LuLaRich Review: All the Right Mottos, All the Wrong Morals
Amazon Prime’s new 4 part documentary on MLM giant LuLaRoe is a must-see for anyone interested in questions about American entrepreneurship, the history of women in entrepreneurship, and–sadly–entrepreneurship that goes wrong.
Founded in 2012 by DeAnne Brady and her husband Mark Stidham, LuLaRoe used a network of independent distributors using “social retail” to sell their whimsically patterned skirts, dresses, and leggings, in at home parties reminiscent of the Tupperware parties of the 50s and 60s. Distributors spent between five and ten thousand dollars for a stock of clothing items, which they then marketed on their own. By 2017, the company had more than 80,000 distributors.
The company’s origin story is magical, particularly for those of us with a strong belief in the power of entrepreneurial vision. Young mother DeAnne Brady, who had been hosting in-home sales parties for fashions made by others, made a maxi skirt for her daughter. The skirt was so cute, she made a few more, began selling them, and had sold 20,000 skirts in six months.
It’s a classic American business story. Young, struggling entrepreneur with a great idea and a lot of gumption makes good. And Brady and Stidham say all the right things. They wanted to support women. Help them achieve. Unleash the underutilized resource of mothers who wanted to help the family budget. But as LuLaRich makes clear, while they had all the right mottos, they had all the wrong morals. The bourgeois virtues were nowhere to be found at LuLaRoe.
LuLaRoe’s timing, as the documentary explains, was ideal. The economic stagnation of the earliest years of the 2010s meant that a lot of families were looking for extra income. Social media–particularly Instagram–were beginning to take off. And women, as always, were desperate to fulfill the dream of adding to the family income without taking away from time at home. That dream is what MLM companies rely on. And that dream may well have been particularly compelling within the Latter Day Saints communities in which LuLaRoe first began to take off, and some of the most heartbreaking moments of the documentary are the individual interviews with these women as they tearily discuss their interactions with the company.
LuLaRich emphasizes the appeal of that entrepreneurial dream and the way that young mothers were persuaded that selling LuLaRoe could be the key to achieving it. Film clips show former distributors praising the company as “a community,” a “sisterhood,” a society where you are “never alone” because “we got you.”
The limited runs of prints and the rise of shopping during Facebook Live events drove a shopping frenzy for particularly desirable patterns, or “unicorns” that put the earlier in-home parties and “pop-ups” in the shade.
The problem, of course, is that demand curves slope down. The number of LuLaRoe distributors grew incredibly quickly, and the supply of whimsically patterned athleisure rapidly outstripped demand. At the same time, the company’s unsteady underpinnings began to be revealed. Brady and Stidham had hired their inexperienced adult children to run crucial parts of the company. Warehouse inventory for the near 1 billion dollar company was managed with one shared Google spreadsheet. Meanwhile the onboarding team was pressured to bring on more and more distributors every day, and individual distributors were pressured to recruit new distributors to “grow their line,” and get bonuses for the sales of those new distributors. They were growing by 25% per month.
There were too many people.
And there was too little product, and the product was getting worse.
Distributors had no ability to select the prints they wanted to carry, so they had no way to suit their stock to the tastes of their customers or to ensure that they were getting up to date prints rather than out of date products. Designers were pressured to create more and more prints, which designer EIliana Estarellas says was “like making art with a gun against my head.” She also mentions that she found the prints she was creating increasingly “tacky.” So did distributors, one of whom says “It became known to us that LuLaRoe made what I would call shit product. In fact, the uglier the better. It doesn’t matter. They don’t see it and they’re going to buy it anyway.”
Zippers and seams were not put in carefully. Fabric tore or contained pinholes. Clothing was faded and sun-damaged. Product began to be delivered to distributors damaged or water-soaked or fetid, perhaps because product was often stored outside of warehouses. Distributor complaints were ignored. And the onboarding only continued.
And costs were going up. The higher “up the line” you were, the more events you were expected to attend and to pay for. The bigger the company got, the splashier they wanted their events to be–like cruises and concerts by Kelly Clarkson and Katy Perry. Distributors were encouraged to spend wildly on dinners for prospective entrants into the LuLaRoe network, on designer fashions to create the impression of success, and even on weight loss surgery. DeAnn is on video saying she brought at least 18 LuLaRoe distributors down to Tijuana for gastric sleeve surgery. The group called themselves the “Tijuana Skinnies.”
In episode three of the documentary, LuLaRoe distributors begin to talk about the life advice offered to them by the company. This began with seemingly innocuous messages like “family first” and “you can’t succeed in business if you’re a failure in the home–and culminated with DeAnn providing workplace training about how to “use your special parts” to get your husband to do what you want, and telling distributors that “all you have to do is spend five minutes on your knees every day and your husband will let you buy anything you want.” Wifely submission and obedience were advised at every turn, particularly to women who were earning well.
Weirdly, this rhetoric of submission was all coupled with an insistence that wives could, and should, earn enough from LuLaRoe to allow their husbands to stop working–a tactic that many interviewed say was obviously designed to make families completely dependent on the LuLaRoe network.
It is instructive and astonishing to watch LuLaRich, particularly when the documentary focuses on its two founders, who insist–while describing a classing MLM–that they did not create an MLM, and that all they wanted to do was to help women achieve. Their nephew, who worked for the firm, explicitly calls LuLaRoe a pyramid scheme. As journalist Jill Flipovic notes, “LuLaRoe says that because they exchanged goods for money, they are not a pyramid scheme. But the primary way…they are making the money is not selling the clothing.”
In the end, distributors were stuck with poorly made product that they couldn’t possibly sell. Meanwhile, they were berated by the founders for complaining and whining, for failing to “work it,” and for betraying the company culture. Worse, the company often simply denied that the problems existed. Soon, the social media that had powered LuLaRoe’s rise, turned against it, as former distributors went online to talk about the company culture, show videos and photos of damaged product, and eventually, begin proceedings for a class-action suit.
Things heated up when the bonus structure changed and bonus checks got cut in half, or more. LuLaRoe also began a “buyback” program, where they committed to buy back any unsold merchandise from distributors for 100% of the wholesale cost. Taken together the two policies spurred a mass exodus from the company by many longtime distributors. But LuLaRoe exploded when, shortly after creating the 100% buy back policy, they yanked it, stranding distributors with thousands of dollars of unsold and unsellable product.
Dozens of lawsuits have been filed against the company for defective products and copyright infringement. But the biggest suit came from a clothing manufacturer saying that LuLaRoe owed them 49 million dollars that they had never expected to be able to pay. By their 2018 convention, there were 20 lawsuits against LuLaRoe. In 2019 the state of Washington filed a suit against them for operating a pyramid scheme. That suit is still open, and as Robert FitzPatrick, and MLM expert notes, until this entire field of business is re-examined cases like this are mostly political theater.
LuLaRich sits at a very complicated intersection of American culture. It touches on cultural expectations for women, the history of women in the workplace, ideas about what kind of work women should do, the dream of owning a business, the culture of entrepreneurship, and the long, long history of good old American flim-flam. I recommend it, without reservation, to anyone with an interest in any of those topics and in the complicated ways they interact.
But maybe buy your leggings elsewhere.
[Editor’s note: If you enjoyed this review, don’t miss Sarah’s earlier series on the Theranos scandal. Timely!]