Product Management and the Search for Product Market Fit
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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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Product Management and the Search for Product Market Fit
- 1. presents Product Management and the Search for Product Market Fit Jeffery Bussgang @Bussgang CONFIDENTIAL PRESENTATION | PAGE
- 2. Product Management 101: Intelligent.ly Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School @bussgang December 11, 2013 CONFIDENTIAL PRESENTATION | PAGE
- 3. 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 CONFIDENTIAL PRESENTATION | PAGE
- 4. 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 CONFIDENTIAL PRESENTATION | PAGE
- 5. Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study CONFIDENTIAL PRESENTATION | PAGE
- 6. Old School Product Management • • • • • Report to: Marketing Output: Requirements Documents Methodology: Waterfall Product lifecycles: Years Decision-‐Making: Opinion-‐Driven CONFIDENTIAL PRESENTATION | PAGE
- 7. Modern Product Management • • • • • Report to: CEO Output: Prototypes Methodology: Agile Product lifecycles: Weeks Decision-‐Making: Data-‐Driven CONFIDENTIAL PRESENTATION | PAGE
- 8. Customer Development vs. Product Development Product Development Concept/ Bus. Plan Product Dev. Alpha/Beta Test Launch/ 1st Ship Customer Development Source: Steve Blank CONFIDENTIAL PRESENTATION | PAGE
- 9. “Lessons Learned” Drives Scaling Concept Business Plan/Canvas Test Hypotheses Lessons Learned Scale Do this first instead of scaling (or raise seed round to test hypotheses…rigorously) Source: Steve Blank CONFIDENTIAL PRESENTATION | PAGE
- 10. Hypothesis-‐Driven Entrepreneurship Pivot Desirable Perish Viable Envision Venture Concept Generate Business Model Hypotheses Feasible Product-Market Fit: Proceed with Scaling Test Hypothesis Using Minimum Viable Product Persevere with Next Test 10 CONFIDENTIAL PRESENTATION | PAGE
- 11. Startup 1. A team launching a new product under conditions of extreme uncertainty 2. A vehicle for testing hypotheses about such an entity Relentless Focus Novel/Innovative Entrepreneurship: the pursuit of opportunity beyond resources you currently control -‐ HBS Professor Howard Stevenson Resource Constrained 11 CONFIDENTIAL PRESENTATION | PAGE
- 12. 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 12 CONFIDENTIAL PRESENTATION | PAGE
- 13. 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 13 CONFIDENTIAL PRESENTATION | PAGE
- 14. CONFIDENTIAL PRESENTATION | PAGE
- 15. Practical Pointers • Outline for an MRD • PRD template • Persona examples: http://bit.ly/18puWOx CONFIDENTIAL PRESENTATION | PAGE
- 16. 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 CONFIDENTIAL PRESENTATION | PAGE
- 17. Crossing The Chasm CONFIDENTIAL PRESENTATION | PAGE
- 18. Where are You? After Product-‐Market Fit: Scaling & Optimization • Building a robust, feature-‐rich • Lean startup approach product • Hunch-‐driven hypotheses • Minimum viable product (MVP) • Crossing the chasm • Customer development process • Metrics, analytics, funnels • Designing for virality & • Selling to early adopters scalability • Pivoting • Challenges with corporate • Bootstrapping partnerships • Small, founding team • Building a brand • Product-‐centric culture; • Scaling the team; more formal informal roles roles • Early in sales learning curve • Scaling a sales force Before Product-‐Market Fit: Search & Validation CONFIDENTIAL PRESENTATION | PAGE
- 19. Should You Always Nail It Before 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 CONFIDENTIAL PRESENTATION | PAGE
- 20. Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study CONFIDENTIAL PRESENTATION | PAGE
- 21. 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 CONFIDENTIAL PRESENTATION | PAGE
- 22. Product Management Skills (2) • • • • • • Think Big Simplify (Product Manager as Editor) Prioritize Forecast and Measure Execute Cross-‐functional leadership CONFIDENTIAL PRESENTATION | PAGE
- 23. 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 CONFIDENTIAL PRESENTATION | PAGE
- 24. 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 CONFIDENTIAL PRESENTATION | PAGE
- 25. 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 CONFIDENTIAL PRESENTATION | PAGE
- 26. Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study CONFIDENTIAL PRESENTATION | PAGE
- 27. 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 CONFIDENTIAL PRESENTATION | PAGE
- 28. Personna 1 CONFIDENTIAL PRESENTATION | PAGE
- 29. Personna 2 CONFIDENTIAL PRESENTATION | PAGE
- 30. CONFIDENTIAL PRESENTATION | PAGE
- 31. 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 CONFIDENTIAL PRESENTATION | PAGE
- 32. 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? CONFIDENTIAL PRESENTATION | PAGE
- 35. 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) CONFIDENTIAL PRESENTATION | PAGE
- 36. Product Management 101: Intelligent.ly Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School @bussgang December 11, 2013 CONFIDENTIAL PRESENTATION | PAGE
- 37. Course Title Course Title INSTRUCTOR NAME CONFIDENTIAL PRESENTATION | PAGE