The Porn Magnate & the International Humanitarian

Phil Harvey sits in his office in rural Hillsborough, N.C., surrounded by the tools of his trade. His desk, like that of any other businessman, is cluttered with reports and memos. Visitors might be distracted, however, by some of the items adorning the wall behind him--just beneath his tightly booked calendar hang pictures of scantily clad women and dildos. Harvey is just another businessman, except as chief executive officer of one of the largest mail-order distributors of sex toys and products in the country, his business is adult entertainment.

Harvey, 65, is dressed in gray slacks and a maroon button-down shirt--no tie--and his office is on the small side. Bulletin boards on the walls are papered with sales figures, charts and graphs, and the desk and chairs are more home office than Fortune 500--and yet Harvey is the CEO of a $65 million-a-year company based 20 minutes from Duke's campus that employs about 300 Triangle residents. A closer look at Harvey's desk proves he leads what he laughingly calls a "double life." Beside a personalized notepad headed with the Adam & Eve insignia lies a nearly identical pad emblazoned with the logo of D. K. Tyagi International, the Washington, D.C.-based nonprofit organization Harvey leads.

Just like Adam & Eve, DKT (named for a public health activist Harvey worked with in India) is founded on the idea that sex sells. Its mission is the distribution of contraceptives and family planning information via "social marketing," a concept Harvey developed while earning his master's in public health from the University of North Carolina at Chapel Hill's School of Public Health, which he completed in 1970. Social marketing hinges on a simple principle--people will value something more if they pay for it than if they receive it for free--which Harvey's company has used to promote condom and other contraceptive use in nine developing countries, with tremendous success.

The Macomb, Ill. native did not set out to be a businessman, and he certainly did not anticipate his involvement in the adult entertainment industry. After graduating from Harvard University and spending time in both the United States Army and the Peace Corps--plus five years working in India with the Coalition for American Relief Everywhere--he arrived in Chapel Hill, where he met British physician Tim Black, his future colleague.

Asking which came first, the mail-order sex toys or the condom distribution in developing countries, is much like asking about the chicken and the egg. They were developed concurrently, Harvey says, as he and Black looked for ways to put their ideas about family planning into practice.

"There was, in a way, an almost simultaneous occurrence," Harvey says, explaining how he began selling condoms by mail as part of his master's thesis in public health. The mail-order condoms were a part of the first family planning organization he was involved with founding in the 1970s, Population Services Inc., which was seeking nonprofit status. However, Harvey says, the Internal Revenue Service was uncomfortable granting such recognition because all they were doing at the time was selling condoms through the mail.

"[It was] suggested, and I agreed, that we split it into two companies. One would be nonprofit, working in developing countries overseas, and the other would be for profit," Harvey recalls. At that time, Harvey and Black created a nonprofit that was the predecessor to Population Services International. Both of these earlier enterprises employed the same social marketing approach Harvey and Black had developed at UNC.

Seven years later, Harvey left PSI for DKT, which he also helped to found. DKT was more focused on family planning, contraceptives and condoms as a means of AIDS prevention, whereas the former organization had broadened its scope to a range of public health issues. PSI still exists and recently received $170 million from the U.S. Agency for International Development to manage health programs abroad.

Back in the 1970s, Harvey and Black decided to test their social marketing theory by selling condoms through the mail, even though the practice was technically illegal according to a federal statute dating back to the late 1800s. Luckily for the young entrepreneurs, the law meant they had no competition in the field, so so "the orders came rolling in."

Since Harvey and Black knew next to nothing about business, they looked to their customers for direction. "We built Adam & Eve on the expressed preferences of the mail-order condom buyers," Harvey says. "Then we expanded to books on birth control, books with erotic content, sex toys, vibrators, in the '80s videos, and now of course DVDs." Harvey's erotica profits enabled him and Black to build their nonprofit organization. With a growing financial foundation, they were able to collaborate to take family planning in an entirely different direction from conventional practices.

"I brought social marketing, and he brought the conviction that family planning could never be delivered in the developing world using the medical infrastructure," Harvey explains. In developing countries, where health systems are barely adequate for major health needs like rapidly spreading illness, care for healthy people like family planning can often fall by the wayside. The solution, Harvey says, is to market contraceptives like any other commodity--with billboards, T-shirts and other aggressive advertising--so that picking up condoms at the store is no different from picking up tea or cigarettes.

It is better to sell contraceptives than to give them away because then they will be of greater value both to the distributor and the consumer, Harvey says. If the distributor stands to make a profit, no matter how small, it will keep closer track of sales than of any free distributions, and if a consumer must pay for the contraceptives, no matter how low the price, he or she will attach value to the product.

"First of all, when you give anything away for free, you invite wastage--there is no control or discipline in the system," Harvey explains. "If people are instructed to spread out into the countryside and give something away, it's very easy to dump them in the river and say they've given them away. Secondly, consumers do not value things that are given out for free. Government contraceptives are often perceived as low quality, and often they are. Packaging is important--if condoms are unpackaged, or cheaply packaged, people will think they are of low quality."

Harvey also sees the retail industry as a valuable resource that can be used to enhance distribution using channels that are already in place. "There is no system of perpetuating the flow of products if no one is paying for them," he says. "There has to be something in it for [distributors]. By charging a small amount, you have recruited an army of people to help you do the job, and that makes an enormous difference.... They don't need to be trained in the art of selling--they already know how to do it."

Kate Whetten, assistant professor of public policy studies and community and family medicine, says social marketing's success is not surprising as it uses the same strategies that make commercial marketing work. "You're using social forces and community to help market your product," she says. "By elevating the status of something by saying you have to pay for it, it can make you say, 'I am now a better person because I am buying this product instead of getting it for free.'"

However, divides within the target population can shape the impact of a social marketing campaign. "I think it's the sociodemographics, the income level, that's what makes a difference," Whetten says--for higher income levels social marketing of contraceptives may not make a difference but for the middle class, it will raise the product's status. For the lowest class, however, even the low price may become a barrier.

DKT's figures suggest that social marketing works. In the Philippines, sales of DKT-distributed condoms went from 200,000 in 1990 to 20.8 million in 2000. In Indonesia, condom sales went from 1.4 million to 29.2 million from 1996 to1999--then declined to 27.6 million a year later, when DKT introduced oral and injectable contraceptives (distributing 1 million of each). In Brazil, China, Ethiopia, India, Malaysia and Vietnam, the numbers all say the same thing--DKT's social marketing gets the job done.

Although the nonprofit receives funding from foreign governments and philanthropic foundations, Harvey has made sure it receives a portion of the fruits of his labors with Adam & Eve. The for-profit company has no official ties to DKT, and so not all of its returns go straight to the nonprofit, but Harvey says he estimates about $2 million annually, or 5 to 10 percent of DKT's funding, comes from the revenue from his own Adam & Eve shareholdings.

Just as Harvey's social marketing philosophy has driven his nonprofit venture to success, the same social conscience is evident in Adam & Eve's marketing. Every product his catalog offers has been screened by sex therapists or counselors, and any item that suggests coerced sexual activity, underage performers, or even conveys the idea of "dirtiness" will be rejected by the screeners. "The result is that we have a very positive line of sex merchandise," he says. "These products not only improve the quality of sex lives, but also improve marriages and increase sexual fidelity by increasing the variety in these relationships."

Even though Adam & Eve's screeners filter out material they deem inappropriate, a quick perusal of the latest catalog reveals these aren't exactly products for the whole family. The purple glitter jelly Scorpion Double-Shaft Probe and the Tickler Cage--a silicone sheath that slides over the penis and sort of resembles a medieval mace--may be clean enough to pass the test, but whether toys such as these truly hold the key to saving the institution of marriage is a bit questionable.

Adam & Eve's warehouse, which is attached to the corporate offices in Hillsborough, houses a wide assortment of dildos, vibrators and lubricants in every shape, size and color, and of course the occasional bin overflowing with fake rubber vaginas. DVDs and videos abound, stacked to the ceiling in unassuming brown cartons, bearing labels that could make even college students blush. Adam & Eve's business is growing, Harvey says, and he hopes to expand retail operations soon.

Duke students tired of the offerings at Railroad Video can expand their erotic horizons by heading over to Adam & Eve's closest retail outlet--one of five in North Carolina--tucked away in a strip mall on 15-501. The storefront advertises "lingerie and more," and true to Harvey's philosophy, it's all sex with a social conscience. Customers are greeted by a mannequin wearing a Hugh Hefner-esque velour jacket, who tempts visitors with the shiny red apple he holds.

"That's Rico," laughs store manager Janice Trent. "Rico's not very well endowed, we're always having to help him out."

Trent does not specify how Rico is "helped" but presumably it is with one of the many products quarantined in the back of the store. Behind Rico, shoppers have their pick of garments made of everything from satin to leather, embellished with rhinestones or even marabou fur. All of the sex toys and explicit pornography are neatly organized in the back of the store. Adam & Eve is not trying to hide the merchandise, Trent explains, rather it is trying to create the most comfortable environment possible for all shoppers.

"The majority of what we sell is what we call 'female-sensitive'--there's no disrespect, it's more erotica," says Trent, a North Carolina native, while her colleague rings up another customer. Both women are well-dressed and look to be in their mid-fifties--not the seedy characters one might expect behind the counter of a store that sells sex toys.

For the store's customers, who Trent says are women in their thirties and up and couples, the female-sensitive environment is important, and no sexuality is lost with the absence of hard-core pornography. "Fantasy is a big part of everyone's life, and people can experience those things without experiencing them physically," she explains. "Even the bondage stuff we sell is fur cuffs and soft types of products. It's a very healthy side of sexuality."

Adam & Eve has no official ties to DKT International, but its employees are well aware of their founder's quest to provide contraceptives and family planning information in developing countries. The employees admire Harvey for both his business savvy and his desire to do good.

"Mr. Harvey always wanted to help people," Trent says. "He was making money, and he took the money he was making off of it to help people get the stuff they needed to help control birth control and AIDS."

From dildos in Durham to rubbers in Rio de Janeiro, Phil Harvey's ventures are making an impact. As Super-Trust, the giant condom-superhero in DKT's Philippines program that battles the evil AIDS virus in a traveling skit, might say: Safe sex is fun, too.