Speaker 1: Hey, it's Jane Marie. We're releasing four bonus episodes from
Speaker 1: season one for the next couple of weeks. They're about
Speaker 1: MLMs again, some of your faves, The Ugly Banana Leggings
Speaker 1: Company for one, and another one that's sort of like
Speaker 1: a cult. If you want to unlock all of the
Speaker 1: bonus episodes right now, you can go to Stitcher Premium
Speaker 1: dot com and sign up for a free trial with
Speaker 1: the code Dream. You'll get access to all four bonus
Speaker 1: episodes today and a free month of listening without ads
Speaker 1: in Stitcher, and you'll also be supporting our show. That's
Speaker 1: Stitcher Premium dot com and sign up with the code
Speaker 1: Dream to listen to everything today. Otherwise, yeah, gotta wait
Speaker 1: over the next four weeks. Thanks. Right after we wrapped
Speaker 1: production on Season one of The Dream, a scandal happened
Speaker 1: in the MLM world involving a company I jokingly refer
Speaker 1: to as the Ugly Banana Leggings Company, Lula Row. Lula
Speaker 1: Row is an MLM, a huge one based out of Utah.
Speaker 1: They carry more than banana print leggings, are also dresses
Speaker 1: and shirts, all kinds of what they call buttery soft knitwear,
Speaker 1: and a variety of prints, and all the styles have
Speaker 1: names like actual human names like Debbie and Jill and Irma.
Speaker 1: So this MLM. They got into trouble last year for
Speaker 1: not paying one of their vendors and ended up in court.
Speaker 1: They've actually ended up in a bunch of courts for
Speaker 1: a bunch of reasons. I was doing all kinds of
Speaker 1: other reporting at the time and didn't follow the case
Speaker 1: super closely, so we found someone who did. I am
Speaker 1: Haley Peterson. I'm a senior correspondent for Business Insider. I
Speaker 1: mostly cover retail companies, and I cover both large and
Speaker 1: small private public includes Walmart, Amazon, Whole Foods, Kroger, really
Speaker 1: anything that people buy I write about, including Lula row
Speaker 1: Lularo popped onto my radar several years ago. I think
Speaker 1: it was like three or four years ago when I
Speaker 1: heard about these online parties where mostly women were buying
Speaker 1: up leggings really quickly. They would go up for sale
Speaker 1: and they'd be gone in a matter of minutes. Hey, welcome,
Speaker 1: so much for joining. We're gonna do Sarah's right now.
Speaker 1: They are seventy dollars. They are true to size, if
Speaker 1: there's if it's has a lot of stretch, go down
Speaker 1: one size if you have any questions. So they will
Speaker 1: have a Facebook live party where they will invite all
Speaker 1: of their shoppers. They have these massive shopper groups that
Speaker 1: they have thousands sometimes thousands of members in them, and
Speaker 1: they'll go live on Facebook and sell items almost like
Speaker 1: an auction, and they will hold up sometimes will unboxed
Speaker 1: items in real time. This is a Jacard fabric. It's gorgeous.
Speaker 1: It's a cream with a dark blue, there's yellow and
Speaker 1: there's red in there. Look at that print is so pretty.
Speaker 1: Then they'll say whoever comments first, that it's sold, It
Speaker 1: goes to that person. And people were just dying to
Speaker 1: get particular patterns. Does that make sense to you, I know,
Speaker 1: it seems probably very complicated. It does. What doesn't make
Speaker 1: sense to me is that I've seen these clothes and
Speaker 1: they and they look like almost all of them look
Speaker 1: really similar to the four dollars ninety nine cent dresses
Speaker 1: that I buy for my five year old at H
Speaker 1: and M. And do you know the ones? Yeah, And
Speaker 1: there's even Walmart's been coming out with a lot of
Speaker 1: really colorful leggings lately. There's a lot of food patterns,
Speaker 1: a lot of cultural appropriation prints. Right. I spoke to
Speaker 1: someone once, a consultant. I can't remember where she was,
Speaker 1: but she was somewhere on the I think she maybe
Speaker 1: it was Chicago or something in the middle of the winter.
Speaker 1: She got a Aztec prints in her box. It was
Speaker 1: just a box full of Aztech princes and she said,
Speaker 1: there's no way I'm going to sell this in the
Speaker 1: middle of the winter in Chicago. I will explain quickly,
Speaker 1: when you're a consultant for Lula Rowe, you don't actually
Speaker 1: get to pick the inventory that you sell. You pick
Speaker 1: the styles, what you picked the silhouette, but you can't
Speaker 1: actually pick the patterns, the colors, anything like that. So
Speaker 1: that is all site unseen. So you're buying a box
Speaker 1: of essentially unknown items. And that box was five thousand dollars.
Speaker 1: That's right. The initial buy in to become a Lula
Speaker 1: Roe seller was five grand in the beginning. It's apparently
Speaker 1: only twenty five hundred now. When the company first came out,
Speaker 1: people were really excited about it. They really appealed to
Speaker 1: people who worked from home or stay at home moms
Speaker 1: that wanted something that was going to be forgiving to
Speaker 1: where that was comfortable so Haley started looking into this
Speaker 1: company selling five thousand dollars mystery boxes full of leggings,
Speaker 1: and what she found is surprising if you've never heard
Speaker 1: our show. But four the people that have done really
Speaker 1: really well with Lularo, which are a very small percentage,
Speaker 1: have made a lot of money, some people making bonus
Speaker 1: checks since then of upwards of ninety thousand dollars a month.
Speaker 1: If you take a look at the numbers, the company
Speaker 1: had about two thousand consultants in late twenty fifteen. That
Speaker 1: jumped to about thirty thousand about a year later, and
Speaker 1: then within six months the company had doubled the number
Speaker 1: of consultants to more than seventy seven thousand people. And
Speaker 1: they're all buying in for five thousand. That makes the
Speaker 1: first two thousand very exactly. Those people who got in
Speaker 1: in twenty fifteen early twenty sixteen are the ones who
Speaker 1: were really successful. And I can almost predict the story
Speaker 1: that I'm going to hear once somebody tells me what
Speaker 1: year they got into lu lar Ro, Like you can say, okay,
Speaker 1: twenty seventeen, here's what happened exactly twenty eighteen. Rod Yes,
Speaker 1: after interview, after interview, after interview. It's been that theme
Speaker 1: has emerged over and over and over again. Where did
Speaker 1: things start going really wrong? That would be around twenty seventeen.
Speaker 1: I would say that's also interestingly when the company experienced
Speaker 1: its biggest jump in growth. When the massive growth happened,
Speaker 1: there was a bit of a production change, and that's
Speaker 1: when a lot of complaints started popping up about quality
Speaker 1: of the clothes that we're coming out of Lular row.
Speaker 1: There's even a hashtag you can look at on Instagram
Speaker 1: called Lulu rou fail, where people post pictures of clothing
Speaker 1: that's arrived with holes in it. They also post photos
Speaker 1: of the front of pants where the print makes it
Speaker 1: look like you have a huge boner. Some of those
Speaker 1: complaints were coming from customers, and some of them were
Speaker 1: coming from consultants saying they couldn't sell what they were
Speaker 1: getting in their boxes. Consultants were also complaining that they
Speaker 1: weren't getting their full order, so they would order sixty
Speaker 1: items and get twenty items and the rest. There would
Speaker 1: be back order slips or sometimes no slips at all
Speaker 1: in their boxes, saying you know, we'll send these to
Speaker 1: you at a later date, or hear some back what
Speaker 1: they would call back office credit for these items. Essentially,
Speaker 1: the factory at the time couldn't keep up the quantity
Speaker 1: or quality of the clothing that was in such high demand.
Speaker 1: And according to Haley, at the beginning, at least that
Speaker 1: demand appeared to be real, like there were real end consumers,
Speaker 1: women who wanted stretchy leggings and dresses and wild prints
Speaker 1: for slightly above what you might pay for the same
Speaker 1: thing at target. But then another problem started happening. In
Speaker 1: addition to patterns being out of season and the dip
Speaker 1: in quality and the back order issue, sometimes boxes contained
Speaker 1: way too many of the same exact item. Obviously, all
Speaker 1: of this made it difficult for consultants to assemble decent
Speaker 1: collections to sell to their followers. So they had to
Speaker 1: get creative, and they started doing something that may have
Speaker 1: been the biggest turning point of all. They began selling
Speaker 1: to each other, moving inventory around the country. Unbeknownst to
Speaker 1: Lula Roux and Lularo's profits began falling even faster. Still,
Speaker 1: You've got money from new recruits and old going out
Speaker 1: to lular Row and screwed up orders of crappy banana
Speaker 1: leggings coming back to sellers and then, of course, in
Speaker 1: true MLM fashion, rather than fix those problems right away,
Speaker 1: Lula Row does a misdirect. They decide to implement a
Speaker 1: buyback program, which they were actually required to have by
Speaker 1: law in the first place, to entice even more new sellers.
Speaker 1: And I think at the time, it was meant to
Speaker 1: be sort of a here's a risk free way to
Speaker 1: get into Lula Row, because if it doesn't work out
Speaker 1: for you, we'll buy back all of your inventory, one
Speaker 1: hundred percent of it and there's no risk. What ended
Speaker 1: up happening is a lot of consultants used that as
Speaker 1: an opportunity to get out of the business and sell
Speaker 1: back their own sold inventory. Suddenly, Lula Row had an
Speaker 1: influx of unsold clothes coming back to their warehouse and
Speaker 1: growing number of refunds that were owed to consultants, and
Speaker 1: these were in amounts of five thousand upwards of twenty
Speaker 1: five thousand, according to consultants that I've spoken to. And
Speaker 1: that was also around the same time that the company
Speaker 1: changed its compensation structure so that bonuses were no longer
Speaker 1: based on what their teams were buying wholesale from Lularo.
Speaker 1: It made it so that the compensation for them was
Speaker 1: based on what their teams were actually selling to customers,
Speaker 1: and that resulted in reportedly sales loss for a lot
Speaker 1: of or revenue losses for a lot of top leaders
Speaker 1: within the company. And so suddenly it was not as
Speaker 1: lucrative of a job. What do you know, when the
Speaker 1: company decided to function slightly more like a normal business
Speaker 1: and follow the rules that the government says must be
Speaker 1: adhered to in all MLMs, the thing falls apart. So
Speaker 1: you have a kind of a perfect storm of things
Speaker 1: going wrong at this company. One of the things you
Speaker 1: said about sending everything back and then were they paying,
Speaker 1: I've no, that is the short answer. In some cases, yes,
Speaker 1: I think that that may have happened. But I spoke
Speaker 1: to a lot of consultants who complained that they were
Speaker 1: waiting months, sometimes over a year to get their refund
Speaker 1: checks for the inventory they sent back to Lulu Rou,
Speaker 1: and sometimes the checks that they were getting were not
Speaker 1: the in the amounts that they expected. Luurou had a
Speaker 1: lot of rules about what kinds of inventory they would
Speaker 1: accept back. That that some consultants have referred to as
Speaker 1: lula math and people. Some people were really struggling financially
Speaker 1: while waiting for these checks. You know that we're worth
Speaker 1: five thousand dollars or more. And I will say, however,
Speaker 1: that I've heard anecdotally over the past several months that
Speaker 1: Luluro has been sending checks out. I don't know if
Speaker 1: that is a result of our reporting or a result
Speaker 1: of the Washington Attorney General suing Luluro and in part
Speaker 1: demanding that they refund consultants. But people have been that
Speaker 1: I've been waiting more than a year, have started to
Speaker 1: see their checks come in. Let's talk about the legal stuff.
Speaker 1: Let's see Luluro is facing a lot of lawsuits. Some
Speaker 1: of them have been settled, some of them are still
Speaker 1: moving through the courts. There have been lawsuits alleging that
Speaker 1: lulu Ro stole prints for its clothing. The most recent
Speaker 1: lawsuits are the Washington. Washington Attorney General sue Luluro, claiming
Speaker 1: that it was an illegal pyramid scheme that made misleading
Speaker 1: income claims and encouraged its consultants to focus more on
Speaker 1: recruitment than selling clothes to customers. The lawsuit also said
Speaker 1: that a majority of people that sold Luluro ended up
Speaker 1: losing money. Luluro has denied the claims in this lawsuit,
Speaker 1: it is still moving through the court. Another lawsuit, which
Speaker 1: hit last fall is from Providence Industries, which is also
Speaker 1: known as my Dire, which for a long time was
Speaker 1: Luluro's chief supplier, and my Dire has sued Luluro for
Speaker 1: now more than sixty three million, claiming that it failed
Speaker 1: to pay its bills for as long as seven months,
Speaker 1: and in some cases, some of the money that it
Speaker 1: says that Luluro owes it is for items that Luluro
Speaker 1: said it no longer wanted after production, or items that
Speaker 1: Luluro asked my Dire to store until it could pay
Speaker 1: for them. The lawsuit from my Dire also claims, and
Speaker 1: here's where things get really juicy, it claims that Luluro's founders,
Speaker 1: a couple named Mark and Dan's didham we're doing some
Speaker 1: funky things with the money they owned My Dire, like
Speaker 1: maybe hiding the money in shell companies, more than twenty
Speaker 1: shell companies, I think seventeen of which were so we're
Speaker 1: set up over the course of two months or so,
Speaker 1: and that they are hiding these assets so they can
Speaker 1: fund their quote unquote lavish lifestyle. That's a direct quote
Speaker 1: from the lawsuit lavish lifestyle. Finally we get to the Lamborghinis. Actually,
Speaker 1: the cars these folks collect aren't Lamborghinis. They're even more expensive.
Speaker 1: We'll tell you all about it on the next episode.
Speaker 1: But back to the courtroom for now. The lawsuit also
Speaker 1: included a quote from Marks Stidham that was allegedly said
Speaker 1: to an executive at My Dire that he was going
Speaker 1: to abscond with the company's assets and go to the
Speaker 1: Bahamas with his wife. Mark has come out and vehemently
Speaker 1: denied this, saying that that is patently false. And what
Speaker 1: is the Stidham's defense for not paying for all of
Speaker 1: these They are that they don't have the money, no
Speaker 1: one of them. Their defense was actually that they don't
Speaker 1: owe the money because the clothing was crappy, which I
Speaker 1: can see, but dude, you figure that out way before
Speaker 1: you owe someone sixty three million dollars. Now, there's also
Speaker 1: my dyer has said that they demanded payment within a
Speaker 1: certain time frame, and there's a disagreement over what that
Speaker 1: timeframe was. So, okay, what you'd expect, and this is
Speaker 1: what I expected when the first season The Dream came out.
Speaker 1: What you'd expect is just hordes of Lula Rows sellers
Speaker 1: coming to their defense. That's right. Yeah, And there has
Speaker 1: been a little bit of that, and Dane has really
Speaker 1: she's very active. Dane Stidham is very active on social media.
Speaker 1: She goes on Instagram Live almost every day and tries
Speaker 1: to sort of rally the troops and say, you need
Speaker 1: to speak about the gift that lular Row is in
Speaker 1: your life. Tag because of Lula Row. Hey, everybody, I
Speaker 1: am so excited. I am in a great movie. Listener
Speaker 1: this sun this is the song I'm a murder. That's
Speaker 1: what we are, man, we are fighters. We'll let you dah.
Speaker 1: That's what's about what it's all about. And mentors and
Speaker 1: team leaders have told consultants, um and I've learned this
Speaker 1: through interviews that whenever you buy a new house or
Speaker 1: a new car, or you know something good happens in
Speaker 1: your life, you hashtag because of Lula Row and share
Speaker 1: that with people on social media. That UM, as I
Speaker 1: interpret it, is sort of like a recruitment tool to say, hey, look,
Speaker 1: this is what your life can be like if you
Speaker 1: sell Lula Row. We're part of something huge and big
Speaker 1: and growing. And guess what, the more we do, the
Speaker 1: better it gets. The more we get, the more we get. Okay,
Speaker 1: I've watched these videos of Lulu Roe's owner, Dan, and
Speaker 1: she's wild. She posts Instagram videos while driving. In case
Speaker 1: you're wondering how committed and yet reckless the woman is.
Speaker 1: She looks like she wants to look like Stevie Nicks,
Speaker 1: but instead she just looks like a grandma wearing too
Speaker 1: much makeup and jewelry for a trip to the grocery store.
Speaker 1: Not that there is such a thing pilot on ladies.
Speaker 1: I've also seen a video, it's a few years old,
Speaker 1: of her and her husband on the morning news talking
Speaker 1: about how great they are. We have a multi billion
Speaker 1: dollar business. It was not built by tricking people into
Speaker 1: giving us their money. Lulu Roe works for you. You
Speaker 1: don't work for Lulu World. You get the product, you
Speaker 1: put it before people, and you sell it and you
Speaker 1: have money. And that's the simplicity of this business. And
Speaker 1: that's as easy as it can be. And so Dan
Speaker 1: has really been trying to, i guess, restore confidence in
Speaker 1: the consultants that remain within the company by going on
Speaker 1: Instagram live every day and saying we're good, everything's fine,
Speaker 1: We've got new styles coming out We've got tons of
Speaker 1: stuff in the pipe blind. Don't worry because and also,
Speaker 1: don't read the internet. Don't pay attention to the internet
Speaker 1: because it will distract you. You know, it'll distract you
Speaker 1: from your business. You need to work your business. She
Speaker 1: said that over and over again, and in the face
Speaker 1: of criticism. So Haw's her husband, Mark, I ask one question,
Speaker 1: how long do you want to be upset and angry?
Speaker 1: It is a choice, once again, with your permission. My
Speaker 1: life philosophy is that we choose our emotions. I'm not
Speaker 1: asking you to believe that. I'm not asking you to
Speaker 1: buy in. I'm not telling you that I'm right. I'm
Speaker 1: saying that's a philosophy that has worked so well for me.
Speaker 1: Do you have a right to be angry? Yes? You do.
Speaker 1: How's that serving you? How does it feel to be angry?
Speaker 1: And do you want to be angry for a minute?
Speaker 1: You want to be angry for an hour? Do you
Speaker 1: want to be angry for a day, for a year?
Speaker 1: Those choices are up to you because eventually, hopefully you
Speaker 1: won't be angry any longer. But it's so much better
Speaker 1: to not be angry. It's so much better to be
Speaker 1: happy and I'm telling you that your happiness is a choice.
Speaker 1: So with that, let me just express once more, but
Speaker 1: we don't know you all personally. Dana and I love you,
Speaker 1: we believe in you, we pray for you. So with that,
Speaker 1: thank you very much, have a wonderful evening, good night.
Speaker 1: How long do you, dear listener, want to be upset
Speaker 1: and angry? Well, you should listen to the next episode
Speaker 1: where we take you deep inside the not so secret
Speaker 1: but oh so decadent world of the Stidhams before you
Speaker 1: decide next time on The Dream. The way that they
Speaker 1: were able to build up there they're following in their
Speaker 1: company through social media, is also giving fuel to folks
Speaker 1: who want to, I believe, take them down in a
Speaker 1: certain way. A lot of financial melffeasance and what accusers
Speaker 1: are saying is that they're saying they're running a pyramid scheme.
Speaker 1: The Dream is a production of Little Everywhere and Stitcher,
Speaker 1: written and reported by Me, Jane Marie and Dan Galucci
Speaker 1: with help from Lyra Smith. Were edited by Peter Clowney.
Speaker 1: Our executive producers are Chris Bannon, Dan Glucci and Me.
Speaker 1: We have a brand new season coming out in a
Speaker 1: few months. So don't forget to subscribe, and we also
Speaker 1: appreciate you rating and reviewing the podcast anywhere you listen