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Mit class on pm 3 19-2014


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Product Management 101 in the world of high technology - as taught to MIT students in Spring 2014

Published in: Business

Mit class on pm 3 19-2014

  1. 1. CONFIDENTIAL PRESENTATION | PAGE1 Product Management 101: MIT Sloan Fall Seminar March 19, 2014 Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School @bussgang John Andrews Vice President Products Oracle
  2. 2. CONFIDENTIAL PRESENTATION | PAGE2 Session Objectives • What people mean when they use the phrase, “Product Market Fit” (PMF), plus: – Customer Development Process – Lean Start-Up Theory • What is great product management? • Exposure to some tools and techniques to be a great product manager
  3. 3. CONFIDENTIAL PRESENTATION | PAGE3 Session Objectives (2) • EV(MBA in startup) = mixed  LTV seeks to increase your expected value “The value of an MBA for a young entrepreneur is about negative $250k.” - Guy Kawasaki in TechCrunch X =
  4. 4. CONFIDENTIAL PRESENTATION | PAGE4 Context for Jeff’s Perspective • General Partner at Flybridge Capital, early-stage VC firm in Boston and NYC 70+ portfolio companies; seed and Series A focused • Senior Lecturer at Harvard Business School • Former entrepreneur Cofounder/Pres. Upromise (acq’d by SallieMae) VP at Open Market (IPO ‘96) • Author: Mastering the VC Game • Blog: Seeing Both Sides
  5. 5. CONFIDENTIAL PRESENTATION | PAGE5 Context for John’s Perspective • Vice President Product Mgt and Strategy, Oracle Commerce Came via $1.1 billion Endeca acquisition • Vice President Marketing & Product Mgt, Endeca Joined Endeca as a product manager • Previously consultant at Deloitte • HBS’01 • BC ‘96, Economics and CS
  6. 6. CONFIDENTIAL PRESENTATION | PAGE6 Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study
  7. 7. CONFIDENTIAL PRESENTATION | PAGE7 Old School Product Management • Report to: Marketing • Output: Requirements Documents • Methodology: Waterfall • Product lifecycles: Years • Decision-Making: Opinion-Driven
  8. 8. CONFIDENTIAL PRESENTATION | PAGE8 Modern Product Management • Report to: CEO • Output: Prototypes • Methodology: Agile • Product lifecycles: Weeks • Decision-Making: Data-Driven
  9. 9. CONFIDENTIAL PRESENTATION | PAGE9 Customer Development Customer Development vs. Product Development Concept/ Bus. Plan Product Dev. Alpha/Beta Test Launch/ 1st Ship Product Development Source: Steve Blank
  10. 10. CONFIDENTIAL PRESENTATION | PAGE10 “Lessons Learned” Drives Scaling Concept Business Plan/Canvas Lessons Learned Scale Do this first instead of scaling (or raise seed round to test hypotheses…rigorously) Test Hypotheses Source: Steve Blank
  11. 11. CONFIDENTIAL PRESENTATION | PAGE11 Hypothesis-Driven Entrepreneurship Envision Venture Concept Generate Business Model Hypotheses Test Hypothesis Using Minimum Viable Product Pivot Perish Product-Market Fit: Proceed with Scaling Persevere with Next Test 11 Desirable Feasible Viable
  12. 12. CONFIDENTIAL PRESENTATION | PAGE12 Startup 1. A team launching a new product under conditions of extreme uncertainty 2. A vehicle for testing hypotheses about such an entity 12 Entrepreneurship: the pursuit of opportunity beyond resources you currently control - HBS Professor Howard Stevenson Relentless Focus Novel/Innovative Resource Constrained
  13. 13. CONFIDENTIAL PRESENTATION | PAGE13 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 13
  14. 14. CONFIDENTIAL PRESENTATION | PAGE14 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 14
  17. 17. CONFIDENTIAL PRESENTATION | PAGE17 Practical Pointers • Outline for an MRD • PRD template • Sample wireframe • Persona examples:
  18. 18. CONFIDENTIAL PRESENTATION | PAGE18 Other Tools/Techniques • Structured idea generation • Business model generation • Customer discovery process • Focus groups • Customer survey • Persona development • Competitor benchmarking • Wireframing • Prototype development • Usability testing • Conversion funnel analysis • A/B test • Landing page optimization • SEM/SEO optimization • Inbound marketing design • PR strategy • Customer support analysis • Clustering and feature prioritization • Sales pitch • Lead qualification • Bus dev screening • Charter user program • Net promoter analysis • Lifetime value vs. Customer acquisition costs 18
  19. 19. CONFIDENTIAL PRESENTATION | PAGE19 Crossing The Chasm
  20. 20. CONFIDENTIAL PRESENTATION | PAGE20 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
  21. 21. CONFIDENTIAL PRESENTATION | PAGE21 Should You Always Nail It Before You Scale It? • That is, when is it ok to be a little “fat”? • If you are in a winner take all market • Deep customer lock-in / high switching costs • Network effect businesses • Capital is cheap • Executive team knows how to scale • Upromise example • Series A: $34m (March 2000) • Series B: $55m (October 2000) • Launch service: April 2001
  22. 22. CONFIDENTIAL PRESENTATION | PAGE22 PM Perspectives at Scale • In larger companies with more mature products, each decision isn’t a “bet the company” decision • Prioritization still a top priority • Increased specialization of roles • Interdependencies become more important across modules and products as product footprint grows
  23. 23. CONFIDENTIAL PRESENTATION | PAGE23 Development Methodologies: No Silver Bullet Waterfall Agile Pro  Avoids piecemeal design  Can work on modules in parallel  Can see full output at of each phase  Can measure progress against full plan  Full-time product owner not needed  Ongoing input from product owner  Product owner buy-in via direct participation  Flexible if requirements should change  Find / fix bugs faster  Faster time to market with MVP  Time-boxing = cost predictability Con  It’s difficult to specify requirements at outset  Not flexible if requirements should be changed  Don’t discover problems until phase is complete  Works best with small team and co- location  Requires full-time product owner  Flexibility can lead to feature proliferation  Piecemeal = integration issues  Piecemeal = product that lacks vision?
  24. 24. CONFIDENTIAL PRESENTATION | PAGE24 Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study
  25. 25. CONFIDENTIAL PRESENTATION | PAGE25 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
  26. 26. CONFIDENTIAL PRESENTATION | PAGE26 • Think Big • Simplify (Product Manager as Editor) • Prioritize • Forecast and Measure • Execute • Cross-functional leadership Product Management Skills (2)
  27. 27. CONFIDENTIAL PRESENTATION | PAGE27 A Few PM Profiles Adi Kleiman • Tel Aviv University (industrial engineering, MBA) • SAP Product Manager (4.5 yrs) • VP of Products, tracx Nagarjuna Venna • Warangal (CS & eng) • Siemens, Lucent, Banyan engineer (4.5 yrs) • MIT Sloan • Start up product manager • Founder, Chief Product Officer, BitSight
  28. 28. CONFIDENTIAL PRESENTATION | PAGE28 Sample Product Roadmap
  29. 29. CONFIDENTIAL PRESENTATION | PAGE29 Amazon’s Technique: Working Backwards 1. Start by writing the Press Release. Nail it. The press release describes in a simple way what the product does and why it exists – what are the features and benefits. It needs to be very clear and to the point. Writing a press release up front clarifies how the world will see the product – not just how we think about it internally. 2. Write a Frequently Asked Questions document. Here’s where we add meat to the skeleton provided by the press release. It includes questions that came up when we wrote the press release. You would include questions that other folks asked when you shared the press release and you include questions that define what the product is good for. You put yourself in the shoes of someone using the product and consider all the questions you would have. 3. Define the customer experience. Describe in precise detail the customer experience for the different things a customer might do with the product. For products with a user interface, we would build mock ups of each screen that the customer uses. For web services, we write use cases, including code snippets, which describe ways you can imagine people using the product. The goal here is to tell stories of how a customer is solving their problems using the product. 4. Write the User Manual. The user manual is what a customer will use to really find out about what the product is and how they will use it. The user manual typically has three sections, concepts, how-to, and reference, which between them tell the customer everything they need to know to use the product. For products with more than one kind of user, we write more than one user manual. Source: Amazon CTO Werner Vogels
  30. 30. CONFIDENTIAL PRESENTATION | PAGE30 Product Mgr vs. Proj Mgr • Project Managers – Focus on successful delivery of the project: deadline, budget, goals – Coordinate the cross-functional team involved in delivering a project / product – Professional operational managers – Live and die by the “Gantt Chart” • Sometimes PM plays Project Mgr role, other times they are distinct roles • Important to be clear on roles, responsibilities and ownership going into a product release
  31. 31. CONFIDENTIAL PRESENTATION | PAGE31 Product Mgt and Sales • The pressure to “add this feature to win this deal”, particularly at the end of the quarter • When do you listen to your salespeople / customers, and when do you direct them? • Sometimes need to slow things down to go faster – focus on infrastructure, scalability • Paying down technical debt can be painful, but often inevitable – how to manage sales / communication MVP PMF TECH DEBT $$
  32. 32. CONFIDENTIAL PRESENTATION | PAGE32 OPOWER Token System • Product manager has limited resources (engineering) and many competing interests to balance • OPOWER created a token system to help build trust, transparency and force trade-offs • Sales received a certain number of tokens and could “spend” those tokens on customer-driven features • But beware of custom requests/features – Create a culture where the executive team focuses on equity value, not functional optimization. – NEVER branch the code – “Make the company” deals are always hairy. Figure out a way to make them work, even if it means sacrificing your roadmap.
  33. 33. CONFIDENTIAL PRESENTATION | PAGE33 Agenda • Customer Development / Modern Product Management • The Product Manager – Role & Responsibilities • Open English Case Study
  34. 34. CONFIDENTIAL PRESENTATION | PAGE34 Open English Case Study • Online English language learning program • Founded 2006 by Andres and Nicolette Moreno – Andres: Grew up in VZ, Simon Bolivar (engineering), cofounded offline English language school – Nic: CO born, Pepperdine (Business and Psychology), non-profit exec, got into but chose not to attend Stanford GSB to co-found Open English • Launched in late 2009 as a subscription service – ~$1,000 per year – guarantee you’ll learn English – Pay up front or monthly
  35. 35. CONFIDENTIAL PRESENTATION | PAGE35 Fernando Gomez “ My textiles company is starting to do business with more clients overseas. I’d like to practice my English to make communication between us easier.” 34 year-old entrepreneur from Mexico City, Mexico Language Topics of Interest: Business Etiquette Banking & Finance Meetings Industry terminology Travel Conversational News & Current events Motivation: Business Relationships Personal Growth Payment: Full payment upfront Why learn English? To support my growing business Challenge myself Current English ability: Advanced Learning Goals: Increase confidence Improve fluency Technology Setup: Personal/Work laptop The Professional Education Level: Advanced Degree Persona
  36. 36. CONFIDENTIAL PRESENTATION | PAGE36 Persona 2 Valentina Silva 25 year-old college graduate from Santiago, Chile “ My brother moved to the U.S. to get a job, and now is a store manager in New York City. I want to practice my English so I can visit him, and explore opportunities nearby.” Why learn English? To prepare for job interviews abroad Current English ability: Intermediate Learning Goals: Become Fluent Find a job in U.S. Learning Pace: As quickly as possible Language Topics of Interest: Traveling Restaurants Culture Music Conversation Technology Set-up: Desktop shared with family Motivation: To make new friends Enter an exciting job market Travel Practice English with natives Learn the culture Payment: 12-month financing 2 The Seeker
  37. 37. CONFIDENTIAL PRESENTATION | PAGE37 Company Timeline 7 04/06 Founded Vzla Entity 02/07 Founded US Entity 04/10 Round A $6M 05/11 Round B $4.25M 11/11 Round B-1 $2M 02/12 SVB Loan $2M 2006 2007 2008 2009 2010 2011 12/08 Vzla Launch 05/10 LatAm Launch 03/11 LatAm Re-Launch 11/11 Brazil Launch +100 +500 +1000 +2000 +4000 New Enrollments Free Alpha Subscription Beta CRM Set Up Service Model Video Production Content Library Launch Student Testing Module 4/12 Round C $43M 2012
  38. 38. CONFIDENTIAL PRESENTATION | PAGE38 Growing Pains “With all the growth and developments, there was very little investment in the learning platform.” – Andres Moreno • Rigid infrastructure made it difficult to add features • Limited personalization, ability to predict churn • Back end that wouldn’t scale more than 20-30% above current volumes • 12 month product with one price point vs. ability to upsell, continue over longer duration to improve LTV • Payment system only accepted money in US $ from consumers who held credit cards, not local currencies
  39. 39. CONFIDENTIAL PRESENTATION | PAGE39 Choices 1. Rearchitect vs. Improve in place? – Continue to progress with incremental improvements rather than stop everything, pay down technical debt and rearchitect the system from scratch 2. Inside team vs. outside team? – Who should handle the work: the current team or hire an outside team so as to not distract the current team? If you were Nic/Andres…what would you do?
  42. 42. CONFIDENTIAL PRESENTATION | PAGE42 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)
  43. 43. CONFIDENTIAL PRESENTATION | PAGE43 Product Management 101: MIT Sloan Fall Seminar March 19, 2014 Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School @bussgang John Andrews Vice President Products Oracle