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.
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 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.
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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
Source: Eric Ries

5.
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“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.
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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

7.
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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.
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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 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.
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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)
• Sean Ellis: Growth Hackers (great blog)

10.
CONFIDENTIAL PRESENTATION | PAGE10
The Search for Product-Market Fit
Jeff Bussgang
General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School
March 31, 2016