Let’s Guess It Mates

Guesstimates 101 Session

ISB Hyderabad Consulting Club | August 2021
What are Guesstimates?

• Process to estimate a number using a rational and structured approach

• Several ways to solve – the process/rationale for solution is more important than the number itself

Key Evaluation Parameters

Critical Important Others

• Structured Thought Process • Articulation of Assumptions (general • Sanity/Hygiene Checks

• Logic and Rationale observations, industry knowledge) • Basic Understanding and Common
• Comfort with Basic Math and Numbers • Presence of Mind Sense
(BODMAS, Ratios, %ages) • Asking for Help
• Communication Skills
Types of Guesstimates
General Estimates
• Top Down/Start Big: Use main equation as the starting point
and split it into sub-parts
• Bottom Up/Start Small: Use a segment or unit to extrapolate
the whole (commonly used when there are constraints on the
number to be estimated)
• Example: Estimate the # of white cars in Delhi
Market Sizing
• Estimate the $-value or unit volume of the market
• Estimate price and quantity to get final market size
• Can use top down and bottom up approaches simultaneously
• Example: Estimate size of pet insurance market as: # of Pets *
Insurance Penetration * Average Premiums
Data Driven
• Set of data is provided
• Understand and absorb all data before attempting a solution
• Do not make assumptions in case data is missing
• Take hints for segmentation from the given data
• Examples: Amazon ACE quiz, McKinsey PST questions
Abstract Estimations
• Do not follow a particular structure
• Not frequently asked but good to practice
• Frame equation(s) to solve
• Break the problem into smaller pieces and solve accordingly
• Example: Grains of grass on a cricket field
Stepwise Approach to Solve Guesstimates

Construct & Deconstruct the

Define the problem State Assumptions & Solve
Problem

1. Define the problem as granularly as 4. Express problem as an equation or 8. Clearly state assumptions & proxy
possible set of equations information to be used
2. Confirm understanding with the 5. Construct the problem from a larger 9. Use logical justification to
interviewer point of view substantiate all assumptions / proxies
3. Make modifications, if required 6. Deconstruct the problem into specific 10. Plug information into the main
sub-components equation and solve
7. Make minor corrections / adjustments
towards the end of the process

Example: Estimate the # of burgers sold at McDonalds1

Assumptions on Timeline, Day, Location, Counters open * Orders/counter * % of Plug and Solve!
Size / Capacity orders with burgers * # of burgers per order

Deconstructing counters open based on time

of the day (requires adjusting to
orders/counter/hour) and segmenting for # of
burgers per order

1. Refer Page 15 of ISB Consulting Case Book 2020 for solution

Common Filters to Know

Population Split by Gender Split by Income

Urban/Rural Divide Split by Marital Status Split by Age

Average Household Size Internet Penetration Smartphone Penetration

Life Expectancy
Guesstimate 1 (1/2)

• Estimate the Number of messages exchanged between ISB students in a day

• Preliminary Questions?
Guesstimate 1 (1/2)

• Estimate the Number of messages exchanged between ISB students in a day

• Preliminary Questions?

Q: Which qualifies for “messages” – WhatsApp, Telegram, Handwritten Notes, etc.?

A: Let’s restrict to WhatsApp and Telegram
Guesstimate 1 (2/2): Number of messages exchanged between ISB
students in a day

Number of messages sent/day: Number of Users x Number of Messages/Hour x Active Hours, across user segments
• Both campuses are considered
• Population: ~900 students
Initial Assumptions • Message means one message where the user presses the send button or hits enter regardless of the
length of the message; sent both on a group or in one-to-one setup
• Platforms covered: Telegram and WhatsApp with 100% penetration
• Types of users: Heavy (10%), Medium (80%) and Low (10%)
• Number of messages/hour by user type (assumptions basis general observation):
o Heavy: 60 (average of 1 message/minute)
Approach
o Medium: 20 (average of 1 message/3 minutes)
o Low: 10 (average of 1 message/6 minutes)
• Students are active for 12 hours/day

Formula to estimate number of messages sent/day by a user type: Number of users x Number of messages/hour x 12 hours
• Total number of messages/day by user type:
o Heavy: (10%*900) x 60 x 12 = 64,800
Calcs and Answer o Medium: (80%*900) x 20 x 12 = 1,72,800
o Low: (10%*900) x 10 x 12 = 10,800
• Total number of messages: 2,48,400 = ~2,50,000
Guesstimate 1 (2/2): Number of messages exchanged between ISB
students in a day

Number of messages sent/day: Number of Users x Number of Messages/Hour x Active Hours, across user segments
• Both campuses are considered
• Population: ~900 students
Initial Assumptions • Message means one message where the user presses the send button or hits enter regardless of the
length of the message; sent both on a group or in one-to-one setup
• Platforms covered: Telegram and WhatsApp with 100% penetration
• Types of users: Heavy (10%), Medium (80%) and Low (10%)
• Number of messages/hour by user type (assumptions basis general observation):
o Heavy: 60 (average of 1 message/minute)
Approach
o Medium: 20 (average of 1 message/3 minutes)
o Low: 10 (average of 1 message/6 minutes)
• Students are active for 12 hours/day

Formula to estimate number of messages sent/day by a user type: Number of users x Number of messages/hour x 12 hours
• Total number of messages/day by user type:
o Heavy: (10%*900) x 60 x 12 = 64,800
Calcs and Answer o Medium: (80%*900) x 20 x 12 = 1,72,800
o Low: (10%*900) x 10 x 12 = 10,800
• Total number of messages: 2,48,400 = ~2,50,000

• Sanity Check: Average number of messages sent per person per day = 250000/900 ≈ 275
Checks • Triangulation: Screen Time on Messaging Apps Extrapolation: 2 hours x 25% / 5-10 seconds/message
x Discount of 0.7 = 250-500 messages
Guesstimate 2 (1/2): Volume of potatoes (in Kg) used by Frito Lays in
India

• We are only considering the packaged potato chips as the product

• The timeline is 1 year
Initial Assumptions • Volume of potatoes wasted are excluded
• All variants/flavors of the chips are considered

• Split of India’s population (140 cr) by age: • Split of India’s potato chips consumers by age:
o 0-5 (5%): 7cr o 0-5 (0%): 0
o 5-15 (20%): 28 cr o 5-15 (40%): 28 cr x 40% = 11 cr
o 15-25 (20%): 28 cr o 15-25 (50%): 28 cr x 50% = 14 cr
o 25-35 (20%): 28 cr o 25-35 (40%): 28 cr x 40% = 11 cr
o 35-50 (20%): 28 cr o 35-50 (30%): 28 cr x 30% = 8 cr
o 50+ (15%): 21 cr o 50+ (10%): 21 cr x 10% = 2 cr

• Total potato chips consumers in India: 46 cr

Approach
• Total number of consumers of Frito Lays chips in India: 23 cr (assuming 50% market share)

• Variants of Frito Lays chips by weight

o 50g
o 100g
o 200g
o 250g
• Average weight of Frito Lays chips packet: 150g
Guesstimate 2 (2/2): Volume of potatoes (in Kg) used by Frito Lays in
India

• Split of Frito Lays consumers by consumption intensity

o Light: 40% (1 packet per month)
o Medium: 50% (6 packets per month)
Approach o Heavy: 10% (45 packets per month)

• Average number of packets/consumer/month = 1x0.4 + 6x0.5 + 45x0.1 = ~8 packets

Amount of Frito lays potato chips (in Kg) consumed in a year: Number of consumers x Average weight of packet x Number of packets in a year

Answer • Volume of potatoes (in Kg) used by Frito Lays in India: 23 cr x 0.15 kg x 8 packets x 12 = ~33 cr kg

• Volume of potatoes (in Kg) used by Frito Lays in India: 3,30,000 tones