Number Guessing Builds Intuition

A framework for developing business intuition by making educated guesses about company metrics and comparing them to actual numbers.

The Guessing Process

• Always guess before hearing any number to develop intuition
• When wrong, brain remembers and helps hone gut instinct
• Compare predictions to actuals to calibrate judgment

Example Case Study: EasyBrain (Gaming Company)

Predictions vs Actuals:

• Revenue
  • Prediction: $400M/year
  • Actual: $210M (2020)
• Profit
  • Prediction: $90M/year
  • Actual: $70M
• Acquisition Price
  • Prediction: $852M
  • Actual: $640M + $125M earnout ($765M total)
• Daily Active Users
  • Prediction: 25M
  • Actual: 12M across 15 games

Additional Context:

• Company had 750M total lifetime installs
• Operates 15 live games
• Acquired in February (3 months prior to discussion)
• Based in Cyprus

Key Takeaways

• Making predictions helps develop pattern recognition
• Even experienced entrepreneurs can be off by 2x on metrics
• Multiple metrics should be considered together (revenue, profit, users)
• Regular practice of prediction improves accuracy over time