Product Management 101: The Search for Product-Market Fit

1. Product Management 101:
The Search for Product-Market Fit
Jeff Bussgang
General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School
December 10, 2012
CONFIDENTIAL PRESENTATION | PAGE1

2. Session Objectives
• What is great product management?
• What people mean when they use the phrase,
“Product Market Fit” (PMF), plus:
– Customer Development Process
– Lean Start-Up Theory
• Help you devise your approach to achieving PMF
and avoid wasting a lot of money
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3. Agenda
• Introduce Concepts – 30 minutes
• Exercise – 30 minutes
• Debrief – 15 minutes
• Q&A and Wrap – 15 minutes
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4. Context for My Perspective
• General Partner at Flybridge Capital, early-stage VC firm in
Boston/NY, $560M under management
60+ portfolio companies
• 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
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5. 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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6. Startup
1. A team launching a new product under
conditions of extreme uncertainty
2. A vehicle for testing hypotheses about
such an entity
Entrepreneurship: the pursuit of opportunity beyond
resources you currently control
- HBS Professor Howard Stevenson
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7. Old School Product Management
• Report to: Marketing
• Output: Requirements Documents
• Methodology: Waterfall
• Product lifecycles: Years
• Decision-Making: Opinion-Driven
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8. Modern Product Management
• Report to: CEO
• Output: Prototypes
• Methodology: Agile
• Product lifecycles: Weeks
• Decision-Making: Data-Driven
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9. Customer Development
vs. Product Development
Product Development
Concept/ Product Alpha/Beta Launch/
Bus. Plan Dev. Test 1st Ship
Customer Development
Customer Customer Customer Company
Discovery Validation Creation Building
Source: Steve Blank
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10. 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 amibiguity
– 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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11. 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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12. 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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13. Crossing The Chasm
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14. Where are You?
Before Product-Market Fit: After Product-Market Fit:
Search & Validation Scaling & Optimization
• Lean startup approach • Building a robust, feature-rich
• Hunch-driven hypotheses product
• Minimum viable product (MVP) • Crossing the chasm
• Customer development process • Metrics, analytics, funnels
• Selling to early adopters • Designing for virality &
• Pivoting scalability
• Bootstrapping • Challenges with corporate
partnerships
• Small, founding team
• Building a brand
• Product-centric culture;
informal roles • Scaling the team; more
formal roles
• Early in sales learning curve
• Scaling a sales force
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15. Tools/Techniques
• Structured idea generation • Conversion funnel analysis
• Business model generation • Landing page optimization
• Customer discovery process • SEM/SEO optimization
• Focus groups • Inbound marketing design
• Customer survey • PR strategy
• Persona development • Customer support analysis
• Competitor benchmarking • Product feature prioritization
• Wireframing • Sales pitch
• Prototype development • Lead qualification
• Usability testing • Bus dev screening
• Charter user program • Net Promoter Score
• A/B test • Lifetime value vs. Customer
acquisition costs
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16. “Lessons Learned” Drives Funding
Business Test Lessons
Concept Plan/Canvas Hypotheses Series A
Learned
Do this first instead of fund raising
(or raise seed round to test hypotheses…rigorously)
Source: Steve Blank
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17. Exercise: Blackberry 10
1. Milk cash cow
Strategic Choices 2. Copy iPhone
3. Leapfrog
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18. Exercise Instructions
• Pick a product development methodology
– Agile vs. Waterfall
• Pick the product manager’s role
– Czar
– Democratic leader
– Oligarchy / committee
• Allocate 100 points across key product features
– Apps
– Screen / keyboard
– Form factor (small, light)
– Browser / reading
• Design a falsifiable test to help you with your scoring
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19. A Few Resources
• My blog: www.SeeingBothSides.com
• Quora on product management:
• http://b.qr.ae/W1npOi (product mgt skills)
• http://b.qr.ae/sYy4jS (Google product mgt)
• HBS Case Note on Product Mgt - http://bit.ly/TQhw7w
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20. Product Management 101:
The Search for Product-Market Fit
Jeff Bussgang
@bussgang
jeff@flybridge.com
December 10, 2012
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