mit class on pm 3 19-2014

CONFIDENTIAL PRESENTATION | PAGE1

Product Management 101:MIT Sloan Fall Seminar

March 19, 2014

Jeff BussgangGeneral Partner, Flybridge Capital

Senior Lecturer, Harvard Business School@bussgang

John AndrewsVice President Products

Oracle


Session Objectives

• What people mean when they use the phrase, “Product Market Fit” (PMF), plus:– Customer Development Process– Lean Start-Up Theory

• What is great product management?• Exposure to some tools and techniques to be a

great product manager


Session Objectives (2)• EV(MBA in startup) = mixed

LTV seeks to increase your expected value

“The value of an MBA for a young entrepreneur is about negative $250k.”

- Guy Kawasaki in TechCrunch

X =


Context for Jeff’s Perspective

• General Partner at Flybridge Capital, early-stage VC firm in

Boston and NYC70+ portfolio companies; seed and Series A focused

• Senior Lecturer at Harvard Business School

• Former entrepreneurCofounder/Pres. Upromise (acq’d by SallieMae)

VP at Open Market (IPO ‘96)

• Author: Mastering the VC Game

• Blog: Seeing Both Sides


Context for John’s Perspective

• Vice President Product Mgt and Strategy, Oracle CommerceCame via $1.1 billion Endeca acquisition

• Vice President Marketing & Product Mgt, EndecaJoined Endeca as a product manager

• Previously consultant at Deloitte

• HBS’01

• BC ‘96, Economics and CS


Agenda

• Customer Development / Modern Product Management

• The Product Manager – Role & Responsibilities• Open English Case Study


Old School Product Management

• Report to: Marketing• Output: Requirements Documents• Methodology: Waterfall• Product lifecycles: Years• Decision-Making: Opinion-Driven


Modern Product Management

• Report to: CEO• Output: Prototypes• Methodology: Agile• Product lifecycles: Weeks• Decision-Making: Data-Driven


Customer Development

Customer Developmentvs. Product Development

Concept/Bus. Plan

Product Dev.

Alpha/Beta Test

Launch/1st Ship

Product Development

Source: Steve Blank


“Lessons Learned” Drives Scaling

ConceptBusiness

Plan/CanvasLessons Learned Scale

Do this first instead of scaling(or raise seed round to test hypotheses…rigorously)

Test Hypotheses

Source: Steve Blank


Hypothesis-DrivenEntrepreneurship

EnvisionVenture Concept

Generate Business

Model Hypotheses

Test Hypothesis Using Minimum Viable Product

Pivot

Perish

Product-Market Fit: Proceed with Scaling

Persevere with Next Test

11

Desirable

Feasible

Viable


Startup

1. A team launching a new product under conditions of extreme uncertainty

2. A vehicle for testing hypotheses about such an entity

12

Entrepreneurship: the pursuit of opportunity beyondresources you currently control

- HBS Professor Howard Stevenson

Relentless FocusNovel/Innovative

Resource Constrained


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

13


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

14


15

Pivoting


Practical Pointers

• Outline for an MRD • PRD template• Sample wireframe• Persona examples: http://bit.ly/18puWOx

https://docs.google.com/document/d/18K08A7IQmHAcuDMiEK7rSk4BmMcAJhgXtnafZmLIZA0/edit

https://docs.google.com/document/d/1hNS5gx-Vi4V2k3I9yHTZY7l-B-QGdd6ldBLmdtsvvQQ/edit

http://bit.ly/18puWOx


Other Tools/Techniques

• Structured idea generation• Business model generation• Customer discovery process• Focus groups• Customer survey• Persona development• Competitor benchmarking• Wireframing• Prototype development• Usability testing• Conversion funnel analysis• A/B test

• Landing page optimization• SEM/SEO optimization• Inbound marketing design• PR strategy• Customer support analysis• Clustering and feature

prioritization• Sales pitch• Lead qualification• Bus dev screening• Charter user program• Net promoter analysis• Lifetime value vs. Customer

acquisition costs 18


Crossing The Chasm


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


Should You Always Nail ItBefore You Scale It?

• That is, when is it ok to be a little “fat”?• If you are in a winner take all market• Deep customer lock-in / high switching costs• Network effect businesses• Capital is cheap• Executive team knows how to scale

• Upromise example• Series A: $34m (March 2000)• Series B: $55m (October 2000)• Launch service: April 2001


PM Perspectives at Scale

• In larger companies with more mature products, each decision isn’t a “bet the company” decision

• Prioritization still a top priority • Increased specialization of roles• Interdependencies become more important

across modules and products as product footprint grows


Development Methodologies: No Silver Bullet

Waterfall AgilePro Avoids piecemeal design

Can work on modules in parallel Can see full output at of each

phase Can measure progress against full

plan Full-time product owner not

needed

Ongoing input from product owner Product owner buy-in via direct

participation Flexible if requirements should

change Find / fix bugs faster Faster time to market with MVP Time-boxing = cost predictability

Con It’s difficult to specify requirements at outset

Not flexible if requirements should be changed

Don’t discover problems until phase is complete

Works best with small team and co-location

Requires full-time product owner Flexibility can lead to feature

proliferation Piecemeal = integration issues Piecemeal = product that lacks

vision?


Agenda




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


• Think Big• Simplify (Product Manager as Editor)• Prioritize• Forecast and Measure• Execute• Cross-functional leadership

Product Management Skills (2)


A Few PM Profiles

Adi Kleiman• Tel Aviv University (industrial

engineering, MBA)• SAP Product Manager (4.5 yrs)• VP of Products, tracx

Nagarjuna Venna• Warangal (CS & eng)• Siemens, Lucent, Banyan

engineer (4.5 yrs)• MIT Sloan• Start up product manager• Founder, Chief Product Officer,

BitSight


Sample Product Roadmap


Amazon’s Technique: Working Backwards

1. Start by writing the Press Release. Nail it. The press release describes in a simple way what the product does and why it exists – what are the features and benefits. It needs to be very clear and to the point. Writing a press release up front clarifies how the world will see the product – not just how we think about it internally.

2. Write a Frequently Asked Questions document. Here’s where we add meat to the skeleton provided by the press release. It includes questions that came up when we wrote the press release. You would include questions that other folks asked when you shared the press release and you include questions that define what the product is good for. You put yourself in the shoes of someone using the product and consider all the questions you would have.

3. Define the customer experience. Describe in precise detail the customer experience for the different things a customer might do with the product. For products with a user interface, we would build mock ups of each screen that the customer uses. For web services, we write use cases, including code snippets, which describe ways you can imagine people using the product. The goal here is to tell stories of how a customer is solving their problems using the product.

4. Write the User Manual. The user manual is what a customer will use to really find out about what the product is and how they will use it. The user manual typically has three sections, concepts, how-to, and reference, which between them tell the customer everything they need to know to use the product. For products with more than one kind of user, we write more than one user manual.

Source: Amazon CTO Werner Vogels


Product Mgr vs. Proj Mgr• Project Managers

– Focus on successful delivery of the project: deadline, budget, goals

– Coordinate the cross-functional team involved in delivering a project / product

– Professional operational managers– Live and die by the “Gantt Chart”

• Sometimes PM plays Project Mgr role, other times they are distinct roles

• Important to be clear on roles, responsibilities and ownership going into a product release


Product Mgt and Sales

• The pressure to “add this feature to win this deal”, particularly at the end of the quarter

• When do you listen to your salespeople / customers, and when do you direct them?

• Sometimes need to slow things down to go faster – focus on infrastructure, scalability

• Paying down technical debt can be painful, but often inevitable – how to manage sales / communication

MVP PMF TECH DEBT

$$


OPOWER Token System

• Product manager has limited resources (engineering) and many competing interests to balance

• OPOWER created a token system to help build trust, transparency and force trade-offs

• Sales received a certain number of tokens and could “spend” those tokens on customer-driven features

• But beware of custom requests/features– Create a culture where the executive team focuses on equity

value, not functional optimization.– NEVER branch the code– “Make the company” deals are always hairy. Figure out a way to

make them work, even if it means sacrificing your roadmap.


Agenda




Open English Case Study

• Online English language learning program• Founded 2006 by Andres and Nicolette Moreno

– Andres: Grew up in VZ, Simon Bolivar (engineering), cofounded offline English language school

– Nic: CO born, Pepperdine (Business and Psychology), non-profit exec, got into but chose not to attend Stanford GSB to co-found Open English

• Launched in late 2009 as a subscription service– ~$1,000 per year – guarantee you’ll learn English– Pay up front or monthly


Fernando Gomez

“My textiles company is starting to do business with more clients overseas. I’d like to practice my English to make communication between us easier.”

34 year-old entrepreneur from Mexico City, Mexico

Language Topics of Interest:Business EtiquetteBanking & FinanceMeetingsIndustry terminologyTravelConversationalNews & Current events

Motivation:Business RelationshipsPersonal Growth

Payment:Full payment upfront

Why learn English?To support my growing businessChallenge myself

Current English ability:Advanced

Learning Goals:Increase confidenceImprove fluency

Technology Setup:Personal/Work laptop

1

The Professional

Education Level:Advanced Degree

Persona


Persona 2

Valentina Silva25 year-old college graduate from Santiago, Chile

“My brother moved to the U.S. to get a job, and now is a store manager in New York City. I want to practice my English so I can visit him, and explore opportunities nearby.”

Why learn English?To prepare for job interviews abroad

Current English ability:Intermediate

Learning Goals:Become Fluent Find a job in U.S.

Learning Pace:As quickly as possible

Language Topics of Interest:TravelingRestaurantsCultureMusicConversation

Technology Set-up:Desktop shared with family

Motivation:To make new friendsEnter an exciting job marketTravelPractice English with nativesLearn the culture

Payment:12-month financing

2

The Seeker


Company Timeline

7

04/06Founded Vzla Entity

02/07Founded US Entity

04/10Round A $6M

05/11Round B $4.25M

11/11Round B-1 $2M

02/12SVB Loan $2M

2006 2007 2008 2009 2010 2011

12/08VzlaLaunch

05/10LatAmLaunch

03/11LatAmRe-Launch

11/11BrazilLaunch

+100

+500

+1000

+2000

+4000

New Enrollments

Free Alpha Thinkglish.com

Subscription BetaEnglish180.com

CRM Set UpService Model

Video ProductionContent Library

Launch OpenEnglish.com

Student TestingModule

4/12Round C$43M

2012


Growing Pains

“With all the growth and developments, there was very little investment in the learning platform.” – Andres Moreno

• Rigid infrastructure made it difficult to add features• Limited personalization, ability to predict churn• Back end that wouldn’t scale more than 20-30% above

current volumes• 12 month product with one price point vs. ability to upsell,

continue over longer duration to improve LTV• Payment system only accepted money in US $ from

consumers who held credit cards, not local currencies


Choices

1. Rearchitect vs. Improve in place?– Continue to progress with incremental improvements

rather than stop everything, pay down technical debt and rearchitect the system from scratch

2. Inside team vs. outside team?– Who should handle the work: the current team or hire an

outside team so as to not distract the current team?

If you were Nic/Andres…what would you do?


Discussion


Summary/Wrap


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)


Product Management 101:MIT Sloan Fall Seminar

March 19, 2014

Jeff BussgangGeneral Partner, Flybridge Capital

Senior Lecturer, Harvard Business School@bussgang

John AndrewsVice President Products

Oracle

mit class on pm 3 19-2014

Business

new product

plan product

great product management

great product manager

agile product lifecycles

waterfall product lifecycles

product market fit pmf

minimum viable product