Monday, May 06, 2013
The only people that get rich with “get-rich-quick” schemes are those that are selling the “get-rich-quick” scheme.
- From
- XXXXXXXXXXXX <XXXXXXXXXXXXXXXXXXXX>
- To
- sean@conman.org
- Subject
- Chuck Stebbins
- Date
- Mon, 6 May 2013 12:57:39 -0400
Sean,
Read your "Tampogo" article while researching Chuck Stebbins. Chuck is now with a company called XXXXXX XXXXX. Actually the name of the company is changing to XXXXXXXXXXX. XXXXXXXXXXXXXXXXXXX is the website.
I've invested some money with this company and awaiting the next step. If you have any insight or interest in Chuck's new business, please let me know.
He's writing in reference to one of four entries about Tampogo. I haven't really given it much thought since I wrote the articles four years ago, and it's interesting to note that the company no longer appears to be around (fancy that).
I can't find any connection between Chuck Stebbins and this “new” company, which is selling an opportunity to sell some diet-aid product. It's not coming across completely as a “multi-level marketing” scam, but some of the numbers the introductory video is showing are misleading.
Okay, the thrust appears to be you “invest” $5,000, and in return you
get 10 tablet computers (wouldn't surprise me if they wholesale around
$60/piece) for an “in-store interactive display”, 100 units of the diet
product, and some guides about shilling selling the product. You
place the “in-store interactive displays” in stores (nail salons, doctor
offices, car washes(?!)) and split the profits 50/50 with the store.
Okay, sounds straightforward to me. But here are some numbers the introductory video is currently showing (not the full table, but enough to show what's going on with the numbers):
| Month 1 | Month 2 | Month 3 | ||
|---|---|---|---|---|
| Reinvestment | 12% | 900 | 1,238 | |
| POP Units | 10 | 14 | 19 | |
| Sales | 15,000 | 20,625 | 28,359 | |
| Cost of POPs | 240 | 2,400 | 900 | 1,238 |
| Gross Income | 7,500 | 10,313 | 14,180 | |
| Network Fee | 50 | 500 | 688 | 945 |
| Retail Partner | 2,300 | 4,363 | 5,998 | |
| Your Gross | 2,300 | 4,363 | 5,998 | |
| Labor | Route Help | 0 | 0 | 1,500 |
| Your Net | 2,300 | 4,363 | 4,498 |
Now, the “product” is $50 (okay, $49.95). Month 1 assumes the “starting package,” that you place them all out on day 1, and 30 (or 28, 29, or 31) days later. The numbers are largely consistent, although it helps to look at things slightly differently:
| Gross Income | 15,000 |
|---|---|
| Inventory | -7,500 |
| Network Fee | -500 |
| Cost of POPs | -2,400 |
| Retail Partner | -2,300 |
| Net Income | 2,300 |
That makes it easier to see what is going where.
One issue already—the “starter pack” only comes with 100 units; that's still 200 units short of this projection, and so you need to spend (from what I can determine using these numbers) another … um … $5,000 just to top of the inventory (ouch) [this company also claims that the “starter pack” is worth $11,495, but given the figures from this, it's actually worth around $7,500 unless they really expect the POP units to retail at around $500 a piece—in any case, just looking at the numbers presented in their introductory video just … yeah … not good].
But the real issue I have is with that 12% reinvestment. $900 is not 12% of $2,300 (it's more like 40%!). No, that 12% is based off the gross income minus the inventory (or $7,500). That's before all other expenses! Okay, let's roll that in:
| Gross Income | 15,000 |
|---|---|
| Inventory | -7,500 |
| Network Fee | -500 |
| Cost of POPs | -2,400 |
| Retail Partner | -2,300 |
| “Reinvestment” | -900 |
| Net Income | 1,400 |
Ouch. Okay, now let's look at month 2:
| Gross Income | 20,625 |
|---|---|
| Inventory | -10,312 |
| Network Fee | -688 |
| Cost of POPs | -960 |
| Retail Partner | -4,333 |
| “Reinvestment” | -1,238 |
| Net Income | 3,095 |
And already the numbers are in trouble. Not only is that 12% “reinvestment” pre-net, but it's not even enough to support the additional POPs—it's actually $60 short! Also, the sales figure is bogus because I can't make it come out to whole number of units and the number. In fact, the numbers for months two and three are close but not quite right (averaging a bit under 30 units per POP per month).
And that 12% reinvestment figure is criminal, given how they've defined it, and the cost of the POPs across the months is inconsistent (some months what is listed is actually less that what it would really be; other months it's a bit more).
But the biggest problem I see is the end-game. At the end of year 2, they “show” you earning over $1,000,000 a year. But in order to get that, you need to have 332 POPs. That's quite a feat, but maybe doable. But when you start having two, three, ten, people all doing the same thing in the same area?
Um … good luck?
Really, all I'm doing here is applying basic math to the figures given. That, and some common sense (which does seem to be in short supply these days) and personally—this is a business I would give a pass on.
