A presentation reviewing the series of techniques and experiments that founders / entrepreneurs can pursue in the quest for acheiving product-market fit.
1. CONFIDENTIAL PRESENTATION | PAGE1
The Search
for Product-
Market Fit
Jeff Bussgang
General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School
May 9, 2018
2. CONFIDENTIAL PRESENTATION | PAGE2
Concepts
• What people mean when they use the phrase,
“Product Market Fit” (PMF), plus:
– Lean Start-Up Theory
– Customer Development Process
• Help you devise your approach to achieving PMF
and avoid wasting a lot of money
• What is great product management?
3. CONFIDENTIAL PRESENTATION | PAGE3
The Lean Startup
• Many startups fail because they waste capital and
time developing a product 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 avoiding rigorous,
analytical or strategic thinking
• Balancing that tension between “ready, fire, aim” vs.
“ready, aim, fire”
Source: Eric Ries
4. CONFIDENTIAL PRESENTATION | PAGE4
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
Source: Eric Ries
5. CONFIDENTIAL PRESENTATION | PAGE5
“Lessons Learned” Drives Funding
Concept
Business
Plan/Canvas
Lessons
Learned
Series A
Do this first instead of fund raising
And perhaps even before writing code
(or raise seed round to test hypotheses…rigorously)
Test
Hypotheses
Source: Steve Blank
6. CONFIDENTIAL PRESENTATION | PAGE6
Startup = Experimentation
Machine
CVP
Experiments
GTM
Experiments
BM
Experiments
Tech, Ops, Product Iterations
CVP = Consumer Value Proposition
GTM = Go To Market
BM = Business Model
Source: HBS Launching Tech Ventures Course
7. CONFIDENTIAL PRESENTATION | PAGE7
Experiments Drill Down
CVP
Experiments
GTM
Experiments
BM
Experiments
WHO HYPOS
WHAT HYPOS
HOW HYPOS
SALES MODEL HYPOS
CHANNEL CHOICE HYPOS
PARTNER HYPOS
GROWTH HYPOS
MONETIZATION
HYPOS
PRICING HYPOS
CVP = Consumer Value Proposition
GTM = Go To Market
BM = Business Model
Source: HBS Launching Tech Ventures Course
8. CONFIDENTIAL PRESENTATION | PAGE8
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
9. CONFIDENTIAL PRESENTATION | PAGE9
INBOUND15
Sales team hitting quota
Sales cycles short
40% test – if product disappeared
Product usage high, growing
LTV : CAC > 3
MRR growing > 10% MoM
Churn < 30% / year
NPS > 20
Criteria for Product Market Fit
10. CONFIDENTIAL PRESENTATION | PAGE10
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)
• Sean Ellis: Hacking Growth (great book)
11. CONFIDENTIAL PRESENTATION | PAGE11
The Search
for Product-
Market Fit
Jeff Bussgang
General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School
May 9, 2018