The 31 - 69 Value Rule PDF Print E-mail
Written by Paul Douglas Katchings   
Monday, 15 June 2009
The 31 - 69 Rule
By Paul Douglas Katchings


Do you know what the 31 – 69 rule is?

Of course you don’t because it is a secret.   At least it is a secret to me and perhaps to a few other number theorists who cherish their research.

But at this critical time of global economic crisis, I feel the time has finally come to expose this 31 - 69 secret for a better, simpler economic design which helps people create more value for themselves just by shopping from a new type of customer-friendly corporation.

Without the methodologies let me present some examples of this 31 – 69 rule.  

The first example should not categorize our discussion about this 31 – 69 rule into games of lottery or chance.  So please bear with me.  Little known to lottery players is that sets of lottery numbers are not equal.  What is known now by the 31 – 69 secret is that 31% of lottery numbers win about 90% of the time and rest are junk.

The second example is taken from data about the Dow Jones 30 corporations.  When you take these companies’ billions of shares outstanding from July 2008 using data from Value Line or even Yahoo Finance, you will find that these public stocks are owned 69% by insiders-institutions and leaving 31% for the outside general public.

The “global stock market awareness” of this 31 – 69 rule becomes very valuable for a new type of customer-owned corporation that will emerge based on this 31 - 69 rule.  When new customer-owners purchase everyday items like computers, clothes, TVs, cars, housing, health, education, etc, they will gain instant cash value of 2, 3, 5, 11, 20, and even 40 times more just for purchasing from a new type of corporation where the 31 – 69 rule will apply.

The use of large numbers is an important characteristic about the two examples described above.  Large numbers – very large numbers – are being used here to reveal the 31 – 69 rule.  When things and events are viewed from a single-event point of view, then the single behaviors are difficult to predict. 

 

But when things and events are viewed from a large numbers point of view or a “bird’s eye view,” then it is easier to see things and events and make simple predictions.

My prediction for 2009-2010 is that large numbers of participants, starting with 14 million customers-owners registered with 235 specially designed web sites, will gain 2, 3, 5, 11, 20, and even 40 times more value from their purchases on everyday items and put the excess value (a.k.a. savings) in their bank accounts.

This excess value starts with new companies using the 31 – 69 rule.  Let me describe how.

Let’s say that you are a startup business called Cell-Phone Co. with a new software package for cell phone users.  This is only an example – any product or service will obtain the same results.  Let’s also assume your corporation is registered in a country with a low tax rate or no tax rate at all.

You went through all of the 20th century motions of obtaining cash for your business, family and friends, angel investors; VC, Investment Bankers and Initial Public Offering or IPO and you retained 31% of your company.  Let’s also assume that your company is listed for trading on one of the top ten money center stock exchanges.

The base formula that accountants use to calculate your newly listed company’s stock price is revenue times gross margins (earnings) divided by shares outstanding divided by a rate of return. The formula looks like this: x=(a*b)/c.

Now let’s say that your new company has 500,000 sales at $21.  Therefore your revenue is $10.5 million. Since you are incorporated in a low or non-corporate taxing authority – a minor point for the revelation of this 31 – 69 secret – your gross margins - earnings are 63% and you have 61 million shares outstanding and the prevailing rate of return is 3%.

We can now calculate a share price by multiplying $10.5 million in revenue times .63 gross margins-earnings divided by 61 million shares to obtain earnings per share of $.1084. Next we divided these $.1084 earnings per share by return on investment of .03 for as stock price of $3.61.

Since there are 61 million shares outstanding then the capitalization or total market value of your new software company is 61 million shares times $3.61 stock price for $220.5 million. Your 31% ownership of this $220.5 million is $68.355 million.

Not bad for a year’s work!  Or is it?  How did you obtained these 500,000 customers?  How much marketing, advertising, and sales cost and headaches did you experience?  How many headaches and delays did you experience with angel investors, venture capitalists, family and friends?

Now suppose you know about the 31 – 69 rule and your company is the new type of corporation that will emerge daily in 2009-2010 with $1 million funding, automatically provided by your customers.  Please stay with this simple logic because your economic worries will come to an end in the near future.  How?  Just by you belonging to a special economic social network where your selective shopping makes you automatic part-owners of new companies.

Since the 31 – 69 rule applies to large numbers, we need an optimum number of customers for these new corporations.  This number is 14 million customers.  When these 14 million customers purchase any product or service from Cell-Phone Co., they will reap multiple values of 2, 3, 5, 11, 20, and even 40 times the purchase prices can be created using this 31 – 69 rule.

Using the same numerical facts as above but instead of having just 500,000 sales your company has 14 million guaranteed sales at the same $21 price and you retain the same 31%.

Why are these 14 million sales guaranteed?  For the simple reason that these 14 million customers own 69% of Cell-Phone Co.  These customers are preassembled for the express purpose of gaining multiple value from their purchases.  The number of shares authorized is still 61 million. So 69% times 61 million shares divided by 14 million preassembled customers is about 3 shares each.

How are these 14 million sales guaranteed using the 31 – 69 rule?   14 million sales times $21 is $2.94 billion in revenue.  Multiply revenue by .63 gross margins-earnings and divide by 61 million shares for earnings per share of $3.036.  Then divide earnings per share by ROI of .03 to get a stock price of $101.21.

Yes this is a mouth full but the information is here for you to read as many times as necessary in preparation for your economic future.

Your 14 million preassembled customers paid $21 for your software and you gave them 3 free shares each immediately after purchase. 3 Shares time $101.21 is $303.63 or 14.4 times the purchase price for each of 14 million customers.

Do you see this 31 – 69 rule here? The startup owner owns 31% of the new corporation and 14 million preassembled customers own 69%.

This is new and has never been done before!  Do you see this?  The only thing that is being done here is changing the ownership percentages around from 31% going to the few, to 69% going to the many.  This change favors the customer who created the value for this company by providing the energy called revenue by their purchasing of this example software.

If this owner did not give 69% to the customers, then guess who gets it free!   The venture capitalist, the investment bankers, the managers and employees through free stock options.  When I discussed this with the president of an American banker he asked me, “why do you want to give the customers free shares?”  But when I discussed this with an Asian Banker, he stated, “Wow, this is new.”

In case you missed what happened here, let’s look at the implications.  The price of your customer’s software package is known in advance of customer purchases and their purchase price is less than the value of their shares.  This is possible just by applying the 31 – 69 rule and giving 3 free shares to 14 million preassembled customers each.

Will customers put up $21 and get back $303.63 instantly in their stock account?  Yes they will.  Here are more examples of what the customer-owners can do:

•    Buy a $1,100 green laptop computer and get $5,700 in instant equity
•    Buy a $100 green cell phone and get $1,038 in instant equity
•    Buy a $1,200 year supply of healthy food and get $5,500 in instant equity
•    Buy a Flat Panel HDTV for $400 and get $2,076 in instant equity
•    Buy a global medical insurance for  $3,300 and get $17,064 in instant equity
•    Buy a $65 ‘solar-lantern’ and get $337 in instant equity
•    Buy a $100 new 16 films annual contract and get $1,147.53 in instant equity

This multiple value creation is not an isolated event here.  The 31 – 69 rule applies to large numbers.  Many new customer-centered corporations will start to use this 31 – 69 rule for the selfish reasons that the 31% owners get more value and the 69% customer-owners get more value.  This is a win-win situation inside a new economic reality.

The second point is that under the old 20th century model the new software company owner’s 31%  is $68.355 million. But under the 31 – 69 rule the new owners’ value is $2.94 billion times 31% for $911.4 million or 13.33 times more!

Multiple value obtained just by you and your customers knowing the 31 – 69 rule and “sharing” or “allocating” 69% of the ownership of your company to your customers free.

The concept is called Product Equity Value©.

You can register and help to accelerate the assembly of 14 million customer-owners and take control and advantage of your economic future at http://www.b2bvp.com.

 

B2bvp's are customer-centered organizations 100% owned by the customers.  Startup companies coming out of these organizations are funded daily with $1 million.  These startups are owned 31% by the partner(s) who conceived and developed the idea.  69% is owned by the partner-customers.

If you have a 1,000 or more members already, email me and lets discuss how you can own 1 of 235 b2bvp’s merely for the conversion cost to fit the location and or language.  The new b2bvp organizations begin to produce revenue for the owners immediately from the $30 one-time registration fees.


Paul Katchings
Business Engineer
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Last Updated ( Saturday, 22 October 2011 )
 
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