We hold some very core beliefs at Estimize which provide the underlying guidance and drive for every decision we make, and tell the story of why we’ve committed so much effort to this endeavor. Some of these beliefs are a drastic departure from the philosophies of what we believe was a stale and broken system. Some of these beliefs are orthogonal to the way that some market participants have previously thought about the sharing of information. We believe they represent a big step in the right direction for the financial ecosystem and provide more value to a greater number of people without being detrimental to any individual or firm.
1. Markets are not zero sum games, and the sharing of information amongst market participants does not disadvantage any individual participant. We built an important layer of pseudonymity into Estimize in order to preserve the ability for every analyst to share his views without being disadvantaged by other participants gaming them or their firm. Market participants are better able to manage risk when there is more transparency into the distribution and consensus of expectations.
2. There are inherent biases in sell side estimate data sets given the specific incentive structure of this group of analysts. These incentive structures create a herding mentality within the group and a tendency to skew estimates in favor of higher earnings beat rates for the companies they cover. It also disincentivizes aggressive estimates which fall well outside of the group. There is little incentive to be right when everyone is wrong, while there are significant disincentives to being very wrong when everyone else is right. Sell-side analyst estimates are an important part of the overall distribution of views, but only represent one part of the complete picture.
3. Crowdsourcing works. As the number of independent views, and the diversity of individuals increases, the accuracy and representativeness of the consensus rises. When individuals with varied informational backgrouounds and different models make projections, they might not be individually more accurate than the experts in the field, but their errors cancel and the crowd collectively tends to be wiser than the experts in the echo-chamber. We built Estimize as an open platform because we believe that all opinions which are submitted in good faith are valid and should be considered on an equal playing field. That is not to say that all opinions are equal in quality- far from it- but they all deserve to be seen and accounted for. Estimize is a structured data platform, and while we do provide for the ability to share analysis along with a numeric estimate, it is the validity of the estimate which is paramount to the data set, not the rationale behind it.
4. Your identity is nowhere near as important as the quality and accuracy of the analysis you share. Insightful viewpoints and amazing talent can be found in many different places - from graduate students to corporate finance professionals, from senior hedge fund analysts to prop desk traders. We make no value judgement on this factor, as we believe in data and statistics, not in the title on someone’s door. This dovetails with our strict policy on privacy. Your personally identifying information will never be shared on or off the platform with any third party without your explicit permission.
5. The core Estimize data set will always be open and free to everyone, regardless of an individual's contribution level. We don’t use a give-to-get model on the platform specifically for this reason, amongst others.
Thank you for supporting our vision and beliefs.
Founder and CEO of Estimize
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