Product Management and the Search for Product Market Fit

CONFIDENTIAL PRESENTATION | PAGE

presents

Product Management and the Search for Product Market Fit

Jeffery Bussgang @Bussgang

https://twitter.com/bussgang


Product Management 101:Intelligent.ly

Jeff Bussgang General Partner, Flybridge Capital

Senior Lecturer, Harvard Business School @bussgang

December 11, 2013


Session Objectives

• What people mean when they use the phrase, “Product Market Fit” (PMF), plus: – Customer Development Process – Lean Start-‐Up Theory

• What is great product management? • Exposure to some tools and techniques to be a great product manager


Context for My Perspective

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

Boston/NY, current fund: $280M

➢70+ portfolio companies; seed and Series A focused

• Senior Lecturer at Harvard Business School

• Former entrepreneur

➢Cofounder/Pres. Upromise (acq’d by SallieMae) ➢VP at Open Market (IPO ‘96)

• Author: Mastering the VC Game

• Blog: Seeing Both Sides


Agenda

• Customer Development / Modern Product Management

• The Product Manager – Role & Responsibilities • Open English Case Study


Old School Product Management

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


Modern Product Management

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


Customer Development

Customer Development vs. Product Development

Concept/Bus. Plan

Product Dev.

Alpha/Beta Test

Launch/ 1st Ship

Product Development

Source: Steve Blank


“Lessons Learned” Drives Scaling

Concept Business Plan/Canvas

Lessons Learned Scale

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

Test Hypotheses

Source: Steve Blank


Hypothesis-‐Driven Entrepreneurship

Envision Venture Concept

Generate Business

Model Hypotheses

Test Hypothesis Using Minimum Viable Product

Pivot

Perish

Product-Market Fit: Proceed with Scaling

Persevere with Next Test

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Desirable

FeasibleViable


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 beyond

resources you currently control -‐ HBS Professor Howard Stevenson

Relentless Focus Novel/Innovative

Resource Constrained


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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Practical Pointers

• Outline for an MRD • PRD template • Persona examples: http://bit.ly/18puWOx

https://docs.google.com/document/d/18K08A7IQmHAcuDMiEK7rSk4BmMcAJhgXtnafZmLIZA0/edit

https://docs.google.com/document/d/1hNS5gx-Vi4V2k3I9yHTZY7l-B-QGdd6ldBLmdtsvvQQ/edit

http://bit.ly/18puWOx


Other Tools/Techniques

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

• Landing page optimization • SEM/SEO optimization • Inbound marketing design • PR strategy • Customer support analysis • Clustering and feature

prioritization • Sales pitch • Lead qualification • Bus dev screening • Charter user program • Net promoter analysis • Lifetime value vs. Customer

acquisition costs�16


Crossing The Chasm


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


Should You Always Nail ItBefore You Scale It?

• That is, when is it ok to be a little “fat”? • If you are in a winner take all market • Deep customer lock-‐in / high switching costs

• Network effect businesses • Capital is cheap

• Executive team knows how to scale

• Upromise example

• Series A: $34m (March 2000) • Series B: $55m (October 2000) • Launch service: April 2001


Agenda




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 ambiguity – 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


• Think Big • Simplify (Product Manager as Editor) • Prioritize • Forecast and Measure • Execute • Cross-‐functional leadership

Product Management Skills (2)


A Few PM Profiles

Adi Kleiman • Tel Aviv University (industrial

engineering, MBA) • SAP Product Manager (4.5 yrs) • VP of Products, tracx

Nagarjuna Venna • Warangal (CS & eng) • Siemens, Lucent, Banyan

engineer (4.5 yrs) • MIT Sloan • Start up product manager • Founder, Chief Product Officer,

BitSight


Product Mgr vs. Proj Mgr• Project Managers

– Focus on successful delivery of the project: deadline, budget, goals – Coordinate the cross-‐functional team involved in delivering a project / product

– Professional operational managers – Live and die by the “Gantt Chart”

• Sometimes PM plays Project Mgr role, other times they are distinct roles

• Important to be clear on roles, responsibilities and ownership going into a product release


Product Mgt and Sales

• The pressure to “add this feature to win this deal”, particularly at the end of the quarter

• When do you listen to your salespeople / customers, and when do you direct them?

• Sometimes need to slow things down to go faster – focus on infrastructure, scalability

• Special cases for the business vs. sticking to the product roadmap

• Opower Case Study: token system – Opower product organization


Agenda




Open English Case Study

• Online English language learning program • Founded 2006 by Andres and Nicolette Moreno

– Andres: Grew up in VZ, Simon Bolivar (engineering), cofounded offline English language school

– Nic: CO born, Pepperdine (Business and Psychology), non-‐profit exec, got into but chose not to attend Stanford GSB to co-‐found Open English

• Launched in late 2009 as a subscription service – ~$1,000 per year – guarantee you’ll learn English – Pay up front or monthly


Personna 1


Personna 2



Growing Pains

“With all the growth and developments, there was very little investment in the learning platform.” – Andres Moreno !

• Rigid infrastructure made it difficult to add features • Limited personalization, ability to predict churn • Back end that wouldn’t scale more than 20-‐30% above current

volumes • 12 month product with one price point vs. ability to upsell,

continue over longer duration to improve LTV • Payment system only accepted money in US $ from consumers

who held credit cards, not local currencies


Choices

1. Rearchitect vs. Improve in place? – Continue to progress with incremental improvements

rather than stop everything, pay down technical debt and rearchitect the system from scratch

2. Inside team vs. outside team? – Who should handle the work: the current team or hire an

outside team so as to not distract the current team?

If you were Nic/Andres…what would you do?


Discussion


Summary/Wrap


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)


Product Management 101:Intelligent.ly

Jeff Bussgang General Partner, Flybridge Capital

Senior Lecturer, Harvard Business School @bussgang

December 11, 2013


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