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The Search for Product-Market Fit

Jeff BussgangGeneral Partner, Flybridge Capital

Senior Lecturer, Harvard Business School

March 25, 2015

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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?

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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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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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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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Careful What You Measure

Vanity Metrics

• Downloads

• Page views/traffic

• Registered users

• Twitter followers

• Pipeline

• Press mentions

Actionable Metrics

• Retention

• Repeat usage

• Cohort analysis

• Net promoter score

• A/B test results

Impress investors…

…and your mother

Maximize learning…

…and create equity value

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Crossing The Chasm

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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

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Tools/Techniques

• Structured idea generation

• Business model generation

• Customer discovery process

• Focus groups

• Customer survey

• Persona development

• Competitor benchmarking

• Wireframing

• Prototype development

• Usability testing

• Charter user program

• A/B test

• Conversion funnel analysis

• Landing page optimization

• SEM/SEO optimization

• Inbound marketing design

• PR strategy

• Customer support analysis

• Product feature prioritization

• Sales pitch

• Lead qualification

• Bus dev screening

• Net Promoter Score

• Lifetime value vs. Customer acquisition costs

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Can You Growth Hack Your Way There?

• Leverage other people’s platforms, especially social (e.g., Twitter, Facebook)

• Guerilla outreach (e.g., reposting Pinboards of reporters as a PR tactic)

• At intersection of product and marketing, can unify the company around common goal

• Users that come via growth hacks can be less engaged than others – need to watch cohort analysis carefully

• Dependency on other platforms can be dangerous – e.g., they can cut you off

• Tactics may give temporary boost, but can’t scale

Range of techniques that combine the culture of hacking

with startups marketing tools to drive growth

Growth Hacking Benefits Growth Hacking Gotchas

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“Lessons Learned” Drives Funding

ConceptBusiness

Plan/CanvasLessons Learned

Series A

Do this first instead of fund raising(or raise seed round to test hypotheses…rigorously)

Test Hypotheses

Source: Steve Blank

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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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The Search for Product-Market Fit

Jeff BussgangGeneral Partner, Flybridge Capital

Senior Lecturer, Harvard Business School

March 25, 2015