Background

From the origins of DS-Max up to the business model used by its descendant companies today.

  1. History
    1. W.M. Industries Inc. (WMI)
    2. Wholesale Warehouse Industries (WWI)
    3. DS-Max (Direct Sales to the Maximum)
    4. Innovage, Cydcor, Smart Circle etc.
  2. The DS-Max Business Model
    1. A Different Kind of MLM
  3. Footnotes

History

W.M. Industries Inc. (WMI)

Founded in 1975 in Canada by Larry Hahn, WMI was a retail business that went door-to-door selling products such as perfume, toys and luggage.[1] With no financial support or education, Larry spent several years training new recruits while living out of his car. By the 1980’s there were thousands of distributors. Recruits were promoted based on their sales, with sales following the Law of Averages (the more doors you visit, the more sales you’ll get). Convicted of tax evasion, WMI was forced to leave the country. The distributors had a choice: relocate to the US or be out of a job.

Wholesale Warehouse Industries (WWI)

In 1980 former WMI distributer Murray Reinhart decided to start his own company – Wholesale Warehouse Industries – despite being heavily in debt.

WWI was largely a carbon copy of its predecessor. Instead of altering WMI’s formula, Murray sought to eliminate the racial discrimination he himself had faced.[2] Murray focused on the power of positive attitudes when selling. Promotions were now based on building a crew of five leaders rather than sales.

Murray recruited fellow Canadians Larry Tenambaum and Avie Roth, later known collectively as ‘The Big Three’. Selling pots and pans bought from wholesalers at heavily marked up prices, Murray found that customers were influenced more by enthusiasm than price. The Big Three would train up to ten salesmen per day. As their revenue increased, so did their buying power. The greater the profits (and therefore volume discount) the cheaper the goods. Eventually they could afford a suite in an industrial park.[3] Soon the direct sales workforce became more efficient and productive, and Canada became saturated with offices. By 1986, WWI had started its international expansion.

Photo of Larry Tenambaum giving a speech.

Larry Tenambaum. See more photos here.

DS-Max (Direct Sales to the Maximum)

After some bad press in the early 90’s, WWI was renamed DS-Max.[4]

While previously only clearance items had been resold, DS-Max now started manufacturing their own products. DS-Max sprouted factories, bought patents and rose fields. Distributors would pitch to business owners and leave shelves of products in their locations. The Big Three had proven that a good attitude could sell anything, to ‘sell the sizzle, not the steak’.

By the mid 90’s, offices were grouped according to the products and services sold. The backbone of the company, selling DS-Max products, became The Clearance Division. There were the Roses Division, the Aliron Division, the Books Division and many others that no longer exist.

Photo of a younger Murray Reinhart standing in front of the DS-MAX logo.

A Young Murray Reinhart. See more photos here.

The Advertising Division (1990)

The Adverting Division would henceforth represent third parties instead of exclusively their own product line. Employees named ‘Listers’ would seek out small businesses and propose advertising campaigns. The New York Yankees campaign marked a turning point. In the early 90’s, while the Yankees were struggling with ticket sales, DS-Max listers proposed a ‘buy one get one free’ coupon. The Advertising Division sold the coupons, kept the profit, and within one baseball season had filled 150,000 seats.[5] DS-Max began to gain traction.

The Communications Division (1992)

Other DS-Max Divisions only dealt with immediate transactions of money in exchange for goods, but now The Communications Division would sign up customers to contracts for subscription-based services.

AT&T was the first client for The Communications Division. The campaign proved so successful that AT&T formed a new department to deal exclusively with DS-Max applications. Today, what would became Cydcor is responsible for over 41% of AT&T’s overall clientele.[6]

By the millennium, DS-Max had a net worth of $75 billion, 15,000 offices worldwide and 2.2 million independent distributors.[7] Murray said that his company offered “the greatest opportunity in the world.”[8]

Descendant companies: Innovage, The Smart Circle, Cydcor etc.

In 2005, due to negative publicity, the DS-Max organisation divided into its descendant companies. All direct connections with DS-Max have been severed, and the ‘DS-Max’ moniker removed from all company names. Instead, each division now promotes their own identity.

Innovage and ThreeSixty Sourcing logos

The Clearance Division spun off and became Innovage. The company purchases “millions of pieces of merchandise from partners like Disney, Warner Brothers and Vivitar” from thousands of factories, sourced by Three Sixty Sourcing Ltd.[9]

Granton Marketing and The Smart Circle Logos

The Advertising Division became Granton Marketing, renamed The Smart Circle International in 2005. The Smart Circle still deals primarily with coupons from contracts with restaurants, fitness clubs, professional sports teams, auto body shops, hotels, golf courses and others. Clients include Domino’s Pizza, Hilton Hotels, The New York Yankees and Miami Heat.[10]

Cydcor

The Communications Division became Cydcor. Cydcor still signs up customers for monthly services. They serve clients across North America, including ATT, Sprint, Visa, MasterCard, CSI, DTV, Optus and many others.[11]

The Cobra Group Accpo Group logo

Another notable mention is the Appco Group (The Cobra Group), a Sydney offshoot founded by an employee of DS-Max in 1980s, Chris Niarchos. It is now primarily based in the UK. The Appco Group is a “billion-dollar group of diversified companies” with “more than 800 offices in 26 countries on five continents”.[12] Clients include npower, Sky, British Red Cross, American Express and Coca-Cola.

Murray Reinhart has retired from the business but occasionally delivers motivational speeches at conventions. [13]

The DS-Max Business Model

Image of the DS-MAX Set up

The DS-Max descendant companies arrangement (click to enlarge)

Each descendant company of DS-Max has a loose confederation of international sales offices.

Each sales office is an independently owned and operated limited company, legally bound to the descendant company only through a marketing contract. Therefore the DS-Max descendant companies remain insulated from any legal or financial liability, making guidelines on ethical conduct difficult to enforce.

Recruiting is done in the name of the affiliated limited company and any discredited company names are immediately changed. This makes it difficult to establish a connection between the independent sales offices and a descendant company, as well as challenging for prospective employees to discover bad press. However, similarities in business practices often indicate an affiliation with a DS-Max descendant company.

Image of The Arrangement with Clients

The Client Arrangement

Suppliers, such as Innovage, supply merchandise to their sales offices. Innovage employees coordinate shipping and storing of products. Sales and marketing companies, including Accpo Group, The Smart Smile and Cydcor, are ‘Listers’. Their employees find client leads for their sales offices. Clients such as AT&T sign a marketing contract with a reputable descendant company, which in turn outsources the contract to an affiliated sales company. All main offices of these descendant companies also process paperwork, admin, bookkeeping and some legal expenses. All affiliated companies pay their descendant company a set fee for this work, plus a cut of their profits in exchange for access to their clients and/or merchandise.

A different kind of MLM

The DS-Max Marketing Scheme classifies as multi-level marketing since products are directly sold to the customer. It does not, however, classify as an illegal pyramid scheme since profits are not made from participation fees.[14] There are several key differences that set it apart from other multi-level marketing businesses:[15]

  1. All members begin as a Field Representative. Their income is completely commission based (rather than a slow transition from part-time to full-time). Members work for 12 or more hours a day, often 6 days a week, and must pay for all expenses since they are ‘self employed’ independent contractors. They are not officially associated with the company yet form their cost-free workforce. Only a small group of Vice-Presidents (now called National Consultants) have achieved the high levels of success that is promoted during the initial recruitment process.
  2. The Manager of a sales office is financially and legally responsible for their limited company and handles day-to-day office and recruitment expenses. The independent office would typically have one room for members, room(s) for the manager(s), a reception, a waiting room and a room where merchandise (if any) is stored under lock and key. It is not unknown to have multiple managers running different campaigns sharing the same office and splitting the rent.
    A simple formula means the network of these affiliated companies grows exponentially. One company helps a member set up their own independent limited company, which eventually generates a new manager that in turn sets up their own company – ad infinitum. The descendant company then compensates the Manager of the first company for half of their workforce moving to a new office.
  3. For products, distributors receive the goods on consignment, thus the distributor does not pay for them up front. Distributors of services only receive their full commission once an application has been approved. There is no fee for becoming a distributor. This was the payment system for the AT&T campaign in 2000. AT&T paid $10 (~£6) for each customer that the field representative signed up. The parent company took $3, the manager of the affiliate company took $3 and the field representative took the remaining $4.[16] If the application didn’t go through, AT&T was refunded the entire $10 due to the Security Bond arrangement.[17] This way AT&T only paid $10 for each successful customer and got free marketing, making it far more effective than conventional advertising.

Multi-Level Marketing Criticism

Thousands have felt exploited after never having achieving the high level of financial reward that was promised. In 2009, The Direct Selling Association estimates there are 16.1 million ‘direct’ salespeople in U.S. alone who earn a median annual income of $2,400  (£1,490).[18][19][20] Only 8% gross more than $50,000  (£31,000) in annual income.[21]

Certain practices employed by Multi Level Marketing companies have also been criticised for being cult-like. Roland Whitsell, a former business professor with 40 years of researching multilevel marketing claimed that “You’d be hard-pressed to find anyone making over $1.50 an hour…The strongest, most powerful motivational force today is false hope”.[22][23]


FOOTNOTES

  1. W.M. Industries Inc. is now known as Scentura Creations. This company is also associated with World Perfume, since the founder was a distributor for Scentura Creations. Both companies use similar business practices to DS-Max.  ↩
  2. Murray Reinhart was Black and half Jewish. Coincidentally, Murray had also lived out of his car.  ↩
  3. Murray’s first desk was made out of standard, plastic crates.  ↩
  4. DS-Max is also be referred to as DsMax, DSMAX, Ds-Max and DS-MAX, among others. It stands for Direct Sales to the Maximum. The actual company name was D S Max USA Inc and/or D S Max Canada Inc ↩
  5. Obtained from reocities.com article “DSMAX History” ↩
  6. Obtained from reocities.com article “DSMAX History”  ↩
  7. Obtained from netipedia.com article “DS-MAX“. N.B. Because the company represents a loose confederation of independent offices there is no reliable way to verify these estimates. Only by analysing accurate and detailed records of these organisations and their affiliates, can verify estimates. These types of public financial disclosure are almost impossible to obtain as each individual office is privately owned and thus is not required to disclose any information.  ↩
  8. Obtained from reocities.com article “DSMAX History”  ↩
  9. Obtained from Web Archive of Innovage Website.  ↩
  10. Obtained from Web Archive of Smart Circle Website.  ↩
  11. Obtained from DS-Max section of wolfram.org  ↩
  12. Obtained from Cobra Group website.  ↩
  13. Obtained from DS-MAX netipedia Article. 
  14. Obtained from State of Michigan article “Multi-Level Marketing or Illegal Pyramid Scheme?” 
  15. Most of the controversy surrounding Multi-Level Marketing is with regards to companies not part of the DS-Max scheme. Members aggressively recruit as many people as possible in order to gain profits through bonuses and commissions (as opposed to selling the actual product). Many ‘Independent Sales Representatives’ end up with garages full of products that rarely get sold. They are criticised for their similarity to illegal pyramid schemes, with price fixing, high entry fees, high costs (for marketing kit and first products) and the exploitation of personal relationships. Well known companies associated with this type of Multi-Level Marketing include: Amway, Herbalife, Avon, Fortune Hi-Tech Marketing and Mary Kay Cosmetics.  ↩
  16. Obtained from DS-Max section of wolfram.org ↩
  17. The Security Bond Arrangement refers to the certain portion of an FRs commission held back and returned only when the sale is approved. In the gas and electric sector this would mean that the subscription is cancelled before the switch over. In the charity direct debit sector this would mean a donor cancels before a certain length of time has elapsed. Should the sale fail, money is taken out of the bond and refunded to the client. After a certain amount of time, to ensure sales are completed, whatever money is left in the bond is released onto the FRs. This ensures the company only pays for sales that would make them money. See Agreement for more details.  ↩
  18. The Direct Selling Association represents “companies that have multilevel compensation plans” in the U.S.  ↩
  19. Obtained from USA Today article “What kind of business do you want to start?”  ↩
  20. Obtained from USA Today article “Multilevel marketing or ‘pyramid?’ Sales people find it hard to earn much.” 
  21. Obtained from Entrepreneur Article “Direct Sales: Golden Opportunity or Hype?” ↩
  22. Another criticism is that, although Multi Level Marketing may have been a useful to reach isolated areas, with the advent of ecommerce it may have outlived it’s usefulness.  ↩
  23. Obtained from USA Today article “Fortune Hi-Tech: American dream or pyramid scheme?”  ↩

DISCLAIMER. Find my full list of references on the References Page.

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41 thoughts on “Background

  1. thanks for enlightening me on the companies background, I am proud to find out that the founder of such a remarkable network of companies was a Black man. I will Make it my mission to ensure his legacy of excellence and self management lives on

  2. Pingback: Piano Links

  3. Kent Schumm says:

    I am live here in Las Vegas I used to work for a product office and loved it 🙂 If you could help me find a Product/toy office #`1, or a advertising office #2, or a Fast Wax office #3 that would be awsome. If their is not one in Las Vegas then give me some numbers i will travel. I do not want to work for a Direct TV office. Can you please help me?

  4. Peter says:

    I used to work 4 wwi in south africa from 1993 untill about 1996. I became a manager and ran the wholesale division at the first wwi branch in pretoria, along with doug forster, who ran the books devision. I am trying to contact al wilson, whom was a owner manager from canada. He came over to south africa to assist our new branch. My name is Peter Livanos. Contact no is 0725455010. Were the best most positive years of my life, and we made great money. Also looking for doug foster and moamed motala.

  5. JE SUIS TRES CONTAN DAVOIR CONUI LE SYTEM DS_MAX CAR GRACE A CE SYTEME JE VAI POSITIONER MA FAMIELL MOI NJIKE JOSEPH JE SERAI RESPECTE UN JOUR .JE QUITERAI DE RIEN POUR ERTRE QUELQUN GRASE OU SYTEME DS_MAX.INTERNATIONAL MERCI FO MORAY REINHAR &DG FOMBACK ERIC.

  6. JOEL KIMEMIA says:

    Hi am a Kenyan who has greatly benefited from DS-MAX. I completed my university and went all round in search of jobs but it was in vain. but when i met ds-max my life changed and i worked hard from the first level of business ie sales and marketting then trainership and lastly in mainstream and i was promoted as a full branch manager in kenya mombasa, iam currently working hard to open extra offices in parts of kenya and in africa at large so that i can be financial stable .I thank all especially the starters of dsmax ,it has really assisted the youths .
    Thyanks alot

    • Retired Cop says:

      And DS-Max has power of attorney over your bank account too, right? And I bet that all the “offices” that you’ve opened up are all under different names too…..
      Read the article thoroughly before spouted off your company prepared rebuttal.

  7. geoffrey chinyanta says:

    Its realy amazing to see such amazing opportunity from one humble person. I have benefited a lot. Iam now in zambia doing some xpansion programe.

  8. For people who are smart working and having a burning desire to succeed this is real system we are now expanding in Uganda, let us keep fire burning juice, VP Otto Abubaker (Abu biz Suc International)

  9. SALMAN MUZAFFAR says:

    This is Salman Muzaffar From Pakistan(Karachi).I was the ex-member of DS-Max(South Asian Marketing) & Grantan Advertising. I am interested to start direct sales(Clearance division) in Pakistan under the umbrella of your organization please contact.

  10. Vika j says:

    As a Cameroonian born in Nigeria, due 2 financial reasons, i could not continue school. I 10k God 4 assisting me come across Dsmax in cameroon. U see u don’t fail in dsmax, U only abandon. WINNERS NEVA QUIT & QUITTERS NEVA WIN. Anything good must b highly criticised. If u neva made it d system, check ur attitude. I love dsmax

  11. Armetage says:

    Hi, I know that this may fall upon deaf ears but I’m looking into these scams in some great detail. I’ve been trying to get people who have worked there and have knowledge about these companies to come forward and speak to me about their experiences

    Please get in contact with me, at armetagemuffakim@outlook.com and we can take it from there.

    I’m looking forward to hearing your stories.

    • Scammed says:

      Hi there, I know you posted this in January but I’ve just seen it- are you still looking into these scams?
      I worked in one for a year and have lots of stories to tell. Please reply if you’d like some info. Thanks! 🙂

  12. TonoTheCurlyGuy says:

    morning everyone im from DS Max malaysia. Negativity always around us. So just put away the negatives and just take the positives. Tough time never lasts tough people will do.

  13. Ibrahima yaya says:

    I l’île ita well ans i think by the Wills of god i’ll finish my train and thanks to ms Murray

  14. Ibrahima yaya says:

    I like its well ans i think by the Wills of god i’ll finish my train and thanks to ms Murray !

  15. Je suis Tchabo Christianie étudiante à la Ds-max inter de la branche d’emana.Après avoir eu ma licence en lettres germaniques j’ai décidé de chercher un emploi et c’est comme ça que je me retrouve à la Ds-max.depuis ce premier jour j’ai donc décidé de m’engager jusqu’aujourd’hui.pour cela je remercie le fondateur Murray Reinhardt et le Grand MGR du Cameroun foumbang Éric d’avoir continuer à expansionner le système .aujourd’hui je suis sûre que je serai une solution aux problèmes de ma famille et de plusieurs malgré qu’ils sont là pour nous négative.en plus je remercie l’Éternel mon Dieu de m’avoir conduite car il est bon et tout ce qu’il fait est bon.tout ce que je peux donner comme conseils 1)”ne jamais regarder le début d’une chose mais plutôt sa fin “; 2) “savoir garder l’attitude, c’est balayer tout négatif’

  16. Clay Turner says:

    Love or hate this marketing model, it matters not. Their training and life skills you developed are all offered to their distributors for free. Many of their insights into goal setting, confidence building, and an understanding of how to create perceived value in goods is second to none. Helping you to develop these skill sets alone is worth far more than many of the haters realise and helped to shape my successes in my life.

    • Winners never quit and quiters never win says:

      I agree Clay, whatever you do people will always be negative, everything I know is due to the training, cant thank the system enough

  17. Anton Wessels says:

    Im in South Africa was a Manager way back in Durban, would like to start a company again. The 5 and 8 rules Juice to flow……..

  18. MANAGER KEVIN BARASA.kenya says:

    here by will of sir God… just saying juice up and down has made me an importand instrument in the society. may God bless His EXCELENCE MURRAY REINHART.

  19. Noel c. Mallari says:

    I AM FROM THE PHILIPPINES AND WORK HARD TO BACOME A MANAGER. THE 5 AND 8 STEPS CHANGE MY LIFE. I HAVE BEEN WITH DS MAX FROM 1994 TO 2001. I AM NOW A REAL ESTATE AGENT AND PRACTICE THE LAW OF AVERAGES. MY MENTOR IS PJ MISA. HOPE ALL MY PEOPLE BEFORE HAVE BETTER LIVES NOW. JUICE!!

  20. Saludos a todos, estuve en DS-Max en Venezuela en la división de Venta Directa, Libros y Publicidad. Teniendo todos los cargos y siendo mentor de muchos gerentes, en total 10 años de experiencia Con excelentes ganancias hasta que por motivos mayores la Corporación tomó la decisión de culminar operaciones en el pais.
    Actualmente soy propietario de 3 empresas de las cuales una está en el area de servicios a empresas, otra en el area de seguros y otra en el area de la formacion financiera, motivacional y de superación personal.
    Absolutamente todos los recursos aprendidos en los 10 años con DS-Max, Granton y B&F Marketing han sido de valiosa experiencia.
    Instagram: @DecisionesHoy
    Facebook:
    http://www.Facebook.com/Decisioneshoy
    whatsapp: +58412998#778 only spanish

  21. joe says:

    hi I worked with Patrick quimpy in the ellispark office way back in 1992 – 1995 and we kicked ass. trevor bible was the inspiration

  22. Ernesto Segoviano Garcia says:

    My name is Ernesto Garcia I was located out of the Visalia CA location under leslie sheehann for 7 years and also under different ownership twice promises after promises of getting your own office was just overlooked or ignored just to keep you running there offices proficiently. contact me if you’d like 4155723012

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