Product market fit fgvn 3-2012


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  • In rough terms, tools in the left column are used pre-PMF, and those in the right post-PMF. A/B tests are used in both phases.
  • Product market fit fgvn 3-2012

    1. 1. Product – Market FitFirst Growth Venture Network Jeff Bussgang General Partner, Flybridge CapitalSenior Lecturer, Harvard Business School March 29, 2012 CONFIDENTIAL PRESENTATION | PAGE1
    2. 2. Session Objectives• Explain 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• Making sure you don’t waste a lot of money before you find PMF CONFIDENTIAL PRESENTATION | PAGE2
    3. 3. 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!)• Mark Leslie: Sales Learning Curve (HBR article)• Sean Ellis: Lean Startup Marketing (great blog)• Tom Eisenmann: Launching Tech Ventures (great blog) CONFIDENTIAL PRESENTATION | PAGE3
    4. 4. 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 4 CONFIDENTIAL PRESENTATION | PAGE4
    5. 5. 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 PMF 5 CONFIDENTIAL PRESENTATION | PAGE5
    6. 6. Crossing The Chasm CONFIDENTIAL PRESENTATION | PAGE6
    7. 7. 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 forceSource: HBS Prof. Tom Eisenmann, J.Bussgang CONFIDENTIAL PRESENTATION | PAGE7
    8. 8. 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 8 CONFIDENTIAL PRESENTATION | PAGE8
    9. 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 BuildingSource: Steve Blank CONFIDENTIAL PRESENTATION | PAGE9
    10. 10. “Lessons Learned” Drives Funding Business Test LessonsConcept Plan Hypotheses Series A Learned Do this first instead of fund raising (or raise seed round to test hypotheses…rigorously)Source: Steve Blank CONFIDENTIAL PRESENTATION | PAGE10
    11. 11. foursquare Case Study • From inception, best practices in PMF: – MVP – Product-centric culture and founding team – $1.35m Series A – Responded to every email, tweet – Hunch-driven, not metrics-driven – The founders were the target customer • Contextual factors – Tech trends enabled success: iPhone/apps, LBS/GPS, social media – Impact of geography (NYC), launch (SXSW) and VC (Fred Wilson) – Game mechanic, playful, entertainingSource: Pikorski, Eisenmann, Bussgang, HBS Case Study: “foursquare” CONFIDENTIAL PRESENTATION | PAGE11
    12. 12. foursquare Case Study (2) • Post PMF Challenges: – Tech founder as scalable CEO – $20m Series B - expectations – Pressure to be more analytical – Competitive response to Facebook, Yelp – The founders no longer can do it all – Monetization pressures – when to run experiments? How scale? • Questions: – Who is foursquare’s customer – the consumer or the business? – What social failure is foursquare solving? – When should foursquare focus on monetization vs. consumer scale? – Has foursquare crossed the chasm?Source: Pikorski, Eisenmann, Bussgang, HBS Case Study: “FourSquare” CONFIDENTIAL PRESENTATION | PAGE12
    13. 13. Product – Market FitFirst Growth Venture Network Jeff Bussgang General Partner, Flybridge CapitalSenior Lecturer, Harvard Business School March 29, 2012 CONFIDENTIAL PRESENTATION | PAGE13