Inside the LuLa Roe Cult

The Newsletter of Newsletters: Volume 12.

Every week I highlight three newsletters that are worth your time.

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1. Culture Study

Anne Helen Peterson has an interview with Meg Conley about LuLa Roe. It’s a corker.

In case you are unfamiliar: LuLa Roe is a company that sells leggings. I will confess to having bought a lot of LuLa Roe leggings for my girls. They love them.

But LuLa Roe is also a multi-level marketing scheme that has left lots of the women who sell them deeply in debt. I wouldn’t call it a scam, exactly. But it seems like the kind of thing designed to take advantage of women—and especially stay-at-home moms.

Here are some excerpts from the Conley interview that I found fascinating:

My parents were always very, very skeptical of MLMs. They usually referred to them as pyramid schemes. Usually, MLMs came up whenever my mom got yet another invitation to a party. This was before there were FB groups, FB Live, or FB at all. (Which is another interesting shift in MLMs. Women bidding on unicorn leggings over FB Live were isolated. I wonder how much of a frenzy there would have been if legging sell-offs happened in person instead of over the internet?) All the invitations were painstakingly put together and mailed out. Kind of like a wedding invitation! Which, as Mormons, we got a lot of wedding invites. But those all tended to come in the summer. Every season was MLM season. When she’d get an invitation to an MLM party, my mom always sighed. Which blew my mind, because I always wanted to get invitations in the mail.  

My mom said that if a product was good enough to be sold, it would be sold traditionally in a store. If it needed the “opportunity to sell” to be sold, it wasn’t a good product. And now she was going to have to go listen to an hour long pitch about a bad product and buy something to support a friend. There wasn’t a ton of economic or social analysis. My childhood takeaway was that MLMs were scams. But they were scams where you had to be polite to the scammer because they didn’t know they were being scammed. . . .

When the documentary showed the LuLaRoe exercise where reps were supposed to write down 50 names of people they could pitch to become part of their downline, I gasped. It sounded so much like the challenges I sometimes heard from the pulpit growing up. Every once in a while a Bishop would get up and challenge each family to come up with the names of ten people we knew who would like to hear about the gospel. We were then supposed to give those people a Book of Mormon and ask if they wanted to meet with some missionaries. . . .

And you know what, proselytizing for a religion and proselytizing for a brand are often pretty similar! That’s why influencers who are religious are able to move so seamlessly between preaching about their church and preaching about the latest Target sponsorship.  Both posts are lifestyle content.

There’s a very depressing undertone to all of this: The people who sell MLMs are being exploited. The people who make the MLM products are being exploited. Just about the only figure who isn’t a mark is the lone Girl Boss at the top. And maybe not even her.

I’m never quite sure if MLMs are the underbelly of capitalism, or the purest distillation of capitalism. Maybe LuLa Roe is the entire capitalist system, rendered in miniature.

2. The Pomp Letter

I don’t expect you to subscribe to Anthony Pompliano’s letter unless you’re really into economic data.

But holy crap. This piece on how jacked up the government’s CPI Rent Index is made me break out in hives.

The short version is this: Pompliano noticed a huge divergence between what Zillow’s data says rents are doing and what the CPI says. Here’s the chart that caught his eye.

So he starts digging to find out how the government computes the CPI. And the answer is:

32,000 units across the US that were selected based on the 1990 census data and are each surveyed only twice a year.

Not a typo.

As modeling goes, this is half a step up from using entrails and chicken bones.

Zillow, on the other hand, uses a slightly more modern approach:

Zillow is using 100 million units that they evaluate every month.

Anyway, here’s Pomp with the big takeaway:

This exercise was only done for the rent index, but you can replicate it for pretty much every single CPI number that is presented. The data is bad. The methodology is antiquated. The government is living in the past and refuses to use modern technologies and platforms to capture more accurate data.

It is impossible to make good decisions when you are using bad data. Everything from your understanding of the problems to your belief in the intended outcomes is skewed. This is a very real problem that is provable today.

The Federal Reserve, Treasury, and various politicians are making monetary and fiscal policy decisions on data that is telling them CPI inflation is 5.3%, core inflation is 4%, and the annual change of the rent index is sub 2%. Alternative data sources, which use more robust methodologies and are based on larger data sets, have these numbers at 50% to 300% higher depending on the metric.

If you’re into this sort of thing, I highly recommend his newsletter.

3. Zero Day

It’s a newsletter about cyber security and this longform essay from Kim Zetter is holy-shit level stuff. It’s about an American who took a job doing cyber security work in Abu Dhabi only to discover that the UAE’s intelligence service was using him as a spy:

Last week the Justice Department revealed that it had charged three former US intelligence personnel with helping the United Arab Emirates procure zero-day exploits and hacking expertise for a surveillance program that was used against US targets. Marc Baier, Ryan Adams and Daniel Gericke, senior managers in the UAE-based company DarkMatter, are accused of violating US export control laws in providing the UAE dictatorship with regulated technology and services without a requisite license and with violating a US computer hacking law. . . .

Former NSA operator and analyst David Evenden worked with the three men in the UAE and was among the first US intelligence workers recruited for the job — though he didn’t know it was a surveillance program when he and his wife said yes to moving to Abu Dhabi.

Worst employer bait-and-switch ever?

In June 2014, Evenden was finishing his military service and intelligence work for the NSA, when a recruiter contacted him about working for a US-based company called CyberPoint. The company had a consulting contract with the UAE, and Evenden was led to believe the work for the UAE would be entirely defensive in nature, aimed at helping the UAE secure its infrastructure against attacks from adversarial nations and terrorists.

Once in Abu Dhabi, Evenden realized he had been deceived and that he and colleagues had actually been recruited to perform offensive hacking operations and surveillance on behalf of the UAE’s National Electronic Security Authority, or NESA (the UAE’s equivalent of the NSA).

The deception didn’t initially concern Evenden, however, because the work was primarily focused on conducting surveillance against would-be terrorist targets. But when his team was asked to help spy on the government of Qatar as well as the movements of the royal family and others with no discernible terrorist connection, they began pushing back. The UAE subsequently cancelled its contract with CyberPoint and moved the surveillance project — known as Project Raven — to a UAE-based company called DarkMatter that would be more amenable to the spying requests. While a number of Evenden’s US colleagues jumped to DarkMatter to continue the work at considerably higher salaries — in some cases more than $200,000 for analysts and close to half a million dollars for managers — Evenden quit and returned to the U.S.

I can’t recommend Zero Day highly enough.

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