$250 Million For A 14-Year-Old's Big Idea: Origami Owl | Hacker News Reader

$250 Million For A 14-Year-Old's Big Idea: Origami Owl

smallbusiness.yahoo.com

35 pointsedw51955 comments

Wow, the comments are so heavy and downbeat on this story. There seem to be 2 main arguments:

Various people are saying it's a pyramid scheme and therefore a con. I don't see it myself. A pyramid scheme generally doesn't have a physical product and crucially requires a number of tiers recruiting new members. Origami Owl just appears to be a straightforward direct sales model akin to Tupperware or various cosmetics parties (e.g. Avon in UK). The reps buy stock, arrange the parties and sell it. That seems to be entirely legit.

The second bone of contention is with the use of the word "designer" as a name for the sales reps. Hardly the crime of the century. Tupperware call their reps "consultants" but they don't charge consultancy rates. It's just in keeping with the theme.

I think we should be celebrating this young woman's initiative in seeing a market, finding a product that fits and building out the business.

>a pyramid scheme generally doesn't have a physical product

Pyramid schemes frequently have physical products.

>and crucially requires a number of tiers recruiting new members.

Bingo. If there's no way to make money recruiting, it's not a pyramid scheme.

>I think we should be celebrating this young woman's initiative in seeing a market, finding a product that fits and building out the business.

As far as I can tell from the article, this business was created, grown, and is run by the girl's family. Her entire contribution may have been simply inspiring the creation of a business by setting up a stand selling charm bracelets in a single mall that did surprisingly well during a single Christmas season, and in giving a cute origin story to the company.

It's an MLM scam, which is different from a pyramid scam. Still a scam.

We velebrstet people who create value and make people happier, not people who trick others into signing up for moneylosing premise who them off in search of a greater fool.

If the profits come from the pockets of the sales staff, not from end users enjoying the product, it is a scam.

> "Origami Owl just appears to be a straightforward direct sales model akin to Tupperware or various cosmetics parties (e.g. Avon in UK). The reps buy stock, arrange the parties and sell it. That seems to be entirely legit."

"Multi-level marketing" is looked down upon as little better than pyramid schemes/cons, even though people are aware they aren't, strictly speaking, those things.

Quite a bit of the structure is heavily anti-consumer and even anti-'consultant'. Incentives often flow up, from each particular direct salesperson, to the people that recruited them, in a web of perverse incentives that leave customers and reps alike with a bad taste. To say nothing of the heavy leveraging of peer/social pressure to incent purchases by a captive/low-information audience, beyond what they would likely buy on their own.

> "Tupperware call their reps "consultants""

Most of these kinds of companies call their reps "consultants", because of liability problems, should they go around presenting themselves as employees or direct representatives of the companies whose goods they're selling. And these consultants are repeatedly, explicitly admonished against presenting themselves this way. The admonishments often try to pretty up the arrangement, like you did, by making "consultant" seem like a desirable title, regardless of the particulars of the relationship.

Which, in and of itself, is a fairly strong "smell" that the business (and the relationship) isn't quite on the up-and-up.

EDIT: typos

> To say nothing of the heavy leveraging of peer/social pressure to incent purchases by a captive/low-information audience, beyond what they would likely buy on their own.

Yes, my wife if constantly invited to these "parties" were the host sells some kitchen or personal products. She also feels she has to buy something even though she doesn't need anything. Business built on guilt and social pressure.

Doesn't that drive most of consumption (at least the social pressure aspect)?

It's MLM.

https://www.origamiowl.com/join/opportunity/index.cfm

REWARDING

It's not just about the money you earn, but how that money can change your life and impact others.

+Get Paid What You're Worth Origami Owl offers one of the highest personal commissions in the home party industry (50% on Charms, Plates and Dangles + 30% on all other jewelry)

+Earn Money Quickly Arrange a Jewelry Bar and keep the profits that night

+Become A Leader Mentor a team of Independent Designers and earn additional income on their sales volume.

+Enjoy Rewards Earn recognition, grow as an individual and enjoy the fun perks we have in store for you!

Origami Owl takes on independent associates – known as “designers” – who buy products at a discount and then peddle them to others for a marked up price. One of the favorite points of sale are “jewelry bars,” or private parties at someone’s home or another venue operated by a “hostess” (the hostesses get discounts and some free products too).

Wait, hasn't this pyramid selling thing been done to death already?

--edit-- I mean obviously not completely to death because it seems to be working here, but, well, you know what I mean :)

Yes but now with added computers!.

And more Chinese labor:

> Though the firm won’t disclose profit margins, as of this writing there about 373 employees, the majority of which work in warehousing (the firm just set up an 80,000 square foot facility in Chandler where components from China are assembled before shipping). According to CEO Robin Crossman, employee numbers fluctuate tend to fluctuate.

I believe it depends on local law, in some countries it can't be prosecuted as a pyramid scheme if it actually sells something, i.e. it configures "multi-level marketing" (e.g. Agel, Monavie). Pyramid schemes always seem attractive to the uninformed, I think the investment these days is in making them barely legal.

You're right. MLM is probably more correct, and I didn't mean to imply any criminality on their part. Just that it's not exactly novel.

This smells bad to me. Even by Silicon Valley standards, that's way too much growth, too quickly. This smells like some adult (or more likely, group of adults) with a ready-and-waiting Pyramid scheme is using a 16-year-old girl as their marketing story. I hope she comes out of this with something other than millions of dollars of debt in her personal name or something.

Edit: I've been inspired to sign up for a Google Alert on "Origami Owl". I shall test my nose for accuracy.

I don't see any evidence of a pyramid scheme here, which is unsustainable. This model is similar to what, e.g. Miglio has used for decades (http://www.miglio.com/). That being said, the growth is suspicious when you consider there are established players.

It smells more like modified multi-level marketing scheme, which when you read the following is not surprising, and fits your 16-year-old-as-marketing theory:

"According to CEO Robin Crossman, employee numbers fluctuate tend to fluctuate." ... "Crossman, who had previously acted as a consultant with the company for several months early this year before becoming CEO in May, boasts a resume that includes Amway Global..."

It sounds like the original business was a straightforward jewelry side business, which ended up becoming something like an "Amway Jewelry" once Crossman got involved.

Sorry, yes, I was sloppy with the term. I'll leave it as-is so your comment makes sense.

There's a lot of WTF going on in the OP, but I'd say the cake stealer is the OP's offhand reference to the mom, who is Owl's co-founder, trying to help exonerate her child-molesting friend who was using an email ruse later popularized by General Petraeus

Here's the link from the OP: http://blogs.phoenixnewtimes.com/valleyfever/2011/11/susan_b...

> Origami Owl takes on independent associates – known as “designers” – who buy products at a discount and then peddle them to others for a marked up price. One of the favorite points of sale are “jewelry bars,” or private parties at someone’s home or another venue operated by a “hostess” (the hostesses get discounts and some free products too). The company has about 50,887 designers.

So, the "designers" don't actually design anything? They just sell stuff at parties organised by a "hostess"?

I hope the friends of the hostess, and the hostess, know that the designer didn't actually design anything, because otherwise this feels really sleazy.

EDIT: Great that it took off so well though. I guess.

So, the "designers" don't actually design anything? They just sell stuff at parties organised by a "hostess"?

That's my read on it. I find it puzzling at the least that the article takes no issue with this at all; it wouldn't immediately occur to me that Yahoo Small Business would publish paid placement ads as articles, but this doesn't exactly scream "reporting" to me, so I have to wonder if that's close to the truth.

If they're using "designer" as part of the pitch, then it's definitely dishonest and intentionally misleading. If that's just a term a 14 year old came up with and it's only used internally, then... I guess it's just really poor word choice.

That said, I do like the fact that when she asked for a car, her parents not only told her to buy it herself, they suggested she start a business. Too bad about the... um... less intelligent decision(s).

>> I find it puzzling at the least that the article takes no issue with this at all; it wouldn't immediately occur to me that Yahoo Small Business would publish paid placement ads as articles, but this doesn't exactly scream "reporting" to me, so I have to wonder if that's close to the truth.

“Journalism is printing what someone else does not want printed: everything else is public relations.” ― George Orwell

>>That said, I do like the fact that when she asked for a car, her parents not only told her to buy it herself, they suggested she start a business. Too bad about the... um... less intelligent decision(s).

The origin story may well be made up, like the eBay eps dispenser legend and many others.

>> I hope the friends of the hostess, and the hostess, know that the designer didn't actually design anything, because otherwise this feels really sleazy.

Eh, it's a social thing. This is really common among my wife and her friends (demographic: she's a 30-something dentist). They'll host parties and sell makeup, candles, handbags, etc... The hostess' or host's job is to know about the product and to have the good taste to select a nice mix of samples/demos on hand. I don't know anything about Origami Owl, but in these other niches the hostess is designing the party itself more than anything else. Everyone knows they're getting commission, discount on their own purchase, etc...

Put another way, the 'designer' is the Sales Engineer.

This just sounds like a glorified Tupperware party, no? That's perfectly ok though as long as everyone is honest about it.

I'm curious about the revenue numbers though. Of the $250 million they're expecting to cross hands, how much winds up going to the 17 year old's company?

> This just sounds like a glorified Tupperware party, no?

Well, maybe I'm confused. With a tupperware party someone invites me round to their house, and asks me to buy tupperware. I know what's going on.

With Origami Owl there's a "designer", who gets someone to host a party. The host invites me round, and then sells me stuff. (So far it's just tupperware) but is the designer there? Is it the "designer" showcasing and selling the product? So the host organises the party and gets a cut, but the designer sells the product and gets another cut.

The problem here is that the designer is just selling mass produced (made in China but assembled in US) stuff.

Sleazy is an excellent business model.

I'm curious if any other country has 16 years olds demanding cars for their birthdays or if it is just our insane culture.

There are countries where 16 year olds would be completing their 6th year at a sweatshop making shirts.

ck2, I get what you're saying ... it's true. But we don't model ourselves after the 3rd world. The governments of those nations should be looking to us, not the other way around.

Having said that some discretion on our part is needed. I don't think every 16 year old needs a car. But that is up to the parents.

The 3rd world reference was to show the other side of the extreme.

I was thinking there has to be some kind of middle ground.

Also, I don't want to be on the same road as a 16 year old driver in 2013 in the US (with their own car). Zero attention span.

The 3rd world doesn't have a 5th world to exploit, so looking to us as a model is not a viable option.

They should be looking to us with a very critical and suspicious eye.

I agree that it's insane for any culture to encourage such extreme feelings of entitlement, but don't lose sight of the motivational merit that's at the heart of this story. Wanting a first car (or an exotic sports car, or a yacht, or anything which is normally beyond our reach) can be very motivating, and that motivation can be productively channeled. That a 14-year old was able to do so is impressive and encouraging. That our culture celebrates productive ambition is also encouraging.

I want to agree with you because it sounds like a great story, the "American Dream", but there are so many kids who want so much and almost none achieve what this girl did. It's like praising a professional sports player for success but ignoring the fact that the other 99.9% of kids who played too many sports and didn't pay attention in school didn't get very far in life. It happened to work out in this situation but it is far from the normal case.

High school sports are correlated with academic achievement: http://newswire.uark.edu/articles/20127/it-s-not-either-or-s...

All that study seems to show is that schools with more students in the sports programs also produce better students. Isn't it possible that schools that strive for better athletes also tend to strive for better students and those two groups could be separate? I know out of the 20 engineers I went to college with, only one of them was in any sports and he did pretty poorly and barely graduated.

Of course, it's only correlation. Causality is unclear, the correlation isn't, and correlation is enough to render incorrect the inference that athletes perform worse academically than non-athletes.

Here's a review of the topic: http://library.la84.org/3ce/HighSchoolSportsParticipation.pd...

Notably, it starts out with "... research has time and again demonstrated a strong and positive correlation between high school sports participation and academic achievement. This basic, baseline finding holds for a wide variety of measures and on a whole range of data sets, methodological approaches, and social conditions."

"The crucial point for a general audience is that periodic updates, reviews, reappraisals and re-evaluations (Braddock 1981; Picou et al. 1985; Holland and Thomas 1987; and Marsh 1992) have, over the years, consistently and invariably yielded evidence concluding that there is a significant baseline correlation between high school sports participation and higher rates of academic achievement and aspiration for individual students... Even research that is critical of the sports/education nexus or that seeks to complicate and unpack this statistical association begins from this basic assumption and understanding."

You can agree with me and still continue to remind us that not everyone will be exceptional. Kids need those reminders. We need those reminders.

Just take care not quash dreams while recommending having a plan B. Exceptional is not normal. True. But it's normal to dream, and from the morass of many unfulfilled dreams emerge our successes, dreams still intact.

I'm sure some 16-year-olds do that. But this one merely suggested that a car would be a good gift. You've maybe done that yourself - planted the seed in your significant others' minds? Unfair to imply she 'demanded' anything - as if she's an entitled lazy girl instead of a record-breaking entrepreneur.

Do you want to drive your 16 year old around to school/work/sports/practice/friends/library/mall?

She didn't "demand" a car, she asked for one. What kid in America doesn't want a car for their 16th birthday?

I asked for one too, and I got one. I had to buy it myself but my family helped me find one that was super cheap ($50) and it lasted me all through highschool. It wasn't stylish, but as Fat Tony would say, the sentimental value of it was through the roof.

> What kid in America doesn't want a car for their 16th birthday?

The ones who don't have money for gasoline or $1800 a year for insurance, and who know without asking that their parents will never pay for any of this.

They still don't want a car that they know they can't have?

I enjoy moments like this, where it's suddenly obvious in a discussion that we think about something in completely different ways.

Did I want a blimp when I was 16? If someone offered me one I would have said yes, but it's not something I ever really considered - likewise for a car.

I suppose a large part of this is due to growing up in an area with very good public transportation and bike infrastructure, but there were a million things I wanted before a car, such as the $60 computer I spent years saving for.

Another pyramid scheme/MLM company. They seem to be at their historical peak right now, and no signs of slowing down. Am I alone in wishing the FTC would crack down on them?

Oh, thank god. For a horrible second I thought someone had paid 250 big ones for a business selling actual origami owls.

Could be worse. I thought it was an origami owl.

So let me get this straight. MLM where reps sell products face to face, answer questions, offer sales suggestions : BAD. Walmart beat supply chain down so everything has to be made in china because us regs(child labor and environomental) to expensive and employees down so employees can't afford to support themselves, GOOD. Facebook were people spend mass amounts of time clicking on games and wasting time as the company sells every click to the highest bidder: good. Google auctions search results off(except 14% of the front page is organic) so most of the product profits go to them: GOOD. Malls were most of the profits end up in real estate developers hands who probably got kick backs from the local government to build it in the first place:Good. Show me a billion $ business model that isn't slimey. Also, I would buy the peer pressure angle except women spend $700 on a purses all the time. Adn nobody bad mouths those designers. Apple came out with an MP3 player that doesn't even play MP3s made obsence profits while child make the electronics in sweat shops. Also, most recuiters for consulting companies make juice off the billable hours fo the people they bring in why isn't that frowned on?

why isn't that frowned on?

Because carriage returns.

Oh look it's a kid who founded a pyramid scheme. Please tell me more about the pyramid parties concerning the sale of pointless baubles.

Revenue metrics are completely pointless. I could exchange $1 dollar a billion times with my neighbor. That doesn't mean that this little enterprise will either turn a sustainable profit, nor does it mean that I have a billion in revenue.

Let the pyramid parties commence!

This is not only a 14y-old's idea it is also an idea that is more than 14 years old.

The selling of costume jewellery via hosting aka tupperware parties was kind of popular with high-income families about 15+ years ago - at that time products sold were the Bulgari / high price style of objects redone with false stones as costume jewellery.

Now this is basically the same concept with similar products catering for a different population group (lower income - less market knowledge).

The companies, like with many others selling products via such a scheme, after the pyramid has grown to a certain size, become stagnant or disappear (after those in at the beginning have cashed out).

Have a look at the people and particularly their previous companies mentioned in the article to know what this model is about. First buy low and find many that sell / buy high for you - after a while it quickly becomes a seemingly today very popular model - FABI (find a bigger idiot)

Article sites that her father worked for Amway which makes a lot of sense, he'd have a lot of experience in getting this kind of model of business up and running.

Regardless of shady business model, it is good to see parents encouraging and backing their kids ideas for business.

http://en.wikipedia.org/wiki/The_Grifters_(film)

Before everybody gets their panties in a bunch, it's just the same old thing as a Tuperware party, or Avon or increasingly personal sexual toys. I've even seen grilling equipment, home beer kits and other kinds of things sold this way.

Person buys a bunch of inventory from the maker, hosts parties and tries to sell the stuff at a markup to the party goers. Maker only sells to their "retailers".

It always seems kind of shady, but in practice the only ones who ever really get burned are the independent retailers. Usually the product is halfway decent, if overpriced.

There's usually some kind of pyramid style recruitment element as well, but moving inventory is typically the goal, not signing up more retailers.

I wish we could get more tech-related startup stories out of Phoenix and AZ in general. The place has whole lot of capital and some pretty big tech resources in local big-name firms and educational opportunities, but so far has yet to leverage any of that into a great startup culture. Mostly what comes out are business initiatives like this, where tech is sort of a secondary concern. A great resource for AZ-related tech/biz stories is AZ Tech Beat (http://aztechbeat.com/)

Saw amway and immediately got what it's about.

Why the hate? Because she's not tech? so much speculation without concrete evidence. HN, you never cease to disappoint... If it was some bullshit JS/Node website with 1 million users with no fucking revenue, it will be alright if it's valued at a billion, because some VC invested $10 million for 1% right?

Um Herbalife?

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