Lane Nemeth may have lost her passion project to a greedy venture capitalist and the MLM giants known as Avon, but Discovery Toys is still going strong without her.
Educational toys and direct sales combined? Sounds like a stay-at-home-mom’s dream side gig.
Just don’t get carried away thinking it’ll be anything more than that. Have I been involved?
This video explains everything:
Make sense? Either way, here’s the full review on Discovery Toys.
Discovery Toys is an educational toys MLM that was founded in 1978 by Lane Nemeth, an early childhood educator.
After years of working with children and watching how they learn and play, this was Nemeth’s passion project. She launched Discovery Toys on a $5,000 family loan.
Despite a rocky start and the threat of insolvency, the company eventually found a venture capitalist (or, he found them) named Philip Greer who was willing to invest $100,000 to help them out because he believed in their product so much. The company took off, and their growth skyrocketed.
While that sounds like a win, it came back to bite them years later. The company had grown so much that his initial investment was now worth $12 million, and it was unlikely that Nemeth would be able to pay him out without the company folding. But Greer wanted his money. He took her to court, suing her for not paying out to her minority shareholders even though she had been paying herself a $750,000 salary. He asked that the company, two decades of Nemeth’s hard work, be dissolved so that he could collect his cash. 
It didn’t work, but Nemeth did lose her grip on the company. By 1997, her company was worth $100 million in annual revenue, and she had some big buyers looking to acquire what he’d built. She sold Discovery Toys to Avon, one of the biggest MLM giants out there. 
Avon was thrilled to take on a new product line and propel Discovery Toys to the top. However, in 2002, Avon sold Discovery Toys to a private equity group. In 2003, they expanded toy sales to China, one of the largest markets in the world. 
Discovery Toys is now run by CEO Jerry Salerno. Their products are sold in the U.S., Canada, and China, and they’re based in Livermore, California.
How much does Discovery Toys cost?
The basic startup kit usually cost $89, but they sometimes run promotions that bring the cost down to $49.
The Business Launch Kit contains extra product and training programs, and it costs $125.
The Business Builder Kit, which includes 23 extra best-selling products and additional training and a deluxe website costs $399.
In order to remain active, consultants must place at least $100 in orders each quarter (every three months).
Toys are pretty reasonably priced, especially considering they’re known for quality. Most of them fall in the $25-$45 range. They can go for as cheap as $10 or upwards of $75.
They have a huge variety of toys too, from make-believe play toys to science and logic toys to construction toys. They even sell art supplies and books.
Marbleworks has long been one of the company’s most famous toys – it’s been around since 1982. It’s one of those marble track sets that comes with various plastic half-pipes of different designs and colors that you interlock to construct one big track for marbles to run through.
In addition to their mission of producing high quality, educational toys for all children, Discovery Toys also produces products specifically geared toward the autism and special needs population. They collaborated with Dr. Patricia J. Krantz, director of the Princeton Child Development Institute, for the product design and development.
These toys are marked throughout their catalog with a symbol denoting that they’re particularly educational for children with autism. They also have a chart that explains which toys are especially helpful for children with different developmental challenges. These toys have rave reviews from occupational therapists, special needs teachers, and caregivers.
This is another company that relies on in-home parties. I usually make fun of those, but I guess it’s not a terrible idea in this case, considering your real target market is the buyer’s kids. If the kids are home during the party to play with the sample toy sets, they’ll probably do enough begging and pleading to mom and dad to fill up your order form.
Hosts get their own product discount ranging from 10%-20% depending on their sales numbers, as well as a handful of half-price toys.
Consultants can earn up to 34% commission on their personal sales. They also get up to 7% commission on the sales of their team.
Here are the actual earnings Discovery Toys predicts for in-home parties based on sales numbers:
- $400 in party sales gets you $80 in base earnings and $20 in bonuses.
- $600 in party sales gets you $120 in base earnings and $30 in bonuses.
- $800 in party sales gets you $160 in base earnings and $40 in bonuses.
- $1,000 in party sales gets you $200 in base earnings and $50 in bonuses.
- $1,500 in party sales gets you $300 in base earnings and $105 in bonuses.
So, let’s say you hold two parties every single week, and you always sell very, very, VERY – $1,500 at each party, the highest sales numbers mentioned in the table. Keep in mind that this is NOT easy. Even if you won homecoming queen in high school, no one has enough friends to sustain that.
But even if you did, you would still only make about $3,200 a month before taxes. That’s a below average salary for a rock star sales performance.
As usual, the real money here lies in recruiting, not in holding in-home parties.
If you’re looking for an MLM that is legitimate, established, and legal trouble-free, this is a great choice. It’s particularly good for moms who can use the product discount to get toys for their kids and who would genuinely have fun selling quality toys to other moms.
Just keep in mind – it’s a side gig at best. Don’t expect to be hitting it big here. Most people are lucky to make back their sign-on costs.
But if it’s financial freedom you seek and you like automated ways to build passive income, there are better ways.
(and you can trash those old MLM habits, too)