Michael describes his early experiences in network marketing beginning in the 1980s. He joined his first company, Herbalife, after seeing an advertisement at age 19. A few years later in 1984, he got involved with Amway after listening to an audiotape. He struggled to succeed and felt the culture was not a good fit. In the late 1980s, he had some initial success with a Japanese skin care company called Noevir by building a team with his wife but continued to have challenges with duplication. He later joined TPN under strict guidelines from the editor of Upline magazine not to leverage his role there. This experience taught him to build his business solely through cold market prospecting. Michael believes the industry's biggest

1. What's your Network Marketing history, Michael?
When I was 19, I answered an ad in The Statesman paper in Salem,
OR, that said something like, quot;Work at home, earn extra money.quot; I was
about as upside down financially as anyone at 19, so I went to hear
about it at a Holiday Inn. It turned out to be an Herbalife presentation.
The most prominent realtor in the community was at the front of the
room -- I mean everyone in Salem knew this guy. It didn't matter what he said; if it was
coming from him, my attitude was, quot;Sure, I'll do it.quot;
Afterwards, this guy singled me out of the crowd and said, quot;We need to go have coffee.quot;
Sometimes when we see potential in people, the question isn't whether they have
potential, but what do we do to extract it?
I remember sitting in a Jaguar, my first time, with this guy, my hands crossed in my lap
because I didn't know what to do with them, and we're going to coffee together! I was in
some kind of hallucinogenic state. He's drawing circles and I sign up not having heard a
word he said. It was inexpensive to do so, and I remember coming home with my kit and
my product order, not knowing what the next step was. I used the products, thought they
were great; I never reordered, no one ever called me, I never heard from the realtor; I
never went to a meeting, I didn't know what to do, so nothing every happened.
The saddest truism, I believe, in our business today, is that the average person doesn't
know what to do. And when you don't know what to do, you do what you
know, which is nothing. How do you find a talented person? That's easy. How do you
teach that person that he's talented? We don't know how, so we have this
philosophy in our business that says we'll just go get another one, and if you keep putting
people into your business, eventually you'll find a superstar. You hear
phrases like, quot;If you have a good person quit, just replace him,quot; and quot;There's not a
problem in your business that a new, hot, excited distributor won't solve.quot; Well,
the carnage that we leave along the way is, in my opinion, unacceptable.
A few years later, 1984, I was in my mid-twenties working on a consulting project with
AT&T. I'd gotten into listening to tapes on sales and motivation at that
point in my career, and one day someone gave me a tape, quot;Pigs Don't Know Pigs Stink.quot; I
listen to it and I'm back in the trance. I don't hear the name Amway until
the last paragraph on the second side of the tape, and by that point I'm in. I'm still not
understanding anything, but I get in for about 30 days, in which time I
realized the culture wasn't a fit for me.
A few more years went by before I answered an ad again, still upside down financially
despite a good salary. It was a water filter company. I'm back in my trance again, and I
lasted six months before I felt I couldn't do it, I was out of integrity with myself. At that
time, people were doing anything -- as I saw it -- to extract $5,000 or more from
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2. prospects. It took me three months to come out of the trance, another month or two to
figure out what was going on, and another month to say, quot;What have I gotten myself
into?quot;
So you never had a sense of a larger industry enough to think, quot;Let me go look at what
companies are out therequot;? It was just one thing showing up, and another and another, as if
they existed in a vacuum?
Yes, that's exactly what it was like. Imagine somebody taking you to a restaurant and the
thought never crossing your mind that other countries, maybe India or China, might have
their own food. You're sitting there eating a hamburger, so to speak, and not thinking
about it. When you decided not to eat the hamburger anymore, you just went home.
Then I had one of those turning points we all have in our careers. A gentleman named
Emil Vinberg attended my presentation one night and came up to me afterward. He said
he was interested and we should get together for a cup of coffee. As it turns out, I was
reverse solicited -- a huge problem in our industry, but for me that day it turned out to be
pretty good. He introduced me to Noevir, a Japanese skin care and cosmetics company.
I'd always thought it would be great if there was a business my wife September and I
could work together, and this seemed perfect.
So you quit NSA and started Noevir as a couple?
That's right, and Emil made me a commitment: If you get involved in this business, I will
teach you. He told me to set up lunch appointments with the sharpest people I could, so I
picked the toughest person I knew -- Carl DeLuca. He was a gruff older gentleman with
AT&T, a nice guy if you were talking to him privately, but someone you didn't want to
piss off. I went over to Carl's desk the next day and said, quot;Hi, Carl, there's this guy I'd
like you to meet. We're doing this business; he's going to buy lunch; will you come?quot;
Carl, who ate all the time, agreed, so we go to lunch -- he's eating and Emil's telling him
about cosmetics. Finally, Emil asks, quot;Do you want in?quot; Carl pauses, wipes his hands and
says, quot;Yeah, I want in.quot; I'm shocked! Emil pulls out the form; Carl fills it out and buys
about 200 catalogs.
The next day, he walked around to every person's desk at AT&T, and his basic
presentation was to throw a catalog down and say, quot;This is a business I'm doing on
the side. I'm taking orders at three this afternoon. Buy something.quot; His first order was in
the hundreds and hundreds of dollars, and that's all he wanted to do. I was off and
running with him as my first distributor.
What purpose did it serve for you to have that quick success?
Well, I don't know, and I've thought about that often -- what if Carl had said no? Could I
have justified his not getting in because he was gruff and a guy? Probably. I don't know
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3. how Emil would have handled it. I do know this: I never would have approached Carl on
my own. I would have been too afraid of the repercussions of being shot down by Carl.
How long did it take before you started to do your own presentations?
Within two or three months. Remember, I was a stand-up speaker and trainer, I had the
background. Then I went through the biggest challenge salespeople face -- when I went
out on my own, I started selling people on the opportunity. Virtually everyone I touched
got in with almost no exceptions, but they never did anything. It wasn't until a decade
later that I learned from Randy Gage that this isn't a selling business, it's a business based
on duplication, and if people can't do what you just did, they won't.
Along the way, I met the co-author of Future Choice. We wrote the book; John Fogg got
a copy, read it, liked it, called me up. He said, quot;I'm looking for a replacement, is that
you?quot; We talked, I took over for John as editor in chief at Upline, and for the first time,
the blinders came off. If John had any idea of how limited in scope my knowledge was at
that time about the industry as a whole, he never would have made that call. Of course, at
Upline it's like dog years – one year is like seven. You spend a couple of years there and
it's like 14 years in the industry. You're immersed in it and pick it up very quickly.
After about a year with Upline, I got involved in TPN, and John had a real problem with
that. He was concerned that the editor in chief be focused on Upline, and
though I felt that John liked TPN and supported it, it was an integrity issue about his
magazine. We had a serious talk one night at his house on the mountain and
agreed that I could do TPN as long as I agreed to four points. This conversation, as I
remember it, changed my life in this business.
John said, quot;You can get involved as long as 1) you don't talk to anyone you currently
know. 2) You don't talk to anyone who knows you, because I don't want you using
Upline as a springboard for this. There are a lot of people who know who you are. You
can't ever reference it; you can't bring it up. 3) You can't do any advertising. I can't have
an ad out there saying 'Editor of Upline just found the perfect company, call me.' 4) If
you meet people and find out they're currently involved in the industry, the only thing
you can talk with them about is Upline. You cannot talk with them about TPN. If you
agree to this, fine, have at it.quot;
Was this daunting?
Not really. I thought, quot;Well, that knocks off about 12 million out of the 100 million
families in America. That's okay; I can do that.quot; What I had to figure out in the business
was how to actually meet people. How do you engage them in conversation? How do you
turn that conversation into presentation? Presentation into association, association into
the relationship, relationship into leadership, leadership into friendship? That to me is the
path that every single person should be on.
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4. My whole approach in the marketplace was that there was this endless sea of people and
all I had to do was keep experimenting to figure out how you say hello to people and turn
that into a situation where you can talk about the business. I found out in a very short
amount of time that it's easy.
You taught yourself?
No, the secret to doing this is contained in Dale Carnegie's How to Win Friends and
Influence People -- the section called quot;Six Ways to Make People Like You.quot; Whenever
you meet someone, you have to put all six ways into the conversation simultaneously.
The funny thing is, when you do that, an absolute stranger will just be drawn to you like a
magnet.
One of my favorite activities is to walk into the lounge area at an airport -- I always arrive
early and I travel often -- and look for the sharpest person I can find at that moment in
time. That doesn't always mean apparel -- sometimes it's posturing; sometimes there's just
a sense; sometimes it's looking for small details, like whether a guy has a manicure. He
may be in a pair of cut-offs, but if his nails are manicured, he probably has an Armani
suit in the case right next to him.
I'll walk over to him and ask, quot;What's the score?quot; That's my great opening line, and I've
found there are two types of people out there. One will not even give you two seconds of
his time. He'll just answer and ignore you. The other will look up at you and not only
give you the score, but literally a blow-by-blow of the plays for the last few minutes (if
not the whole game) and invite you to sit down. Before you know it, you're engaged in
conversation.
So when you built Noevir, you used the traditional range of approaches, warm market
included, but with TPN it had to be completely cold market and with restrictions.
Right. I'd done advertising with Noevir, national ads, a full page in Money Makers
Monthly, card decks, local ads. I'd done anything and everything you could imagine.
With my speaking ability, I created an audio tape with some really powerful stuff on it
and I sold it at 15 for $10, made a profit, sold thousands every month to Noevir
distributors, who didn't have anything like that at the time, and invested every penny I
made into advertising -- with very, very disappointing results.
So this proved cheaper but required more skill.
Exactly. What I understand today that I didn't then is that the vast majority of people who
are reading those publications are already in, and it becomes an incestuous business.
Here's a classic analogy I use in training to get this across:
Imagine you're having friends over to your house, everyone's having fun, and someone
says, quot;Listen guys, can I talk to you about something? I need your help. I'm recently
divorced, I'm back to being single again and I really want to find a girl I can commit to
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5. and be with long term. If you know anybody I could meet, I'd love you to set me up,
bearing in mind the one stipulation that I only want to talk to women who are currently
married.quot;
What would the reaction be at that point in the party? If he's not thrown out, he's
definitely not getting any more wine.
He goes on: quot;No, no, listen -- most people can't commit, and those already married have
proven that they can. The only reason they're with the schmucks they're with now is they
haven't met me. If they knew how charming I am and how much money's in my bank
account, they'd walk away from those jokesters in a heartbeat!quot;
You can see how ridiculous this is, but why is it really so different in this industry? What
I teach is: Honor the ring. The relationship may not be good, there are plenty of marriages
that are horrible, but that's not for me to decide. When you find out somebody's involved
in the business, talk about the industry, talk about their success, talk about anything you
want, but don't talk about how they could leave their spouse and come spend the rest of
their life with you!
Did building under such strict requirements lead you to change the way you do business
even now, without those restrictions?
Yes. I don't call people who are in Network Marketing, and I don't subscribe to any lists.
We all have to make a personal decision on which is the right company for us, and I think
we need to ask two questions: 1) If there was no opportunity to profit -- zero -- would you
pay retail for the product? 2) If you did pay retail, would the benefits be so extraordinary
that through casual conversation you would make a point to tell your friends, family, and
coworkers?
I ask people this all the time. If the answer to those two questions is no and you get in, it's
a scam. That doesn't always mean it's a bad company, but it does mean it's bad for you.
Someone else summarized it this way. Before you make the decision, ask yourself these
two questions: Does it feel right? Is it good for people? If the answer is yes to all four
questions, you've found it. Unless the company goes out of business, translation, widow
or widower, stay.
What are the industries biggest problems in your view?
The number one problem we have in our industry is structure and accountability.
My daughter, Ashley, is a barrista at Starbucks and gets her work schedule two weeks in
advance. She can tell you at any given moment in the next two weeks when she's
supposed to show up and come home. That's little more than a minimum wage job.
Structure and accountability get things done.
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6. The snag in our business is we don't like structure. We paint a picture of this business for
prospects with truisms like the fact that you can design your own schedule, there's no
glass ceiling, you work when you want to. But here's the problem -- I want you to come
to the weekly meetings, and the first week rolls around and you're not there. What can I
expect?
When I sit with you for the very first time, I'll tell you up front that structure is necessary
for you to succeed. You need a day timer, and the first thing we're going to do is block
out the things you must do first -- work, commute, family obligations, etc. We'll block
out an entire month, then look at what's left over so we can find a way to realistically
carve out ten to 15 hours. If we determine that you can schedule calls on Monday evening
between six and nine, I've got that on my calendar, and I'm going to call you around 9:10.
quot;How did the calls go?quot;
quot;The calls?quot;
quot;Yes, I have on my calendar that you were making calls from six to nine tonight, how did
they go?quot;
quot;Oh, well, I didn't make the calls.quot;
Now we have a little accountability involved. You don't know if I'm going to call you the
next time or not. I'll remind you of your dreams. Were you serious or just
kidding around?
Do people usually rise to the occasion?
They rise or step out, one of the two, but here's the thing: What you want in your business
is a prospect, not a project. Someone who won't is someone who's not going to make it in
the business.
What do you do with the people who aren't making those calls? Just let them be and not
give them any of your time?
I invest 80 percent of my time with the 20 percent of my associates who are actually
doing the business. Not the ones talking about it, but actually doing it, and that time is
spent one on one. Conversely, 20 percent of my time is spent with 80 percent of the
organization in groups.
If I call you and you haven't made your calls, it reverts to a chess game. I don't get to
make two moves; we take turns. So I'll say, quot;Look, until you're making calls, there's not
much I can do to help you. I'm going to block out next Monday to help you make some
calls. Call me at six with a list in front of you of the calls we're going to make. I'll make
the calls with you listening, but you need to initiate the session.quot;
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7. If the phone doesn't ring at six, I don't call you.
Leaders reading this know that the people who do the least try to suck the most time out
of you. I get calls from inactive people saying things like, quot;Michael, we've got to get
together. I've got this strategy I want to talk to you about.quot; This guy hasn't been to a
meeting in over a year, he's never done anything, and now he has some quot;brilliantquot;
strategy? I don't want to offend him, and it is possible that this will turn his business
around, so I say, quot;Bill, you sound excited. Let's talk at the event on Saturday. If you're
unable to make it, I totally understand.quot;
Usually, this type of person won't put forth the effort, but when we get off the phone, he
still knows I was available to help him and continue to be.
And if you get such a call from someone who is putting out effort?
The people who are doing it and putting in the time, even if they're not getting results,
should have your time one on one. The people who talk about doing it should get your
time, too, but only in groups.
If you say you want my help, again, we're going to work together like chess. I give you
an assignment; you call me back when it's complete. The follow through required to
continue getting my time is the accountability. The structure is how we agree to work
together.
That said, I always permit people to renegotiate these agreements; otherwise you'll just
embarrass people to an extent that they'll disappear. You can't have people afraid to call
you and speak the truth. I let people know that there is no inappropriate conversation held
privately on the phone. There are inappropriate conversations publicly, but not privately.
I say, quot;If I give you an assignment and you can't do it, let me know because I'm not a
mind reader. If you're uncomfortable calling me, drop me an email. My goal is to figure
out a way for you to succeed, and if you're willing to help me, I'm telling you there's no
end to the possibilities we can create together.quot;
If you give people that level of permission to work with you, unbelievable things can
happen. And when people get discouraged, I often ask this question:
quot;What if it took you a couple of years, maybe even three or four, to figure this business
out? And what if it took you a couple of more years, for some people even
three or four, to put it all together? And what if it took a couple of more years, maybe
even three or four, for you to make every dream you've ever wished for come true? Let
me ask you -- would it be worth it? Because the time is going to pass either way.quot;
My advice is learn how to do it and just stay. You'll make all your dreams come true.
How to Ethically Sponsor Other Network Marketers
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8. Here's a concept that is so unbelievable I don't understand why leaders don't do this
and why it's not widely taught. We all know about building outside your business, finding
someone new, but what about sponsoring inside your business?
You've got an organization, say, of 100 people. Is it possible that there are people
you've never met? Of course. So you get a printout from the company and you start
looking for any sign of new life. You see one new sale in Albuquerque by Mary Johnson.
You don't know her, though you kind of know the lineage. You don't have anything going
on in Albuquerque, and the sale may have been to herself or her brother, but now there's
activity there. Pick up the phone and give Mary a call:
quot;Hi, I'm calling for Mary.quot;
quot;This is Mary.quot;
quot;Mary, this is Michael Clouse. We haven't met, but I'm involved with you in the
business. I just got a printout from the company that shows where activity is taking place
in the organization I'm developing, and your name came up. Congratulations on your
sale! If you have a minute, let me tell you my position in the organization and the reason
for my call. I've been wanting to expand my business to Albuquerque, and I'm looking for
someone I can personally work with for the next 90 days to really get things going.
Would you have an interest in personally working with me forthe next 90 days to get a
group going in your area? I can teach you what I know, we can work together, and we
can see what we can accomplish as a team.quot;
If you want to sponsor people who are quot;in the business,quot; this is how to do it! I try to
pick one to two people from within the organization every month -- particularly in areas
where I know there is a solid infrastructure, regular events, great support they can plug
into -- and for 90 days, they have unlimited access to me.
Recently I was going to New York City for an event, and because my company lets
me look up my genealogy online by state, I looked up New York. Turned out there were
nine people already there in our group. Nine! Do they know me? No, so I pick up the
phone and call all nine. Of the nine, three called back, one showed up.
How many people reading this would like to be able to run an ad in a city or state
they're about to go to, have nine people call, three show up for the business presentation,
and one say, quot;I want to do thisquot;? Those results are great, considering that the only reason
you were running the ad is because you were going to the city whether anyone showed up
or not. This is icing on the cake! --MSC
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