Estimation questions are common in product manager interviews at companies like Google, Amazon, and Facebook. For instance, your interviewer might ask, "How much revenue does YouTube generate every day?" These questions can feel really unsettling at first.
- How to answer estimation questions
- Example with answer: YouTube's daily revenue
- List of practice questions
- Cheat sheet
1. How to answer product manager estimation questions ↑
We recommend using a four-step approach to answer product estimation questions. Let's discuss each step one by one.
- Ask clarification questions
- Map out your calculations
- Round numbers and calculate
- Sense-check your results
Step one: Ask clarification questions
The first thing you should do is ask a few clarification questions to make sure that you know exactly what number you need to calculate.
For instance, let's imagine your interviewer asks: "How much money is spent on gas in the US every year?" Here are a few important clarification questions you would need to ask:
- Should we focus on gas consumption from road transportation only? Or also include home heating, air transportation, etc.?
- Should we focus on personal cars only? Or include consumption from commercial vehicles, too?
These questions are useful to make sure that you calculate exactly what your interviewer wants. In addition, they are also a great way to buy yourself some time. While your conscious brain asks these questions, your subconscious brain can start working on step two of the approach.
Step two: Map out your calculations
Once you know exactly what number you want to calculate, you then need to map the calculation steps to get to that number. Let's imagine we want to calculate the quantity of gas consumed by personal cars in the US.
Here is a step-by-step approach that you could use to get to that number:
- Calculate the number of personal cars in the US
- Calculate the consumption of an average personal car
- Calculate the total consumption in gallons and then dollars
If you struggle to find a starting point, an alternative approach is to begin from the number you want to calculate and draw an issue tree from top to bottom, as we have below. In addition, the advantage of this approach is that it will force you to be mutually exclusive and collectively exhaustive (MECE).
Both approaches are equally acceptable. But in both cases you should VALIDATE your approach with your interviewer by telling them the different calculations steps you are going to take BEFORE starting to calculate numbers (step three). This is important because it gives your interviewer a chance to rectify your course of action if they had another plan in mind.
Skipping this validation step is extremely risky because your interviewer might realize too late in the exercise that you are approaching the problem in a different way to what they wanted. In our experience it's almost impossible to recover from that situation.
Step three: Round numbers and calculate
Once you've agreed on an approach, it's time to start calculating. You will need various data points (e.g. number of miles driven by an average US driver each year) to get to your final estimate. In most cases your interviewer will ask you to make your own assumptions to get to the final number. But in some other cases they might share data with you.
When making assumptions it is vital that you pick simple numbers. For instance, you should use 350 days in a year instead of 365. You should assume that the average cost per gallon of gas is $3.00 instead of $2.50. Etc. Rounding numbers will make your calculations easier and decrease your likelihood of making a mistake.
In addition, you should talk out loud when doing calculations so that your interviewer can follow your thought process. Your interviewer is interested in what's going on in your head - not the final result.
Note: if you are looking for ways to become faster at mental math calculations we recommend reading our interview maths guide.
Step four: Sense-check your results
Most candidates stop talking at the end of step three. They look up and expect their interviewer to tell them if they got to the right result or not. This is a mistake. The best candidates sense-check their results and try to spot their own mistakes before telling their interviewer they are done.
Mental calculation errors happen frequently. If your interviewer spots a mistake in your calculations this will definitely play against you. But if you spot your own mistake you still have a chance.
Now that you know what technique to use to answer product estimation questions let's apply it to an example.
2. Example - Estimate YouTube's daily revenue ↑
Try answering the question below accurately and as fast as possible. Leave a comment at the bottom of the blog post with your answer. We will reply to every question in the comment section.
The key is to answer the question without seeing other people’s answers. To do so, scroll down directly to the bottom and leave your answer before reading other candidates’ proposals.
Try this question:
How much revenue does YouTube make per day?
You will find our proposed answer to the question below. Before taking a look at it, make sure you go to the bottom of the page and answer the question by yourself in the comments section. There are only so many opportunities to prepare for product manager estimation questions!
1. Ask clarification questions
Here are some clarification questions that immediately come to mind for this estimation question:
- Do we want to calculate all of YouTube's revenues? Or just advertising which is likely to be the main source?
- Does YouTube charge advertisers per 1,000 views or per click? Are we interested in YouTube's revenues globally or just the US?
Let's assume here that we want to calculate the advertising revenues ($) made by YouTube in the US only. And let's also assume that YouTube mainly charges advertisers per 1,000 views for simplicity.
2. Map out your calculations
We could estimate YouTube's daily revenues in the US by taking a three-step approach.
- Calculate the number of daily US YouTube users
- Calculate the number of advertising videos they view
- Calculate the corresponding revenue
In a real interview, you would need to lay out that approach to your interviewer and check that it works for them before starting your calculations.
3. Round numbers and calculate
Let's step through our approach:
1. Calculate the number of daily US YouTube users
- There are ~300m people in the US. Let's assume that the average life expectancy is 80 years old.
- We need to estimate how frequently each age group watches YouTube:
- 0 to 10 y.o.: does not watch
- 10 to 20 y.o.: every day
- 20 to 40 y.o.: every day
- 40 to 60 y.o.: 75% of days
- 60 to 80 y.o.: 50% of days
- We then need to calculate the number of users for each age group. 300m / 4 is 75m, and 300m / 8 is about 32m.
- 0 to 10 y.o.: 0
- 10 to 20 y.o.: every day = 100% x 300m / 8 = 32m
- 20 to 40 y.o.: every day = 100% x 300m / 4 = 75m
- 40 to 60 y.o.: 75% of days = 75% x 75m = 55m
- 60 to 80 y.o.: 50% of days = 50% x 75m = 32m
- Total = 32 + 75 + 55 + 32 = 195m
- The number of daily YouTube users is therefore approximately 200m in the US
In an actual interview it's a great idea to justify the assumptions you make by relating them to your personal experience. For instance here you could say, "I'm going to assume that the 40 to 60 y.o. group watches YouTube 75% of days as this is roughly how often my parents watch it. And I'll assume 50% for the 60 to 80 y.o. group, as this is how often my grandparents watch it."
2. Calculate the total number of advertising videos viewed
Let's now estimate the total number of ad views per day on YouTube.
- The number of videos viewed by users probably varies quite dramatically. Users who stream music on YouTube probably view 20 or more videos on an average day. Other users might just watch a single video. So, let's assume the average is ten videos per day. We've got 200m users, so that's 2bn views per day.
- YouTube does not systematically play an ad at the beginning of a video. Based on our experience, let's assume only 50% of videos viewed start with an ad. So, that's 1bn advertising video views per day.
3. Calculate the corresponding revenue
- Assuming YouTube charges advertisers $10 per 1,000 views, the total revenues it generates in a day is therefore: 1bn x $10 / 1,000 = $10m
We therefore estimate that YouTube generates about $10m per day in ad revenues in the US only.
4. Sense-check your results
As mentioned above, it is crucial that you spend some time sense-checking your results. In practice, you should check your intermediate results as you progress through the estimation and your final result at the end. But here we are checking all the numbers in one place so it's easier for you to keep track of what we are doing.
- Intermediate result: If 200m people watch YouTube every day this means about 2/3rds of the country watches at least a video on any given day. That sounds reasonable.
- Final result: Similarly, if YouTube generates $10m per day, that means it generages $3.65bn per year. Again, this is in the right order of magnitude given Google made about $120bn in ad revenue across all geographies in 2018.
Note: it's a good idea to learn some numbers for estimation questions such as the cost per thousand views in advertising ($10) or Google's ad revenues in 2018 ($120bn). We've put together a cheat sheet at the bottom of this article to get you started with this.
How did you do?
Did you find the right answer? Leave a comment below with your thoughts and questions, and we will answer them promptly.
3. List of practice questions ↑
In addition, here are also a few more product estimation questions that were asked in PM interviews at Google according to data from Glassdoor.com. If you have any questions about them or would like feedback on how to answer them you can leave your answer for one of the questions in the comments section below and our team will get back to you.
- What is the market size for driverless cars in 2025?
- What is the market size for toilet paper in the US?
- What is the storage space required to host all images on Google Street View?
- What is the required Internet bandwidth for an average college campus?
- How many golf balls can you fit into a Boeing 777?
- How many restaurant reviews are written on Google Reviews every month?
- How many kindergarten teachers are there in the US?
- How many millennials own homes in the US?
- How much ad revenue does GMail make every year?
- How many computers does Google own?
- How many dentists are there in New York?
- How many bicycles do you need to start a bike sharing service in New York?
- How many passengers are in the air on a plane at any given time in the US?
- What is the weight of the Empire State building?
- What is the weight of a school bus?
- You are opening a new Walmart store. How many cash registers do you need?
- How much money is spent on gas in the US every year?
If you are practicing for PM interviews, here are some other question types you should prepare for:
- Behavioral questions
- Product design questions
- Product improvement questions
- Strategy questions
- Metric questions
4. Estimation questions cheat sheet ↑
Finally, it's useful to memorise some common assumptions, such as population and life expectancy, as they will often come up in estimation questions. We've created a cheat sheet with socio-economic data, advertising data, and some company information below. You can download the slides by simply clicking this link.
If you have any questions about product management interviews, do not hesitate to ask them below and we will be more than happy to answer them. All questions are good questions, so go ahead!Keep reading: product manager interview articles