Worth Magazine Article January 1997 Issue

 

Selling the Dream

It’s definitely not Avon calling.  Say hello to Excel Communications and the new face of network marketing.

by Andrew Tilin

“You guys are getting paid less, you’re not living as good, you can’t take care of your kids as well, and you know why?” shouts Linden Wood from the stage, his reddening face filling two of those big screens you see at rock concerts.  “Because those companies you work for have decreased salaries for ten consecutive years. I’m interested in building a company on people’s hopes and dreams!”  At that, the boisterous, pom-pom-shaking crowd – 5,000 men and women who have given up a temperate spring evening to sit in the still air of the Dallas Convention Center – breaks into giddy applause.  “We’re not stopping in 410 cities, we’re not slowing down.  In fact, we’re speeding up!”  The twangy voice booms over the sound system, and the crowd is so filed you figure that the “Amen!’s” are right around the corner.  Or that the bespectacled Wood, himself in a pretty good lather, will double over and suddenly windmill his arms gloriously skyward in the wave, which would not doubt spin around the auditorium all night long.

The Super Bowl party never quite forms, but then again, the speaker has to pace himself.  Ahead of Wood are two more days of this rally, a motivation fest for Excel Communications, quite suddenly the fourth-largest provider of residential long-distance service in the country.  But this is much more than a celebration of a phone company.  It’s also a love-in for network marketing – that line of business, pioneered and still typified by Amway, where success is determined more by the number of salespeople you draft than by the sales you make.  This pitch-men and –women all sell Excel.

The heated rally is also an impressive manifestation of a determined movement to make much of American business anti-corporate.  The way network marketers see it, big companies have become as heartless as they are shortsighted, showing their gratitude for your hard work by shrinking your income and transferring you and your loved ones to some faraway outpost, if not handing you your hat altogether.  America’s 200-odd network-marketing companies play against that, and none more so than Excel, whose express goal is to take network marketing upscale.  The pitch is: Amway may want your mother, Mr. or Mrs. Executive, but we want you.  And we can pay you.

Linden Wood is proof.  With an act that’s part Tony Robbins, part Robert Reich, and a dash of Jed Clampett, Wood is widely reported to have a $500,000-per-month take.  Somehow the Oklahoman, who proudly wears jeans with fraying hems and a blazer, still manages to brand himself a “30-year-old, broke travel agent.”  But these 5,000 people in Dallas are just a portion of the Excel representatives Wood educates, motivates, and makes money from.  Wood’s Team Excel (Team is an acronym, naturally: Together Everyone Achieves More) is 30,000 strong.

What’s drawing bigger and bigger crowds to the like of Wood and network marketing isn’t just the potentially fat paycheck either.  It’s the promise of a decidedly anti-1990s business ethos: Leave the world of cutthroat competition and instead chum your way into happiness! Friends! A guaranteed future! Network marketers call their way capitalism with a conscience.  In this business, you get everyone else to do what you do, and then everyone heads down the yellow-brick road together.  Spreading the good work, direct-marketing veterans like to boast, is as easy as “telling a bunch of people to go see a good movie.” Linden Wood’s particular genius is that he turns old-fashioned motivational speaking into a clarion call for the oppressed white-collar masses. “In ten years,” he says, “the question’s not going to be, Are you in network marketing? But, What network –marketing company do you represent?”

Of course, getting everyone else to do what you do – a conversion that network marketers unabashedly term “duplication” – might be considered the hard part.  In this business, you have to be a salesperson.  You have to get others to believe in the product you’re pitching, and then, push it as hard as you do.  The sign of true duplication is when your recruit has given up job, exercise, and Monday Night Football to talk incessantly about “the opportunity.”  As recruits for the opportunity are told, Excel is an easy sell: The Dallas-based company has seen triple-digit growth for the better part of this decade and will easily crest $1 Billion in revenues for 1996, its eighth year in business.  Excel’s rates are low, the service and features are on a par with AT&T, and, well, everyone needs a dial tone.

Wood lifts his crowd to peaks, sets it down gently, lifts it again – it’s an overwhelmingly skillful preacher-teacher performance.  Now, under the concrete beams and the hand-painted posters with messages like WE LOVE YOU MAN, TEAM ST. LOUIS, Wood reaches for a big moment.

“When I discovered Excel, I was still waiting for life to come to Linden,” Wood says, walking through his own salivary spray, his cheeks becoming ruddier on the grainy monitors.  “Well, that’s the day I got an attitude and decided to meet destiny.  We’re here this weekend to get that attitude!”

ALL THIS ALTERNATIVE-CAPITALISM STURM UND DRANG didn’t form into a groundswell yesterday.  In 1959, Jay Van Andel and Rich DeVos founded Amway, the granddaddy of all network-marketing companies, as a patriotic tribute to free enterprise.  Back then, it wasn’t corporate downsizing that gnawed at the collective unconscious of the American-business workforce; it was Communism.  DeVos stumped for network marketing in school auditoriums and churches, banging a gong of optimism that still reverberates in the meetings held by Amway, Mary Kay, Sheklee, Herbalife, Ne Skin, Excel and all the other network-marketing companies.  “We call our company Amway,” DeVos would say to crowds heavy with housewives and factory workers, “because the American way of private ownership and free enterprise is the best way.”

Then DeVos would sign ‘em up to buy and sell all those products destined for the cabinet under the kitchen sink.  Today, the process is similar, but the interested parties have evolved.  More and more, network marketers are well-paid baby boomers, and so are their recruits.

But corporate recruits can be difficult to pry loose. They may be grumpy, but they’re mindful of the advantages of the nine-to-five: paid vacations, health insurance, retirement plans, expense accounts. Network marketing takes all these things away as it turns recruits instantly into independent representatives.  Self-employed salespeople, in other words.  As for organizations line Team Excel, the name perhaps misleads.  Team Excel is just one of perhaps dozens of representative associations connected with Excel Communications.  These associations aren’t officially recognized by Excel and don’t get much more from the company that a mixture of exhortations, materials, and occasional stern reminders about protocol and procedures.  What a representative association primarily offers are an inspirational figure, such as Linden wood, and a sense of community-no no small thing for people who work out of their homes, face a lot of prejudices and suspicions about their line of work, and spend most of their time hearing “no.”

Why would a company choose to sell itself this way?  In Excel’s case, network marketing allows the company to run a billion-dollar operations with no advertising budget and with just 2,200 employees (Sprint, the third-largest long-distance company in terms of revenues, has 47,500 employees).  Excel’s sales force is 950,000 representatives strong, and not one of these reps draws a salary, receives benefits, or gets paid for anything except pure production.  If you don’t bring in long-distance customers, Excel owes you nothing.  It might even make money off you, because every representative is required to pay a refundable $50 fee to get on board, and the overwhelming majority step up to the $195 starter package of motivational and educational materials.  Multiply those numbers by the three quarters of a million people expected to apply to sell the product in 1996, then add a few hundred dollars more per committed rep each year (for additional materials, plus, perhaps, a dedicated satellite dish and a subscription to the company-produced programing on Excelevision), and it’s easy to see how 18 percent of Excel’s revenue actually comes from the reps.

Predictably, the work really begins once a network marketer lands a recruit.  At that point, the two take on the respective roles of, in industry lingo, “upline” and “downline”.  The upline is something of a hybrid between benevolent shaman and Little League parent.  Uplines work hard at what they call “selling the dream”: Do as I do, and we’ll all live like dukes.  Uplines promise downlines that their hours will decrease as they become uplines in their own right and their downlines work to earn them money.  The flip side is that, until a downline is well on the road to duplications, an upline must badger him or her relentlessly, always prodding the downline to bring more people to business presentations.

The work is hard, in the way of any job that requires successful people always to be up.  But the potential for prosperity is real, according to the number generated by the Direct Selling Association, a trade group representing some 200 direct-selling companies.  (Direct selling is an umbrella term that covers both network marketing and single-level marketing, a simpler arrangement in which a salesperson buys products from a company and sells them.  Avon is the best-know example of a single-level direct-selling company).  In the 1990s, annual sales by direct-selling companies have increase a total of about 30 percent to $18 billion – 51 percent of it through network marketing.  The number of salespeople has grown at approximately the same clip to 7.2 million – 5 percent of them network marketers.  Through direct sellers who go at the business full-time are a distinct minority, more than half of the full-timers make over $50,000 annually, and one in ten makes $100,000 or more.  “But don’t believe anyone telling you that most new millionaires are coming out of network marketing.  That’s an absurdity,” says DSA president Neil Offen.  What’s also absurd is the industry’s turnover: Excel has annual rep-turnover rate of 86 percent, and among network-marketing companies, that’s consider low.

NETWORK MARKETING IS BUILT ON stories.  I was successful, I had the corner office, but someone showed me this opportunity one night and I quit my job the next day. Or, Women in my former business are only going to get so far. I wanted more.  Or, I had to borrow the $195 to get into this business, and I’m not ashamed to admit it.  The particulars differ, of course, but inevitably the message comes down to this: Opportunity is close, ridiculously close, for anyone with the eyes to see it and the heart to seize it.

Nelson and Mark Morgan, two friendly, solidly built brothers in their early 40s, have both seized the opportunity within the past year, as they’re explaining to new and old friends the morning of the second day of the Dallas rally.  They’re having coffee at the hotel that is serving as de facto headquarters for out-of-town rally-goers, and they’re surrounded by buzzing, happy colleagues.

The Morgan’s story is that Nelson was a doubter, pitting his cynicism against the good sense of his entire family.  For months, he refused to see the beauty of what his older brother had got involved in-even after their father joined Excel, too, even when their mother said nelson was just being a fool.  When Nelson finally gave in and went to an opportunity meeting, it was almost entirely to get his family to change the subject.  “I wasn’t going to do nothing with it,” nelson says laughing.  “I was going to pay  $195, become a rep, go through training, and quit.  Just to keep peace in the family.”

The night after his training, though, Nelson had a bout of Excel insomnia.  “I sat up in bed and said, ‘Jiminy Christmas,’” he remembers.  “I know literally hundreds of people who need this opportunity.  Then I realized, I need this opportunity – this is my way out.”

Both brothers are holding other jobs until their network-marketing businesses gather sufficient steam.  Nelson is the director of management information systems for the Oklahoma Housing Finance Agency in Oklahoma City; Mark is a stockbroker in Dallas.  Having been so difficult to bring over, Nelson is, of course, without peer in his passion for Excel, to an extent that shows up even in his vocabulary.  “You go out and live your life and Excel.  I have my brochures, I have my business cards, I have my things, and while I’m out living life, I’m talking to the filling-station attendant, I’m talking with my accountant, I’m visiting with the sacker at the grocery store, I’m talking to the grocer.  To put a number of hours on it is tough because you’re living it.”  mark sits with his arms crossed, smiling, enjoying his brother’s performance.

The Morgans say long-distance and pager services are just the start of the Excel empire; with the deregulation of Utilities, the company can expand into services like water, gas and electric, cellular, cable and Internet access.  The Morgans chuckle contentedly about the differences between their businesses and traditional network Marketing franchises – the “lotion and potion” companies.  Excel is a white-collar network-marketing program, mark confides, not condescendingly.  “Another company might say, ‘We just created a whole new line of income potential for you, “’ nelson bellows. “’You can now sell garbage cans!’” Excel is different, the brothers concur.  It’s cutting edge. It’s money.

“We’re taking folks that corporations have stomped and beaten and calling on them to work in a business with integrity,” Nelson exclaims.  “In Team Excel, it’s do what you say you’re going to do, help people, trust people, build them up.”  Mark, who in his business has seen a lot of careers built on much different premises, takes a long drag on a cigarette, reflects for a moment, then exhales.  “The reason everyone gets so excited about this is that they know in the pit of their stomach that it’s the way business should be,” he says.  “We’re doing something very un-American.”

The last comment bangs around the brain.  That we’ve come to expect no more from our corporate footholds than the fear of cutbacks and an every-middle-manager-for-himself mentality is depressing.  The idea of a company that values its employees over its stockholders seems quaint.  So when the Morgans hammer away at the premise that the qualities we value in our everyday lives – Compassion, friendship, loyalty – needn’t be left next to the bathroom sink when we go to work, you want to believe.  You want this system to work.

The Morgans could sit there communicating all day, but it’s time to get back up the freeway to the convention center, where the audience is sponging up the determined works and the final guest speaker.  And then it’s Linden Wood’s turn again, this time to provide closure.  The chief of staff, his voice raspy from his multiple appearances, implores the huge audience to go back to their hometowns and inspire others to do what they do.  Squeezing out one last bit of charisma, Wood concludes: “Repeat after me: I’m financially independent! I’m an Excel Maniac!” The crowd is on its feet.

IN THE WEEKS FOLLOWING THE DALLAS RALLY, Excel Communications is so hot that reps are regularly throwing around the M word in a chest-beating attempt to find a peer.  In some ways, the comparison to a young Microsoft aren’t so silly: Excel reports that revenues quadrupled in the first quarter of 1996 versus the first quarter of 1995 – the fifth straight quarter of triple-digit revenue growth.  The number of applications for new representatives was up nearly 500 percent to almost 250,000.  At this rate, there will soon be a million people a year applying to sell the product.