{"id":215745,"date":"2024-12-02T13:09:47","date_gmt":"2024-12-02T18:09:47","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=215745"},"modified":"2024-12-02T13:09:10","modified_gmt":"2024-12-02T18:09:10","slug":"estimize-part-two-the-wisdom-of-give-to-get","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/ibkr-quant-news\/estimize-part-two-the-wisdom-of-give-to-get\/","title":{"rendered":"Estimize Part Two: The Wisdom of Give-to-Get"},"content":{"rendered":"\n<p><em>Part One of this series examines the concept of the <a href=\"https:\/\/www.interactivebrokers.com\/campus\/ibkr-quant-news\/estimize-part-one-the-wisdom-of-crowdsourcing\/\">Wisdom of Crowdsourcing<\/a><\/em><\/p>\n\n\n\n<p>In support of his crowd-sourced market intelligence model, Vinesh Jha, founder and CEO of ExtractAlpha and Estimize, cites Galton&#8217;s ox theory, the foundational experiment that established the concept of the &#8216;wisdom of crowds.&#8217; In 1907, England&#8217;s Sir Francis Galton asked 787 villagers to guess the weight of an ox. None of them got the right answer, but when Galton averaged their guesses, the estimate was nearly perfect.<\/p>\n\n\n\n<p>&#8220;It&#8217;s really like that. If you average out everyone&#8217;s viewpoints \u2013 including non-professionals &#8212; you get to something better than you would if you just took a small group of professionals.&#8221;<\/p>\n\n\n\n<p>Estimize uses what Jha calls a &#8220;give-to-get&#8221; model.<\/p>\n\n\n\n<p>&#8220;You don&#8217;t get to see what the rest of the crowd thinks about a company until you give your own estimate. You say 65 cents, hit submit, then see what the rest of the crowd thinks. Then you can rethink and revise your estimate as much as you like.&#8221;<\/p>\n\n\n\n<p>Jha says the database has had roughly 120,000 contributors over the company&#8217;s full history, though in a given quarter the count is anywhere from three to five thousand.<\/p>\n\n\n\n<p>&#8220;We do a lot of data quality assessments, so we don&#8217;t have people putting in random numbers. We also measure everyone&#8217;s track record. If you&#8217;ve been contributing estimates for, say, Apple for the last eight years, we know if you&#8217;re good or not, and we put more weight on your numbers. That gives us a smarter estimate, what we call the &#8216;Select Consensus.&#8217; That&#8217;s another incentive: if you want to be part of it, you can&#8217;t be lazy. You have to do your homework. When people feel they&#8217;re part of something, it&#8217;s self-affirming. It encourages them.&#8221;<\/p>\n\n\n\n<p>On average, the Select Consensus has been closer to reported company results roughly 70% of the time compared to sell-side-only estimates.<\/p>\n\n\n\n<p>&#8220;It&#8217;s even better in the quarters with more contributors.&#8221;<\/p>\n\n\n\n<p>The company monetizes its research by selling refined sets to quant hedge funds, who use it as part of their own research.<\/p>\n\n\n\n<p>Contributors get to decide whether or not to reveal their backgrounds, but Estimize believes that, in addition to traders and investors, they have a healthy number of professionals \u2013 buy and sell-side \u2013 along with independent researchers who contribute prices on companies in industries they&#8217;re particularly familiar with. There are also students and academics who want the numbers for their studies.<\/p>\n\n\n\n<p>&#8220;When contributors sign up, we give them various categories they can fill in. We get anonymous analysts from buy and sell-side firms who don&#8217;t want to bother getting their participation cleared through compliance. We don&#8217;t formally check their backgrounds, but when you aggregate that much data, you look at averages and get a fairly clear sense of the composition. Combining all these different sources is a big part of our value.&#8221;<\/p>\n\n\n\n<p>In terms of reach and business development, Interactive Brokers is Estimize&#8217;s most significant partner.<\/p>\n\n\n\n<p>&#8220;Initially, we just delivered a data feed, which IBKR clients could subscribe to, to get our consensus estimates. But now, with your Discovery area, it&#8217;s a much more substantial integration. The most valuable parts of our website are integrated entirely into your portal.&#8221;<\/p>\n\n\n\n<p>IBKR clients can add their own estimates from within the platform.<\/p>\n\n\n\n<p>&#8220;That data gets pulled into our backend through an API and added to our estimate pool. The advantage for IBKR clients is they&#8217;re not part of our give-to-get model. Anyone on the platform can see our estimates without giving their own.<\/p>\n\n\n\n<p>But our special value to institutions and active traders is the premium content we offer by subscription.&#8221;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"741\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Make-EPS-Estimate-2-1100x741.jpg\" alt=\"Estimize\" class=\"wp-image-215788 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Make-EPS-Estimate-2-1100x741.jpg 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Make-EPS-Estimate-2-700x472.jpg 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Make-EPS-Estimate-2-300x202.jpg 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Make-EPS-Estimate-2-768x518.jpg 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Make-EPS-Estimate-2-1536x1035.jpg 1536w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Make-EPS-Estimate-2-2048x1380.jpg 2048w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/741;\" \/><\/figure>\n\n\n\n<p>Source: Estimize screenshots from Discovery<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"697\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Earnings-Calendar-1100x697.png\" alt=\"\" class=\"wp-image-215786 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Earnings-Calendar-1100x697.png 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Earnings-Calendar-700x443.png 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Earnings-Calendar-300x190.png 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Earnings-Calendar-768x487.png 768w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Earnings-Calendar-1536x973.png 1536w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/12\/IB-Estimize-Earnings-Calendar-2048x1297.png 2048w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/697;\" \/><\/figure>\n\n\n\n<p>Source: Estimize screenshots from Discovery<\/p>\n\n\n\n<p>Stay tuned for Part III: Jha on the impact and potential of AI.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>That data gets pulled into our backend through an API and added to our estimate pool. The advantage for IBKR clients is they\u2019re not part of our give-to-get model.<\/p>\n","protected":false},"author":1261,"featured_media":215763,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[339,338,341],"tags":[3803,864,806,1006],"contributors-categories":[13576],"class_list":{"0":"post-215745","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-data-science","8":"category-ibkr-quant-news","9":"category-quant-development","10":"tag-alternative-data","11":"tag-api","12":"tag-data-science","13":"tag-fintech","14":"contributors-categories-interactive-brokers"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Estimize Part Two: The Wisdom of Give-to-Get | IBKR Quant<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/posts\/215745\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Estimize Part Two: The Wisdom of Give-to-Get\" \/>\n<meta property=\"og:description\" content=\"That data gets pulled into our backend through an API and added to our estimate pool. The advantage for IBKR clients is they\u2019re not part of our give-to-get model.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.interactivebrokers.com\/campus\/ibkr-quant-news\/estimize-part-two-the-wisdom-of-give-to-get\/\" \/>\n<meta property=\"og:site_name\" content=\"IBKR Campus US\" \/>\n<meta property=\"article:published_time\" content=\"2024-12-02T18:09:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/11\/api-sphere-blue.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"563\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Burt Shulman\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Burt Shulman\" \/>\n\t<meta name=\"twitter:label2\" 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