Day 18 - Metrics Question 2

Practice metric questions with us...

Hello learners!

Welcome to the 18th day of the series 30 Days of PM Interview by Crework! Yesterday, we discussed the first exercise question for metrics and analytics. Today, we will practice one more.

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Choose a Metric ✨

Your practice question for today is:

What should Airbnb's key north star metrics be? (Asked at Airbnb)

Now, before we move on to “how should we approach it” part, I want you to try it. Come on, pause here for a while, bring a notebook and pen and try this question.

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Okay, now let’s talk about how we can approach this.

Step 1: Ask Clarifying Questions

1. Are we talking about the Airbnb business and product as a whole, or any specific part of it?

2. You said metrics, so I should be thinking about more than one metric here? One north star metric and other supporting key metrics?

For this question, I am assuming that I have to identify general success metrics for Airbnb and not for any specific feature.

Step 2: Understand the Objectives and Goals

Let’s try to understand the goals of Airbnb currently.

1. Airbnb’s mission is to create a world where everyone can belong anywhere.

2. How does Airbnb make money? - Through a %age of booking amount as commission

3. Who are the user?

   1. Guests who want a place to stay for a few days

   2. Hosts who want to rent out their home for extra income

4. Airbnb wants:

   1. More revenue for the company

   2. Better experience for the customer

   3. More income for the hosts

Step 3: Let’s come up with the metrics

1. North Star Metric - This is the most important metric for any product that tells if the product is doing well or not.

   1. For Airbnb, the north star metric would be - Number of bookings per month (This time duration could be a week, day or month too)

   2. To qualify as a “North Star,” a metric must do three things: lead to revenue, reflect customer value, and measure progress.

      1. More bookings per week → More revenue for both the company and the hosts

      2. More bookings per week → More users are engaging on the platform

      3. Increase in bookings per week → Shows progress

2. L1 Metrics - These are the metrics that either directly contribute to the NSM or act as a check to make sure the product is growing in a healthy direction.

   For Airbnb, L1 metrics would be:

   1. Total user signups

   2. Total host signups

   3. Activation rate for users = no. of users who booked/ number of users who signed up

   4. Activation rate for hosts = no. of hosts who listed their property/ number of hosts who signed up

   5. Retention - Out of guests who have completed their first time booking, how many complete a second time booking?

This was an example of how you can approach a metrics question asked in a PM interview. There can be multiple ways of approaching the same problem, and there is no “right” answer. The interviewer wants to assess your ability to think and come up with a solution. The real answer is the process you use to come up with your solution.

I would love to see the solution you came up with. Please share it with us on twitter or reply to this mail.

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Day 18 - Completed ✅

Congratulations on completing the 18th lesson of the series 30 Day of PM Interview. 🥳 Now, you know what to do. Share your learnings with the world and be accountable.

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