fgvn 3 31-2016 search for pmf

CONFIDENTIAL PRESENTATION | PAGE1

The Search for Product-Market Fit

Jeff BussgangGeneral Partner, Flybridge Capital

Senior Lecturer, Harvard Business SchoolMarch 31, 2016


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?


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


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 PMFSource: Eric Ries


“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


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

CONFIDENTIAL PRESENTATION | PAGE7INBOUND15

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


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


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)


The Search for Product-Market Fit

Jeff BussgangGeneral Partner, Flybridge Capital

Senior Lecturer, Harvard Business SchoolMarch 31, 2016