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The Growth Catalyst
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Mastering the Product Interviews - Solving Market Sizing Questions
- The article discusses market sizing for incumbent and innovation products, which are both tricky and essential for PMs. The framework for market sizing is similar for both, and includes clarification of the product, identification of the end-user, defining geography and timeframe, identifying channels (where applicable), and picking an estimation approach. The article also provides guidelines for estimation interviews and recommendations for practicing estimation. Finally, the article warns that most estimation examples found on the internet are not realistic, and that caution should be taken when interpreting one's own performance.
- Market sizing problems are two-pronged: established products and innovation products. Mastering market sizing is a critical PM skill to have, even though predicting the future is hard to do.
- The steps to market sizing, regardless of the nature of the product, are: clarifying the product, identifying end-users, defining geography and timeframe, identifying channels (where applicable), picking an estimation approach, drawing an issue tree and performing calculations, and performing a sanity check.
- Estimates are prone to bias, and one should have more realistic expectations about one's performance, especially given that most internet estimation examples are not realistic.
- Market sizing is harder for innovative products, but both types are doable with practice and following a structured approach. Good estimation can be the difference between a successful and failed product and also help PMs spot opportunities.
- There are general guidelines for estimation interviews: think aloud, pivot if necessary, use easy numbers, and remember broad numbers for key geographies such as India and the US.
- The article recommends starting practice with solving problems by oneself before interviewing with peers, experts, and participating in real-life interviews.
- The article also mentions a recommended book, Case in Point, but warns about the selection bias of most estimation examples found on the internet.
- The final example illustrates how to calculate market size for a Teleportation Device in the US market using the framework of market sizing and the steps above. One should keep general assumptions about a high income per capita in mind when estimating for the US market.
- The article concludes by stressing the importance of mastering market sizing, as it is an essential skill for PMs and helps spot opportunities.
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