The emotional side of businessHiten Shah is a serial entrepreneur and startup advisor who loves to create and grow businesses. He’s is the co-founder of two software-as-a-service companies: Crazy Egg and KISSmetrics – and co-host of The Startup Chat – a podcast that offers actionable advice straight from the trenches of startup life. Hiten has great insights about business and marketing – and a knack for simplifying complexity into cogent ideas. Listen in and learn from a true pioneer who’s on the forefront of building and selling software as a service.
[Amy Jo Kim] Hiten, give us a whirlwind tour of your background, how did you get started in tech and how did you decide what to pursue along the way?
[Hiten Shah] Sure. For me it actually starts all the way when I was five years old, and when I was about five years old, my father started telling me that I should be an entrepreneur.
He’s a physician, he’s an anesthesiologist and his thesis was just as a physician he doesn’t really use his brain, I think he just really means he’s not newly challenged everyday and there’s some ceiling to what he can achieve in his profession and I think he wanted a different profession for me and, or, he realized that it just wouldn’t work out if I tried to work for people.
I’ve only had one job in my life, it was an internship in high school and it was a company that my dad had known the two founders since they were in the garage and it’s a company that public now called Masimo and they make medical device. I worked for the head IT there.
That’s the early whirlwind which would shape everything else. In high school I had business selling car parts, or I had a business selling car parts just so I could fix up my car, just so everyone knows, you probably shouldn’t try to turbo charge a Honda Accord, it didn’t really go too well, but I used all the money to fix up my car so I was very entrepreneurial.
Then in college I just had a bunch of offline business while I was there and when I got out of college it was about 2003 and my co-founder now who’s actually my brother-in-law he had one customer paying him $3,500 a month to do SEO. I really didn’t have to work for a while, just made a bunch of money in college and so we decided to start the company, and it was a consulting company and we were doing marketing consulting.
The story really starts there for everything else we’ve done. Really quickly within the first year to two we realized we needed to start building products because that was a more scalable business model than consulting and so we decided to start building products, we built about 12, 13 different products. I’ve said many different numbers throughout the years, it’s all the way up to 20 depending on how you count different software products.
The funny thing is neither him nor I are engineers. I fake it now, it’s about 10 years later so someone’s got to fake it and he doesn’t and he focuses much more on sales and marketing. Since then we’ve launched two to three different companies all building software. My latest one is called Quick Sprout and we’re building content marketing software. The previous two are analytics companies that are still around, one is KISSmetrics, and the first one which is 10 years old this year is called Crazy Egg. They both just help people understand what their customers, users, visitors are doing on their websites.
Wow, and it all started when you were five?
My dad told me I should be an entrepreneur so I owe him that gratitude for pointing me in the right direction I would say.
Where were you living then?
That’s a good question. I was living in New York. I was actually born in Africa, Zambia, and when I was five we moved to New York.
Did you grow up in New York?
Yeah, until I was about 12, then we moved to Southern California, so I had, I would say very formative years, but pre-teen in New York and then sort of post-teen and onward in Southern California. I’ve been in California since.
You’re a hands-on company and product builder from way back, what prompted you to start sharing your knowledge through writing, and speaking, and podcasting as you are now? What is it that you’re passionate about sharing that made you want to do that?
It’s another thing that I watched growing up. My father was very helpful to other people. In Africa they actually gave him the nickname Doc because anytime somebody had any medical issue in their family or themselves or anything he’d be their first call just because he was always able to guide them to the right solution.
I used to say he’s more selfless than I could ever imagine to be. I don’t really say that anymore because I’m not sure if his brand of selflessness matters in the world, just because a lot of people are helpful these days compared to back then. I think his ethos was a little bit more special back then, but I essentially watched it growing up and I mimicked it for a lack of a better word, just because I watched him do this growing up and I really liked it and it was something I naturally hung on to as I grew up and wanted to help other people.
More importantly we’re in a world today where there’s so much opportunity to share what you know and have other people relate to it and get use out of it, so why wouldn’t you do it?
Absolutely. Along those lines, what are the topics that are most near and dear to your heart?
I’ve had some challenges with the question like that because I’m going to say something that’s pretty generic but my co-founder and I are challenged with this all the time because him and I are very similar on this one, but we just love business. We don’t really care what kind it is.
If someone has a coffee shop and I get to meet the owner, him and I, or her and I have a lot to talk about. It’s like that for anybody essentially starting a business, running a business, don’t really care too much about what kind of business it is, it just helps me … I just love this idea that you can create something and people will pay you for it and there’s an awesome value exchange there.
And it all goes back to when you were five?
Yup, pretty much.
That’s actually a deep answer to me, not a trivial one.
Yesterday I was talking to a game designer and we talked about it and at the end he said, “You know, I don’t care if it’s a board game, or a physical art game, or a commercial shooter, I just love games.”
That’s what I’m hearing in your answer about business that it transcends the platform, you love the process of starting and running a business.
I think that’s super cool. You’ve also- What’s interesting is that you have both the perspective as a business creator yourself multiple times with all the struggles that ensue and you’ve also have this ethos of helping and you have this wonderful podcasting show and channel now which we’ll talk about more in a moment, but through that you’ve also seen a lot of first time creators try and start a business, try and create a product, try and build an MVP, try and understand who their customers are, so what are the most common mistakes from your perspective that you see first-time creators make in the early stages of designing and testing their ideas?
One of the biggest mistakes I see … and it’s very fundamental and there’s definitely been a reduction I’d say over the last 5, 10 years partly because the content people like you share, content I share … but it used to be the case that a lot of people would be really excited about their idea and the solution that they had in mind to some problem that they personally experience, or that they saw experienced by somebody they know or friends, or just out in the world, and then they’d just start building stuff instead of actually understanding whether that problem’s even worth solving.
I see the biggest problem as being creating something that nobody cares about, and as product builders we’re all sort of affected by this because it takes this unnatural level of excitement and optimism and determination to start something, but then it takes this self-awareness which is kind of the opposite of that oftentimes to actually grow something and take it from that very early stage where some would say it’s very fragile and turn it into an actual idea, to an MVP if you want to call it that, to a real product, to a business. Those are all different stages.
In the very earliest stages of building a company if you get that first stage wrong and you don’t really find a problem worth solving you’re going to be almost like the mouse in the mouse-wheel just chasing your tail.
Exactly, I call that going from salesman to scientist, to rally the teams to raise money, even if you’re in school, to get a group excited about working on your game, or your app, or your product you need to be a salesmen, you need to have that confidence, and reassurance, and vision, and then to do a good job of building and testing your product and making sure you’re solving a real problem you need to be a scientist and take that dispassionate, “What am I learning even if I don’t want to learn it?”
That’s awesome, so yourself, as you’re building businesses, turning back to your own methods and what you’ve learned, how do you go about the early testing and iteration phase on a new project? First off, how do you decide which ideas to pursue and which to filter out? You’re a creative guy, how do you make those decisions?
I think for anybody building any kind of products, it always starts with your own point of view and understanding whether it’s the right point of view for a market or being able to change that. For me I generally gravitate towards where I see opportunities to actually innovate. For me it’s innovate on product. I think there’s also other types of innovation but I always tend to lean on that as my go-to.
For example, at Crazy Egg we were one of the first companies to create a visual representation of where people are clicking on a page which enabled many people to understand data, period, when they couldn’t before because they’re not into numbers and they don’t understand bars, and charts, and don’t want to spend the time to know how some tool works, instead we gave them a visual view on this and that was just a big change and customers liked that.
We did the same with KISSmetrics where we built this funnel tool that was really flexible that was literally didn’t exist before we created it, so for me specifically I look for those kind of opportunities. When I don’t find those kind of opportunities I tend to essentially not really enjoy the job as much as when I find opportunities where I can actually innovate first.
I think it’s been a learning experience myself because eventually a market isn’t like that, and a market becomes crowded and then you have to figure out what to do next. In general I like to find opportunities where I can wedge myself in and solve problems that customers actually have, sometimes very directly in that problem.
For example, with KISSmetrics we built those funnels and a lot of other products now have the same funnel, so if we were to keep doing a great job in that business long-term we would’ve kept innovating around that idea and that method that we were very good at.
Those are all things that I would encourage anyone to do even if you’re a multi-time builder, just think about what are the things you’ve built and what’s the commonality because that’s generally what you’re going to default to in any market that you’re in.
I think that’s one of the biggest challenges, everyone has their own point of view and what kind of problems they should solve, or what kind of solution they enjoy, and knowing that will help you pick markets and ideas better.
So you like to innovate first and solve a real customer need?
Yeah, that’s interesting. Yeah, real customer need, that’s a good way to say it because in both those products that have been around a while … over five years both of them … it was around a real customer need and it was very easy to figure it out to be frank because we would just look at the most popular product in the market which happened to be Google Analytics at the time and just be like, where does it suck and then why are people building some of the stuff in-house. We found something where we could solve a problem that a major issue in that market.
You just outlined a great strategy for getting a foothold into solving a real customer need, exactly what you just said, that was beautiful. Let’s dig into tactics a little bit, at what fidelity do you first test your ideas with target customers? You talked about this process for both Crazy Egg and for KISSmetrics, there was some point where you built a prototype before you launched the whole product and I know you’re doing that now as well in your new endeavors, so how do you go about early low-fidelity testing, what are some of your tactics and tricks?
I’ll talk about my tactics and tricks in a second for sure. I think one thing that I always try to remember is looking at the resources I have available to me and we as a team have, and figuring out which low-fidelity tactic is going to be most useful to us.
For example, in some cases building something with an engineer can only take two or three days, especially with things like Bootstrap and these UI … basically Bootstrap’s a CUI thing that Twitter came up with that gives you a template for a web app and also it’s responsive and all of that kind of stuff. Sometimes we’ll just pick that off and built something that our engineer builds just to get something out and get people looking at something or using it, or using it for their own data sometimes.
We work on a lot of data things and people need to see their own data oftentimes.
Could I characterize that as building a very stripped down and simple working system?
Yeah, I like that, it’s not even an MVP.
There’s lots of different kinds of MVPs, that’s the thing, is MVP is both a process and a great variety.
For me, and again, I agree with you, just to simplify it for most people, I like to say, well it’s the MVP, it’s more on the product side while if it’s not an MVP or if it’s a different type of MVP, more of a prototype. People say like, “Wizard of Oz” testing where it looks like it’s interface and there’s a whole bunch of stuff going in the background that’s manual, that’s an MVP only if there’s actually a product in front of it, it’s the way I define it otherwise it’s a prototype.
In a prototype we might have some users see or we might want to play with it, use it, so that we can get a better feel for what we’re trying to do. That’s been the single easiest tactic to be frank because just telling an engineer I need these five things done you have three days, and this is kind of what it needs to look like. Most of them at this point when I bring them that kind of problem they’re used to me doing that so they know what to do in those three days and they plan it accordingly.
If I’m working with a new engineer or somebody I would just be very deliberate about, “I’m not saying three days so you work 24 hours a day, I’m saying three days so we get a good shot of about 20ish hours in those three days or whatever it may be so you can spend those hours on just getting this system working, because we kind of need to play with it to understand it.”
I’ll just label it a prototype.
Sure, and in gaming we might call that the first playable, but there’s lots of different words. For me the important thing is not to get into … and I appreciate your definitions … it’s really good to define how you’re using a term, and the move on, right? Because there’s not going to be universal definition.
Of course not.
My experience has been that iterative prototyping is how you get really good stuff and at some point it turns into a product and sometimes you do mock-ups and sometimes you build a simple working system, and sometimes you do a “Wizard of Oz” prototype, and sometimes you build a app that you have people use for two weeks and then diary study. There’s a lot of different ways to learn what you need to learn, but the thing is you work backward from, what do you need to learn and you’re focused on that, and then what resources do I have available that could help me learn that which is what you’re talking about. What you didn’t articulate but I’d love you to talk a little bit about is, all of that was clearly driven by you had something in mind that you needed to learn from building that app.
Let’s talk about that a little bit, about having clarity when you’re doing whatever you want to call it, a prototype, an MVP, or whatever, having clarity about what it is you want to learn from that.
I think what your first shot of learning is going to be different depending on mainly the market you’re in. For a game I’m assuming there’s some component of enjoyment, some component of they remember after they try it, and a bunch of that kind of stuff that you want to learn about in a game. I’m sure you have your ways.
In software what I like to do is spend a lot of time figuring out what is worth learning and the way I would do that is actually talk to a ton of the customers around their workflow.
What I’ve found to be the most useful thing to me to create more innovative software products is to start by understanding someone’s workflow, and then based on the workflow we can determine what we need to learn.
For example, right now we’re building content marketing software, our angle is to actually help people write better content. We did about 20 interviews of people who are creating content on a regular basis and tried to figure out sort of what’s their workflow, and we found these seven steps that people take. In the case of that process the one thing we figured out and are homing in on is actually one of the first things they try to figure out which is choosing a topic or a title.
Depending on who you are and how you think about it you might pick one or the other, and then you have these 5 or 10 different ways. For us, all the experimentation we’ve done, all the prototyping we’ve built has been around how do people pick a topic, come up with the headline for their content?
There a lot of the prototyping, MVP, whatever we’re doing has to do with that. I’ve even gone to the lengths of people will give me their calendar with their titles in there and I just go in and make all the titles better. Yes, there’s no software, that is a version of a prototype because what we discovered is almost everyone that’s taking content marketing seriously has literally a sheet with a calendar and all the title they’re going to post that week, that month, that day.
What I’ve been doing is … because one thing we discovered is that … and one thing we also know intuitively based on our own experience is that the headline is the most important thing when it comes to content in terms of getting people engaged. That’s like the start of the journey.
If you have no front door to your house anyone can walk in, the title or headline’s very similar where it allows people to understand what you’re all about and all that kind of stuff, almost like a house always need a door, content always needs a great headline.
I just started helping people rewrite their headlines and through that I learned a lot about how people create the headlines, how far ahead they pick them, and all these things that we wanted to learn, all around the headline.
For me it’s very tactical and it’s very much about what part of the workflow in a SaaS … not even SaaS … what part of a workflow … so what people are trying to get done … do we want to focus, then doubling down on the learning based on that.
Awesome. You’ve had a lot of experience with remote collaboration, we were talking about that earlier. Switching gears a little, and when you talk about working with engineers you’re probably talking about working with engineers that aren’t sitting next to you, right?
What practices and tools have you tried out for remote collaboration and what are you using now, let’s start with that.
I’ve tried everything, there’s probably no project management tool that you can throw at me that’s at least somewhat popular that I haven’t tired whether it’s, Trello, Asana, Quip, Hackpad before Quip, and then obviously Basecamp and all their different tools.
I stopped worrying about the tools, I just really quickly stop worrying about the tools and started worrying a lot more about the process and the documentation, and then also labels. We do something where everything we start has actually a label.
For example, in design work one thing we learned is that our designers if they spent a lot of time on a specific solution they get really caught up in it and then other people might have different ideas when they first see it and then sort of throw wrenches in the main idea.
When a designer … as you probably know … they’re very thoughtful and they thought through everything but they don’t necessarily always write it down so we started labeling their design work as explorations and said, “Hey, the first thing we’re doing is we’re just exploring this thing.” and at that point we get like 10, 20 ideas from the designer with all pros and cons and everyone’s happier.
For me it’s a constant- The way we work on process on a remote team is a lot more iterative and constant just because most of the stuff is written down and so early on we use a lot of GTalk, Skype, and a bunch of different systems and then obviously whatever the flavor of the month, week, year was on collaboration. We’ve used Confluence from Atlassian in the past all the way to Quip, it’s kind of the new one we’re using now just because of the folders. In-between we used Hackpad but it got bought by Dropbox and didn’t feel like they were improving the product.
We try to keep up with the product cycles there and try to use the most modern thing. One of the reasons is, I use a lot of stuff on my phone and so if it doesn’t have an app and/or isn’t HTML5 responsive friendly then we’ll switch to a different tool. Confluence and a bunch of those other tools weren’t very good at that.
That’s the tooling side of it, then the other side I’ll point out on the remote side is the thing that’s changed our life and I’m sure it’s going to be obvious is actually Slack, where in my latest company which we started in March, it’s called Quick Sprout, it’s the content marketing software, in that one, I don’t think anybody sends any email.
I haven’t gotten an email from anybody on that team in forever, since March literally. There’s probably been 10 threads, maybe 20 threads since March, everything else is on Slack. There’s rooms, and bots, and all kinds of action going on, and it’s just changed the game for us.
Have you written a “Hiten bot” yet to give good feedback on headlines with all the AI logic embedded in your many years of content marketing expertise? I would like the Hiten bot, please.
We’re thinking about stuff like that actually with the headlines where we can reduce the friction to people creating one. That’s a great idea.
I’ve converged on Slack as well and found that it’s reduced a lot of friction and allowed me to get better work done faster with teams I’m working with.
That’s awesome, yeah, same here.
Sounds like you’ve discovered the same thing.
Yeah, I’m on 25 slacks right now between all the different things I’m involved in so it’s pretty insane.
Whoa, dude. What would you say, you have such an interesting variety of projects and clearly a ton of creative energy, what would you say is your super power as a creator? What’s your sweet spot?
I’ve just gotten a lot of practice advising people, talking to them, understanding their problems, understanding their situation really fast and then helping them take action. For me if I meet with someone it’s generally they walk away from the meeting very motivated in a way that is- I don’t think other people motivate the folks they meet up with the way that I tend to on average.
I guess my superpower is understanding humans and then try to help them become better. I have a lot of practice, that’s the only reason I’m good at that, at least that’s what I like to tell myself.
That, and then it all goes back to when you were five.
There you go.
You watched your dad helping other people.
That’s right. All the stories he would tell me is about he helped people. Even like things like they call you on the plain and they say, “Hey, is there a doctor on the plane?” he’ll be the first one to raise a hand a be like, “I’m a doctor, I can help.” Watching that, I really like that, that makes me feel good to help other people, and I think it makes my dad feel good. I just co-opted that.
What’s on your horizon, where’s your focus these days, what’s exciting? Tell us about it.
Sure. I think about software as a service businesses a lot. All of my business have been software as service. I also think about consumer businesses a lot just because I think we’re learning a lot on how to build software on both sides, whether it’s a monetization and subscriptions going to consumer products more and more, or actually useful engaging products moving over to the SaaS world and all of that.
I think the thing that gets me excited is there’s a ton of opportunity to provide people with great products and have them use them and I think we’re realizing now that people don’t want to pay for software and that’s probably the most interesting challenging thing that I’ve noticed lately. For me if I build software my goal now is try to make it free so that more people can use it and adopt it and then go …
I don’t mean “figure out how to make money later,” but use freemium and a free product as a way to get the product to spread to, ideally hundreds of thousands, if not millions of businesses.
That’s probably what excites me the most right now is all the opportunity around that and how to actually do that, because those are things that I think are going to involve software.
By belief today is that the software budgets are they’re increasing for the short run, but in the long run they’re going to go to zero especially as a lot of us .. the cost of our software goes to zero.
That’s a disruptive thought.
Yeah, I’m probably many years ahead on that one, but it’s something I’m very in tune with and a lot of the patterns that I’m seeing in a lot of products kind of relate to that.
For folks who want to gather more of your wisdom and learn, what are some URLs that we can share?
I got lucky enough to get my first name .com, so Hiten.com, I own that and it’s a newsletter for SaaS. If you’re interested in SaaS, or considering starting a SaaS business or investing in it or whatever, I sort of have a newsletter for you. Then outside of that I got one other thing which is my friend Steli and I, we have a podcast, we have almost 40 episodes now and it comes out, there’s two every week, it’s about 20 minutes so it’s not every long, and actually the 40th one just came out I think it was this morning. It’s called TheStartupChat.com.
That’s another place where if you enjoyed hearing what I have to say here I’ve got tons of stuff to say.
Great, tell us a little about Steli.
Sure, Steli, him and I, we recently met maybe officially probably within the last year to 18 months and we just literally hit it off. We met at a conference and we were casually advising people as they walked up to us and talked to us, and him and I just got along and had a lot of good conversation and things that are very complementary. End of the day he’s a found running a SaaS business called Close.io where they’re making CRM software that’s just deeper integrated with voice calls and stuff like that.
He’s been around and he likes helping people as well just like I do so we decided to do a podcast together. There’s no real agenda or anything like that. I generally just tell people look on the episodes and if you know you’re struggling with something or there’s a topic that’s very timely for you, pick that one and listen to it and 9 times out of 10 it helps people, 90% chance it will help you.
Wonderful. If you want to find these links look in the episode notes, they’ll all be there. Thank you so much, Hiten, for joining us today and sharing your wisdom and all of these great stories.
My pleasure, thanks for having me.