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Jeff Bussgang on Product Management and the Search for Product-Market Fit Startup product management is both an art and a science. We're thrilled to host Jeff Bussgang - author, blogger, professor, VC partner, and generally one of the best all round startup minds we know - for an in-depth dive into best practices in product management as well as tactics to achieve product-market fit. You'll Learn: -The skills that characterize great product managers -Tactics and techniques for finding product-market fit About Jeff Bussgang: Jeff Bussgang is a general partner at Flybridge Capital, a senior lecturer at Harvard Business School and an author/blogger (book: Mastering the VC Game, blog: Seeing Both Sides). He was previously an entrepreneur, cofounding Upromise (acquired by SallieMae) and serving as VP of marketing and products at Open Market (IPO 1996).
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CONFIDENTIAL PRESENTATION | PAGE
presents
Product Management and the Search for Product Market Fit
Jeffery Bussgang @Bussgang
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Product Management 101:Intelligent.ly
Jeff Bussgang General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School @bussgang
December 11, 2013
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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
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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
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Agenda
• Customer Development / Modern Product Management
• The Product Manager – Role & Responsibilities • Open English Case Study
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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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Customer Development
Customer Development vs. Product Development
Concept/Bus. Plan
Product Dev.
Alpha/Beta Test
Launch/ 1st Ship
Product Development
Source: Steve Blank
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“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
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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
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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 beyond
resources you currently control -‐ HBS Professor Howard Stevenson
Relentless Focus Novel/Innovative
Resource Constrained
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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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Practical Pointers
• Outline for an MRD • PRD template • Persona examples: http://bit.ly/18puWOx
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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
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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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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
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Agenda
• Customer Development / Modern Product Management
• The Product Manager – Role & Responsibilities • Open English Case Study
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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 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
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• Think Big • Simplify (Product Manager as Editor) • Prioritize • Forecast and Measure • Execute • Cross-‐functional leadership
Product Management Skills (2)
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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
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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
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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
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Agenda
• Customer Development / Modern Product Management
• The Product Manager – Role & Responsibilities • Open English Case Study
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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
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Personna 1
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Personna 2
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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
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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?
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Discussion
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Summary/Wrap
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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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Product Management 101:Intelligent.ly
Jeff Bussgang General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School @bussgang
December 11, 2013