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October 01, 2011

Company Focus

Opportunity in Their Genes

by Barbara Seale

Click here to order the Direct Selling News issue in which this article appeared.

 Life Vantage

Company Profile

Founded: 2003
Headquarters: San Diego
CEO: Douglas C. Robinson
Products: Health and wellness

For its first six years, the theme song for LifeVantage Corp. seemed to be “The Long and Winding Road.” But when it transformed its sales model to direct selling, the lyrics changed to “Life in the Fast Lane.”

LifeVantage was founded in 2003 to market a unique product, Protandim. Developed by now Chief Science Officer Dr. Joe McCord, Protandim combats the oxidative stress that results in general aging, and is also linked to heart disease, diabetes and more. Protandim’s natural, indirect antioxidants actually signal the body’s genes to increase production of antioxidant enzymes that work together as the body’s first line of defense against free radicals.

And that’s just the beginning of the product’s science story. Its promise was so compelling that in 2005, when ABC’s television program Primetime learned of a human clinical study of Protandim that was conducted at the University of Colorado, the program produced an overwhelmingly positive segment on Protandim. They reported the results of the study, which showed that the product decreases oxidative stress by more than 40 percent. What happened next was every company’s dream. Sales skyrocketed. So did the price of company stock. But there was a hitch. The young company was still small and wasn’t ready for the surge. It didn’t have the infrastructure to keep up with orders, and its multimillion-dollar monthly sales volume dwindled to about $250,000. The dream outcome quickly became more of a nightmare. But it was also a turning point. Executives who were already sold on the product’s potential for health had seen its commercial possibilities. But what could they do about it?

Sea Change

David Brown
David Brown

David Brown, the company’s CEO in 2008, had a bold idea. Take Protandim off retail shelves and sell it through network marketing. After all, no 30-second commercial could effectively explain how it works and note the numerous independent academic studies that back it up. And retail sales clerks could typically do little more than scratch the surface on the science behind it. It needed more. Brown believed that network marketing could do the job.

“Protandim has a particularly unique message to tell,” he explains. “It’s unlike anything else out there. There is no other pharmaceutical product, supplement or food that does what Protandim does. It actually has a composition patent—three, in fact—and we’re working on a fourth. That’s difficult for supplements to obtain.”

In late 2008 Brown took his recommendation to market Protandim through direct selling to the LifeVantage board of directors, but they were cautious. Still, Brown came armed with convincing facts. He explained that the largest companies in the dietary supplement arena and the only ones that expanded internationally were network marketing companies. And when he added that such respected, influential businesspersons as Warren Buffett were investors in network marketing companies, the board was convinced. Brown immediately began to bolster the company’s management team with knowledgeable direct selling executives who could build the necessary support organizations and help the company avoid pitfalls, and during 2009 LifeVantage re-launched as a direct seller.

“Protandim has always been a great product with great science and a great corporate team behind it, but now we were able to get out and talk with people about the way this product could help them improve their physical health as well as their financial health,” Brown recalls. “We gave people an opportunity at a time when many were worried about the economy and their financial stability. We’ve been fortunate to attract some distributor leaders who have been great ambassadors and evangelists of our products and their benefits, as well as the LifeVantage financial opportunity that can change lives.”

Red to Black

The sales surge originally spurred by the television program returned, but this time LifeVantage was ready. It had invested in the infrastructure, management strength and educated salesforce to support growth through direct selling, and its finances began an impressive turnaround. Brown and the board of directors decided that his focus should be on working closely with direct selling distributors, and they began a search for a CEO. They didn’t have to look far.

Douglas C. Robinson
Douglas C. Robinson

Douglas C. Robinson had joined the LifeVantage board of directors about six months after it had become a direct seller, bringing his 25 years of healthcare business management expertise. He joined the management team as President and CEO of LifeVantage Corp. in March of this year. Brown became President of LifeVantage Network. Both men are pleased with the company’s sales growth, but their long-term goal is to manage the company judiciously to achieve not just sales growth, but lasting company success.

“I’m very bullish on not just top-line growth but also bottom-line growth,” Robinson says. “When we finished fiscal 2010 we had a top line of just under $12 million. Our bottom-line operating loss was $7 million last year. But this year, we’ll end up with a huge turnaround, not just in terms of top line, but also a huge turnaround of the bottom line. Those days of red ink are in our rearview mirror. This is about profitable, responsible growth.”

Recently, LifeVantage reported preliminary results for the full year of fiscal 2011. The company generated net revenues of $38.9 million, a 238 percent increase compared to $11.5 million in fiscal 2010. It said that operating income for fiscal 2011 is anticipated to be approximately $3.7 million, compared to an operating loss of $7.3 million in fiscal 2010—a year-over-year improvement in operating income of approximately $11 million.

Great Marriage

Robinson gives direct selling much of the credit for the turnaround, but it doesn’t hurt that they also have a great product.

“[Direct selling] is a huge reason for our rapid growth, but I am incredibly bullish about our products and the science behind them,” Robinson says. “Dr. McCord was there 40 years ago at the birth of the science that goes into our products. It’s unique for LifeVantage. Having that science behind us and peer-reviewed studies by very reputable, third-party, non-aligned institutions are huge for us. To arm a distributor workforce with dynamite science-based products is pretty fantastic. What we’re experiencing is that marriage between a great science-based company and a great selling channel in network marketing, which includes very skilled and experienced distributors who are energized, hard-working, ethical people armed with continuing education. We want our distributors to understand the science and how it’s evolving. Our growth is the result of those commitments.”

Arming LifeVantage distributors with scientific information they can understand and use is a job enthusiastically embraced by Dr. McCord, a respected scientist. McCord received the Elliott Cresson Medal, awarded to distinguished inventors and scientists by The Franklin Institute. That puts him in the company of Pierre and Marie Curie, Alexander Graham Bell, Orville Wright and Henry Ford. He has researched antioxidants and their functions for more than 40 years. With so much knowledge, he works hard to distill the science behind Protandim into information that distributors can understand and use. “I speak with around 2,000 distributors about four times a year. I really do my best to educate them scientifically about what Protandim is and does,” he says. “Even though it’s complicated science, they have an amazing capacity to understand it. When we have meetings with distributors, for a couple of days I literally can’t step into the lobby without being surrounded by people with well thought-out questions about how it works and how they can explain it to others.”

LifeVantage distributors fuel the company’s growth by introducing Protandim and the business opportunity to their friends and acquaintances in person, at hotel meetings or during home gatherings. The distributor who enrolls a new person becomes a mentor, making sure that the new recruit learns about products and how to build a business. The recruit can choose among three levels of the Vantage Starter Kit, which includes training materials and the company’s Blueprint to Prosperity, a step-by-step guide to getting started.

Group training is also offered at least once a month at locations around the country. Events range from half-day Premier Schools held monthly and led by top distributors to two-day events called Elite Academies, which include a day of corporate news, training and scientific reports, along with a day of sales training and motivation by top distributors; not to mention the company’s annual convention, which is packed with training, recognition, motivation and team-building opportunities.

“Our distributors include a large number of health professionals who understand the opportunity to make money through our business plan and who almost feel it’s an obligation to share the science of this product with people they come in contact with,” Brown says. “But the vast majority comprises people who care about their health and are excited about the prospect of helping their physical and financial health through Protandim.”

Looking to the Future

While Protandim is the company’s first and premier product, LifeVantage has begun developing sibling products. The first is an anti-aging skin cream called TrueScience. Executives predict it will be the first of the complementary products offered to continue to focus on the fight against oxidative stress. CEO Robinson says that pet products are also among the likely future LifeVantage offerings.

“Domestically, we spend a lot of money on pets,” he notes. “They’re an extension of our family. One of the reasons domestic pets don’t live as long as humans is there is so much more free radical damage. We want to extend the lessons learned from Protandim to domestic pets. When we extend the product line, we’ll do it in a successful, profitable manner. In five years we’ll have a diversified and extended product line focused on the fight against oxidative stress.”

Geographic expansion is also likely, but once again, the company will do it carefully. LifeVantage already operates in the United States, Mexico and Japan. Further international expansion fits into the company’s purpose.

“If we believe that we can help people live healthier lives, and in doing so they can become more productive, then why would that be limited geographically?” he asks rhetorically. “We have a burden—in a positive way—to expand geographically. But we must do it appropriately, successfully. We’ll be sustained in the marketplaces we go into. No starts and stops.”

LifeVantage’s anchor product Protandim is sparking interest in many quarters already, including the military, which wants to investigate how its use might affect recovery times of soldiers in physically demanding circumstances. As big as that opportunity might be, Robinson also sees it as a responsibility.

“With the excitement comes a heightened responsibility to execute excellently,” he says. “Yes, things are exciting—the growth, profitability and attention we’re receiving. But we have a heightened burden to successfully guide and shepherd this company forward, domestically and internationally, because of the opportunities that are in front of us and the purpose that’s driving us. When we do those things well, day in and day out, we will be a very successful company, in every way one could define that term.”


Simplifying Science

Dr. Joe McCord
Dr. Joe McCord

Protandim BottleWhen Dr. Joe McCord explains the science behind LifeVantage’s top product Protandim, he is both methodical and metaphorical.

Take his explanation of oxidative stress. He compares the human body to an automobile engine, explaining that the body uses the oxygen a person inhales to turn the fuel, or food, into energy. Likewise, cars burn fuel using oxygen. He notes that in cars, the process takes place at high temperatures, creating an internal explosion that powers the car. The human body burns its fuel at lower temperatures in a more controlled manner. But both situations create byproducts that are often reactive and toxic. Catalytic converters manage a lot of the byproducts in automobiles, and in the human body, antioxidant enzymes do the job. Then McCord plays his trump card about the product he helped create.

“Protandim really increases the antioxidant enzymes that every cell knows how to produce,” he says. “But as we get older, we don’t produce enough of those. Things associated with aging crank down our ability to produce them. Protandim nudges it back up. It keeps our catalytic converter big, and it protects cells.”

McCord notes that the product activates something called transcription factor Nrf2, which signals the cell’s DNA to regulate 3,000 to 4,000 genes in the body, tamping down the functions of some and boosting others, bringing them back in balance the way they were when a person was young and healthy. The biggest effect may be on the immune system.

“The immune system is a very complicated system that is your major protection against the diseases of aging,” he explains. “Cancer is viewed by many as a failure of the immune system. When you get a mutated cell when you’re young, the immune system recognizes it, jumps on it, and kills it. But if the system gets partially incapacitated as you get older, and you’re getting more cancer cells, and your immune system didn’t notice or do anything about it, then you’re in big trouble.”

The science behind Protandim—and the product itself—has been validated through seven scientific studies so far, most of them conducted by organizations that have no connection to LifeVantage.

“This company and product are different because they came out of academic research at universities,” McCord says. “A number of university faculties around the world are studying this just because of their fascination with it. It’s real cutting-edge science. Protandim is a powerful tool for anyone interested in Nrf2 and how it works, and that’s a lot of scientists.”

He adds that some prescription drugs are in the final testing stages of clinical trials that are based on Nrf2 activation. So far, studies have shown positive results in chronic kidney failure and in multiple sclerosis. The University of Colorado study that caught ABC Primetime’s attention showed that human test subjects who took one Protandim tablet daily realized a 40 percent average decrease in TBARS (thiobarbituric acid reactive substances), which are an indicator of a person’s rate of aging and oxidative stress. The effect was even greater after four months.

Protandim is made of a synergetic blend of five herbal ingredients: silymarin from milk thistle; bacopa extract, ashwagandha, green tea extract, and curcumin from turmeric. McCord notes that natural ingredients are among the best activators of Nrf2.