Wednesday, October 27, 2010

Mathematical proof that TVI Express is a Scam: TVI Express Shills Using Funny Math in Indonesia


First, I have to admit, I do NOT read Indonesian, so I am going through the website in question using Google Translate. However, it is clear that this member is spreading BULLSHIT all over the place, by claiming 3 is somehow LESS than 1, or something of the sort.



The website in question is tviexpressdollar.com, whose owner had posted various "rebuttals" on the Indonesian web forum kaskus.us against critics of TVI Express. Here's his primary rebuttal:



http://translate.googleusercontent.com/translate_c?hl=en&sl=id&u=http://www.tviexpressdollar.com/the-truth-behind-tvi-express-membongkar-kebohongan-kaskuser-terhadap-tvi-express-bagian-pertama/&prev=/search%3Fq%3D%2522TVI%2BExpress%2522%26start%3D20%26hl%3Den%26safe%3Doff%26sa%3DN%26rlz%3D1B3GGLL_enUS400US400%26tbs%3Dqdr:d%26prmd%3Dvlfd&rurl=translate.google.com&twu=1&usg=ALkJrhja4ZweBxm3GsEINE6vaEVaYtn9Xw

The gist of this webpage is basically as follows: Some folks on kaskus.us forum claim TVI Express is a scam and proved it mathematically that it cannot be sustainable. TVIExpressDollar will prove that TVI Express is sustainable mathematically, thus defeating the scam argument.







This is a strawman argument at best. A scam can be sustainable mathematically. Just because it can be sustained mathematically (i.e. does NOT pay out more than it takes in) does NOT prove it is not a scam.
While the original charge of being mathematically unsustainabe is one way to prove a scam, defeating that ONE argument proves just that ONE argument is flawed.



However, there is a very fundamental way of analyzing the input / output idea. In any business, for a business to be sustainable, income must be greater than expenses. What was left is "profit". To do this, you calculate the maximum income, vs. maximum expenses, and make sure the numbers are "profitable", to the order of say, a reasonable margin of 25%, before deducting for clerical expenses (alleged office, alleged employees, phones, website hosting, programmers, and so on, plus executive team salaries).  That should leave a "healthy" profit. This is an assumption, but I trust, a reasonable one.



So what are the sources of TVI Express INCOME? So far I only see two completely reliable sources: the $250 membership fee, and the recently added $150 "processing fee and taxes", that is "per member". We will have to make another assumption here... As the 150 was added only at June 2010, we will assume average member paid $300 (remember, the earlier ones did NOT pay the $150, I'm just estimating, and I believe I am generous), and we will assume there is a million members. It is a nice round number.



So the income, so far, of TVI Express, is estimated to be 300 million. It can go up to $400 million, but I believe $300 is a more reasonable number.

What about expenses? That is a bit more difficult to calculate, due to the way the matrix boards work. The first time through, the big payout of $10000 chance is 1 in 225, or less than 0.4%. However, the trick here is you are cycled back into the express board. Still, keep in mind that it still takes every member in the express board 14 people from the traveler board to push them "up", so the "re-entry" does not actually affect the calculations.



I believe we can agree that TVI Express has FOUR expenses: big board payout, small board payout, the trips, and the clerical / facility expenses. The last one we've estimated earlier to be a reasonable 5-10% range, but it could go higher. We'll estimate the ones we know first.

Big board payout is 1 million members divided by 225 * $10000 = 44,444,444



Small board payout is 1 million members divided by 15 * $500 = 33,333,333

The trips is going to be more complicated. How much is the 7-day 6-night trip for two worth? This gets complicated until you look up similar trips offered by other companies... And  the answer is... about $400. (Go ahead, price it yourself using whatever booking engine you prefer, even TVI Express's backoffice, which is just Travelocity)



1000000 members * 400 = $400 million.


Total expenditure (excluding housekeeping, such as salary, taxes, office, etc.) is in excess of 477 million.

As we have just estimated that TVI Express income with 1 million members is about $300 million, clearly the expenses have outstripped income... By over 50%.



Ah, but you ask, could I have overestimated the trip costs? It is certain possible. Let's assume 25% discount... $300 million. That's still expenses of $378 million (rounded up). NOT ENOUGH. 

I am sure the critics of this math exercise can continue to tweak the variables until they claim they *have* reached an equilibrium, where income balance expenses, but the numbers will NOT be realistic. Remember, we have yet to account for salary, office, and other expenses, or even a PROFIT for the company. 

The only way TVI Express can continue to operate is by cheating the joiners out of those trips, which is their MAJOR source of expense. They have done so throughout their company history, by making the process as difficult as possible, always blaming the problem on one delay of upgrade vs. another, and finally they decided to add the $150 "processing fees and taxes" to see if they can just pull even. 



Even TVI Express announcements only admit to "thousands" having enjoyed the trips, and they have NEVER published verifiable numbers on how many people have enjoyed those trips.

What if they only gave trips to 50% of the people who joined? Expenses falls to 150 + 78 = 228 million, now they are profitable, assuming income of 300 million. Not very much so, as there's still salary and so on, but you can see that the MORE trips they withhold, the more money they make.



So there you go. Mathematical proof that TVI Express is a scam... its business model only loses money. It relies on deception, and NOT giving out what it promised.

And everybody who claims otherwise is using funny math.

13 comments:

Anonymous said...

It will be funnier if you DO read Indonesian.

GuyReviews said...

I figured as much. Google translate was accurate enough to let me know the entire "rebuttal" of that "fansite" is, as Americans say, bull****. However, you know some supporter is going to argue with me that I don't speak the language and all that. :P So I simply go about it in a different direction.

Very reminiscent of "EmJay007" episode on my blog here. He opened up 3 blogs and 4 profiles in 3 days, posted some bull**** defense of TVI Express, claimed to reveal me to be a liar. When I revealed his flimsy defense to be bull****, he promptly disappeared.

Unknown said...

Hi Kasey.

My name is Rudy Phan, the owner/author of www.tviexpressdollar.com

You do NOT read my article in Indonesian. And I think you don't understand what I wrote.

I agree with you that Google translate was accurate enough. But, Enough is not mean EXACT. Ok?

And, google translate can NOT translate the picture. Whereas, the picture is very important to know what I wrote.

Your mathematical proof is wrong. You don't know what is the mean with mathematics. You often use "believe", "about" and "estimated ", but MATH IS NOT believe. I think you must learn math better.

You said that "the big payout of $10000 chance is 1 in 225". This is wrong. Do you know the difference between the FIRST BOARD (when TVI Express established) and the REAL BOARD that operate now? The basic number to calculate for the REAL BOARD is NOT 15, BUT 8. From the wrong basic number, your mathematical calculate in totally WRONG.


Where do you know that the global member TVI Express is 1 million?

Your mathematical proof is NOT MATH, BUT YOUR BELIEVE.

Regards,
Rudy Phan

GuyReviews said...

Actually Rudy, the actual number of TVI Express members do not matter. We can use any number you want, but "1 million" was the number brandied about in June. We can use 1.2 million, but the overall math does not change. You can't balance the income and expenses.

You claim to cycle out of the first board the number is 8? That is very funny. Current powerpoint presentation still says 15. Are you calling TVI Express provided Powerpoint presentation to be a lie? Like Ms. Goernawan claim TVI Express is NOT multi-level when the official website says it is?

I believe YOU are the one not dealing with facts.

Anonymous said...

Hi K,

You ARE SO RIGHT about 'I do not read Indonesian' argument. The comment above mine is attacking you. Hahaha. But I think, to understand the point of the story, you don't have to read the whole passage.

Mr. Rudy Phan said that your calculation is relevant for TVI's'old system' (first board) and now, they are using the new one. Did they change it?

The thing is, in Rudy Phan's calculation, TVI can be sustainable in one condition...TVI does not deliver the 7N6D package or convert the eVouchers into something valuable for the members.

GuyReviews said...

Rudy:

My answer to your "concern" is posted here:

http://kschang.blogspot.com/2010/10/tviexpressdollarcom-author-rudy-phan.html

Unknown said...

Thank you for getting back to me.
http://kschang.blogspot.com/2010/10/tviexpressdollarcom-author-rudy-phan.html

I prefer to post my comment in your original article.

8 is a BASIC NUMBER to calculate the REAL BOARD, new members fill the 8 nodes in level 1 of Traveller Board. While 7 old members, who was in level 2, 3 and 4, the money had been counted in the PARENT BOARD. So, if the money had been counted in the PARENT BOARD, then when it was split off, please DO NOT CALCULATED it again. We talk about business, we talk about money. Calculate the MONEY, NOT THE “NODES”.

Rudy Phan
www.tviexpressdollar.com

GuyReviews said...

@Rudy -- Oh, I *sort of* see your point there.

What you are saying is once the board has split, (i.e. only level 2, 3 and 4) it takes only 8 people from the bottom to push the top person off. So you invented a new term "real board" to explain this 8 people along the bottom. Is that what are you thinking?

I already see where you went wrong, but I want to confirm whether that is indeed what you are thinking or not.

Unknown said...

Your question have indicated that you don't understand what I wrote on http://www.tviexpressdollar.com/the-truth-behind-tvi-express-membongkar-kebohongan-kaskuser-terhadap-tvi-express-bagian-pertama/

Thanks,
Rudy

GuyReviews said...

@Rudy -- I've told you before... I don't read Indonesian. So, since you seem to write English just fine... Explain it to me.

Or else I'll have to classify you as a user of the "You don't understand us" excuse.

GuyReviews said...

@Rudy -- Oh, by the way... Your calculations are WAY OFF.

In the "up to 92% payout"? You did not figure in cost of the trips. Yep, it's completely left off the board.

And that 12.5%? Should be 1.56%. You forgot that you need to count 2 boards, not just one, based on your logic.

Aero Art said...

Kasey,

Rudy just think a few people want to use the voucher.
maybe less than 10%.
If that happen, TVI still could exist.
but the fact, are people join TVI doesn't want to redeem the voucher?

Maybe i could clarify with simple math, basic from Rudy.
Every 8 people come in , have 1 people got USD 500
and every 64 people come in, have 1 people got USD10000 and 8 people got USD 500

TVI income = USD 250x64=USD 16000
TVI cost = USD500x8 + USD10rb = USD 14000
TVI still have profit USD 2000

If we just calculate only 50% use that voucher.
and every voucheer TVI has cost USD 250.
TVI cost = 64x50%xUSD250 = USD8000
TVI loss USD 6000

When TVI got breakpoint?
if less than 15% use that voucher.
TVI cost = 64x15%xUSD250 = USD 2400
TVI still lossi USD400

So, the question is. Who will became the 15% member that got that voucher?

GuyReviews said...

So Rudy's basic premise is "TVI Express will continue to exist only if members do NOT demand their trips as promised".

Is that proof that they NEVER planned to redeem all those trips? The fact that people caught on to that, forcing that $150 charge or half-size the trips should prove that TVI Express cannot continue to run.

Then there's pyramid scheme aspect of the problem...