Tips and Tricks in Guesstimates

Having learnt the basics of guesstimates thoroughly, here we have a few tips and tricks for you to apply when faced with a guesstimate to reach the solution quickly. In the video, the SME would run down some basic tricks to adopt.

As mentioned in the video, there are various tricks you can refer to when faced with a guesstimate in an interview. Let's revise them one by one:

Calculations 

Whenever you’re choosing numbers in your approach, try to make sure that they are the ones which are easy to calculate.

• For example - Multiples of 5, 10, 100, 1 million etc.
• For example - If you are to assume a value, assume 60% of something rather than 64%

Proxies

Substituting unknown data with a comparable known data in order to solve the problem.

Limiting factors 

Understanding what limits your scope of calculation is essential to simplify your solution and reach it faster. 

• For example - If you are asked to calculate the total number of taxis in your city and you apply a limiting factor that only the yellow and black government-run taxis are considered and not the Ola and Uber ones, you immediately simplify the solution.

Pareto Principle

The Pareto Principle states that 80% of the output is generated by 20% of the input. You can apply this in your solution to ease your calculation.

• For example - If you were trying to the total cost of building a monument, 80% of the cost would come from the 20% of raw materials used like Cement, bricks, steel and the cost of land. The smaller amenities like electrical wires, plumbing, etc.

Growth, replacement and wastage 

In a guesstimate related to market sizing, it would be wise to remember the product cycle and inculcate practical approaches to your solution. So keeping the growth of a product over time, its replacement or perishability period or wastage of components or product in different operations as factors will help you get a more realistic answer. 

• For example - if you were asked to calculate the number of washing machines bought in your city over a year, you need to keep in mind the longevity of a washing machine and based on that calculate how many people would buy a new machine that year. 

Sanity check 

It simply means that you may want to make sure that your answer makes sense by either using proxies or simply common sense. 

• For example - If you’re asked to estimate the number of leaves in the world and your answer is less than 7 billion, you know you have gone wrong because there are obviously more leaves in the world than humans.

In the next segment, you will learn how to communicate your guesstimate while you are solving it n order to maintain a constant interaction with the interviewee.