This presentation discusses the concept of product-market fit and the lean startup methodology for achieving it. It explains that the lean startup approach rapidly tests hypotheses about a new venture based on customer feedback to refine promising concepts and eliminate flops. The goal is to validate business model hypotheses through rigorous experiments and metrics. Startups should get feedback from customers as soon as possible through a minimum viable product and pivot until product-market fit is achieved before scaling up. The presentation provides tips on measuring the right metrics, crossing the chasm to broader adoption, skills for product management, growth hacking techniques, and influential books and blogs on the topic.

1. CONFIDENTIAL PRESENTATION | PAGE1
The Search for Product-Market Fit
Jeff Bussgang
General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School
March 25, 2015

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?

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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
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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
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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

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Careful What You Measure
Vanity Metrics
• Downloads
• Page views/traffic
• Registered users
• Twitter followers
• Pipeline
• Press mentions
Actionable Metrics
• Retention
• Repeat usage
• Cohort analysis
• Net promoter score
• A/B test results
Impress investors…
…and your mother
Maximize learning…
…and create equity value

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Crossing The Chasm

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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 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

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Tools/Techniques
• Structured idea generation
• Business model generation
• Customer discovery process
• Focus groups
• Customer survey
• Persona development
• Competitor benchmarking
• Wireframing
• Prototype development
• Usability testing
• Charter user program
• A/B test
• Conversion funnel analysis
• Landing page optimization
• SEM/SEO optimization
• Inbound marketing design
• PR strategy
• Customer support analysis
• Product feature prioritization
• Sales pitch
• Lead qualification
• Bus dev screening
• Net Promoter Score
• Lifetime value vs. Customer
acquisition costs
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10. CONFIDENTIAL PRESENTATION | PAGE10
Can You Growth Hack
Your Way There?
• Leverage other people’s
platforms, especially social
(e.g., Twitter, Facebook)
• Guerilla outreach (e.g.,
reposting Pinboards of
reporters as a PR tactic)
• At intersection of product
and marketing, can unify
the company around
common goal
• Users that come via growth
hacks can be less engaged
than others – need to watch
cohort analysis carefully
• Dependency on other
platforms can be dangerous
– e.g., they can cut you off
• Tactics may give temporary
boost, but can’t scale
Range of techniques that combine the culture of hacking
with startups marketing tools to drive growth
Growth Hacking Benefits Growth Hacking Gotchas

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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

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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)
• HBS Prof Tom Eisenmann: Launching Tech Ventures
(great blog)
• Sean Ellis: Startup Marketing (great blog)
• Andrew Chen: Growth Hackers (great blog)

13. CONFIDENTIAL PRESENTATION | PAGE13
The Search for Product-Market Fit
Jeff Bussgang
General Partner, Flybridge Capital
Senior Lecturer, Harvard Business School
March 25, 2015