Guide to Estimation Questions in Product Management Interview
Aspiring or Experienced Product Managers often find themselves facing a unique challenge in interviews — the estimation question.
Estimation questions are an integral part of product manager interviews, challenging candidates to showcase their analytical and problem-solving skills.
Whether you’re an aspiring product manager aiming to break into the field or an experienced professional looking to advance your career, mastering estimation questions is crucial.
This comprehensive guide provides a step-by-step approach to tackling estimation questions effectively.
Understanding the Importance of Estimation:
Estimation is a fundamental skill for product managers as it demonstrates your ability to break down complex problems, allocate resources efficiently, and make informed decisions. From project timelines to market sizing, product managers frequently encounter estimation scenarios in their roles.
For Aspiring PMs:
1. Establish a Structured Approach:
- Begin with a top-down approach to provide a high-level overview of the problem.
- Identify major components and progressively break them down into more granular details.
2. Leverage Analogies:
- Draw parallels with familiar situations to make the estimation process more relatable.
- Analogies can help bridge the gap between limited experience and the ability to make informed estimations.
3. Emphasize Problem Solving:
- Focus on demonstrating problem-solving skills rather than aiming for pinpoint accuracy.
- Interviewers are often more interested in your thought process and approach to problem-solving.
For Experienced PMs:
1. Leverage Past Experiences:
- Reference your experience in similar projects to provide context for your estimates.
- Showcase your ability to learn from past experiences and apply lessons to new challenges.
2. Incorporate Data and Analytics:
- Utilize data-driven approaches whenever possible.
- Leverage historical data, market research, or any relevant metrics to support your estimations.
3. Acknowledge Uncertainty:
- Experienced PMs should be comfortable acknowledging uncertainties and mitigating risks in their estimates.
- Discuss how you would adapt your estimation as more information becomes available.
General Strategies for All:
1. Communication is Key:
- Clearly articulate your thought process as you approach the estimation question.
- Engage the interviewer by explaining your assumptions and reasoning.
2. Use Frameworks Wisely:
- Be versatile in your application of estimation frameworks.
- Choose the framework that best fits the nature of the problem at hand, whether it’s a top-down, bottom-up, or parametric approach.
3. Collaborate with the Interviewer:
- Engage in a dialogue with the interviewer to seek clarification and demonstrate your ability to collaborate.
- Emphasize that estimation is often a collaborative effort involving input from various stakeholders.
Let’s take an example — Estimate the total number of Uber rides in a Metro City in India.
Clarifying questions and Assumptions -
Considering only Delhi NCR region, India
Calculating # no rides per day
Will consider all cab rides (Uber go, Sedan, premier, auto, bike, share, etc) but not food delivery rides
Approach: To come to a reasonable number I will user below equation
# number of Uber rides in Delhi NCR per day = #of uber users * avg. no of rides
Now I will calculate the number of uber users in the Delhi NCR region
The total population of Delhi NCR = 20M
Internet and smartphone users = ~50% so the remaining number is 10M
Assuming the target audience which might use online cab services is 60% which makes it 6M.
Assuming Uber and OLA being 2 major players in the NCR region with equal market share so uber’s market share is approximately 50% which implies 3M users of UBER in Delhi NCR
Now to calculate avg no of rides per day I will break Uber users into the following segments -
Power users = 10% of 3M = 0.3M and takes 10 rides per week making ~0.42 M rides per day
Daily users = 20% of 3M = 0.6M and takes 5 rides per week making ~0.42 M rides per day
Frequent users = 30% of 3M = 0.9M and takes 2 rides per week making ~0.25 M rides per day
Casual users = 20% of 3M = 0.6M and takes 1 ride per month making ~0.02 M rides per day
Rare users = 20% of 3M = 0.6M and takes 1 ride per quarter making ~0.007 M rides per day
Total Uber rides per day = Total no of rides by all different types of users
Total Uber rides in Delhi NCR per day is around 1.1 M rides
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