We asked one of the most respected founders in SaaS for his insights on mistakes, marketing, hiring and more…
One of the biggest turning points in my life as an entrepreneur happened pretty early on.
I used to think of myself as a rebel. I wanted to blaze my own trail, reinvent the wheel and do things that nobody had ever done before.
And to an extent, I still feel that way. I think most entrepreneurs do.
But at the time, it was actually holding me back.
I’ll never forget one time when I was struggling for weeks with a specific product design challenge; it was a boring one, but there was a UX issue that was causing a lot of friction for our users.
I had our design team try everything I could think of to make the interaction smoother. But no matter what we did, nothing really helped all that much.
One day, I was having lunch with a friend — a guy a bit older and much more experienced than me — and I was telling him about the issue we were having.
“Show me,” he said.
And so I pulled out my laptop and showed him.
“Yeah, we went through the same thing at [his last company]. As soon as we tried [simple but non-obvious fix], it went away.”
After lunch, I rushed back to the office to tell the team about what I’d learned. We built and pushed my friend’s simple fix that afternoon, and just like that, the problem was solved.
I was determined to be the guy that finally cracked the case. And so I wasted weeks trying to come up with solutions. All with no results.
And yet in five minutes, my friend — who had been through this before — was able to solve the problem for me.
That was when I truly internalized something that seems pretty obvious (though I had largely ignored it before): I am not special. Every single challenge that I’ve had has been solved before, and it’s exponentially easier and more efficient to start with those solutions and adapt them to my business, than it is to start from scratch each time.
That was when I started reading every business book and blog I could get my hands on, and taking every meeting I could to learn from people smarter, more experienced and further along in their careers than I am.
It’s one of the most valuable things I do as an entrepreneur, and I think anyone can get tremendous value from doing the same.
That’s why I’m so excited to launch the My First $100K interview series on this blog. I’m asking the people I look up to most in business to share the insights that helped them reach their first $100K in monthly revenue so that we can all learn from them.
These are founders whose time is worth huge sums of money, so I feel incredibly lucky to get to ask them these questions and share them with you. PLUS, they’ll be answering your questions in the comments.
(Note: we’re testing the format and structure of the series, and after you read it, I’d love your feedback in the comments. Let me know how I can make it better and more valuable to you.)
In the first interview alone — with Hiten Shah — I’ve picked up more than a half dozen insights that I’ve already started applying to Groove. I hope it’s just as useful to you.
My First $100K: Hiten Shah on Building Startups
Building a million-dollar-per-year startup is pretty rare. Hiten Shah has done it twice, first with Crazy Egg, and then again with KISSmetrics, both with his co-founder, Neil Patel. We use both products religiously at Groove, and they’re among the most valuable tools we pay for. I consider his weekly newsletter, SaaS Weekly, a must-read for our whole team.
And if that’s not enough, the list of companies he advises — LinkedIn, Buffer, AppSumo, Automattic, Slideshare, Clarity.fm, to name a few — is insanely impressive.
When Hiten says something, I pay very close attention.
I asked Hiten 11 questions about his experiences in growth, marketing, mistakes, hiring and more.
Here’s what he said…
1) You and Neil built several products before Crazy Egg finally took off. Did you do anything differently — from the start — with Crazy Egg?
We spent time to actually research the various risks in the business and interviewed people before we created a product. At the time in 2005 when we created the product, there were a bunch of technical risks we had to work through based on the technology available at the time.
There weren’t that many products available in the market so we didn’t have as much product / market fit risk as there is today.
2) What were the big turning points for Crazy Egg that took you from $0 in MRR to $50K? And from $50K to $100K?
We didn’t really have or even think about big turning points. We just kept executing and focused on doing what was best for our customers and at the same time providing the best customer service and support that we could.
For the first few years of the business, I handled all support and was diligent on commenting on blogs that mentioned us.
Times were different and it was much easier to stand out by just providing a great product backed by great service. Now, that’s the norm and having a great product with great service is foundational for any SaaS business.
3) What would you do differently than what you did in the early days, if you were starting Crazy Egg today?
Spend more time thinking through our pricing and figuring out how our customers want to buy our product.
I would also spend time to think about where the product and business go in the longer term so that we are more prepared to expand our feature set and opportunity as things change.
Overall just being more thoughtful about these things can lead to great insights earlier in a business which will lead to faster growth.
We used to have a free plan at Crazy Egg and decided to stop making it available for new customers. It was a short-term great decision for increasing revenue but I believe it was not the best decision for the long-term.
If I’m starting a new SaaS business today, I would highly consider having a free plan that you invest resources in and plan on keeping forever.
4) How are the marketing approaches that you took with Crazy Egg different from what you did when you started KISSmetrics?
With Crazy Egg we really focused deeply on keeping the product simple, it started out doing one thing very well and has continued to be that way since.
We’ll be expanding the product next year but you’ll have to wait and see what we are cooking up. This focus on creating a simple, easy to use, self-service product in conjunction with great customer service led to a huge amount of word of mouth which has been our primary customer acquisition driver for the longest time.
With KISSmetrics we knew we had more work to do on reaching product / market fit for the business so while we were doing that we decided to start engaging with social media and also blogging. This has led to our blog being the #1 channel for customer acquisition at KISSmetrics. We have a growing base of readers who we provide ebooks, webinars and of course more content via blog posts, which leads people to signing up for a trial of the product.
5) You’re an online marketing master. If KISSmetrics lost all of its traffic, and you had to rebuild it but could only use one marketing channel — what would it be? How would you attack it?
If the audience we are trying to attract is the same, which is online marketers, I would start blogging. I’d set a goal of blogging at least 2–3 times a week and writing posts that the audience loves.
From there the readers will come and we’d build our audience. That tactic isn’t for everyone’s business simply because there might be a better way for you to reach your audience that could be much more effective than blogging.
6) You advise and invest in a lot of companies. What are three huge mistakes that you see early founders make most often (these can obviously be from companies you’ve passed on, and no need to name names unless you want to)?
I believe that startups should be optimized for speed. Speed is their greatest weapon (often times the only weapon).
So, when I see decisions that should be made faster or a focus on the wrong things it really bothers me and makes me want to convince them to start making more decisions faster.
Often times it’s the speed of decision making that gets in the way of growth and progress.
I’ve come up with a bit of a formula for speed.
You can only move fast by figuring out what to focus on right now then breaking that down into small steps so you can prioritize the order you work on these steps.
7) You and Neil have always gotten “a lot from a little” with regard to marketing budget. What are some examples of strategies or tactics that have delivered ridiculously outsized value for you?
It’s all about finding opportunities and figuring out whether you have time or money.
If you have time, spend your time on the highest leverage things you can do for your business right now. If you have money, figure out how to spend your money as efficiently as possible by running as many simultaneous small experiments that you can.
With Crazy Egg we had money that we were making from our consulting business so we found a high leverage (cheap and targeted) traffic source in all the CSS galleries that were popular at the time. So we spent a bit of money to buy ads on these CSS gallery website that directed people to the Crazy Egg early access homepage. It worked and resulted in over 23k email sign ups before we publicly released the product.
With KISSmetrics we had raised money for the business so we had more time to work on the product and iterate it. So in that case we decided to invest our time into creating a popular Twitter account (we have never spent much money trying to grow the following, it was all our time). This early investment of time in our twitter account led to the initial readership for our blog.
8) You’ve had the same tagline (Google Analytics tells you what happened. KISSmetrics tells you who’s doing it.) for KISS for a long time, so clearly it’s working very well. How did you come up with it, how did you test it, and how should a startup founder go about perfecting their elevator pitch?
We did a lot of customer interviews and research on our blog subscribers to determine how they think about Google Analytics and also how they think about KISSmetrics.
The tagline initially came out of that research and we’ve had a hard time coming up with a better performing one. Recently we’ve tested some new versions of our headline and have found a better one.
My big piece of advice for founders is to spend your time figuring out the words your customers and people in your space use to describe their problems and the solutions to their problems. This involves everything from customer interviews, interviews of potential customers and your target market all the way to reading other people’s blogs in space, industry magazines and business publications.
Alex note: score another one for customer development!
It’s all about finding the best ways for you to get in the mindset of your future customers.
Additionally, I recommend getting a crash course in writing copy from the old school direct response folks. My favorite book on this topic is Tested Advertising Methods by John Caples.
9) You’ve talked about how you value smart, self-directed learners more than people who may have a specific skill (because that can be learned). How can a founder judge that quality in people? Are there specific questions they should ask, or tasks they should assign?
When hiring you might not have the same perspective as I do on the types of people to hire. Regardless of your perspective on that, the following very simple approach will help you figure out whether the person is right for your company or not.
My favorite interview tactic for non-engineering candidates in roles such as marketing, product and customer success is to ask them to create a 1–2 page write up on something very related to what they would do in their actual jobs.
An example could be, “write 1–2 pages on how you would improve our blog”. An exercise like that will give you a glimpse into their thinking. You can then decide whether you want to pursue the person more or if their thinking just isn’t what you are looking for in the role.
10) One of the values at KISSmetrics is “Be better than yesterday.” What are some of the ways that you, personally, approach doing that?
I don’t believe you can personally grow without having a philosophy of constant improvement. You also can’t improve without feedback.
I try to seek feedback as much as I can.
After meetings with people, I review what happened by writing a quick summary of notes right after the meeting and I also think about where could I have improved.
This is more like self-reflection as a form of feedback. Additionally, when I value someone’s opinion I also ask them for feedback on myself.
11) Other than SaaS Weekly (which everyone in SaaS should subscribe to), what are 3-5 blogs or newsletters that you’d want every team you invest in to read on a regular basis?
Yes, everyone in SaaS should subscribe to my newsletter: http://hiten.com
To answer this question I’m going to categorize my must-read blogs for various SaaS topic categories:
Product: http://insideintercom.io (they love writing about how to create better products)
Marketing: http://blog.kissmetrics.com (of course 😉
Sales: http://saastr.com (Jason Lemkin knows what he’s talking about when it comes to SaaS sales)
Growth: http://www.coelevate.com (Brian Balfour is head of growth for one of HubSpot’s products, Sidekick and his essays on growth are must reads and highly actionable)
Business: http://tomtunguz.com/ (Tomasz Tunguz is a venture capitalist who blogs a lot. He’s always breaking down business concepts and analyzing trends for both SaaS businesses and startups as a whole.)
Your Turn: Ask Hiten Anything
Hiten has (very) generously agreed to answer your questions in the comments of this interview. I’m going to be watching closely and trying to learn as much as I can myself, so don’t be shy.
Post your questions for Hiten in the comments below.