The Private Equity version of Moore's Law: a $3,600 investment should be worth $163 million... PDF Print E-mail
Written by Prof. Paul Douglas Katchings   
Thursday, 14 February 2013

The Private Equity version of Moore's Law: a $3,600 investment should be worth $163 million in 90 days.

Electronic device capabilities such as processing speed and memory size have been tied to Moore's law. Even the number of pixels in your digital camera have been tied to Moore's Law.


In 1971 the microprocessor had 2,300 transistors. In 2008 a microprocessor had 42 million transistors. With time, the number of transistors per chip has increased and the average cost of the transistor has dropped to fractions of fractions of a dollar.


Since Moore's law is true, why haven't we seen an increase in equity value resulting from smaller amounts of private equity investments in a shorter and predictable period of time? The obvious answer is the lack of visionary financial skills by private equity professionals.


When computer scientists and financial professionals read about using $3,600 to get $163 million, they don't see the 45,277-to-one effect of Moore's law in operation. In fact, most people using computers, smart cell phones and digital cameras have no idea of Moore's law and quite frankly they don't care.


But a few bold people reading this information have 163 million reasons to care.


A new business model


Since computer engineers have packed increasing numbers of transistors into smaller spaces and have pushed down technology costs for billions of people to afford cell phones, it seems logical that we can optimize a business model for a fixed number of customers to guarantee instant sales from a public company in 2013.


If there are 14 million people paying $100 a month for something and the delivery cost is 5% of revenue, then the earnings - 95% of revenue - produces a projected equity value of $712.5 billion. The average equity value produced by the 14 million people is $50,892 per person.


This average equity produced per person is straightforward. Optimizing the business model means taking this average equity value and pre-allocating it to customers and investors in such a way that the desired market value for the public company is achieved.


Here is an example. Allocate 46% ownership to 14 million people and 11% to 480 participants. How much equity does a person in the group of 480 have? Take 11% of $712.5 billion and divide it by 480. The answer is $163 million.


This is the new business model for new public companies.


The model is called Product Equity Value© (PEV)


A few private equity investors have the first opportunity to participate in bringing PEV into the global marketplace.


When the public company was invented, we did not have PEV, Moore's law, instant communications and computing technology. Today we have these things. This means we have immediate and 24/7 access to all the components and expertise needed to organize any public company just by how the ownership is shared.


We start with a bundled financial service that costs $100 a month for 14 million participants who are given 46% ownership in addition to what they buy with their $100 monthly purchasing. Their equity value guarantees their monthly purchases. Why? 46% of $712.5 billion divided by 14 million is $23,411 of equity which is much more than $100 of monthly expenditure. Their equity also produces $524 in annual dividends.


The PEV model is ready today for 12 to 48 Private Equity investors. Contact me at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it for your immediate participation.


Last Updated ( Wednesday, 20 February 2013 )
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