Mary Meeker Fixes More Than Her Math In YouTube Report
from the number-massage dept
Last week, Morgan Stanley internet analyst Mary Meeker was embarrassed when it was revealed that a math mistake on her part caused her to vastly overstate (by a factor of 1000x) the revenue potential from YouTube’s new ad overlay system. After having her mistake pointed out to her by none other than Henry Blodget, Meeker went back and fixed the report. But she did more than just correct the math. She also tweaked some of her original assumptions so as to boost the significance of the new advertising scheme. Whereas she originally predicted that ads would be shown on approximately 1% of streams, that number has now been boosted to yield a greater revenue impact. Meeker’s new model now has the company garnering an additional $75-$189 million in net revenue over the coming year, as compared to the $720,000 that her original model predicted. This whole fiasco is quite revealing about the way Wall Street analysts sometimes operate. Rather than start out with a fixed set of assumptions and then figuring out what that will result in, they come up with an end result and then figure out what reasonable assumptions will get them there. While we’re sure that this sort of thing happens all the time, it’s rare to get such a stark glimpse into the way it happens.
Filed Under: mary meeker
Companies: youtube
Comments on “Mary Meeker Fixes More Than Her Math In YouTube Report”
They Teach it in Business Schools
Having recently completed a business degree, I can attest that everybody does this… in class projects. Perhaps, Mary picked up the number skills at Cornell University (her MBA alma mater).
P.S. Never mind massaging the numbers, but not knowing the definition of CPM is puzzling, especially considering Mary has followed the Internet sector since 1993.
Re: They Teach it in Business Schools
That sorta explains what happened during the 90s. =)
Never Ass-ume !
Good girl,
Ya show the true meaning of never to ass-ume !
She must be buy-side
Clearly she wants to tout anything Google — it was Morgan Stanley (along with Credit Suisse) which underwrote the GOOG stock offering. Fund managers and their aides are notorious for this sort of goal-seeking.
It is always better to know the end
result that is expected.
CPAs, Engineers, Architect, Lawyers all know this.
You tell them what the answer is and they adjust the future reality to meet the answer. We are all molders and manipulators of reality to meet future desires. Some are better than others. The good ones get their services hired out to others.
other possibilities, too
Without denying that the tweaking goes on, there is another possibility as well. Having worked on models such as this, I can tell you that the assumptions are rarely all one’s own. What usually happens is that you present your model to umpteen people who rank more highly than you in your organization, and then they argue and discuss the assumptions and eventually tell you what changes need to be made. After you do that you go through that process again, sometimes ad infinitum or until your deadline arrives. It is quite possible that the flak she got for her first bungle also generated a number of criticisms of her assumptions from within and without that required her to change them.
"Tweaking"
This is tweaking… but there is a reason for it in most cases. In business, executives want to meet a target. Their target is that end number. 89 million, let’s say. So the executive says to the accountant… “What do we have to do to make that 89 million?” Then the tweaking begins.
We can charge our customers x per impression with y impressions per day.
ANALysts numbers
Are always pulled out their rear to make something look good so they can make money off suckers buying into it.
meeker morgan stanley
They could be trying to justify the youtube acquisition as MS probably issued the fairness opion for Google.
Hindsight !
Typically you would have variables and then you would put value to those variables to come up with a number. This is a classic case where you had a result and you computed the value of the variables.
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