What is the truth about Orrin Woodward and his past relationship with Amway/Quixtar? Is Orrin a hero or just another person out for personal success at the expense of others?
To myself and the other founders of LIFE this is old news, but since the “Amway Drones” want to keep talking, lets share the whole story and clear up some untruths.
I wanted to cover four main points in this article:
1) In 2005 Orrin Woodward risked his hard-earned position at Amway by writing a letter directly to billionaire owner Doug DeVos to point out major problems within the Amway/Quixtar business model.
2) Orrin Woodward, after nearly three years attempting to drive change within the company, departs from Quixtar in disgust. Orrin and his leaders spend tens of millions of dollars to get free from Amway’s tentacles.
3) Earlier this year, in a California court, Amway/Quixtar settles a potential billion dollar lawsuit by surrendering over 100 million dollars in settlement money. Not surprisingly, many of the disputed issues in this case were the same ones that Orrin pointed out to Doug DeVos back in 2005.
UPDATE: Recently, in both a state and federal court, the same issues where challenged once again. The Amway vs bHip Global lawsuit was settled with a jury ruling unanimously in favor of bHip.
The critics claim Orrin Woodward is a misleader, however, how do you explain that when Orrin left Quixtar over 40,000 people gave up their checks from Quixtar and followed Orrin and the Team into the unknown? Maybe the 40,000 recognized the same problems and chose to follow a leader with the character and courage to fix them. I believe that is what you will find after reading this post.
Lawsuits, negative internet traffic, rumors…what is one to believe? When you begin to hear the whole story it is easy to see Orrin Woodward is taking so much heat because someone finally had the guts to blow the whistle on the problems with the A/Q business model. No one likes to be exposed and be caught doing something wrong. Sadly, most people instead of owning up and changing, choose to finger point, blame and attack. Once the whole story is on the table it is easy to see, most of the negative is just “Amway Drones” still not willing to take responsiblity, face the facts and go away quietly. Instead they ramble on with gossip, lies, and attacks on people who truly are out trying to make a difference.
Finding the truth can only happen in one of two ways, get to know Orrin personally or look at all the facts objectively. I have been able to do both, but I realize many people reading this or other articles may not have had the chance to meet Orrin on a personal level so lets look at the facts.
A hero deliberately and courageously overcomes obstacles for the benefit of others without regard to personal consequences. Conquered obstacles are the only qualifying credentials of heroes and a measure of one’s true leadership.
-Modeling Future Heroes, Inc.
After reading this article I believe you will see, in a day and age without heroes, this quote best describes what Orrin Woodward has done with the last 18 years of his life. While researching some history I came across a letter written by Orrin Woodward and delivered to Doug Devos, one of the owners of Amway/Quixtar.
What is interesting is Orrin gave this letter to Doug in 2005, nearly three years before the final showdown with Quixtar resulting in Quixtars’ private arbitration process. Talk about courage and conviction. Would you hand a letter to a billionaire business owner of the company you represent knowing that if he did not like what you said it could damage your long term relationships? Sadly, because Orrin would not surrender on the principles involved, it eventually resulted in Quixtar and Orrin’s team parting ways in 2007. This resulted in the arbitration process that many judges have deemed unconscionable.
What happened over the next five years will shock you! Orrin’s letter to Doug DeVos made an impact; a letter that started a journey to protect a community; a letter that one man had the courage to write; a letter that stirred up so much criticism of Orrin, now five years later has come full circle and is vindicated by a recent settlement from a lawsuit against the Amway/Quixtar company. In fact the lawsuit settlement vindicates Orrin on nearly every issue he fought for over the last five years. Furthermore, being a man of purpose, Orrin and the seven other business founders launched a company called LIFE that addresses and fixes almost all of the problems spelled out in the letter to Doug DeVos.
I want to walk you through this letter step by step and explain what unfolded, not based on rumors, biased opinions, entrenched beliefs or corporatism, instead, however, lets examine the true story of a man who risked everything; reputation, finances, popularity, his business and much more to protect what truly matters – his purpose, character and his commitments to his community!
I would like to thank you for taking the time out of your busy schedule to meet with various board members on the Monday of the board week. I have always admired the DeVos and VanAndel families. Your families have exemplified the Godly foundation that is sorely lacking in our country and business culture today. To be given the privilege of sharing open and honest communication on how we can improve the Quixtar opportunity was an honor that I do not take lightly. Randy Bancino did an excellent job of presenting the main roadblocks holding Quixtar back from truly thriving in today’s business environment. I feel, after the transparent communication offered by the family leaders, it is important that the Board members share transparently any ideas we have to help transform our business.
At this point in Orrin’s career he was one of the top distributors in Quixtar and invited onto the IBOA board to help represent all of the IBOs (Independent Business Owners) in the company. As a matter of fact, Orrin was routinely recognized as having the fastest growing group in the whole English speaking community. I remember attending a conference with Team around this time, as I was fairly new to this profession and still trying to figure out if this was something I would pursue. The Team’s major leadership conference was in Green Bay, WI and the executives from Quixtar sent over a video for the crowd to watch. The video edified Orrin and the Team, celebrating Team as one of the fastest growing communities in Quixtar. The video communicated Quixtar’s leadership and supported Orrin’s practices 100%. Is anyone shocked that Quixtar stopped supporting Orrin after his letter to Doug DeVos? Whistleblowers never seem to have a long career path in the company they expose. I will return to this point later; however, isn’t it interesting how the story changed? Before the letter to Doug DeVos, Orrin was celebrated for the very practices that later they would claim where “bad” practices.
Can you say whistleblower? Orrin’s letter initiated several years of behind the scenes conflict focused on fixing Quixtar’s ailing business model. This letter reveals that Orrin was not a greedy business owner trying to leave Amway/Quixtar to start a company; rather, it reveals a man of courage trying to right a known wrong. Once a person reads this letter and understands that Orrin was a whistleblower on the failing North American business model, it becomes clear why the “Amway Drones” began a smear campaign in 2007, attempting to discredit the message by shooting at the messenger. Back to Orrin’s letter:
My Deepest Motivation
One of my favorite theologians and statesmen of history is a man named Abraham Kyper. Mr. Kyper was a strong Dutch minister that taught that God was working out His sovereign plan through culture. He taught that Christians were called to redeem culture through their Godly example and business ethics. Mr. Kyper did a series of talks at Princeton in 1898 known as the Stone Lectures which I strongly recommend to anyone concerned about the current state of our culture. Abraham Kyper said, “When principles that run against your deepest convictions begin to win the day, then battle is your calling, and peace has become sin; you must at the price of dearest peace, lay your convictions bare before friend and enemy with all the fire of your faith.” As Randy was presenting the slides, my mind kept drifting to how this vehicle is my main opportunity to influence culture and make a difference. I was led to Christ, as a direct result of my involvement in the business, through the ministry of Billy Zeoli and Bob Dickie. My world view was formed through reading the Christian classics and asking what was truly important in life. Edward Gibbon, in his magnum opus Decline and Fall of the Roman Empire, stated the five attributes that marked Rome at its end:
1. Mounting love of show and luxury (affluence)
2. Widening gap between rich and poor
3. Obsession with sex
4. Freakishness in art masquerading as originality
5. Increased desire to live off the state.
The parallel between the decline of the Roman culture and the cultural decline of today is self-evident. Many of the IBO leaders feel their communities are a platform which can be used to stem the tide and reverse this decline. I am proud of the system created to educate our IBO’s and feel that our system is vital in the ongoing culture war. The goals that I have for my personal life have more to do with influencing culture than just simply making more money. I know that those who make money, if they use it for the glory of God can have great influence in the culture in which they live, But the driving passion of my life is to influence our nation and to help turn our culture back to the God of the Bible. Making money is just one way of many for me to have influence and leverage in the culture in which I live. Our stated objective of the Team training system is to “Lead people to the truth.”
In Orrin’s book Resolved: 13 Resolutions for LIFE the first resolution is Purpose. Back in 2005, when this letter was first penned, Orrin had a very clear purpose for his life and how this business could achieve it. How many people in your life could so clearly define their purpose?
Orrin was not the only one to see there was a problem. Randy Bantino, Quixtar’s sales director, explained all of the problems as well. However, Orrin was the only one more concerned with purpose than money, which gave him the courage to take a stand.
“If you do not stand for something, you will fall for anything.”
This also fits into the 2nd resolution in Orrin’s book on Character. Character is not only knowing what is right, but being willing to do what is right!
While reading this letter it becomes obvious that Orrin not only writes books about character and purpose, but he also lives what he teaches, that takes courage.
To sin by silence when they should protest makes cowards of men. – Abraham Lincoln
Let us continue through the letter. In the next section, Orrin begins to use his award winning benchmarking skills to lay out the problems facing the business.
The Importance of the “First Circle”
My ability to influence culture and lead people to truth depends directly upon our ability to help the “first circle” (network IBO) work. The first circle must be able to buy good quality products at below market price and then turnaround and retail these products to develop a profitable business. If the first circle does not find a good value in the products then we should expect a high attrition rate, which reduces our ability to influence and change culture.
All business’s need to offer competitive prices if they plan on staying in business, yet Randy’s data represented the exact opposite. Most people joining the Amway/Quixtar business model realized that they could not afford to buy the products let alone sell the products to legitimate customers! Again, Orrin Woodward could have sat back, making money off of this flawed business. Instead, after three year with intense effort, working on the inside to get things right; he realized Quixtar was not going to change. It was only at this point, realizing he could not leave because of Quixtars rules and he could not stay because of his principles, Orrin was forced to blow the whistle on Quixtar’s business model. Back to Orrin’s letter:
Mr. Gerber states: “Ray Kroc began to look at his business as the product, and at the franchisee as his first, last, and most important customer. For the franchisee wasn’t interested in hamburgers, or French-fries or milkshakes; he was interested in the business. Driven by a desire to buy a business, the franchisee only wanted to know one thing: ‘Does it work?’ Ray Kroc’s main concern then became how to make certain his business would work better than any other.”
When people no longer feel the business proposition works due to overpriced products and little ability to sell those products at retail price, they become discouraged and eventually quit. My goal to influence people is severely hampered if the first circle will not stay in the business long enough to gain respect for the leadership team and fall in love with learning and growing. In my ten-plus years in the business, I can count on one hand the number of people who have continued to buy products after leaving the business. Many of these people are still close friends of our family, but they refuse to buy products because they say they are overpriced. Therefore, we have a situation where we lose our ability to influence culture, Quixtar loses out on massive sales potential, and the new IBO loses out on the opportunity to grow a new business.
Clearly Orrin understands the necessity of a viable business model as the first step to helping people succeed. Orrin’s point is that it takes reasonably priced products in order to build a viable business model. Without properly priced products the business model becomes personal consumption only, making it hard for people to become profitable. The good news is in LIFE, Orrin fixed the value based proposition which has lead to over 20% customer base already. Orrin continues:
The Current Value Proposition Prevents Sales
Since 1994, I have consistently been in the living rooms of this country representing this business plan to people, an average of 25 times per month. The number one objective I deal with night in and night out is the price of the products. I have repeatedly had people conduct price comparisons on identical products, and we lose every time. I have arrived at the point where I am hesitant to display the catalogs until after they have signed up into the business. (Why should the IBO’s have to hide the product catalogs in order to register people?) After the new IBO is registered, the next toughest task is to get them to order products. We have had to resort to holding special meetings (150 PV parties monthly) just for people who generate volume. Without the PV parties, our leaders feel volume would drop an estimated 50%. Randy stated that 8% of the IBO’s do over 40% of the volume. This means that 8%, the ones that are receiving bonus checks, are doing a large part of the volume.
Notice in this paragraph, that Orrin and the Team were criticized for not promoting products early enough. The Team focused on building depth to help people climb the bonus chart quickly, so that the products were less over-priced. The Team believed they had to work around Quixtar’s broken business model, if new people stood a chance of winning. Back to the letter:
If you take away signup volume, making this statistic even more extreme, we will find that a majority of the IBO’s are doing almost no volume. Why won’t they even buy products from their own business? The answer is that they cannot reconcile in their own mind the buying of overpriced products. Furthermore, if it doesn’t make sense to buy the products at the wholesale price, what chance do we have to sell products at retail? This difficult situation would disappear if we had an authentic value proposition where the first circle sold products at retail and prospered financially.
Author John Love, in his book McDonald’s, Behind the Arches, teaches how Ray Kroc’s thinking was different than other franchise operators: “By comparison, everything in Kroc’s franchising plan was designed to encourage the success of his franchisees first, and on that McDonald’s itself would prosper. Kroc instinctively knew that making an easy killing at the expense of his franchisees would not produce anything that would last. McDonald’s was in business to satisfy the retail consumer, but as a veteran salesman, Kroc knew he was also in business to serve his franchisees and build loyalty with them. They were his customers too, and if they failed, he failed.”
The Current Value Proposition Prohibits Growth
Randy Bancino’s main point of his presentation was that most IBO’s (90%) are not making money, and that a better retail business would generate more profit for the first circle. I agree wholeheartedly, but we need products that are reasonable value propositions at retail in order to sell them. 70% of business owners in other networks make money because they have products capable of retailing at retail price. Without a proper pricing strategy, we will constantly register people and cycle them through the business as they realize the poor value proposition. Randy stated that we were growing at 1/3 the rate of the networking industry as a whole. Combining this with the fact that we are registering people at five times the market share means we are losing people at 15 times the attrition rate in order to grow 5/15 or 1/3 the rate of other networks. Can we really continue to cycle through 15 times the number of people that other networks cycle through, and all that to end up growing more slowly? To provide an example, think of a typical bottle of spring water. If the target cost is $1.00, then we have to have the retail price set at $1.00 or less for a comparable product if we expect retail sales. We can no longer expect the market to bear a wholesale cost of $1.25 for the water and just encourage people to sign up others to generate a discount in order to drive the cost of water back to $1.00, (after you factor in your monthly bonus), let alone the retail price being $1.50, in which no sane person would buy a product from you for $1.50 that they can buy elsewhere for $1.00.
Quoting again from John Love’s book about McDonald’s; “The essence of Kroc’s unique but amazingly simple franchising philosophy was that a franchising company should not live off the sweat of its franchisees, but should succeed by helping its franchisees succeed.” I feel we have all agreed there needs to be more retailing in this business, but without an even somewhat realistic target cost, it will not happen. It is morally wrong for me to sell products to people, who believe in me, in a value proposition that is not to their benefit. When would it ever be right to offer a product through our network that is not sellable by IBO’s to customers at the retail price?
This is a crucial point. Because of the poor pricing and over all bad business model, distributors had to sponsor 15 times faster just to grow at the industry average. What business would be ok with 15 times the attrition rate? No wonder Orrin was so persistent in bringing these concerns to Quixtar. Why continue to build a business when the company executives refuse to fix the business model? Essentially, what the company wanted Orrin to do is churn thought 1000s of people in order to maintain their corporate profits. Knowing Orrin, this is clearly something he refused to do. Either the business model must be fixed or Orrin must leave. One or the other.
The Current Value Proposition Protects an Uncompetitive Margin
The last major point is the operating margins discussed in the meeting. On one of the slides was a chart that stated the average operating margins for Alticor products was 17%. This shocked me, since I was in the process of reading Don Soderquist’s new book, The Wal-Mart Way, where he states that Wal-Mart’s operating margin was 3%. I can understand why we are not competitive at the retail price if we continue to expect margins of almost 6 times the world’s benchmark company! I am all for the Alticor companies making a great return, as long as the value proposition to the first circle is in line. If not, then this is morally wrong and must be fixed, or I am misrepresenting the truth when I show the plan.
The Current Value Proposition Makes Constant Achievement Almost Impossible
The most shocking piece of data is the number of people who have achieved a Founders Emerald level or above since the founding of Quixtar. The number of Non-Multi-Cultural’s (NMC’s) who have achieved Founders Emerald or above, who started in the business after Quixtar began in 1999 is estimated to be between 7 & 10 people, with only one achieving Founders Diamond level. Approximately 700,000 NMC’s have had more than 5 years to achieve Founders Emerald and approximately 1 out of 100,000 have achieved it. Alticor states its goal is to be the “best business opportunity in the world”, but the data for the NMC’s does not back up this claim. To state these statistics differently; if you were an NMC and started the business in 1999 or 2000, you had a .001% chance of achieving a Founders Emerald level or higher after 5+ years. Further, according to Quixtar, the average Founders Emerald only makes $80,000.00 per year (less than twice the median income in America, and below what those with professional degrees will earn after less than 5 years in their profession). Who would or should be excited about an opportunity like this.
Referring again to Gerber; “It is literally impossible to produce a consistent result in a business that depends on extraordinary people. No business can do it for long. And no extraordinary business tries to! Every extraordinary business knows that when you intentionally build your business around the skills of ordinary people, you will be forced to ask the difficult questions about how to produce a result without the extraordinary ones. You’ll be forced to find a system that leverages your ordinary people to the point where they can produce extraordinary results over and over again.”
Those of us involved with Quixtar must build a business where any hard working American can have a business opportunity that works! As I studied the information and trends, I realized it was not the negative lies on the internet that were killing us, but the negative truths on the internet that were killing us.
The critics would like to say Orrin ignores criticism, but he clearly stated back in 2005 that he was learning from the critics who had legitimate concerns. Eric Blomdahl posted an informative article on the topic of how to deal with criticism both just and unjust. Eric also dispels and explains many of the lies bantered about by the “Amway Drones.” Back to Orrin:
The Value Proposition Can Be Changed From an Obstacle to an Opportunity
I am not a negative person. And I am not easily discouraged. But I am concerned by the disappointing data that was presented at the IBOA board meeting. I believe it is imperative that we all come together to make some corrections to improve this business beyond the problems that we currently face. Leaders solve problems and I believe we have successfully identified the problems and now just need the courage of our convictions to implement successful solutions. I believe everything should be on the table. If you told me my bonuses will have to be reduced in order to meet target costs, then I am prepared to discuss this option. For me, this is beyond a business discussion and has become a moral discussion. This is because I have leveraged my relationships and credibility with those on my team in order to generate product volume. I have tens of thousands of people who are counting on me to do right, and I must maintain their trust and personal integrity. We are all ultimately accountable to God for our actions and pleasing him should be our first objective.
I am so proud to be in business with Orrin Woodward for his courage to stand on principle. While many people talk the talk Orrin Woodward walks the walk. The “Amway Drones” accuse Orrin of being only concerned about money; however, as far back as 2005, he volunteered to take a pay cut to fix the business model. What leader that is only concerned about money would do that? Clearly Orrin is more concerned with helping new people win then padding his own pocketbook.
When Orrin chose to confront the powers-that-be, and try to fix the problems, he did so knowing it would jeopardize his respected position at the company. Instead of making millions while other struggled, Orrin risked bankruptcy and spent tens of millions of dollars in order to stand on his convictions. Orrin did not enter this conflict with the intention of starting a new company, or gaining more wealth; rather, he did it because principles he holds dear were at stake; freedom and justice.
I was with him one weekend during probably the hardest part of this fight when he said to me, “If Laurie and I have to sell everything and move back into a trailer, that is what we will do to make this right.”
Does that sound like a money-hungry greedy person, or a person who is willing to sell everything except his principles? Orrin continues:
The Destiny of Our Business
We live in challenging times and it will require great leadership and courage to get the job done. I believe you and your father were called for a time such as this, just as Esther was of old. I am willing to help in any way you deem fit and appreciate the opportunity to express my feelings and thoughts in a transparent way. I promise if you do your part to fix the product pricing and the opportunity for the “first circle,” then I will do my part and, God willing, will put over 1 million people into our community proudly driving traffic to your website for product purchases. We can be the best business opportunity out there and we can win the culture war in the process of achieving our business goals.
I believe in this business with all my heart. I am grateful to you and your family for providing this opportunity that allows me and so many thousands of others to achieve financial freedom and to use our talents, wealth, and gifts to influence the culture in which we live. Doug, it will take courage to make the right choices to correct the things that need fixing in this business. I am confident that if those choices are made this business will become the greatest success story in our lifetime. I know that the suggestions that I am making will work. If we do not make the decision to fix the problems that are hindering us from going from good to great, then it is my feeling that some other corporation will eventually see what needs to be done and will do it. This is our opportunity to make this business the greatest business opportunity in the country. I want to forge ahead with you to a fantastic future. I want to give genuine help to those who are struggling financially. And finally, I want to see this business be used of God to help bring back to our country the Godly principles that it was founded upon. This is a goal worth striving for and a life worth living. Sir Edmund Burke once said, “The only way for evil to prosper is for good men to do nothing.”
Thank you for your time in reading this letter. I would love to take you to lunch sometime and give you copies of the books from which I have quoted. If I can serve the Quixtar team in any way, please feel free to call or email me.
In hindsight, this letter is powerful! Imagine if they would have listened to the advice from Orrin Woodward and the rest of the leaders who were calling for change. Most likely, Amway’s 100 million dollar Pokorny legal settlement (The judge ordered a 5% price reduction; sound familiar?) would have been avoided, if they would have only listened to Orrin back in 2005.
Let me sum up this Amway/Quixtar/Orrin Woodward conflict in a few talking points:
1) In 2005 Orrin Woodward risked his hard-earned position at Amway, by writing a letter directly to billionaire owner Doug DeVos to point out major problems within the Amway/Quixtar business model.
2) Orrin Woodward, after nearly threes years attempting to drive change within the company, departs from Quixtar in disgust. Orrin and his leaders spend tens of millions of dollars to get free from Amway’s tentacles.
3) Earlier this year, in a California court, Amway/Quixtar settles a potential billion dollar lawsuit by surrendering over a 100 million dollars in settlement money. Not surprisingly, many of the disputed issues in this case were the same ones that Orrin pointed out to Doug DeVos back in 2005.
4) Undaunted, Orrin, instead of criticizing the old, creates the new. He forms LIFE with his co-founders, and fixes the concerns he expressed in his letter to Doug DeVos.
Is Orrin a money-hungry person or principled-centered person? You decide. As for the Hawkins family we are with Orrin and Laurie Woodward, going to 1 million people and beyond.
Any good idea goes through three stages. First it is laughed at. Second, it is violently opposed. And third, it is finally accepted as self evident. People who live by their convictions will make fast friend and fearful enemies. As the old saying goes… If you do not want to be criticized, say nothing, do nothing and become nothing.
It’s your life. Is Orrin a hero or just out for selfish success? You decide.