 This is Think Tech Hawaii, Community Matters here. Aloha and good morning ladies and gentlemen. I'm Pauline Schachmach, Jr. host for We Like the One Percent. We Like the One Percent is a show about individuals and entrepreneurs. And today we're going to be following the entrepreneurial journey of Peter Merck, the founder of the beauty company Arban. My guest today joining us via Skype from California is the founder's son, Dion Merck, who is managing director of Arban International. Hi, hi, Dion. Hi, hi, Pauline, how are you? Very well. Aloha, how are you? I am wonderful. Thank you for having me on your show. I really appreciate it and just good to be here. Thank you. And now, before we get to your father's story, could you just tell us a little bit about yourself? Well, of course, Pauline. Missy, where do I begin? I am originally born and raised in Norway. I left Norway at age of 16. I went to high school in the U.K. and I came to the U.S. in my late teens. And I studied in San Francisco at the University of San Francisco for about five years and got my couple of degrees there and started to work in Arban in 1989. And moved with that to Orange County, Southern California, beautiful, sunny Southern California, where my work and where eventually married and kids and cats and dogs and you know what. So that's kind of my story in a nutshell. I've been with Arban for close to 30 years. And I have grown kids, pretty grown kids by now. I love it here in Southern California because it's a beautiful climate, good people. I love the outdoors. I love the ocean. I love the mountains. Here in Southern California, in the right time of year, you can swim and two hours later you can be skiing in the mountains. So it's one of those things. I love it very much. Arban has been a big part of my life and an exciting journey in Arban for the past almost 30 years. So that's kind of my story in a nutshell right there. And Stian, do you still have family in Norway? Do you still commute to Norway? Yeah, so in fact we just had holidays. My mother was here in California. So this time of year everyone loves to come to California because it's nicer and warmer than back in Norway. But yes, I have a mother who was here. I have a sister and a brother who's back in Norway as well, as well as kids and all kinds of things. So siblings and friends and family. And I thankfully get to go over once or twice a year to bring my family and try to give them the heritage and try to establish some roots for them in Norway. I have my daughter lives there full time. So we are connected, well connected, California and Norway for sure. That's wonderful and you're right, it's not so easy to go to the beach in Norway. I've been there one time Oslo is a beautiful city. I haven't been to Trondheim yet. But I did go to your summer resort. I hope I pronounced it correctly, is it Kragere? Kragere, yes, that's the beautiful part of Norway, southern part. Beautiful, beautiful in the summertime. Also winter, but it's cold. It's known as a summer resort in Norway. And it's very quiet throughout the year, except during the summer when it gets quite crowded actually. Very crowded, lots of boats and everything, lots of people. It's a ship building city, yes. So now we're going to focus on Arban, the company that your father founded. And let's just talk about your father, because he sounds like he has a fascinating journey in establishing this company. So can we start off with a little bit how your father came from Norway all the way here to Southern California? Yeah, so that is a very fascinating story. And I could spend hours, I know we don't have time for that. But he basically was born at the very beginning of the Second World War. And so he grew up in that time in Norway. And as was common in Norway in those days, the young men often didn't have much opportunity. So he became a sailor and became part of the Norwegian merchant marine. So actually at the age of 15, he had a mother, a single mom, raised him and two siblings. And at the age of 15, he left Norway and became a sailor. And for 10 years, those very formative years of 15 to 25, he was actually out in the big wide world. You know, whatever you do when you're at that age, out in the big world in the 50s and the 60s, and spent about five years in Australia. And the stories that he told me of those days, I will never forget, but very interesting, very sort of, how does it, broad and diverse experiences that he had. Can you tell one very good story? Well, you know, he was, so in Australia, he was, he did all kinds of things. He lived out in the bush and he was, you know, he would sell shells at the beach and he would work. He bumped into a fellow Norwegian that sort of took care of him, I think, because I think my father wasn't really good at taking care of himself back in those days. But you know, interesting story is how he jumped ship without the passport in the Philippines. And oh, you know, you name it, it happened. But he, you know, he saw the good and he saw the bad. And I think that really shaped him a lot. I think that when he eventually came back to Norway, aged around 25, I think he was driven to kind of make his mark and really establish something and create a legacy. And so he was an entrepreneur, always was, started many businesses in Norway. There's conscription. So usually at the age of 18, you go to the military and spend a year there. He was traveling when that happened and came to the military and was 25 and he told me stories there, what kind of like business ventures he did there. But he was always buying and selling and starting businesses and, you know, basically got into the beauty space in the 60s and started a business, the very successful business in the direct selling channel in Norway in the 60s that he was engaged with for many years. And Stean, why did he select beauty as the sector to do his enterprise in? Well, so I think in some ways it sort of happened by accident. So he was involved in many different kind of businesses and he was employed as the sales manager for a company that manufactured skincare and cosmetic products in Norway. And he was responsible for getting these products and getting new business and so on, getting products out in the marketplace. In Norway in those days was a small, poor country and when he saw these products come across the line some products caught his attention and he was able to contact the people that had started this business that he actually eventually started in Norway. So it was sort of by accident in a way that he was just engaged in a sales management position and how one door opens and more door opens and that's kind of, so sort of by accident but for him it was interesting because he was always very much involved with, I don't know, he liked products and consumable products and these were products that piqued his interest and he was pretty quickly, he discovered that there may be a better way to make products than how they were being made back in the 60s with the kind of ingredients and so on that was commonplace back in those days. So he pretty much immediately started to explore ways to make products more natural, more botanically based which became essentially the foundation of Arban. That's why Arban started because he created products that were different than better in his mind and then what existed in the marketplace in the 60s and 70s. And the primary product lines associated with Arban are skincare, nutrition, personal care and cosmetics. Is that correct? That's correct. So back in the early days it was just skincare really and then small line of makeup but really essentially we're a skincare company and it's more recently, I'd say in the last 10 years or so that we have really embraced nutrition and our community has really embraced the nutrition side as well so our big focus is the inside and outside and health and wellness from inside out if you like. So it's more of a comprehensive overall approach to the product line. And these products have very good characteristics associated with them. A lot of them are vegan certified. They are cruelty free which is important to a lot of consumers of these types of skincare products. So it's quite a great endeavor. So can you tell us a little bit about your father as a boss? Well, he was a great father and I enjoyed have lots of good memories with him as a father. As a boss he was driven. Oh, I can tell you that the years that we worked together there was non-stop arbonne, breakfast, lunch and dinner really but that's what I wanted as well and that's what everyone around him wanted and they wanted to be part of that energy and that passion that he had and he shared that with people and people that were able to hang on and keep up, it was an amazing experience but he had high expectations of people for sure. These are always the most excellent types of bosses because they have very high standards and they have a vision and as you said people have to keep up because it's like Mackenzie, you're up or out, right? Is that how it was with Peter? Yeah, I think so, I think so. I mean, I think he appreciated people bringing different strengths to the table, to the business but he really, if he sort of didn't really think that you brought something of value to the table then I don't think that he really cared that much. So he was always seeking to enhance people that could bring value to the table and to the business in one way or another so it was sometimes the people that he embraced weren't the obvious candidates always. There were people that would think for themselves and have different ideas and would bring something maybe surprising to the table so he was surrounded by a lot of really good people that brought, you know, it was a very interesting and entertaining group of people always. Very creative, very fun. How would you categorize his leadership style or management style? So he was approachable, you mentioned he's approachable. Oh, yeah, very much, very much so. He was very, very approachable and he really, he was, and maybe this was because of his own journey but he was very interested and very curious about people and really wanted to get deeply under the skin of people and he would spend, you know, more time than maybe you would expect with sort of some sort of an ordinary person because it caused his interest and he would learn from everybody. It didn't have to be a very important or, you know, sort of an important person necessarily for him to really be engaged. It could be, you know, more of a normal person and he would find things with his people that was outstanding or special. And did he start off with a very large team of advisors, that sort of thing, or was he basically, at that time, this was 37 years ago, is that correct? Yeah, so definitely, I mean, the industry is a small industry, the direct selling industry as well as the, you know, the skincare and the cosmetic industry is not, it's not, I mean, it's giant but there's a few key players and I think that in those early years he made a lot of friends and a lot of connections so he had a really good support team around him, not necessarily of professional advisors, I would say more of just people that liked him and that wanted to support him and it was through those connections, those friends, if you like, I think, that helped push him forward and helped him create those initial products and that initial, you know, to help him define the vision around the product and the opportunity. But obviously as we launched, we were a tiny company but over the years, and one of the beauties of our model is that essentially we're a people business and you'll only succeed when you're able to surround yourself with really clever, smart people that can help build or grow your vision. Okay, Stean, that's great. We'll get more into how the business model, how the corporate structure is of our bond after we take this quick break. So we'll be right back after we take this break. Hi, I'm Pete McGinnis-Mark and every Monday at one o'clock I present Think Tech Hawaii's Research in Manoa where we bring together researchers from across the campus to describe a whole series of scientifically interesting topics of interest both to Hawaii and around the world. So hopefully you can join me one o'clock Monday afternoon for Think Tech Hawaii's Research in Manoa. Aloha, I'm Winston Welch and every other Monday at 3 p.m. you can join me at Out and About, a show where we explore a variety of topics, organizations, events, and the people who fuel them in our city, state, country, and world. So please join us every other Monday at 3 p.m. and we'll see you then. Aloha. Aloha everyone and welcome back. We're speaking with Stean Merck of Arban International. So, Stean, we're going to now discuss a little bit about the corporate structure of Arban because there are sometimes some misunderstandings with this type of a company and they are commonly, they used to be referred to more as MLMs or multi-level marketing companies and it's more appropriate to call them network marketing companies, is that correct? Yeah, so I think we refer to ourselves as social marketing companies. So, you know, it's really we're a direct sales company which simply means that we, you can't really buy our products in any fixed retail location. We market our products directly from the consultant, from our consultant, directly to the end user. Which, you know, this is a business model that's been in existence for hundreds of, I mean, forever, it's like the oldest business model. It's referred to as the Tupperware model and companies. Yeah, I mean, so, you know, there's many different actors and many different companies in our space but, you know, that's essentially what it is. It's a, you know, and the way that we compensate ourselves for it is really, it's unique to Arbonne but, you know, our consultants are independent contractors and other employees and they are out there because they love to be part of Arbonne. They all love our products and they all love to share the opportunity that goes along with the product that we have. So, you know, in some ways they are volunteers out there building their own businesses and to whatever extent and whatever time they want to put into it, they can do. So, we have people that are, that have their very, very part-time and then we have some consultants that work this full-time like a business and make good incomes. And as far as social network marketing companies go, there are many of them. People can research this online but Arbonne is one of the few that has a very good reputation and what you find is a lot of the products from these companies focus on the female market. Most of them are around skincare, cosmetics. Arbonne is slightly unusual. You have a broader product range in that you have a male product line and you don't have as many male independent consultants but my father is one. So, my father is a dental surgeon and he's been in practice for 45 years and he endorses the fluoride-free toothpaste that is one of the products under the personal care line. And as you mentioned, these are products that are not sold in stores so you need to know a current consultant because in order to place the product you need to input a certain ID number for a consultant. So, in this example for any viewers and listeners watching here in Hawaii or elsewhere, my, as an example, my father's consultant number is 241-77302 and you would input that when you visit the Arbonne International website and pick the country that you're in. And it is a transnational or transregional type of system so even if the person wants to purchase something in Australia it doesn't matter that my father is in California. So, that's a fairly accurate representation. That's correct, that's correct. So, one of the, you know, our business is really only as good as the business of our consultants and so everything we do, our role is simple really. We make a really good product and we make sure that we do a lot of the heavy lifting that a normal business person would have to do in her business so we take care of the product, we'll take the order, we'll ship the order, we'll provide reporting and marketing materials and training in collateral so you, the independent consultant can actually go out there and share the product and tell the story and bring the people into the business if that's what you want to do. So, we try to keep it very simple and duplicatable so it'll grow. And that's a business model, it works great. Every single sale that comes into the company goes back out to the field one way or another. So, in the case you just mentioned if someone just wants to go to arbonne.com they can place an order but the commission for that order will be assigned to someone out in the field wherever the nearest consultant is based on some algorithm. But our job is to make sure that our consultants have good businesses and so that makes it kind of simple. We are partners and we want their success. Even though you are headquartered in Irvine, California you have arbonne in seven areas in the world including America. So, can you just name the areas? Yeah, correct. So, we're in the United States, we're in Canada, we're in Australia, New Zealand. We are in the UK and we're in Poland and most recently we opened up in Taiwan. So, those are our markets. And you have a special product line for Taiwanese clients because skin whiteners are very popular in Asia. So, you have a special skin care line. Absolutely, so for the most part our products are consistent throughout the markets but we definitely look at a certain market and if we need to adjust our products or our product offering to that market And in the Arbonne website the company is described as being of Swiss heritage. So, your father was Norwegian so can you explain to the listeners and viewers the Swiss connection with Arbonne? Yeah, so the Swiss connection is when I talked about the 60s and the 70s and the people that he was surrounded by that he surrounded himself with a lot of those people were Swiss and some of the best laboratories and formulators and so on were Swiss and there was a meeting in the northern town of Switzerland called Arbonne, A-R-B-O-N on Lake Constance that I wasn't there but there were my father and some of his friends and some of his collaborators met there and that's sort of where Arbonne sort of came to be I feel like that's where the idea was really finalized and I think he in honor of that little town he named the company Arbonne so we added an N and an E to make it sound a little better and be a little better but that's the story so the Swiss connection is really our products were originally formulated in Switzerland and eventually now our global headquarters and R&D and so on happens here in California but we leverage the best people and the best ingredients anywhere in the world where you find them so we're still now more of a global company but our heritage is definitely Swiss So you mentioned that the laboratories in the headquarters in Irvine can you tell us a little bit about your scientific team? Right so we have we actually have a lab here in Irvine and we also have a sister company up in Los Angeles where a lot of R&D is happening we have a lot of people you know scientists that all they do is formulate products and so on we also have a scientific advisory board made up of several people from different backgrounds that advisors help us with with anything that has to do with with product whether it be skin care or nutrition just to help us support our mission of bringing you know the very best products to market and you also listen to your consultants the independent consultant input is taken into account when a new product is being created is that correct? Yeah absolutely so we get a lot of our inspiration from our field from our customers and of course we look at what's happening in the marketplace with what is going to work for us but absolutely the field and our end users are a very important part of helping drive our product development efforts and how many approximately how many consultants independent consultants are with Arbonne at the moment? I think we have in the neighborhood of 200,000 consultants That's quite a lot Worldwide and approximately I would say about a million preferred clients these are people that would be able to shop with Arbonne at a discount and our consultants are the people that are able to build a business with Arbonne and build it they can sponsor and bring in preferred clients and other consultants and build a team as well And is Arbonne looking to expand further? I was told that there is a new launch coming up is that something you can discuss? Yeah absolutely so we have announced that we are going to be in Germany this year in 2018 the dates have not been announced yet and we are still working out some of those details but very very excited about Germany which is the biggest market in Europe and I believe the fourth biggest market for us in our space in the world and you know the Germans are very we need to do it very well so we are making sure that we cross all the T's and all the I's They do everything by the book It is a great opportunity for us and we are very excited about that and our field in all markets are very excited about the opportunity to go to Germany and share our products and eventually share our opportunity there And Stian we are almost out of time but can you explain why Arbonne comes to Hawaii every year you go specifically to Maui is that correct? Yeah well thank you because of bringing it all back home I am in love with the Hawaiian islands in the many many times we come there once a year with our very top senior leaders to sort of celebrate the year that passed and to kick off the new year so we were just in Maui in Wailea at a beautiful property there and launched new products new tools and trainings and just as a place for people to get together and network and be together and community building but it is at the leadership level and we go there to really because we love the islands and we love to shower our consultants with the best that there is and I can't think of a better place than Maui Oh yes you have exquisite taste this is the best place all the islands as you expand your business you have to come to all beautiful except for well Kahoho Lawe and Niihau are a little bit tricky but the others are all fair games We have been there we love them all but right now it just happens to be Maui is the place we go to Brilliant Stean thank you so much for joining us here on We Like the 1% on Think Tech Hawaii and I'll see everybody next Thursday at 11am