"Why
Network Marketing is Poised to Drive the Next Major Economic
Powerhouse!"
Every generation, among the thousands of brilliant and merely-bright
social commentators, the human race produces one or two visionaries
whose stunning insights burst the bounds of their own specialist's
expertise and cut across all disciplines. We have our Benjamin
Franklins, our Buckminster Fullers - and Paul Zane Pilzer, the man who
sizes up seismic shifts in our economy.
Pilzer is quick to assert that he has no crystal ball: it's all in
the data. But the three-times New York Times best-selling author and
economic advisor to two presidential administrations has an uncanny
knack for assembling masses of facts and figures and seeing the forests
those reams of trees represent. His penetrating insights have attracted
the attention of network marketers for over a decade.
Now he's back, with a new
message: We are witnessing the explosive birth of a new trillion-dollar
industry, and network marketers everywhere are poised to be the vanguard
of that explosion.
After two centuries of economic opportunity for the pioneers of
manufacturing, we have entered the age of distribution. Today, the
greatest opportunity for wealth awaits those who can deliver what Pilzer
calls "intellectual distribution."
He is describing network marketing. He is, as the saying goes,
singing our song.
Q: Paul, you were the first well-known economist to have anything
kind to say about network marketing. What got your attention about the
business in the first place?
I think it would be more accurate to say that the business found me.
It started with my 1990 book, Unlimited Wealth, which analyzed different
sectors of our economy and projected some interesting changes by the
year 2000.
In the 70's and 80's, we were told, "What's wrong with America is
that we don't make things." So, the bright young people of that era
started to make things - and they did it so much better, converting all
the expensive raw materials and labor into plastics and flexible
automated manufacturing processes, that they completely restructured the
economics of retail.
Take a typical $300 item; it could be anything-say, a television,
camera, or dress. In the 1960s, the manufacturing costs of this item
would be $150. About 50% of the item's cost was in manufacturing with
the other 50 percent in distribution.
By the 90's, the same item still sold for $300, but it was a far
superior product with a great many more features -yet its manufacturing
cost had fallen from $150 to $15 or $20! Now 8o to 85 percent of the
product's costs was in distribution; only 15 to 20 percent was in
manufacturing.
By 1990, I explained in Unlimited Wealth, the greatest
opportunities for wealth were no longer in manufacturing but in
distribution. The book projected that this would continue for the next
decade at least. That's why the richest people in the world in 1990 were
people who found better ways of distributing things, versus better ways
of making things.
Q: Can you give us some examples of those "richest people" who
made their fortunes in distribution?
Back in 1961, Sam Walton started a company that was committed to
never make its own brand, that would sell only other name brand goods.
By 1990, not only was Walmart the largest retailer in the world, Sam
Walton was also the richest person in the world - a man who made his
living distributing things that other people made. (Sam Walton, by the
way, thought very highly of Unlimited Wealth and emphatically
endorsed the book.)
In 1990, Fred Smith was the most successful airline entrepreneur of
the day. Back in 1976 he had started an airline with its own fleet of
planes and pilots - yet it didn't fly people! The only purpose of
Federal Express was to move packages: distribution - an unheard-of
thought in 1976.
Ross Perot was one of the wealthiest people in the world in 1990.
Perot built a $3.5 billion computer company that made neither software
nor hardware. What did EDS do? It distributed other people's hardware
and software.
Q: How did your observations about wealth and distribution get
network marketers' attention?
I did three shows on "Larry King Live" that year. I was explaining
the book on one of those shows; a man named Donald Held happened to be
watching. Don, a Senior Executive Diamond with Amway, brought the show
to Dexter Yager's attention. Dexter and a number of his people read the
book and said: "Hey, here's an economic analysis of why our business
works. This guy has no idea what network marketing is - but he knows why
it works!"
I had no idea what Amway was. I didn't even know what network
marketing was. I wasn't trying to promote anything: perhaps that's one
reason my research rang true. I was just using impirical data, analysing
distribution in America and the world.
Dexter's people decided to book me as a speaker and have me explain
to their people what I said on "Larry King Live". That's how it all
started.
Q: That was over a decade ago, and you've since become a household
word to thinking network marketers everywhere. Obviously, your thinking
hasn't stood still; what has happened in the ten years since?
I've changed my focus a good deal. Back in 1990, the opportunities
still lay in physically distributing products; since 1990 we've seen a
dramatic shift. In my new book, The Next Trillion, I break distribution
into two functions: physical and intellectual.
Physical distribution means getting the product to the
consumer-products that the consumer already knows he wants. That's
Walmart: You know exactly what you want when you walk into Walmart; you
go in, pick it up, and get out of the store. You don't leam about
anything new there.
Intellectual distribution is where you learn about a new product or
service that you didn't know existed before.
Up through 1990, the great opportunities to eam fortunes in
distribution, the opportunities for the Fred Smiths, Ross Perots, and
Sam Waltons were in physical distribution. Today, the great
opportunities are in intellectual distribution.
Q: For example...?
In 1999, a business person made Time magazine's man of the year -
especially meaningful because it's quite rare for a business person to
earn that distinction. Who was it? Jeff Bezos, who revolutionized the
distribution of books with amazon.com.
Now, look closer: Jeff Bezos is really in the intellectual
distribution business. You don't sign on to amazon.com just to
physically get the book; you sign on to learn about the book. You read
the various reviews, look at other books in the category, you may even
log on to find out if there even is a book on the particular topic you
want.
The truth is, the great part of the physical distribution boom that I
described in Unlimited Wealth has already come and gone; the
fortunes to be made there are largely already made. The fortunes that
will be made in the new millennium - at least in the first decade of the
new millennium-will be more in intellectual distribution: educating
consumers about products and services that will improve their lives,
products, and services that they didn't already know existed.
Q: Why is that where the real opportunities are today?
Because that is precisely where the biggest bottleneck is today.
There was a time when the two aspects of distribution - physical and
intellectual - were commonly combined under the same roof. No
longer.
If you are as old as I am, you might remember the first few times you
went into a store and said to yourself, "Hey, I know more about this
product than the clerk selling it!" Twenty-five years ago that was a
shock: who would think of opening a store where the clerk didn't know
anything about the product?
Today it's universally accepted. Today, you the consumer are
expected to know about the product. There are a few specialty
retailers left, such as Nordstrom's. But, in general, the retailers have
completely abandoned the traditional function of teaching people about
products. In stead they have focussed on the function of efficiently and
inexpensively delivering the product.
Go into a showroom and talk to a car salesman: does that salesperson
actually own the car you're talking about? Not likely. Go into an
electronics outlet: how often will you meet a salesperson who actually
owns the particular product you are considering - or who can even afford
to? Seldom. These people are in the business of showing you where to
find it on the shelf; They're not there to teach you what it
is.
Q: So where do we learn today?
That's the problem. The pace of technological change is rapidly
accelerating today, no matter what the industry. By the time you learn
about a product and are ready to buy it - guess what? There's a better
one!
As I carefully studied current
conditions, I found that the greatest need in America today is
wellness. This is such a new need that the word itself, in the
context we're using it, is an entirely a new term.
Where do you learn about that one? Nowhere - that's what's missing,
that's the bottleneck in our economy. Talk to any manufacturer and he'll
tell you, "We're selling models A, B, C, and D; the new model F, is
seven times better, it's even better priced - but nobody's buying it
yet!" Why aren't they? Because they haven't learned about it yet. They
call this "backlog."
I saw this with some educational software we developed in the early
90s: here was a product that could totally change a child's life - but
telling people about it was far more expensive than producing it. Until
we found the Amway Corporation in the mid 90s, we were pretty much dead
in the water: we had great new products, but no way of telling the
consumer they existed.
Q: How does network marketing's way of doing that contrast with
more conventional ways of marketing - through advertising and other mass
channels?
Network marketing today is almost wholly intellectual distribution.
When you as a network marketer discuss a product with a consumer, you
don't actually hand over the product. You rely on UPS or some other
delivery service to have the product shipped to your consumer.
Even more fascinating is that network marketing today is typically
done person-to-person by someone who is also the user of the product.
Unlike the car salesman, electronics salesperson, or clothing
salesperson, the network marketer is an educated, enthusiastic,
experienced user of the product you're asking about.
Those companies that prosper in network marketing will focus almost
entirely on intellectual distribution, teaching people about new
products and services that will improve their lives. Those that really
flourish will have some sort of unique or proprietory technology. And
not just unique, but efficacious - better than anything else out
there.
Q: So you've seen the weight of opportunity shift from
manufacturing, to physical distribution, and now to intellectual
distribution. How else has your own thinking changed? What is the focus
of The Next Trillion?
I started to focus on the great needs of America - which led me in
some surprising directions. People think of their needs in a very
mundane way - "I need a new dress that doesn't make me look
overweight.", or "I need a car that gets better milage." I looked at it
on a more macro level: we have more fundamental needs such as eating,
sleeping, being healthy, being educated. As I carefully studied current
conditions, I found that the greatest need in America today is
wellness.
Q: Can you define "wellness" for us?
This is such a new need that the word itself, in the context we're
using it, is an entirely new term. I had to come up with entirely new
definitions. First I had to realize that what we call the "healthcare"
business is really the sickness business. Our medical industry
today has very little, if anything, to do with health. The $1.4 trillion
we spend on medical care, which is one seventh of the U.S. economy, is
concerned with being sick and treating symptoms of sickness. It has very
little to do with preventing illness, with being stronger or healthier.
When you go to people in the medical industry today and say, "I have
arthritis, I don't see as well, I don't hear as well." They say, "It's
because of age - age, age, age, age." But these are really just syptoms
of poor nutrition.
What we call the "health care" business
is really the sickness business. The $1.4 trillion we spend on
medical care is concerned with treating the symptoms of sickness.
It has very little to do with preventing illness, with being
stronger or healthier.
I define "wellness" as money spent to make you feel healthier,
even when you're not "sick" by any standard medical terms. To make
you stronger, to make you see better, to make you hear better, to fight
what we might call the symptoms of aging.
Walk into any average home in any average neighbourhood, talk to
them, see what they need. If we were doing this 20 years ago, we'd find
that most of them were worried about making a living, about their new
job, about what professions their children should go into. The primary
need for Americans in our first 200 years was economic. That's no longer
true.
Today we are in the eleventh or twelfth year of an unbelievable
economic expansion. Here is what you find today as you walk into each
home: They have enough to eat, they overwhelmingly know where their
economic opportunities are, they know what they could be doing to make
more money, and if they're not, it's often by positive choice - for
example, because they want to spend more time with their families. the
overall primary need today is not their wealth - it's their
health.
In the past we've associated poverty and econmic depression with ill
health. When I was young, we often equated " poor" with thin, starving.
"Thin rich man" was an oxymoron. Today, "poor" and "fat" have become
synonymous. The tables have turned: "rich fat man" has become an
oxymoron!
In the past, we've associated poverty and economic
depression with ill health. When I was young, we often equated
"poor" with thin, starving. "Thin rich man" was an oxymoron.
Today, "poor" and "fat"have become synonymous. The tables have
turned: "rich fat man" has become an
oxymoron!
Today, the lower the incme, the more we see obesity. Obesity is a
symptom of poor nutrition. Typically someone who is obese is also
vitamin-deficient, suffers from fatigue and arthritis or other ailments
that all stem from poor nutrition.
Since 1980, we have more than doubled the percentage of overweight
and obese people in our country. In 1980, 15 percent of the population
was obese; by the year 2000 that number had jumped to 27 percent-that's
77 million clinically obese people! Those numbers have increased ften
percent in just the past four years and are still growing at beyond
epidemic rates.
Because of people being overweight or obese, we've also tripled the
propensity to get diabeftes in this country, with similar increases in
so many other diseases. Today, at a time of unprecedented economic
prosperity, we're seeing a huge part of our population falling off the
edge. For me, here is the most amazing number: 61 percent of the
United States population is overweight. That number, too, has doubled
since 1980.
Now, how did we win the Cold War and become so prosperous - only to
end up in a world where 61 percent of the population is as oppressed as
if the Russians had won the Cold War?
Q: Is there a ray of sunshine here?
More than a ray; in fact, as grisly as this situation is, it has also
given rise to an entirely new economic sector, a very positive sector -
which is where I got the title The Next Trillion.
Q: Why do you call this the "next" trillion?
Today, the food industry represents about one trillion dollars
annually; the "sickness business" is another trillion (actually, about
$1.4 trillion). These two industries feed one another in a fairly
insidious way because such a huge part of sickness today is caused by
the poor nutrition supplied by the food industry. These two
trillion-dollar industries work together to support that horrifying 61
percent overweight number.
Looking at those numbers, you might think that one day soon,
everyone will b e overweight or obese. That's actually not the
case, though. The 39 percent of the U.S. population who are not
overweight comprise 10 to 15 million Americans who are aging; as they
age, they are getting more healthy, more fit, more strong - actually
younger, by any standard medical definition.
These people represent that new economic sector. They are primarily
wealthy people; the first thing they do as they start to have money is
to figure out how they can be healthier - and they're doing it outside
the medical establishment. They are going to fitness clubs, watching
their food, taking the proper amounts of vitamins and minerals, and
investigating supplements and other products that support their
wellness.
When I began to see this trend clearly, I started wondering , is
there is a business here? The answer stunned me.
In the year 2000, wellness in America was already a $200 billion
industry; about half of that is composed of the $24 billion spent on
fitness clubs plus the $70 billion spent on vitamins and minerals. This
$200 billion was hardly a blip ten years ago.
Q: Who is spending this Mony?
Mostly Baby Boomers: prosperous people from the ages of 35 to 55. The
Baby Boomers are a powerful economic force; all marketers know that.
Baby Boomers represent only 28 percent of our population - yet the group
represents 50 percent of our economy.
Baby Boomers are the first generation we know of in recorded history
who refuse to accept the aging process. This is fascinating, from a
marketing standpoint. Look at the cars they buy: they're retro, designed
to make them look like they're in high school. Look at the clothers they
buy; they're retro, too - they look like the clothes they wanted
but couldn't afford to but in high school.
Up until now, the Baby Boomer marketing mind has been all about how
to make them feel younger, how to help them remember what it was like to
be young. Now it's gone a step further. Today, Boomers are starting to
buy things that actually make them younger!
This has only just begun. Most people don't even know there are such
products. As the rest of this 50 percent buying power group learn about
wellness, this sector will explode. It has already gone from virtually
zero in 1990 to $200 billion today. It's easy to see that this $200
billion will become one trillion - or more - by the year 2010.
Q: Do you get reactions, people saying, "What-a trillion
dollars?!"
Oh, all the time. But put it in perspective. The first IBM PC came
out in 1981 - and by 1990, PC sales exceeded automobile sales. Nobody
knew what the Internet was in 1990; consumers were allowed to get on the
Internet with their own accounts and private email addresses only in
1995. By 2000, the overwhelming amount of new wealth and new
millionaires in this country were being created by the Internet. Given
how fast these new industries grow, one trillion in wellness by the year
2010 starts to look like a conservative projection.
As much as we focus on the financial and lifestyle
benefits of the business, the real benefit is what you can do to
change a life - and the lives of all the people who are touched by
that
life.
Q: Does that same challenge of the bottleneck, the need for
intellectual distribution, apply to the wellness industry, too?
Absolutely. By definition, all of wellness is new technology.
There is virtually no place to go learn about it. If you go to
conventional weight loss clinic, they are focused on marketing their
processed food products to you - they don't give you lessons in
wellness. The information just isn't out there; all the research in the
medical business is on sickness. Where does the consumer turn?
The only way to learn about wellness is through someone close to you
who has had a wellness experience. You see your college roommate and go,
"My God, John, you look great! You look so healthy - what did you do?"
You bump into a wellness experience and start to find out that there is
a whole wellness industry out there, with all sorts of new products and
services.
I went every year to an orthopedic surgeon about my knee. Each year
he'd tell me, "Its worse than last year, you've gotta have an operation,
Paul." At some point, I started taking glucosamine. Within two months,
kthe pain was gone. I went back to check up with my orthopedist; he
couldn't believe it. When he found out that all I'd done was take
glucosamine, he said-jokingly, but also truthfully - "Don't spread this
around, Paul...I'll be out of business."
Now, how could it be that a product like glucosamine, a natural
substance which has been around for 50 years (primarily as a veterinary
product for horses), a product that rebuilds my cartilage and makes me
feel so good...how could it be that nobody knows about it? That's the
classic introduction to wellness: typically, you have one experience
like that, then you say, what else might there be that my doctor never
told me about?
This experience set me on the path of learning about supplements,
vitamins, and minerals. In my research for writing this book, I was
amazed at how much basic biology and nutrition had excaped my education.
Here I am, a college professor for 20 years, three times New York
Times best-selling author - and I had been frankly oblivious about
food, nutritikon, vitamins, minerals, and natural supplements. That set
me on this path of inquiry.
You couldn't really have gone into wellness 10 or 15 years ago
because there was no wellness industry. Most of these products and
services are just now coming out of the laboratory. And when you look
into those laboratories and see what's coming, you see that this
business is really going to take off.Of anything I've ever been involved
with, the wellness industry looks the most exciting right now.
Q: What connection do you see between network marketing and this
wellness revolution?
It's all about the difference fbetween what I call "active learning"
versus "passive learning." Conventional advertising media are not
effective at delivering what they call "intellectually challenging"
information-which is euphemism for "new ideas."
Think for a minute about how you watch TV. You're sitting back,
you're relaxed, on your couch; the last thing you want is to be
challenged with new information. In fact, when you do see something that
challanges you, something that disagrees with what you already know or
think is true, what do you do?
Q: You change the channel.
Right! Television is a very passive medium for learning, so we can't
really use it to teach new ideas. It's the same with news papers. I used
to write op-eds regularly for various newspapers such as The New York
Times. I'd be at a cocktail party, excited about a piece I'd
written, and ask a friend, "So, what'd you think about my piece on such
and such?" He'd say, "Paul, I don't read your stuff. I'm a Democrat!" We
don't read the op-ed pieces that challenge us. We read the ones that
reinforce what we already think.
Most of our information sources today have become passive media. You
don't spend time with them to be challenged; when you do encounter
something that challenges you, you change the station or read the other
column.
The only time you learn actively, meaning that you actually start
taking in and considering new information, is when you start talking
with someone in a real-life dialogue. First, the person says something
you don't agree with. You think, "oh, that couldn't be true." Perhaps
you don't say anything, because you're being polite-but your face gives
away the fact that you don't agree. This starts a dialogue: they come
back with a little more, you start to respond...gradually, bit by bit,
kthe dialogue changes your mind.
Correct information about diet, nutrition, vitamins, minerals, and
supplements is almost all contrary to what we've heard from our medical
community; for many, it runs counter to how we were brought up. There's
so much inaccurate information, naturally they're going to be skeptical.
The only way they will actually change their paradigm or start to learn
new information is person to person - because they're actively engaged
in a conversation.
This doesn't happen overnight. It may take three, four, five, or six
conversations with different people before your actually change your
mind. That's why wellness, which is so clearly paradigm - changing
information for so many people, really works best in a one-to-one
interactive environment - like network marketing.
Q: What do you see for the decade ahead, Paul?
I see a one trillion dollar wellness industry by the year 2010. I see
great opportunities for network marketing and network marketers. I see
certain network marketing companies, because they're the fastest way to
get the new information out there, leading that industry. I see great
opportunities coming for the network marketing industry because network
marketing is clearly the best vehicle we have today, in the United
States and around the world, to educate people about new products and
services. There's a great window of opportunity for network marketing
companies to educate consumers about wellness products and services. I
also see great challenges ahead for successful network marketing
companies, particularly those involved in wellness, as the technology
continues to evolve. Network marketing companies need to remain flexible
so they can stay ahead of new technolgy. the best wellness products and
services of yesterday may not be the best products and services
tomorrow.
The personal computer industry is an apt analogy; entire companies
have come and gone because they made, say, the best fax software-until
someone came up with a better fax software, or because they made the
best high-end monitor card - until every computer started coming with a
high-end monitor card already built in.
Many of today's network marketing products will go to retail fairly
quickly. You're already seeing that with glucosamine and a number of
other supplements: they're starting to get into the conventional retail
channels. To stay competitive, network marketers are going to have to
stay ahead of the new technology.
I see consolidation in the industry. Many of the smaller network
marketing companies will not have enough money for the R&D they need
to compete with the new technologies. I see merging of companies, as
well as companies enlarging their product offerings. Companies who can
serve more of their customers' needs will be the most successful.
I see real clinical trials. The products of the wellness business are
moving toward an era of greater quality control. Today, a third to a
half of the bottles in retail stores do not have in them what is on the
labels because it's not a regulated business. The company whose sole
business is wellness has a lot more to lose if they make a mistake: they
often have better quality control. Ultimately, none of the successful
wellness companies can afford to have a bad quality product out
there.
Make no mistake: there is a crisis, a trend of epidemic
proportions going in the other direction in the rest of America.
Right now, network marketing is the only force I see on the
horizon that has the potential to make this kind of huge
change.
Q: As a part-time rabbi and someone who has been vegetarian (as
you say in your book, for spiritual reasons), you've become pretty
passionate about wellness, haven't you?
It has become something of a mission for me, and I think it is for
network marketers as well. As much as we focus on the financial and
lifestyle benefits of the business, the real benefit is what you can do
to change a life-and the lives of all the people who are touched by that
life. If you can add five, ten, fifteen years to someone's life, think
of his children, think of his spouse. We're wonderfully interrelated in
the world today, and when you can give someone the gift of wellness,
improving the quality of that life every day and increasing the length
of that life, it's a truly wonderful thing.
Make no mistake: there is a crisis, a trend of epidemic proportions
going in the other direction in the rest of America. Right now, network
marketing is the only force I see on the horizon that has the potential
to make this kind of huge change.
This article originally appeared in the September 2001 edition
of Network Marketing Lifestyles Magazine. For more information on the Immunocal® Biotechnology Network Marketing opportunity, call 800-378-1578
Now he's back, with a new
message: We are witnessing the explosive birth of a new trillion-dollar
industry, and network marketers everywhere are poised to be the vanguard
of that explosion.
