The Selling Of U.S.A.

Robert M. Adler II, founder of Dallas-based United Sciences of America Inc., wants his company to be America’s all-time start-up success story. To land that title, he’ll have to beat Compaq Computers’ first-year gross of $105 million. And he just may succeed.

USA Inc. is a multilevel network of more than 100,000 “associates” who distribute the company’s four nutritional supplements nationally. With endorsements from superstar athletes and prominent scientists, USA grossed $34 million in sales during its first seven months of operation.

Will USA become business’s newest star, or will it follow the path of Herbal Life International, which began as the supernova of multilevel marketed nutritional supplements-but fizzled after unsavory details about management and ingredients were exposed?

At first glance, USA seems nearly perfect. Its videotaped promotional pitch, narrated by Star Trek’s William Shatner, uses exciting verbs and high-tech adjectives to explain these “revolutionary” products that have been “years in the making” (three years, to be exact).

Between scenes of laboratories and environmental pollution, doctors and scientists talk tough and scary about the hazards of everyday living. “We’re discovering new diseases at a faster rate than we’re finding cures for known diseases,” notes Dr. Robert Morin, a member of USA’s Scientific Advisory Board. The script suggests that preventive medicine and the proper nutritional balance in our daily diets can literally save our lives. And how can we achieve that nutritional balance? Take a guess.

We hear about the USA Research Foundation and its $1.2 million commitment toward nutritional study programs, a number of which involve the effect of USA products on human health and fitness. Says grant recipient Dr. Alexander Leaf, another of USA’s advisers, “I’m happy that they’re supporting the work in my laboratory.” You’d better believe he is. Research takes money, and USA’s endorsement and financial support will likely attract the attention of other funding sources.

The tape’s tone becomes more seductive when the subject shifts to individual business opportunities for USA associates, talking about a “ground floor opportunity to be part of an American legend in the making.”

USA’s multilevel marketing relies on a word-of-mouth, friend to friend sales and personnel recruitment technique (a la Mary Kay Cosmetics) through which a company can avoid stocking retail outlets and incurring huge advertising bills. Instead, USA’s associates receive royalties from their retail sales and sales made by their recruits. They work from a plan formulated by Mark Albion, a marketing professor at Harvard, who guarantees on the tape that “anyone who uses this [advertising and marketing) package properly will become very successful.”

Using the package correctly couldn’t be very hard. According to Haydon Cameron, USA’s vice president of marketing and a former Cambridge Diet salesman, “What we say in our literature is that you don’t have to learn about all this nutrition, you don’t have to learn about the business plan from the Harvard Business School; just let the videotapes make the presentation for you.”

By supplying a ready-made pitch for its associates, USA now sidesteps the early problems they had when “relatively untrained, unsophisticated new recruits thought up their own ads,’1 says Bill Beckhart, vice president of trade practices for the Better Business Bureau’s Dallas office.

“They |USA] were paying commission on wholesale purchases of the inventory,” Beck-hart adds. “In Texas, you can pay commissions only on retail sales. That discourages any par-ticular distributor from carrying a garage full of inventory, or inventory loading. That’s the number one problem in multilevel marketing. After I mentioned it, they took the lead to straighten out the problems.”

So, is United Sciences of America Inc. too good to be true, or what? According to Bill Beckhart, “It’s hard to tell, because a company is not just its policies, it’s the people who are there, and the management-how forcefully they maintain their policies, how they manage their growth. There are a lot of companies that are perfectly all right on paper, but they will allow people to get away with murder in recruitment and other aspects.”

The BBB will continue to monitor USA Inc.’s sales presentations and earning claims. While it may be too early to judge the company’s marketing plan, the nutritional contents of the products are already raising doubts.

Dr. Fredrick Stare, emeritus professor with Harvard Medical School’s nutrition department, has been quoted as saying “USA is peddling unnecessary nutritional supplements and calling it a breakthrough.” Apparently, Stare doesn’t agree with USA’s advisory board, which holds that every day, every adult needs a month’s supply of vitamin C and thiamine, plus ninety-four other ingredients, to supplement his regular diet.