‘It’s very culty’: the bizarre billion-dollar downfall of fashion company LuLaRoe – The Guardian

Roberta Blevins first heard about the leggings in the fall of 2015, in a post by a fellow member of a motherhood-themed Facebook group. They were loudly patterned, buttery soft, interesting – clothing functional for chasing around young children, accommodating of changing bodies post-birth, and cute enough to be socially acceptable outside the home. The woman who advertised the leggings said she bought them wholesale from a company called LuLaRoe, and sold them for double the price.

Blevins was intrigued. She was struggling with the alienation of young motherhood and looking to supplement her family’s income, and LuLaRoe offered an alluring, soothing promise: sign up to be a retailer, and you could run a successful virtual boutique out of your home while still being present for your kids.

LuLaRoe seemed to offer “this built-in community, where I knew I could have an instant friendship”, she told the Guardian. As Blevins recalls in LuLaRich, a four-part Amazon docuseries on the beleaguered multi-level marketing company, LuLaRoe women added her to Facebook groups, texted her, invited her to parties that doubled as fashion sales, and showered her with encouragement. By March 2016, Blevins paid $9,000 to become a LuLaRoe consultant and receive a starter package of clothing to sell.

At first, things went well – she was enthusiastic about the clothing, and made money selling LuLaRoe on Facebook out of her home in suburban San Diego, California. But Blevins quickly felt the strain of the company’s precipitous growth, owing to its emphasis on recruiting new “consultants” – people on the “downline” whose start-up costs traveled up the ranks as “bonus checks”. By the end of 2016, what had started in 2012 as a homespun business selling maxi skirts out of the trunk of a car by two Mormon grandmothers had reached over $1.3bn in sales with over 60,000 consultants – and faced lawsuits alleging that LuLaRoe founders Mark and DeAnne Stidham misled retailers and ran a pyramid scheme.

Over four episodes, LuLaRich, directed by Jenner Furst and Julia Willoughby Nason (makers of Hulu’s Fyre, on the spectacular meltdown of the scammy music festival), surveys the warp speed growth of a company that preyed on millennial, overwhelmingly white women’s sense of purposelessness, repackaged the fallacy of “having it all”, and saddled thousands in debt and broken promises while the company’s top brass raked in millions. The company appealed, said Furst, to the “middle America millennials who don’t have the same opportunities that their parents had, who are facing a lot of different struggles, who are susceptible on one hand to the patriarchal nuclear family structure but then also the pitch to be a girlboss and to be empowered and to be a feminist who is selling these leggings”.

Blevins, like several of the former LuLaRoe consultants who appear in the series, was at first convinced by the promise of running her own business. The company hammered home the perks of being not just a LuLaRoe retailer, but a member of a movement – a “boss babe”, “part-time work for full time pay”, contributing to household income without going to an office. Or, as Mark puts it to Nason and Furst in the first episode: “Take your creativity, your passion, your excitement for life, and here’s a place that’s a pure meritocracy.”

“They saw me, they’re like she’s bubbly, she’s energetic, she knows how to use social media, she’s an asset to moving this forward,” Blevins said of the “love-bombing” grooming process that convinced her to join LuLaRoe. “At that point, I was just another walking dollar sign.”

Slowly, inconsistencies began to pile up. Blevins would visit “home office” in Corona, California, or attend company events, which increasingly took on the feel of pop religious festivals (corporate events included performances by Kelly Clarkson and Katy Perry), and Mark would start reciting passages from the book of Mormon. “I thought we were selling leggings?” Blevins recalled thinking. “It just seemed strange.” Blevins received an order of merchandise that reeked of mold; quality was slipping, and some leggings straight-up poorly designed, with prints that resembled anatomy at the crotch. Now with several consultants down-line of her, Blevins passed questions up the chain, “and they would give me an answer that made sense,” she said.

“You reach up inside the organization [for answers]. You don’t reach outside the organization for information or to have your questions answered. It’s very culty.”

Through interviews with former and current consultants, employees, and even Mark and DeAnne themselves, LuLaRich takes a bird’s eye view to what Blevins couldn’t see at the time: the company, allegedly designed to make money not on clothing but through the unsustainable recruitment of new members, was collapsing under its own weight. Mark and DeAnne, who married in 1998, trademarked LuLaRoe in 2013, and staffed it with members of their large extended family. In 14 months from 2015 to 2016, the company grew from $70m in sales to over a billion. The profits for those who joined early in the company, and whose down lines flowered into the thousands, were astounding: some in the series claim to have received bonus checks of anywhere from $20,000 to $70,000 a month.

Meanwhile, the majority of LuLaRoe consultants struggled to make ends meet – encouraged to take on debt and saddled with merchandise they couldn’t sell. With a glut on the market of LuLaRoe consultants, most buckled under the weight. “A lot of people lost their marriages, their lives were in shambles, people were selling breast milk for startup costs – are you kidding me?” LaShae Kimbrough Benson, who started as an administrative assistant at the company’s headquarters in 2015, told the Guardian. “People were taking out loans, all kind of stuff. And [Mark and DeAnne] knew that.”

The lopsided margins were by design of multi-level marketing companies – essentially, pyramid schemes legal under the guise that they’re selling a product rather than membership – according to experts featured in the series such as Robert FitzPatrick, author of Ponzinomics: The Untold Story of Multi-Level Marketing. Legal MLMs have to have a buyback policy, and prohibit buying new inventory until retailers have sold 70% and have at least 10 new customers. As Benson and other former employees recall, LuLaRoe more than skirted this line. “We always had a quota to hit,” said Benson, who eventually worked for the “onboarding” team for new members.

The Stidhams maintain that LuLaRoe, which is still in business (though startup costs are down 90% and the commission structure altered), was never a scam, but a meritocratic ladder reflective of personal effort and character. The couple participated in an initial interview with the film-makers to detail the origin story behind the company and their values of entrepreneurism while maintaining a traditional family structure; they declined a second interview to specifically address claims made against the company in 50 lawsuits filed since 2016, as well as some of the more outrageous elements of corporate culture – that they pressured consultants to get weight-loss surgery in Tijuana and received kickbacks from the doctor, for example.

The company instead offered a statement presented at the end of the series: “We continue to bring greater focus to our mission of improving lives and strengthening families through the principles of entrepreneurism while continuing to educate small business owners about the opportunities found in personal responsibility and individual choice.”

“It’s that dual-edged sword of personal responsibility,” said Furst of the statement. “That’s what the MLMs feed off of in the first place: if you’re a failure, it’s your fault.”

Blevins felt the stigma as she began to lose faith in the company over the course of 2017. The last straw was joining a Facebook support group for ex-LuLaRoe consultants and “having every little thing that I had ever complained about, any question I had, all answered”, she said. She read through the posts and cried.

“There’s a process of grief that you go through when you leave an MLM,” said Blevins, who left LuLaRoe in September 2017 and now advocates against MLMs through her own podcast. “There was a lot of ex-communication, a lot of harassment, a lot of people telling me I was crazy, or saying ‘You’re going to ruin your life by leaving.’”

The internal pressure to stay quiet and avoid “negativity” was something that dogged many women who participated in the series, according to co-director Julia Willoughby Nason. “There was just tons of the behind the scenes peer pressure and bullying, and blowback that these women had already experienced, and I think that they were very scared of the repercussions if they were going to have a platform like a multi-part docu-series,” she said.

In February, LuLaRoe agreed to pay $4.75m to the state of Washington to settle a 2019 consumer protection lawsuit alleging the company operated a pyramid scheme that made “unfair and deceptive misrepresentations regarding the profitability” of being a retailer. Through its collation of first-person testimony, LuLaRich offers an “invitation, tacitly, to attorney generals around the country to do what Washington did, protect their consumers” said Furst. In the meantime, the company still promises a “community of lasting love and fellowship” on a website that pitches “creating freedom through fashion” over a single button: “Join LuLaRoe.”