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Amway Goes Wrong Way

Wired News, September 2, 1999

by Craig Bicknell

Charles Brown expected to begin his ascent into the ranks of the Web millionaires when he woke up on Wednesday.

"I don't think it would be unrealistic to expect seven figure incomes," said Brown, a 48-year-old part-time Amway salesman who had hammered his $99 stake into Quixtar, the company's much-hyped e-commerce site.

Brown said he had lined up as many as 500 folks to give the site a spin, and if they liked what they saw, they might choose to become Quixtar e-salesmen, too.

And because he'd referred them, Brown would get a cut of every sale they made.

When he went to the freshly unveiled Quixtar site Wednesday, he found ... nothing. It wouldn't load. All day. For anyone.

This after a relentless, months-long drumroll by Amway that included a Web cast last week viewed by more than 500,000 Amway reps and friends.

"I had all these people interested in becoming [salesmen], and I gave them the same buildup I'd received for the last 18 months, and then there was nothing there," said Brown. "It hurt my credibility, and I got a lot of angry email."

He spent the day on the phone with Quixtar demanding answers, but received none.

"What can they say? They're working on a problem and trying to fix it. But that's a problem after they built it up so much," Brown said.

Brown wasn't alone. Online message boards bristled with angry and incredulous posts.

The reason for their anger: Each "Independent Business Operator" (IBO) must pony up a $99 fee for the right to sell Amway products and other merchandise through the site.

IBOs are then encouraged to recruit other IBOs -- much like the classic Amway model. The original IBO then gets a cut off every sale made by his recruits, and their recruits, and so on.

Brown, along with other pre-launch IBOs, saw their hard recruiting work become potentially meaningless with Quixtar's opening-day failure.

Quixtar's reaction? Whoops.

"We've had our developers, guys from Microsoft, and guys from the telecom in all night trying to figure out the problem," said Ken McDonald, Quixtar's senior VP and managing director for North America.

As of midday Thursday, they still hadn't figured it out, though they had determined it was something outside of Quixtar's ring of 70 servers. By early afternoon, they managed to get the site up, although it was slow and limping.

Some 40,000 to 50,000 folks were rummaging about the site, said McDonald.

That's a tiny fraction of those who tried. By noon Wednesday, even before Quixtar officially tried to launch the full site, the Quickstar.com URL got 20 million hits, officials said.

"Most people start out slow and ramp up, but we didn't do that," said McDonald. "We started out with a huge site and told the whole world so that everyone was hovering with their finger on the button."

Ouch.

Any regrets about that strategy? "It's not worth pointing fingers and finding out who hit George," said McDonald. "Whatever it is, we're going to fix it and move on."

After his initial wrath subsided, Brown arrived at the same conclusion.

"The hallmark of the professional is to work around a problem," he said.

For him, that means returning to the chat rooms and message boards, the email and his Web site, drumming up interest in the ostensible promise of Quixtar and dreaming of making it big.

"It's still going to be big. When you're dealing with Amway, you're talking about selling soap suds to your neighbor. Getting someone to come on board and shop online is a lot easier."

Quixtar has no plans to offer redress to affected IBOs, McDonald said.