Jeffrey J. Bussgang is a Senior Lecturer in the Entrepreneurial Management Unit at the Harvard Business School and a General Partner at Flybridge Capital Partners, an early-stage venture capital firm. He studies lean startups as well as strategy and management challenges for founders. He teaches Launching Technology Ventures in the MBA Elective Curriculum and has previously assisted in teaching Founders' Dilemmas. Jeff's investment interests and entrepreneurial experience are in consumer, Internet commerce, marketing services, and software and mobile start-ups.
Jeff currently represents Flybridge Capital Partners on the boards of Cartera Commerce, ClickSquared, DataXu, i4cp, Plastiq, SavingStar, SimpleTuition and tracx, and is a board observer at ZestFinance. Jeff was previously a director at Brontes Technologies (acquired by 3M), BzzAgent (acquired by Tesco), Convoke Systems, go2Media, oneforty (acquired by HubSpot), PanGo Networks (merged with InnerWireless), Ready Financial (merged with AccountNow), Transpera (acquired by Tremor Video).
He is also on the board of MITX, the Massachusetts Innovation and Technology Exchange, and is a Founding Executive Committee Member of FirstGrowth Venture Network, a network of venture and angel investors supporting first- and second-time entrepreneurs building exciting companies in the New York area.
Jeff has authored and co-authored several HBS cases that are taught in both Founders' Dilemmas (Curt Schilling's Next Pitch) and Launching Technology Ventures (foursquare, Predictive BioSciences, BabbaCo, and Plastiq). He is the co-author of Ruling The Net, a 1996 Harvard Business Review article on the Internet's potential for commerce.
Jeff's book on venture capital and entrepreneurship, Mastering the VC Game, is an insider's guide for entrepreneurs on financing and company-building. The book has been hailed by the Wall Street Journal, BusinessWeek, TechCrunch and The Financial Times as an essential guide for entrepreneurs. The first chapter of Mastering the VC Game can be downloaded here.
Jeff's popular blog on helping demystify the venture business for entrepreneurs, "Seeing Both Sides", can be found at http://www.seeingbothsides.com/, which is syndicated by BusinessInsider.com, Inc Magazine, Fortune, Reuters, PE Hub, and others. You can follow Jeff on Twitter at www.twitter.com/bussgang.
Prior to joining the firm in January 2003, Jeff co-founded Upromise (acquired by Sallie Mae), a loyalty marketing and financial services firm with 12 million members that currently manages over $35 billion in college savings assets, where he served as President, Chief Operating Officer and Board Director. Prior to Upromise, Jeff was an executive at Open Market, an Internet commerce software leader that went public in 1996 and grew to nearly $100 million in revenues. During his five-year tenure, he served as Vice President of Worldwide Marketing and Business Development, Vice President of Worldwide Professional Services and head of Product Management. Prior to Open Market, Jeff was with the strategy consulting firm, The Boston Consulting Group.
Jeff holds a BA in Computer Science from Harvard University where he graduated magna cum laude and an MBA from Harvard Business School where he was a Baker Scholar and a Ford Scholar.
Jeff is married with three children and is an avid baseball fan. He is an active community member, serving as vice-chair of the The Alliance for Business Leadership, vice chairman of the board of educational non-profit, Facing History and Ourselves, and has served on various civic boards, including Governor Deval Patrick's Council for Innovation (to use technology to make government more efficient), Economic Development Council (creating an economic development plan for the State) and the Readiness Finance Commission (education reform).
Mastering the VC Game
Entrepreneurs who dream of building the next Amazon, Facebook or Google have the opportunity to take advantage of one of the most powerful economic engines the world has ever known: venture capital. To do so, you need to woo, impress, and persuade venture capitalists to take a risk on an unproven endeavor. Getting funding is challenge enough, but choosing the right investor and creating a good working relationship can be harder still. You want your VC to act as a partner and adviser, not as an adversary who cares more about a quick return than about realizing the vision of your company.
Jeffrey Bussgang is one of the few people who have played on both sides of this high-stakes game. By his early thirties, he had helped build two successful start-ups—one went public, the other was acquired. Now he uses his experience and unique perspective on "the other side" as a venture capitalist helping entrepreneurs bring their dreams to fruition.
Bussgang offers detailed insights, colorful stories, and practical advice gathered from his own experience as well as from interviews with dozens of the most successful players on both sides of the game, including Twitter's Jack Dorsey and LinkedIn's Reid Hoffman. He reveals how to get noticed, perfect a pitch, and negotiate a partnership that
works for everyone.
An insider's guide to the secrets of the world of venture capital, Mastering the VC Game will prove invaluable for entrepreneurs seeking capital and successful partnerships.
Seeing Both Sides
The purpose of this blog is to provide transparency into the venture capital process and to give entrepreneurs advice on company building.
Cases Featuring Jeff
Jeff’s involvement with Open Market and Upromise has been the subject of the following cases.
UPromise 2002: Describes a set of decisions confronting the senior management of a company that has established a loyalty rewards program allocating cash to tax-advantaged college savings accounts for participants. The company has recruited a new CEO and needs to raise additional capital in the post-Internet bubble period.
Citation: Sahlman, William A. “Upromise 2002.” Harvard Business School Case 804-058, September 2003.
UPromise: Describes the development of UPromise, a company that has developed a loyalty program through which corporate partners can contribute to funds that finance the education of consumers' children. Presents the accomplishments prior to the company's second round of financing and asks students to consider how the recent NASDAQ drop could or should affect the company's ability to raise money.
Citation: Sahlman, William A., Michael J. Roberts. “UPromise.” Harvard Business School Case 801-321, November 2000.
Open Market, Inc.: The E-Commerce Wars: Continues the story of Open Market, Inc., a company founded in 1994 to support electronic commerce on the Internet. Despite a very successful initial public offering, the firm had reached a growth plateau, and the management team was considering several strategic options. Should it focus on building market share of its simple "storefront" product shop site (which was targeted at small e-merchants) or develop new channels for their high-end order-processing software, Transact? The 1999 holiday season was rapidly approaching, and Open Market's management team hoped to benefit from a predicted surge in online sales.
Citation: Cash, James I., Janis Gogan, Micahel Haselkorn, and Mani Subramani. “Open Market, Inc.: The E-Commerce Wars.” Harvard Business School Case 800-255, October 2000. (Revised from original February 2000 version.)
Open Market, Inc.: Managing in a Turbulent Environment: Presents the story of Open Market, Inc., one of numerous companies formed in 1994 to engage in electronic commerce over the Internet. This case examines the company's development--its business strategy and organization evolution--as the company increased in size and gained a firm foothold in the uncertain electronic commerce.
Citation: Applegate, Lynda M., Janis L. Gogan. “Open Market, Inc.: Managing in a Turbulent Environment.” Harvard Business School Case 196-097. August 1996. (Revised from original March 1996 version.)
Ruling the Net
The Internet promises a radical new world of business. But for many companies, it has yet to deliver. Although doing business in cyberspace may be novel and exhilarating, it can also be frustrating, confusing, and even unprofitable. Debora Spar and Jeffrey Bussgang argue that the problems companies face have little to do with a lack of technology or imagination. Their problems stem instead from a lack of rules. The authors explain why the informal rules that have developed on the Internet since the 1960s are no longer sufficient. Businesses thinking of allowing millions of dollars of transactions to occur on the wide-open Net need specific assurances. They require clear definitions of property rights, a safe and useful means of exchange, and a way to locate and punish violators of on-line rules.
Keywords: Information Services;
Spar, D. L., and Jeffrey J. Bussgang. "Ruling the Net
." Harvard Business Review
74, no. 3 (May–June 1996): 125–133. View Details
Raising Startup Capital
Entrepreneurs typically focus their full energies on business-building. But raising capital is a core part of building a valuable business. Developing expertise in raising capital is more than a necessary evil, it is a competitive weapon. Master it and you will be in a better position to make your company a massive success. But how do you finance a new venture? In this note, I will try to help answer this question by addressing the following topics:
• Types of funding. The two major types of startup capital are equity funding and debt funding although there are a few hybrid flavors as well.
• Sources of funding. These include venture capital firms, angel investors, crowd-funding, and accelerators/incubators.
• What investors look for. Each source has a different funding process and set of criteria which you need to understand before seeking funding from that source.
• The mechanics of equity funding. Seeking and securing funding involves setting amounts, agreeing to terms, and defining relationships.
Keywords: fund raising;
venture capital term sheet;
Jumpstart Our Business Startups (JOBS) Act;
National Venture Capital Association;
venture capital firm compensation;
Financing and Loans;
Financial Services Industry;
Open English, a Miami-based startup offering online English language learning services, had more than 30,000 active students across Latin America in 2012. The company had just closed a $43 million financing round in order to rapidly scale its service to the next level. Nicolette Moreno, Co-founder and Vice President of Product Development, felt that a substantial portion of the new funding was needed to rework Open English's platform to enable the additional growth. She was concerned that the company's learning platform (LP)—the core set of software systems used to deliver online lessons—was beginning to show its age. Although one path would be to shore up the LP's capacity incrementally to allow the company to sustain its momentum with minimal disruption, Nicolette felt it was just a matter of time before they had to tackle a complete rewrite of the platform. Although daunting to undertake, a rewrite would allow the company to grow beyond the current LP's capabilities and position them for future success. Nicolette needed to give the board a full sense of what she saw—was now really the right time for a complete rewrite of the LP? What were the risks? And how should she approach the effort?
Keywords: technology strategy;
Bussgang, Jeffrey J., and Lisa Mazzanti. "Open English."
Harvard Business School Case 814-020, January 2014. (Revised June 2014.) View Details
Yahoo: Both Sides of the Stamped Deal
In 2012, Marissa Mayer became the CEO of Yahoo!, a tech giant with a tumultuous past. When Mayer tries to reinvigorate the company, she hires Jacqueline Reses, who has a private equity background, to head both human resources and mergers and acquisitions (M&A). As part of Mayer's turnaround strategy, Reses looks to build a mobile technology product development team by executing an "acquisition-hire" (i.e., "acqui-hire") to acquire New York City-based start-up Stamped, a mobile application company launched by former Google employees, Robby Stein and Bart Stein. Without an M&A team that is fully staffed and before new acquisition processes have been formalized, Reses must decide whether acquiring Stamped is a wise strategy. The case also considers the perspective of Robby and Bart and explores if selling Stamped to Yahoo! and transitioning the Stamped team into Yahoo!'s mobile product development team is the right exit strategy for their start-up.
Keywords: mobile app;
Mergers and Acquisitions;
New York (city, NY);
The young CEO of a venture-backed startup needs to figure out his go to market strategy and the right profile for his first key sales hires. Should he develop partnerships with channels that would provide leverage or build out a direct sales force? And should the sales team be led by an experienced senior sales executive or a scrappy, mid-level sales manager?
Selection and Staffing;
Cost vs Benefits;
Bussgang, Jeffrey J., Gaurav Jain, Liroy Haddad, Luke Langford, and Matt Noble. "Plastiq."
Harvard Business School Case 813-125, December 2012. View Details
Having just raised a Series B financing, the case protagonist is faced with a tough decision: should she "step on the gas" and scale the customer base, or continue focusing on fine-tuning the product and business model. The case describes the various marketing channels employed by the BabbaCo team (Search, Email, Social Media, Deal Sites, Affiliates, etc.), including the strategy and effectiveness for each. Readers can use this knowledge to evaluate the effectiveness of the marketing efforts to date and determine whether they think the company is ready to scale those efforts or whether it is premature to do so.
Growth and Development Strategy;
Bussgang, Jeffrey J., and Gaurav Jain. "BabbaCo."
Harvard Business School Case 813-107, December 2012. View Details
The Business Development Manager
Describes the role of business development (BD) managers in technology companies, detailing: 1) BD managers' key responsibilities at each step in the process of creating a partnership agreement; 2) how the nature of the BD function evolves as a technology startup matures; and 3) the attributes of effective BD managers.
High technology products;
Business or Company Management;
Partners and Partnerships;
Growth and Development Strategy;
The Product Manager
Describes the role of product manager (PM) in technology companies, detailing 1) PMs' responsibilities; 2) different ways to organize the product management function; 3) how PMs interact with other functions within technology companies (e.g., engineering, product marketing); 4) how the nature of the PM role varies depending on context (e.g., early- vs. late-stage startups, business- vs. engineering-driven cultures); and 5) the attributes of effective PMs.
Keywords: Product Marketing;
Co-founders of foursquare are deciding how to respond to competitive threats and scale up the organization. Foursquare was a location-based online service that allowed users to "check in" to a location using an application on a smartphone. Foursquare kept track of a user's check-ins, shared them with users' friends, and unlocked "Specials" that gave users discounts at nearby locations. Within a year and a half of its founding the company had 45 employees and over 5 million users and was valued in excess of $100 million. However, many competitors, including Facebook, Twitter, and Yelp, developed competitive services requiring foursquare to respond.
Web Services Industry;
Piskorski, Mikolaj Jan, Thomas R. Eisenmann, Jeffrey J. Bussgang, and David Chen. "foursquare."
Harvard Business School Case 711-418, January 2010. (Revised March 2013.) View Details
Curt Schilling's Next Pitch
As his major-league pitching career was starting to wind down in 2006, baseball all-star Curt Schilling decided to become an entrepreneur. Looking to focus his tenacity and his passion for online role-playing games on a new challenge, he founded an online gaming venture, which later became known as 38 Studios. During the venture's first two years, he built a team of 70 people, including an executive team of business and industry veterans and learned key lessons about the challenges faced by industry-changing entrepreneurs. Wanting to self-fund the venture initially, and later finding it hard to raise outside money, he put a substantial percentage of his net worth on the line to build 38 Studios. Now he is facing a critical acquisition decision that could either double his problems or help solve them.
Keywords: Mergers and Acquisitions;
Decision Choices and Conditions;
Financing and Loans;
Personal Development and Career;
Groups and Teams;
Video Game Industry;
A small cancer diagnostics start-up is deciding whether to acquire a laboratory to make and sell its bladder cancer test or build its own manufacturing and sales team.
Keywords: Mergers and Acquisitions;
Factories, Labs, and Plants;
Health Testing and Trials;
Growth and Development Strategy;
Launching Technology Ventures
Jeff’s research focuses on applying Lean Startup principles to early-stage technology companies as well as the challenges and opportunities when scaling startups. His series on scaling – featuring case studies such as Akamai, TripAdvisor and athenahealth – was published in Harvard Business Review online in 2012.
Jeff’s work on how to raise venture capital culminated in a book, Mastering the VC Game, published by Penguin’s Portfolio. He also researches how to achieve alignment between entrepreneurs and venture capitalists and frequently lectures on startup ecosystems, particularly Boston’s.
Field Course: Launching Technology Ventures
Launching Technology Ventures (LTV) is designed for students who are actively working on their own startups or who will work at early-stage startups, launching information technology products. The course material is, in particular, focused on new businesses in the Internet, mobile, and enterprise software sectors, although the lessons from these sectors are quite generalized.
Extending concepts introduced in the MBA Required Curriculum course, The Entrepreneurial Manager, LTV explores in greater depth "lean startup" management practices as well as scaling challenges in startups. The course takes the perspective of not just the founder but also functional leaders in product management, sales, and business development. LTV will emphasize implementation rather than strategy issues, and will avoid overlap with concepts covered in Entrepreneurial Finance and Founders' Dilemmas.
Course Content and Organization
LTV is organized into classroom and project sessions. Senior Lecturer Jeff Bussgang will lead a series of case discussions that explore execution challenges before and after a startup achieves product-market fit, i.e., a match between its product solution and market needs. Topics explored in the cases include: 1) the importance of launching early and conducting experiments using a minimum viable product (MVP), i.e., the smallest set of features necessary to rapidly validate a hypothesis about a new venture based on customer feedback obtained through A/B tests, interviews, usability tests, customer support interactions, etc.; 2) the use of metrics to gauge whether hypotheses have been validated, e.g., viral coefficients, customer retention rates, unit economics; 3) the process of pivoting, i.e., modifying a product/business model based on market feedback; and 4) challenges in "crossing the chasm" from early adopters to mainstream customers; 5) challenges in scaling a direct sales force; 6) tradeoffs for startups relying on business development partnerships with large companies; and 7) why, when and how startups should introduce formal product management processes, e.g., project prioritization and tracking systems, product roadmaps.
Project sessions in the Batten Hall hives will entail a series of team exercises supervised by Senior Lecturer Bussgang and Professor Eisenmann, as well as startup mentors, including HBS Entrepreneurs-in-Residence. Through these exercises, a team of students will specify, for one team member's startup idea, business model assumptions and rigorous tests to validate those assumptions, leveraging tools and techniques covered in the LTV's case sessions. Students will present their projects the end of the term and draft a short essay, optionally published on the LTV course blog, about what they learned.
Awards & Honors
Named a 2014 "Venture Capitalist" Power Player in Digital Media by AlwaysOn.
Named one of Boston Magazine's Most Powerful Idea People in 2014.
Named one of Mashable's Top 15 People Shaping Boston's Tech Scene.
Named one of Boston Business Journal’s 40 Under 40 in 2006.