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).
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
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
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
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
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