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MIT Class on Product Management 10-22-2013

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MIT Class on Product Management 10-22-2013

  1. 1. Product Management 101: MIT Sloan Fall Seminar Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School @bussgang October 22, 2013 CONFIDENTIAL PRESENTATION | PAGE1
  2. 2. 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 | PAGE2
  3. 3. Session Objectives (2) • EV(MBA in startup) = mixed  LTV seeks to increase your expected value “The value of an MBA for a young entrepreneur is about negative $250k.” - Guy Kawasaki in TechCrunch X = CONFIDENTIAL PRESENTATION | PAGE3
  4. 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 | PAGE4
  5. 5. Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study CONFIDENTIAL PRESENTATION | PAGE5
  6. 6. Old School Product Management • • • • • Report to: Marketing Output: Requirements Documents Methodology: Waterfall Product lifecycles: Years Decision-Making: Opinion-Driven CONFIDENTIAL PRESENTATION | PAGE6
  7. 7. Modern Product Management • • • • • Report to: CEO Output: Prototypes Methodology: Agile Product lifecycles: Weeks Decision-Making: Data-Driven CONFIDENTIAL PRESENTATION | PAGE7
  8. 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 | PAGE8
  9. 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 | PAGE9
  10. 10. Hypothesis-Driven Entrepreneurship Pivot Viable Perish Feasible Desirable Product-Market Fit: Proceed with Scaling Envision Venture Concept Generate Business Model Hypotheses Test Hypothesis Using Minimum Viable Product Persevere with Next Test 10 CONFIDENTIAL PRESENTATION | PAGE10
  11. 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 | PAGE11
  12. 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 | PAGE12
  13. 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 | PAGE13
  15. 15. Practical Pointers • • • • Outline for an MRD PRD template Sample wireframe Persona examples: http://bit.ly/18puWOx CONFIDENTIAL PRESENTATION | PAGE15
  16. 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 | PAGE16
  17. 17. Crossing The Chasm CONFIDENTIAL PRESENTATION | PAGE17
  18. 18. 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 CONFIDENTIAL PRESENTATION | PAGE18
  19. 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 | PAGE19
  20. 20. Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study CONFIDENTIAL PRESENTATION | PAGE20
  21. 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 | PAGE21
  22. 22. Product Management Skills (2) • • • • • • Think Big Simplify (Product Manager as Editor) Prioritize Forecast and Measure Execute Cross-functional leadership CONFIDENTIAL PRESENTATION | PAGE22
  23. 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 | PAGE23
  24. 24. Sample Product Roadmap CONFIDENTIAL PRESENTATION | PAGE24
  25. 25. 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 | PAGE25
  26. 26. 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 | PAGE26
  27. 27. Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study CONFIDENTIAL PRESENTATION | PAGE27
  28. 28. 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 | PAGE28
  29. 29. User Story The Professional Fernando Gomez 34 year-old entrepreneur from Mexico City, Mexico “ My textiles company is starting to do business with more clients overseas. I’d like to practice my English to make communication between us easier.” Why learn English? To support my growing business Challenge myself Current English ability: Advanced Learning Goals: Increase confidence Improve fluency Technology Setup: Personal/Work laptop Language Topics of Interest: Business Etiquette Banking & Finance Meetings Industry terminology Travel Conversational News & Current events Motivation: Business Relationships Personal Growth Education Level: Advanced Degree Payment: Full payment upfront CONFIDENTIAL PRESENTATION | PAGE29
  30. 30. User Story 2 The Seeker Valentina Silva 25 year-old college graduate from Santiago, Chile “ My brother moved to the U.S. to get a job, and now is a store manager in New York City. I want to practice my English so I can visit him, and explore opportunities nearby.” Why learn English? To prepare for job interviews abroad Current English ability: Intermediate Learning Goals: Become Fluent Find a job in U.S. Language Topics of Interest: Traveling Restaurants Culture Music Conversation Learning Pace: As quickly as possible Motivation: To make new friends Enter an exciting job market Travel Practice English with natives Learn the culture Technology Set-up: Desktop shared with family Payment: 12-month financing 2 CONFIDENTIAL PRESENTATION | PAGE30
  31. 31. Company Timeline 04/06 Founded Vzla Entity 02/07 Founded US Entity Launch OpenEnglish.com Video Production Content Library 2006 Free Alpha Thinkglish.com 2007 2008 2010 2011 Student Testing Module 2009 CRM Set Up Service Model Subscription Beta English180.com 05/11 Round B $4.25M +500 12/08 Vzla Launch 2012 +2000 +1000 +100 New Enrollments 4/12 11/11 Round B-1 Round C $43M $2M 04/10 Round A $6M 05/10 LatAm Launch 03/11 LatAm Re-Launch +4000 11/11 Brazil Launch 02/12 SVB Loan $2M 7 CONFIDENTIAL PRESENTATION | PAGE31
  32. 32. 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 | PAGE32
  33. 33. 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 | PAGE33
  36. 36. 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 | PAGE36
  37. 37. Product Management 101: MIT Sloan Fall Seminar Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School @bussgang October 22, 2013 CONFIDENTIAL PRESENTATION | PAGE37