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Although he has made millions, entrepreneur Ryan Blair knew what being poor and desperate felt like. So when his parent firm said it was “lights out” for his company ViSalus, he reworked his business model, gun-to-the-head style. yan Blair has the type of personal turnaround story that reads like a Hollywood script. As a teenager, he was in a Los Angeles street gang, learning about technology by stealing computers and wiping away the identities of the owners, and about the export-import business by helping his father dry and bag up marijuana. After meeting an entrepreneurial mentor—his law-abiding realtor stepfather—he transformed from a high school dropout with a criminal record and two stints in jail to a multimillionaire entrepreneur who started his own tech company at 19. Blair now can afford a home, nice cars, artwork, a nanny for his son and has even appeared as a model in a Stoli vodka ad. But at the end of 2009, when the recession nearly wiped out his direct-sales health and wellness company ViSalus, Blair was practically back on the street—metaphorically anyway. He had to turn around the company that was flat on its back, bleeding money. He had to deal with a wrath of his parent company, Blyth Inc., whose board once had high hopes for ViSalus's three young cofounders but ended up regretting the phased buyout of the company. And oh yes, Blair had to figure out how he would not, personally, go broke. “All of a sudden, I'm looking at my last million bucks in the bank,” said Blair in a recent interview with Portfolio.com. “As you become a successful entrepreneur, you pick a number that you feel comfortable with and my security number was a million dollars. I felt like I could always start over, start another company with a million bucks.” Amid a huge increase in ViSalus's sales and a surge in its valuation, the cofounders will also, according to Securities and Exchange Commission filings, get another $10.1 million, plus 340,662 shares of Blyth common stock (currently worth upwards of $21 million). This makes them the largest inside shareholders after the Goergen family, and part owners of a global company that nearly pulled the plug on their business. The Recession Strategy The near-failure of ViSalus was brought on by a familiar double-whammy: the recession itself and the fact that ViSalus’ business model was based on good economic times—the kind that, as everyone now knows, didn’t last. “When the economy changed, the consumer changed. And selling high-premium, luxury-based vitamins, which was our original strategy, was terrible,” Blair said. “Average consumers were not going to spend above average prices (about $125) for a monthly supply of vitamins. If you think about it, that’s a cable bill that’s a phone bill that’s a gas bill, a car payment for some people.” Sales went from $2.5 million a month at the peak in 2008, just when Blyth bought the three-year-old company, to $600,000 a month. But the company was also losing another $600,000 a month, and had $7 million in debt. Rather than walk away, at the end of 2009, Blair and his cofounders decided put their own money, $1 million each, back into the business. “We didn’t want to break so many promises to employees, so many promises to investors, so many promises to customers,” Blair says. “I’d rather say we went down and look everyone in the eye, and not say that I protected myself on the way out the door and didn’t protect them.” To turn the company around, the ViSalus founders also laid off about 25 people, about half the staff at the time, and “stripped [the company] down to the bare bones, removed all the non-core projects and got really focused on our essentials,” Blair said. “One of our essentials is a mantra we have—the path is math—so every decision was filtered by me and I had a say-no-first attitude. It was fact-based decision making with a gun to my head, to all of our heads. Innovation will occur when you have a gun to your head.” Perhaps most critically, they shifted the business model from high-end vitamins to affordable weight-loss products with a core initiative called the Body by Vi 90-day Challenge that was affordable to everyday people (a shake, for instance costs $1.80) and became wildly popular. Company sales surged from $34 million in 2010 to $231 million in 2011, according to Securities and Exchange Commission documents. Seizing on the quest for Groupon-like “deals,” ViSalus also made a pivotal offer to customers: Anyone who can get three people to join them on the Body by Vi challenge gets the product for free. Currently ViSalus has 20,000 customers who get about $200 worth of product, on average, for free, which means it spends millions per month to obtain customers. For a company that just counted its one millionth customer, Blair says, the costs have been well worth it. “Everyone has been looking at multi-tier incentives. Do we give points, prizes, money? Target influencers online? Who do we incent to move our product? I wanted to incent the walking billboards,” Blair said. He also said that since weight loss programs are more likely to succeed if people have support from family and friends, the challenge fits with that idea of having partners in weight loss. Blair calls the concept "challenge marketing" and he so wants to own the idea that last week, ViSalus plunked down $825,000 on the domain names “challenge.com” and “Vi.com,” according to TechCrunch.