KulaBrands Review: Crowdfunding manipulation?
The webinar page of the KulaBrands website contains images of two individuals, Peter Gantner and Doug Kyle. The website does not disclose their roles within the company.
On his LinkedIn profileFurther research reveals Gantner citing himself as the CEO of KulaShare Inc. KulaShare Inc is assumed to be the parent company of KulaBrands.
Update October 5th 2016 – Peter Gantner has been in touch to clarify that ‘kulaBrands and kulaShare are two separate and distinct companies with no affiliation other than some common ownership.‘ /end update
Previous MLM opportunities Gantner has been an affiliate with include Visalus (2008-2012) and Lyoness (2012-2013).
As per a marketing video uploaded to YouTube on February 22nd 2016, up until recently Gantner was promoting Kannaway (right). Whether Gantner’s still involved in Kannaway is unclear.
Doug Kyle is the owner of the KulaBrands website domain (“kulabrands.com”), registered on the 4th of September, 2015. An address in the US state of Arizona is also provided.
In late 2015 Kyle attempted to fund development for “Fuel Matrix” on KickStarter.
Fuel Matrix is a breakthrough technology that will help you mitigate your personal impact on the environment from driving.
Fuel Matrix bonds oxygen to gas or diesel at the molecular level. This helps your car engine burn cleaner, resulting in an up to 50% reduction in harmful emissions.
Moreover, it saves you money by improving your gas mileage up to 20%.
The project goal was $50,000 but as of January 16th, 2016 only $10,312 had been pledged.
Read on for a full review of the KulaBrands MLM opportunity.
The KulaBrands Product Line
KulaBrands has no retailable products or services of its own, with affiliates only able to market KulaBrands affiliate membership itself.
Third-party merchants are able to use the KulaBrands crowd-sharing platform, through which products and services can be marketed by KulaBrands affiliates.
The gist of this process sees a merchant list a product on the KulaBrands network.
KulaBrands affiliates vote on which product(s) they wish to support, be pledging to pre-purchase a product.
Once a set target is reached, the product is then listed on a third-party crowdfunding platform (such as Kickstarter or IndieGogo). KulaBrands affiliates who pledged to pre-purchase the product donate funds to the project, in an attempt to manipulate the popularity of the project and attract non-KulaBrands affiliate interest.
If a product is ultimately developed through the platform, KulaBrands run a replicated storefront through which affiliates can market and sell developed products through.
The KulaBrands Compensation Plan
If a third-party merchant decides to use the KulaBrands platform, the company negotiates a royalty fee that is paid out on the sale of each product.
Assuming the project is funded and products are actually manufactured for sale, KulaBrands take a cut of the royalty fees and split the rest with their affiliate-base.
The affiliate portion of the royalty fees are placed into two pools; a Founder’s Pool and a Brand-Marketing Pool.
- a Founder’s Pool
- a Branding-Marketing Pool and
- a Direct-Online Pool
Each pool is paid out via “points”, with affiliates able to generate points in each pool via the following criteria:
Founders Pool
When a KulaBrands affiliate pledges a dollar amount to a project, they earn a point in the Founder’s Pool.
Branding-Marketing Pool
The Branding-Marketing Pool rewards affiliates for spamming social media with advertising for KulaBrands crowdfunding projects.
KulaBrands tracks these efforts through an inhouse system that affiliates use to publish unsolicited advertising to social networks.
Direct-Online Pool
When products are purchased through a KulaBrands affiliate’s replicated storefront, they earn points in the Direct-Online Pool.
Partial Points
The MLM side of KulaBrands sees “partial points” awarded when a downline qualifies for points in any of the three offered pools.
This will be tracked via a unilevel compensation structure of unspecified depth.
At the time of publication KulaBrands have also not specified how many points will be generated by downline activity.
Update October 5th 2016 – Peter Gantner has been in touch and states that
every product that is brought to kulaBrands is unique and the terms will be individually negotiated with the inventor or owner of that product. This negotiation will involve community members.
Due to the unique nature of each product and the community involvement undertaken before committing to each project, it is impossible to identify the points generated by downline activity before the projects are identified.
/end update
Joining KulaBrands
Affiliate membership with KulaBrands is currently $199. KulaBrands marketing material suggests this might be raised to $299 at a later date.
KulaBrands affiliates who signed up before March 14th only paid $150.
Conclusion
Before we get into the ethics of people with a financial incentive manipulating crowdfunding campaigns before they are opened up to the general public, the glaring compliance issue inherent within KulaBrands needs to be addressed.
I think the best way to get into that is to look at KulaBrands’ first crowdfunding project.
It’s… wait for it, KulaBrands.
I’m not kidding. The first project offered for funding through KulaBrands is KulaBrands. Affiliates who pledge money to the project are promised a quarterly share of 8% of the total revenue raised by the company.
That’s starting to get into securities territory, with the pitch for third-party merchant offerings not any better:
We’re going to do the research on the marketplace, that we’re going to provide to you – so you understand what the potential is for that product or service in the marketplace.
What is the potential that product can sell (at), so if you make a decision to get involved in that project and support it, that you know what the potential is that you can get from that.
We’re gunna let you know the numbers, so you’re going to know what the reverse royalty percentage is. So it’s going to say, “Hey, this project is willing to pay four, six percent royalties to the community.”
And then we’re going to explain how you participate and how you get your share in that reverse royalty.
We’re gunna give you sales projections and what this (product or service) has the potential to do.
So we’re gunna give you the data and the information. Once you have that data and information and you’ve analyzed it, then you’re gunna do step 2.
Step 2 is whether or not an affiliate votes on the project.
This is problematic, as KulaBrands affiliates are voting with a passive financial return in mind – based on information the company, with a financial vested interest itself, has provided them.
The instinctive reaction upon claiming this to be a security is to compare KulaBrands’ offering with existing crowdfunding platforms.
It is the financial incentive of the company and its affiliates however that sets it apart.
This isn’t the public pledging funds to a cause and receiving a product or service in exchange. This is a company providing investor information, which its members then decide to pledge money towards based on ongoing ROI projections.
Those ROIs are based on the efforts of others (passive), which defines KulaBrands’ offering as a security.
The KulaBrands’ crowdfunding project offering is even more murky, as affiliates are pledging funds to qualify themselves for a share of 8% of funds deposited into the company by subsequently recruited affiliates.
To offer securities, in MLM or otherwise, you need to be registered with the SEC. Nowhere on the KulaBrands website or in their marketing presentation does the company represent it is registered to offer securities.
As to the ethics of the KulaBrands concept, legitimate crowdfunding sees projects succeed or fail based on public interest. The general concept is crappy ideas don’t get funded.
Through KulaBrands, it’s entirely possible that a crappy idea will get funded, based on projected ROIs rather than the merits of the product or service itself.
It is unashamedly mentioned in KulaBrands webinars that the aim of getting affiliates to pledge before the general public is to generate immediate interest in a KulaBrands’ backed project when it goes live on a public platform.
It is represented that this immediate interest, the source of which is not disclosed to the general public, will spark group mentality interest in the project.
That’d be fine without the financial incentive… but in KulaBrands it’s very much a factor.
Is it ethical to represent to the general public that a crowdfunding project has a high level of initial organic interest that’s infact artificially curated?
I personally don’t think it is. Do you?
Update 27th November 2017 – As of mid 2017, KulaBrands has registered itself with the SEC.
A June 8th Form C Offering Statement reveals KulaBrands intends to issue common stock through “TruCrowd”.
As per a 20th July post on the official KulaBrands Facebook page;
Kulabrands is now offering its members the opportunity to purchase stock through the Chicago-based equity crowdfunding company, tru-Crowd.
This is a kulaBrands members-only offer, so if you want to get in on this, join our community.
4551 shares are to be offered at $8.79 a share.
The filing also reveals that last year KulaBrands made a net-loss of $33,981, despite generating $263,133 in sales.
Might be worth re-examining your business model if generating a quarter million dollars in revenue still results in a loss.
Anyway, glad to see an MLM company involved in securities actually register itself with the SEC.
Props to Peter Gantner and his team for not ignoring what were obvious glaring regulatory issues with KulaBrands initial MLM offering.
Update 5th January 2022 – Four years after covering KulaBrand’s TruCrowd share offering, BehindMLM revisited the company for an update.
Hilarious. The guy ran one FAILED KS campaign with some pseudoscientific woo and thought he knows how the system works.
Well, at least that’s what he’s selling… His “expertise”.
what absolute horseshit. you can’t change the laws of physics.
an engine burning too lean (which is what would happen if any of this were true) would basically melt itself. That’s why they don’t run lean to begin with.
And eyebrow plucking is so not cool anymore.
Well what yall have to say now first product zip n store over 130k less then 30 days and it’s only on kickstarter kulabrand is the best 10 stars
Still not registered with the SEC.
And crowdfunding manipulation is just affiliates buying in because they think they’ll get rich.
Regarding Zip n Store: amazon.com/s/ref=nb_sb_noss_1?url=search-alias%3Daps&field-keywords=zip+n+store
16 products now! Shiver Shield and Yahooty Who are two of my faves! 😀
As I read this article it is not to favorable towards kulaBrands. I do see though that it is almost two years old.
I am a kulaBrands member and I am very impressed with the way I am treated by the community but also very impressed by the pay structure and my royalties.
Being impressed with what you’re paid is one thing.
Has KulaBrands addressed securities concerns?
kulaBrands SEC Documents: sec.gov/cgi-bin/browse-edgar?company=kulabrands&owner=exclude&action=getcompany
Thanks for providing that information.
Glad to see an MLM company address regulatory issues rather than just ignore them. I’ve added an update acknowledging KulaBrand’s SEC registration to the review.
I really like your post I sent a link from this review to the owners and this is the reply I got.
What would you say to that response thank you.
Any time an MLM company responds to a BehindMLM review by deflecting (“slander”), be immediately suspicious.
The review is clearly date-stamped and 100% accurate as to KulaBrand’s business model at the time.
Bottom line: If there were no securities concerns, why did KulaBrands finally register itself with the SEC in June, 2017?
As to Kulabrand’s “proven model”, their SEC filings reveal:
To me an MLM company isn’t a success until they actually start turning a profit.
It’s a shame KulaBrands was initially offering unregistered securities but great to see them finally address them (too many companies don’t).
It’d also be nice if Peter Ganter stopped being disingenuous and acknowledge BehindMLM likely being first to point them out to him via our review, but you can’t have everything.
– Its webstore is a joke shopkula.com, looks like a kid made it.
– Inventors are leaving in droves
– Complaints are off the charts with no apologies from the CEO
You can take my word for it or you can go to this public Facebook group that was formed because the Kula Brands staff censor all the posts on their Community pages.
facebook.com/groups/kulbrandsreviews/
^ That should tell you all you need to know about Kulabrands #kulabrands.
Kula Brands is a PONZI SCHEME… all the Peter and Doug want it more money and they do nothing with it. Excuses and lies is all you get. What a SCAM!
They give points away like they are worth something in exchange for more “investments” into the company. The final straw was raising money for Veterans and pocketing it to pay employees.
kulaBrands has the only affiliate model in the Network Marketing space that’s transparent and unique.
What you’ll notice is that 90% or more of the members haven’t left the company and have high regards for the integrity of the leadership, the businesses that the kulaBrands community works with and the structure of the compensation program.
The fact that members aren’t paid from the membership fees of new members joining should be enough to crush any speculation that it is a scam or a Ponzi scheme, but since that’s not enough for some, here’s my perspective: kulaBrands works with businesses that have a product or service which needs a little extra support to help multiply their effort.
Using an interest-based system, members get to choose what products and services they want to help fund and promote. Upon purchasing the product or service, they are agreeing that they like and want to use the product or service, and if the product meets it’s funding goal, then it is manufactured and the supporters then receive said product or service.
As you can see so far, it’s like buying any other product or service on the market- if you like and want a product or service and you buy it, then you get an equal exchange of value by receiving it.
Where the kulaBrands business model deviates from traditional retail businesses, is that if a business which a member supported is successful and meets a certain monthly revenue threshold, the members get paid reverse royalties from the inventor/business owner(s).
There’s no guarantee of financial incentive and it’s up to members to decide which projects they personally believe in and want to support.
As far as the projects go, many of them are award-winning and do well in both online retail and at physical store locations. Some products have been aired on television and even featured in the news.
KulaBrands has shifted from a simple concept into a dynamic and proven business. While it’s true that some people have chosen to leave, the vast majority of the members remain.
I believe most members choose to stay, because of the culture, the education, the potential and the fact that no-one has to build a team or recruit a down line.
The review which I’m responding to here, has many errors and misinformation. If I were you, I’d ask a few of the thousands of members their feelings.
Uh, instead of “most people didn’t leave” let’s instead turn to success.I published this review in 2016, where are the KulaBrands success stories?
Of course people who have lost money are going to stick around. They literally have nothing else to lose.
That to me sounds extremely similar to the most traditional model of all to handle multiple investors in a single business. Where if a company someone supported by buying its shares is successful, the investors get paid dividends. It’s been going on since the late 16th century.
But I’m wondering: since it’s based on revenue, what happens if a company reaches that threshold, but is barely breaking even or running at a loss, and having to pay these so-called “reverse royalties” could mean the difference between survival and bankruptcy?
A company with shareholders wouldn’t pay any dividends in such a situation, it sounds like in this model they have to give money to investors regardless.
Also: the KulaBrands website shouts: “WHO’D LIKE ROYALTIES FOR LIFE?” Is that the life of the investor, or the life of the company being funded, or the life of KulaBrands?
Each of these three possibilities raises some serious questions.
If any of these three cease to exist, what happens to the invested money, and to the “reverse royalties” money flow “for life” between the two still-existing parties in the scheme?
Members haven’t lost money, because there’s no investments made by participating in the business model.
There have been opportunities for members of the business model to buy shares in the company, but being a share holder and being a member are separate and there’s a clear distinction between the two, which you are attempting to muddy.
There’s plenty of members that you can personally reach out to and ask about their experiences. Most members can be easily found on social media and many share regular updates. A quick YouTube search will yield success stories and testimonials.
I’ve personally enjoyed the products that I’ve bought as well have the many people that I’ve bought gifts for.
Several companies are paying royalties at this point, and they’re consistently growing.
So, while you’ve both tried to make sly comparisons to investments and taken my statements out of context, the fact remains that the business model is proven and not the same as an investment model.
Your blatant manipulation of my statements are glaring evidence that you are consciously misleading your audience.
You’ve failed to articulate how buying or promoting a kulaBrands product is similar to an investment or carries the same inherent risk.
First of all thank you for confirming your inability to name one KulaBrands success story.
It’s been three years. Not even one recognizable brand that we can look at and go, “Yep, KulaBrands helped that company get off the ground and now they’re thriving”?
I mean it’s not like that wasn’t the whole idea of the company or anything.
Buying shares = investing. Investing + MLM = securities offering.
Sorry for your loss. Least you got some worthless products tho hey.
And now from 2016 to 2020.
Yeah “Oz”, you either don’t understand the distinction between two separate business models or you’re blatantly disregarding it… Though I’ve made it easy for you to see the difference, you still labor to twist my statements.
While kulaBrands itself is a business model, investing in the company and participating in the kulaBrands model are in fact, separate from one another. Participating in the kulaBrands business model doesn’t require or even involve investments, but again, you’ve already been told this and continue to be intellectually dishonest.
I’m respecting the members of our community by not associating them by name with your incredulous review, which let’s be honest- is almost entirely misinformation rather than review.
It’s easy for you to find that information on your own.(YouTube is the second largest search engine in case you aren’t aware.)
The goal is and always has been, to assist businesses and to help them get into major distribution channels, which we’ve been doing successfully with several products.
Making a business successful takes time, which I’m sure everyone understands. Within a little over three years of our company getting off of the ground floor, we’ve helped multiple businesses get into a position where they’re doing $100k/month run rates.
Instead of nitpicking and twisting people’s words, why not discredit my statements with evidence instead of personal attacks?
By the way, your sentiments towards the products is very revealing of your character. If you know of the products, then you should be aware that several of them are thriving, both in stores, and online at some of the largest retailers in the world…
I guess you don’t want to let facts get in the way of your misinformation campaign, huh?
No they’re not, it’s the same company offering one passive investment opportunity. You can’t pseudo-compliance a securities offering.
Whether it does or it doesn’t has no relevance to there being a passive investment opportunity within KulaBrands.
Yeah nice try. Thank you for once again confirming there is not one independent KulaBrands success story you can provide.
Yet you can’t name one.
Yet you can’t name one.
You’ve been repeatedly asked for evidence to verify your claims. And have provided none.
I can’t do that for you. What I can do is provide evidence to back up my claims. You’re welcome to peruse the Securities and Exchange Act and Howey test.
The facts are KulaBrands offers its affiliates a passive investment opportunity. KulaBrands is not registered with the SEC.
The only misinformation here is you pretending otherwise.
So has this business fallen off the face of the Earth?
Success stories I can’t find any at all on youtube.
A quick visit to the website I don’t really see anything new.
Jumped on the CBD bandwagon in 2019 – https://behindmlm.com/mlm-reviews/healx-nutrition-review-kulabrands-cbd-supplement-offering/
Kulabrands is a ripoff. They do not follow up on quarterly payouts.
They do not respond to questions regarding account discrepancies or anything. Monies on projects disappears.