How To Start A Business Without Ever Feeling Fear - with Hiten Shah

Hiten Shah believes the two biggest myths entrepreneurs buy into are “I need money to start a business” and “I need an idea I’m passionate about.” Why does he believe this? We tackle that question head on in the first two minutes of today’s episode.

But let me warn you - you may not like his answer.

Hiten Shah is the founder of KISSmetrics and Crazy Egg - two web analytics company that provide businesses with actionable website metrics. He also advises dozens of startups like AppSumo and Buffer. Over the years, Hiten has developed a mindset that lets him to make decisions without fear - even though he’s faced situations in his business that would have crippled most with fear.

One of Hiten’s early businesses was a web hosting company; and it was a HUGE failure. He lost close to $1 million in less than 12 months. It was an experience that would have caused many entrepreneurs to give up. But Hiten has learned to see problems differently than most and after today’s interview, you’ll understand his process well enough to apply it to your life and business.

In This Episode You'll Learn...

  • The process Hiten uses to eliminate fear from his life
  • Why you don’t need money or an idea you’re passionate about to start a business
  • How to use lean startup principles to test your business hypothesis in one week or less
  • The one strategy a new business should focus on above anything else (look for this around the six minute mark)
  • Why you should avoid the solution and focus on the problem when building your business - optimize for learning

Downloads

Show Notes

Podcast transcript:

Andy: All right. Welcome everyone to another episode of The
Foundation podcast Starting with Nothing.Today with us I have Hiten
Shah and Hiten is the founder of KISSmetrics and Crazy Egg, two web
analytics companies that provide business with actionable website
metrics. He’s an adviser to dozens of well-known startups like
AppSumo, Buffer, SlideShare and more and he’s been a mentor to some
of our students in The Foundation as well.The two things I think I
appreciate most about Hiten is one that he generally wants to help
entrepreneurs. The question he’s constantly asking himself is how many
businesses can I help and it’s an incredible question to ask because
they’ve put a little over 200, 250,00 people through their doors as
customers. Is that right?
Hiten: Yeah.
Andy: It’s incredible number.
That’s the first thing. The second thing is that Hiten is driven by learning
above everything else. After he built his companies from scratch using
no outside funding he went and raise money for KISSmetrics purely
because he wanted to experience what raising money was like as oppose
to just reading about it from other people. I find people who prioritize
learning above everything else, tend to make more progress than anyone
else and it also makes for great stories. Hiten, welcome to the show man.
Hiten: Glad to be here.
Andy: Thanks. Let’s get started by talking about … you believe
there’s two myths that people have about starting a business. What are
the two myths and why are they myths?
Hiten: Yeah, those myths change about every few months. No,
just kidding. Hang on. There’s a bunch of cops going by which should
stop soon. Yeah.
The first myth I’d say is that they need … well the two myths are at least
as of this minute and I think these are pretty universal now for me, are
one that they need an idea to get started and need an idea they’re
passionate about and two is that they need money. I think they’re
somewhat related. I’ll start with the first one about passion or idea and
that’s a myth that I think is perpetuated because you learn that you
should do something you love, you should be passionate about what
you’re doing, all that kind of stuff. I think there’s a combination of being
good at something so that you’ll be passionate about it because you’re
just good at it and you can learn faster because you’re good at it and you
might want to get better at it.
The thing that bugs me is when people really wait for an idea instead of
just getting started. To me I think the true entrepreneurs that I’ve met
end up just being passionate about being able to create things, being able
to help other people, being able to do all of that from nothing. That’s
really what I would say is where I would start in terms of dispelling that
myth and saying most people just start and through that process it come
up with ideas and things that they’re passionate about. Sort of in my
experience the younger someone is even all the way down to elementary
or high school, the harder it is for them to actually be passionate or find
passion in something and then that constantly leads them to waiting.
Waiting to do actually what they should.
Andy: Let me see if I’m getting this right. The younger they are
the harder it is to be passionate about something?
Hiten: Yeah. Because of the myth I think the myth that you have
to be passionate about your idea to do it. My thought is most successful
entrepreneurs have done so many different things. You couldn’t even
point what their passion is beyond the fact that they like making things
or creating things or wanting businesses or starting businesses, right? All
the great entrepreneurs they end up … I don’t know if they knew when
they first started their first business that they were really passionate
about that. Or even what they are passionate instead they just wanted to
do something. Do something more with themselves.
Andy: Got it. Because I remember this, I remember being like in
college and being like I just don’t know what idea to pursue and I’m not
really passionate about anything in particular but I didn’t really know
where to start so I bought some internet marketing courses or something.
For people who are sitting in that position where do you advise them to
get started?
Hiten: Yeah, I think … I wouldn’t emphasize idea; I would just
emphasize back to the thing you said about me and learning. I would just
emphasize what you want to learn about. If you want to learn about
marketing because you think it’s really important to any idea then just
go learn about marketing and try different things and you’ll pretty much
find what you’re aligned with, right? If you’re really dying to build
software online and build like softwares and service products or learn
how to program because you think that that’s what you need to do then
just go learn it. Just start learning. Figure out what you think you’re most
attracted to and start learning it. If you don’t know then try a little bit of
a few things. Try to learn how to do marketing, try to learn how to
program, try to learn how to write content for example and pick the one
that you just feel more naturally … sort of naturally wanting to learn
more about or wanting to know or having a little bit of success with and
then everything else normally comes out of that.
For me it just started with knowing from a very young age partly
because of my father that I should be an entrepreneur, I should try to
work for myself and that’s kind of what he taught me. It was just that
sort of … I’m talking about six years old when he said that to me and so
I always just wanted to be on my own and build my own businesses.
Andy: Okay. Totally get the idea of following what you want to
learn about then talk about how the money piece comes into play
because if you [inaudible 00:05:36] focus on learning where pretty start
focusing on revenue.
Hiten: Yeah. I’d say that … part of that learning at some point
whether you know it or not comes from … well, I want to figure out how
to make money or be … whether it’s self-sustaining or build what they
call a billion dollar business. Well, you don’t build a billion dollar
business by setting out to build a billion dollar business. You build a
business by having your incremental steps and starting to make money
in some category and actually get people to pay you.
If you’re focused around getting customers to pay you and getting good
at that or getting users to pay you depending on the type of business
model you’re going for or getting advertisers to pay you, all you have to
figure out is who do I want to pay me and how do I get better at that
instead of worrying about raising money from inventors. My gripe with
people thinking they need money is simply they think the only way to
make money or get money to start is getting money from investors. In
fact we’re in a place today where most of the business I’ve seen that end
up being successful, end up making money and getting really good at
making money. In fact all business is about that.
I would just encourage you … try to start making money any which way
you can instead of worrying about raising money and that’s kind of the
myth that I’m trying to dispel which is that most great thing start just by
somebody focusing on getting somebody to pay them.
Andy: Got it. Tell me a little bit more about your dad when you
were six years old. What happened then?
Hiten: Yeah. He would literally just sort of lightly too, not even
very aggressively just tell me, hey, I’m a physician and I go to work, I
get paid and that’s the life I live up an hourly worker, a salary worker,
right? His whole point was in my world there’s some limit to how much
money I could make. I guess for me I just learn that there should be no
limit and that’s kind of what he taught me and the way to have no limit
is to really think about how to make your own money, make your own
business, be an entrepreneur for lack of a better term. He didn’t even use
the word, somehow he just instilled this idea in me that I can do
anything that I want to and that’s the best way to go versus becoming a
lawyer, becoming engineer or becoming a sort of doctor. Instead it was
just about … how can you have the most impact and highest leverage.
Andy: Do you remember this moment in particular when you
were six years old? [Inaudible 00:08:11].
Hiten: No. Not really.
Andy: No?
Hiten: No. He said that all my life until he felt like that’s what I
started doing. He just sprinkled it across everything; whether it’s
showing me early on like so. One thing he does is he holds three [held
00:08:29] camps across the world for people … it doesn’t matter if they
have insurance or not, anyone can come and get everywhere from a
blood test to an eye exam to an EKG. He’s even done free surgeries
across the world and recently did his first one in America. It’s very
difficult. All the way from like cataract surgeries, like really crazy sort
of intensive stuff. From a young age he basically showed me how he is
able to leverage his time and get a lot of things done outside of work.
The one thing I always think of is how do I find people that can do
things better than me and basically enable them and that’s how I
leveraged my time.
When I started reading some of the books around management and stuff
like that all the good books say a good manager doesn’t manage at all,
right? And it’s really about leverage on your time and enabling people to
succeed, enabling people to reach their highest potential. I think over
time as I watched him and his non-work endeavors and his outside
endeavors around basically all those stuff is non-profit and how he was
able to just get a lot of stuff done without having to put his own time in.
[Inaudible 00:09:36] leverage other people and leverage his own time I
think that’s what he taught me.
Andy: So he’s been telling you this pretty much all your life.
When did you start your first business?
Hiten: I started my first business actually in high school when I
was just selling car parts so that I could fix up my own car. I had a nice
little Honda Accord Rice Rocket as they call it and I lived in Southern
California where these things are everywhere. It’s either a Rice Rocket
especially where I grew up or big, big trucks which I’ve owned as well.
[Inaudible 00:10:05]. That business was just to fund my own … kind of
fixing up my own car. I had a turbo charger in it and we painted it from
black to silver and all that normal stuff.
Andy: So you wanted to fix up your car and what … then did
you start seeing like car parts where this much and you wanted to buy
them for cheaper or like … what was your thought process there?
(Crosstalk)
Hiten: Yeah. I wanted to buy them for cheaper and then it turned
into being able to buy them for other people for cheaper and still being
able to make money.
Andy: Yup.
Hiten: That was the first business. Most of it I just [found
00:10:42] my own car. And then from there … in college I had a bunch
of offline businesses doing all kinds of things, there’s a lot of students
out there, they had money and they wanted to party and stuff like that
around … helping frats throw frat parties and things like that.
Andy: No way.
Hiten: Yeah. There’s a bunch of businesses like that. Once I got
out of college I had a whole bunch of money …
Andy: Wait, wait, was this like a Van Wilder thing?
Hiten: I wasn’t that cool. Not at all. It was more of just enabling
the frats to throw better parties and having a fee at the door and stuff like
that. I just made a lot of friends while I was in college and then had a
bunch of other businesses around like helping people rent out apartments
and stuff like that because there’s a lot of things around limited
apartment and housing at Berkeley and so there’s a lot of little
businesses I was running out of that. From there when I got out of
college I basically … my co-founder is actually my brother-in-law
married to a sister, he had one customer paying him about $3500 a
month for SEO and so we started a SEO company and that was my first
internet company, internet web-based business.
Andy: This was right when you graduated?
Hiten: Yeah, it was right when I graduated in about 2003.
Andy: 2003. $3500 a month.
Hiten: Yeah.
Andy: Was that a lot to you at the time?
Hiten: Yeah, absolutely. It was a lot of recurring income and him
and I didn’t really think about it like it was a lot because we were just
getting paid and then we just started getting more customers once we
decided to join forces. He was actually barely getting into college at the
time and so we started our business when he was getting into college and
when I was getting out of college.
Andy: Got it. And you were doing SEO. What was the name of
this company?
Hiten: Yeah, it’s called ACS, Advantage Consulting Services.
Andy: Okay. Good.
Hiten: We started out doing SEO, we got into social media
marketing and also did a bunch of … little bit of … or actually a lot of
design work and a little bit of development [inaudible 00:12:42] as well.
Andy: This is your first kind of jaunt into the online world. What
did you know about SEO (crosstalk)?
Hiten: I didn’t know anything. I knew nothing. My co-founder
Neil knew everything about at the time he had been learning for the last
few years before that from a lot of the experts in the industry. At one
point he was the youngest one … within a couple of years actually he
started going to internet marketing conferences and for a long time he
was the youngest one at those conferences.
Andy: Got it. Why did he want to partner with you?
Hiten: I think it was a complement. I’d known him since he was
11 and I was 15. There’s complementary skill sets. I think over time we
figured out why and I think it’s just a lot of … just complementary skill
sets. He loves sales and marketing. At the end of the day I love building
great products and engineering.
Andy: Yeah.
Hiten: I’m thinking about that kind of stuff. We cross over
obviously here and there. He’s someone that probably … is necessarily a
natural manager or leader or whatever you want to call it in the same
way that I am but he has a way with people that I don’t. It’s just a
complementary sort of relationship from that perspective.
Andy: Your first contract was for 3500 bucks a month. Where
did that customer come from?
Hiten: Neil actually before we started the company went to some
speech classes around public speaking and he met somebody there that
worked at this company called Elpac Electronics and he ended up
figuring out how to get that customer and getting them to pay 3500
bucks a month and then that was the result, that was before I joined the
company and we started the company actually and then it just seem like
we could do more of that.
Andy: Were you doing a lot of sales at this point? Were you
focusing …
Hiten: At that point it was just one customer and that just led to
many more. We learned a lot about branding and marketing and things
like that as a result; very early into blogging, early into social media. We
just wanted to learn how to grow businesses online. That was really what
our passion was at the time and then from there it turned into how to
build businesses online and create software.
Andy: How long did it take to make that transition?
Hiten: We started our first products in about ‘04, ‘05. Between
there we were [light 00:15:02] in ‘04, we started company in ‘03 and
then by end of 2005 we had already figured out how to do it pretty well
after hiring 70 to a hundred different designers, contractors. That’s when
Crazy Egg was actually built. That was the one we got lucky with. We
built about ten different things. Ten different businesses actually and the
worst lost financially was lost about a million bucks trying to start a
hosting company that never launched and then we ended up hitting on
Crazy Egg which is alive today still and launched by ‘05.
Andy: That was ‘05. Okay. You guys had a lot happening over
those two years then.
Hiten: Yeah.
Andy: How quickly was the business growing? (Crosstalk)
Hiten: We never measured it that deliberately. We just tried to do
whatever we can to make more money. We might have solution almost
every problem like even gas prices. I’ll just go make more money
because I can control that. I think that attitude is kind of what Neil and I
sort of aligned with and so we just make more money, we find ways to
market it, brand it. I think one of the easiest ways to make more money
is just do good work for people.
Andy: Yeah.
Hiten: Especially in consulting and services.
Andy: Did you lose the million dollars before or after you
started Crazy Egg?
Hiten: It was before.
Andy: I assume that was a significant amount of money for you
at the time?
Hiten: We were making money pretty fast. We never thought of
it like that.
Andy: Got it.
Hiten: At that time a lot of things that are sort of public
knowledge now weren’t at the time and so things like testing and
iteration, understanding markets and stuff before you go into them. All
those things are things we learned along the way but by making these
mistakes and so yeah. We didn’t think about it as an expenditure. We
were really half hazard and optimizing for learning so we always try to
learn about things like … Neil, he was the one actually spent most his
time learning about hardware and networking and all that. Probably
knows more about that that’s useless to him today than he wants to.
Andy: When you’re thinking about the money that you’re
putting towards products, towards ideas it’s really just … your money is
like a playground it sounds like. (Crosstalk).
Hiten: Yeah. That’s how we thought of it in our consulting
company back then. Absolutely. We optimize for learning which meant
optimizing for spending money on things. Neither him or I are engineers
so one of the critical things was, well, how do we actually build things
and figure out how to work with engineers and designers and that was
probably the first job I tackled personally around how we spent our
money to focus on working with these type of people that we figured are
the type of people that would help us build products.
Andy: Got it. (Crosstalk). The consulting company is making
money. You guys want to get in products. You have no idea how to
build products online and so you’re like all right we’re going to put
some money towards it and learn.
Hiten: Yeah.
Andy: Was the hosting company one of the first company or one
of the first product ideas you had?
Hiten: We tried actually four or five at the same time which was
actually a bad idea but in hindsight it is worth it because we learned a
lot. It was about leveraging our time so we were able to get multiple
people on those projects and that help us find a core group of people that
actually have helped us start Crazy Egg and KISSmetrics. About six or
seven people that we kind of [inaudible 00:18:19] so far.
Andy: Through both different products and stuff?
Hiten: That’s right.
Andy: What was the mentality going into the hosting company?
Why do you want to start a hosting company?
Hiten: We thought there was money there.
Andy: Yeah?
Hiten: We thought hosting companies made a lot of money in
there. Those ad symbol.
Andy: Then what did you do after that?
Hiten: I don’t remember the timeline because we worked on so
many different things. We worked on this thing called Fruitcast which
was a podcast advertising network. That … didn’t work at all. We tried
this little buzz tracker that was probably earlier than like … before it’s
times before Radian6 or even like right around the time of Technorati
but they were focused on blog, we were focused on everything, Flickr,
everything. You can get RSS feed and run a search for, you were able to
let research things. Just didn’t put enough emphasis and time into that or
that could have been a pretty big business. Those are probably the three,
two or three notable ones. Beyond that was just a lot of little things.
Andy: How do you know when to pull the plug on a project?
Hiten: These days I usually can tell sooner but that’s because of
the process. If you think of the world as I have to write, I have to design,
write code and then get something in front of customers it takes you a lot
longer to figure out if something is a bad idea. These days with ideas of
customer development and sort of a lot of lead startup principles you can
figure out if an idea is good or bad within a week or two. Depending on
how fast you can reach people to talk to about kind of the problems that
they have and whether your idea aligns with solving a problem for them
or not.
Andy: Can you give me example of how you’re using that?
Either today or in something you’ve done.
Hiten: Yeah. Just generally speaking back in the day with Crazy
Egg the way we did that was we put up a lending page, we collected
email addresses which is common place now but in ‘05 when we first
did nobody was doing it. Then we got about 23,000 email addresses at
the time and that really helped us sort of launched that product and sort
of start iterating and all that. What we did back then which was basically
we built something pretty faster in about 45 days and we basically used a
small number of those people on the list, we’re very deliberate about
who we let in to get feedback and make it better. Today I wouldn’t have
to have to spend the 45 days to build it, I probably would have spent
more time trying to understand what problems people had around those
days that we’re dealing with and then basically built something more
tuned on solving that problem which might have been a different version
of Crazy Egg at the end of the day.
Andy: How do you get 23,000 email addresses before launching
any product?
Hiten: Yeah, in that product now it’s a little more common place
to get a bunch of those emails but in that product we ended up realizing
that the CSS gallery are really popular. These are examples of great
design back then. This was before HTML5 and CSS3. This is when web
standards were just coming up. We decided to actually … at that time
we bought advertising on all those sites because it’s very cheap. They
were getting millions and you need to only charge it a few hundred
bucks for the ad every month. We were able to drive traffic like that.
We also were part of the 9Rules Network which was a network back in
the day for a bunch of … which focused around web designers and so
we were part of their network and use sort of that forum there that just
tell people what we’re doing because web designers were a very early
easy sort of customer that could use that product and had the pain that
we were … pain related to what we’re trying to solve.
Andy: Got it. Bought some ads, post it on the forums that you’re
a part of and not many people were doing lead capture back then.
Hiten: That’s right.
Andy: What about now? People are putting up these squeeze
pages all the time it seems like the thing for startups. Is there anything
you guys are doing now that you think people haven’t caught up to yet?
Hiten: That’s good question. I think now we’re in a world where
you build a foundation of audience as early as you can so even today if
we launch a new feature, launch a new product or want to do customer
development on something new we have a pretty large Twitter following
at KISSmetrics, we’ve also got personal followings both my co-founder
and I that combined are probably if you [inaudible 00:22:39] it 150,000
or 100,000 or something like that … people and our KISSmetric’s
account is about a 110,000 followers.
I think what people don’t do today is they don’t try to find out how they
could build a following; people that are very interested in the topic area
or whatever it may be. What I would do is I try to find a way to build a
following, build an email list where you’re actually engaging with them.
We actually did engage with them back in the day the way I think we
need today so they can sort of come along with you on the journey and
the story. Everyone’s doing something for a reason but problem they see
in the world or problem that they notice that their friend have or that
businesses have and then are trying to discover whether that a lot of
people have that problem which is the general thesis of how you should
do the stuff.
To me we’re in a world today I think that a few companies that are
notable for this are … if you guys remember back in the day [inaudible
00:23:33] called Meebo, M-E-E-B-O that got sold to Google and they
are basically the first company to think federated instant messaging. You
had your AOL, you had your Yahoo, you had your Gtalk. They
federated all that and let you do it all in one interface on the web to start
with. Then they turn into all these other stuff but they’re one of my
interesting case studies of a company early on that just like 37signals I’d
say just started sharing a lot about what they’re doing, why they’re doing
it, how they think about things. And so I see some company still taking
that strategy today, new companies; they’re doing amazing job of that.
It’s really about getting your audience, getting these people and finding
out who resonates with what you’re doing and how you’re doing it. I see
a lot more of that working now even more so than ever before just
because it’s easy to reach these people.
Andy: Who’s doing a really good job for that right now?
Hiten: Yeah. One of my favorite companies do that is a company
called Intercom. Intercom.io.
Andy: Okay.
Hiten: I forgot what their blog name is although I should
remember it but they’ve got a separate domain for their blog. I’d go find
their blog. They’re doing great job of just … not even talking about their
product at all but more talking about how they think about building
product. That’s kind of the 37signals approach I’d call it. One of the
founders and I think the CEO there, his name is Des, D-E-S. He is
writing a lot about their processes and how they think about things and
how they build their own business and their product. I think that’s a
brilliant way to do these days. Where somewhat can basically get
attached to your company especially early adaptors especially because
they target people that would read their post as well which are very
smart. And sort of pulled them in and he helped them understand how
they think help them understand what the story is.
Another great thing which 37signals keeps doing is just they let you in to
their design process, let you in to their world and how they think of
things.
Andy: I feel like some people have a hesitations of doing that
because they feel like their company won’t be seen as having it all
together or having a professional [inaudible 00:25:32] like this company
that they want to portray this image of. If somebody comes to you with
that what would you tell them?
Hiten: Yeah. The truth is it really depends on your audience but
in this world today everything is transparent and it should be and that’s
where we’re going whether we like it or not. Just because there’s so
much out there and so much you can do. Anyone that has that fear is sort
of … for lack of a better explanation kind of stuck in a world where …
they’re maybe letting their own ego get in the way. You don’t really
build a brand by hiding things. You don’t build the brand by faking it.
Either you’re real or you’re not. I think that the more you can bring that
out the better off you’re going to be. I think that’s a level of being
genuine, that’s important.
Nobody has it together. Even some of the largest companies make
mistakes, right? If you look at internally a lot of these companies it’s a
shit show. One of my favorite lines is with startups or even companies in
general, it’s a shit show until it isn’t and it probably never isn’t. I
wouldn’t really stress that. Once you get around companies you realize
that everything is always screwed up. That’s just the reality of running a
business. It’s like an impossible feat anyways. Just share it, let people in.
That’s what I would say.
Andy: In the pre-interview you mentioned that you don’t … you
haven’t had a lot of fear when it comes to business. Where does that
come from? I feel like fear is the biggest thing that holds most people
back.
Hiten: I think you learn over time that the fear just drives you
away from actually doing the right thing. When you do something think
about it. Am I doing it out of fear? All right? Are you doing something
out of fear? Or not doing something out of fear and really finding out …
a lot of times most the decisions we make are out of fear. So I think at
some point you realize that the things that you probably ended up feeling
good about and making progress on you did because you went against
that fear, against that feeling of … the fear of the unknown. I would just
say that in some mentality and it’s something you train yourself with
overtime of just having no fear about … especially things that are … I
guess, it’s not having fear by just breaking down what can I control,
what can I not control, and then focusing on all the things you can
control.
Andy: Yeah.
Hiten: Right? Usually that’s a way of not even thinking about
fear.
Andy: Have you always had that mentality or is that something
… yeah.
Hiten: It’s a good question. If you’re optimizing for learning fear
doesn’t come into the equation because you’re always seeking …
Andy: Yeah.
Hiten: … new things, seeking how to do something better,
seeking the best way to do it, seeking the knowledge and so fear isn’t
even part of the equation, it’s not even the thought that comes to mind
because you’re like, “Well, how can I learn how to do that?”
One of my favorite things which I’m going to butcher is something
Steve Jobs said that it’s not a video that I haven’t really … I haven’t put
out there but I probably should. My favorite line he basically says that at
some point you realize that everything around you is build like people
no smarter than you. I think that just spells all the fear. I think he was
actually talking about fear at least my interpretation of what he’s saying
is like well, what were you scared of? Because everything around you,
the table I’m sitting on, the computer that I’m using which is obviously a
Mac and your phones you’re using, they were built by somebody and
they’re no smarter than any of us, right? You just learn. I think that’s
really this whole thing about not worrying about anything like fear,
especially in business.
Andy: One of the things that surprise me as well, is you
mentioned building your own personal brand online and I feel like
there’s a lot of people who do that but then it doesn’t translate into
business for them. If you’re starting a business where do you see
spending time marketing your personal brand or like who you are as a
person versus marketing the business and should those be separate. How
do you balance that?
Hiten: I think from a social media standpoint those should be
separate in terms of separate presences for sure. Most people when they
start businesses venture funded or not it doesn’t matter. Their identity is
their business. Just the way they think about it if that’s what you do. I
guess for me it’s like separate social media presences but then figuring
out how to grow above for whatever reason, right? Where in the world
today we’re like your own personal brand can help all your businesses.
You can even hurt them. I think it’s just a matter of thinking through
who you really are and how you want to represent yourself online and
figuring out how you can build [inaudible 00:30:21] and align it to your
own value. I guess the part people miss is what are your personal values,
what are the company values that makes sense that are kind of
commonalities, shared values with your team members and then really
focusing in on both of them.
For example our KISSmetrics brand is educational, helpful and wants to
teach me something all the time. The blog, our blog is really the first
touch point for that, maybe our Twitter account or combination of both.
That’s how that is. Well like in my own life I really believe and I truly
believe in that whole process … one of my quotes at the bottom of every
email is a Ziegler quote that’s basically saying you’ll get everything
what you want in life if you help other people get what they want. I
think our own company, KISSmetrics, all my companies … everything I
do is tuned around sort of that and so it’s really … that adds a common
value between the company and I. Every other value in the company if
it’s … if it’s difference in that it still comes out of that main thing which
is like we want to educate the market, educate our customers, educate
everybody, help everyone be better. Whatever values in our companies
be better than yesterday and I think that has a lot to do with learning and
proving yourself.
Values are like a little foo-foo in a lot of people’s minds and things like
that but I think … when I think of what you just said on how you
balance the two it’s really … what are your values, what are your
company’s values, what are your co-founders’ values, what are your
early teen member’s values and how does all that align, right? So that
you can always find a commonality between them.
Andy: Got it. Was the process that you went through starting
Crazy Egg versus KISSmetrics a very different one or did you use kind
of the same principles?
Hiten: We use very much the same principles around both of our
companies. At the end of the day they’re both analytics companies and
we tended to grow both businesses by sharing and helping people sort of
learn.
Andy: With Crazy Egg it was came up with the idea through a
squeeze page, drove traffic and then got feedback from people as you are
building the idea.
Hiten: That’s right.
Andy: Is that fair? How was the process of raising money for
KISSmetrics?
Hiten: We were building a second product as part of the Crazy
Egg kind of business and we ended up talking investors who had talked
to for Crazy Egg who didn’t invest; no one ever invested in that
company outside of ourselves, and they were interested in our idea
which was probably in their eyes a bigger opportunity. The same for us
we wanted to work on something larger which was sort of filled the gap
between Google Analytics and Omniture. One being a really large
enterprise oriented business another being free which all these has its
limits to some extent. And so there’s a big gap in the middle and we
decided to … we were able to share that vision with them and show
them early versions of our product.
Andy: What did you learn from raising money?
Hiten: Yeah. I think I learned that either way you’re building a
business whether you raise money or not and focus should be not on
raising money it should be on building a business, solving a real problem
in the world, real problem for users, real problem for your customers,
depending on which ones you have. The venture capital and money
helps you get … should help you get there faster. You don’t want to treat
it any other way. What I mean by that is if you don’t know how that
money is going to help you get their faster you have more work to do
first.
Andy: Got it.
Hiten: I just don’t mean like business models and stuff I just
truly mean like … how do you invest your capital in the right way so
that you can grow it every stage of your company?
Andy: Did you know what the money would go for for
KISSmetrics when you’re raising it?
Hiten: Yeah. I mean at that time was really early on in the
product and we didn’t necessarily know which version of the product or
which idea was going to work really well so we use our early money, it
was a seed around early in the first round just to basically figure out
where the market really was and then basically start growing from there.
Andy: Got it. Just fascinating stuff man.
Hiten: Yeah.
Andy: If you were starting fresh … I remember, like I said,
being 21 years old, just out of college, not really knowing what to do,
having no money, no … I didn’t really feel like I had any skill set or
anything else. Where would you start with people if they’re starting
completely from scratch?
Hiten: Can you elaborate more? That’s …
Andy: Yeah. I’m thinking for the person who’s listening to this
and who’s never build a business before and they’ve been working for
somebody for a really long time and they don’t feel like the skill sets
they have are valuable outside of working for an employer. If they want
to start some sort of a business where is the first place they should go
aside from buying some internet marketing product?
Hiten: There’s so much knowledge online about how to start
businesses at this point, right? There’s a whole lead startups sort of
series of books. I think all those books are very interesting. On a high
level if I didn’t know anything I might just start with the lead startup
book that way you can get an idea of sort of the high level of how things
can be built today. How you can start something. I think they applies to
venture funding [inaudible 00:35:45] as well as not. Then I would just
start building. Honestly today I might even encourage somebody to learn
how to program in any language. Just so that you can build something
on your own and get a taste of … get some empathy with whoever is
going to build your product for you or even start building it yourself.
One of the first things I do is learn that and then learn how to talk to
customers in the right way. Any of those are the two skills I probably
learn today if I were to start which is learn how to program so that you
can only start understanding how to build things and then learn how to
talk to customers in the right ways.
Andy: When you say talk to customers in the right way what
does that mean?
Hiten: It’s really … for lack of a better definition just really learn
customer development. What that really is about is how do you talk to
customers and understand what their problems are instead of try to sell
them your solution. Because in the beginning you don’t know whether
your solution is right or not, you really need to understand what
problems your customers have. That goes everything from creating a
hypothesis for what problem your customers have, hypothetical problem
and then taking a deliberate process to validate whether they actually
have that problem or not.
Andy: I love the idea of starting with a hypothesis instead of like
a business idea. How did you use that with Crazy Egg? What was your
hypothesis that you are testing?
Hiten: Yeah. It was very loose because that was many years ago
and a lot of stuff wasn’t formalized but if I were to come up with a
hypothesis today that was essentially aligned with how we thought of it
was. Basically people who design websites or are involved in the design
process of websites have a problem basically communicating why
they’re making the decisions they are.
Crazy Egg is a product that helps you see where people click so it gives
you a visual representation of where people are clicking on a page. One
of our lines that works the best actually … tag liner or sort of messages,
see where people click which we actually got by doing a lot of
interviews with customers couple of years later. It’s really just solving
that problem of communicating data in a way that anyone can
understand it.
Andy: Got it. By starting with the hypothesis it’s really neat
because it pulls you out of getting sucked into the solution every time.
Hiten: Yeah. I tend to just stay away from the solution. Even
though I have one in mind when I think of my problem I really try to
figure out … well, what problem is that solution trying to solve and why
do I love that solution so much? Why is it, in my head, why is that idea
in my head? Because everything actually starts as an idea which is
usually a solution not a problem. Then really try to say, “Wait, let me
walk away from this and figure out,” or walk backwards and go, “Okay,
what is the problem that this solution’s related to and how can I validate
that that’s the right problem?” Always try to do that first.
Andy: Got it. Got it man. This has been incredible. Yeah.
Anything else? Anything else you can think of for people?
Hiten: Yeah. Not really I think. I think the one thing I would say
is like people either get caught up in not having idea or they get stuck on
an idea. I would say that just think of your idea as more of a solution to a
problem. Think of ideas in general as solutions to problems and then I
would work back think about … if you’re really early and you have an
idea and hopefully you nail it down to a problem think about … this is
where other people mess up too. Think about what should going to need
to learn to be able to solve that problem. Because sometimes people
think of the great grandiose problems that are just going to take forever
for them to learn things to solve those problems, right? Then you have to
minimize the problem you’re going to solve and solve a smaller problem
if you want to call it that or solve a problem for somebody and in a way
that you can actually achieve in a short amount of time.
Andy: Even as you say that like I feel more relaxed hearing that
as oppose to … I have to come up with this idea and I have to build a
business around it versus just focusing on where people having problems
and what do I need to learn to solve those problems.
Hiten: There will never be a shortage of problems in the world.
Andy: It seems so simple.
Hiten: It’s the reality, right? Everything’s a problem. One belief I
have in the coming future is everyone’s going to be building businesses
to solve people’s problems … in the future. It’s just a more natural way
to sort of … or not even natural … for now it’s unnatural. It’s a way to
actually build more predictability in your life. If you are building your
own business even if it’s on the side of your day job or whatever it may
be. I’m not saying everyone should start kind of a side project but I think
that it’s a very healthy thing to do especially if you have this impulse of
always wanting things to be better.
[Inaudible 00:40:45] people in my company that I look at and I’m like,
“Hey, that person always wants things to be better. They have a
propensity to be able to start something of their own.” That’s one thing I
look for. It’s also one thing I look for when I want to find people to join
the team it’s like … and they learn fast, are they always curious? Are
they always thinking about problems that need to be solve and always
thinking about the right solution to these problems instead of just their
own solution?
Andy: Yeah.
Hiten: I think we’re seeing more and more of that thinking and
that makes me happy.
Andy: Do you have any other beliefs about the future especially
in like the business realm that standout to you?
Hiten: Yeah. I think we’re seeing a trend of … more and more
companies not needing a huge sales force to sell to businesses. I think
that’s a huge trend and it’s very early. This is what I mean also by
making money. You probably can’t go get an enterprise company to pay
you $100,000 in the first two or three months of existence, right? But
you can probably get a few hundred people paying you a hundred box a
month, even a hundred bucks a year for something you’re building and
that’s just built on itself and eventually you might get that hundred
thousand dollar contract if that’s what your business needs to do or
that’s what you’re aligned with but at the end of the day you can start
really small and start building some scalability into your business very
early which is something that even like when I first started Crazy Egg
was unheard of. One of the reasons people wouldn’t fund Crazy Egg is
they didn’t believe there’s millions of people that would pay nine bucks
a month for something.
Andy: Oh wow, really?
Hiten: In millions of businesses I should say.
Andy: Yeah.
Hiten: And there are.
Andy: Awesome man. This has been incredible. Thank you.
Where else can people find more information about you if they want to
see Crazy Egg or KISSmetrics. We’ll have all the links of that below us.
Hiten: Yeah. I think my Twitter account I share everything that I
find that interesting and people tell me they love it so you should follow
my Twitter account hnshah and you should also follow the KISSmetrics
account. I think those are the places that you’ll find a lot of information
related to a lot of the stuff I just talked about and more.
Andy: Good. Awesome man. Thanks for coming on the show.
Hiten: Yeah, my pleasure. Thanks for having me.
Andy: Yeah.

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