A few strategies and tricks for estimation questions

Estimation questions, like many other PM interview questions, are tough because they are so open-ended. There are so many paths you can go down that it’s often difficult to get started. Additionally, it can be hard to explain your process or do quick whiteboard math. In this lesson, we’ll see some strategies to counteract all those problems.

Estimating the Unknowns

Most estimation questions will probably ask you to estimate something you have no clue about. Even after coming up with a structure and breaking down components, you might still struggle to come up with some final number. Here are some tips to break out of that rut in the interview. An example we will use throughout to demonstrate is “how many cars are there in Seattle?”

1. Estimate via proxy

An excellent method to estimate a number is to figure out another related and known number. Instead of trying to just guess how many cars in Seattle, we can hypothesize that the number of cars is directly related to the number of families in the area. This latter quantity is definitely easier to derive a number for. Eg: Self Driving Car

Once we have our related quantity, all we need to do is scale that number up or down. For example, if we assume there are 300,000 households in Seattle, it doesn’t mean there are 300,000 cars in Seattle. Each household may have, on average, 2 cars. So that means there are 300,000 households * 2 cars = 600,000 cars in Seattle.

2. Personal references

In essence, what any method to estimate is trying to do is relate some unknown quantity to some known quantity and move from there. One of the most fail-safe options is to relate the unknown quantity to some known quantity in your life. Working with the Seattle question again, you might know that 50% of your friends have cars. Working from here, you can estimate that 40–50% of Seattle is probably around the same age as your friend group. The other 50% of the population might have more or less (and this is up to you to assume). If you assume that the population of Seattle is somewhere around 1 million, this would give you at least 1 million * 50% of the population same age as friends * 50% of your friends have cars = 250,000 cars. Then, you would want to estimate how many cars the other 50% of Seattle has (the group not similar to your friends). Obviously, this doesn’t seem as accurate as it could be, but it’s a starting point. From here, you can adjust your assumptions.

3. Upper and lower bounds

When all else fails, start with the extremes. What’s the realistic upper and lower limit on quantity X? You can then whittle down these limits through the course of the interview, ending with a much narrower range or even a concrete number.

For example, we know that the extreme lower limit on cars in Seattle is 0 and the extreme upper limit is probably around the population size in Seattle — around 1 million. Even that can give you a pretty good estimate. If you take the average of the two numbers, you get 500,000 cars in Seattle. The actual number is closer to 430,000. But, in the interview, we don’t care about correctness as much as we care about your process. So definitely whittle down your range with relevant assumptions.

Ask clarifying questions -

  • What’s the market? US or global?
  • What’s the device for which we are estimating - mobile, desktop, etc.?

I’d like to lay down the high level data points that’ll be used to solve this -

  • Pixel devices sold in a year * avg amount of data a user would use * cost to google of storing that data

And then each of those can be broken down further as the next step.

Here’s a list of more estimation PM interview questions to practice. Try to test yourself

  • How many self-driving cars does it take to map the entire continental U.S. in one year?

  • Estimate the revenue of AirBnB
  • How many ping-pong balls fit in a helicopter?
  • How much money does it cost Google Photos to store unlimited data for its users?
  • How much laundry detergent is used every year, across the world?
  • How many locksmith shops are there in the US?
  • What’s the annual revenue of Pinterest?
  • How much do NYC Broadway plays make per show?
  • How many trees exist on Earth?
  • Estimate Dropbox’s annual financial costs.
  • How many earphones have been sold in the US in the past year?
  • How much does a schoolbus weigh?

For PM estimation questions, it’s useful to develop a bit of intuition about numbers, and to memorize a few key ones. Here’s a list that we recommend PM interviewees be familiar with.

Please keep in mind. This fact sheet is NOT meant to be memorized. Use this guide to get a general sense of numbers and sizes. This fact sheet is intentionally brief, since many PM interviewees often mistakenly spend wasted hours memorizing numbers, when it’s rarely relevant for the interview.

  • US population: 300M
  • California population: 40M
  • NYC population: 8.5M
  • World population: 7.5B
  • Size of continental US: 3M square miles
  • US households: 100M
  • Average people per household in the US: 3
  • Life expectancy: 80
  • Median household income: $50,000
  • Weight of an average car: 4000lbs

Technical

  • Amazon S3 Standard cost: $0.023 / GB / month
  • Average file size for a 90-min 720p movie: roughly 3.5GB
  • Average file size for a smartphone camera picture: roughly 3-5 MB
  • Average CTR for a search ad: 1.91%
  • Average landing page conversion rate: 2.35%
  • Average WiFi bandwidth: ~10Mbps
  • Cost of iPhone X: $999
  • Cost of Google Pixel 2: $650
  • Cost of Amazon Echo (2nd Gen): $85

General sense of revenue (2018)

  • Dropbox revenue: $1B
  • Airbnb revenue: $3B
  • Google revenue: $109B
  • Facebook revenue: $40B
  • Apple revenue: $215B
  • Amazon revenue: $180B
  • Netflix revenue: $12B
  • Google net income: $16.35 billion
  • Apple operating expenses: $7.65 billion

General sense of user populations

  • Netflix (Q1 2018): 125 million subscribers
  • Google Drive (August 2018): ~1 billion users
  • Uber (Jan 2018): 750,000 drivers in the US
  • Twitter (Q1 2018): 336 million monthly active users
  • Number of Americans that own a smart speaker (Jan 2018): 39 million
  • Number of products Amazon sells: over 12 million (not including Amazon marketplace sellers, which brings the total to 350 million)
  • Amazon Prime (2021): 200 million subscribers globally; 150 million in US; 10 million in India
  • Netflix (2021): **200 million subscribers globally

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