AMWAY, WINDQUEST, AND REAL BUSINESS

The first signs that Dick DeVos, son of Amway-founder Rich DeVos, may not be able to count upon a united West Michigan base for a 2006 run for governor appeared publicly in the form of a column CPA Paul Hense wrote for this week's Grand Rapids Business Journal.

While Hense generously (and incorrectly) credited Dick Jr. and his family with doing good for us in the Grand Rapids area, he wasn't so generous in affirming Dick Jr.'s bona fides as the tribune for the Republican core of small businessmen.  He cites Dick Jr.'s inherited wealth as the problem with making the connection to this important constituency, because it has insulated him from the hard financial realities small businessmen had to meet to grow and sustain their companies.

There's probably something to that, but the fundamental problem is more serious than that.  To succeed over the long run, a businessman has to offer a service or a product to his customer that has real value.  In this regard, the endurance of Amway was a fluke.  While manufactured products existed at its core, it profited from exploiting the dreams, greed, and foolishness of ordinary people with sales kits, promotional materials, motivational tapes and books, and a noxious reduction of Christian faith to a "get rich quick" creed.  Because the value of what Amway sold to its "distributors" (i.e., customers) was soon discovered to be non-existent by them, Amway had to keep finding keep new marks (ahem, I mean, customers -- wait, I mean, distributors) to replace old ones.  Burning through customers is a tough way to stay in business, and it's a soulless one too.

That's why Amway, though legal, has never been held in very high regard in the small business community.  It succeeded until its dismantling by inverting the principles businessmen must embrace for long-term success.  Evidence of the perverse nature of Amway is here:  If one looks at the history of Dick Jr.'s Windquest, originally a venture capital fund for investment into manufacturing, and notes that it now nothing more than a modest metal-shelving concern, it would appear that the Amway experience hasn't been a useful one for learning the ropes of real business.

So Hense is properly dubious of Dick Jr.'s resonance with small businessmen.  There's no there there.  More interesting, however, is not just the failure of Amway as a respectable business model, but the black hole Amway's actual failure created in the middle of our entire community over the past decade.  Keep an eye here for that story.