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 In the checkered entrepreneurial journey that Max James has taken, his path eventually crossed that of the Guthy Renker Company. After a ten year stint in the hotel industry as an owner, developer, operator, Max entered the nutritional supplement arena. Joining a Canadian nutriceutical company that marketed nutritional supplements via the distribution system know as network marketing, he eventually succeeded with a US nutriceutical company, named New Vision. This company utilized a cassette tape to market one of their products. The tape became famous as it was extremely effective as a “call to action” marketing tool. In looking for numerous channels of distribution for this tape, Max talked with a former “speaker” for the Guthy Renker team that taught clients how to create their own business using the internet.
Max convinced the speaker to offer the tape to the “students” at the end of the gatherings, saying something like, “We want to give you a gift as you leave today. It is a cassette tape that we know you will find very informative AND entertaining as you drive home tonight. And by the way, it might just save your life.” This effort was so successful that many of the companies that were using infomercials to gather potential clients into hotel conference rooms around the country also began giving the tape away as a gift at the end of their presentations.
Max felt that the speaker on the tape was so effective with his message that he might be a candidate for presenting this information via an infomercial. He convinced his contact to give him and introduction to the Guthy Renker Company. Max met with Bill Guthy and Greg Renker in Santa Monica to discuss taking the tape, “Dead Doctors Don’t Lie” and its author onto a TV infomercial that would sell the nutritional supplement to that audience. Bill and Greg were already familiar with the product and the tape, however after the “legal department” reviewed the content, it was decided that the promotion of that tape, which had strong inferences that the mineral drink “treated, cured and mitigated the symptoms of disease”, might put the Guthy Renker Company in jeopardy of a potential FTC charge.
That meeting was the first introduction of Max to Bill, Greg and the GR team. But during the due diligence period, Max and Greg flew from Palm Desert to Phoenix to meet with the owners of New Vision, the network marketing company that was selling the mineral drink.
The plan was to run the infomercial to sell the product, but capture the phone number of the buyer. Max was to create a follow up team that would call the customers to see if they would like to “purchase the product for free”, by signing up as a network marketer, referring their friends and family to the marketing team and thus earning sufficient “commissions” on their sales to more than cover the cost of the product. But when legal killed the product promotion, the idea was dropped. |
A few months later, Greg called Max to come to Palm Desert to discuss the possibility of setting up a Guthy Renker Network Marketing Division/Subsidiary, under the same business model as had been proposed before, but selling one or more of the Guthy Renker product lines instead. This plan went so far as an offer being made for a President of this company to an internationally recognized executive in this industry
But once again, the legal department advised strongly against a GR network marketing company (and rightly so), because of lack of control of tens of thousands of independent contractors, who most probably would make “illegal or false” claims about the benefits of the nutritional products, and thus risk the financial well being of all the Guthy Renker divisions.
In late 1997, Max was introduced to a new network marketing company that was allowing its distributors to sell the product lines from a cart in shopping malls. American Kiosk Management, LLC was incorporated in January of 1998 to open these shopping mall carts and sell a weight management product called Metabolife. The program was extremely successful. The business model used by Metabolife was to run radio infomercials in a region until the product was well branded and the revenue was sufficient to pay for the radio advertisements. Then, the cart operators would open in malls within that radio coverage area.
Max was searching for and testing a diversity of products to sell in this venue. Some worked. Some did not. The plan was to find a company, like Metabolife, which did NOT sell their products at retail, but DID create product brands via infomercials. That is when Max went to Palm Desert to pitch his plan to Greg and Bill for selling infomercial products from these carts.
The answer was a polite “No”.
As the Metabolife business continued to be a giant success from these carts, Max tried again, and the answer was a forceful “No”.
Finally, Max sent one of the Nashville cart’s P&L to Guthy Renker, in which the cart had sold $150,000 of product in one month.
The AKM/GR legend has it that GR then sent the plane. Guthy Renker approved the beta testing of five carts, to be located in “B” markets only. Max agreed, and was asked what he needed from GR to begin.
The answer was:
1. Product
2. Brochures
3. A copy of the infomercial |
To Max’s dismay, he was told that he could not sell a particular product which he had selected, but that the product line to be tested was something called “Proactiv”, of which he had never heard.
Max explained that he did not think he could sell “Zit Cream” from a cart. And he asked Bill how much of this “stuff” they had sold the previous year. When Bill replied, “About $125 million.” Max immediately replied, “I CAN SELL IT.”.
AKM began 2001 with six carts and by July of 2003, that number had grown to 40 carts. During this period, Max brought in additional executive staff, including Linda Johansen, now the President of AKM.
Max also brought in financial partners to fund the growth of the company. These investors owned an interest in certain individual carts. In Max’s effort to raise additional expansion capital, he requested a formal Distribution Agreement from Guthy Renker. Pushing for this document to be signed, Max was asked to come to Santa Monica to meet with the Guthy Renker Executive Staff.
During this meeting, Max was offered the opportunity to start a new company with the Guthy Renker Company. This new company, North American Kiosk, NAK, would purchase all of the existing 40 cart operations from Max and his partners. Max would retain sole ownership of American Kiosk Management, and AKM would contract with NAK to manage its operations. NAK would open as many additional carts as the market and the AKM team could handle.
During the next two and a half years, over 500 carts were opened in the United States, Canada and Puerto Rico. The AKM Team grew to over 1400 full and part time employees.
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