Playing with Matches

The Story of Nerium/Neora

The following is a guest opinion post from Dave Vaughan.  Let him know your thoughts on this post in the comments below.

Image by Pavlofox from Pixabay

Every business man or woman is in search of the latest new idea. Perhaps it’s a remarkable new household product, or a wildly entertaining children’s toy. In the world of direct selling, it is often a miracle health product, that looks to shave decades off your experienced face. This is the story of Neora, once called, Nerium International, but it could very well be the story of any number of direct selling companies, save a few modifications and speed of outcomes.

The story of Neora doesn’t begin in the direct selling space, in fact it starts in a research lab. The lab is in San Antonio, Texas and led by Nerium Biotechnology, Inc founder Dr. Robert Newman, which opened in 2006. The plant itself, Nerium oleander is part of the dogbane family and is notoriously known for being the most poisonous of all garden variety plants. In fact the origins of the species name comes from the Greek word for “water” and “I kill man”. As comic book evil scientist go (which Newman is not, I am obliged to say) this did not stop the good doctor. He found a method of proper extraction to neutralize a product coined as Anvirzel™ which he was then able to apply to cancer treatment due to its cell killing properties. This led to the launch of Nerium Skincare, Inc in 2009.

Anyway, Newman continued his work and his lab expand their possibilities to the point they discovered the application potential for nerium oleander in skincare routines. At this time he is said to have approached Jeff Olson. Olson had sworn off Network Marketing for about 3 months before he was finally willing to consider the possibility of partnering with Nerium Biotechnology, Inc. He needed to see the scientific studies that proved the product works. Nerium Biotechnology employed the science of a technology company designed to detect faults in silicon computer chips, they were hoping to use this same method to survey human faces for anomalies in skin conditions.

The company’s name was ST&T, which stands for Science, Toxicology and Technology. Ultimately they offered praise and remarkable insight into the results of Nerium oleander, in fact the Direct Selling News stated, in their article introducing Olson’s new company, “[in] decades of research and testing, ST&T had never seen results of this magnitude.” This is an unattributed quote, and the article only list the DSN staff as writer of the content, but it does seem to amplify a similar sentiment shared in other pages and content referencing this origin.

We should really focus a bit on Olson’s backstory a bit. He is the author of the book titled “The Slight Edge.” To have a sense of the material covered in this book, that Olson claims “…establishes a common philosophy that defines our culture. Every great direct selling company eventually has to define a culture, a rhythm and a language for their company.” Consider the seven principles outlined in the 280 pages of material produced by the man who “has helped hundreds of thousands of individuals achieve better levels of financial freedom and personal excellence.”

  1. Show Up
  2. Be Consistent
  3. Have a Good Attitude
  4. Have a Strong Desire
  5. Plant, Cultivate and Harvest
  6. Be Willing to Pay the Price
  7. Have Integrity

The experience Olson draws from to fill the other 279 pages of material of this self-help shelf stocker is grounded in his time building up a large downline organization with Pre-Paid Legal. Now, Pre-Paid Legal no longer exists, it folded into a larger MLM program now known as Legal Shield, but even before that Olson launched a company known as The People Network with big-time buddy Eric Worre, who he met up with at National Safety Associates and migrated over together to Quorom International, an electronics MLM. Eric Worre for those of you who aren’t familiar, is the king-pin of MLM self-help seminars now under his company GoPro. The People Network was actually merged with Pre-Paid Legal Services Inc. and Worre and Olson share the title Vice Presidents of Marketing. (President should never have an “s”. NEVER).   It’s not clear what happened to this thick-as-thieves pair, but whatever it was ended at Pre-Paid Legal and both departed around 2010, where reports of Worre being fired for growing a powerful organization reverberate off rumor walls.

Jeff left to start his Nerium baby with the help of his now ex-wife Renee and daughter Amber. Seeing the results from ST&T study, Olson leapt full steam ahead into the idea of Nerium. He granted 30% ownership to Nerium Biotechnology for any profits and created an adaptive unilevel compensation system that was grounded on his philosophy “Be Real”. The company has a long-storied history of industry labelled successes and some regrettable moves towards profit, even though it a late-game entrant, launching officially in August 2011.  To capture this story in a succinct manner I present you with a graphic that visualizes the timeline of Nerium/Neora. The rest of this piece will seek to dissect four key moments over the lifespan of this company in the hopes of offering a stronger argument for why these compensation plan systems must be carefully revaluated. Carefully consider the people who make up the organization (THE PLAYERS), the era of praise and growth (THE FUEL), the era of reorganization (THE MATCHES) and finally the period of legal troubles (THE FIRE).

THE PLAYERS

Outside of Jeff Olson and his ragtag teams of ne’er-do-wells he also had his buddy from VideoPlus University take head office. Dennis Windsor who was named President of Nerium International brought with him a link to a leadership hungry group of young professionals. Windsor and Olson seem to have met while Windsor was involved with The People’s Network and in 2009 he sought Olson as a lead investor in a failed project to make Poker Training an MLM scheme with the Poker Training Network. VideoPlus held an annual conference that gave Olson a means of connecting with a community of engaged network marketers that would be thirsty for the rapid growth he could promise and generally provide an adequate degree of success for at the start of Neora. Dennis Windsor was his key, but so was his relationship with John Fleming.

 John Fleming was the Host for the 2013 VideoPlus conference which another main player, Darren Harding was the event emcee for. Harding ran Success University and has roots with Olson at The People’s Network. Harnessing the power of both of these companies Olson leveraged the people he needed to rapidly expand his distributor base that swiftly increased company revenues from $2.5 million to $100 million in their first full 2012 calendar year. John Fleming was a very helpful agent who offered Olson and other Nerium affiliates a chance to speak in positive articles about the company in his chief-editor role at Direct Selling News. Fleming would go on to run a youth leadership program that he still manages today, based on principles Olson wrote about in Slight Edge and marketed through SUCCESS Magazine. Fleming also wrote a book called SUCCESS for Teens that would go on to be used why Nerium in youth training seminars.

The main other entrant was the duo of Mark and Tammy Smith. Their story will reveal some essential details in the massive readjustment of Nerium. At this point you should understand that Mark and Tammy moved over to Nerium from Pre-Paid Legal on the basis of promises made by Olson. They brought with them a massive organization, which ultimately led to Legal Shield (the new Pre-Paid Legal) filing a lawsuit against the Smith’s. They never had the promises in writing from Olson, on Olson’s advice, to protect what they would otherwise have to give up in a settlement. Details of this will be made clear in THE FIRE section.

THE FUEL

These factors helped fuel the sensational growth for Nerium. Being the single-fastest company in the history of direct selling to move over $1 billion USD in product in under 4 years of business. Through the publicity in conferences, the positive press in the direct selling community and the early reach to young leaders ambition for fast starts, Olson guaranteed him a system of measurable progress. They also added to their repertoire, a magazine known as Live Happy (´π`) which features loads of positive psychology thought reform that helped sustain a market at least until Nerium could achieve these sizable benchmarks. They now have a podcast with over 200 episodes that cover a wide range of topics within the field and connect regularly with Nerium (Neora) related touchpoints.

Nerium, almost suspiciously, was able to reach its billion dollar revenue point in less than 4 years with nearly 95% of sales originating only in the US. This is rather peculiar as it is not the only miracle anti-aging product available in America, and no company is capable of truly generating this amount of sales in one market unless some fishy dealings are going on. According to Nerium records on Direct Selling News, the distributor base in 2012 reached 52,000 reps, nearly doubling the next year to 109,000. The next, and last time figures were reported, Nerium had 154,600 distributors in 2015. A much smaller increase than might be expected after entering three new international markets. And yet the company was still applauded for its impressive growth figures.

Let’s assume for the sake of understanding that these raw figures on distributorship do not accurately represent the true number of people that actually existed over the course of the business. If we take their start-up package as the main product purchased by new distributors and assume that Nerium until the end of 2015 had 200,000 distributors purchase a start-up kit (some would have left the program with this period) we would get a total revenue of $100,000,000. So a tenth of their billion dollar success revenue[1] is attributed to start-up packages.

Brand Partners must also satisfy monthly commission volumes in order to maintain their status, which would be either 200 PQV or 80 PQV that was set on an Auto-delivery option to renew each month. It’s worth mentioning that this sizeable discrepancy is meant to push people into a long-term relationship with the product. With a 3 degree factor of expansion and fast start members no longer being required to meet commission eligibility PQV so long as their downline does, let’s estimate that only half of the distributors are required during this period. Equating 1PQV to 1USD, we would get a revenue source of $180,000,000 each year of the business with 100,000 distributors trying to meet company purchase requirements. When it’s all counted up, nearly 60% of revenues comes from a very conservative estimate of purchases required to be made by reps to maintain activation thresholds.

The fuel to Nerium’s launch is clearly in its distributors. This may be the one statement they will completely agree with in this document, although I would argue the rest is equally as true, perhaps terrifyingly so. This fuel was feeding this rise, until about 2015, when matches started to appear on the table.

THE MATCHES

Nerium saw the need to address its stagnating margins of growth. It needed to expand its overseas market as 95% of its growth was dependent on the US for its first billion in revenue, it would be a long time for it to reach its second billion if it did not expand its market and opportunities of success. There were also several key departures and entries to the corporate structure that made 2016 an important year for Nerium.

First of all, with the new expansion into foreign markets, Nerium faced new regulation standards. The toxic nature of ‘nerium oleander’ might have been ok’d for the US market, but it was unable to pass proper certification in the Canadian market, and was facing difficulty in other market entries as well. Nerium pursued relations with a new supplier, Signum. Now Signum has been working with Nerium since 2014. Signum has two offices that a part and parcel of one another, Signum Biosciences and Signum Nutralogix. True journalists would differentiate them throughout their work, I will not pretend to be that. Signum is managed by Maxwell Stock the son of the owner Dr. Jeffry Stock. Dr. Stock is a Princeton chemist who developed the supplement formula for EHT, a new active ingredient in Nerium products. Optimera became the replacement alternative for Nerium AD (night and day cream) and was develop by Signum, offered to all international markets, but allegedly not sold in the United States. This shake-up will create tensions that will lead to several issues later with Nerium Biotechnology.

Expansions took place outside of South Korea to now envelope Japan, Australia, New Zealand and Hong Kong. This brought with it new partnerships with big names like Peter Dale and Rick Arnold, both of “well-respected” network marketing companies Nature’s Sunshine and Modere, respectively. These two big names brought with them some talent from dried up resource areas that helped to grow Nerium’s name in the regions they served. The Hong Kong market was helped up by South Korea’s BJ Choi’s past fellow in all three past network marketing ventures, Lifestyles Global Network, Isagenix and Monavie, his buddy Eris Ching. Having contacts from multiple groups he was able to also secure a good base in the city of 7 million, with direct ties to the world’s single largest market, China. As far as matches go, it’s hard to pick a better pair to strike success for Nerium overseas. Olson was proving that his wealth of experience in network marketing had value and he was making successful exchanges and still able to sustain rather impressive numbers for Nerium.

These ambitions did however lead to problems, specifically in the name of Dennis Windsor. Arguably the first great match Olson had made for Nerium was just set ablaze, as it brought with it a whirlwind of damage to the Nerium name as is explained in the now era of lawsuits.

THE FIRE

Image by David Mark from Pixabay

Dennis Windsor, the company President is asked to leave around March 2016, he would become the first major match to set alight the unicorn of the Network Marketing world. The reasons aren’t entirely clear, but a lawsuit would follow to help illustrate some details of why he suffered such a fate. The case revealed that Olson approached Windsor at some point in 2009 looking to start a network marketing company that started as the Poker Training Network and would eventually become Nerium. Please note that Olson was definitely playing a bluff when he made up the story that he was looking to move on after his time at Pre-Paid Legal. Olson negotiated terms with Windsor that were never written down, please take notice of this. The terms included (1) an income equivalent to a top distributor in Nerium, (2) a 15% royalty from all back-end subscriptions and (3) a 5% equity ownership in Nerium. Now what are the odds Olson held up his bargain? Given the lawsuit, we already have our answer.

Windsor claimed that much of the material production, business model and compensation structure were drafted by him alone and he retains copyright of these materials. Windsor initially argued there were ten such documents, but sought to remove eight of these works, which was denied. Only two of the ten submitted had actually sought formal copyright protection. The court also determined that Windsor was unable to offer enough evidence of a contract, despite offering further evidence of Olson’s acknowledgment of the contract and a signed written note indicating the existence of the terms of the contract. Windsor claimed he was owed over 20 million dollars based on the original terms of the contract, but the court ruled in favor of the Defendant, Nerium. The court had an issue with Windsor’s requirements not being clearly labeled in the original contract and thus he had no requirements to fulfil in exchange for a healthy reward.

The lawsuit does not entirely wash the hands of Windsor either, as a contact from Jeunesse, the company he would move to only a short time after his departure from Nerium and become Chief Development Officer, would email Nerium Brand Partners in June of 2016. The message was designed to poach top talent from Nerium in order to grow their own revenue streams with more distributors.

These pre-trial readings eventually went towards a settlement before official proceedings were to begin on May 15, 2019. Details of the settlement indicate a permanent injunction preventing Windsor from using any of his data he collected or material he produced while at Nerium. It is still unknown if any cash rewards have been determined.  

Now there’s nothing exceptionally unusual about these proceedings. It’s unclear what drove Windsor’s departure, but one could speculate it had something to do with those who held power over him, which would be Jeff Olson and Jeffrey Dahl. Given that Jeffrey Dahl left Nerium around the same time as Windsor, the culprit would most likely be Olson, seemingly to concentrate power. Or perhaps it was just that Jeff Olson caught wind of Windsor’s interest in Jeunesse.

As luck would have it, at the start of January 2018, two top distributors Mark and Tammy Smith were dismissed and launched their own lawsuit. This event followed another high-profile case of near dismissal of other top distributor couple, Leslie Hocker and Ron Forrester, following a few alleged policy violations during the South Korea launch. The Smiths were a permanent departure fuelled by the same grievances of Dennis Windsor, (1) a promised stake of 5% in the company, each, 10% in total, (2) a combined stake in royalties for Nerium back office products of 15% and (3) being named co-founders of Nerium. This agreement yet again was not written down at the time the terms were negotiated as The Smiths allege that Olson warned that Pre-Paid Legal would sue, and having terms like this in writing would almost certainly harm the Smiths significantly in settlement court.

When Pre-Paid Legal did sue, and the trial wrapped up in 2013, the Smiths went to Olson to secure the terms of their negotiation. Olson was not so ready to settle this issue however, he kept giving various reasons for delay, according to the Smiths. Unwilling to fully comply with the initial demands (Jeff Olson must be first paid millions before Smiths are awarded their ownership share in the company) and hoping to entice the Smiths through other options (offering to solidify compensation beyond reaching a set point), Nerium kept the Smiths struggling through misunderstandings. Jeff Olson, allegedly made the work environment quite hostile towards the Smiths, sharing information that cast them in a negative, unfavorable light. In the lawsuit the Smiths respond to being disparaged in the office by Olson, by identifying key issues Olson had around faith and his feeling that all religions were illegitimate.

The trial with the Smiths is ongoing. The last case covered here in the fire is a long-standing battle with Nerium Biosciences that appears to have now ended with Nerium name change to Neora, letting go entirely of the Nerium oleander association. The product that Jeff Olson once believed was going to revolutionize the anti-aging skincare selling market, was not being abandoned by its champion marketer. This change came about because of an undisclosed settlement which led Nerium Biosciences to end their partnership with Nerium International (the MLM) and join PURE in a distribution model to still market nerium oleander-based products. During this lawsuit however, it became very clear that the tactics Olson was using to protect his money from the Smiths and Windsor, were also being done with his business partners at Nerium Biosciences.

As Nerium Biosciences had a contractual agreement to lean on they were able to source more financial material in their lawsuit. They found shell companies to disguise the names of Olson’s ex-wife and daughter, as well as his son-in-law drawing off the work of downline distributors. Call center employees support these accusations, claiming they have dealt with matters under these accounts, but were told never to touch these accounts themselves. They also noticed Olson began a company of his own off shore where he was hiding company revenues. These ultimately all became untried matters of court as issues were resolved via arbitration. It should also be noted that Nerium International accused Biosciences of underperforming and inflating costs.

THE SMOKE

What does this all mean? Well consider the fact that tens of thousands of people in Nerium are making little, if any, money. Over half of their distributors make no money in the year despite making several qualifying purchases and many attempts to market the product. They commit to Be Real conference events and team seminars that are targeted at bringing them results. They make lifestyle changes and ultimately lose people that have been close to them their entire lives. All while this is happening people are fighting over the millions of dollars in revenues these tens of thousands are generating just by struggling to maintain the monthly requirements of participating as a Brand Partner. It’s sadistic.

This is not only a window into what is happening at Neora, this is a view of what’s happening through the market in MLM companies. Yes, there are tensions that lie at the root of any major business, but they do not normally cause an entire restructure once all events lead to a termination. Within MLM, because it’s a networked structure, this ripples throughout the organization, causing greater pain for those near the bottom. It creates a need to step-up and improve, to boost sales revenues and expand the product through an even larger set of distributors; distributors that did not exist a month ago, but must now in order to ensure the survival of the company.

Neora holds on now, as it faces a tide of action by the FTC. In typical fashion it has fought back against its characterization as a pyramid scheme, identifying the fact that the FTC is operating under a set of rules and guidelines that have not been clearly publicized. Many other actors in the MLM world have stepped in to offer their shadow support. This could be a long battle. Other MLM companies should be aware that Neora got a helping hand that many others do not. It could generate many more distributors and revenues on the basis of having deep industry-level contacts, connections that offered the company a crucial amount of positive publicity in its infancy. Jeff Olson is losing this battle, as karma dictates he should, I suggest save your legal funds for your own battle expected to appear much more frequently this next decade.

[1] There is of course the argument to be made that company revenues do not account for retail sales of products purchased by the brand partner (BP) for the sake of resale. For instance as described in the 2015 compensation package: “they can sell Age-Defying Night Cream for $110 and earn a retail profit of $30 on each bottle. They can also sell the Nerium Night and Day Combo Pack online for $165 and earn retail profit of $45.” I don’t know what to say about applying a questionable toxic chemical to your face to make wrinkles disappear because of skin swelling, but I feel $110 is a bit steep.