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.