Executive Perspective: Gordon Morton

INSIDER takes you behind closed doors to meet with an industry executive. Get to know the industry’s power players on a personal level, and discover their long-term strategies and vision for the industry’s future. This month, INSIDER connects with Gordon Morton, executive vice president of XanGo LLC. One of the original company founders, Morton has been engaged in marketing and direct sales with companies including Enhanced Living and Enrich International; he directs the marketing strategy for XanGo, contributing to the company’s rapid global growth.

INSIDER: Tell us a bit about XanGo’s origins.

Morton: My brother Joe and I, who are two of the original six company founders, were raised in natural products. My mom had a retail health food store, and my dad established the Canadian division of Nature’s Sunshine Products, a nutritional supplement network marketing company. So we understood the commercial value in supplements. When my brother was stationed for a year in Kuala Lumpur, Malaysia, he discovered mangosteen, which had been identified as a botanical with substantial nutritional value for use in traditional healing. But he realized it had a commercial value beyond its traditional use. A lot of people knew the nutritional value of mangosteen, even a lot of Americans traveling to Asia, but they didn’t have the forward thinking to see it had commercial value in the United States.

INSIDER: The company has seen tremendous growth both domestically and internationally. What are some of the strongest markets?

Morton: The vast majority of our business is in the United States. Canada and Mexico are also big markets, made easier by the fact that we share friendly borders and the same time zones, and it’s easy to find Spanish speakers and even French Canadians. My brother and I were also born and raised in Canada—we’re dual citizens now—so Canada takes a certain amount of credit for the company. It has been a little trickier jumping the pond into markets like Japan, addressing issues such as programming with Japanese characters or handling currency conversions.

That said, we just had our strongest international opening to date in Malaysia. It’s fun because Malaysians claim a certain piece of the brand story. Germany and Australia are also strong tier one markers for us. There are other markets that are very strong but what you’d consider in marketing tier two markets, like the United Kingdom, Ireland, Hong Kong, New Zealand, Sweden. These are good, very strong markets per capita but, population-wise, they’re not going to be the United States.

INSIDER: A large part of that growth has been driven by the rapidly-expanding network of XanGo agents. Why go the network marketing route?

Morton: I’m a big fan of word of mouth marketing. There is a tremendous amount of cred in that. There is a great synergy between network marketing and dietary supplements. A lot of great supplements are on the market because of volunteer armies of people who are really impassioned about educating people on health. When I was growing up, I worked at Gabriella’s Health Food Shoppe, which my mom owned, as well as working at Nature’s Sunshine with my dad. What I found was a lot of products that made their way to the health food store, the education had started at a grass roots level through network marketers. So when we launched XanGo, we saw advantages of a quick way of getting product education out there. Of course, I also have 750,000 distributors worldwide who are impassioned. They’re buzz agents about the product, but it is a lot of people to manage. That’s not just customers; those are people who have signed up as distributors, and there are a lot of personalities.

INSIDER: What have been some of the major challenges you’ve confronted?

Morton: Obviously, education. You’re talking about a new botanical for most of the world. Malaysia knows what mangosteen is, but in most of the world, the first thing most people think is it must be related to the mango. We were exhibiting at the natural products shows and had a lot of questions as to why we were there, as a network marketing company. It’s about category leadership and educating everyone—even the industry—about mangosteen.

That’s part of the burden of being a category creator. Now, it’s neat to see the growing recognition. We just read in The New York Times some high-end hotel chains and boutiques in areas like New York and Los Angeles are bringing in fresh mangosteen to differentiate their hotels. It’s a prestigious fruit that’s selling for $10 to $12 a piece.

We’re also seeing more competition, but it’s a point of pride for us that at trade shows there are many mangosteen supplements jumping into the market. As a marketer, I think we’ve forced a position where most people who enter the mangosteen market reference XanGo.

This is in a bigger bottle than XanGo. Or it has more polysaccahrides or whatever. I love that they say XanGo.

INSIDER: XanGo has also done a lot of marketing outreach to build the brand, such as the sponsoring of the RSL team and championing children’s charities.

Morton: The thing I said from the start, and this is my philosophical world view, I like brands that stand for something, that have personalities. I have posters from the Apple Computer campaign, and like those huggable brands like ifruit or Volkswagen Beetles. I didn’t want to be just another nutritional company. There are a lot of them that offer great products, but the brand doesn’t mean anything. We wanted our brand to have a friendly jovial personality and really resonate. We chose to rally behind our soccer team because we wanted a sport that had universal appeal. Baseball is a fantastic American pastime, but it isn’t embraced in Europe or Australian. And hockey is anamazing Canadian-American pastime but they don’t play it in Mexico. We’re an international brand and soccer is probably the most universally accepted sport in the world.

As far as charitable contributions, when we started our company, we made an oath that we’d be fiscally responsible enough that we could make sizeable donations to charity. When we talk about XanGo Goodness, our charitable initiative, our distributors love that. They see what we’re doing at a corporate level and they get empowered to do things in that spirit in their own communities. It’s a part of the brand. Truthfully, we have really responsibly changed in a positive way many communities throughout the world.

Universally, all peoples of all nationalities and all political spectrums can agree that children’s charities, especially well run ones, are a given. We try to find a charity that resonates in the communities in which we do business. In Japan, we work with Yokohama Family House; in Germany, it’s a charity called Off Road Kids to help young teenagers get off the streets.

Also, we choose not only to be a company that supports charities but also one that rolls up its sleeves and does volunteerism. Every employee at XanGo has two hours a month that they can contribute to a community project or 501c3 charity that the company reimburses them for. And that idea came out of an employee think tank, because we encourage that kind of thinking. Personally, I spent time in Ghana earlier this year working with malaria test kits, clean drinking water, education on disease, even something as simple as educating them on using mosquito nets and doing census work.

INSIDER: XanGo recently joined the Coalition to Protect DSHEA . What was the impetus to get on board?

Morton: I’m a big fan of DSHEA, and we’re a big supporter of the industry and of being responsible about it. It’s glaringly obvious to me that botanicals and supplements are very different from pharmaceuticals. And I think to put the same threat of burdensome regulations on supplements would be a travesty. We want to be proactive and part of responsible solutions. It’s a competitive industry here in Utah, but we’re all coming together at the table and standing united on this point.

We’re also helping educate politicians. There is a lot of ignorance on Capitol Hill about DSHEA. There is a gathering storm, and we want to be pre-emptive, take the lead and help educate key legislators. We can’t wait until there is an onerous bill before Congress and then try to scramble. It’s important that we are all working with industry trade groups and with other companies to educate Congress and our constituents, so when those things come, we’re not starting from ground zero.

INSIDER: What does the future hold for XanGo and for the industry at large?

Morton: What I’m excited about in the industry is the speed at which dietary supplements and functional beverages are gaining traction and the consumer recognition that is becoming fashionable at a level I’ve never seen before. Dr. Andrew Weil recently commented about the shift in health care, whereby you used to look for a doctor who was at least neutral on supplements, but now you can demand your family practitioner is hip on supplements and ready to help educate you. That’s a radically huge shift.

As far as XanGo, we’ve defied all expectations as far as growth every year since we were founded five years ago, and I’m still optimistic. We’re in 20- plus markets internationally right now; in five years I’d like to see that double. Can I be that bullish and optimistic? I’d like to be in 40 markets, and we have the moxie and tenacity and enough optimism to pull that off. Here’s a broad marketing goal. In Microsoft Word, if you type in the word mangosteen, it’s probably still coming up as a typo, which means the word is still reasonably new because it’s not on spell check yet. I want it to be like Aloe vera and Echinacea. It will be a bittersweet day, like when everyone discovered REM when you were an original fan. But I and 750,000 other buzz agents will say: it’s buzz, and we did a good job.