LuLaRoe’s Leggings Rip-off Scheme Is Just Capitalism Writ Small
The LuLaRoe documentary LuLaRich got one thing right: everybody wants full-time pay for part-time work. But it blames selfishness and incompetence for keeping that dream out of reach — not the market forces that produced and encouraged the company’s behavior.
DeAnne and Mark Stidham, cofounders of LuLaRoe, featured in Amazon's new documentary series LuLaRich. (Courtesy Amazon Prime Video)
The documentary series LuLaRich from Amazon opens with an interview of DeAnne and Mark Stidham, cofounders of the multilevel marketing company LuLaRoe. They seat themselves and make small talk, unaware that the camera is already rolling — a shortcut the filmmakers have taken to signal to viewers that this documentary won’t merely channel the Stidhams’ point of view. DeAnne and Mark, dressed to convey prosperity, are grateful for the opportunity to tell their “side of the story,” but we already know they won’t be given the benefit of the doubt.
In the first fifteen minutes of the series’ first episode, the filmmakers take several other shortcuts to communicate their unsympathetic view of the couple. We learn immediately that they’re Mormon and have seventeen children between the two of them, some of whom are adopted. We learn that DeAnne’s mother once showered her children with cash from their home’s second-floor landing in order to make a point about the fruits of hard work. We watch uncomfortably as Mark is moved to tears while recounting a story about his father saying he’d never want to work for someone else. DeAnne and Mark are unlikable and unrelatable, and the film wants us to know it before we even begin to hear about how they took advantage of thousands of people to build a multibillion-dollar leggings empire.
DeAnne and Mark deliver a polished narrative about how they built their company from the ground up. With wide-eyed credulousness, they describe how LuLaRoe’s business model emerged from a desire to help people, to share the wealth-creating opportunity they had discovered as widely as possible. Nearly a decade ago, they began producing maxi skirts, and later leggings, in bright colors and patterns as cheaply as possible and selling them for a markup out of a van. Soon, some of their most enthusiastic customers began buying their products wholesale and selling them at parties hosted in private homes. Later, these “retailers” would pay $5–10,000 to begin selling LuLaRoe products, while the “upline” retailers who had recruited them would receive monthly bonuses that were calculated according to how much product their “downline” recruits had sold.
It was a classic pyramid scheme structure, and hardly unique: many other “direct sales” companies operate the same way, trading in products like candles, cosmetics, vitamins, or Tupperware. These companies find success primarily by preying on the particular needs and desires of working-class women who want to be at home spending time with their children but need to contribute to their families financially to make ends meet.
In a country with no mandatory paid parental leave and very little publicly funded childcare, women who find themselves in this double bind are incredibly vulnerable to the message that multilevel marketing companies (MLMs) are peddling: that you can have it all, for an up-front fee. Buying into the company will allow you to earn full-time pay for part-time work, from home, while being part of a supportive community. As one of LuLaRoe’s former retailers says, “In a perfect world, who wouldn’t want that?” LuLaRoe updated these common MLM themes with a message of feminine empowerment intertwined with entrepreneurial idealism (You can be a girlboss and run your own business!) to draw in tens of thousands of women at the company’s peak in 2017.
“Join the Movement”
LuLaRich features interviews with two talking heads: Robert FitzPatrick, author and MLM expert, and Jill Filipovic, feminist writer and lawyer as well as sometime Hillary Clinton superfan and preacher of the girlboss gospel. (It’s not clear why Filipovic is in this film or what her connection to LuLaRoe is — her identifying tag just says “journalist.”) FitzPatrick, who offers incisive and wide-ranging critiques of pyramid schemes throughout the series, explains that the structure of MLMs dooms the vast majority of their participants: over half the money goes to the top 1 percent involved in the operation, while more than 80 percent of participants have no one below them and never receive the bonus checks that comprise the greatest possible financial opportunity. (Sounds like a microcosm of our wider society!)
Rather than interview any bottom-of-the-pyramid LuLaRoe retailers, the filmmakers focus almost exclusively on the stories of women who rose through the ranks and were earning monthly bonus checks up to six figures before the rug was pulled out from under them. These are no doubt sad stories: some of these women lost their houses, cars, and marriages and later filed for bankruptcy. But it’s notable that the film’s main reserve of sympathy is directed toward women who had hundreds of thousands of dollars in their grasp before losing it all.
The LuLaRoe retailers featured in the documentary were part of an inner circle of true believers who extracted a great deal of money from LuLaRoe’s scheme, at least initially, by exploiting women beneath them. As I watched the film, I found myself wondering: What about the women who dumped their life savings into (or went into debt for) an initial investment that went nowhere? Who alienated their friends and family by trying to sell them leggings they didn’t want and were eventually forced to admit defeat? LuLaRich doesn’t offer much insight into their experiences.
Nor does it offer much insight into manufacturing. Where are these cheap leggings being constructed, and who’s being exploited to keep up with the breakneck pace of LuLaRoe’s expansion? The closest we come to hearing about this is through an anecdote about a legal dispute between LuLaRoe and former supplier MyDyer, which operates factories in Asia and Central America and is owned by Mark Stidham’s ex-friend (the two shared a love of astronomically expensive racing cars). Several workers from the LuLaRoe “home office” are featured prominently, though: a pattern designer, a customer service representative, and an onboarding specialist. Each describes being pressured to work constantly and meet unrealistic production goals in order to generate the huge profits the Stidham family was raking in (LuLaRoe’s revenue was $2.3 billion in 2017). One can only imagine the conditions faced by the anonymous workers who manufactured the products themselves.
“Helping Families, Blessing Lives”
DeAnne and Mark, along with many of their children and relatives, occupied LuLaRoe’s highest corporate positions, visiting the office only occasionally in luxury vehicles. Their nepotism and incompetence are the main focus of LuLaRich, which is told more or less chronologically. The picture looks rosy at first — large numbers fill the screen, ticking ever upward to reflect the number of retailers working for the company — but along the way, complaints begin to arise, like manufacturing defects (damaged and moldy leggings), irresponsible spending on parties and concerts (Katy Perry in a rented stadium), and pressure on retailers to constantly buy more inventory.
Many of the former employees interviewed blame LuLaRoe’s problems on DeAnne and Mark not “knowing how to run a company of this size,” as though technocratic competency could have righted the ship. The implication is that LuLaRoe was a victim of its own out-of-control greed — that if it had merely taken things slower, stayed smaller, or had better corporate leadership, everything would have been fine.
But a pyramid scheme will always be a rip-off and a scam for the vast majority of its participants by design. The only people who will make any money are those at the top of the pyramid: founders and early-joining retailers who recruit others, like those interviewed in LuLaRich. In 2016, LuLaRoe reported that 70 percent of its retailers made zero dollars from recruitment bonus checks while the top 0.1 percent made an average of $150,000 per month. And that’s how it was supposed to work. It’s also how capitalism is supposed to work, with the vast majority selling their labor to a small owning class with little means of upward mobility.
Ultimately, LuLaRich diagnoses the problem of LuLaRoe as individual excess, not systematic exploitation. It may seem like a subtle distinction, but it suggests that the proper restraint of selfishness can prevent the worst excesses of capitalism. As the former customer service representative from the home office summarizes at the end of the final episode, “This is what happens when you stop caring about ethics and morals and become completely consumed by greed.” He also describes it as a “cautionary tale of a company that grew too fast for its own good.” But if the company had grown sustainably, the result would not have been shared prosperity for all its retailers. The best-case scenario, as with capitalism itself, would have been perpetual exploitation.