New Earth Review: Simplexity Health rebooted
New Earth officially launched in September 2013 and operates in the health and wellness niche. Despite the new name, New Earth is actually a relaunch of a relaunch with the company initially starting out as Cell Tech back in 1982.
Founded by Daryl Kollman and Marta Cartman (married at the time, divorced in 2002), Cell Tech and its various incarnations have quite a colorful history.
In 1982, Kollman founded a business that harvested, processed, and sold blue-green algae as a nutritional supplement. Kollman designed harvesting equipment and was the business’s inspirational leader, while Carpenter ran day-to-day operations.
In 1990, Kollman and Carpenter became the sole owners of the business, using the trade name Cell Tech. The business operated through two subchapter S corporations, The New Earth Co. and The New Algae Co., which were each half-owned by Kollman and Carpenter.
In the mid 1990s disaster struck for the company, after the
Oregon Department of Agriculture banned the sale of algae products for human consumption that contain one part per million of microcystin.
It was later revealed in a 2010 tax case against the company that this banning had a devastatingly negative impact on Cell Tech’s sales revenue.
The microcystin regulation was an immediate public relations disaster for Cell Tech. Sales fell as customers worried that Cell Tech’s food supplements were unsafe.
In 1990, Cell Tech had sales of about $10 million. From 1990 to 1996 Cell Tech grew rapidly through its network of individual distributors selling directly to customers.
By 1996, Cell Tech’s gross receipts were more than $193,000,000. Cell Tech’s products were sold across the United States and Canada through 350,000 individual distributors.
Cell Tech then suffered what Kollman’s attorney calls a “perfect storm” of troubles: “In 1997 Cell Tech found itself with millions of dollars of worthless inventory, plummeting sales, harvesting capabilities that far exceeded the new lower demand, and state and federal tax liabilities that greatly exceeded the [company’s] dwindling income or cash reserves.
In 1997, Cell Tech’s gross receipts were about $113 million, down more than $80 million from 1996. In 1998, gross receipts were about $69 million; in 1999, $52 million; and in 2000, $37 million.
In August 1999, as part of an attempt to save the business, Cell Tech became a publicly traded corporation, Cell Tech International, Inc. After the reverse merger in August 1999, Kollman no longer had a role in managing the business. Carpenter became president and CEO of Cell Tech International.
In October 1999, Cell Tech International entered into a financing agreement with a private investor. (Kollman and Carpenter) then each owned more than 40% of the shares of Cell Tech International.
As the company continued its downward spiral, by late 2004 the terms of the financing agreement granted the private investor ownership of more than 90% of the company. (Kollman and Carpenter’s) ownership share correspondingly dwindled to about 3% each.
In 2002, Kollman brought a lawsuit in state court against Carpenter, Cell Tech International, the private investor, and other defendants. After a jury trial, the state court issued a judgment awarding Kollman $40 million in damages against Carpenter and another defendant.
The damages were based on the jury’s verdict that Carpenter breached a fiduciary duty to Kollman by entering into the financing agreement that diluted the value of Kollman’s stock in Cell Tech International.
Kollman also apparently ‘went to prison for tax evasion‘ in connection with the above case.
While all that was happening, Cell Tech was also sued in 2001 by “Teachers for Truth in Advertising”.
In their California filed complaint, the organisation listed 30 claims they objected to on the grounds that they were ‘false, misleading or deceptive’.
Such claims included
- that the general American food supply was nutrient deficient
- Cell Tech’s algae products provided increased physical energy, shiny hair, sound sleep, extra vitality, enhanced brain activity, intestinal cleaning, improved absorption of nutrients, elimination of digestive disturbances, a reversal of the ageing process and the elimination of headaches
- that use of Cell Tech’s algae products resulted in a decrease in cholesterol levels of up to 75%
- that use of Cell Tech’s algae products would result in the improvement of conditions caused by chronic fatigue, fibromyalgia, hypertension, attention deficit disorder, ear infection (in children, mostly), depression, viral infections, including HIV and irritable bowel syndrome
In 2003 a Californian judge ruled that all of the sourced marketing statements from Cell Tech and its affiliates were “deceptive”, banned the use of Cell Tech’s products in the state and ‘ordered Cell Tech to refund the full purchase price to California consumers who purchased its algae products between October 1997 and September 2002‘.
For more information on the judge’s order and a complete list of misleading statements cited in the Teachers for Truth in Advertising lawsuit, see MLM Watch.
In April 2005 the family of ex-Cell Teach employee Melissa Blake filed a lawsuit against Cell Tech after Blake died in 2003 from liver and kidney failure.
In the lawsuit, Blake’s family alleged
the company supplied her with algae products that contained toxic levels of microcystins.
Blake worked for the company as a receptionist. The suit papers state that
(a) the autopsy report showed liver and kidney damage suggestive of exposure to toxins that occur with Blue Green Algae called microcystins, and
(b) tests on Cell Tech products found in Blake’s home found high amounts of microcystins.
Ruling that the family’s expert testimony was inadmissible, a judge ruled against Blake’s family. The decision was appealed twice in 2009, however in both appeals the original ruling was upheld.
These lawsuits are largely credited with the renaming of Cell Tech to Simplexity Health in 2006. Ocean Malandra over at eHow even goes as far to claim
Cell Tech Super Blue Green Algae is an algae from Klamath Lake in Oregon that was marketed aggressively by pyramid type network marketers for years.
Cell Tech changed its name to Simplexity in 2006 and stopped marketing the blue green algae under that name following several lawsuits.
On the now defunct Simplexity Health website, the company cited ‘Zubair Kazi, owner of Kazi Management‘ as ‘the company’s majority shareholder‘ and Bob Underwood as CEO.
With the launch of New Earth there’s no mention of Zubair Kazi or Bob Underwood on the company website. No idea what happened to Underwood but he seems to have been replaced by Bilal Ruknuddeen as CEO of New Earth.
Ruknuddeen (full name “Mohammed Bilal Ruknuddeen”) comes over from Simplexity Health, where he served as Managing Director.
I’m not entirely sure when he joined Simplexity (seems to be around 2009), but on their now defunct website the company credited him as a member of Simplexity’s Board of Directors, responsible for
expanding (Simplexity) internationally with accomplishments in opening offices in United Arab Emirates and United Kingdom.
No mention of Ruknuddeen’s past appointment in Simplexity Health is made on the New Earth website, possibly indicating that the company is trying to once again distance itself from a previous brand name.
Read on for a full review of the New Earth MLM business opportunity.
The New Earth Product Line
Continuing the Cell Tech and Simplexity Health product offering, New Earth offer a series of products that revolve around what they call “Wild BlueGreen” algae.
New Earth claim that their Wild BlueGreen algae is
The only pure, edible, abundant, sustainable wild blue-green algae in the world.
Box of 30 satchets which each contain five capsules:
- 1 Wild Bluegreen Body
- 1 Wild Bluegreen Mind
- 1 Acidophilus
- 1 Bifidus
- 1 Enzymes
Box of 30 satches which each contain eight capsules containing a “premium algae blend”, “premium mushroom blend” and “premium sprout blend”.
Three varieties of blue-green algae blends targeting cell recovery, “heightened focus and mental clarity” and “maximum energy”.
“Targeted nutrition” that covers “immune system support”, “cardiovascular system support”, “nervous system support”, “natural healing” and “stem cell nutrition”.
At the time of publication New Earth do not provide the retail prices of any of their products on the company website.
A replicated online shop exists, however it demands to know which New Earth affiliate “referred” you before it will let you enter the shop.
An “I was not referred by anyone” option exists on the page, however if selected the website dumps visitors on the “contact” page rather than provide access to New Earth’s online store.
Note that the above storefront is only accessible via the “teamnewearth.com” website, the primary New Earth company website (“newearth.com”) makes no mention of an online store.
The New Earth Compensation Plan
New Earth offers affiliates an autoship heavy compensation plan, paying out retail commissions, residual commissions via a unilevel and a series of performance bonuses.
In order to qualify for certain commissions in New Earth an affiliate must be “active”. New Earth define active affiliates as those who
have either a minimum 100 BV in autoship volume or at least 150 in personally purchased volume.
Note that personally purchased volume only includes an affiliates own purchases, not those of their customers.
New Earth offer retail commissions on all product sales made to retail customers (non-affiliates).
New Earth define retail sales as ‘the difference between the retail and wholesale price‘.
Note that retail commissions are also offered on autoship retail customers (preferred customers), paid out at a rate of 20% of the sales volume generated by the order.
Preferred Customer Bonus
In addition to the 20% volume commission an affiliate earns on their preferred customer orders, they can also qualify to earn off the autoship orders of their downline’s preferred customers.
This is calculated via an affiliate’s unilevel rank (see below under “residual unilevel commissions”), with affiliates paid 5% of their downline’s preferred customer orders down a maximum of 5 levels of recruitment.
- Bronze – 1 level
- Bronze 1 – 2 levels
- Bronze 2 – 3 levels
- Silver 5 – 4 levels
- Silver 10 – 5 levels
Autoship Recruitment Commissions
Dubbed the “Get 3” bonus, New Earth pay out affiliates on the recruitment of affiliates who sign up with a monthly 100 PV autoship order.
If a New Earth affiliate has three personally recruited affiliates on autoship in any given month, at the end of the month they are paid $50.
If a New Earth affiliate has three personally recruited affiliates on autoship who in turn each have three personally recruited affiliates on autoship, they earn $300.
If a New Earth affiliate has three personally recruited affiliates, who each have three personally recruited affiliates who also have three personally recruited affiliates, all on monthly autoship, they earn $1200.
Note that only one of the above Get 3 Bonus commissions are paid out as they are not accumulative.
Affiliates can however, via recruitment, build multiple groups within the Get 3 Bonus, with each group paying out one of the three above bonuses subject to the group meeting the respective Get 3 qualification requirements.
First Order Bonus
New Earth’s First Order Bonus is paid out weekly on the first order of a newly recruited affiliate (the order must be made when they sign up).
Up to 1000 Business Volume (BV) are payable, with the affiliate who recruited the affiliate making the order earning 25% of the volume of the order. The recruiting affiliate’s immediate upline (the affiliate who recruited them) also makes 15%.
To qualify for the First Order Bonus a New Earth affiliate must be “active”. To qualify for the direct upline bonus an affiliate must have signed up
with an initial order of at least 500 BV or accrued 1000 in Personal Team Volume.
Personal Team Volume is Group Volume (GV), and is defined as the sales volume generated by an affiliate’s downline.
Residual Unilevel Commissions
Residual commissions in New Earth are paid out using a unilevel compensation structure.
A unilevel compensation structure places an affiliate at the top of a unilevel team, with every personally recruited affiliate placed directly under them (level 1).
If any recruited level 1 affiliates recruit new affiliates of their own, they are then placed on level 2 of the original affiliate’s unilevel team. If any level 2 affiliates recruit new affiliates they are placed on level 3 and so on.
Using this unilevel compensation structure, New Earth pay out on the BV generated down a maximum of nine levels of recruitment. How many levels and how much of a percentage of generated volume is paid out depends on affiliate’s “unilevel rank”.
There are eleven New Earth unilevel ranks in total and, along with their respective qualification criteria, they are as follows:
- Bronze (generate 500 GV and recruit at least one affiliate) – 2% on level 1
- Bronze 1 (generate 1000 GV and recruit at least two affiliates) – 2% on level 1 and 3% on level 2
- Bronze 2 (generate 2000 GV (max of 1200 from any one unilevel leg) and recruit at least 3 affiliates who each generate a minimum of 200 GV) – 2% on level 1, 3% on level 2 and 6% on level 3
- Silver 5 (generate 5000 GV (max of 3000 from any one unilevel leg) and recruit at least 3 affiliates who each generate a minimum of 500 GV) – 2% on level 1, 3% on level 2, 6% on level 3 and 5% on level 4
- Silver 10 (generate 10,000 GV (max of 6000 from any one unilevel leg) and recruit at least 3 affiliates who each generate a minimum of 1000 GV) – 2% on level 1, 3% on level 2, 6% on level 3 and 5% on levels 4 and 5
- Silver 20 (generate 20,000 GV (max of 12,000 from any one unilevel leg), recruit at least 3 affiliates who each generate a minimum of 2000 GV and have two or more Silver 5 or higher ranked affiliates in your downline) – 2% on level 1, 3% on level 2, 6% on level 3 and 5% on levels 4 to 7
- Gold 50 (generate 50,000 GV (max of 30,000 from any one unilevel leg), recruit at least 3 affiliates who each generate a minimum of 5000 GV and have three or more Silver 5 or higher ranked affiliates in your downline) – 2% on level 1, 3% on level 2, 6% on level 3 and 5% on levels 4 to 8
- Gold 100 (generate 100,000 GV (max of 60,000 from any one unilevel leg), recruit at least 3 affiliates who each generate a minimum of 10,000 GV and have five or more Silver 5 or higher ranked affiliates in your downline) – 2% on level 1, 3% on level 2, 6% on level 3, 5% on levels 4 to 8 and 3% on level 9
- Gold 200 (generate 200,000 GV (max of 120,000 from any one unilevel leg), recruit at least 3 affiliates who each generate a minimum of 20,000 GV and have ten or more Silver 5 or higher ranked affiliates in your downline) – same as Gold 100
- Platinum 500 (generate 500,000 GV (max of 300,000 from any one unilevel leg), recruit at least 4 affiliates who each generate a minimum of 50,000 GV and have twenty or more Silver 5 or higher ranked affiliates in your downline) – same as Gold 100
- Platinum M1 (generate 1,000,000 GV (max of 600,000 from any one unilevel leg), recruit at least 4 affiliates who each generate a minimum of 100,000 GV and have twenty-five or more Silver 5 or higher ranked affiliates in your downline) – 2% on level 1, 3% on level 2, 6% on level 3, 5% on levels 4 to 8 and 4% on level 9
New Earth’s Leadership Pools consist of 4% of the company’s global sales volume and are paid out quarterly.
There five pools in total, starting at the Gold 50 unilevel rank up to the Platinum M1 rank.
Each pool is paid out pro-rata according to an affiliate’s personal unilevel GV. The higher GV an affiliate and their downline generates the higher their share in the respective Leadership Pool they qualify for.
Unilevel qualification volume varies between the pools with the Gold 50 pool only counting 5 unilevel levels, the Gold 100 pool 7 unilevel levels and the Gold 200 pool 9 unilevel levels.
The Platinum 500 and Platinum M1 pools count down an unlimited number of unilevel levels.
Note that no single affiliate is able to earn over 33% of any given pool’s total payout.
In order to qualify for shares in New Earth’s Leaders Pools, an affiliate must initially qualify for a full “Get 3” commission (recruit 3 affiliates on autoship who recruit three who recruit three), and either maintain that status or requalify for the Get 3 at least once annually.
Joining New Earth
Basic affiliate membership to New Earth is $50, payable annually.
Affiliates optionally are able to purchase a “Business Builder” pack, which qualifies them for the upline commission component of the First Order Bonus (see compensation plan break down above).
New Earth’s Business Builder packs range in price from $500 to $1000.
Off the bat I’m going to put aside New Earth’s long and detailed history in the MLM sector. I’ve provided Cell Tech and Simplexity’s respective history’s as best I’ve been able to piece them together, so readers are able to make of that what they will.
New Earth appears to be a “clean” reboot with new management however with that said I believe Zubair Kazi still owns the company.
Product wise affiliates are either going to be able to convince people they should be chowing down on blue-green algae or they won’t. I think the “ew” factor will probably play as larger a role as the health benefits as a deciding factor for consumers, so that could pose a challenge for affiliates when marketing New Earth’s products.
Whether or not this explains the heavily tilted favouring of recruiting affiliates and signing them on autoship I’m not sure, but it’s unfortunately a core mechanic of New Earth’s compensation plan that pops up over and over again.
First and foremost is the worrying “Get 3” bonus payout. To qualify you as an affiliate have to be “active”, which means purchasing a set amount of product each month either on autoship or of your own accord.
Then in order to get paid the Get 3 bonus, you have to recruit new affiliates and whack them on an autoship order. If they recruit affiliates who do the same, your bonus increases, down three levels of recruitment.
Simply put, the Get 3 bonus alone draws the rest of the New Earth compensation plan into dangerous pyramid scheme territory. By offering affiliates a direct recruitment-driven commission combined with a mandatory autoship requirement, the company fosters a recruitment focused environment.
As such, the motivation behind any New Earth affiliate’s product purchases is then called into question. The argument that they are buying product due to perceived value in said product is hard to make when commissions are directly tied into their purchases and the purchases of those they recruit.
What’s even worse is that the Leadership Bonus only pays out if an affiliate has maxed the Get 3 bonus. If we simply what that qualification means, an affiliate has to recruit 3 autoship affiliates, who recruit 3 autoship affiliates each who also recruit 3 autoship affiliates each.
Thus the expectation at the upper end of the New Earth compensation plan is that an affiliate will have, via direct and indirect recruitment, a total of thirty-nine autoship affiliates under them.
This emphasis on recruiting autoship affiliates is further re-enforced by New Earth with their core “active” commission qualification being restricted to an affiliates own purchases. Taken from the New Earth compensation plan,
retail volume does not count toward the volume it takes to qualify you as active.
This naturally only encourages an affiliate to sign themselves up for an autoship order, without which if they fail to keep track of their purchases, they lock themselves out of commissions.
Typically volume qualification includes retail volume however New Earth explicitly exclude this volume, leaving only an affiliate’s own financial contribution the only way for them to qualify as active.
Offsetting the recruitment and autoship focus however is the interestingly effective way New Earth pay out on their preferred customer orders. Not only do affiliates get the upfront 20% volume commission but there’s also a five level residual built into it as well.
This I thought was nicely done and, if one ignored the glaring focus on recruitment and autoship elsewhere in the plan, does demonstrate some attention to the retail side of the business.
All in all I think from an MLM business point of view New Earth is going to come down to affiliate autoship recruitment focus playing off against preferred customer focus.
Unfortunately I don’t think offering five levels of residual commissions on preferred customer volume is going to be enough to offset the rest of the compensation plan.
With everything outside of retail and preferred customer commissions tied into either an affiliate’s own purchases, recruitment of new affiliates and/or signing up to autoship, over time I think it’s clear this will dominate how New Earth’s affiliates market the business. Inadvertently this will also extend out to the company culture new and prospective affiliates are exposed to.
Footnote: New Earth began their prelaunch campaign back around May 2013, under the name “The Alpha Launch“.
On the New Earth website the phrase “everytime you say wild someone will listen” triggered my memory as it was similar to the “we are the wild ones” marketing hype the Alpha Launch were pushing in their marketing video.
Not having checked on the Alpha Launch for a while I visited their YouTube channel where I confirmed New Earth were indeed behind the Alpha Launch:
The above video was uploaded on July 31st yet since then has only garnered 131 views, indicating that The Alpha Launch never really took off as a prelaunch marketing campaign.