Techniques to Find Product-Market Fit - from Growth Hacking to Lean Methodology

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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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