LuLaRoe: The Mormon Family Behind the Billion-Dollar MLM Empire

[00:00:04] Hello and welcome to Postmormon Postmortem? Where we put each other on the spot so you don't have to. There's two hosts on one topic, one host who knows things. And one host who often knows some things and sometimes knows something. Maybe not about these pop culture type things. If it's not current events in foreign policy you might not know about it but... I know. Jess, my question for you is, we've talked about MLMs before but let's get specific.

[00:00:33] What do you know about LuLaRoe and the Mormon Family behind the multi-billion dollar leggings empire? I remember a brief phase where people in my community were doing the mid-level marketing scheme, like leggings parties and events and stuff.

[00:01:02] But I don't know anything about the family. Jess Okay, what do you know about the leggings themselves? Anything? Jess Well, bright, colorful, different patterns, pretty cheaply made. Jess Yeah. Jess That's what I know. Jess Like not gonna hold up for a workout or getting snagged was my impression. Jess Oh, you were looking at the practicalities, right? Like that's not gonna last. Jess Yeah. Jess Well, I came across LuLaRoe leggings when it was actually my waxer, my bikini waxer.

[00:01:29] Jess It was like Halloween or Christmas or something and she had these festive leggings on and I commented that they were cute. Jess And she's like, Oh, feel them. They're the softest leggings you've ever felt in your life. Jess Feel them. They're like buttery soft. That was kind of the thing. Jess It was like, you won't believe how like super soft and comfortable these are. Jess And then she said that you could only buy them basically on Facebook, essentially through at home retailers. Jess Through someone. Jess Yeah. Jess Exactly. And I wasn't on Facebook at the time. So that was the end of the journey for me.

[00:01:59] Jess You couldn't escape it though on Facebook or not. Jess No, they were. Jess Especially if you were on Facebook, you knew somebody probably who was selling it. Jess And as you said, you may have been invited to parties and had people posting their latest purchases. Jess And they were distinctive. Jess My waxy used the word buttery soft, but this must have been, this must have come from the distributor. Jess I think it came from the marketing.

[00:02:25] Jess 100% because I remember that phraseology that she used, right? Like it stuck in my head, but they use that like language. Jess These are the butteriest, softest leggings available in hundreds of brightly colored patterns, which are some combinations, you know, were frankly hideous, but people went and some were nice and people went wild for them. Jess And women, women were signing up by the thousands to sell them. Why?

[00:02:48] Jess Because LuLaRoe promised women a chance to start their own businesses, become financially independent, work from home, earn a full time income and a nice one at that while raising your children. Jess I mean, it is ideal, especially if you don't have a college education, or you have one, but you never used it. Jess And so you feel like you're stagnant in the marketplace. Jess The company itself was founded in 2013 by a Mormon couple from California, Deanne and Mark Stidham.

[00:03:18] Jess There is a four part documentary on Amazon Prime called LuLaRich. Jess And as with everything, you just have to see to believe. Jess You gotta see these two in action. Jess Deanne became the face of the company. Jess She was an enthusiastic salesperson, think like Tammy Faye Baker, or a Mary Kay, like salesperson. Jess I mean, super put together, kind of had money and wanted to have the appearance of having money. Jess She had decades of experience selling clothing to women at home parties.

[00:03:46] Jess And then Mark, her husband, became the CEO. Jess Well, because you would need the male to be the CEO. Jess That only makes sense, right? Jess You need the patriarch to have the company. Jess A hundred percent. Jess What inspired the charming women for you? Jess Can I jump in there and then you can talk? Jess Jesus. Jess As with every multi-level marketing company, which means only the people at the top will make money, but everybody has promised that they will have the potential.

[00:04:17] Jess A world of riches. Jess Yeah. Jess You pay thousands of dollars to join. Jess And don't you buy the merchandise wholly like you buy it. Jess And then if you want your money back, you got to sell it. Jess Correct. Jess Right? Jess There's no... Jess Yeah, exactly. Jess Yeah, you buy the inventory direct from LuLaRoe and then you sell the clothing yourself. Jess The company called these sellers independent fashion retailers because their independence came from you're responsible for buying my merchandise, finding customers, advertising my products, Jess And then... Jess And fixing it all out yourself.

[00:04:46] Jess Exactly. Jess So, typically joining costs around $5,000. Jess But some people spent a lot more than that. Jess And then you received these hundreds of items of clothing to sell. Jess And people have talked about how these schemes work where I was listening to somebody on YouTube saying her husband was like, absolutely not. Jess Like, just hard no to this because she had gone home from one of these parties and was kind of like, oh, do you think? Jess And so she went back and she's like, no, my husband said no.

[00:05:13] Jess And the person who was trying to recruit her said, well, I'll pay it. Jess And you just pay me back when whenever you have the money. Jess Oh, when you're making a ton of cash. Jess Exactly. Jess So then it's really hard to then go, well, if you're not requiring anything of me up front, then, you know, how can I say no? Jess Now, what was unusual about LuLaRoe was you couldn't pick, you couldn't choose the sizes and prints that you wanted and that you were buying. Jess No, you could get... Jess Exactly.

[00:05:44] Jess Whatever designs arrived in your shipment. Jess That's what you got. Jess That's what you got. Jess You might receive the highly desirable pattern that customers are fighting over, or you might end up with dozens of legging prints that nobody wants. Jess The most popular designs became known as unicorns, you know, rare, extremely hard to find. Jess Because every retailer was receiving different, you just did not know what you were going to get. Jess What a terrible construct for anybody trying to do an independent business.

[00:06:12] I don't even get to choose the merchandise that I'm going to try to sell. Jess I don't know what is going to, I don't know what I'm getting in my shipment. Jess It ended up a lot of times with retailers hosting live events on Facebook Live, holding up the leggings to their webcams, like showing the customers their latest inventory and then encouraging the viewers to claim the items that they wanted before someone else bought them. Jess Around 2015, LuLaRoe had around 2,000 consultants. Jess By 2017, it had 70,000.

[00:06:42] Jess Oh my wow. Jess So from 2015. Jess How many were Utah based? Jess Utah or California based? Jess I don't know if that's a good question. Jess In 2016, the company reported about 1.3 billion in sales. Jess And there were just women waiting for the chance to join because not everybody could be involved, I guess. Jess The women who made the most money were the ones who recruited the others just like every M-L-M. Jess In 2017, LuLaRoe's leadership bonuses were based on how much inventory the women in the

[00:07:11] downlines bought. Jess So basically, the top sellers were receiving enormous monthly paychecks and were genuinely and legitimately earning, you know, a lot of money. Jess But LuLaRoe was then encouraging them to put everything they earned back, all of their earnings back into buying merchandise and growing their teams and promoting the fact that you have the opportunity to make a fortune. Jess They had these massive conventions. Jess I'm sure this is not unusual. Jess Huge productions, cruises, celebrity entertainments, motivational speakers, top

[00:07:40] sellers telling the audience how much money they'd made. Jess Katie Perry performed at Angel Stadium in 2017. Jess Why am I not surprised? Jess She's such a sellout. Jess Katie Perry, such a sellout. Jess And Kelly Clarkson performed at their convention the next year. Jess Another one. Jess I said cruises, luxury cars, designer handker. Jess And they were making money handbags. Jess Stories about women who paid off their mortgage, earning enough money for their husbands to quit their jobs.

[00:08:07] Jess And that was something that LuLaRoe actively encouraged. Jess They were urging successful retailers, bring your husband into the business so you can work together as a couple, make money together. Jess It's a family business, right? Jess What could possibly go wrong that now you don't have that income that you had before Jess That was keeping you at home as a stay at home mom. Jess Right. Jess Or likely your health insurance or any of the associated benefits that come with being part of the, you know, the US capitalistic economy.

[00:08:37] Jess Go ahead. Jess Everybody quit. Jess Incar with your husband to quit his job. Jess The documentary has former sellers talking about how uncomfortable that may then. Jess If a husband leaves his job and you end up depending entirely on LuLaRoe for your income, which is kind of the point, right? Jess It keeps you locked in. Jess It keeps you hooked. Jess It keeps you grinding, right? Jess It keeps you just trying. Jess Now, again, on the documentary, Mark said, this is a quote, if you want to create incredible

[00:09:05] wealth, identify an underutilized resource, end quote. Jess And of course, the underutilized resource that he was talking about was who? Jess Stay at home mothers. Jess Stay at home mother being the operative word, the one who's like raising children. Jess Yeah. Jess It's not like she didn't have anything to do. Jess Underutilized resource. Jess She had an assignment and it was a full time one. Jess And it really is. Jess Yeah. Jess It's really like, just do something else. Jess Mark explained that women who choose to stay home with their children pay a price

[00:09:33] professionally and LuLaRoe is going to offer you a chance. Jess That's true. Jess Yeah. Jess Now you can continue to raise your families. Jess We'll just pay you between. Jess And do a run a full time business. Jess You can have it all. Jess What's your time? Jess 20 hours a week. Jess 20 hours a week. Jess You can earn $60 to $75 grand a year. Jess Right. Jess You can earn $75 grand a year by working 20 hours a week at stay at home mom. Jess Okay, please sign me up. Jess Yeah, that is really appealing to a lot of people.

[00:10:01] Jess I mean, that's middle class wages for halftime work, right? Jess Yeah, 100%. Jess And then you might not have made an investment in, you know, a college degree or something. Jess So you're like, even better. Jess That sounds great. Jess Exactly. Jess Exactly. Jess So 2017, redale started reporting serious problems because the company has just exploded Jess In growth going from 2000 to 70,000 distributors in two years. Jess That's insane. Jess So basically, how are you going to keep up with the tomorrow? Jess Ramp up is a hard, yeah. Jess Okay, yeah.

[00:10:30] Jess And obviously, you know all about this. Jess I know nothing about business. Jess Even I know. Jess How is that logistically and practically going to work, right? Jess The infrastructure, the production operations management, the quality control, all of that Jess It just goes out the window at that kind of, that rate of growth. Jess See, you are exactly right. Jess Customers were complaining that their leggings were tearing after only a few wears, developing holes almost immediately.

[00:10:56] Jess And then retailers were saying when they opened their packages, the clothing was damp, smelled like farts, or had mold and mildew in it, on it, on the clothing. Jess There was mold and mildew on the clothing. Jess Damp, smelly, moldy clothing. Jess Wow. Jess Gross. Jess So, as you can imagine, if you wear your leggings once and then they end up with holes in them, customers wanted their money back. Jess And the retailers selling them were like, I am being left with enormous amounts

[00:11:26] of shitty leggings I can't sell. Jess Sometimes thousands of them. Jess Because the quality control you mentioned, right? Jess The patterns. Jess Yeah. Jess Would be mismatched on the, I mean, I saw them. Jess Correct. Jess The patterns would be mismatched, leading to you looking like you might have a cock and balls, for example. Jess If the pattern was, like it just, and it was kind of ridiculous.

[00:11:52] Jess So they introduced a policy in 2017 that allowed retailers who left the business to return unsold inventory for a full refund, including shipping. Jess So women thinking about joining LuLaRoe were like, okay, well that's less risky then, because they're spending thousands of dollars up front, right? Jess Yeah, I get all my money back. Jess Exactly. Jess Particularly because the company said the policy had no expiration date. Jess So technically, I guess you could do it for five years and then when you went out, if you could just sell back your unsold inventory.

[00:12:22] Jess Okay, so that probably got more people to sign up because less risk involved. Jess I mean, you don't sell it, send it back. Jess I mean, right. Jess Five months later, LuLaRoe changed the policy and went back to their previous arrangement. Jess Now you're screwed. Jess We gotcha. Jess Yeah, which was obviously full of restrictions. Jess So women who had then arranged to leave and were waiting for instructions on how to return their clothing, right?

[00:12:49] Jess The rules had changed and now again, left with tens of thousands of dollars of clothing that they couldn't sell and that were absolutely worthless. Jess So they had growing debts, financial losses, families whose savings had been wiped out. Jess Some filed for bankruptcy. Jess Others reported having to sell homes and cars. Jess There were reports of thrift stores receiving so much unwanted LuLaRoe inventory, clothing that they struggled to take anymore. Jess Can you imagine? Jess And some of the women from the very top of facing financial problems.

[00:13:17] Jess They have some of the former top earners complaining about it. Jess And it's like, B, you need to recognize that you were exploiting people while you were being exploited. Jess Right. Jess And you had a role in this. Jess I don't care how much it sucks to be you now. Jess You perpetrated this and promulgated it. Jess So yeah. Jess On you. Jess The higher ranking retailers, the ones up the top who were making big bucks, they gave accounts of how they were pressured to look a particular way, including being pressured to undergo weight loss surgery in Mexico.

[00:13:47] Jess We want all of our top executives to be thin. Jess Yeah, you can't. Jess Yeah, because it's like, we don't want a bunch of fatties up on the stage selling our product that's unappealing. Jess Oh my God. Jess That's horrifying. Jess They literally, they described their expectations about weight, clothes and hair. Jess And pressure to show off the wealth that you're supposedly earning. Jess So the pressure was, people were earning, some of these women were like, I was earning $40,000 a month, and they have nothing to show for it.

[00:14:16] Jess Because they spent it all so that they could look wealthy. Jess Exactly. Jess You have to have a lavish lifestyle to encourage women who are thinking about joining it otherwise, where does your luxury spending has to be on display? Jess Well, that kind of signaling is common. Jess I mean, if you look at Mary Kay, when you get like, you get the pearl necklace and then you get the pink blazer, and then you get the pink Cadillac. Jess It is a, that signaling of how successful I am. Jess Yeah, it's pretty common in MLM. Jess Exactly.

[00:14:45] Jess So they had problems with their retailers, then they had problems with their suppliers. Jess The supplier was a company called MyDyer, and it ended up in a major legal fight. Jess MyDyer, the supplier, they had basically tens of millions of dollars of unpaid bills. Jess In October 2018, they went after this, these unpaid bills. Jess They said that LuLaRoe had continued ordering clothing and continued failing to pay for earlier shipments.

[00:15:12] Jess And the amount owed allegedly reached more than $48 million. Jess So that's... Jess Then stop sending them stuff. Jess Sorry. Jess No, I like your thinking. Jess You think you're part of this billion dollar enterprise? Jess Yeah, it'll come, they'll pay us. Jess Exactly. Jess So apparently, and maybe this came out through discovery in the court process, but the suppliers alleged that the money in LuLaRoe was being moved out of LuLaRoe into, they had

[00:15:38] this collection of other companies associated, you know, the Steedhams. Jess They were really into luxury cars and property. Jess And according to what the supplier said, Mark had threatened the supplier that if they sued him, he could just take the money and leave for the Bahamas, where it would be difficult Jess So that's not difficult to get anything back. Jess Wow, that guy's got a great moral compass. Jess Yes, super duper moral compass. Jess LulaRoe counter sued for more than a billion dollars and accused the supplier of fraud, charging

[00:16:07] too much for clothing and failing to deliver the quality and quantity of clothing it had been paid to make, arguing that it was the supplier's actions that had damaged LuLaRoe's business. Jess Now, there's a disagreement here, obviously, because Mark and Deanne publicly defended the quality of their clothing. Jess And then their company legal claims blamed supplier for defective and poor quality clothing. Jess So you've now just admitted that you have defective and poor quality clothing.

[00:16:34] Jess I mean, they, that was one of several lawsuits that they were involved in. Jess Washington's attorney general sued the company alleging that LuLaRoe had run a legal pyramid scheme, missled women thinking about joining, about how much money they could earn and used unfair inventory and refund practices. Jess Particularly, I'm thinking of the agreement they made that they didn't change five months later. Jess This lawsuit focused on the reward system, the bonus system, which encouraged exploitation.

[00:17:03] Jess It rewarded you for the clothing bought by the people under you. Jess So according to Washington's investigation, two people at the top of the company, two of the top retailers, made more than a $5 million in combined profits between 2016 and 2019, while more than a third of people lost money. Jess So some people are making millions. Jess A third of people are losing money.

[00:17:29] Jess At our company event in 2017, one of those top sellers even acknowledged that she had been overpaid while the people on her team were failing. Jess So ultimately, LuLaRoe, in that Washington case, agrees to pay about $5 million in settlement without admitting wrongdoing. Jess Because of course, they absolutely couldn't do that. Jess So LuLaRoe is still operating today. Jess Something to delve into on another day is the marriage advice that Leanne gave the retailers.

[00:17:59] Jess They're giving marriage advice? Jess Oh yes, she taught women how they should behave towards their husbands. Jess Let me guess, they should be subservient and make his life as easy and comfortable as possible? Jess Yeah, there's a very specific way that you need to do this. Jess And what you need to know about Deanne is that her mother was an anti-feminist activist

[00:18:25] Jess And had written a book called The Secret Power of Femininity. Jess Okay, so she was actually again, a Mormon raised California girl. Jess Deanne was born, Deanne Startup. Jess Okay, so Deanne Startup, she grew up in this Mormon family in Southern California. Jess She was one of 11 children. Jess Their father actually was a great grandson of Hiram Smith. Jess So you know how Mormons love to whip out that heritage at every opportunity. Jess They're just sad their last name is no longer Smith. Jess I'd agree. Jess Probably. Jess Yeah.

[00:18:54] Jess Anyway, so Deanne's parents, Elba and Maureen, they started what's called the American Family and Femininity Institute in 1945, offering classes that taught women how to what behave, how to attract a man, how to keep your man happy and how to behave femininely. Jess Wow.

[00:19:22] Jess And in 69, they published the book with the magnificent title, I really think we need to do a book club read of this. Jess The Secret Power of Femininity, The Art of Attracting, Winning and Keeping the Right Man for You. Jess But guess what? Jess The advice is, this is how you do it. Jess You act helpless. Jess You act like a bratty, pouty, helpless child.

[00:19:53] Jess You literally- Jess Because men love that. Jess They want to come and rescue you, right? Jess Some men do. Jess Some men do. Jess Some men do. Jess Some men would look at you. Jess Exactly. Jess Any man worth his salt would be like, get me over. Jess No. Jess The advice was, you don't just act helpless. Jess You don't just go, I'm a baby. Jess I'm just a baby. Jess You out. Jess You stamp your feet. Jess You have literal tantrums.

[00:20:18] Jess They instruct you in how to have a freaking Judy Garland like 19, like child's tantrums. Jess Make your husband feel strong and important. Jess Daddy, I want it now, daddy. Jess So women are supposed to practice behaviors that they consider feminine acting like a child Jess Is to them. Jess Is feminine. Jess Is feminine. Jess Acting dependent. Jess Oh wow. Jess Yes, exactly. Jess So this is one of the exercises from the book, Jess, and I want you to do this today.

[00:20:47] Jess In fact, I want everybody listening to do this, please. Jess Stand in front of a mirror and practice saying, I am just a helpless woman at the mercy of you big strong men. Jess I couldn't get through that. Jess Try it. Jess Feels good. Jess I don't think I can make those words. Jess I don't think I can make those words. Jess It feels so good. Jess It feels so good to know what's up. Jess Their workshop, their Femininity Institute offered workshops where it's just basically all about keeping a man happy.

[00:21:17] Jess When I say that Maureen was an anti-feminist activist, I mean the way that this woman campaigned against the Equal Rights Amendment. Jess Her and Phyllis Shaffley. Jess Exactly. Jess Maureen explained her position by saying, quote, I love the idea that women have a freedom of choice. Jess But under ERA, we will give it up. Jess I want to fight to rescind ERA so we can have more rather than give up more. Jess Close quote.

[00:21:43] Jess She thought that treating women differently under the law preserved women's existing protections. Jess You would be giving up your protection if the law said you were equal because you're not. Jess So you need to be looked after like a child, right? Jess You don't want that. Jess Wow, that's some backward thinking. Jess Yeah, exactly. Jess So that is the household that Deanne grew up in. Jess The household where she eventually built a business selling things to women and telling women how to keep their man happy.

[00:22:11] Jess That even makes more sense in terms of like work so hard that your husband can quit his job so he can come home and tell you how to run your business. Jess So that he can dabble in that. Jess Because you're helpless. Jess Exactly. Jess So that you can dabble in luxury cars. Jess Now, the other thing that they did, which you would probably suggest from a business point of view is an incredibly poor idea, is they got all of their children deeply involved in the company. Jess Their son Kenny became the vice president of sales. Jess Another son Jordan worked in leadership and culture development.

[00:22:41] Jess The son in law, because of course the daughters have to say, I don't know, the son in law, Jeff Thompson was the vice president of finance. Jess And then they had relatives working in photography, marketing, events, analytics. Jess And so basic job for you, a job for you, a job for you. Jess I'm not worried about your qualifications. Jess Exactly. Jess No, just if you want to look at like things that could go wrong in a company, it would be like, you might be familiar with anti-feminism. Jess You might be familiar with MLMs.

[00:23:10] Jess You clearly don't know how to scale a business. Jess And it shows this is the last thing I just want to share because it's kind of apropos of nothing. Jess But to me, it's like, if you grew up Mormon and you watch this documentary, you'll see so many things that you will be able to recognize as ideas that came from the culture. Jess You will recognize that it may not be doctrine. Jess It may not be taught in Sunday school, but you know it came from their Mormon upbringing.

[00:23:39] Jess It was taught through other ways. Jess Now they came, this marriage that Deanne and Mark have is a blended marriage. Jess So she had four kids in California and then he had, I think they have like 14 children all together or something. Jess So he had his bunch and two of their children, one of his and one of hers have married each other. Jess Oh, gross. Jess That's so gross. Jess But hopefully everybody is sealed so that they can all be together in heaven.

[00:24:09] Jess Oh, they're going to be together in heaven. Jess Make no mistake. Jess It's so funny because it's like, that is the response, right? Jess It's like, Oh, but then it's like, but wait, they're not brother and sister. Jess Did they grow up together? Jess You know, were they step siblings? Jess It's still just, I look, look outside for your dating Jess Yeah, something novel. Jess Someone you don't have to say, well, you know how mom and dad are to them and they get it. Jess No, that's what your siblings are for. Jess That's what your siblings are for and not your spouse.

[00:24:38] Jess Yeah, exactly. Jess You don't want to say to your spouse. Jess Yeah. Jess Yeah, well you remember that when we were kids, when mom and dad used to- Jess Hey, remember that Christmas when- Jess God, remember when dad used to say, I'm going to pull this car over. Jess If you do don't stop squabbling. Jess Well, we're doing it again. Jess Yeah. Jess Yeah. Jess That's a snapshot of the family, the founders and the company and Mormonism all combined. Jess And I'm as a women staying home and harnessing their untapped potential. Jess All of it is Mormonism 101.

[00:25:08] Jess It really is. Jess Yeah, I would be really curious. Jess Maybe I'll do a deep talk. Jess You know me in the numbers. Jess I want to see where were the populations concentrated in terms of Lula Rue sellers and retailers or whatever they were called. Jess Independent. Jess Independent retailers. Jess Independent retailers. Jess Exactly. Jess Yeah, whatever they called them. Jess I don't know. Jess I don't know. Jess I bet the Mormon corridor was pretty thick. Jess But then again, look at me, I'm out here in the Midwest and you know. Jess They made, I mean it permeates.

[00:25:38] Jess I'm not saying it doesn't, but I'll bet if you looked at, like if you did a map and you showed the highest areas of concentration, it goes right along the data. Jess Oh, I am sure. Jess And maybe, maybe, maybe that information is available somewhere. Jess But I think we should read the Divine Feminine book. Jess Sorry. Jess It's not called Divine Feminine. Jess It's called The Art of Femininity and Acting Legal Bible. Jess And maybe we'll do a, we will have a little book club read of that. Jess That would be awesome.

[00:26:07] Jess If I can find a version online, I will happily disseminate it to anybody who wants a copy for free. Jess Yeah. Jess Illegally. Jess Let's do it. Jess We'll sue it. Jess Okay. Jess Well, that's all that we have for What Do You Know Wednesday today. Jess We'll be back on Saturday with an episode of Mormon True Crime. Jess More Crime for Mormons. Jess Well, indeed. Jess Until then, if you are interested, you can find us on the socials, TikTok, Instagram, and Facebook.

[00:26:34] Jess We are also online at postmortem.com. Jess If you want to leave a review and you don't know what to say, you could always say what I'm about to say to Jess. Jess I'm sorry for what you said when I was Mormon. Jess I'm sorry for what I said when I was Mormon too. Jess I'm sorry for what I said when I was Mormon too.