💁 Tips to ace guesstimates in PM interviews
This week, we're diving into how to effectively solve guesstimates in product interviews!
Guesstimate questions, favourites in interviews at top consulting firms like McKinsey, BCG, and Bain, are more than just intellectual exercises. Estimating the number of golf balls fitting in an A380, for instance, is a test of structured thinking - a vital skill in both consulting and product management. These questions help interviewers gauge a candidate's ability to analyse and solve complex problems, a key indicator of their potential in strategic roles.
Tech giants such as Google, LinkedIn, Microsoft, and Meta have started to integrate guesstimate questions as a staple in their Product Management interview process. Here are some insightful tips to help you confidently navigate through these guesstimate challenges.
Clarify the Question
Approach: Ensure you fully understand the question, asking for clarifications if necessary. Mistake to Avoid: Starting your analysis without complete understanding.
Break Down the Problem
Approach: Segment the problem into smaller, manageable parts.
Mistake to Avoid: Attempting to solve the problem without a structured breakdown.
Make and Justify Reasonable Assumptions
Approach: Base your calculations on logical assumptions and articulate the reasoning behind each. Always state your reasons for specific assumptions. This demonstrates your thought process and understanding of the market or problem context.
Mistake to Avoid: Making assumptions without providing a rationale.
4. Choose Your Approach
Approach: Decide on a top-down or bottom-up approach based on the nature of the question.
Tip: Use top-down for market-sizing or large-scale estimations (e.g., estimating the total market value of laptops in India) and bottom-up for unit-level or granular estimations (e.g., estimating sales based on individual stores or regions).
5. Stay Organised
Approach: Maintain clarity in your calculations and thought process.
Mistake to Avoid: Presenting a disorganised or unclear line of reasoning.
6. Review and Sense-Check
Approach: Evaluate your final estimate to ensure it's practical and reasonable.
Mistake to Avoid: Overlooking the need to cross-check the final estimate against real-world data or common sense.
Example: Estimating the Number of EV 2-Wheeler Users in India 🛵
Clarify: Confirm the specifics such as the timeframe and the definition of an 'EV 2-wheeler user'. Break Down: Examine factors such as the total population, demographic segmentation, and EV adoption rates.
Assumptions: Assume 20% of India's population falls into the demographic likely to use 2-wheelers. This is based on the age group and income levels suited for 2-wheeler use.
Assume 5% of this demographic is using or likely to adopt EVs, considering the growing awareness and government incentives for EVs.
Approach: Apply a top-down analysis, starting from the total population to the specific user base. Organize: Clearly lay out each calculation step and assumption.
Review: Ensure the final estimate is realistic in the context of India's market size and consumer trends.
Using these assumptions, the calculation would be 1.3 billion (total population) * 20% (target demographic for 2-wheelers) * 5% (EV adoption rate) = 13 million EV 2-wheeler users.
Closing Thoughts
In PM interviews, your approach to guesstimates reveals much about your problem-solving style and analytical depth, and it often matters more than the accuracy of your answer. We hope this has provided you with solid takeaways for approaching guesstimates in PM interviews
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That’s all for today, folks! We hope you enjoyed this week’s newsletter. 🤗
Until next week, keep learning and growing! 👋