Jay Van Andel, 80, Co-Founder of Amway, the International Direct-Selling Behemoth
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Jay Van Andel, who died yesterday at his home in Ada, Mich., was the cofounder of Amway, the giant word-of-mouth vendor of consumer items that is in some ways as much a philosophy of life as a business.
Van Andel was an outspoken libertarian Republican, a rigorous exponent of self-reliance, a generous funder of local charities and religious broadcasters, and, according to Forbes, the 23rd wealthiest man in America, with a fortune estimated at $2.3 billion.
Amway rose through the efforts of a sales force of literally millions who sold its products – cosmetics, shoe polish, fire extinguishers, vitamins, and even at one point bomb shelters – to friends and acquaintances.
With an advertising budget of almost nothing, the company depended on salesmanship to generate business, resembling Avon and the Fuller Brush Company. What made Amway distinctive was the concept of “multi-level marketing,” through which the sales force was encouraged to recruit more salesmen for the reward of a percentage of their recruit’s sales.
The system created daisy chains of payments that reminded many of pyramid financial scams, although in 1978 the Federal Trade Commission cleared the company of such charges. It also involved a kind of salesmanship that seemed almost religious, a message reinforced by the company’s support of Christian churches.
Amway was equally evangelical about laissez-faire economics; at the company’s sprawling headquarters in Ada hung a large sign announcing: “Center for Free Enterprise.”
Van Andel founded Amway in 1959 with partner Rich DeVos in the basements of their homes in Grand Rapids, Mich. It was not the first venture for the businessmen, who had dreamed of owning their own business since they were students at Grand Rapids Christian High School.
The friendship grew out of a business arrangement, according to a story Van Andel often told. DeVos paid Van Andel a quarter each week to help pay for gas to drive to and from school.
Following World War II, during which both men served in the Army Air Corps, they opened their first commercial venture, a flight school they called the Wolverine Air Service. They owned a single Piper Cub plane fitted with pontoons for landing on the Grand River. It was a typically audacious enterprise, as neither partner knew how to fly. They opened a drive-in restaurant in Grand Rapids, but it lacked running water or electricity and failed to thrive.
After selling off their Grand Rapids business interests, Van Andel and De-Vos purchased a 38-foot Nova Scotia schooner in Connecticut and sailed it to Cuba. Any thoughts of a Caribbean business were snuffed out when the boat sank.
Returning to Grand Rapids, they became wholesalers for Nutrilite Products, a California-based manufacturer of food supplements. They were instantly successful, and by 1952 had half a million dollars in sales annually.
Nutrilite paid distributors who found and trained new distributors, a scheme that Van Andel and DeVos adapted when they launched Amway. Amway’s first product was a cleanser called L.O.C., still an important part of the company’s product line. Before long, they moved the business out of their basements in Grand Rapids and into an abandoned gas station in nearby Ada, at the same site where they would eventually build Amway’s corporate headquarters.
Diversifying their product line, the partners quickly became wealthy as Amway grew fast. By the early 1990s, the company had 13,000 employees, including 200 chemists on staff in Ada, and an 80-country sales force that numbered in the millions. Some 80% of its business is now in Asia, especially in China, Japan, and Thailand. Amway is now a subsidiary of Alticor, which includes an online component; Alticor reported $6.2 billion in sales for its most recent fiscal year. The privately held company’s profits are not announced.
Amway got into the broadcasting business in 1977 when it acquired Mutual Broadcasting, which owned radio stations around the nation. Despite nurturing some marquis on-air talent, including Larry King, Amway was not able to turn a profit in radio and sold the stations in 1985.
The company’s unorthodox method of compensating its sales force garnered the attention of the FTC, which let stand a ruling that Amway had improperly fixed prices and ruled that the company had to revamp its corporate literature but dismissed more serious charges. More vexing was a series of actions brought against Amway in Canada during the 1980s; the company was alleged to have failed to pay import duties.
As a businessman with conservative political leanings, Van Andel came to prominence as a supporter of the Reagan Revolution, a time when Van Andel was often mentioned in the same breath as hotel baron J. William Marriott and brewing tycoon Joseph Coors. Among Van Andel’s most ardent causes was ending the progressive income tax, which he thought fostered dependency on federal government handouts.
Consistent with his dislike for federal funding, Van Andel led a private-sector revival of downtown Grand Rapids, where he renovated the largest hotel in town and built an annex to the Public Museum of Grand Rapids. The recipient of a heart transplant, a victim of Parkinson’s disease, and the husband of a victim of Alzheimer’s disease, he funded the Van Andel Institute in Grand Rapids, a medical facility that cost $60 million to build.
Van Andel even funded the Van Andel Creation Research Center, an independent laboratory in rural Arizona dedicated to proving the biblical version of creation through geology, botany, biochemistry, and the tracking of meteors.
In his memoir, “An Enterprising Life,” Van Andel wrote of conducting an “M.B.A. classroom” for his kids at night around the dining room table. They must have learned his lessons well, for they became Amway executives. His son Steve is chairman of the company, while DeVos’s son Dick is president.