Michael Eisner and Michael Ovitz in court … a James B. Stewart book making everybody uncomfortable … impending divorces with Pixar and Miramax. Who needs all that? Not Michael Johnson. In April 2003, the former president of Walt Disney Intl. left the Mouse House to become CEO of Herbalife Intl. ($1.3 billion net sales in 2004). Daily Variety visited Johnson in Los Angeles.
Q: How and why did you make the quantum leap to running a wellness company?
A: I wanted to be a CEO. I believed that I had reached a certain level at Disney. I told a couple of headhunters, “Find me a CEO job.” And in the entertainment industry, what are there, five of them?
Q: What made you think you could handle the Herbalife job?
A: It’s about the leap of faith that you have (in) your own skill set. When I worked at Disney, I viewed myself as a businessperson. You need a certain set of skills. You have to motivate people. You have to inspire people. You have to create sales and bottom-line efficiency and profit and margin. Those are business skills that you could apply to running an automotive company, you could apply to running an entertainment company, and you certainly can apply to running a nutritional company.
Q: At Herbalife do you have the equivalent of blockbuster, tentpole products?
A: Our (nutrition product) ShapeWorks is about 24% of our sales. We have a Niteworks product created by Dr. Louis Ignarro, who won the Nobel Prize. That’s also a tentpole product, and we’ll develop more cardiovascular health products off his creation.
Q: Are there other parallels to a movie studio?
A: We have a release schedule and a release slate of product. We have an audience on which we’re focusing within market segmentation. We have 59 markets worldwide. How are you going to roll a product out? Through what marketplaces?
Q: An MPAA-distributed movie had an average negative cost of $63.6 million in 2004. What’s the average investment in your products?
A: It varies widely. If you’re going to repackage and reposition a product, it’s not much. A brand-new product often can be anywhere from $500,000 to $2 million. So it’s certainly not a (studio) movie budget; it’s an independent.
Q: Some of your former colleagues also migrated to Herbalife. Has everybody made a smooth transition?
A: Yes, I’ve been fortunate. We had something real special in the video division at Disney. We had a Camelot period in there for about five or six years. And that wonderful team that I was fortunate enough to be the coach of, I wanted to put that back together again. To be fair to everyone, we had some great executives here and we have invited everyone to join a new culture which is not Disney and not Herbalife. It’s a blend: a culture of planning, a culture of making sure we’re making decisions correctly based on facts — not on emotions.
Q: It’s no secret that Herbalife had challenges when you came aboard, and you were brought in to solve those challenges.
A: Our problems at Herbalife stem from distributor relationships gone bad. I want to say this carefully, because we have 1,200,000 distributors, and 99% of those distributors are wonderful people. We have 0.01% characters out there, like any company would, who would hurt the Herbalife brand. They have overpromised what the business opportunity is. They’ve led people down a primrose path.
Q: Where do you see the growth of your business?
A: Our marketplace is everywhere in the world because, unfortunately, the world is growing wider rather than taller, and it’s doing it at a very rapid rate. The movie “Super Size Me” is not a joke.
Unger is a leading exec recruiter. At various times, he led the media and entertainment practices of the world’s three largest executive search firms. He can be reached at firstname.lastname@example.org.