I am writing, updating and reviewing the FAQ section for LIFE Leadership. Perhaps the most interesting and inspiring answer for me was the one on Amway, Quixtar, MonaVie and LIFE Leadership. For in it, I was able to share how proud I am of the pioneers of LIFE Leadership. I have attached the answer below. Compensated Community is the future of business and LIFE Leadership is in the sweet spot of the growing trend.
Orrin Woodward – Chairman of the Board: LIFE Leadership
What was the 2007-2010 legal dispute between some of the LIFE leaders, Quixtar and MonaVie about?
I get asked this question periodically even though the dispute ended in 2010. Still, I believe the highlights from the issue can help a person understand the principles LIFE Leadership is founded upon. Before discussing the details, however, I think it’s important to share that I have no hard feelings for anyone who worked with Quixtar or currently works with Amway. As a matter of fact, I still have friends that work within the company. I believe life is too short to carry grudges and what is past is past. Further, I have heard from several sources that Amway has softened its litigation policy against leaders who want to leave the company. For this, I am thankful. Finally, I learned a ton during my time with Quixtar and have many memorable experiences. In consequence, I have taken the good, flushed the bad, and move ahead with no animosity.
Before LIFE Leadership was launched, Laurie and I, along with some of the other top leaders, worked with a company called Quixtar to build our community (business asset). Quixtar was a North American internet based multi-level business started by the owners of Amway, but set up as a separate company from it’s parent. This was an important feature to me because I had joined Amway in 1993 when I learned they were developing an Interactive Distribution model to combine high-tech and high-touch. Regretfully, however, by 1998, I realized this was more hype than substance and had not come to fruition. Since I had no interest in building a traditional Amway business, we planned on starting a new venture.
LIFE Leadership 2015 Winter Convention
Nevertheless, after hearing Ken McDonald (Quixtar’s first managing-director) share his vision for a new online model, we changed our minds. Since it was a separate from Amway (but backed by the founders funds) and would leverage the fast-growing internet, we were intrigued. As a result, in 1999, we chose not renew our Amway distributorship and joined Quixtar instead as an IBO (Independent Business Owner).
The online model fit our young and hungry team perfectly. In fact, from 1999 through 2007, Laurie and I led the fastest growing organization within the whole company. We grew from several hundred to over ten thousand people attending events and our sales increased from a couple hundred thousand dollars to over one hundred million dollars! In addition, many other teams sought our training and started growing resulting in nearly another hundred million dollars in volume. Our training organization, in other words, was responsible for nearly $200 million of Quixtar’s total sales.
Unfortunately, the rest of Quixtar was not doing well, mainly because the older, more mature organizations seemed unable to adjust to building an online business. I saw the loss of confidence and numbers firsthand because I was asked to speak (hundreds of times) to Quixtar groups across North America. Dismally, instead of growing into the 100 billion dollar company predicted by Ken McDonald and other top leaders, Quixtar leveled off around a billion dollars even with our team’s meteoric growth. In fact, many of the top leaders lost half their numbers or more as they struggled to marry high-touch communities with the high-tech online environment. Nonetheless, I didn’t realize the precarious nature of the Quixtar business until Ken McDonald abruptly announced his retirement in 2005 despite flying to see me just weeks earlier to discuss future strategies. To say I was disappointed would be an understatement (Ken and I worked well together), but I also respected Quixtar’s right to choose its leadership team.
Curiously, however, Quixtar’s new managing-director was also an Amway vice-president. Although I thought this was strange, I was assured on numerous occasions that the two were still separate corporations and the change in management was merely to help Quixtar increase its sales. As a result, the 2007 announcement that Quixtar was closing its doors and that all its Independent Business Owners (IBOs) would be transitioned into Amway shocked me. This was unacceptable for several reasons. For one thing, I was not in Amway (having purposefully not renewed when Quixtar launched), nor did I want to be in Amway. For another, I had told tens of thousands of people that they were independent business owners affiliated with Quixtar just as the IBO moniker implied. True, Quixtar was owned by the founders of Amway, but they were allegedly separate companies with separate field organizations. Indeed, I must have repeated this message of separate companies a thousand times because that is what Ken McDonald and the rest of the Quixtar’s management team had told all of us. In sum, I had been misled, and thus had inadvertently misled others.
For me, the whole conflict was a moral issue. On one hand, I knew Quixtar (like any company) had the power to break its commitments to its customers, but it didn’t have the power to avoid the subsequent fallout. On the other hand, how could I represent a company to others that I believed had misrepresented itself to me? Indeed, leadership is character in motion and without trust, it’s impossible for any leader to get in motion. Nevertheless, quitting my independent business was not as simple as it sounded since Amway had stated its intention to litigate against any leader attempting to leave the Amway/Quixtar (indeed, hundreds were sued before and after me). Not surprisingly, the legal risk intimidated many other leaders into submission, but it only emboldened our leadership team. For if we stayed with Amway because we feared litigation, then we would be imprisoned into Amway’s Legal Matrix and not truly independent anyway. How, in a word, could we ever recommend others to join us as independent business owners when we knew in our hearts that this was no longer true?
Although the easiest thing to do would have been to rejoin Amway, announce my retirement, and slowly watch my groups dissolve, this was morally unconscionable. I also doubted Amway’s antiquated business model could work in the internet savvy North American market regardless of how many millions Amway spent on television advertisements (Amway no longer discloses North American sales volume but it is rumored to have dropped precipitously). How could Laurie and I in good conscience give up our purpose and principles for profit while our community suffered? And yet, I also knew that I would be sued by Amway (a multi-billion dollar international company) if I didn’t agree to their plan. Financially, this was a lose-lose scenario. Neither option, in other words, was without massive risk and challenges, but leaders are paid to make decisions and it was time to make a decision.
Thankfully, I had great leaders like Chris Brady, Tim Marks, Claude Hamilton, George Guzzardo and Bill Lewis (interestingly, I barely knew my good friend and LIFE co-Founder Dan Hawkins at the time), who all believed we should choose character over convenience. Accordingly, I called a meeting to announce my immediate resignation and intention to sit out Quixtar’s six month non-compete period. My plan was to form a new company and build our businesses entirely separate from either Quixtar or Amway. Disastrously, however, instead of accepting my resignation, Amway announced it was “firing” me (how a company can fire an independent business owner is still inexplicable to me). They proceeded to call each of the leaders in our community to demand they choose either Quixtar (soon to be Amway) or staying with me. Of course, the field leaders had no idea what Quixtar was talking about since I had not announced to anyone (except a handful of my top leaders) any plans to start another business.
Amway’s management team had no idea the hornet nests they had knocked over. People in our organization were already upset at the name change and now Amway/Quixtar compounded its errors through firing myself and Chris, manufacturing press releases, and issuing business ultimatums. Not surprisingly, Quixtar paid for its hubris. In our organization alone, over 50,000 IBOs resigned rather than switch to Amway. Of course, Amway (true to their promise) initiated multi-million dollar court and arbitration proceedings against me and others. The financial stakes were high since we had already lost our business incomes and now risked bankruptcy. Evidently, the plan appeared to be to sue people into submission.
Consequently, starting our own company was out of the question. It would be foolhardy to attempt when a multi-billion dollar company was seeking to squash us. I didn’t feel that falling on my own sword and hurting the many people who followed me out of Quixtar was the proper plan. Rather, I needed a plan for survival until Amway realized we would not surrender our principles no matter what the consequences. Accordingly, I sought a join another company so I could earn money to help support our growing legal mess (tens of millions of dollars). Of course, I ensured, upfront, that once the legal battles were over, we would be free to start our own business if we still desired to.
Fortunately, I found Dallin Larsen, the 2009 Ernst & Young Entrepreneur of the Year and founder of MonaVie. MonaVie, in 2008, was one of the fastest growing companies in the network marketing. While he benefited from bringing in our large organization (millions of dollars per month in volume), he also had taken a huge risk. In truth, I do not see how we would have survived without working with MonaVie. As expected, Amway subsequently sued MonaVie (I commend their persistence) and countless more millions were spent battling the behemoth. Fortunately, Dallin Larsen did not flinch and followed through on everything he committed to despite several years of legal harassment.
Finally, in 2010, a global settlement was reached. After much pain and pressure (the battle had left no one unscathed) the war was over. I believe Amway finally realized the IBOs who resigned were not coming back and we had enough funding to continue the legal battles indefinitely. As a result, the biggest leadership challenge we had ever faced was finally over. Our community was FREE! This was our team’s finest moment. I have never been prouder of any group of leaders for they had survived nearly three years (2007 through 2010) without surrendering. Some even choosing to declare bankruptcy rather than give in to Amway’s legal demands.
Introducing New Executive LC Claude & Lana Hamilton
In closing, many times during the war I had told the leaders that those who stayed would be champions. It is inspiring to see how many achievers stayed with us to finish the million person mission. These men and women are the one’s who dreamed, the one’s who dared, and the one’s who sacrificed to make LIFE Leadership a reality. Although I have read thousands of books on businesses, I have never found a more inspiring example of a group of common people willing to face uncommon giants. Perhaps the best description of the LIFE Leadership pioneers is the plaque at the Overpass Museum in Carney, Nebraska, “The cowards never started. The weak died on the way. Only the strong survived.” If a person is ready to face his personal Goliath, I know of no stronger community to help him do so than LIFE Leadership.