description of the role of the product manager, tools and techniques product managers use, how to achieve product market fit.

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. 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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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
=
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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. Agenda
• Customer Development / Modern Product
Management
• The Product Manager – Role & Responsibilities
• Open English Case Study
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6. Old School Product Management
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Report to: Marketing
Output: Requirements Documents
Methodology: Waterfall
Product lifecycles: Years
Decision-Making: Opinion-Driven
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7. Modern Product Management
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Report to: CEO
Output: Prototypes
Methodology: Agile
Product lifecycles: Weeks
Decision-Making: Data-Driven
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8. Customer Development
vs. Product Development
Product Development
Concept/
Bus. Plan
Product
Dev.
Alpha/Beta
Test
Launch/
1st Ship
Customer Development
Source: Steve Blank
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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
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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
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CONFIDENTIAL PRESENTATION | PAGE10

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
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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
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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
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15. Practical Pointers
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Outline for an MRD
PRD template
Sample wireframe
Persona examples: http://bit.ly/18puWOx
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16. Other Tools/Techniques
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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
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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
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17. Crossing The Chasm
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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
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19. Should You Always Nail It
Before You Scale It?
• That is, when is it ok to be a little “fat”?
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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. Agenda
• Customer Development / Modern Product
Management
• The Product Manager – Role & Responsibilities
• Open English Case Study
CONFIDENTIAL PRESENTATION | PAGE20

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:
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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. Product Management Skills (2)
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Think Big
Simplify (Product Manager as Editor)
Prioritize
Forecast and Measure
Execute
Cross-functional leadership
CONFIDENTIAL PRESENTATION | PAGE22

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
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24. Sample Product Roadmap
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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
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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. Agenda
• Customer Development / Modern Product
Management
• The Product Manager – Role & Responsibilities
• Open English Case Study
CONFIDENTIAL PRESENTATION | PAGE27

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
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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. 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. 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. 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. 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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34. Discussion
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35. Summary/Wrap
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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. 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