Product Market Fit by Jeff Bussgang

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Condensed description of lean start-up theory, customer development process and a case study on foursquare as presented at First Growth Venture Network session in March 2011.

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Product Market Fit by Jeff Bussgang

  1. 1. Product – Market Fit<br />First Growth Venture Network Panel<br />Jeff Bussgang (Flybridge),<br />Charles Smith (ExtensionFM), Dan Porter (OMGPOP)<br />November 17, 2010<br />
  2. 2. Panel Objectives<br />Explain what people mean when they use the phrase, “Product Market Fit” (PMF), plus:<br />Customer Development Process<br />Lean Start-Up Theory<br />Help you devise your approach to achieving PMF<br />Making sure you don’t waste a lot of money before you find PMF<br />
  3. 3. Leading Thinkers<br />Steve Blank: Customer Development Process<br />Eric Ries: Lean Startups<br />Mark Leslie: Sales Learning Curve<br />Sean Ellis: Lean Startup Marketing<br />
  4. 4. Where Are You?<br />Before-Product Market Fit<br />After-Product Market Fit<br />Minimum viable product<br />Customer development process<br />Agile development processes<br />Outsourcing engineering<br />Selling to early adopters<br />Lifetime value of customer<br />Pivoting<br />Bootstrapping benefits<br />Small, founding team<br />Crossing the chasm<br />Metrics when scaling<br />Conversion funnels<br />Designing for virality & scalability<br />Scaling a sales force<br />Challenges with corporate partnerships<br />Building a brand<br />Scaling the exec team<br />Source: HBS Prof. Tom Eisenmann, J.Bussgang<br />
  5. 5. Crossing The Chasm<br />
  6. 6. Lean Startup Principles<br />Nail it then scale it<br />Rapid hypothesis testing about market, pricing, customers (customers & markets unknown)<br />MVP (Minimum viable product)<br />Low burn by design (no scaling until revenue)<br />Metrics, iteration, agile development<br />Learn fast (fail fast)<br />Source: Eric Ries, Sean Ellis<br />
  7. 7. Start-Up Transition to Growth<br />Value<br />Source: Sean Ellis<br />
  8. 8. Key “Value” Question<br />“How would you feel if you could no longer use this Product?”<br />Source: Sean Ellis<br />
  9. 9. Concept/Bus. Plan<br />Product Dev.<br />Alpha/Beta Test<br />Launch/<br />1st Ship<br />Customer Development as important as Product Development<br />Product Development<br />Customer Development<br />CustomerDiscovery<br />Company<br />Building<br />CustomerValidation<br />Customer Creation<br />Source: Steve Blank<br />
  10. 10. Customer Development: Big Ideas<br />Parallel process toProduct Development<br />Measurable Checkpoints<br />Not tied to FCS, but to customer milestones<br />Emphasis is on learning & discovery before execution<br />Source: Steve Blank<br />
  11. 11. Sales Learning Curve<br />Scale Sales Team<br />Start-up Sales Team<br />Founders Sell<br />
  12. 12. “Lessons Learned” Drives Funding<br />Test <br />Hypotheses<br />Concept<br />Business Plan<br />Lessons <br />Learned<br />Series A<br />Do this first instead of fund raising<br />Source: Steve Blank<br />
  13. 13. Product – Market Fit<br />First Growth Venture Network Panel<br />Jeff Bussgang (Flybridge),<br />Charles Smith (ExtensionFM), Dan Porter (OMGPOP)<br />November 17, 2010<br />

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