Introduction
This blog post is aimed at aspiring Product Managers who are preparing to navigate a product interview question in a FAANG interview setting. One of the key aspects of landing a PM role is demonstrating strong analytical and estimation skills. We’ll tackle a common type of question that tests your ability to estimate and reason through complex problems with limited data: Estimate the Number of Credit Card users in India. Utilizing the structured frameworks and strategies from ‘Decode and Conquer: Answers to Product Management Interviews,’ we will formulate an answer that is both educated and structured.
Detailed Guide on Framework Application
a. Picking the Right Framework: For estimation questions, a modified version of the Fermi estimation technique or breakdown approach works best. It allows us to decompose the question into manageable parts whose answers we can either estimate or look up.
b. Applying the Framework:
- Define the Scope: We clarify what a credit card user means. For our purposes, this is anyone who has and uses a credit card in India.
- Population Data Gathering: Start by obtaining the current estimate of India’s population. We can use an estimated figure for the purpose of this example.
- Demographic Segmentation: Break down the population by adults and minors. Only adults are typically eligible for credit cards.
- Economic Segmentation: Consider the fraction of the population that has access to banking services and is in the economic demographic likely to use credit cards.
- Bank Penetration Rates: Research and estimate the percentage of the adult population that actually owns a credit card, recognizing that multiple cards per person are possible.
- Final Estimation: Multiply all the segmented parts together to estimate the number of credit card users.
c. Hypothetical Example Demonstration: Suppose we know India’s population is around 1.3 billion. We estimate that roughly 50% are adults. Of those, maybe 30% are economically eligible for credit cards, and 25% of those actually own one. Our estimate would be 1.3 billion * 50% * 30% * 25%.
d. Fact Checks: To ensure our estimate is plausible, we should compare it to available statistics on banking penetration and credit card usage, refining our percentage estimates if necessary.
e. Estimation without Exact Data Points: The key is to explain your thinking process and assumptions clearly, showing that you can logically estimate figures that you don’t have immediate access to. It’s important to validate these assumptions during a real interview scenario.
f. Effective Communication Tips: Articulate your thought process step by step. It’s not only the final answer that matters, but the logical structure and rationale behind it. Practice out loud, refine your reasoning, and ensure you are concise yet comprehensive.
Conclusion
To succeed in FAANG interviews as a Product Manager, it’s crucial to master estimation questions. Applying frameworks and logical breakdowns allows you to approach these questions methodically. Remember that the interviewer is looking to understand your thought process as much as they are looking for a reasonably accurate estimate. Practice diligently, and refine your approach using the techniques outlined in this post for a successful interview experience.