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Guesstimates for Product Interviews, Tips to ask clarification Questions

Estimate the number of Hotels | Estimate the number of users of Google Drive

Estimate the number of hotels?

Clarification Questions

1. Understanding of Hotel
2. Are we also including Airbnb, lodges or only hotels? [Only Hotels]
3. Which geography are we talking about? [Bangalore]

Overall Approach

1. Define the area of Bangalore that will be around 600Km².
2. Since there is a national park, a lot of lakes, forests, and wetlands so assuming that around ~50% of the area is there where a potential hotel can reside.
3. So we are looking around an area of 300Km², we can divide this area into 3 parts according to the density, assuming a normal distribution of 25% highly dense for the hotel, 50% mid dense and the rest 25% is low dense.
4. For highly dense that is closely around 75km², for a Km² we can have 5 hotels, that is around 375 hotels.
5. For mid dense(150Km²), on an average, we have around 2.5Hotels per km², so for mid dense, it will be around 375 hotels
6. For low dense (75 Km²), on an average we would be having 0.5 Hotels per Km², so we will be having around 35 hotels. Total number of hotels in bangalore will be around ~800

Gut Check of the Final number

Bangalore's population is around 1.5 Crore and it is also a place where a lot of business travellers come and also people come for vacations, so safely we can assume that 1 out of every 1000 to be tourist. So we will be requiring hotels to accommodate around 15K people. On an average we can assume that a hotel will be having 20 rooms, so total number of rooms would be around 16K, if we take account the occupancy, this would be something close to what we have state.

Similar approach can be used to estimate the number of Restaurants, Tech parks, Children parks, Temples etc.

Estimate the number of users of Google Drive?

Clarification Questions

1. Understanding of Google Drive
2. Are we looking for personal users or enterprise users or overall users? [Both]
3. Are we looking for a particular geography or globally? [Global]
4. Are we looking for daily users or monthly users, or yearly users. [Daily]

Overall Approach

1. Total world population ~ 7.5 billion but there are some countries where google services are not allowed like Chine and some part of russia, so we can eliminate around 1.5 billion people from our set.
2. We are looking around 5 billion people and approximately people above 15 and less than 60 will be the one who are potential Google services users. So we are looking at around 60% of 5 billion that is ~ 3 billion people.
3. We can also think about the internet penetration around the globe, that is around 60%, so it will be ~ 1.8 billion people.
4. Since there are other services as well, like onedrive, dropbox etc. so we can assume the market share to be 70%, so around ~1.25 billion users of Google Drive

Similar approach can be used to calculate the guesstimates around Google Search, Youtube, Gmail etc.

Gut check of the final number

Given the kind of market penetration, it is okay to have 1 out of every 4 people all over the world using Google Drive.

Tips to think of clarification Questions

Sample Problem — Estimate the market size for product X

1. First, clarify your understanding of product X.
2. If there are multiple versions of product X (Youtube or Youtube Music), clarify which he is focusing on, if it has multiple platforms (android vs ios vs desktop)?
3. Clarify the understanding of the market size (in terms of volume or in terms of revenue)?
4. Clarify if it is for a particular geography or demography?
5. Finally, reiterate the goal which you want to achieve?

-- Technomanagers

Shailesh Sharma

The Product Guy | IIM Bangalore | IIT Kanpur | https://technomanagers101.blogspot.com/

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