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Product Management 101:The Search for Product-Market Fit

Jeff BussgangGeneral Partner, Flybridge Capital

Senior Lecturer, Harvard Business SchoolDecember 10, 2012

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Session Objectives

• What is great product management?• What people mean when they use the phrase,

“Product Market Fit” (PMF), plus:– Customer Development Process– Lean Start-Up Theory

• Help you devise your approach to achieving PMF and avoid wasting a lot of money

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Agenda

• Introduce Concepts – 30 minutes• Exercise – 30 minutes• Debrief – 15 minutes• Q&A and Wrap – 15 minutes

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Context for My Perspective

• General Partner at Flybridge Capital, early-stage VC firm in

Boston/NY, $560M under management60+ portfolio companies

• Senior Lecturer at Harvard Business School

• Former entrepreneurCofounder/Pres. Upromise (acq’d by SallieMae)

VP at Open Market (IPO ‘96)

• Author: Mastering the VC Game

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Leading Thinkers/Books/Blogs

• Geoffrey Moore: Crossing the Chasm (read this!)

• Steve Blank: Customer Development Process (read Four Steps to the Epiphany)

• Eric Ries: Lean Startups (read this too!)

• Marty Cagan: Silicon Valley Product Group (great book and blog)

• HBS Prof Tom Eisenmann: Launching Tech Ventures (great blog)

• Sean Ellis: Startup Marketing (great blog)

• Andrew Chen: Growth Hackers (great blog)

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Startup

1. A team launching a new product under conditions of extreme uncertainty

2. A vehicle for testing hypotheses about such an entity

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Entrepreneurship: the pursuit of opportunity beyondresources you currently control

- HBS Professor Howard Stevenson

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Old School Product Management

• Report to: Marketing• Output: Requirements Documents• Methodology: Waterfall• Product lifecycles: Years• Decision-Making: Opinion-Driven

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Modern Product Management

• Report to: CEO• Output: Prototypes• Methodology: Agile• Product lifecycles: Weeks• Decision-Making: Data-Driven

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Company

Building

Customer Development

CustomerDiscovery

Customer Developmentvs. Product Development

Concept/Bus. Plan

Product Dev.

Alpha/Beta Test

Launch/1st Ship

Product Development

CustomerValidation

Customer

Creation

Source: Steve Blank

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Product Management Skills• Responsibilities:

– Define the new product to be built– Secure the resources to build it– Manage its development, launch and

ongoing improvement– Lead the cross-functional product team

• Attributes:– Ability to influence and lead– Resilience and tolerance for amibiguity– Business judgment and market knowledge– Strong process skills and detail orientation– Fluency with technology and implications on product design, business– Design/UX instincts

Mini CEO – with none of the authority

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The Lean Startup• Many startups fail because they waste capital and

time developing and marketing a product that no one wants

• Lean startups rapidly and iteratively test hypotheses about a new venture based on customer feedback, then quickly refine promising concepts and cull flops

• Being lean does NOT mean being cheap, it is a methodology for optimizing—not minimizing—resources expenditures by avoiding waste

• Being lean does NOT mean avoiding rigorous, analytical or strategic thinking

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Lean Startup Principles

• No idea survives first customer contact, so get out of the building ASAP to test ideas

• Goal: validation of business model hypotheses, based on rigorous experiments and clear metrics

• Minimum viable product (MVP): smallest set of features/marketing initiatives that delivers the most validated learning

• Rapidly pivot your MVP/business model until you have validation and product-market fit (PMF)

• Don’t scale until you have achieved PMF

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Crossing The Chasm

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Where are You?Before Product-Market Fit: Search & Validation • Lean startup approach• Hunch-driven hypotheses• Minimum viable product (MVP)• Customer development process• Selling to early adopters• Pivoting• Bootstrapping• Small, founding team• Product-centric culture;

informal roles• Early in sales learning curve

After Product-Market Fit: Scaling & Optimization• Building a robust, feature-rich

product• Crossing the chasm• Metrics, analytics, funnels• Designing for virality &

scalability• Challenges with corporate

partnerships• Building a brand• Scaling the team; more

formal roles• Scaling a sales force

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Tools/Techniques

• Structured idea generation• Business model generation• Customer discovery process• Focus groups• Customer survey• Persona development• Competitor benchmarking• Wireframing• Prototype development• Usability testing• Charter user program• A/B test

• Conversion funnel analysis• Landing page optimization• SEM/SEO optimization• Inbound marketing design• PR strategy• Customer support analysis• Product feature prioritization• Sales pitch• Lead qualification• Bus dev screening• Net Promoter Score• Lifetime value vs. Customer

acquisition costs

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“Lessons Learned” Drives Funding

ConceptBusiness

Plan/CanvasLessons Learned Series A

Do this first instead of fund raising(or raise seed round to test hypotheses…rigorously)

Test Hypotheses

Source: Steve Blank

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Exercise: Blackberry 10

1. Milk cash cow2. Copy iPhone3. Leapfrog

Strategic Choices

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Exercise Instructions

• Pick a product development methodology– Agile vs. Waterfall

• Pick the product manager’s role– Czar– Democratic leader– Oligarchy / committee

• Allocate 100 points across key product features– Apps– Screen / keyboard– Form factor (small, light)– Browser / reading

• Design a falsifiable test to help you with your scoring

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A Few Resources

• My blog: www.SeeingBothSides.com• Quora on product management:

• http://b.qr.ae/W1npOi (product mgt skills)• http://b.qr.ae/sYy4jS (Google product mgt)

• HBS Case Note on Product Mgt - http://bit.ly/TQhw7w

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Product Management 101:The Search for Product-Market Fit

Jeff Bussgang@bussgang

jeff@flybridge.com

December 10, 2012