Interviewers ask estimation interview questions to evaluate your quantitative and problem-solving skills. They’d like to see if you are able to do quick math and calculations to come up with a reasonable estimate on the size of an opportunity, potential impact of a project, cost of a project, etc.
To answer an estimation interview question you will have to make a few assumptions along the way. Make sure you communicate your assumptions clearly. You can also ask the interviewer if your assumptions are on track and ask for the interviewer’s feedback.
Here is how you can answer an estimation interview question.
- Clarify the scope of the question
First, you want to make sure that the question is clearly defined and if it is not, ask for clarification.
For example, if you are asked to estimate the bandwidth for Gmail, you’d like to make sure the time period for estimating the bandwidth (e.g. one day vs. one month vs. one year) is clear. Let’s assume that we are estimating the daily bandwidth for Gmail.
- Create the main equation
You will need a main equation that will help you calculate the estimated number that you are looking for. This equitation will be the foundation of your estimation.
Going back to our Gmail example, we can apply the following equation:
The bandwidth for Gmail = number of Gmail accounts x average daily bandwidth per Gmail account
- Break down the unknowns in the equation into simpler equations
When you have unknown inputs in the equation, you will need to demonstrate how you will find the unknown numbers. Guessing is not enough. The way to find an unknown is to create a new reasonable equation.
In the example above our unknowns are the number of Gmail accounts and the average bandwidth per Gmail account.
To find the number of Gmail accounts, we need a new equation:
The number of Gmail accounts = The number of Gmail users x Average number of Gmail accounts per user
You can take a similar approach to develop a new equation for the bandwidth per Gmail account.
Average daily bandwidth per Gmail account = # emails viewed or sent per day x average bandwidth per email sent or received
You will have to continue breaking unknowns into simpler equations until you are able to replace the unknowns with reasonable assumptions:
- Total number of Gmail users can be assumed to be the total number of American Gmail users multiplied by 5. The number 5 is certainly an assumption but a reasonable one. I considered the population of Americans with access to internet (300 million) vs. the population of the world with access to the internet (3 billion). Given higher internet speed and penetration of Gmail in the U.S., I have assumed the penetration rate of Gmail in the rest of 3 billion is half of that of the U.S. This gives me a multiplier of 5 for estimating the total number of Gmail users around the world. Notice that while this number might not be accurate, there is some logic behind it and I can explain my logic to the interviewer.
- We can assume that there are a total of 100 million Gmail users in the U.S. This number is reasonable when you consider that many people in age groups of 0 to 16 and over 60 do not have an email account and some have other email services such as Hotmail and Yahoo. You can do a more accurate estimation here by guessing the probability that a person in a particular age group has Gmail and multiple that percentage by the population in that age groups. Add number of Gmail users in each age group and you will have the total number of Gmail users in America.
- We can also assume that the total number of Gmail accounts per user is 1.5 to account for the fact that some users have multiple accounts and also have corporate accounts that are using Gmail.
- We can assume that one person reviews or sends 5 emails per day. This is an assumption and should be communicated to the interviewer.
- Finally, assume that each email is about 1MB on average. This is also an assumption and must be communicated to the interviewer. Be ready to explain your justification behind whatever number you select (e.g. what % of emails have attachments? how large are the attachments?)
By breaking down the equation step by step, you have finally come to an equation that can be calculated with assumptions.
- Calculate the numbers
After explaining the unknowns and your logic for how you will calculate them, you should retrace your steps and replace the unknowns with your assumptions and calculated numbers until you reach a number that is the estimated number that you were tasked to find.
- Do a sanity check
A sanity check is the best way to ensure that your results make sense. Ask yourself, is this final estimation logical? For example, if your estimate for Gmail bandwidth came out to be 100GB, it’s probably wrong and you will have to double check your calculations and your assumptions.
I have gathered a list of product manager estimation interview questions for you to practice.