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ViSalus
View on WikipediaVi (formerly ViSalus Sciences)[2] is an American multilevel marketing (MLM) company based in Los Angeles, California, with offices in downtown Detroit, Michigan.[3] The company is mostly known for the Body by Vi 90-Day Challenge platform. The company markets weight management nutritional products, dietary supplements and energy drinks in the United States, Canada, Italy and United Kingdom.[4][5] Weight management products, including Vi-Shape meal replacement shake and Vi-Trim Clear Control Drink Mix, form the bulk of the company's sales.[6]
Key Information
History
[edit]Vi was originally started in 1997 by Nick Sarnicola and Blake Mallen, two distributors with The Free Network, LLC, a telecommunications MLM company based in Troy, Michigan.[3] After The Free Network folded in March 2005, Vi was purchased by wireless Internet developer Ryan Blair with investment from Ropart Asset Management, a private equity firm owned by Robert B. Goergen. Sarnicola and Mallen were retained as sales chief and CMO, respectively. The company was moved to the San Francisco Bay Area.[7]
The 2008 recession put Vi near bankruptcy, with the business $6 million in debt.[8] In 2008, Vi was acquired by Blyth, Inc., a multi-level marketing company that sells home decor which had been founded by Georgen.[7] In the first stage of the takeover – completed in 2008 – Blyth purchased a 43.6% equity interest for $14.0 million.[6][9] By 2010 the company had returned to profitability, and Vi was making over $15 million a month.[citation needed] Blyth completed the second phase of the takeover in 2011, investing an additional $2.5 million and increasing their ownership share to 57.5%.[10]
In August 2012, Blyth – which then owned a 73% share of Vi – planned to spin off the company in an initial public offering of shares worth up to $175 million. In September 2012, Moody's Investors Service downgraded Blyth's credit from "stable" to "negative,"[11] Vi reported extremely high growth rates in 2012, being audited at 450%, which made it one of the fastest-growing companies of its size. Blyth stated that the company's growth was not properly valued.[7] Blyth withdrew the Vi IPO citing uncertain market conditions.[12] According to the Detroit Free Press, one reason why the Vi IPO was cancelled was because the co-founders were artificially inflating sales numbers: "Vi has been criticized for allegedly puffing up its record sales in 2012 by recruiting top product distributors in the industry. Like mercenaries, these distributors were purportedly willing to switch company affiliation for a price, and after Vi peaked, they jumped to another direct sales company. Such a practice would be legal."[13]
In September 2014, Vi announced that it had become a private, independent company. Vi arranged a transaction with Blyth to convert the company's stock to common stock, although Blyth remains an equity holder with 10% of Vi's stock.[14][5][15] The transaction eliminated Blyth's obligation to pay the co-founders $143.2 million as part of the 2008 acquisition. At the time of the transaction, Vi' earnings and revenue had declined from a high-point in 2012, and the company had been operating at a loss for 2013 and the first two quarters of 2014.[5] After becoming private, Vi stopped reporting sales figures.[16]
According to the Detroit Free Press, Vi was at a high of 114,000 distributors in the summer of 2012.[13] According to a report in Crain's Detroit Business, Vi had 76,000 distributors in June 2013, which declined to 31,800 distributors in September 2014. The article also reported that Sarnicola is the largest distributor in Vi, with his distributor team accounting for 74% of company revenue.[5] In 2016 the company laid-off 87 workers at its Troy facility, following years of declining sales and legal problems.[16]
Controversies
[edit]Racketeering
[edit]In October 2013, charges were filed in US Federal Court that Nick Sarnicola and Blake Mallen on behalf of Vi committed Racketeer Influenced and Corrupt Organizations Act (RICO) violations, engaged 3rd party individuals to commit criminal acts, extortion and other violations against Fred Ninow & Ken Dunn of Ocean Avenue.[17]
In the lawsuit, Ocean Avenue, a competing direct selling nutrition company, accused Vi officials of hiring two private investigators in California, Nathan Moser and Peter Siragusa, who in turn contracted with computer experts to illegally hack into the files of Ocean Avenue, and former Vi distributors who switched to Ocean Avenue in late 2012.[13][18][19] Vi denied the allegations.[20][13] In July 2015 the two private investigators pleaded guilty to the charges, which are Federal offenses with sentences of one to three years. Vi' security director Carlo Pacileo was convicted and sentenced to three years' probation.[20]
Pyramid scheme
[edit]In 2012, CNBC Commentator Herb Greenberg said Vi walks "a controversial line between legal direct selling and pyramid scheme."[21]
Vi was investigated by the Southern Investigative Reporting Foundation which published a detailed report that assailed the company's business model and high probability that investors will lose their money in the scheme.[7][22]
In April 2016, a class action suit was filed against Vi, Robert Goergen Sr., Todd Goergen, Nick Sarnicola, Blake Mallen and Ryan Blair in the United States District Court for the Eastern District of Michigan alleging racketeering and fraudulent pyramid scheme selling of distribution rights.[23]
Robocalls
[edit]In April 2019, a jury awarded a plaintiff in a class-action lawsuit $925 million against ViSalus for making millions of robocalls (the money will be distributed amongst the eligible victims), which was upheld by a federal judge in 2020.[24]
Products
[edit]Weight-management products, including Vi-Shape meal replacement shake, Vi Go Instant Energy and Vi-Trim Clear Control Drink Mix, form the bulk of the company's sales.[6] Other products include Neuro, an energy drink, and Vi-Pak, an energy supplement, which were both developed by Michael Siedman, an ear, nose, and throat specialist.[3] Vi promotes its products with the Body by Vi Challenge, a program where people set weight-loss and physical fitness goals to be achieved over a 90-day period.[25][26][27]
Locations
[edit]Vi's products are now available in 16 countries including USA, UK, Italy and Canada.[28] In 2013, Vi launched in the United Kingdom.[29] On February 18, 2014, Vi announced its expansion to Germany and Austria.[30]
References
[edit]- ^ ViSalus. "ViSalus Careers. About Us". Retrieved 6 May 2012.
- ^ "Vi sets world records while launching new products and expanding global mission". Your Site NAME Goes HERE. 7 May 2019. Retrieved 2019-06-07.
- ^ a b c "Pill Power". Metroactive. Retrieved 3 May 2012.
- ^ "Blyth, Inc., Form 10-K, Annual Report, Filing Date Mar 14, 2013". secdatabase.com. Retrieved April 26, 2013.
- ^ a b c d Walsh, Dustin (14 September 2014). "ViSalus co-founders buy back stake, launch new product line". Crain's Detroit Business. Retrieved 23 September 2014.
- ^ a b c Edgar Online via Yahoo Finance. "Blyth Inc. 10K - 4/18/2011". Archived from the original on 10 March 2014. Retrieved 15 May 2012.
- ^ a b c d Boyd, Roddy (26 November 2012). "The Infernal Machine: From Powder to Dust". Southern Investigative Reporting Foundation. Retrieved 31 May 2014.
- ^ Giang, Vivian (14 August 2012), How This Guy Went From Gang Member To Multimillionaire Entrepreneur, Business Insider, retrieved 10 February 2013
- ^ DM News. "Blyth Makes Two Acquisitions". Archived from the original on 9 September 2012. Retrieved 3 May 2012.
- ^ "Blyth, Inc. Completes Third Closing of ViSalus Acquisition". Reuters. Archived from the original on January 19, 2012. Retrieved 6 May 2012.
- ^ "Moody's lowers outlook on Blyth". Bloomberg Businessweek. September 20, 2012. Archived from the original on September 23, 2012. Retrieved 2012-09-22.
- ^ Blyth's ViSalus unit pulls plans for IPO, Marketwatch, 26 September 2012, retrieved 10 February 2013
- ^ a b c d Reindl, JC (1 August 2014). "Troy-based direct seller ViSalus in sales spiral". Detroit Free Press. Retrieved 11 January 2015.
- ^ "ViSalus Completes Founder-Led Management Buyout (Press Release)". MarketWatch. PR Newswire. 5 September 2014. Retrieved 23 September 2014.
- ^ "Blyth Inc. (BTH) Is Up Sharply After Majority Sale Of ViSalus". RTT News. 3 September 2014. Retrieved 23 September 2014.
- ^ a b Reindl, JC (15 January 2016). "Layoffs, lawsuits at once-hot direct-sales firm ViSalus". Detroit Free Press. USA Today. Retrieved 12 March 2018.
- ^ Tina Williams (October 30, 2013). "Ocean Avenue Hits ViSalus With Espionage Lawsuit". businessforhome.org. Archived from the original on January 22, 2014. Retrieved May 28, 2014.
- ^ Melendez, Steven (29 May 2015). "Hackers on Demand". Fast Company.
- ^ Lee, Henry K. (11 February 2015). "Private eyes allegedly hired hackers to gain edge in civil suits". San Francisco Gate. Retrieved 18 August 2015.
- ^ a b Reindl, JC (January 15, 2016). "Layoffs, lawsuits at once-hot direct-sales firm ViSalus". Detroit Free Press. Retrieved December 12, 2016.
- ^ Greenberg, Herb (24 August 2012), Beware of Get-Rich-Quick IPO, CNBC, retrieved 1 March 2013
- ^ National Council Against Health Fraud, Consumer Health Digest #13-10, March 7, 2013
- ^ "Sommers Schwartz, P.C. Seeks Class Action Status on Behalf of Plaintiffs Suing ViSalus, Inc. for Alleged RICO Violations". Business Wire, Inc. 12 April 2016. Retrieved 14 December 2016.
- ^ Bernstein, Maxine (18 August 2020). "Record $925 Million Verdict Upheld in ViSalus Unlawful Recorded Robocall Case". The Oregonian. Retrieved 20 August 2020.
- ^ Kitt Walsh. "Be a kick butt entrepreneur". CNN Money. Retrieved September 25, 2012.
- ^ "Supplement Maker's Sales Appear Up to 'Challenges'". Los Angeles Business Journal: 10–12. 30 April 2012.
- ^ "The Changing Face of Commerce". Nutrition Business Journal. XVII (4). Direct Sales Channels: Internet, MLM, Media: 3–4. 1 April 2012. Archived from the original on 28 May 2012. Retrieved 8 May 2012.
- ^ Naperville, Community Contributor. "Disrupting the Weight Loss Industry to Raise a Healthier Generation – The Story of Vi". Naperville Sun. Retrieved 2019-06-07.
{{cite web}}:|first=has generic name (help) - ^ "Visalus Launches in the United Kingdom (press release)". 24 April 2013. Retrieved 30 May 2014.
- ^ "ViSalus, Inc. Expands to Germany and Austria". prnewswire.com. February 18, 2014.
ViSalus
View on GrokipediaFounding and Early Development
Origins and Founders
ViSalus Sciences was founded in March 2005 by Ryan Blair, Nick Sarnicola, and Blake Mallen, with initial operations based in Troy, Michigan.[8] The company's vision centered on promoting health and wellness through direct sales of nutritional supplements, weight-management products, and related items, leveraging a network of independent promoters.[8] Blair, an entrepreneur with prior business experience, served as the initial CEO, while Sarnicola and Mallen brought backgrounds in multi-level marketing distribution.[5][2] Prior to ViSalus, Sarnicola and Mallen had collaborated as distributors for other direct sales entities, including an early venture in 1997 under The Free Network, where they focused on health products.[9] This experience informed the multi-level marketing structure adopted by ViSalus from inception, emphasizing promoter recruitment and product challenges like the later Body by Vi program.[5] The founders aimed to differentiate through innovative marketing and community-building, though the model drew from established direct sales practices rather than novel inventions.[2]Initial Product Launch and Challenges
ViSalus Sciences emerged in 2005 when entrepreneur Ryan Blair acquired the company, which originated from nutritional supplement efforts by Blake Mallen and Nick Sarnicola dating back to their work with the predecessor Free Network. The initial product lineup centered on weight-management solutions, including nutritional shakes and supplements aimed at promoting health and fitness. A cornerstone offering was the Vi-Shape Nutritional Shake, a low-calorie meal replacement formulated with protein, fiber, and vitamins to support weight loss and meal substitution.[10][11] The company's early operations emphasized direct-to-consumer sales through a multi-level marketing model, but product adoption remained limited as ViSalus refined its formulations and distribution. By focusing on functional beverages and shakes, the firm positioned itself in the competitive wellness sector, yet revenue growth was sluggish amid broader market saturation in nutritional products.[2] ViSalus faced acute financial and strategic hurdles in its nascent phase, starting with Blair's $75,000 acquisition amid $6 million in accumulated debt. The first five years involved trial-and-error, with founders later describing this period as dedicated to identifying and discarding unsuccessful approaches in product development, marketing, and recruitment. Regulatory scrutiny typical of the supplement industry added compliance burdens, while internal pivots were needed to stabilize operations before scaling.[12][2] A pivotal but initially underwhelming initiative was the July 2009 rollout of the Body by Vi 90-Day Challenge, a structured program tying product use to weight-loss goals and incentives, which garnered scant immediate participation and underscored early deficiencies in consumer engagement and promoter network buildup. These setbacks delayed momentum until subsequent marketing adjustments, reflecting the high failure rate common in startup MLMs where over 90% of ventures falter due to unsustainable recruitment dynamics and product differentiation challenges.[13]Growth and Peak Expansion
Rapid Scaling and Marketing Innovations
ViSalus achieved rapid scaling primarily through the introduction of the Body by Vi 90-Day Challenge in 2010, a structured program encouraging participants to replace two daily meals with Vi-Shape nutritional shakes, incorporate exercise, and track progress toward personalized health and fitness goals over 90 days.[2] This initiative transformed the company's marketing by emphasizing measurable results, participant testimonials, and community accountability, which promoters used to drive enrollment via social media and personal networks.[2] The program's simplicity—requiring minimal upfront commitment and offering tools like progress trackers—facilitated viral word-of-mouth promotion, positioning it as the company's foundational sales driver.[2] The Challenge's marketing innovations included incentives for promoters, such as commissions from direct sales and recruitment, with an entry model simplified to acquiring just three customers to qualify for bonuses, lowering barriers to participation and accelerating network expansion.[14] By 2011, this approach had propelled ViSalus to become one of the fastest-growing entities in the direct selling industry, leveraging early social media platforms like Facebook and MySpace for recruitment and sharing before-and-after success stories.[15] Home parties and peer-to-peer endorsements further amplified reach, as promoters hosted events to demonstrate product efficacy and enroll challengers collectively.[10] Revenue growth reflected this scaling: first-quarter 2012 sales reached $136.7 million, a 585% increase from $20 million in the prior year's corresponding period, driven by surging promoter numbers and Challenge kit sales.[16] Enhancements in 2013, such as a 90-day money-back guarantee, weekly winner recognitions, and expanded support resources, sustained momentum by addressing participant retention and boosting promoter confidence in outcomes.[17] These strategies collectively grew ViSalus's independent promoter base into a large direct sales force, enabling nationwide penetration without traditional advertising reliance.[18]Acquisition by Blyth and IPO Attempts
In 2008, Blyth, Inc., a consumer products company primarily known for candles and home fragrances, initiated the acquisition of ViSalus Sciences through a multi-stage transaction involving its founders, Ryan Blair, Blake Mallen, and Nick Sarnicola.[19] The deal provided ViSalus with capital and operational support while allowing Blyth to enter the health and wellness direct-selling sector.[20] By January 16, 2012, Blyth completed the third closing, increasing its ownership to 71.7% after issuing approximately 340,000 restricted shares of its common stock to the founders.[21][22] The acquisition's final phase, which would have given Blyth full control, faced delays amid ViSalus's rapid growth and shifting market dynamics. On October 1, 2012, Blyth announced a deferral of the fourth closing, extending it to April 2014 and negotiating new employment agreements with the founders to maintain leadership continuity.[23][24] This nonbinding agreement reflected ongoing tensions between retaining founder-driven momentum and Blyth's strategic goals.[25] Parallel to these developments, ViSalus pursued an initial public offering (IPO) to capitalize on its expansion, filing with U.S. regulators on August 16, 2012, to raise up to $175 million.[26] The filing highlighted $498 million in revenue for the 12 months ended June 30, 2012, positioning the IPO as a potential vehicle for Blyth to monetize its stake while retaining influence.[27] However, on September 26, 2012, ViSalus withdrew the IPO, citing unfavorable market conditions, which triggered a sharp decline in Blyth's shares.[28][29] The cancellation underscored challenges in timing public listings amid volatility, effectively shelving plans for a spin-off that could have separated ViSalus from Blyth's core operations.[30]Corporate Restructuring
Founders' Buyback and Leadership Changes
In September 2014, ViSalus co-founders Ryan Blair, Nick Sarnicola, and Blake Mallen, along with certain shareholders, executed a management-led buyout, acquiring approximately 70.9% of the company's common stock from Blyth, Inc., which had previously held a majority stake following its phased acquisition of ViSalus completed in 2012.[31][5] The transaction, valued at $143 million and finalized on September 5, 2014, reverted ViSalus to private ownership, with the founders and aligned shareholders increasing their collective ownership to about 90%, while Blyth retained a 10% equity interest.[32][33] This buyout eliminated ViSalus's obligation to redeem roughly $143 million in preferred stock primarily owed to Blyth, addressing financial pressures from earlier acquisition terms and a stalled initial public offering attempt.[5][31] The buyback was motivated by the founders' belief in ViSalus's core mission and potential for independent operation outside Blyth's public company constraints, as articulated by Blake Mallen in a public statement emphasizing renewed commitment to the company's vision.[34] Post-buyout, ViSalus shifted focus toward operational autonomy, including product line expansions, though it faced ongoing challenges in distributor retention and revenue stabilization amid broader direct-selling industry headwinds.[31] Leadership transitioned significantly in late 2016, with CEO Ryan Blair stepping down effective January 1, 2017, after overseeing the post-buyout turnaround, including a $55 million transaction that further aligned executive incentives with company performance.[35][36] Co-founder Nick Sarnicola succeeded Blair as CEO, assuming responsibility for long-term strategy, international expansion, and internal reforms outlined in his "Project Catalyst" initiative launched in 2017, which aimed to streamline operations and reinvigorate distributor engagement through targeted incentives and cultural shifts.[37][1] These changes reflected efforts to adapt to declining sales post-2012 peak, with Sarnicola's tenure emphasizing data-driven promoter retention over prior growth-at-all-costs models.[36]Product Line Evolution
ViSalus, founded in March 2005, initially concentrated on developing weight-management products and nutritional supplements targeted at direct-to-consumer sales through its multi-level marketing model.[8] The company's early product lineup centered on the Vi-Shape Nutritional Shake Mix, a protein-based meal replacement designed for weight loss and fitness goals, which emerged as its flagship offering during the foundational years as the company refined its formulations.[10] Complementary items like Vi-Trim Clear Control Drink Mix supported the core shake by aiding appetite control and hydration in weight-management programs.[2] By the early 2010s, ViSalus expanded its portfolio to include energy and supplement products, such as Vi-Pak, a daily nutritional pack, and Neuro, a nootropic energy drink, both formulated with input from physician Michael Seidman to address sustained energy needs alongside weight goals.[38] This phase marked a shift toward a more comprehensive health ecosystem, with product development expenses directed toward royalties and consulting for these innovations.[38] In July 2013, the company introduced Vi Crunch Protein Super Cereal and flavor toppings, achieving over one million bowls sold in North America by October of that year, signaling entry into convenient breakfast options for its promoter base.[39][40] Post-2014 corporate restructuring, including the founders' buyback from Blyth Inc., ViSalus accelerated diversification into snacks and lifestyle products to revitalize sales, launching Vi Bites wholesome snacks in September 2014 as a portable, nutrient-dense addition to its weight-management focus.[31][41] This period emphasized blending weight-loss shakes with energy boosters and supplements to form a broader "lifestyle brand."[31] In 2016, under refreshed leadership, ViSalus unveiled further evolutions, including NEON Energy Drink, Nutra-Bars, and an upgraded Vi-Shape Superfood Shake—a vegan, kosher variant of the original shake incorporating premium ingredients like superfoods for enhanced nutrition, launched in January to capitalize on over a decade of sales data and health transformation feedback.[42][43] These additions aimed to reward direct sales by promoters while adapting to consumer demands for plant-based and allergen-free options, though the core emphasis remained on Tri-Sorb protein blends for fat-burning and energy support.[44] By this stage, the product line had matured from singular shake-focused offerings to a multifaceted array spanning shakes, bars, cereals, drinks, and snacks, with ongoing refinements driven by empirical sales milestones rather than unsubstantiated claims.[45]Business Model and Operations
Multi-Level Marketing Structure
ViSalus employs a unilevel multi-level marketing (MLM) structure, in which independent distributors, referred to as promoters, earn commissions from personal product sales and from the sales volumes generated by their recruited downlines across multiple levels.[46] Promoters enroll as Associates, typically requiring an initial enrollment fee of around $49 and a commitment to ongoing personal qualification volume (PQV) through product purchases or sales to maintain active status.[47] Active participation demands a minimum monthly PQV of $125 via autoship or equivalent retail sales, enabling eligibility for commissions and bonuses.[48] The compensation framework provides eight primary income streams, including retail profits from marking up products (often 25-50% margins on wholesale costs), customer acquisition bonuses for enrolling preferred customers, fast-start bonuses for new promoter enrollments, and team commissions paid as overrides on downline group qualification volume (GQV).[47] [49] In the unilevel model, promoters can recruit unlimited frontline distributors, with commissions distributed across potentially unlimited depth levels, facilitated by progressive placement that allows spillover and broader organizational volume to contribute to payouts.[46] Rank advancement is tiered, starting from Associate and progressing to Director, Executive, and higher levels like Ambassador, based on achieving specified PQV, GQV thresholds, and a minimum number of qualified "legs" (independent downline branches each producing at least $125 in volume). For instance, Director qualification requires three such legs and $2,000 total GQV, while Ambassador status demands three legs and $150,000 GQV.[47] [50] Higher ranks unlock enhanced bonuses, such as leadership pools and matching incentives on personally sponsored promoters' earnings.[51] This structure incentivizes recruitment and volume-building, with volume valued near dollar-for-dollar (e.g., a $125 product purchase counts as $125 QV and business volume).[51]Compensation and Promoter Incentives
ViSalus operates a unilevel compensation structure with compression, enabling promoters to earn commissions on sales volume through up to eight levels of their downline organization.[51] Promoters qualify for ranks based on personal qualification volume (PQV) and group qualification volume (GQV), with bonus volume (BV) typically equaling dollar-for-dollar product sales value.[51] Entry requires a $49 enrollment fee without mandatory product purchases, though incentives like the "three for free" program allow promoters to receive a free Challenge kit after referring three kit buyers in a month.[8] The plan provides eight avenues for income generation, emphasizing both personal sales and recruitment-driven team growth. These include:- Personal Customer Commissions: 10% to 25% on BV from personal retail sales, scaling with monthly PQV thresholds ($201–$500 for 10%; $501–$1,000 for 15%; $1,001–$2,500 for 20%; $2,501+ for 25%).[51]
- Team Commissions: 2% to 5% on downline BV through eight levels, with the highest rate (5%) for Regional Director rank and above.[51]
- First Order Bonus: Weekly payouts to the first four upline enrollers on new promoter orders (20% to the direct enroller, 10% to the second, 5% each to the third and fourth).[51]
- Fast Start Bonuses: Weekly awards of $50 to $180 based on GQV milestones and active legs ($2,000 GQV for $50; up to $150,000 GQV for $170, or $180 for Ambassador rank).[51]
- Rising Star Weekly Enroller’s Pool: Distribution of 2% of prior four weeks' BV to qualifying Directors (first 30 days) or higher ranks meeting minimums like $75 personal volume.[51]
- Ambassador Star Bonus: $1 to $2 per Vi-Net subscription from first- or second-generation downline, available at Ambassador rank.[51]
- Leadership Pool: Shares of 2% company BV allocated to pools for Presidential Directors (1%) and Ambassadors (additional 1%).[51]
- Special Promotion Bonuses: Time-limited incentives, such as up to $1 million for achieving Crown Ambassador rank by December 31, 2011, with escalating amounts ($25,000 to $1,000,000) tied to team GQV over 12–24 months.[51]
