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Fgvn 3 31-2016 search for pmf

  1. 1. CONFIDENTIAL PRESENTATION | PAGE1 The Search for Product-Market Fit Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School March 31, 2016
  2. 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. 3. CONFIDENTIAL PRESENTATION | PAGE3 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 Source: Eric Ries
  4. 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. 5. CONFIDENTIAL PRESENTATION | PAGE5 “Lessons Learned” Drives Funding Concept Business Plan/Canvas Lessons Learned Series A Do this first instead of fund raising (or raise seed round to test hypotheses…rigorously) Test Hypotheses Source: Steve Blank
  6. 6. CONFIDENTIAL PRESENTATION | PAGE6 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
  7. 7. CONFIDENTIAL PRESENTATION | PAGE7 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
  8. 8. CONFIDENTIAL PRESENTATION | PAGE8 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
  9. 9. CONFIDENTIAL PRESENTATION | PAGE9 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: Growth Hackers (great blog)
  10. 10. CONFIDENTIAL PRESENTATION | PAGE10 The Search for Product-Market Fit Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School March 31, 2016

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