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The Film
17:56English captionsAbandon Ship
From a Houston start-up to a $97 million public company, through the sale to Jerry Kramer’s Everest group, a cash-starved relaunch and the consultant who took over. David Bertrand’s account of how the ship he helped build went down.
Chapters
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Cold open
From the recordJuly, 2003. Nutrition For Life is declared Chapter 7.
NarratorFor eighteen years, a company in northwest Houston was built on a simple promise.
From the recordMaking a difference while you make a living.
David Bertrand“just as surely as day follows night and night follows day… Nutrition For Life is doomed to failure.”
NarratorThe man who wrote those words had helped build that company from nothing. He wrote them after he was pushed out of it.
David Bertrand“I was being forced out.”
NarratorThis is his story, told in his own words.
David Bertrand“A lot has been said about me since leaving… mostly by people that know the least about the company… This is my attempt to set the record straight.”
NarratorAbandon Ship.
The untold story of the Nutrition For Life takeover.
Part One: The Company
NarratorDavid Bertrand studied at McNeese State, in Lake Charles, Louisiana. He earned two degrees in education, and began his career as a teacher and a coach.
His sister-in-law, Jana Mitcham, also trained as a teacher. In 1981, the two went into business together.
In 1984 they teamed up with Tom Schreiter, known across the industry as Big Al, the man who wrote the book on recruiting. Together they built the company that became Nutrition For Life.
They built it in Houston, on four values the company printed for every distributor to see.
From the recordIndividual worth. Freedom. Equality. Love.
NarratorAnd it grew. $13 million in sales in 1993. $17 million the next year. $32 million. Then, in 1996, $97 million.
But growth that fast draws attention. In January 1996, the Wall Street Journal, Bloomberg and CNBC ran critical reports on the company.
In July, it signed voluntary compliance agreements with several states. In August, shareholder lawsuits claimed the plan was a pyramid scheme. Then the SEC opened an inquiry.
In December, the SEC closed it, with no action taken.
By early 1997, David was telling distributors the company had come through.
David Bertrand“Today, Nutrition For Life International has one of the few network marketing plans in the country that has been subjected to the scrutiny of major federal and state regulatory bodies with no action taken.”
NarratorThe shareholder suits were settled that fall, with no admission of wrongdoing.
The company traded on the NASDAQ. Its network reached Canada, Great Britain, Ireland and the Philippines. By 1997, more than 100,000 distributors.
In March of 1997, the company set a record: $1.5 million in sales in a single day.
David Bertrand“In thirteen years, I've never seen anything like it.”
NarratorIn 1998, David put his philosophy into a book. Its title was the company's promise: Making A Difference While You're Making A Living.
David Bertrand“I wrote Making A Difference to show that there was at least one industry where you don’t have to choose — network marketing.”
NarratorIn the Houston office, it was a family business. Of more than a hundred employees, about a dozen were related to the founders.
From the recordYou pick the car. We make the payments.
NarratorFor distributors, it meant real income, and sometimes a new car in the driveway.
David Bertrand“People who built a business with us in 1984 and 1985 are still earning residual income today.”
NarratorBy the end of the decade, Nutrition For Life was owned by a larger parent company, Advanced Nutraceuticals. And the marriage was not working.
David Bertrand“The attempt at combining manufacturing and marketing was not working.”
NarratorIn 2000, the parent company decided to sell. David supported the decision.
Part Two: The Deal
David Bertrand“We had a serious offer from a large (nearly $1 billion) company to buy the company and allow it to run as is.”
NarratorBut another group was interested. It was called Everest. And Everest had a name.
Jerry Kramer. Green Bay Packers legend. Five-time All-Pro. He had played for Vince Lombardi.
David Bertrand“I thought with the Jerry Kramer name and the active involvement of the rest of the team, it would make a better team.”
NarratorThere was one more issue: family. David raised it with Barry Loder, who negotiated for the parent company.
David Bertrand“Barry said that Everest had a ‘nepotism’ policy for their companies, but, since NFLI was unique in the way it started this would not apply to us.”
NarratorOn December 29, 2000, the sale was announced.
David Bertrand“Jerry Kramer is a legend and a true American hero.”
NarratorBy June, the company had a new banner, and a new slogan.
From the recordThe new Nutrition For Life. Founded 1984. Launched 2001.
With initials like that, NFL, how could I miss them?
NarratorThe new owners made promises.
From the recordMassive financial backing.
We are moving in the same direction as before, but at ten times the speed.
David Bertrand“I am convinced Nutrition For Life will be in a better position than ever…”
NarratorDavid believed it.
The terms were $5 million in cash at closing, plus a $5 million note. But the cash came with a condition.
David Bertrand“The $5 million cash would be predicated on at least $1.2 million working capital being left in the company at closing.”
“For every dollar of working capital not there, it would be deducted from the upfront cash purchase price.”
“Because ANI drained working capital out before closing… the actual cash purchase ended up being $3.2 million.”
From the recordAt closing, the company received $3.2 million dollars in cash.
David Bertrand“This deal was a great deal for Everest but left Nutrition For Life short in working capital by about $2 million.”
NarratorAdvanced Nutraceuticals told its own shareholders a different story.
From the recordThe sale of NFLI significantly improved ANI's financial condition by generating $3.2 million dollars of cash.
NarratorNutrition For Life began its new life $2 million in the hole.
And after the deal was agreed, David says, Everest's Dave Wheeler raised the nepotism policy after all. Two family members, Tommy and Judy, agreed to retire. The rest would be handled case by case.
Part Three: The Squeeze
NarratorThe new owners brought new executives, most of them from out of state. By David's count, five salaries alone came to $675,000 a year, before the travel.
Jerry Kramer became CEO. In the first month, David says, Kramer called him into his office.
David Bertrand“made it clear that I was not to make any decisions on my own.”
“I asked him if we had to have a committee decision to buy paperclips.”
NarratorKramer said no. But any decision of substance would take everyone's approval.
David Bertrand“The problem was that Jerry couldn't make a decision on his own.”
NarratorDavid says he raised the style with Dave Wheeler of Everest.
David Bertrand“He went on to tell me that he was not sure that Jerry could handle the job.”
NarratorAccording to David, Wheeler had doubts about the new CFO as well.
The chief financial officer was Brent Hudson.
David Bertrand“On many occasions I asked for monthly financial statements. They never came.”
“His inability led to the destruction of relationships with vendors that had taken years to build.”
NarratorIn the spring of 2002, a young finance manager named Nathan Linquist showed David something.
David Bertrand“He told me he had already created a very similar statement he called his R-Drive.”
“He said that Brent wouldn't let him do them. He didn't know why.”
NarratorOn a morning walk in Korea, David says, Kramer asked him a question.
David Bertrand“Jerry asked me if I thought Brent was capable of handling the CFO job.”
“I thought something might happen…”
NarratorNothing did.
One old problem had already been dealt with. For two years, field leaders had complained about BTS, a program every new distributor was required to join.
David Bertrand“It caused probably the most negative feeling about the company of anything we have done.”
“In early 2001, before our transaction was closed, I decided we needed to end this area of dissatisfaction and we made it voluntary.”
NarratorClose to 10,000 people stayed on it. But the voluntary program brought in less money, and David says late payments to its vendor soon meant late shipments.
David and his field leaders tried to grow their way out. A new bonus, the Super Fast Track, sped up recruiting through the summer of 2001. Then came September.
David Bertrand“our momentum stopped dead in our tracks.”
NarratorIn November, Kramer and David went to the investor, Art Preston, to ask for cash.
From the recordMassive financial backing.
David Bertrand“We were met with silence.”
NarratorA bet on Korea, funded by Jack Preston, brought in nearly $10 million in sales in a few months. Then sales fell off steeply. The Korean office needed $250,000 a month to stay open.
By summer, the company owed its biggest supplier, Vitarich Labs, about $1.5 million. Freight costs for the year before had come in about $800,000 in the red.
David Bertrand“these things would not have happened if we had regular monthly financial statements.”
NarratorThere were bright spots. A new core product line called Essentials, built with product chief John Holchin, lit up the business in Europe.
David Bertrand“The European tour really ignited the business over there.”
NarratorBy summer, David says, U.S. sales had steadied at about $3 million a month, and Europe was moving forward.
David Bertrand“The distributor base was motivated and mostly happy, and the future looked good.”
NarratorThat summer, the executives drew up a list of what the company needed from its investors: about $2.2 million. David asked the CFO whether it included the money owed to Vitarich.
David Bertrand“He said no it did not. I asked why not? His reply was he just didn't think it was necessary.”
NarratorKramer now said the company was paying out too much in bonuses. The Fast Track he had approved had pushed the payout to about 46 percent of sales, close to the industry norm.
David Bertrand“He acted as if this was a surprise even though he had been in on the decision and knew it would increase the payout.”
NarratorVitarich Labs made about 160 products for the company. Its president was Kevin Thomas.
David Bertrand“He was the best vendor we had, and really worked hard to help us build.”
NarratorThomas offered a lifeline: forgive $1 million of debt in exchange for equity, and help bring the other vendors back on side. David arranged for him to come to Houston and present it.
Then, in early July, everything changed.
One more name had already appeared. In January 2002, Kramer brought a consultant to sit in on a presentation of the new Essentials concept. His name was John Neubauer.
David Bertrand“We thought he knew our industry and had some positive input as a consultant.”
Part Four: The Takeover
From the recordApril, 2002.
Within five months, he would be gone.
NarratorIn early July, Jerry Kramer brought a consultant into the office. His name was John Neubauer.
Within about three days, David says, Kramer told him Neubauer would be the new CEO.
The company's own website later listed his background.
From the recordDirector of Domestic and Worldwide Operations for Herbalife International. Chief Operating Officer of Cell Tech Industries. Senior Vice President of Starlight International.
The only changes will be the addition of key management.
NarratorThe promise had been made one year earlier.
David Bertrand“He said that Art and Jack would no longer support the company unless we did this.”
“He asked me to help him keep an eye on John.”
NarratorAt first, David welcomed it. The decisions would no longer be Kramer's.
David Bertrand“However, I soon changed my mind, as there was a lot I was not aware of at that time.”
NarratorWithin days, David says, the company he knew began to disappear.
From the recordNew faces took over departments, with no announcement. A consultant took over Skeeter Trahan's department. Another took over Stephen's areas.
David Bertrand“I was completely frozen out of all meetings and decisions.”
NarratorTwo weeks before the annual convention in Denver, the entire plan was thrown out and started over.
When David objected to how longtime employee Skeeter Trahan was being treated, he says Neubauer answered him.
David Bertrand“I don’t know what you’re complaining about… you’re getting paid aren’t you?”
“I responded that it wasn't about money. It was about how we were treating good people.”
“You can't mistreat good people and not expect it to come back on you.”
NarratorThen, just before the convention, Kramer and Neubauer called David in.
David Bertrand“Jerry asked if I could live with the fact that all the kids were going to be fired.”
“I said that I could… but, what I couldn’t live with is their being treated unfairly as Skeeter was.”
NarratorDavid told them it was obvious he was being forced out. They said that wasn't true.
David Bertrand“I responded that their actions told another story.”
NarratorKramer asked David to stay at least six months.
David Bertrand“He said he didn't know if Neubauer was the man for the job, but he had to back him.”
“There had been no board discussion, due diligence or vote on Neubauer. He was just brought in, and that was that.”
NarratorDavid made his decision. He wrote down why.
From the recordAnyone close to me was being forced out. Under Neubauer, the company had no chance of survival. The Preston brothers were no longer going to back the company. The working capital shortage was never going to be addressed.
David Bertrand“Jerry was Jerry. He was not going to change, and he had not a clue as to what our business was about.”
“it was not a difficult decision. In fact, it was a decision that made itself. I had no choice!”
“At the same time, I would say that it was the hardest decision that I have ever had to follow through on in my life.”
NarratorIn early September, 2002, after eighteen years, David Bertrand resigned.
Part Five: Abandon Ship
NarratorBefore Neubauer, David says, sales ran about $3.2 million dollars a month. After, by his estimate, barely $500,000.
David Bertrand“After Neubauer was introduced, the leaders left in droves.”
“Before Neubauer office morale was high. Now it is the worst I have ever seen with many of the really good people gone.”
NarratorAnd David says the fight followed him out the door.
From the recordHis last paycheck, never paid. His vacation pay, never paid. His retirement contributions, never deposited. A corporate American Express balance of $144,000, left in his name. 800,000 airline miles, taken from his account. Unpaid sales taxes, and a lawsuit against him and his family.
NarratorThe company, he says, still blamed him for its troubles.
David Bertrand“I wonder how long it takes to fix the problems that they say I created?”
NarratorIn January 2003, Nutrition For Life announced a sponsorship deal with the Continental Basketball Association. Jerry Kramer was still chairman.
From the recordWe are committed to taking Essential Nutritional Supplementation to every home and family in America.
David Bertrand“unfortunately their ‘ship’ is sinking and I expect the ‘abandon ship’ call to go out real soon.”
From the recordJuly, 2003. Chapter 7.
David Bertrand“Nutrition For Life was a good company. We paid bonus checks on time. We had good relationships with our vendors, because we paid them and told them the truth.”
“We had good relations with most of the field, because we treated them humanely, and genuinely cared for them and their success.”
“That no longer is the case.”
“It has no heart.”
“I also realize that I am at fault too for allowing these uncaring, self-dealing schemers in the door.”
Epilogue: Starting Over
NarratorIn 2002, David, Jana and Big Al started over. They called the new company Vitacorp. After a brief dispute over the name, it became Vitamark International.
They set up in a bank building on the Northwest Freeway, Highway 290, and built it the way they had built the first one.
New products, like Limu Plus and VitaOne. A convention in Houston every year. And a share of every Limu sale went to a children's charity, Limu Kids.
Abandon Ship.
The untold story of the Nutrition For Life takeover.
Sources & credits
Pictures
- NutritionForLife.com (1997–2003), Vitacorp.com and Vitamark.com (2002–2011) and AdvancedNutraceuticals.com (2004), via the Wayback Machine
- Barry Loder photograph: ShieldAir.com (2015)
- David Bertrand on camera: “The Vitamark Office” (2012)
The record
- SEC EDGAR: Advanced Nutraceuticals, Inc. Exhibit 99.1, December 29, 2000 and June 13, 2001; 2000 proxy statement
- Nutrition For Life history (encyclopedia.com) and the Stanford Securities Class Action Clearinghouse, for the 1996 lawsuits and SEC inquiry
- NutraIngredients, “Nutrition For Life in CBA deal,” January 10, 2003
- Everything else attributed to David Bertrand comes from his own account, “Why I Left Nutrition For Life.”
Production
- Written and produced by: Stephen Bertrand
- Primary source: David P. Bertrand, “Why I Left Nutrition For Life”
- David’s words: Read in a recreated voice, with the family’s permission
- Archive: NutritionForLife.com, Vitacorp.com, Vitamark.com and AdvancedNutraceuticals.com via the Internet Archive’s Wayback Machine; SEC EDGAR