Founders Who Built the Direct Selling Industry: A History in Profiles
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Founders Who Built the Direct Selling Industry: A History in Profiles
The direct selling industry founders who built today’s largest companies started small: a traveling book salesman giving away perfume, two high school friends working out of their basements, and a sales veteran with her life savings. Their stories explain a lot about how direct selling works, and why regulators have watched it closely for half a century. This history profiles the pioneers using public records and the companies’ own published histories.
Key facts
- Avon: founded 1886 by David H. McConnell as the California Perfume Company; renamed Avon in 1939 (Avon)
- Amway: founded 1959 by Rich DeVos and Jay Van Andel in Ada, Michigan (Amway)
- Mary Kay: founded September 13, 1963, by Mary Kay Ash in Dallas (Mary Kay)
- Landmark rulings: Koscot (1975) defined pyramid schemes; In re Amway (1979) found Amway’s plan was not one
Before Multi-Level Marketing: Door-to-Door Roots
Selling directly to consumers, away from a store, is far older than any modern company. Peddlers and traveling salesmen carried goods across 19th-century America. What changed in the late 1800s was the idea of a company recruiting a network of independent representatives, many of them women, to sell its products in their communities. That model became the foundation of the industry.
David H. McConnell and the California Perfume Company
According to Avon’s published history, David H. McConnell was a traveling book salesman who offered perfume samples as a gift. He noticed customers were more interested in the perfume than the books. In 1886 he started the California Perfume Company in New York City, mixing early fragrances himself and recruiting women as sales representatives. Avon credits Mrs. P.F.E. Albee as his first representative.
The company’s timeline records several milestones: its first brochure in 1896, expansion to Montreal in 1914, first use of the Avon name on a cosmetics line in 1929, renaming to Avon in 1939, and a New York Stock Exchange listing in 1946. Avon’s model was single-level: representatives earned mainly from their own sales.
Rich DeVos, Jay Van Andel and the Rise of Multi-Level Pay
Amway’s founders made a pact in high school to go into business together. Their company history says they tried a flying school and a drive-in restaurant, then became distributors for Nutrilite before launching their own company in 1959 from their homes in Ada, Michigan. Amway’s first product was Frisk, a liquid organic cleaner concentrate later renamed L.O.C.
Amway paid distributors not only on their own sales but also on the volume of people they sponsored, which is the multi-level element that defines network marketing. The company grew into the largest direct seller in the world. In the 2026 DSN Global 100 ranking, Amway reported $7.3 billion in 2025 revenue.
The 1979 FTC decision
In 1975 the FTC challenged Amway’s structure. In 1979, in In re Amway Corp., the Commission concluded the plan was not an illegal pyramid scheme, citing rules meant to tie rewards to retail sales: a buyback policy for unsold inventory, a requirement to resell 70% of purchased product each month, and a rule requiring sales to ten different retail customers. The FTC also ordered Amway to stop misrepresenting participants’ likely earnings. These “Amway safeguards” shaped industry practice for decades, though the FTC’s current guidance says no percentage test is a safe harbor. Our regulation explainer covers that shift.
Mary Kay Ash and Career Recognition
Mary Kay Ash had a long career in direct sales, starting at Stanley Home Products in 1938, according to the Texas State Historical Association. On September 13, 1963, she founded Beauty by Mary Kay in Dallas with her son Richard’s help and, by the TSHA account, $5,000. The company’s history notes that its first products included a five-item skin care set. Mary Kay became known for its recognition culture and its focus on opportunities designed for women.
The Pyramid Problem: Koscot and the Regulatory Era
As multi-level plans spread in the 1960s and 1970s, so did schemes that rewarded recruiting more than selling. The FTC’s 1975 Koscot Interplanetary decision described a pyramid scheme as one where participants pay for the right to sell a product and the right to recruitment rewards unrelated to sales to ultimate users. That definition is still the starting point for FTC cases today. The industry’s founders, in other words, built their companies alongside the legal framework that now governs them.
What the Founders’ Era Tells Us Today
Three themes from this history still apply. First, the most durable companies began with products customers wanted. Second, the shift to multi-level pay created both the industry’s scale and its biggest legal risk. Third, regulators have revisited the same questions repeatedly, most recently in 2026 when the FTC and Washington State announced a proposed $225 million order with Amway and two affiliated training groups over alleged deceptive earnings claims and recruiting practices. Our profile series continues with present-day leaders; see what top earner lists really tell you for how modern figures are presented.
Key Takeaways
- Avon (1886), Amway (1959), and Mary Kay (1963) are foundational companies with well-documented origins.
- Amway popularized multi-level compensation, paying on sponsored volume as well as personal sales.
- The FTC’s Koscot (1975) and Amway (1979) decisions shaped how pyramid schemes are defined.
- Questions about recruiting versus retail sales remain central more than 45 years later.
Frequently Asked Questions
Who founded the direct selling industry?
No single person founded it, since door-to-door selling is centuries old. David H. McConnell’s California Perfume Company, founded in 1886 and later renamed Avon, is one of the earliest companies built on a network of independent representatives. Amway’s founders popularized multi-level pay after 1959.
When was Amway founded and by whom?
Amway was founded in 1959 by Rich DeVos and Jay Van Andel in Ada, Michigan. According to company history, the two had been Nutrilite distributors and started Amway from their homes. Its first product was a biodegradable cleaner concentrate called Frisk, later L.O.C.
What did the 1979 FTC Amway decision decide?
The FTC concluded Amway’s plan was not an illegal pyramid scheme, citing its buyback policy, its rule requiring 70% of purchased product to be resold, and its ten-customer rule. It also ordered Amway to stop misrepresenting likely earnings and to end certain price-fixing practices.
When did Mary Kay Ash start her company?
Mary Kay Ash founded Beauty by Mary Kay on September 13, 1963, in Dallas, Texas, with help from her son Richard. Before that she worked in direct sales, including at Stanley Home Products starting in 1938, according to the Texas State Historical Association.
Sources
- Avon: Our Story and timeline
- Amway: History and milestones
- Mary Kay: Our History
- FTC Decisions Vol. 93: In re Amway Corp. (1979)
- Texas State Historical Association: Mary Kay, Incorporated
- FTC: Business Guidance Concerning Multi-Level Marketing (Koscot standard)
- FTC: Action against Amway, WWG and LTD (Sept. 17, 2026)
QastMe does not endorse any company. Information is for education only and is not financial or legal advice. Earnings in direct selling vary widely, and most participants earn little or no money. Review each company’s income disclosure statement before deciding.
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