Estimation question
How much will it cost for Facebook to add one additional user?
- Estimation
- Medium
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What this question tests
Cost estimation: breaking down infrastructure and support costs per incremental user for a large scale social platform.
How to approach it
- Clarify scope: marginal cost of serving one more active user, not the average cost including fixed overhead like R&D.
- List the main variable cost buckets: data storage, compute for feed ranking, content delivery, and customer support.
- Estimate each bucket per user per year, for example a few dollars for storage and compute combined.
- Add a small allocation for support and moderation costs per user.
- Sum the buckets to reach a per user marginal cost, then sanity check against Facebook's known revenue per user for plausibility.
What a strong answer includes
- Separates fixed costs like R&D and office overhead from true marginal costs like storage and compute, since only the latter apply to one new user.
- Lands on a small dollar figure, for example a few dollars per year, and explains this is far below average revenue per user.
- Sanity checks the number against Facebook's reported ARPU to show the business model works with large margin.
Common mistakes
- Including fixed costs like headcount or R&D in a marginal cost estimate, which inflates the number unrealistically.
- Skipping the sanity check against known revenue per user.
Likely follow-up questions
- How would this marginal cost differ in a market with expensive data infrastructure?
- How would video content change this estimate?
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Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 2: Data fluency: SQL, logs, and reading the truth yourself
- Chapter 9: Prove it paid off: outcomes, economics, and pricing
- Chapter 14: Get the job: the AI PM interview loop