How Frank VanderSloot, Wellness Billionaire And GOP Kingmaker, Became Idaho’s Richest Person
Chase Peterson-Withorn , FORBES STAFF
I cover the world’s most successful entrepreneurs.
Idaho might supply a third of America’s potatoes, but you won’t find its richest resident among the state’s 325,000 acres of potato fields, or even in its capital city of Boise. He’s in Idaho Falls (pop. 60,211), running one of the nation’s largest online retail companies from his headquarters four miles from downtown.
Idaho’s wealthiest person, with an estimated net worth of $1.9 billion: Frank VanderSloot, the 68-year-old founder and CEO of Melaleuca, which bills itself as “the wellness company.”
Photo courtesy of Melaleuca.
Melaleuca manufactures more than 450 products ranging from vitamins and health supplements to environmentally-friendly household cleaners. It then sells them direct from the factory to more than 1.8 million consumers every month through its online store. About two-thirds of customers simply buy products for personal use. But Melaleuca also offers commissions to those who want to refer customers of their own. Most just earn a 3-4% commission on goods purchased by people they have directly referred, but it’s possible — depending on how many people you have referred and how active a role you take in the company each month — to earn higher rates and commissions on purchases made by the Melaleuca customers referred to the business by your own Melaleuca customers (the chain extends, at most, seven iterations).
It’s a business model that has been compared to that of companies like Herbalife and Amway, but Melaleuca is quick to reject the comparisons and insist that it’s not a multi-level marketer. That’s because every customer buys products directly from the company, not from other customers who distribute the goods, so no one is forced to fill their garage with inventory that may never sell. Commissions are paid only when a customer actually buys a product to use, not for signing other people up.
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When someone pays off their mortgage thanks to commissions, VanderSloot personally hosts a mortgage-burning party to celebrate the milestone. For those in the uppermost tier (just 0.01% of customers), who earned an average of $1.27 million last year according to the company’s published income statistics, that seems possible. But Melaleuca — which markets itself as a part-time opportunity and stresses frugality — admits that most people don’t make that kind of money. Of the 34% of customers who earn commissions, about two thirds are “product advocates” (those who have referred only one to eight people and may not be actively seeking commissions at all) who earned between $93 and $550 on average last year. The remaining 12% of Melaleuca customers are “business builders” — people who are working to earn income from referrals. While a few of these “builders” go on to make six, or even seven, figures, 90% of them made just $2,047 on average.
“This is not a get-rich-quick scheme,” VanderSloot told Forbes in 2004, but noted that the income can still “make a real difference to a family earning $30,000.”
VanderSloot would know. Born into a poor farming family, he spent his childhood in northern Idaho chopping wood, feeding chickens and milking cows. By age 12 he was running the family farm while his father worked a railroad job. He paid his way through college by cleaning a laundromat that he lived in, before taking a break to spend two and a half years in the Netherlands on a missions trip (he converted to the Church of Jesus Christ of Latter-day Saints as a teenager), and eventually earning a marketing degree from BYU in 1972.
By 1985 VanderSloot was a regional vice president for Cox Communications’ cable TV division, in Washington state. His then brother-in-law convinced him to return to Idaho to help launch a company based on a handful of products tied to the melaleuca, or “tea tree” of Australia. VanderSloot moved back but soon discovered a few problems, including that the company’s supposed 80% ownership of the tea trees in Australia was actually closer to 5%. He and the partners shut the company down within five months. They regrouped and launched a new business, Melaleuca.
Since then, the company has grown at a compound annual rate of 28%, crossing the $1 billion in annual sales mark in 2011. In 2016 the company’s sales hit a record-high $1.75 billion.
Thanks to the profits from his estimated 44% stake in the business, VanderSloot has been able to buy up a significant amount of land throughout the West. An environmentalist, he owns an estimated 117,500 acres across Idaho, Utah and Montana. Much of this land supports his Riverbend Ranch cattle business. VanderSloot launched the operation 25 years ago near his Idaho Falls home and today it’s one of the ten largest purebred Angus breeders in the world. He also uses the properties to host “Grandpa’s Academy,” a six-week ranching trip that teaches the value of hard work to his 48 grandchildren (he and wife Belinda had a combined 14 children from previous marriages).
The other sizable investment VanderSloot has made with his Melaleuca spoils: politics. He is a major donor to Republicans. A national finance co-chair for friend Mitt Romney’s 2008 and 2012 presidential runs, he has been credited with donating and bundling more than $60 million for the latter campaign. According to data from the Center for Responsive Politics, VanderSloot and his wife publicly gave at least $1.6 million during the 2016 cycle — all to Republican causes. Most of the money went to Marco Rubio, the Republican National Committee and state Republican parties across the U.S.
His political activity has brought him influence — Donald Trump Jr. visited the Melaleuca headquarters for a closed-door meeting in September 2016, and VanderSloot met with Marco Rubio and Carly Fiorina during their campaigns as well — but has also led to conflict.
When the Idaho Falls Post Register published a series of articles detailing pedophilia at a local Boy Scout camp in early 2005, Melaleuca took out ads in the paper criticizing the article and repeating speculation that, among other issues, its homosexual author may have had “a personal axe to grind” due to the Scouts’ then-policy of not allowing gay scout leaders. In 2012 — after VanderSloot made a $1 million donation to a Romney super PAC, which reportedly landed him on an Obama campaign “enemies list” and led, according to VanderSloot, to four audits from government agencies — Mother Jones published an article claiming that VanderSloot, in his letters to the local paper, publicly outed a reporter as gay. VanderSloot sued for defamation in Idaho court. The judge, while criticizing Mother Jones’ reporting, dismissed the claims as protected speech and threw out the case in October 2015.
Active in the Idaho Falls area, VanderSloot also owns a number of smaller, local businesses, including eight East Idaho radio stations. And each year since 1992 he has put on a free July 4th fireworks display in his hometown to honor military service members. It’s “the largest show west of the Mississippi,” according to its website. VanderSloot knows because Melaleuca monitors the shows in competing cities — including Seattle, Portland, San Francisco, Los Angeles, Phoenix, Denver and Houston — to ensure that its billionaire benefactor always comes out ahead…