Be sensitive to numbers is what I learnt most from running a business. Numbers have magic power to tell a story more complete, and more vivid than an article, if you know how to read numbers. Without the skill to read numbers (do we call it analytical skills), people just see numbers, instead of the story it tells.
When we watched the CBN (China Business Network, or in Chinese, called No. 1 Finance) channel for business news, there is a piece about Yahoo! lost 10.5 billion USD in market cap in one day.
I was shocked.
I am happy that I fell shocked. I couldn’t feel that before. I will tell you why I felt shocked later.
Too Big, or Too Small Numbers Means Nothing
Many people, including me, feel numbers too big means nothing. People get clear sense of what 1,000 RMB means, but lost the sense of what 10 billion, 200 billion, or even more means. There is no difference.
When people say some company is losing 10 million RMB this quarter, sometimes, I just have no idea. Should I be worried about the business or not? Many times, I found my reaction is different from what the writer of the news feel about.
Back to Yahoo! Numbers
Numbers are valuable only when put into comparison, either vertical comparison or historic comparison.
What does 10.5 billion USD means? If I compare it to my own world, it does not make sense. For example, it may mean 1.05 million cars, or 300 billion ice cream. But what this is tell you? The only thing it tells is, it is a big number. I know that.
I remember Yahoo!’s market cap was something around 50 billion USD (to be exact, 45 B). 10 billion means 25% drop in stock price. What does that mean? Also, it may also mean the market cap now is very similar with eBay… Many things to think about.
Number is One Language
Barry Johnson said:
Before I came to Shanghai, I thought, if I could say Chinese, I can talk about one fourth of people in the world. If I can speak English, I can talk to half of the world. If I know the language of Finance, I can talk to the whole world
Finance he said is pretty much based on numbers.
I would agree, number is a language. It is simpler than English – just has ten to twenty characters:
But it can tell story. The skill to write in number, and to read numbers is an important skill to manage in business world. I am trying hard.