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For the past 17 years, a former real estate entrepreneur
named Rex Maughan has been quietly building a
company in Tempe, Ariz., selling products derived
almost entirely from a single type of plant: aloe
vera. Privately held, it's been chugging along
with no advertising or promotion — an interesting
little firm, you might say. Maughan's little firm,
Forever Living Products International Inc., hired
its first public relations specialist this year
as annual sales neared $1 billion (not a misprint),
with 4 million distributors in 44 countries. His
empire is one example of what can happen when
conservative management meets a hot trend.
When real
estate entrepreneur Rex Maughan started Forever Living
he had the company keep a low profile and focus on growth
for its first 17 years. But with sales of its aloe vera
skin and nutrition products at nearly $1 billion, the
secret is out.
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I grew up in Idaho, on a ranch, growing
grain, cattle, and hay. My father always told me
if I wanted to dance, I had to pay the fiddler.
I loved the out-of-doors, but I wanted to make more
than you can make ranching. After Arizona State
University, I went into accounting and then real
estate in Phoenix. It was fun. I started handling
office space for Del Webb in 1967, doing leasing
and managing. I did a big deal with Prudential in
Denver and moved Greyhound from Chicago to Phoenix. |
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Friends kept inviting me to opportunity
meetings for various network marketing companies
to size them up. Since Del Webb was the only local
company on the New York Stock Exchange, having me
there gave them credibility. |
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I looked at them and analyzed their
compensation plans. Most of them seemed to be top-heavy
—designed to benefit the guys who founded them.
So I started developing my own plan for a company.
I hadn't even looked for a product to sell. But
it seemed to me that with the right plan, you could
build a very stable organization. I didn't want
people to get discouraged and leave, so my plan
paid bonuses on retail prices, not wholesale. The
distributor could make a 43 percent markup immediately. |
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If they're making more at the lowest
level, they can afford to keep going and build a
bigger organization. For the owner, making a little
profit with each of a large number of people is
better than making a big profit with a small number. |
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Water purifiers and burglar alarms were very
popular then, but I didn't want anything that
wasn't consumable. I was interested in health
products and thought other people might be, too.
But I didn't want a me-too item like diet products,
soaps, or vitamins. They seemed like something
you could get in a store. Finally, a group of
doctors heard about us locally. They had an aloe
vera product that they were trying to sell in
health food stores, but it was just sitting around
getting dusty. I tried it and gave it to friends.
I'm very fair, and I sunburn very easily —boy,
it really felt great and saved me after being
sunburned. At that time, you basically couldn't
get aloe, except in health food stores. I thought,
"If this will do half of what these doctors tell
me it will do — give you more energy and [make
you] feel better, too.... When I put that idea
together with multilevel marketing, it looked
very promising.
On the other hand, 17 years ago, if you said
aloe vera, people would say, "Who?" Today, almost
all women know what it is. A lot of men still
have no idea what it is.
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It's a naturally occurring gel from
the leaves of a plant — it's a member of the lily
family that, like a cactus, has stickers. It grows
as a rosette, from the center out. You harvest four
or five times a year by taking a few leaves off
the bottom. To get the gel, you just nick one edge
and tear it down to the base. We add a stabilizer
to keep the gel from oxidizing. |
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Some companies concentrate the gel
as much as 40:1 to keep the shipping weight down.
They'll freeze-dry or powder it in cosmetics. But
we've found that the active ingredients and nutrients
keep better when it's just used as a gel. |
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People use it for a wide variety of
things. It's very high in vitamins, minerals, and
amino acids, including vitamin B-12, which is usually
found only in animal products. Our best-selling
product is an aloe vera drink. People tell us it
gives them more energy; it's especially popular
among vegetarians. Doctors tell us aloe vera stimulates
the body to perform as it should. People with stomach
ulcers have told me that after a few days or weeks
of drinking it, the ulcer is sealed over. I had
a 70-year-old lady come up to me with tears in her
eyes to say she used to have arthritis so painful,
she could hardly walk, and now she can go out dancing
twice a week. Athletes rub it on their injuries
and find it gets them back in the game twice as
fast. It is an amazing plant. |
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The FDA, because of exaggerated claims
for their products is always investigating some
companies, like. We realized that with natural health
products, we'd have to take a conservative approach.
We don't make any claims per se; people read medical
journal articles about aloe vera on their own. We
have a man on our staff who used to be with the
FDA who can warn us about any problems in our literature.
For income, I found you don't have to make big
claims of $10,000 a month to get people's attention.
They find it easier to believe they could make
$500 a month. If they do better, they're very
happy.
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We became distributors for this group of three
doctors and sold their aloe vera juice,jelly,
and lotion starting in 1978. We started growing
so fast, I bought up aloe plantations and bought
out the doctors entirely in 1981. I kept away
from heavy debt. It was different from the real
estate business, where everybody wants to leverage
as much as possible. I didn't want to endanger
the company.
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I had to learn to speak to large crowds. For
a long time, the company was a well-kept secret.
We don't sell our product in stores or advertise.
For five years, the company next door didn't know
what we did for a living.
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We have an affiliate we call Forever Resorts,
with marinas on Lake Mead and Lake Mohave in Nevada,
plus some Alaskan hotels and fishing lodges. We
also own Southfork Ranch, where they filmed Dallas.
It's a small proportion of the business — about
$25 million in sales.
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Instead of being one worldwide organization,
we set up as a local company, which I either own
or have with a local partner. That company is
the importer of the product — they buy directly
from Aloe Vera of America. If there's ever a political
problem or disaster in a country, it's much less
complicated than having down-lines crisscrossing
from one country to another. We'd never untangle
it.
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We opened Argentina and Bolivia in April, and
Israel in June. Taiwan, Greece, and Poland are
hot spots. I was just in Warsaw this past week
for our annual rally there. I had four people
come to the rally from Slovakia because they liked
our products. Because of that, in the early fall,
we'll be selling in both Slovakia and the Czech
Republic, too.
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In other businesses I've been in, people want
to kick you in the shins — "I thought I should
have gotten more from that deal!" Here, people
come up and say, "Thanks for making me a millionaire."
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