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The Search for Product-Market Fit

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A presentation reviewing the series of techniques and experiments that founders / entrepreneurs can pursue in the quest for acheiving product-market fit.

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The Search for Product-Market Fit

  1. 1. CONFIDENTIAL PRESENTATION | PAGE1 The Search for Product- Market Fit Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School May 9, 2018
  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 a product 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 avoiding rigorous, analytical or strategic thinking • Balancing that tension between “ready, fire, aim” vs. “ready, aim, fire” 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 And perhaps even before writing code (or raise seed round to test hypotheses…rigorously) Test Hypotheses Source: Steve Blank
  6. 6. CONFIDENTIAL PRESENTATION | PAGE6 Startup = Experimentation Machine CVP Experiments GTM Experiments BM Experiments Tech, Ops, Product Iterations CVP = Consumer Value Proposition GTM = Go To Market BM = Business Model Source: HBS Launching Tech Ventures Course
  7. 7. CONFIDENTIAL PRESENTATION | PAGE7 Experiments Drill Down CVP Experiments GTM Experiments BM Experiments WHO HYPOS WHAT HYPOS HOW HYPOS SALES MODEL HYPOS CHANNEL CHOICE HYPOS PARTNER HYPOS GROWTH HYPOS MONETIZATION HYPOS PRICING HYPOS CVP = Consumer Value Proposition GTM = Go To Market BM = Business Model Source: HBS Launching Tech Ventures Course
  8. 8. CONFIDENTIAL PRESENTATION | PAGE8 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
  9. 9. CONFIDENTIAL PRESENTATION | PAGE9 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
  10. 10. CONFIDENTIAL PRESENTATION | PAGE10 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: Hacking Growth (great book)
  11. 11. CONFIDENTIAL PRESENTATION | PAGE11 The Search for Product- Market Fit Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School May 9, 2018

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