to sell them.

In itself, the pitch is honest enough.  Some Amway people do
become affluent, even rich.  But not many of them.  The lion's
share of money earned by Amway distributors is pocketed by 2%
of the sales force, the organization's 35,000 so-called direct

These distributors typically have about 50 downline distributors
channeling orders up to them.  Direct distributors gross a minimum
of about $35,000 a year.  The really big money - bonuses of up to
$300,000 and more - is made by a handful of kingpins at the top 
of the heap.

And once a network has been created, what's to stop the organiser
from selling other goods to the faithful?  Indeed, the really
successful operators sell self-help books, tapes and even
investment schemes to their recruits to supplement their incomes.

Among the big distributors are people like Chapel Hill, N.C's
Bill Britt and Charlotte's Dexter Yager.  These two men each
run networks of over 100,000 distributors and are each believed
to net over $10 million a year.

As with any army, the recruits are expendable.  Amway is a fluid
organization.  Nearly half of the 1.8 million distributors who
will be registered with Amway worldwide will drop out in the
course of the year.  For those who remain, the average distributor
in the US will net around $780 a year in bonuses and markups from
selling Amway products.  But in addition to the products the
distributor sells to others, he will also consume, on average,
$1,068 worth of Amway goods himself.  And he may spend hundreds of
dollars or even thousands more on telephone bills, gas, rallies,
publicity material and other expenses to expand the business.
Some of the distributors may end up dipping into their savings,
and a few may even run up debts.

The real money is made not by peddling to the public but by
recruiting for Amway's sales force.  There is a great incentive for
a new recruit to quickly recruit distributors reporting up to him.
Which is why DeVos can say with some confidence: "We'll expand not
by selling more per store but by opening more stores" - recruiting
more distributors, that is.

Is Amway an illegal pyramid scheme?  As far as the authorities have
been able to discover, the answer is no.

The fact remains.  The average foot soldier doesn't make much money
for his or her efforts.  This is where the inspiration comes in.

When he says, "Amway is more than a companu; it's a movement" DeVos
isn't just spouting propoganda.  Amway promises, in effect:  Join
Amway, work hard and, with almost no capital investment, you too can
become as rich as Bill Britt or Dexter Yager.  It's up to you.

Few Amway distributors do not know by heart the inspiring 
rags-to-riches stories of the most successful distributors.  Among 
the patron saints of the Amway movement is Charlie Marsh, a 
gravel-voiced former small-town policeman who built a hugely 
successful world-wide Amway network.  There is Bernice Hansen, the 
grandmother who was an accountant in Grand Rapids before she joined
Amway and discovered her talents for sales and recruiting.  Perhaps
most inspiring is Dexter Yager, the stout, bearded former beer salesman
from Rome, N.Y.

In a world where many people find little satisfaction in the paychecks
they receive from big companies on public agencies, such visions of
financial independence are often compelling.  But Amway goes a crucial
step beyond mere money.  It offers its recruits membership in a
community of like-minded people - entrepreneurial, motivated, upwardly
mobile people who believe in their country, in God and in their family.
"This country was built on religious heritage, and we had better get
back in it.  We had better start telling people that faith in God is
thre real strength of America!", Richard DeVos writes in his book

Amway distributors are bound by a set of shared beliefs reinforced by
myths, icons and documents.  They are expected to read self-improvement
books (popular titled include "Believe!" and "How to be Happy though 
Married").  They purchase and listen to Amway-sponsored inspirational
cassettes (usually live recordings of their "upline" leaders' speeches
and seminars).  And they are expected to use only Amway products in
their personal lives.  Internal Amway documents show that the average
active distributor sells only 19% of his priducts to non-Amway 
affiliated consumers.  The rest is either personally consumed or
sold to other distributors.

It all adds up to this.  When you sell Amway products, you're not
working for a boss or a faceless organization and its shareholders.
You're working for yourself and for Richard DeVos, Jay Van Andel,
Charlie Marsh, Bill Britt, Dexter Yager, and all the other Amway people
who struggledsnf made it.  You're on the Amway team, and it feels good
to be there.

Amway rallies typically resemble a mix between a rock concert and a
religious revival meeting.  The evenings are often kicked off with
inspiring music - the theme from "Rocky" say, or "Chariots of Fire" -
followed by much audience hand-holding, singing, swaying and listening
to testimonials.  Some Amway leaders, such as Dexter Yager, are famous
for working their crowds into Amway chants and ...  their audiences with
inspirational speeches that last ******   [Sorry this is unreadable..]

If Amway sounds like a commercial version of fundamental religion,
DeVos offers no apologies.

"For a lot of people Amway is their way out [of poverty]" he says,
"so Amway relates right down to the grass roots, right down to where
people live, you wonder why this mythology, why this rah rah, why
they scream and yell.  They scream and yell for the same reason they do
at a football game.  They have discovered that it is fun to be around
people who cheer other people on, who encourage people".

One weekend this summer over 12,000 enthusiastic people gathered for
a rally in Richmond, Va.  A handful were wealthy distributors of
Amway Corp's products; the rest wanted to be.

The meeting began with a prayer and a Pledge of Allegiance.  On
stage, Bill Britt, the master Amway distributor who organized
the rally, introduced the other top distributors, who had arrived
in their Cadillacs and Mercedes. flaunting expensive furs and 
jewelry.  With the introduction of each of these role models, the
crowd cheered.

Britt, 60, was a city manager in North Carolina before becoming an
Amway distributor.  An inspirational speaker, he might have made a
great television evangelist had he not found Amway.  He addresses
his message not above or below but straight at the average Amway
distributor's dreams "I got tired of my Mercedes and I'd heard that
the Lexus was a nice car.  So I went down and bought myself one - 
and, yes, it is a nice car."

Britt normally lectures the audience on living clean, traditional
lives.  "Don't wear pants in the family," he admonishes the women,
who make up half his audience.  He glowers at the men: "Get rid of 
your pornography."

This time he focuses on the visions of financial security.  Britt
talks of the multimillion-dollar business he has built selling Amway
products.  Hundreds of average working people - barbers, policemen,
truck drivers, car wash supervisors, dentists, middle managers - are
introduced, and many of them recount how they became successful and
became better people with Amway.  After each story the audience roars 
its approval of the proud witnesses.  ("We have two forms of reward in 
this world," says DeVos.  "One is recognition, and the other is dollars.
We employ them both in the Amway business.")

After two days the ceremonial part of the Britt rally ends as the 
audience joins hands and, swaying gently, sings "God Bless America".
The attendees leave feeling good about Amway and good about themselves.

As DeVos puts it: "Our people are seeking inspiration all the time, as
most people are.  Some people find it in the Rotary Club, some people
find it at church and some people like to go to Amway meetings."

How did DeVos and Van Andel get the idea for Amway?  As great business
ideas often do, this one came to them by accident, and without much
indication that it would make them millionaires.

In the 1940s Van Andel and DeVos were next-door neighbors in a Dutch-
American section of Grand Rapids, Mich.  DeVos' father was a car 
dealer, Van Andel's a garage owner.  Both men, says DeVos, inspired in
their sons an entrepreneurial spirit and desire to start their own

During World War II the two friends served in the Army Air Corps.  After
the war they started a chartered air service, then a drive-in restaurant.

Then, in 1949, they joined a small direct-sales firm called Nutrilite.
Nutrilite was started by an entrepreneur, Carl Rehnborg, who survived
on cooked plants and animal bones in a detention camp in China in the
1920s and had gotten the idea for marketing a nurtitional supplement.

DeVos and Van Andel developed a particularly successful Nutrilite
distributor network that eventually grew to about 200 distributors in
the Midwest.  But the friends were not cut out to be rungs on someone
else's distribution ladder.  When Rehnborg and other Nutrilite leaders
quareled in 1959, DeVos and Van Andel pulled their 200 distributors out
of Nutrilite and struck out on their own.

Amway's first product was Frisk, a biodegradable soap whose distribution
rights they hought from a struggling Detroit chemist.  Using the sales
methods and distributor network they brought from Nutrilite, DeVos and
Van Andel sold so much soap that within two years they had opened their
own soap manufacturing plant outside of Grand Rapids.

They added other products - cosmetics and cookware.  Soon they were
expenading across the country and over the border into Canada.  The
power of pyramid math was really working.  Starting in the early 1970s,
they expanded overseas, to Australia, the UK, France, Germany, Japan.

DeVos and Van Andel have become very powerful men.  Former President
Gerald Ford and Ronald Reagan have addresses Amway rallies.  Some senators 
have been Amway distributors, as have celebrities like singer Pat Boone
and former football coach Tom Landry.  All of these roles help inspire
the Amway movement with a patriotic and religious feeling.

There were setbacks for Amway - one of them nearly fatal - along the
way.  The Federal Trade Commission began investigating Amway in the
1970s to determine whether Amway was, among other things, an illegal
pyramid scheme in which newly recruited distributors lose out unless 
they themselves recruit other members.

"That was really a 'go' or 'no go' situation for us," remembers DeVos.
Finally, in 1979, the FIC ruled that Amway was not a pyramid, but found
it did engage in restraint of trade and misleading advertising.

In the 1980s the Canadian government charged DeVos and Van Andel with
customs fraud.  Amway paid the Canadians $58 million to settle criminal 
and civil charges.

Is there today bo snake in Amway's paradise?  There are several.

As with a church or a political party, Amway must constantly protect its
image if it is to recruit new members.  In some case, Amway seems to have
taken concern for its image to extremes.

Former distributors and Amway officials say that like many movements
based on a cult of personality, Amway's attitude toward any insider 
critical of the organization has bordered on paranoia.

Edward Engel was Amway's chief financial officcer until 1979; he resigned
over a disagreement with DeVos and Van Andel on how to run the Canadian
operations.  This apparently branded him a traitor; he says he and his 
family received threats for years after his resignation.  "It was a Big 
Brother organization," says Engel today.  "Everyone assumed that the
phones were tapped, and that Amway had something on everybody."

In 1983 Engel's former secretary, Dorothy Edgar, was helping the
Canadians in their investigation of the company.  She was roughed up
in Chicago, after she was told to "stay away from Amway".  Engel, who
picked her up after the incident, says he believes her story.  Amway
would not comment on the incident.

There was extremely bad publicity in 1982 when a former distributor,
Philip Kerns, quite to write a damaging expose called "Fake it Till
You Make It".  Kerns charges that Amway used private detectives to follow
him and rough him up (see photo below).  kerns' expose prompted the
"Phil Donahue Show" and "60 Minutes" to run uncomplimentary pieces on
Amway.  Amway's recruitment dropped off; with it, sales plunged an
estimated 30% in the early 1980s.

In 1984, another former Amway insider, Donald Gregory, says he started
to write a book on Amway, but the company obtained a gag order against
Gregory in a Grand Rapids court.

More bad publicity surfaced to hurt Amway in 1989, when it teamed with
Minneapolis' remainder magnate Irwin Jacobs to buy work in Avon Products, 
Inc. as part of their respective takeover bids for Avon.  Avon Chairman
James Preston hired private investigating firm Kroll Associates to dig up 
some dirt on Amway, Kroll unearthed several lawsuits pending against 
William Nicholson, who was hired in 1984 as Amway's chief operating
officer.  Several days afterwards, Amway and Jacobs dropped their bid.

The fact that Amway is a loose confederation of hot-shot sales empires 
creates other thorny problems.  In years past, several of Amway's
wealthiest distributors created independent empires that published their
own magazines, organized their own rallies and even published their own
versions of the Amway sales and marketing plan.

Known inside Amway as the "Black Hats", these master distributors
frequently indulged in excessively high-pressue methods of exploiting
their foot soldiers, persuading them to shell out hundreds of dollars
each for distributor-produced books, tapes and even unrelated products
and investment schemes.

The problem:  if Amway's distributors make a lot of money from selling
such promotional materials (as opposed to actual products) to new
recruits, then it again raises questions of an illegal pyramid scheme.

In 1985 two distributors sued Bill Britt, Dexter Yager and Amway Corp
among others in the state of Washington, alleging they were "brainwashed"
into purchasing enormous amounts of motivational materials.  The case was
settled out of court in 1988, but a gag order was placed on the court
records and participants involved in the case.

Says DeVos: "We're dealing with many motivated entrepreneurial individuals
who are actively seeking to improve their businesses.  Through their own
lack of knowledge they can run afoul of the law, or do thing they
shouldn't do."

Why not fire the rascals?  Says DeVos: "Whenever you terminate anybody in
this business it sends tremors through the whole organization, because
[the distributors] say 'Oh, oh, the company now has the power to kick
me out.' And all those people with the sole idea of owning their own
business and doing their own thing suddenly have a spike driven through
their hearts."

The lawsuits, bad publicity and government scrutiny seem to have taken
a toll.  Several of the old-line distributors now seem to have become
ultraconservative in their recruitment of new distributors - bad news for
an organization that grows with a constant influx of new crecruits.

Says one colleage of kingpin distributor Bill Britt: "Britt has become
very conservative.  He's preoccupied with the FIC, with the legalese of
what can and cannot be done.  To listen to him these days, you'd think 
you were listening to a lawyer."

Fortunately for DeVos and Van Andel, there are fewer such problems 
overseas so far - where Amway has kept tighter control over its
distributors.  Amway Japan has expanded into a network with over
500,000 distributorsd accounting for $734 million in sales last year.

Last April, DeVos and Van Andel sold a sliver - 8% - of Amway Japan to
the Japanese public.  The Tokyo market values Amway Japan at $5 billion,
a fanciful value based more on the tiny amount of stock outstanding than
the business' inherent value.  Next foreign targets: Brazil, Poland,
Indonesia, China, the Phillippines, and Czechoslovakia.

DeVos is convinced that motivating foreigners is no different from
motivating people in the U.S.  "In Mexico, people will ride a bus for
hours to come to an Amway meeting because Amway will give them a shot
at success.  Most of these people have believed for generations that
they would never be anybody, because the rich guy on the hill told
them they'd never be anybody.  But the Amway business has come to 
symbolize for great numbers of people their chance to get out of their

As the sleep of centuries lifts from more and more people around the
world, as the dead hand of socialism vanishes, this message should bring
recruits flocking to the Amway banner all across the world.

Will the message continue to reverberate when DeVos and Van Andel are gone?
There are simple signs that the company is preparing for that day.  Several
top executives have taken early retirement, and there are rumours that
Nicholson is on his way out.  DeVos and Van Andel each have four children;
all but one - Richard DeVos Jr. - work for Amway.  "My guess is that we
will have professional management, at least initially", says Van Andel.

But can hir4ed hands run a truly entrepreneurial business of this sort?
Probably not.  Amway may well decline when DeVos and Van Andel are gone.  
But there will beother Amways.  The business is rooted in principles
deeply rooted in human nature.

Forbes, December 9, 1991.