The Power Of Positive Eyewash

Forbes/December 1, 1975

What did the Wizard of Oz give the Tin Woodman when he asked for a heart, the Scarecrow for brains and the Cowardly Lion for courage? Nothing -- yet each went away convinced he got what he needed.

So it is with Werner Erhard, founding guru of Erhard Seminars Training, the latest self-improvement fad hot off the West Coast.

"There's nothing to get, so you got it," EST trainees are told at the end of their marathon indoctrination sessions. Since 1971 Erhard has preached to over 60,000 graduates that happiness is simply thinking: "You are perfect the way you are."

What makes EST noteworthy is the kind of followers it attracts. They aren't the usual strung-out adolescents or inner-growth groupies; a great number are seemingly solid white-collar types -- doctors, executives, sales managers, accountants and editors. Some 17% of EST graduates have college degrees (vs. 8% in the total U.S. population), while another 22% have done post-graduate work (vs. 2%). EST's president, Donald Cox, is a former Harvard Business School instructor and Coca-Cola vice president. Erhard has lectured at Stanford and the American Management Association.

EST's techniques are as old as the Inquisition and as new as a Don Rickles monologue. For two consecutive weekends (at a cost of $250), trainees are subjected to verbal abuse and physical deprivation (of food and bathroom privileges) to break down their defenses. Then the EST trainer fills up their heads with an amalgam of ideas Erhard appropriated from zen, gestalt, scientology, transactional analysis and Voltaire's "best-of-all-possible-worlds" Dr. Pangloss.

Erhard thinks EST appeals to businessmen because of their pragmatism: "Business people are only interested in one thing -- does it work?"

A lot of businessmen testify that EST does work. A San Francisco insurance executive says he has doubled his business in a year. An Oakland real estate operator says he is more productive now because he can walk away from any deal that is not entirely open and above board. A Ford Administration official in Washington says he is less hassled because he can deal with "what is, rather than what I hoped would be."

A Los Angeles psychiatrist explains EST's appeal this way: "Organized psychology overstated its claim, and when the inevitable disillusionment came, people were open to do-it-yourselfers like Erhard."

Erhard has perfected the each-one-sell-one sales technique whereby the satisfied EST graduate urges his friends and relations to sign up for the bliss blitz. There are waiting lists for the monthly courses (held in 12 U.S. cities).

The organization's publicity says it is "a breakeven operation." But it is not tax-exempt. "EST is to serve people, not make money." It certainly takes in money: EST reportedly grossed $3.4 million when it had only half its present number of graduates.Yet expenses would appear to be minimal. It does little advertising. Most of the nine trainers earn less than $30,000 annually. Most of the staff work is done by several hundred volunteers who labor virtually around the clock. Besides the San Francisco headquarters, EST's main operating expenses are trainers' travel and hotel room rent for the session (approximately $600 a weekend).

"If there is any surplus over operating expenses," says the publicity, "our policy has been to give the money away." EST apparently benefited from a Caribbean tax shelter to increase the amount of money it had to give away. An indictment brought in October as a result of the IRS's Project Haven investigation of offshore tax shelters charged three Northern Californians with reporting fictitious tax-reducing transactions for their clients (including EST). None of the clients was charged.

EST provides founder Erhard, 40, with a lavish lifestyle. He drives a Mercedes 450 SEL, pilots a corporate plane, lives in a $100,000 house and operates out of an EST San Francisco mansion complete with valet, chef and multi-person retinue.

The former used-car and encyclopedia salesman has come a long way. He admits to changing his name from Jack Rosenberg and leaving behind his first wife, four kids and a pile of debts when he headed west from Philadelphia 15 years ago. But bad news seems to follow him around. Erhard was a division sales manager for Grolier Society Inc. when it was enjoined by the state of California for fraudulent and deceptive sales practices. As recently as 1974 California was seeking to enjoin Mind Dynamics -- whose ex-president said Erhard was once his No. One man -- from making fraudulent claims and practicing medicine without a license.

None of this seems to dismay Erhard's followers. "What if he is a con man?" asks one Los Angeles executive. "EST works."

In the 1920s, a Frenchman, Emile Coue, became famous for a kind of mantra, the incantation of which was supposed to be very therapeutic. It went: "Every day and in every way, I am getting better and better."

Sound familiar, ESTers?