How about a nice massage to start off your morning? Sorry, no scented oils or sounds of crashing waves here. Instead, we’re talking about the suggestion by TechDirt that Morgan Stanley internet analyst Mary Meeker massaged her YouTube calculations in order to fix a previous mistake.
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.
Henry Blodget worked out Morgan Stanley’s YouTube numbers based on the original calculation and the new fudged numbers.
Yesterday: $720 million. ($720 thousand using same assumptions and correct math)
Today: $75 – $189 million (using new assumptions)
Meeker is likely not alone in this practice. If you had anonymous interviews with other analysts, they’d probably tell you they’ve practiced similar number massaging.
I’m not going to waive my finger at Meeker and admonish her for the debacle – she was just unlucky to have been caught out. Instead, let this be a cautionary tale to all of us that rely on estimates and predictions from research companies and analysts. These are just predictions and the numbers can vary depending on the way the wind is blowing that day.