Herbalife nutrition clubs

I visited an Herbalife nutrition club in Queens. There are many things wrong with this company, but this is not an article about the company's problems (most of which I'll leave for other people to analyze). Basically, this is an article about what I observed and the ramifications of Bill Ackman's thesis on Herbalife.
(a) There are a ton of Herbalife nutrition clubs in Queens. This is a Hispanic region, and in the US, Herbalife is fundamentally a Hispanic phenomenon. Assuming you use Google satellite routing on your phone, you will find a few Herbalife clubs (there are dozens of them in Crown Queens), but some of the ones you try to find will no longer be there (suggesting they have moved or closed).
(b) I was told that the best time to visit a nutrition club was between 7 a.m. and 9 a.m., so I dutifully showed up around 7:15 a.m. The club was empty. I was told to go with a Spanish speaker because the clubs were very much like monolingual Spanish. The club was not signposted from the street and the window panes were fogged up by shading paper, so a passerby wouldn't notice what was there.
(c). I was served "each of the three" meaning an aloe drink, a diet suppressant tea and the protein shake.
(d). This was my first time drinking a protein shake. I can understand them being awful, so is tea. This stuff tastes incredibly awful. It's absolutely disgusting. I emailed (using the trusty PDA) a friend in Asia to explain where I was and let him know how disgusting it was. He was perplexed - he asked if I was a virgin. He explained that when he was a competitive lightweight rower (rowing for an Elite level college) he used to live on protein shakes because he needed to keep his weight within limits. Plus, he exercised a lot on them. Exercise and protein shakes are a well-used and tried combination for weight loss. However, they really do taste disgusting. [I'm told that Herbalife tastes a little better than some protein shakes at the cost of adding some sugars; I'm also told that the texture is much better if you add a banana or even a mango...]
(e). There were no visitors before 8:00 a.m. At 8:00 a.m., I planned to sell all my Herbalife and leave the booth. My Spanish interpreter spoke to the person running the booth and he told us in general how many visitors he received per day and informed us what time they arrived, and that they actually started around 8:00 a.m.
(f) The interpreter was right. The visitors started around 8:00 am and over twenty of them arrived in the next 75 minutes. They arrived generally according to their schedule, suggesting that they were regular customers. They spoke Spanish and he addressed them as friends. Most of them were not obese at the time or were in that frame of mind that went from being gigantic to (just) rectangular.
(j). The key element: the owner/distributor welcomed the visitors as friends and offered them moral support while they drank the tea and milkshake.
(k) There were a number of back-to-back photos on the wall. They were impressive: many of the clients, and the couple who ran the club's group, had gone from being lumpy in shape to being generally rectangular. [I suppose back-to-back photos are impressive at other weight loss meetings like Weight Watchers, but in this case there were a lot of impressive photos for a small club.]
(l). The couple who ran the store had been Herbalife customers for about five and a half years and had run the club for about eighteen months. They were true fans of the product, praising its virtues and repeating the Herbalife system's advantages, mostly in Spanish but also in Spanglish. [In their case, they also praised the rightness of replacing non-Herbalife fat- and cheese-laden meals with something more nutritious and the idea of getting some exercise, even if it was just walking more.]
(k). The benefits of the Herbalife program in the wife's case were real. The wife had gone from being diabetic on three insulin injections a day to being diabetic on half an insulin injection a day. [Statistically, this should add more than 15 years to her life expectancy.] An expansion created her previous body. (l). On the wall was a list of the seventy-odd people who regularly attend this Herbalife club. There was a list of gold stars next to the names with their weight loss and Herbalife usage points. Obviously, the gold stars were essential to the reward system. This seemed to be elementary school.
(m) We asked him if he had any "downlines." He explained that all the clients of his center were also distributors and that they were distributors in order to get a 25 percent discount on the products they brought home.
Observations
This club wasn't a club that sold diet drinks (although it obviously did). It was a club that sold the welfare group needed to drink diet drinks. These diet drinks work (especially when combined with a dash of exercise). However, ordinary people lack the self-control necessary to adhere to a diet, drink, and exercise plan. My Singaporean friend did, but at the time he was competing in rowing, and rowers are highly motivated individuals (think of all those early risers). Be that as it may, I am a truly disciplined person and without social assistance I would not be able to drink these shakes.
In the more upmarket parts of our audience, we have a solution to the problem of self-control of diet and exercise. We hire a fitness trainer (usually someone bright, young and attractive) and he or she convinces us to lose weight. This is an individual assistance group that is "on call." However, Herbalife is another https://www.herbahelp.com/herbalife-nutrition-club-cost-is-it-worth-the-investment/ important mechanism for getting individual help, and it obviously worked with the clients I saw. I can't help but support a product that reduces a person's need for insulin infusions by one sixth, bit by bit. Assuming Bill Ackman believes America would be in an ideal situation without Herbalife, he might politely explain that at the lady's funeral.
To be fair, I'll include the super unfortunate observation: the person running this store did cover his rent (we fixed that), but he was an active man who really put in the work (80+ hours a week) and earned an amount that was less than the lowest wage allowed by law. My understanding is that many, if not all, Herbalife clubs do not cover rent, which is consistent with the observation that some Herbalife clubs on Google Maps appear to have closed down. The lowest wage allowed by law has all the hallmarks of being a silver lining.
Herbalife as an exploiter from a Marxist perspective
Herbalife is unmistakably a Marxist framework for exploiting others. The bigwig receives compensation of over million, which comes from a huge organization of individuals who are paid the lowest wage allowed by law or less. Dan Loeb (who currently controls 8 percent of Herbalife) is someone who often seeks excessive salaries for top-level executives. This could get pretty entertaining.
Some comments on Bill Ackman's thesis
It was amazing how Bill Ackman's thesis completely self-destructed after observing it for just a couple of hours in a nutrition club.
My best way to evaluate Herbalife is as an AA for obese individuals (always Hispanic). I joke, "My name is Jose and I'm fat."
Herbalife works in a similar way to AA: it offers (and in this case sells) a care group to help you leave the "slavery of obesity."
Like AA, it has a large membership and is, remotely, a bit like a religion.
Herbalife, like AA, has a large following because it works. It doesn't work because one nutritional powder is better than another (in fact, some nutritionists argue that soy-based powders are inferior). Herbalife works because of the focus group.
AA is supposed to be the best way ever devised by mankind to cure drunks. It is undeniably more effective than any drug developed by the pharmaceutical companies, and if a drug as potent and side-effect-free as AA were designed, it would be worth tens of billions of dollars. Even then, AA most likely fails frequently. Herbalife is one of the most successful methods of curing terrible obesity (but even then, it probably fails more often than not). [I shudder to think how much a weight-loss drug as successful as Herbalife's emotional support network would be worth: considerably more than Herbalife's market capitalization.]
The biggest difference I can see between AA and Herbalife is that Herbalife is (unequivocally) a for-profit institution (and perhaps a rather exploitative for-profit institution), while AA is just a club.
Let's review Ackman's presentation by section
Ackman's take on Herbalife as a product From page 21 to 26 of the presentation, Bill Ackman "proves" that Herbalife's products are not unique, and from that argues that they do not live up to their cost position as a "unique product." He compares the product to GNC and other brands and points out that the cost per serving or cost per calorie is higher.
This is a complete misunderstanding of the Herbalife article. GNC and other brands are sold as commodities. Herbalife is sold with a community support mechanism.
Anyone is welcome to go for a run in Central Park. It's free. It costs you an hour if you work out with a fitness trainer. Comparing the price of Herbalife (sold through a company) to GNC (sold without a company) is like comparing the price of a park run with and without a company.