Wednesday, August 6th, 2014
7

That Millennial Marketing Verve

Screen Shot 2014-08-06 at 2.29.57 PMLast summer, a dozen people, mostly in their late teens and early twenties, crowded into a living room in Aldan, Pennsylvania, a small working-class suburb outside of Philadelphia. They toggled back and forth between smartphones and tablets while they downed an energy drink called Verve. "Did you know Red Bull and Monster can stay on the shelf for more than four years?" one guest told another. "That’s disgusting," the other person replied. "Verve has a shelf life of eight months." The chatter continued until Erin Wilkers, the twenty-year-old college dropout who had invited them into her parents’ home, quieted them and began her soliloquy. "I’m just going to start off by eliminating the people in the room that aren’t right for this," she began. "I know this sounds blunt, but if you’re cynical, there’s the door, leave. Straight up. I don’t want to work with you. And that’s fine if you’re cynical—if you’re happy with what you’re doing."

Wilkers put on a YouTube video. In the video, a twenty-three-year-old named Alex Morton stands in front of a wall plastered with the Verve logo, talking to a group at Verve Central, a company training center in Virginia Beach. His bro-ish drawl, combined with a rapid-fire speech pattern, makes him occasionally smear his words. "I’m not here to tell you it’s the next Facebook, but it’s the next Facebook," he tells the audience in the video. "Society says, ‘You want to be a millionaire? Who Wants to Be a Millionaire?’ They make it some fantasy thing. You have to be on a game show to have a million dollars? That’s not true. That’s why three percent of this country own ninety-seven percent of all the money. Three percent own everything. So that means most of our moms, dads, teachers, professors and friends don’t know how to make money. So chances are the person in your life currently teaching you how to make money is probably broke."

After the video, a man named Jim Brogan, a former San Diego Clippers player, appeared on the television screen. He had dialed in with Oovoo, a Skype-like service hooked up to the TV. Despite the poor frame rate and the mild pixelation that softly scrambled his face, he projected a bone-rattling ebullience from the television. "Learning about this business is easy," he said in a mild Philly accent. "It’s similar to going to school. I don’t care if you’re taking philosophy, calculus, reading 101, economics 101, I don’t care. We see young people, fifteen to twenty-four-year-olds, that are making—there’s two fifteen-year-olds making a hundred thousand dollars, two twenty-four-year-olds making over half a million. Don’t be cynical about your chances. Don’t be cynical about what’s happening out in the world. Stop watching the news and all the crap and all the negativity that’s out there." He eventually talked about Verve: "You’ve got a product that helps people," he said. "If they have cancer, diabetes, high blood pressure, high cholesterol, fibromyalgia, irritable bowel syndrome, chronic fatigue, chronic headache, they’re a little overweight, why not say, ‘For thirty days, try this’?"

At the end, when he asked if there were any questions, I responded with one about how, once we started selling Verve, the payment plan actually worked. "The more people you help, the more money you make!" he said. "Haha! I love that line!"

Verve is the flagship product of the Vemma Nutrition Company, which was founded in 2004 in Scottsdale, Arizona, by Benson "BK" Boreyko. At first, Vemma sold an eponymously named liquid vitamin supplement—the company’s name is an acronym for Vitamins, Essential Minerals, Mangosteen and Aloe—that promised to slow the aging process. In 2008, on the wave of a bullish energy drink market—the industry reached about six billion dollars in sales that year—the company introduced Verve, which added caffeine to its original vitamin formula and injected it all into a Red Bull-sized can. The advertising for Verve boasts that it has "the highest antioxidant value of any energy drink, revitalizes energy levels and supports a healthy lifestyle" and that "if you are drinking Verve, there is no need to take a multivitamin supplement." It also comes in six different varieties now: Verve, Verve Zero Sugar, Verve Bold (extra energy), Verve ReMIX (a "fresh approach to energy and taste," Verve MoJoe ("awesome coffee), and Verve ParTea (a "spark of energy" with "bright fruit tea flavor").

But Vemma isn’t like most energy drink companies. It’s a multilevel marketing company, or an MLM, meaning that it sells its products through independent salespeople who are compensated both for the products they sell along with whatever is sold by the additional salespeople they recruit, much like Amway or Avon. Vemma doesn’t recruit salespeople from a central office, but through independent distributors like Wilkers and Brogan, who host meetings to tell attendants about the company and its products and compensation plans—often with galvanizations of opportunities for wealth not available in the traditional job market, without the shackles of a 9-5.

In 2011, Verve became the foundation for Vemma’s brand shift towards Millennials, who found themselves facing news-making levels of student debt with poor prospects for repayment. Vemma adopted the slogan "Young People Revolution" and developed a social media presence, punctuating its tweets and Facebook comments with the hashtag #YPR. In one video, Boreyko touts Vemma's "more social approach," calling its business model "social network marketing." It added a sales reward in which the company pays for the lease of a BMW 3-series sedan if salespeople hit certain sales quotas. Between 2011 and this year, it has enlisted a roster of celebrity endorsements, including Dr. Oz, Chris Powell and Jenny McCarthy, and it has sponsored the Phoenix Suns and Charlotte Bobcats. According to figures provided by the company, sales have risen from ninety million dollars in 2011 to two hundred and twenty-one million in 2013. The Direct Selling News Global 100, a sort of Fortune 100 for direct marketing—which includes all companies who replace storefronts with independent sellers, whether or not they compensate their sellers for additional recruitment—now ranks Vemma as the fifty-third largest direct-marketing company by revenue, up from eighty-first last year and ninety-seventh in 2010.

In January 2013, the same week that Wilkers dropped out of Temple University’s advertising program after her scholarship had run out, she quit her job as a server at a local restaurant. She then scheduled a Friday night to take LSD in an austere, furniture-less room with a group of friends. It wasn’t Wilkers’ first time using it, but the combination of drugs and fresh unemployment felt like a personal nadir. That night, just before she planned on taking acid, Rachel Fry, a friend from the restaurant, called Wilkers and told her to come to a meeting. "She was like, ‘Dude, get out of bed. Like, what are you doing laying in bed?’" Wilkers told me. She abandoned her plans and decided to go with Fry.

Fry took Wilkers to a Prudential Fox and Roach real estate office in Ardmore, Pennsylvania, a wealthier, unaccented suburb on the Philadelphia Main Line. Inside was a large conference room filled with about a dozen people. Jim Brogan, the man from the television, and his brother John, a man in his mid-fifties with a slightly boyish, slender figure and spiky, gelled hair that’s thinning, but not receding, pitched the crowd on Vemma’s supersonic growth and its potential to free them from the shackles of debt and a boring life. In the middle of the meeting, Jim asked Wilkers to stand up and tell him her five-year plan. "And I didn’t have one," she told me. "I said, ‘You know what, maybe this is for me.’"

Wilkers spent a hundred and fifty dollars on a couple of thirty-can cases of Verve—one to give out as samples, the other to drink—and began building her business. She reached out to old high school friends and Facebook feed became a stream of optimistic memes and brief motivational sermons. ("I’M NOT HERE TO FIT INTO YOUR WORLD I’M HERE TO BUILD MY OWN.") She began talking to the Brogans more. Jim "literally had no other reason to do this other than the fact that his wife had ovarian and uterine cancer and she was taking the product and it helped her immensely. He’s a business partner and makes about seven grand a month part time and has a full paid-for BMW. But this is just something that he does to help people," she told me.

vervebro

Three weeks later, I met John for the first time at his real estate office in Ardmore. He greeted me with an extended hand, and a warm pitch that began a preemptive defense of the company. "I mean, now why would Dr. Oz, the Phoenix Suns, Charlotte Bobcats—why would they get involved in something like this?" he said shortly after I had introduced myself.

When I met him again, a week later at a cafe just down the street from his office, he recounted how he got involved in Vemma and came to sell an energy drink whose branding feels like a paean to YOLO, targeted towards someone about thirty years younger than him. His brother Jim, he told me, gives private basketball lessons at a day school in La Jolla, California. "There’s no Verve product at this point, just Vemma," he said. "One of the kids at his day school was…a high school senior going into college. Jim starts to teach him how to become a better basketball player." But when the student hurt his knee, and could no longer play basketball, his father, an early Vemma distributor, encouraged his son to also become a distributor. The student reached back out to Jim to convince him to become a distributor, too. "Jim’s thinking multilevel marketing, he’s thinking Amway," John said. "But he’s completely convinced in the product. And the reason he’s convinced of this product is this handout."

John pulled out a manila envelope and withdrew a faded graphic that looks like it was printed with a printer almost out of ink. "Your body is a sponge…" read the paper, and underneath was an image of two human-shaped sponges—one being doused by a liquid slightly darker than carrot juice from a Vemma shot glass, and another with five capsules resting on the sponge, not being absorbed. The idea was that without infusing a drink with your necessary vitamins, they inertly rest in your intestinal tract. "Most diseases that are known in the world today can usually be attributed to a nutritional deficiency, and that involves your immune system," John told me. "I do this with people all the time: Would you agree that over that time frame, quality of food in this country has gone in that direction?" He turned over the sponge picture and begins drawing a chart, or something resembling one, that begins with the fifties and ends in the current decade.

"Sure," I said.

"How about now?" he asked.

"It’s still bad," I told him. "I don’t know if I can argue one way or the other. We were eating Salisbury steak in the sixties and fifties." Before I had even begun my answer, he began drawing a line, an x-axis notched with marks indicating decades. "Over that time frame, would you agree that the incidence of disease is on the increase?" he asked. "I’m gonna fill you in, because you’re too young to know." He then drew a line indicating an upward trajectory of sickness against a y-axis measuring disease. "How about diabetes? How about fibromyalgia? Irritable syndrome? How about cancer, any type of cancer?"

I didn’t know, and I was less interested in epidemiology than I was in the specifics of Vemma’s compensation plan, so John pulled out his phone and opened the Vemma app, a sleek interface that allows brand partners to keep track of their orders, customers and distributors underneath them—essentially, how much money they’re making. John told me that his goal is to make twenty thousand dollars a month, which is the somewhat informal standard of success in Vemma. He quickly crunched the numbers; he needs nine thousand distributors underneath him, making up two "legs." Through some inscrutable twist of the model, John’s left leg is heavily stacked with Vemma distributors, but it’s not until he hits a certain number of distributors on the other leg that he actually reaches another level of compensation. "And that’s the thing," he said. "These young people just keep feeding this side for me!"

The precise mechanics of Vemma’s compensation plan are convoluted, and discussions of how the plan works sound like knockoff financial jargon. "Once you cycle one time, you can cycle a thousand times," Wilkers explained to me at one point. Vemma calls its business model a "binary compensation plan" that depends on stacking people on two different "legs." The bones of the compensation plan work like this: Under any given distributor are two "legs." Whenever a distributor brings on a new Vemma distributor or customer, that person is placed on one of them. Then, for example, when Leg A has six people and Leg B has three people, the distributor is paid. Each time the distributor's recruits bring more people on, those new recruits also fall into the corresponding legs. If you drew it on a piece of paper—and in YouTube videos explaining the plan, many have—it looks like a pyramid. This doesn’t make Vemma a pyramid scheme—an illegal business model, typically involving salespeople paying substantial fees in order to participate in the company, in which payment primarily depends on the recruitment of new salespeople rather than the sale of good or services. But some experts in the field have doubts about the company.

Bill Keep, the dean of the College of New Jersey in Trenton’s business school and a pyramid-scheme expert who found some renown after his research was cited to explain Pershing Square Capital’s billion-dollar short on the MLM company Herbalife—after making the short, one of the company’s hedge-fund managers attempted to convince the investing and regulatory worlds that Herbalife was a pyramid scheme to crash the stock—has looked into Vemma and believes it may meet the criteria to qualify as a pyramid scheme. (Last year, Boreyko told the New York Post, "Don’t call us a frickin’ pyramid scheme because we’re not.") To Keep, what’s remarkable about Vemma is that it appears to be the first successful multilevel marketing company in history to aggressively target Millennials, rather than jaded sufferers of midlife crises who find themselves dissatisfied with their lives and incomes by the time they reach their forties."If you look at the videos, there’s this ‘life sucks, the world sucks, you’re screwed if you’re going to college, there’s no jobs out there,’" said Keep. "You would have never heard that message in 2005."

Legally determining when a company is a pyramid scheme is something of an art; there are no hard and fast three-pronged tests to apply. But the official example for when something is not a pyramid scheme was laid out in the 1979 landmark case In re Amway Corp. The Federal Trade Commission, in its decision, cited Amway rules that ensured that products and money are not simply circulating within the distribution chain and are, in fact, reaching end users who aren’t also Amway distributors. For instance, Amway required each distributor to sell at wholesale or retail at least seventy percent of its purchased inventory each month, a policy known as the seventy-percent rule. Essentially, compensation wasn’t primarily based on recruiting more people.

"I think [Vemma has] many features that could be at issue if they’re held up to a legal standard," Bonnie Patten, Truth in Advertising’s executive director, told me. One of the things Patten cites is Vemma's model of compensating brand partners for recruiting more brand partners; Vemma distributors receive "bonus points" for signing up new members (part of an aggregate of points that eventually turns into money), and the Frenzy Bonus rewards distributors with a cash payout for signing up three new distributors in a single week.

Before 2004, Vemma was known as New Vision International, which marketed a concoction similar to the original Vemma formula, but with different panacea-like ingredients. New Vision was sued by the FTC for claiming that the formula could treat ADD, which it claimed with a surprising lack of circuitousness:

The problem: Johnny isn't staying up with the rest of the children, he's getting into fights at recess and he's just not listening. The teacher has seen it hundreds of times: ADD (Attention Deficit Disorder) – the most common form of treatment: Ritalin. Parents trusting the advice of well-meaning professionals are unknowingly starting their children on a cycle of chemical dependency. Is there an alternative? The good news is yes, and this tape will outline what has become known as 'God's recipe' as well as letting you hear from some doctors on this very subject.

New Vision was enjoined from making further claims and, as part of a settlement, was placed on a regimen of accountability, which required the company to more closely monitor the statements of its distributors. Boreyko told me over the phone that the complaint was triggered by one distributor who made claims unauthorized by the company and that he was subsequently fired. "I stood up and said, Hey, we’re going to take responsibility," he said.

More recently, in June, Italy’s Competition and Markets Authority—Italy’s analogue to the FTC—ruled that Vemma’s compensation plan and purchase requirements qualified as a pyramid scheme and forced the company to institute changes to its plan to reduce emphasis on recruitment and product purchases by distributors. The company reacted by simplifying its jigsaw arrangement of bonuses and by appealing the decision, and made a formal switch from "network marketing" to "affiliate marketing," a change more nomenclatural than practical. "Italy is a very small market to us, under a couple hundred thousand dollars a month," Boreyko told me. "I still don’t know why they don’t like it, but they don’t like it."

In my conversation with Boreyko, I told him that Brogan pegged his measurement of Vemma success at a twenty-thousand-dollar monthly income; Wilkers and her team alternately threw out numbers hovering between twenty thousand dollars and fifty thousand dollars a month. Morton, in his YouTube pitch, had said that a million dollars a month was a reasonable expectation with enough time and effort. The figures were always monthly, never yearly, perhaps because doing so would strike those involved as too redolent of a salaried life dependent on employers.

Vemma’s own income disclosure figures state that roughly ninety-seven percent of people made eleven thousand dollars per year or less, while ninety-percent made under fifty-seven hundred dollars year. "I never say everybody is going to succeed," Boreyko said. "I say, hey man, you’ve got the same opportunity as everybody else, and you can work your way out of that ninety-two percent and get into the three percent or four percent or one percent or wherever you want to go, just like when you buy a Subway, you're an entrepreneur, you're a business owner."

"Are you telling me that everyone that signs up for Vemma can be making twenty thousand dollars a month, every last person if they worked hard enough?" I asked.

I hear silence on the other end, then, "Alright, you want hypotheticals or you want reality? Because I can deal in both."

"Both, I suppose."

"Okay. Hypothetically?" he said with an upwards lilt. "No," with a chuckle as if hearing a preposterous idea. "It’s never going to happen. In reality? Guess what? It’s never going to happen." He continued, "You look at just in America, startup small businesses, the failure rates in the first five years. Eighty percent. Not the success rate, the failure rate. Eighty percent failure rate. And these people sign leases, they mortgage homes, they take out loans, they save after tax dollars to buy a dry cleaner or buy a sandwich shop or any of these small businesses, as you look through the strip malls across America, these people who have dreams, they're willing to stand up and fight for them. And you know what? The eighty percent odds are that they're going to go out of business in the first five years. That’s just the small business association. That’s what they report. So I'm just telling you, you know what, if you took that same number in Vemma, how am I going to put a number on your head and get you to say no, don’t even try? You know what, you’ve got an opportunity, Andrew, but I don’t want you to even try, because you know what? Eighty percent chance you're going to fail. Why do you want to start someone out in business saying the odds are you're going to fail?"

I saw Wilkers and her team for the last time in September, at John’s office in Ardmore. Wilkers had invited two old high school friends from Facebook to hear about Vemma. Two months earlier, John’s office was packed beyond capacity with about thirty-five potential recruits that various Vemma distributors—Wilkers, her teammates and those up-leg from her—had invited. Wilkers got up to perform her routine, reciting her Vemma creation myth, in which Fry invited her to the meeting and Jim asked about her five-year plan. She put on another YouTube video, the slickest one I’ve seen yet: A series of celebrities—Will Smith, Steve Jobs, Arnold Schwarzenegger, Barack Obama—speak vaguely about greatness, leading into a briefing on the gloomy economy, followed by a kinetic flash of images of Boreyko and BMWs and Morton, overlaid with Kanye West’s "Black Skinhead." "I keep it 300/like the Romans/300 bitches/where the Trojans?"

Seeing her flatly recite a rehearsed sales pitch, it dawned on me that her energy, in retrospect, is not about Vemma, but desperation to escape the new miserable normal of post-college life—one of stagnating wages, of tech-bro robber barons, of mortgage contracts engineered to ruin your life. The financial meltdown may have triggered the Occupy movement, but its power derived from the fact that our system of cultural logic had broken down—that people like Wilkers were victims of computerized shuffling of binary code on a trading floor, meaningless points that somehow turn into money. It seemed, at the moment, that the young people involved in Vemma didn’t enter the company to become rich; they wanted to create a parallel economy that allowed them to create their own dynasties and regain a sense of control, working with rules that they can actually understand.

I never saw Wilkers again, but over the last few months, her Facebook posts became dimmer, the optimistic memes petering out until she didn’t post them at all. Eventually, her posts indicated that she had begun working as a telemarketer, and she began to post poetry—not swift uplifting aphorisms, but thoughtful stanzas. In March, she wrote:

Her whole life she has been reduced to a work of art,
often looked on with admiration and
sometimes touched by awe-inspired hands,
but never examined to see what lay beneath
the surface. They have always wanted her,
but only to hang in their gallery—
to show off as their trophy.
She has begun to believe her offerings are made up of
batted eyelashes and perfect skin. You
need to remind her that she is a masterpiece,
wonderfully crafted, with her true value locked away in the unseen.




Andrew Thompson is a writer living in Philadelphia.

7 Comments / Post A Comment

KarenUhOh (#19)

Why must the glass slipper always turn into a BMW?

sajrocks (#2,067)

Making money off of people who want to make money equals the real secret. Bravo!

GailPink (#9,712)

I got the worst food poisoning imaginable from drinking one of their tiny protein drinks that was a week past its expiration date, despite it having been sealed and in my fridge. Live and learn.

Vemma operates very similar to Amway, the world's largest MLM scam. Read about both of them here: http://www.StopTheAmwayToolScam.wordpress.com

15436436@twitter (#246,238)

"Seven grand a month part time and has a full paid-for BMW." So he spent 80% of his pre-tax annual income on a car. Good job.

As printed on those cans, the brand name appears to be "Vomma". That is all.

Abe Sauer (#148)

Ah, things were so much simpler for those of us in Gen X who spent months in Union Square, NYU lecture rooms, Long Island malls (and elsewhere) cold selling $5 comedy show tickets after the dot com meltdown.

Post a Comment