Mit class on pm 3 19-2014

CONFIDENTIAL PRESENTATION | PAGE1
Product Management 101:
MIT Sloan Fall Seminar
March 19, 2014
Jeff Bussgang
General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School
@bussgang
John Andrews
Vice President Products
Oracle

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

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 =

Context for Jeff’s Perspective
• General Partner at Flybridge Capital, early-stage VC firm in
Boston and NYC
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

Context for John’s Perspective
• Vice President Product Mgt and Strategy, Oracle Commerce
Came via $1.1 billion Endeca acquisition
• Vice President Marketing & Product Mgt, Endeca
Joined Endeca as a product manager
• Previously consultant at Deloitte
• HBS’01
• BC ‘96, Economics and CS

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
11
Desirable
Feasible
Viable

Startup
1. A team launching a new product under
conditions of extreme uncertainty
2. A vehicle for testing hypotheses about
such an entity
12
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
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
14

Pivoting
15

Practical Pointers
• Outline for an MRD
• PRD template
• Sample wireframe
• Persona examples: 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
18

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 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

PM Perspectives at Scale
• In larger companies with more mature
products, each decision isn’t a “bet the
company” decision
• Prioritization still a top priority
• Increased specialization of roles
• Interdependencies become more important
across modules and products as product
footprint grows

Development Methodologies:
No Silver Bullet
Waterfall Agile
Pro  Avoids piecemeal design
 Can work on modules in parallel
 Can see full output at of each
phase
 Can measure progress against full
plan
 Full-time product owner not
needed
 Ongoing input from product owner
 Product owner buy-in via direct
participation
 Flexible if requirements should
change
 Find / fix bugs faster
 Faster time to market with MVP
 Time-boxing = cost predictability
Con  It’s difficult to specify
requirements at outset
 Not flexible if requirements
should be changed
 Don’t discover problems until
phase is complete
 Works best with small team and co-
location
 Requires full-time product owner
 Flexibility can lead to feature
proliferation
 Piecemeal = integration issues
 Piecemeal = product that lacks
vision?

Agenda
Management

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

Sample Product Roadmap

Amazon’s Technique: Working
Backwards
1. Start by writing the Press Release. Nail it. The press release describes in a simple way what
the product does and why it exists – what are the features and benefits. It needs to be very
clear and to the point. Writing a press release up front clarifies how the world will see the
product – not just how we think about it internally.
2. Write a Frequently Asked Questions document. Here’s where we add meat to the skeleton
provided by the press release. It includes questions that came up when we wrote the press
release. You would include questions that other folks asked when you shared the press
release and you include questions that define what the product is good for. You put yourself
in the shoes of someone using the product and consider all the questions you would have.
3. Define the customer experience. Describe in precise detail the customer experience for the
different things a customer might do with the product. For products with a user interface,
we would build mock ups of each screen that the customer uses. For web services, we write
use cases, including code snippets, which describe ways you can imagine people using the
product. The goal here is to tell stories of how a customer is solving their problems using the
product.
4. Write the User Manual. The user manual is what a customer will use to really find out
about what the product is and how they will use it. The user manual typically has three
sections, concepts, how-to, and reference, which between them tell the customer everything
they need to know to use the product. For products with more than one kind of user, we
write more than one user manual.
Source: Amazon CTO Werner Vogels

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
• Paying down technical debt can be painful, but often
inevitable – how to manage sales / communication
MVP PMF TECH DEBT
$$

OPOWER Token System
• Product manager has limited resources (engineering) and
many competing interests to balance
• OPOWER created a token system to help build trust,
transparency and force trade-offs
• Sales received a certain number of tokens and could
“spend” those tokens on customer-driven features
• But beware of custom requests/features
– Create a culture where the executive team focuses on equity
value, not functional optimization.
– NEVER branch the code
– “Make the company” deals are always hairy. Figure out a way to
make them work, even if it means sacrificing your roadmap.

Agenda
Management

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

Fernando Gomez
“ 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.”
34 year-old entrepreneur from Mexico City, Mexico
Language Topics of Interest:
Business Etiquette
Banking & Finance
Meetings
Industry terminology
Travel
Conversational
News & Current events
Motivation:
Business Relationships
Personal Growth
Payment:
Full payment upfront
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
The Professional
Education Level:
Advanced Degree
Persona

Persona 2
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.
Learning Pace:
As quickly as possible
Language Topics of Interest:
Traveling
Restaurants
Culture
Music
Conversation
Technology Set-up:
Desktop shared with family
Motivation:
To make new friends
Enter an exciting job market
Travel
Practice English with natives
Learn the culture
Payment:
12-month financing
2
The Seeker

Company Timeline
7
04/06
Founded
Vzla Entity
02/07
Founded
US Entity
04/10
Round A
$6M
05/11
Round B
$4.25M
11/11
Round B-1
$2M
02/12
SVB Loan
$2M
2006 2007 2008 2009 2010 2011
12/08
Vzla
Launch
05/10
LatAm
Launch
03/11
LatAm
Re-Launch
11/11
Brazil
Launch
+100
+500
+1000
+2000
+4000
New Enrollments
Free Alpha
Thinkglish.com
Subscription Beta
English180.com
CRM Set Up
Service Model
Video Production
Content Library
Launch
OpenEnglish.com
Student
Testing
Module
4/12
Round C
$43M
2012

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:
MIT Sloan Fall Seminar
March 19, 2014
Jeff Bussgang
General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School
@bussgang
John Andrews
Vice President Products
Oracle

Mit class on pm 3 19-2014

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