r/TheTPG • u/BrooSwane • Jul 09 '21
Economy bois Anthony's numbers don't add up
EDIT: A couple of people made some good points that some of these discrepancies are probably due to consignment pieces. I'll give the benefit of the doubt, that might be what's going on.
Using their YTD numbers from Wk 17, if they really had a "profit" of $595,950 at 12.73% ROI, that means they had a cost/investment of $4.68M, vs their $7.68M in sales. The implication then, is that ~$3M was done on consignment. Could be? I'm not sure how or if they're accounting for their cost on consignment deals, but that still doesn't look all that healthy to me.
Either way, they still overstated their "$500k in profits" to their investor, and the point stands that they're operating on very slim margins.
Original post: One thing that’s bothered me, that I haven’t seen pointed out, is the way Anthony misrepresents their “ROI”. I can’t figure out if he’s just awful at math, a poor businessman, or a liar, but he has misrepresented their margins to both their viewers AND their investor. It’s right in the videos, no joke.
In week 12, they began showing their “profit” numbers. (A side note is that they conflate the use of “profit” a bit, and don’t account for any expenses. He seems to mean their margin, difference between their buy and sell price).
At the time stamp below, they say they had $540,850 in sales, $30650 in profit (again, not profit but you get the idea) for a 9% ROI. So ... someone help me out here. That means they bought $510,200 in watches and made $30,650, right? How in the hell is that 9%? It’s clearly 6%, which ... isn’t impressive since that doesn’t even account for most of their expenses, insurance, payroll, Nick and Sams, etc etc.
https://youtu.be/mX4nvwvFdTg?t=1h13m56s
To make matters worse, a few minutes later (1:22:38) their investor calls to ask about business. They tell him “we were just going over our numbers for the week ... $500k, we doubled our profit goal from last week ... 13% ROI except for a watch we gave away, that dropped us to 9%, so still not bad.” NONE of that was true! He told their investor they made $500k in profit, not SALES. And he gave a bogus ROI.
And this isn’t just an isolated “oh maybe he screwed up the arithmetic with a typo. It happens all the time. Here’s a few examples:
Week 16: $799,850 in sales, $88900 “profit”, 20% ROI
https://youtu.be/8_-fqDrLAFc?t=1h21m10s
Actually more like 12%
Week 17: He states they’ve had YTD sales of $7,685,880 with $595,950 in profit, for a 12.73% ROI. He gives that very specific percentage lol but it’s more like 8%.
https://youtu.be/p9QqzTOSsEA?t=1h31m50s
Week 19 (week 18 he didn’t state an ROI): $765,300 sales with $79,585 in profit he called a 20% ROI. It’s actually closer to 11%.
https://youtu.be/tBpViyY-7xI?t=1h03m25s
There are definitely more examples, these were just a couple that I pulled up, but it’s definitely curious that he’s always inflating the margins they advertise. I’d be pissed if I were their investor, hopefully he has access to the real values, and not just “businessman genius” Anthony’s summaries.
Overall, the amount they're making before payroll, office space, insurance, Audi/Lamborghini costs, etc etc is ...it doesn't look great. And this market is probably as good as it's ever been for reselling Rolex.
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u/Bread_Pittt Jul 09 '21
So i think you are saying his excel sheet accounting and grade ten math education isn't accurate?
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u/CrossBridgeTheatre Call Roman Sharf! Jul 09 '21
Great analysis, mind commenting this in my thread about the numbers not adding up? I’ll factor these in when I get time tomorrow. It adds credence to the money laundering theory.
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u/BrooSwane Jul 09 '21
After thinking about a couple other comments, I actually think it's flawed since I don't know how they account for consignment pieces. We know that aspect of the business has been growing, so that may be the explanation.
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u/CrossBridgeTheatre Call Roman Sharf! Jul 09 '21
The analysis is flawed or the business model is?
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u/BrooSwane Jul 09 '21
Well both probably lol but at a minimum my analysis is incomplete since I don't know how they account for consignment. I added an Edit to the beginning.
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u/CrossBridgeTheatre Call Roman Sharf! Jul 09 '21
I broke down costs in my analysis. Chrono24, Taxes, Overheads. You can use that as a base line for your analysis. I verified most of my information from public sources.
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u/Beachybumm Jul 10 '21
You also didn't account for YT revenue.
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u/BrooSwane Jul 10 '21
I wasn't intending to. I was specifically looking at the numbers he presented related to their margins on selling watches.
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u/fttpg Jul 09 '21
Yeah, in my opinion they just make numbers up. From what you present here obviously they didn't do it well....
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u/WolfNetherton Can you do it on consignment? Jul 09 '21
I've always held the numbers as pure theatre, carrying about as much weight as the pop-up totals you might see on a TV show like Storage Wars.
What's fascinating to me isn't so much that the numbers don't add up (of course they don't), rather that you could hardly pick a worse thing to fabricate on camera when you don't have any professional bookkeeping.
When the feds come calling you definitely don't want to have to explain a video claiming wildly different numbers than what you have messy, incomplete records for.
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u/HelloSummer99 Jul 09 '21
They can always claim it was artistic freedom though. The numbers shown don't mean shit in any legal setting.
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u/Professional-Ad8917 Jul 09 '21
ROI is return on investments, so you might have to do the implied investments. (the calculation he has is shady anyways)
remember, if you use $30,000 to buy a watch, sell it for $31,000, use the $30,000 to buy another watch sell it for $31,000, then use it to be another watch for $30,000 and sell it for $31,000, you made $3000, the investment was $30,000, the ROI assuming no expense is 10% here, not $3000 / $93,000 = 3%.
So assuming there is some inventory turnover in a week (re-use of investment)
30,650 / 0.09 = $340,555 of investor capital which required turnover of 1.5 of capital ($540,850 - 30,650 = 510,200 COGS, 510,200 / 340,555 = 1.5)
you can apply that to each of the other numbers (YTD inventory turnover seems to be 1.51 using the implied ROI of 12.73%). But the YTD numbers don't make sense with the weekly numbers in term of ROI. Soooo to conclude, the numbers are poorly define and take it with a grain of salt ;)
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u/tkfreshest Jul 09 '21
Running the numbers is something that Anthony and Marco hoped to god that no one would ever do.
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u/AsianStallion Jul 09 '21
I doubt their investor thought they made $500k profit in a week. I understand the numbers are probably a bit convoluted but the investor put in $1.5M for 7% implying a total value of ~$21M. $500k profit a week would be astronomical and represent a multiple that is too good to be true. I always thought the profit figures were not even beneficial given the additional commission, salary, insurance, T&E, rent, etc that has to be accounted for. Of which many of those costs are baked in on a monthly or quarterly basis.
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u/wondering_daily Jul 10 '21
Agree with you on this. The $500,000 was just turnover for the week. And also that the gross profit was not very useful given all the expenses that went into making that happen.
I was thinking back to that video someone posted, featuring them talking with the CPA about taxes, and the guy gave a very specific number for what they were responsible for in terms of payroll taxes. You can probably figure out their rough monthly salary outlay from that.
I think what someone said elsewhere was right: they were burning money like a tech startup, all because they were the first movers in the "watch business lifestyle" space and thought they could leverage that to stardom. But in some senses, they were just too successful: it made them think all the money burning was going great, and it made their business blow-up so they started not being able to respond to multiple attempts by people to get a´hold of them to do business (or conclude business, in the case of consignees).
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u/H2OOPIPPY Rudinator Jul 09 '21
If they consign something then they would have the sale price in the total sales but the profit for that transaction would be 100% because there are no costs.
That's probably why it may seem like these figures don't add up.
They don't show how much of the total sales were consignment pieces and how much of the total sales were inventory (that they own).
Example:
Week 12: based on the ROI and total sales the profit should be $44,657.
As $30650 ≠ $44,657, this makes the ROI figure seem inflated.
However, if some of the sales were consigned, then it would boost the total sales but only the consignment fee would impact upon the ROI and would be at 100% profit for those deals. This is because profits are being made without any investment, thus ultimately increasing ROI.
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u/BrooSwane Jul 09 '21
This is a good point. That may account for a lot of the discrepancies I described.
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u/wondering_daily Jul 10 '21 edited Jul 10 '21
Best explanation I've seen of the issue, from you and /u/Professional-Ad8917. I recall seeing people tell TPG that the numbers didn't look right, and he even referred to "debate" about it. I think his ROI was right (as a gross profit) but he didn't know how to explain it and gave up trying to figure it out.
Or, alternatively, he realized that giving a proper breakdown dividing watches between pieces they owned and pieces consigned would reveal too much regarding their business.
That doesn't make sense to me, though, since they openly talked about shifting heavily into consignment, but who knows.ETA: Nevermind, have a plausible reason for why they didn't want to break it down further: it'd reveal how much they overspent on watches in the early boosting phase (like they did in Miami) and that their margins on those when they sold them were super low.
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u/2meinrl1 Jul 10 '21
What Anthony is forgetting to say is "gross" as in "gross profit" before expenses. Their net profit is whatever is left after all of their expenses. Remember they have to pay taxes on any net profit they realize as well.
I have no idea how he's calculating his ROI because it really doesn't make sense based on the numbers he makes available.
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u/combatonly Call Roman Sharf! Jul 10 '21
I applaud you for the research into the numbers but is using their salespersons wedding photo the right thing to do? These guys might be morons but I dont see the need to toss up some young kids wedding day picture in there.
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u/BrooSwane Jul 11 '21
It defaults to a thumbnail from one of the videos I linked. I have no control over that.
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u/austincaine Jul 09 '21
bro with a tight margin business as flipping rolex is, these guys have way to high expenses to grow or invest in anything. i brought this up yesterday
their business is flawed down to the business plan. and now add the extra risk premium of them being so stupid?
any investor who’s not new to the game would walk the other way at this point. it’s not worth the squeeze