Market sizing - how much do hedge funds spend globally on information services (e.g. Bloomberg)?

B2B Case Interview Market sizing
New answer on Jan 20, 2021
4 Answers
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Anonymous A asked on Jan 15, 2021

How much do hedge funds spend globally on information services such as Bloomberg, or any other information services that help inform their investment strategy and back office strategies?

How would you answer this question?

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Ian
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replied on Jan 15, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

What's important here is the process of figuring it out. Why don't you post your initial thinking/approach and we can critique it? Just getting the answer won't help you develop as much!

First question: Do you think top-down or bottom-up would be more straightforward?

Second question: What breakdown allows you to estimate things reasonably?

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Clara
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replied on Jan 15, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Agree with Ian, important thing here is not so much the final result but the thought process.

Cheers,

Clara

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Denis
Expert
replied on Jan 20, 2021
Ex-Bain 5 yrs | Goldman Sachs Investment Banker NYC | MBA Chicago Booth | Passed > 13 MBB > 20 IB interviews

As pointed out by the other coaches - there is no value-add if we cannot see your process.

I would follow the following process:

  • Think about formula (not just a flimsy approach, literally an algorithm)
    1. How many approaches are there (bottom-up vs. top-down)?
      1. In your Malaria case using population proxies of any kind is in my book bootom-up, using however the revenues earned by Malaria medicine manufacturers for example, breaking down how many perople there MUST be given the revenues they have would be top-down.
    2. What are the upsides / downsides of each approach? Which one should I choose given the limited time in a case? Explain this to the iviewer.
  • Necessary assumptions / key drivers (no numbers at this point, just in terms of important Proxies by thinking VERY practical). This is why you should ask follow-up questions after the case prompt. Not for the sake of asking but to help you identify Step 1 and 2. If you dont understand the basic business model and how the service / product PRACTICALLY works and is used, I dont see how you can comfortably estimate the market size.
  • Do the Math transparently using clear language. No mumbling. Double-check your numbers before you speak up.
  • Sense-check the result (!) 2 ways mostly work: checking your calculations and scrutinizing your key assumptions. Or using other "proxies", perhaps other bottom-up or top-down approaches brain-stormed before. E.g. if you have a number of Malaria patients... does this correspond to perhaps the number of available hospitals or the revenues earned by Malaria meds producers? You need to be able to tell me as an iviewer if you think your result is too high / low at least. Ideally also give me a rough range of the expected result with a rationale.

Best,

Denis

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Gaurav
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replied on Jan 18, 2021
Ex-Mckinsey|Certified Career Coach |Placed 500+ candidates at MBB & other consultancies

Hi there,

Agree with Ian: It would have made more sense if you shared your approach - this question is pretty much never about precise end result, but about your way of finding a solution.

Cheers

GB

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Ian gave the best answer

Ian

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