Guesstimate for Uber Product Management Interview [Uber Product Interview Experience]

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1. Estimate the market size for driverless cars in the USA by 2030.

Interviewer: Estimate the market size for driverless cars in the USA by 2030.

Shailesh: Ok, before I start solving, I would like to seek some clarification. When we are talking about market sizing, will it be by revenue or by the total no of users of the product?
Interviewer: You can assume it to be market sizing by no. of users.

Shailesh: Ok, Since we are talking about 2030, is it safe to assume that the technological advancements and legalities related to driverless cars will be ready by then?
Interviewer: Yes, that’s a fair assumption.

Shailesh: When we talk about driverless cars, will they be fully automatic or semi-automatic?
Interviewer: You can assume it to be fully automatic.

Shailesh: Also, I am assuming the driverless cars will be utilised for personal use and not commercial use?
Interviewer: Yes.

Shailesh: I will iterate the goal of the problem. We want to estimate the market size based on the no. of users for fully automatic driverless cars in the USA by 2030, which are meant for personal use.

Now, talking about the approach, I will use to solve the problem. Firstly, from the population of the USA, we will find the no. of households who can afford luxury cars. We will calculate how many of these would be fully automatic driverless cars from the luxury car owners. Using the average lifetime value of a driverless car, we will find no. of such cars purchased every year. Then we will project the no. of driverless cars for 2030 using the data on the growth rate for driverless cars.

USA’s population: ~ 330 Million
Average household size: 4
No of households in the USA: 330 Million/4 = ~ 80 Million

To afford fully automatic cars, people should belong to the high-income and upper-middle groups.

High-income(10%) can afford 2 luxury cars on an average
Upper-middle-class income(20%) can afford 0.5 luxury cars on an average
Lower middle-class income(30%) cannot afford luxury cars
Low income(40%) cannot afford luxury cars

High-income households = 10% of 80 Million = 8 Million
No of luxury cars owned by High-income households = 2*8 Million = 16 Million

Upper-middle-class income households = 20% of 80 Million = 16 Million
No of luxury cars owned by Upper-middle-class households = 0.5*16 Million = 8 Million

Total no. of luxury cars in the USA = 16 Million + 8 Million = 24 Million

I am assuming that out of every 1000 luxury cars, 1 would be a fully automatic driverless car due to lack of safety and trust in the driverless car technology.

Total no. of driverless cars in the USA currently = 24Million/1000 = 24,000

We are currently in 2022. Assuming that the growth rate of driverless cars will be 20% every year and the average lifetime value for driverless cars = 5 years

Total number of driverless cars in the USA/average lifetime value = 24,000/5 = 4800 = ~5000

Total no. of driverless cars in the USA in 2030 = (1.2)⁸*5000 = ~ 20,000

~ 20,000 driverless cars in the USA in 2030

Interviewer: Thank you.

2. Estimate the number of Uber drivers in Bangalore.

Interviewer: Guesstimate the number of Uber drivers in Bangalore.

Shailesh: I would like to state the assumptions I am making and seek some clarification. I am assuming that we are talking about pre-covid times when offices are functioning and there is no lockdown.
Interviewer: That’s a fair assumption.

Shailesh: Uber has different business verticals like Uber rides, Uber eats, Uber connect etc. It is ok to assume that we are focusing on drivers in the ride-hailing business driving cabs/autos/bikes etc.
Interviewer: Sure, you can focus on the ride-hailing side.

Shailesh: The way I see this question is that if we can cover the demand during peak hours we are good to go. If we estimate the drivers driving in peak hours, we can get a fair estimate of the demand for rides, and we can find no. of drivers in Bangalore.
Interviewer: Please go ahead.

Assuming that the peak hours in Bangalore: 8 am — 11 am [3 hours]

The population of Bangalore: 13 Million

Assuming people in the age group of 20 – 50 will be using ride-hailing services during peak hours for travelling workplace etc.

Average life expectancy: 80 years

Potential population: 30/80 * 13 Million = 4.8 Million ~ 5 Million

Since smartphone penetration and internet penetration are important factors to enable the use of ride-hailing apps, so we can take ~ 80% of the people as the potential userbase.

It is safe to assume smartphone penetration and internet penetration to be 80% as the age group of 20 – 50 is comparatively more tech-savvy.

Potential user with smartphone/internet: 0.8*5 Million = 4 Million

Out of these 4M people, we can assume that 25% of people can afford cab services as others might be blue-collar workers.

Potential userbase who can afford cab services: 0.25*4 Million = 1 Million

Out of these 1M people, again 20% might book cabs as there are other modes of transport like bus, metro or own cars.

Potential userbase who can afford and use cab services: 0.2*1 Million = 0.2 Million ~ 200K

Assuming Uber and Ola to be the major players in the Indian market with a market share of 40% each and other players like Rapido, Meru etc. with a remaining 20%, the potential user base of Uber in Bangalore during peak hours: 0.4*200K = 80K

Normally it will take almost 20 minutes for the driver to complete a ride, but in peak hours, there is a lot of traffic, so we can assume that it will take double the time and the waiting time between rides will also increase by 5 minutes.
So, Time taken in peak hours to complete a ride: 45 mins

80K rides in 3 hours ~ 25K rides/hour

It will take 45 minutes for a driver to complete one ride, so approximately 4 rides in 3 hours
= 0.75 rides/driver/hour

25K/0.75 ~ 30K drivers

~ 30,000 Uber drivers in Bangalore

Interviewer: Thank you.

-- TechnoManagers

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