Clara McDermott was sevenwhen she landed her first sales job.
She thought she was getting a bike.The Wyoming youngster saw an ad in a magazine that said, "Win free bike!" A struggling reader, the rest of the details eluded her. Clara scrawled her name on a piece of paper, the company's address on an envelope and sent off for her first bike.
Instead, the company sent her a liberal supply of cow salve with a menacing letter that ordered her to pay for the product soon or the company would take her to court.
Clara likes to tell about trudging from farmhouse to farmhouse in Cowley, Wyo., trying to sell her cow salve. "After the first house, someone read enough of the instructions to me so I knew what to charge."
She sold the salve.
Today she sells Nu Skin products. The cow salve company never sent Clara her bike. But Nu Skin has made her a millionaire several times over.
Before Nu Skin, McDermott sold the Cambridge Diet, again making millions. (McDermott doesn't bring up the "m" word. When pressed, she simply said, "Millions were made. Several people made millions.")
Industry watchers call McDermott "the grand dame of multilevel marketing." (She prefers the phrase "network marketing.") She is also dubbed "the mother of Nu Skin."
Blake Roney may have created the Nu Skin products, but he'd still be trying to figure out what to do with them if it weren't for Clara McDermott, folks say. Nu Skin has its critics, but no one minimizes McDermott's role in getting the company on its feet and started in the right direction.
McDermott is an unexpectedly successful blend of rural Wyoming and multimillion-dollar success - maybe because both require toughness. The lady exudes it. A large woman with the strong features of the early prairie families, she is forthright and exacting.
McDermott made her first fortune on the synthetic wig trend that swept the country in the early 1960s. She hosted a wig party for a friend while living in Brigham City. When women who bought wigs at her party couldn't figure out how to style them, McDermott told them to come on over and she'd see what she could do.
She discovered a gift for wig work. "I styled a wig so that it would hold its style. Women could put it on and off like a hat, but it would remain soft."
Her knack led to a wig shop, a national mail order wig business and a smattering of patents for some wig accessories she developed.
She fell into her Cambridge Diet fortune with no more forethought than she gave to hosting a wig party. McDermott discovered the Cambridge Diet while the company was in its infancy in the early '80s. She drank the stuff and dropped her excess weight. Wig clients began asking for her secret.
So McDermott started ordering the drink for her wig clients. "It was strictly retail to retail. I was selling it to my customers for what I was paying."
She began holding weekly support meeting for fellow dieters, pulling in hundreds of Cambridge Diet customers.
When Cambridge Diet became a multilevel marketing company. McDermott already had more clients in Utah than the company had through its national mail-order program. By the time the sales of the company peaked, 80 percent of its distributors had joined the company under Clara McDermott: including her four sons and only daughter.
"I needed legs to help me support the business. They plugged in and helped."
And ultimately made their own millions on Cambridge Diet. But only because McDermott and her brood - her children go by Tillotson - worked hard, she stressed. "You don't just get plugged in and carried off to glory. If that's what you want, you are better off going down to Vegas and putting your money in a slot machine. This is work."
When Cambridge Diet collapsed into bankruptcy, "the company had two Lear jets, a fleet of limousines and leased every building possible on the Monterey peninsula. They operated on debt."
The bankruptcy left McDermott disillusioned and furious. "That company pulled the rug out from under us." McDermott tore a page from the Cambridge book of failure. Her own operation is modest, based in an old house on 3300 South haphazardly remodeled into offices.
After Cambridge failed, McDermott and her youngsters found other pursuits: the wig shop, engineering, writing, investment and real estate.
Then son Craig Tillotson found Nu Skin. He asked his mother to take a look at the tiny company that was still testing its fistful of products. McDermott looked and liked what she saw.
Angry at the Cambridge people's short-term planning, she set about to help Roney develop a network marketing company that would be around as long as Amway. When she became confident Nu Skin would soar, she summoned her brood.
"I knew people were saying that my kids had gotten lucky (with Cambridge.) But I knew what they had done and what they could do. But unless they did it again, the Cambridge success would not be theirs to keep."
Three sons, a former daughter-in-law and a son-in-law now devote themselves to Nu Skin. By Utah standards, they are all rich. But like their mother, the clan doesn't discuss money.
What they do discuss - with a zeal most reserve for religion and their firstborn - is Nu Skin products. Nu Skin is like a sixth child to McDermott. Attacks on her company sting her like attacks like on a child would sting a mother.
Claims that Nu Skin is a pyramid scheme where distributors reap their fortunes off of new distributors instead of product sales enrage her.
As for the state investigations and national news stories, "We always knew we would get the test when we reached $50 million (gross) a month. Anytime a company reaches $50 million a month, you become big business. You're a Fortune 500 company. You move into the political, legal and media arena."
The way McDermott sees it, the recent spate of controversy is just Nu Skin's initiation to the big time.
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Network Marketers
Nu Skin International
Founded: June 1984
Corporate headquarters: A three-story building in Provo. A 10-story office building under construction in Provo will become the corporate office in November.
President and CEO: Blake M. Roney, a 1982 Brigham Young University finance graduate.
Philosophy: "All of the good, none of the bad."
Distributors: An estimated 100,000 nationwide
Corporate employees: 2,400 in Provo and regional distribution centers in Marietta, Ga. and Toronto, Canada.
Wholesale sales: An anticpated $500 million in 1991.
Products: Hair- and skin-care products and nutritional systems
Problems: Officials in Michigan, Illinois, Florida, Pennsylvania and Utah are investigating the firm.
Images International Inc.
Founded: 1987
Headquarters: Salem
Market: six countries
President and CEO: Thomas Mower
Claims: The recipes for its products came from the pharmacopoeia of the Ming Dynasty Imperial Hospital, which was unearthed by two Chinese peasants in 1977. (The Ming Dynasty reigned in China from 1368 to 1644.)
Distributors: 10,000
Annual sales: $18 million
product line: 40 products for skin, hair and nails
Problems: Nu Skin International has filed a defamation suit against Images, accusing the company of stealing its trade secrets and luring away Nu Skin distributors with false, derrogatory information about Nu Skin.
Utah-based network marketing companies
Nature's Sunshine
Founded: 1976
Headquarters: Spanish Fork
Market: United States
President and CEO: Alan Kennedy
Products: encapsulated herbs, vitamins and food supplements
Distributors: 200,000
1990 Wholesale Sales: $60 million
Problems: None
Enhanced Living
Founded: June 1991 (merged with The Food Connection)
Headquarters: Provo
Market: western United States
President: Vaughn Erickson
Products: food storage, food supplements, water treatment systems
Distributors: 10,000
Wholesale Sales: has only been operating one month
Family Star
Founded: January 1991
Promoters: Sally Ann Hall, Rulea Brooksby, Vickie Rupp, J. Blaine Rupp, Matthew J. Peterson, Neda Peterson and Gary Ford
Products: offered cleaning products and health aids
Problems: Promoters were charged for operating a pyramid scheme in Provo's 4th District Court in March. An injunction was filed agains the company by the Utah Division of Consumer Protection
Other companies
Amway
Founded: 1959
Headquarters: Ada, Mich.
Market: Worldwide
Founders: Jan Van Andel, chairman of the board; Richard DeVos, president
Products: 400 various home- and personal-care products including MCI long distance service
Distributors: one million
Corporate employees: 8,000
1991 Projected Wholesale Sales: $4 billion
Problems: After federal investigation in the 1970s, officials determined in Amway was primarily engaging in the retail sale of products
Sunrider
Founded: 1982
Headquarters: Torrance Calif. (moved from Orem, Utah in 1985)
President: Tei Fu Chen
Market: United States
Products: herbal foods, cosmetics and vitamins
Distributors: 100,000
Annual sales: $300 million
Problems: Salmonella was discovered in some products in the early 1980s. The company pulled those products.