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December 2012, New York. A tall man, in an impeccable suit, steps onto a stage in front of hundreds of investors and journalists. Behind him, on a giant screen, appears a name you know very well, Herbalife. For more than 3 hours he is going to say something that no one on Wall Street had dared to say out loud, that Herbalife was, according to him, the best managed pyramid scheme in the history of the world and that its stock price was going to reach zero.
And he wasn't just saying that; he had bet nearly $1 billion that Herbalife would go under. That man's name is Bill Ackman. And what began that night was a 5- year war. With millionaires fighting on live television, protests, government investigations, and a decision that forever changed the way any Herbalife distributor works, including you.
If you were ever told, "That 's a pyramid." Or have you ever wondered why your sponsor insists so much that you have real clients? The answer is in this story. And at the end I'm going to give you five lessons that you can use starting tomorrow in your business. Before we begin, there's a documentary like this every Friday and a training session for your business every Tuesday.
If you like these stories, subscribe and turn on notifications so you don't miss any. Now, let's go back to the beginning. To understand this war, you first have to understand who Bill Ackman is. Ackman was born in May 1966 in New York into a wealthy family. He studied at Harvard and at a very young age decided that he didn't want to work for anyone.
In 2004 he founded his own investment fund, Pershing Square, with about 54 million dollars. For Wall Street it was a small amount, but Ackman had something that made him different. He wasn't afraid to fight in public. His style was what in Wall Street is called activist investor. He did n't buy a single share and waited in silence.
He would buy, he would research, and if he thought something was wrong, he would say so out loud, with presentations, letters, and interviews, until the market proved him right. And many times he gave it to her. His most famous bet before Herbalife was against a company called MBIA, a bond insurer. Ackman began questioning it in 2002, when everyone was saying it was one of the safest companies in the country.
For years he was accused of exaggerating. Then came the 2008 financial crisis and Ackman [musician] made a fortune with that bet. So when I saw Ackman get up on a stage and say that a company was going to fail, Wall Street listened. And in 2012, Ackman set his sights on a company that sold milkshakes.
Now let's go to the other side. What was Herbalife like in 2012? Twelve years had passed since Mark Hughes, its founder, died in May 2000. If you saw our previous documentary, you already know that story. After his death, the company passed into the hands of investors and since 2003 it was run by Michael Johnson, an executive who came from Disney.
And Herbalife was doing very well. In 2012 it sold more than 4.1 billion dollars, a record in its history, almost 18% more than the previous year. It was in more than 80 countries. In Latin America it had a presence in about 18 countries and in the United States it was growing very fast thanks to something you probably know, nutrition clubs.
On paper, it was a healthy company that was making money and growing. So why would anyone bet $1 billion [in music] against her? Here you need to understand how a bet against works, what in the stock market is called short selling. Typically, an investor buys a stock because they believe it will go up.
Short selling is the opposite. You borrow shares, sell them today at the current price, and wait for the price to drop. If the price goes down, you buy them again at a lower price, return them, and keep the difference. It sounds simple, but it's extremely dangerous. If you buy a stock, the most you can lose is what you paid.
But if you bet against it and the stock goes up, there's no limit to your loss. That's why almost no one makes such large and public bets against it. Ackman did it with about 20 million shares of Herbalife, a bet of about $1 billion. On December 19, 2012, CNBC broke the news. That same day, Herbalife's stock fell 12%.
And the next day, December 20th, the presentation took place. It was in Manhattan, in front of a packed room. More than 3 hours. More than 340 slides. The title referred to a famous television contest. Who Wants to Be a Millionaire? It was a direct provocation. What was Ackman's argument? In short, he said that Herbalife's money didn't come from selling shakes to customers, but from recruiting new distributors who bought the product for themselves.
According to their calculations, in 32 years almost 2 million people had entered the business and lost money, about $2,000 each on average. And he said a phrase that went around the world, that it was the best managed pyramid in history. Furthermore, he promised that any personal gain he obtained from that bet would be donated to charity.
In an interview, he even said that it was the investment he had been most convinced of in his entire life. Herbalife's response was immediate. The company said it was a malicious attack based on old, distorted, and inaccurate information. And Michael Johnson, its director, uttered a phrase that became famous, "This isn't about Herbalife's business model, it's about Bill Ackman's business model." In other words, he makes money if we fall, so of course he wants us to fall.
But the market was afraid. The stock, which was at about $42.50 on December 18, fell to about $26 on December 24. In less than a week, Herbalife lost almost 40% of its stock market value. Imagine how the distributors experienced that Christmas . People like you, who had their club, their customers, their team, and who suddenly saw on the news that a New York millionaire was saying that their business was a scam.
Many received calls from family members asking if they had gotten into something bad. Some were afraid. Others continued working as if nothing had happened. And then the story took a turn that no one expected. On January 9, 2013, another millionaire, Dan Loeb, of the Third Point fund, announced that he had bought more than 8% of Herbalife.
In other words, he bet in favor just when Ackman was betting against. The stock rose 10% that day. Loeb, by the way, sold shortly afterwards and ended up leaving. But the message to the market was clear; not all of Wall Street agreed with Ackman. And then appeared the man who would turn this fight into a spectacle, Carl Icahn.
Carl Icahn was and remains one of the most feared investors in the United States . And between him and Bill Ackman there was an old feud, almost 10 years old, over a previous business deal in which they accused each other. On Friday, January 25, 2013, something happened that Wall Street had never seen before.
CNBC was live with Icahn on the phone talking about Herbalife. Suddenly, Ackman also called the program. And for long minutes, two of the richest men in the United States argued on national television, live, as if they were in a schoolyard. Icahn said that Ackman was like the crybaby in the schoolyard.
He said he was fed up with him. Ackman responded that Icahn was not an honest man, that he did not keep his word, that he took advantage of small people. And at one point, Icahn blurted out, "I wouldn't invest in you even if you were the last man on Earth." People in the offices on Wall Street stopped working to watch the fight.
It was so famous that it is still remembered today as one of the craziest moments in financial television. And two weeks later, Icahn did more than just talk. In February 2013, it informed the stock exchange authorities that it had purchased almost 13% of Herbalife. That day, the stock rose 20%. Over the years, Icahn continued buying until he owned more than a fifth of the company.
Thus the war was set. On one side, Ackman, who needed Herbalife to go under. On the other hand, Icahn needed Herbalife to go up. And in the middle of it all, millions of distributors around the world, most of them unaware that their business had become the battleground for a fight between millionaires.
Before we continue, I want you to remember one idea, because it's the first lesson of this story. When Ackman attacked Herbalife, he didn't attack the shakes; he did n't say the product was bad. He attacked one thing only. According to him, the money didn't come from real customers. And that criticism, even though it comes from someone who had a financial interest in sinking the company, tells you exactly where the strength of a healthy business lies.
In customers who buy because the product serves them month after month. That's why , at Momentum VIP, we're working on just that. It's the membership for this channel, and there you have the path to supervisor. A new class every Sunday, step by step, with WhatsApp templates ready to copy, to get real customers, follow up with them and get them to buy again.
Without chasing anyone and without promising miracles. If you want to build your business on real customers, tap the join button below the video, and I'll see you on Sunday for the next class. Now then, let's go back to the war, because what came next was even more intense. Ackman did not give up, on the contrary.
Between 2013 and 2016, he mounted one of the largest campaigns ever seen against a company. According to The New York Times, his team organized protests, press conferences, and letters to regulators, and hired lobbyists in Washington to pressure politicians. And he focused on a very specific place, the Latino community in the United States.
His argument was that Herbalife was growing mainly among Latinos, through nutrition clubs, and that many of those people were losing money. In October 2013 there were protests in Los Angeles. Some Latino organizations received donations from Ackman and others from Herbalife. One of them, one of the oldest Latino organizations in the United States , ended up returning a $10,000 donation from Ackman.
Each side accused the other of using the Latin community as a shield. Herbalife also defended itself by speaking in Spanish. One of their directors for North America, Ibi Fleming, [musician] said in an interview with the BBC, "We are supporting our Latinos." And he added a phrase you've probably heard from your own team, "Nobody needs an education.
What they need is desire." Meanwhile, Ackman's gamble was going badly. In February 2014, in a letter to its own investors, Pershing Square acknowledged that its position in Herbalife had lost almost half of its value and called it its worst investment. And in July 2014, Ackman prepared what was to be the final blow.
He announced another presentation, this time dedicated to nutrition clubs. More than 3 hours again. He said that what was happening with many of those clubs was a tragedy. The entire market expected the stock to plummet. The exact opposite happened. That day, Herbalife's stock rose more than 25%, the best day in its history on the stock exchange.
Investors felt that Ackman had not presented anything new that could sink the company. Herbalife also said that Ackman had already spent about $50 million on his campaign alone. There were also investigations. There were reports that the FBI looked into Herbalife, and then there were reports that prosecutors were looking at whether some people paid by Ackman's side had made false statements.
None of those investigations resulted in charges. In 2016, a documentary called Betting on Zero was released, telling the story from the point of view of former distributors who lost money. It was very controversial. It was later revealed that it had been financed by another investor who was also betting against Herbalife, although Ackman always denied having paid for it.
And Herbalife, for its part, also took steps to curb its spread. The war was already being fought on all fronts: the stock market, politics, the press, and even the cinema. But everyone knew that this fight was n't going to be decided by Ackman or Wikan, it was going to be decided by the United States government.
The agency in charge is called the Federal Trade Commission, the FTC. It is the one that ensures that companies do not deceive consumers. For two years he investigated Herbalife and on July 15, 2016 he announced his decision. Pay close attention to this part because this is where the most lies circulate, from both sides.
Herbalife accepted a settlement with the FTC, paying $200 million to return money to people who had lost out. In early 2017, checks were sent to approximately 350,000 music distributors in the United States. But the most important thing wasn't the money. It was because Herbalife had to change the way it worked in the United States.
The FTC required that at least two- thirds of what the company pays its distributors be based on sales to actual, recorded, and verified customers with receipts or other reliable methods. He demanded that at least 80% of sales go to actual end consumers and not to people who buy just to qualify. He separated those who buy at a discount for their own consumption from those who do business and put an independent supervisor in place for 7 years to make sure everything was done correctly.
Now, the big question: Did the FTC say that Herbalife was a pyramid scheme or not? The honest answer is neither of the two. The word pyramid does not appear in the FTC complaint. When asked about it, FTC Chairwoman Edith Ramirez acknowledged it, but also clarified that this did not mean the agency had determined that it was not a pyramid scheme.
He said that Herbalife would have to fundamentally restructure its business so that people would earn money for what they sell. Herbalife, for its part, said that the agreement recognized that its business model was sound. In other words, each side kept its own version. But the market quickly decided who had won that day.
Herbalife's stock rose by about 18%. For Wall Street, the message was clear. The company was going to have to change, yes, but it wasn't going to close. And Ackman's gamble, which needed the action to reach zero, had lost its best card. Ackman held on for another year and a half . In November 2017 he reduced his risk and on February 28, 2018, in a live call to CNBC, the same channel where the fight with Wiccan had started, he announced that he was completely withdrawing from his bet against Herbalife.
That day, Herbalife's stock rose about 10% to its highest price ever up to that point. How much did Ackman lose? He never published the exact figure. The press talked about hundreds of millions of dollars and many estimates speak of close to 1 billion, but these are estimates, not a confirmed fact. What we do know is what Carl Icahn said the next day, "On paper I made 1 billion." And when Icahn finished selling his shares in 2021, according to CNBC, his total profit was around $1.3 billion.
His closing statement was that Herbalife was an example of activism that worked very well. Five years, hundreds of millions of dollars, a televised fight, protests, a documentary, and a government investigation. And in the end, the company that according to Ackman was going to reach zero, was still standing.
And then what? Herbalife continued. It changed directors several times, had other legal problems, such as a fine in 2020 for improper payments to officials in China, and in 2025 someone from the distribution network came to lead it for the first time since Mark Hughes . Big companies never stop having problems.
The important thing is that you learn from all of this. Because here's what really matters for your business. I'm leaving you with five lessons. Lesson number one. Your business is only as strong as your customers. Read again what the FTC demanded. That the majority of what is paid comes from real sales to real, registered and verified customers.
That's not a threat to you. It's a map. If you have 10 customers who buy every month because the product works for them , there's no 3-hour presentation or millionaire in New York that can bring down what you built. Before you think about recruiting, ask yourself, how many actual customers do I have today?
Lesson number two, document everything. The FTC talked about receipts and reliable methods for proving sales. The rules may be different in your country , so ask your sponsor what Herbalife requires where you live. But do yourself this favor, write down every sale, every customer, every date. A notebook [snort] or a simple spreadsheet.
The day someone questions you, you're not going to argue with opinions, you're going to show numbers. Lesson number three. When they tell you, "That's a pyramid," don't argue, show. You saw that even the United States government didn't give a one- word answer, so don't make one up. Don't say the FTC said Herbalife isn't a pyramid scheme, because it didn't.
Tell the truth. That the company was thoroughly investigated, that it had to change rules, that today it is required that the business be based on real sales and that you work like that. And then teach your customers . A person who sees your satisfied customers believes you more than any document. Lesson number four, never promise income.
One of Ackman's strongest attacks was against the promises of easy money. When you talk to someone about business, talk about work, consistency, and clients, never about figures you can't guarantee. It's the right thing to do; it protects the person in front of you and it protects you. Lesson number five, noise doesn't decide, consistency does.
For five years, every week there was a new story against Herbalife. The distributors who gave in to fear left. Those who continued to serve their customers, following up and working honestly, were still there when the storm passed. In your business there will be noise, a family member who criticizes, news, a bad week.
Don't let the noise take you out of the game. Now I want to read your words. Have you ever been told "That's a pyramid"? What did you answer? Tell me in the comments, because I'm going to use your answers for an upcoming video on how to answer that objection calmly and with the truth. If you want to work through these five lessons with a week-by-week plan, remember that in Momentum VIP you have the path to supervisor with a new class every Sunday and templates ready to get and take care of real clients.
The Join button is below. And if this story captivated you, the next step is the story of the man who started it all. I'm leaving you here on screen the documentary about Mark Hughes, how a kid who sold milkshakes from the trunk of his car built the company that, 30 years later, the most powerful millionaires on Wall Street would fight over on television. And next Friday, a new documentary. See you there.
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