1886, Chicago, USA

As a child, David McConnell lived on a farm, but always knew he would achieve big things. In truth, he had no money and had to start completely from scratch. At first he hoped that an education would help him break through, but as it turned out, he wouldn’t make much as a math teacher. Thus, McConnell became a traveling salesman. Selling books turned out to be so profitable that within two years he could buy his own publishing factory.

To increase the volume of sales, McConnell decided to throw in a gift to every female customer: a bottle of perfume. The idea worked, and soon the entrepreneur came to thinking about selling perfume the same way through sales agents.

In 1886, he founded California Perfume, a company which produced five kinds of perfume. Mrs. Persis Foster became the company’s first salesperson, and came up with the idea of direct sales through a network of customers. The concept was simple: “Buy perfume, recommend them to your friends, receive a cut of their purchases.” In the 1880’s, women didn’t yet have the right to vote; yet Mrs. Albee offered them a good deal, good perfume, and the chance to make money—“all in one bottle.” Towards the start of the 20th Century, California Perfume had already amassed 5,000 sales agents.

The new business model was so successful that eventually David McConnell passed control of the company down to his son, and retired to his long-standing passion: studying Shakespeare’s work. He even completed a pilgrimage, so to speak, to Stratford-upon-Avon, the homeland of the legendary poet. Soon after, the company was renamed in honor of the journey, into Avon.

Today, Avon’s turnover is estimated at $9 billion per year.

Marketing Through Recommendation: A History of its Inception

1926, Shanghai, China

The prison stew was slightly warm, but the inmates waited patiently for their companion to toss in a pinch of powder into every bowl. Only after that would they begin eating; it became a ritual. It was only a few weeks ago that they were poking fun at the strange cellmate and his habits, but the quiet, intelligent American was persuasive. Even the guards, chuckling to themselves, brought the oddball the plants he asked for: bamboo stems, fern leaves, and ginseng roots. In the end, every cellmate tried his “potion”—the harsh plant powder. As it turned out, those who agreed to take the American’s “potion” got sick less and felt healthier overall than those who didn’t.

It seemed as though Carl Rehnborg knew everything. He was well versed in astronomy and mathematics; history and philosophy; physics and chemistry. Above all, however, he was interested in the science behind nutrition. The desire to learn the secrets of Chinese medicine brought him to Shanghai, but a revolutionary coup condemned foreigners to internment camps.

After the fall of Chiang Kai-shek’s regime, the prisoners could go home—those who took Rehnborg’s medicine lived to see the day.

1927, California, USA

“What do you think you’ll do now, Mr. Rehnborg?”

“Carl, quit sitting in the damn attic and find a job!”

For some reason, people assumed he wasn’t his old self after the Chinese prison—nonsense. While it’s true that after twelve years of work and a successful business in China, he returned home a beggar; but the invaluable experience, unique knowledge of plant properties, and, of course, his prison experiments—made it all worth it.

He spent four more years on research and experiments.

1931, Balboa Island, USA

Finally, a solution! The first biologically-active food additive was ready in 1931. Carl Rehnborg had no doubt he created a valuable and essential product. He sent envelopes with the powder to his friends, hoping they would notice an improvement in their well-being. Perhaps unsurprisingly, there were no results—because nobody thought to sample the strange gift.

Knowledge of human nature led Rehnborg to realize that it’s much easier to throw away an ailment that is free, than one that costs something. Thus, he started taking small amounts of money from those he sent the powder to; only then did people try the ailment and noticed the results. The invention had worked, and could’ve become the basis for a serious business if Rehnborg had any starting capital.

Of course, he wasn’t the first to encounter this problem, but an unorthodox solution had already been found almost half a century ago by a California Perfume salesperson: Mrs. Albee.

1934, California, USA

It is uncertain whether Carl Rehnborg had heard about McConnell’s Californian perfume company, but the idea of direct sales was once again a success. Rehnborg didn’t have the money to advertise or hire personnel, so he offered each of his friends to sell the supplements for him. They would tell their friends about the product, and receive a commission from Rehnborg for every sale. He called this system “Marketing through recommendation”. In this moment, the company California Vitamins was born.

In 1939, a new food supplement appeared on the market: Nutrilite. The founder then renamed it to Nutrilite Products.

Upon achieving a turnover of $7 million, Rehnborg’s company could comfortably afford its own luxurious office, mass advertising campaigns, or a staff of the best marketers and managers; but why change something that is working so well?

Distributors sell the product and bring in their own customers as new distributors. However, at a certain point, there is simply too many “beginners” in the system who need training; this is where Rehnborg improved the scheme by introducing the concept of sponsors. The job of a sponsor is to not only bring the newcomer into the system, but also to train him and help him attain experience and knowledge.

1959, Grand Rapids, Michigan, USA

“Yes, Jay, about your idea…” Rich DeVos looked thoughtfully at his companion. But Jay Van Andel never doubted that DeVos would support him. After all, they came into Rehnborg’s company together ten years ago, created their own supplement trading firm in Michigan, and it only made sense that they started a business together as well.

“Rich, you do understand that Rehnborg’s marketing plan is universal, right? You could use it to sell anything!”

DeVos understood. They both understood the possibilities of network marketing. They didn’t need any starting capital, headquarters, or advertising to start a business—the American dream in its essence; the American way to success from nothing. American Way Corporation, or AmWay for short, was the name Jay Van Andel and Rich DeVos gave their new company. On top of food supplements, the company started selling household items.

The business model turned out to be truly universal. History has shown us something that half of the world’s marketers are trying to prove, and the other half—to disprove.

Creating a passive income with the help of network marketing is very much a reality. Carl Rehnborg, having earned $7 million, dedicated his time to his favorite pastime: astronomy. Success opened thousands of doors for him, while his circle of friends grew bigger with the likes of Winston Churchill, Jawaharlal Nehru, and even the Pope.

Marketing Through Recommendation: A History of its Inception

Starting your own business with a network company is also a reality. Jack Van Andel and Rich DeVos, after 10 years of working in Nutrilite Products, founded AmWay, and later bought a majority stake in Nutrilite Products.

Making a billion and passing down the business after starting from scratch: also possible. $7 billion a year is the current sales volume of the companies created by Van Andel and DeVos nearly 60 years ago. Today, the company is run by their sons: Doug DeVos and Steve Van Andel.

The total capital in the network marketing business is estimated at around $200 billion. Over 100 million people have chosen this business path for themselves. According to survey data in 44 countries, 75% of them are happy with the results of their involvement in network marketing.

Even experts believe that within the next 10 years, interest in this business model will increase several times over. Business giants such as Colgate, Lipton, Canon, and Coca-Cola already use principles of network marketing, but the most interesting part is still ahead of us.