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Why Math Matters, A Tale of Ruin and Opportunity

A detailed account of a Fastlane process...

AgainstAllOdds

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@Kak Re: Your surprise that he would give up a booming business to do hoodrat shit. Do you think the business was really successful, or did it look successful on paper because of all the illicit income looking like legitimate business?

I'm sure the feds will have an opinion on the matter, but that was one of my first reactions when I saw that. Maybe the guy was on the treadmill propping up his business with scumbag side gig.

I was curious about your question so just skimmed through the court filing, which you can read here: William Burgamy affidavit.pdf

Hopefully @Kak can answer your question since the court documents do not.

But some tidbits that stood out:

"A review of the Empire NEVERPRESSEDRX account on April 3, 2020 revealed that the account had 2543 sales, a vendor level of 7 and a trust level of 7 with 99.95% positive reviews."

"As noted above, on January 6, 2020, the FBI undercover employee sent 0.02400203 Bitcoin (at the time worth approximately $190 USD worth of Bitcoin) to the NPRX payment address in order to pay for the above-described 20 Percocet® pills."

Screen Shot 2020-04-23 at 10.33.47 PM.png

According to a quick internet search, Percocet sells for $6 with prescription. We will use the prescription price as the cost since it's also stated in court documents that he was hitting limits with his own customers.

He was reselling for $9 each. ($190 - $10 for shipping / 20 = $9).

But let's assume he was selling at 4x the prescription price (even though above he only sold for 1.5x on the given transaction.

And let's assume $180 revenue per order.

$180 * 2,543 transactions = $457,740 * 75% margin = $343,305 gross profit. Split between him and the other guy, so $171,652.50 for himself. This is assuming that he used normal markups.

If he used the 50% markups to get the account going:

$180 * 2,543 transactions = $457,740 * 33.3% margin = $152,578 gross profit. $76,289 for Hyrum.

If you annualize the earnings, he was bring in between $114k and $256k a year off of this hustle.

Is that a lot of money? Maybe. Is it a lot of money for the amount of risk he took on and selling his soul? A definite NO.

To put things into perspective...

Pharmacies sell at a 2-5x multiple:

Screen Shot 2020-04-23 at 10.58.39 PM.png

Here's one that's for roughly 2x.

But let's say it's 4x to purchase a pharmacy that is well established with sufficient barriers to entry.

With a $200k down and good credit, he could have gotten an SBA loan for $2MM. 8% interest, so:

$500k annual income
(160k) interest payment
= $340k annual profit.

His payout was a lot higher to just acquire an existing pharmacy. On top of that, the risk was a lot lower (going to jail vs going bankrupt).

If he went the latter route, he would've made more and saved his soul.

But unfortunately he was greedy and stupid, so now he's getting locked up for likely decades.

Greed and unethical business practice doesn't pay.

@MJ DeMarco @Vigilante - please let me know if it makes sense to turn this post into its own thread. I understand that it's bad for the forum to draw attention to this idiot, but maybe if we take out Hyrum's details, the quick analysis above can save someone down the line from making the same boneheaded unethical mistake. Crime doesn't pay.
 
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MJ DeMarco

I followed the science; all I found was money.
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Extracted from the "Heavy Heart" thread now located in the Speedway.


It is a story about a forum member who had a business and decided to dip his toes in illegal activities. He is now facing a long time in prison.

This thread is about HOW math plays an important role in decision making.

Often times we ask "Hey, what's the most important skill for an entrepreneur?"

The answer usually is sales or marketing.

I would argue, it might be MATH.
Knowledge of risk/reward, Expected value, and more.


(For those of you without SPEEDWAY access I believe you need at least 50 likes for admittance.)
 

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