How KISSMetrics Uses The Lean Startup Philosophy – with Hiten Shah

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Hiten Shah wasted hundreds of thousands of dollars on past business ideas (and you can in this video how painful those losses are to him).

Then he discovered the lean startup approach to product development and everything changed. At his latest company, KISSMetrics, development is faster, cheaper and tightly connected to what customers really want.

In this program Hiten reveal the mistakes that he made before he discovered the lean startup concepts. (I bet you’ll see your own decisions in many of the mistakes he describes.) And he’ll show you how to implement the lean startup philosophy, step-by-step.

The FULL program


About Hiten Shah

Hiten Shah is CEO and Co-Founder of KISSmetrics, an analytics company that gives web-based businesses actionable metrics. Previously he started Crazyegg and ACS.

You can connect with him on his personal blog or his company blog.

But you should really say hi to him on Twitter.

Raw transcript


Mixergy’s audio transcription is done by Speechpad

Andrew: This interview is sponsored by Woofoo. Do you have an embeddable form or survey on your site right now? If you did, you’d be able to collect information from your audience and use it to build your business. Go to Woofoo.com right now and for free you’ll get embeddable forms and surveys. Woofoo.com. Its also sponsored by Shopify. Many Mixergy listeners are telling me that they heard me talk about shopify, they went online, they created their store and now they’re up and running with a new store from shopify.com. Don’t you have an idea for a business for a store that you want to get up and running? With Shopify, within minutes you can have it online and within weeks you can start interacting with your customers and they’ll make it easy and give you all the tools you need to grow your business. Check out Shopify.com. It’s also sponsored by Grasshopper. It’s the virtual phone system that entrepreneurs love. If you had a shopify number right now, you’d be able to get calls right now no matter where you were in the world. You’d be able to set up extensions for the people in your company or virtual extensions to give the impression of size, maybe for a sales department, an IT department any department you want. Get all those features and so many more. Check out Grasshopper.com for a full list of all the features that they at a reasonable price. That’s Grasshopper.com. Here’s the program.

Hey everyone its Andrew Warner, founder of Mixergy.com, home of the ambitious upstart. Today I’ve got with me Hiten Shah. Hiten Shah is the co-founder of KISSMetrics which is an analytics company that gives web based businesses actionable metrics. And here’s why I invited him here. I saw a video Hiten, that you did for start ups lessons learned, the conference that’s going on, I guess that’s [unclear] conference?

Interviewee: Yup

Andrew: There’s a couple lines in here that are just intriguing and I said we got to do a long interview on this. Here’s what I wrote down from that video. He said ‘in 2003 my co-founder and I started a consulting company doing internet marketing, search engine optimization and social media marketing. We tried building twenty different products, most of those twenty products failed because we really didn’t think about our customers when we were thinking about the products. And then you talk about how the lean startup the philosophy helped you have a hit product with KISSMetrics and how it changed the way that you’re building. Now what I want to find out in this interview is what are some of those products that you launched? Why didn’t they work? What are your start up lessons learnt from all those different products? Then talk about lean start ups. I know lean start up ideas. I want to see them through your experience, how they actually work in a real business. How does that sound to you?

Interviewee: Yeah. cool. Sounds great to me.

Andrew: Okay. All right. So the consulting company that you guys founded was what?

Interviewee: It was called ECS. Its ECS [unclear].com. The site is still alive. Yeah and we basically started doing search engine optimization and social media marketing and all that kind of stuff and got into just wanting to build our own product so we could build a more scalable kind of revenue stream. And so we hired about seventy to eight hundred different developers or contract development jobs to try to build stuff for us. My co-founder and I realized that we were at a disadvantage because we are not technical. So we had to learn really fast on how to deal with kind of that aspect of building web based products. Then that’s when we started hiring people and that’s because we had the money to do it from the consulting business. So yeah my story is basically we built I think it’s over twenty products at the end of the day. And I’m actually speaking tonight at the lean start up circle event with some of my KISSMetrics team. So I actually have the stack out right now. So I’ll make sure you get it Andrew later. I’ll pass it up. But basically the number of things we built one was, we built with a development shop as a partner we built a podcast advertising network. So it was called Fruitcast. There’s still sponsor page up. Let me give you guys some stats and stuff if you guys are coming tonight to San Fransisco, I’ll also be talking about it. But basically we built it in two months. We outsourced the development, we spent forty five thousand bucks to build it and we launched it in November of 2005. And Erington actually wrote about it and he pointed something out that we didn’t know which was bad. He said based for how much we were charging advertisers he said that’s a hefty two hundred and fifty dollars CPM to the advertiser, which is way above what radio stations charge for ads. We didn’t know that. We should have known that. So Erington was smarter about our business than we were. And I think some of the lean start up principles would have helped us avoid all of this. Like I’m pretty sure we could have spent less than a thousand dollars and came to the conclusion that we ultimately came to which is we did pulled in October 2006, which is what like six months, no almost a year later
Interviewee: And basically when a line in an email from one of our partners was, I was sincerely hoping we would find some magical combination of events that would jump start it. So we were waiting for magic to happen and it didn’t happen and we wasted about a year and forty five thousand bucks on that idea and it failed. We are still right for podcast for advertising on Google though, whatever that’s worth. So yeah, that was one of our, I would call it small to medium failure. Another failure which I don’t want to talk about tonight is actually a hosting company. We spent half a million dollars trying to build a hosting company. Bad idea. Just a bad idea.

Andrew: Why? Why was that a bad idea?

Interviewee: Ton of investment, ton of effort trying to do it, had no idea about the space. We were very focused on the wrong thing. So we were focused on server infrastructure and all those kind of stuff when really we should have been focused on what actually is the product that makes sensible market. So companies that have done well in this market are Media temple as you know. Andrew I’m sure you’ll love that point right now. Slice host and a number of other companies that have actually figured out what the opportunity is and built a product based on that. I wouldn’t say that any of them built an awesome product necessarily but they’ve been able to win market share because they understood customer needs. So I think not understanding how much investment it would need to make a successful company back then which was you know 05, 06. Those were things that we didn’t understand. That was a significant hit, I think that was my biggest, our biggest failure because we spent half a million dollars. And yeah in hind sight yeah knowing what I know, I could probably build a hundred things with that money and have ten of them be pretty successful.

Andrew: Okay I would like to now, here’s what I do here on Mixergy. I really debate and I dissect everything that people say to a point where if you’re not a real entrepreneur, if you’re not really into business the next part of this interview is going to be boring. If you are I think it’s going to be extremely useful. Let’s start with Fruitcast. I want to understand two things. Where this money went? And then I want to see how you built this out and then the second thing is now that you know what you know about lean start up philosophy. How would you do it differently today? So let’s start it off with, you guys are two developers, two non-developers. People in the audience are asking, who is the business partner? The business partner is Neil Patel, who is your brother-in-law, who is married to your sister. Okay. Forty five thousand dollars, you got a consulting company, it’s your own money that you’re investing. How did you find the developers to build this out for you?

Interviewee: That’s a good question. We had money. So weren’t starving so to speak. We had money from building our consulting business and charging people for consulting. We were able to scale that, we were good at that. So we had money to spend, which I think most people don’t necessarily have when they first start and because of that we just kind of hired people. We tried hiring people you know everywhere we could. We tried looking at all the developing shops that were out there and we just picked one and said work on a project with us. It was as simple as that. Like I said, we had money. Today if I didn’t have money, and if I was doing this, I would try it with a different approach and validate a lot of my ideas first. So that when this as a business person and completely non-technical, I’d validate my idea first and then plough a lot of information around the customer using maybe some prototypes that will..

Andrew: Let’s slow it down. I’m sorry. Let us slow it down and understand how the wrong way unfolded so that we can identify it because believe it or not even though we understand lean concepts, lean start up philosophy, I know we are all going to get stuck in one of these traps at one point or another. I want us to see ourselves in the story that you’re telling here. So you have money before you had a business and customers and you went out and hired developers to this for you?

Interviewee: Yes

Andrew: Okay. And you hired them under what basis? Was it development shops that you hired to build out the whole product or was it employees that you took on and you said we’ll definitely grow this so we’ll need them full time?

Interviewee: Development shops that we hired just to build out the initial version one is what I call it.

Andrew: Okay. And how did that go? Were they able to take your idea and actually give you a finished product?

Interviewee: So forty five thousand dollars later and in two months we had the finished product. It was a substantial finished product. It was a podcast advertising tool where one can just easily go and sign up and basically just have the tools agree with their podcast. The advertisers could come in and buy the inventory, so buy an adspace they needed .

Andrew: And when they bought it would it automatically be inserted into the podcast?

Interviewee: Yes
Andrew: Okay so you mentioned Media Temple which is by a hosting company and if they use this system right now in the middle of the program they’d have their ad inserted.

Interviewee: If it was live. Yeah we shut it down until six.

Andrew: All right. Well that was it. Were you guys podcasters yourselves?

Interviewee: No.

Andrew: Why..Where did this idea come from then?

Interviewee: We had a list of ideas and we always have a list of ideas being business people and it just happened to be one of them and the shop that we chose got excited about it as well. So for us it was really important when we picked of all the shops or designers or whoever it is, specifically outsource to make sure they are excited about the opportunity as well. Because usually you get more out of someone when they are excited and passionate about it truly. So we usually did. We would always go to these shops, give them three or four options of what we wanted to do.

Andrew: Okay two months forty five thousands dollars. That doesn’t seem like that much. It’s something running. It’s also not a long time. Michael Irington shoots the first hole in the business but you know you always take your product to market and you get negative feedback that you can adjust by. You were able to adjust based on that feedback.

Interviewee: Yes we did. But I felt dumb because it’s something I should have known even before I even pursued the idea at all. It’s something I could have known for cheap, for free. And if I had known that things would have been much different. I probably wouldn’t have wasted the money.

Andrew: Oh really. So this model just didn’t work without the high CPMs.

Interviewee: Yeah it wasn’t going to work. There’s a number of reasons it wasn’t going to work. I had so little having to do with the way mp3s are distributed and all this kind of stuff, with the way audio pulses are distributed and the fact that itunes is probably the only one that can make a lot of money on this. There are a number of reasons we realized as we got into it but these are all things we could have understood way before. So another example you know [INAUDIBLE] pointed out is the fact that Radio Station, we could have mimicked their model work if we understood it. We didn’t bother to understand it. We didn’t go out to the advertisers first and say hey are you advertising on radio. Are you even interested in podcast or anything like that? Like there’s a lot of things we could have done that were free to cheap that we can do.

Andrew: I see. Okay. Can you give me one other one? One other thing that you could have done differently?

Interviewee: Yeah. So with podcast advertising it’s a market place. We need the podcasters and we also need the advertisers. And so what I actually would have done very related to what I just said is actually I would have done two tracks of what they call customer development and basically there’s a number of ways that I could have done it. Let’s just take podcasters. Those are easy guys to reach out to. There’s a lot of folks like you and other people you know especially even back then that were doing it, there were several businesses built on just having all those people there. So we could have went to most of those popular guys and tell them hey we are trying to build a better way for you to monetize and just asked them some simple questions with the phone or survey monkey or whatever it may be. And basically got some answers around what their needs were. Were they okay with putting advertising in? You know how long were their podcast? All these kind of little minute details that we didn’t know about quite frankly at all. So that would have given us a better idea about one part of our model. So basically like a market place. It was very challenging. Typically I would never do a work like this again or try something like that again because you have to please two types of customers. Then what we would have done is went to advertisers. We probably would have went to bigger advertisers which would have been harder to get to and started talking to them about how they buy ads on radio. And that I think like I said, would have been harder to get to but we would have only needed three to five of them to give us a pattern of data. I’m always at this point I’m always hunting for patterns. What are patterns in basically these customer interviews that I would do that I can basically turn into products or learn from?

Andrew: Okay. You mentioned customer interviews, you mentioned looking for patterns. Let’s talk about how you would use all these different ideas today. Ethen Shaw looks at Mixergy and says ‘hey, Andrew’s doing these videos, it’s growing, it’s getting good attention, [unclear] is just crushing it with his Twit network? I see that there is now a growing area here, a growing business here. I don’t want to invest forty five thousand into space. I want to just go out and figure it out and build it out completely. What would you do today? Right now you if you have this idea, what’s the first thing you would do?

Interviewee: The first thing I would do is, the way I would approach it actually is like that I would just identify those two different groups. So you’re the producer, excuse me you’re the producer and then there’s the advertiser. So one thing I would do is I would go look at all the producers out there and see who’s advertising with them already. And then I go talk to those advertisers. I feel like those are the people that ultimately have the money and they are the ones that are going to help the producer monetize and help us be the middleman to do what I really can there.
Interviewee: …That are gonna help the producer monazite and help us be the middle man to do whatever we can there. So for me, the person spending the money’s number one important, and then, the producers I’m assuming I can get them. Right? I’m assuming I can get them if I’m gonna offer them money. Which I think is a pretty good assumption. Would love to prove that out, but I think it’s…it, if I offered you more money, you’d take whatever product I have most likely as long as it kept your, customer experience the same. So then what I’d do is go to [Media Temple], I’d go to, you know [inaudible] advertisers I think he’s got some big brands as well. And try to reach them and find out, why they’re advertising, what benefit they’re getting and understanding what they might need. And then, I’d use that to figure out what type of product to build, on that side of the business. So do they want, automated placement, is there a certain type of placement pre roll, post roll all that kind of stuff they would want. And figure out what their needs are. And then I would go to folks like, you, [inaudible], you, whoever else makes sense, and try to understand what your needs are. I think, I think, one of them that I can imagine is that, you’re, and this is two different products at the end of the day but… you probably could use a better video platform. Not talking shit or anything on the one you have, but you might be able to use that, and there’s probably certain little knitpicks that you have, so I’d really try to find the patterns in that across multiple…kind of [inaudible], I guess bloggers like you, and try to understand if I can build something better to hook you in. It might be, like provide analytics. That’s always a good cookie in these types of businesses. Most people provide analytics, as a way to get all these producers, or content providers, or publishers. And then, and then, kind of have the advertisers come in, now that you have a max of these kind of producers. So that’s probably the first thing I’d poke around in and see and it’s not just cuz I’m in the analytics business, but it’s because that’s a typical thing and that’s basically how it’s done. Probably provide you with a video platform. I think that, that seems like the fastest, easiest, low friction thing. And really learn about what your needs are around that and then kind of go from there.

Andrew: Okay, but, at the heart of it, you’d be doing interviews with people on both sides. You’d be calling my sponsors, WooFoo, Shopify, Grasshopper. Why are you advertising with Andrew. And then you’d call up people like me, and other people who are doing interviews, and find out, what are our paying points? What’s bothering us? What could we use? And you’d be prodding certain areas that you assume that we’d be interested in. Like do we want a new video platform? Now, that I can tell you if you were to ask me, I wouldn’t want a new video platform. Not just because it’s my sponsor but because it’s a headache and it’s embedded so deeply into all my work that to switch, would just not be worth it.

Interviewee: Sure.

Andrew: But, but, and maybe you’ve talked to a couple of other people they say the same and they save you trouble and that’s what you’re saying here, you want to spend time having those conversations.

Interviewee: Yeah and you want to start with your assumptions. So that’s the part I kinda skipped. All everything I talked about is basically an assumption I would have about, these two parties that I need on my platform, so to speak or in my business. And I would start with these assumptions and one assumption is one you just invalidated for me, which was, that you need a video platform or a better video platform. It sounds like you’re happy with what you have. So then, I might go dread digging deeper and find out if the platform you’re using has [API’s]. If that’s a way for me to do business right? I actually am a big fan of the platform you’re using. I love their, the analytics they provide and little [inaudible] maps. But yeah, so I might have done more research already, and kind of, came to you with a better proposition. I think, the video platform thing is something I could of, an assumption I could have invalidated or validated myself, before even talking to you. So I like to do some of that up front work. It’s not market research, it’s more customer research, and really trying to understand, and be intelligent when I talk to you. Right?

Andrew: Okay. And by the way, I use [Wisteer] for my video platform, not just to plug them, but, I think you can go now in, into this interview and see the analytics, and see what people…

Interviewee: Absol…

Andrew: …are winding to listen to. What are people skipping that Heaton and I are talking about, and so on. Why, why analytics? Why would you be looking for analytics in whatever you are interested in? Can you talk more about that?

Interviewer: You mean looking, you mean looking for analytics as in, what I mentioned about…

Andrew: As the first solution you’d be giving me, or anyone else to get into our world. And I do see that by the way. That people who want to get into the mobile space, they look for an analytics hook to get in, and then they continue to do business. Why?

Interviewee: If you want to, it has more to do with the business type. So if you’re running a marketplace, you have to give something away for free. And a marketplace means there’s two, there’s two parties right? So, so, I would say that the simplest, easiest platform which we’ve historically seen work is, giving analytics for free, in return, for the, you know, usage of my product, or usage, or me hooking into your business. If I have analytics and I understand more about, all, all of you publishers or producers, and then I can go to an advertiser and say, “here’s who I have, here’s who their audience is, let me help you reach that audience.” And that’s typically how it works.

End of transcription.
Interviewee: …It’s worked in the facebook apps space. It’s worked in, even with google analytics so to speak. They’re giving it away for free so that certain percentages of those people can improve their ROI and then they can use adwords. That’s the real reason google analytics exists is so that they can make more money on adwords, which is their ad platform. So I think people, that’s the first place I’d go for this type of thing. That being said it really depends on the business.

Andrew: So the first thing that you would do in this new business that you and I are creating is go and do interviews with as many people as you can.

Interviewee: And before that I’d probably list out my assumptions.

Andrew: So list out your assumptions. Then go do interviews. Now what about this. One final question before we move on to the next step. I know that at Kiss Metrics you have some pretty big names, pretty big brands who are doing business with you. Those aren’t people who you could just pick up the phone and call randomly and ask them to spend a half hour on the phone teaching you about their business is it?

Interviewee: Linkton is very valuable. And there is a lot of ways to reach a customer. I could go on for days about this but really, again, it depends on business type. So in the businesses that I tend to lean towards are ones where I could put up a survey or a landing page and I could just buy traffic and send people through it. That way I’m not worried about talking to big brands or anybody like that. So I tend to skew toward those types of businesses because it’s easier to buy customers online or buy traffic and kind of watch them take your survey. That being said, I would say, like I said previously, Linkton is your best friend. So if you go for their subscription service that allows you to mail people. You could basically go in and mail people. Like so, if I wanted to get at the brand manager at Logitech, they’re on Linkton. I can email them or I could see who in my network might know them. And if I’m paying for Linkton subscription service I can go reach them. Another thing is Linktons Q and A platform, their question and answers platform is very powerful. So I might ask my network a questionnaire. I might even use facebook. I might even use twitter and go, oh does anyone know anyone like this. I hate to put it like this but, maybe I do like to put it like this but, if you’re an entrepreneur. You’re trying to do a startup, you’re going to do whatever it takes to get to the next step. In this case the next step is reaching a potential customer and talking to them. So, if you can even figure out how to do that, maybe you need to go ask somebody.

Andrew: OK Alright, that makes a lot of sense. If you’re going to really be building a business or launching anything new. You’re going to have to make phone calls to grow that thing. If you can’t even make phone calls to even find out where you don’t have to ask people to take money out of their wallets to help you out, then you shouldn’t really be in business because you won’t be able to take it to the next steps. You also mentioned surveys. When you say interviewing do you mean just interviewing on the phone or in person and having conversations like that? Or are you also talking about putting up a survey and asking questions like that? Would you and I in our hypothetical pod casting business put up a survey to talk to sponsors and pod casters?

Interviewee: I would do both. So I think the advertiser is going to work out better on the phone. Because you’re talking to brand managers and people like that. And if anyone has ever tried doing sales it is not actually that difficult to get on the phone with someone for twenty minutes. So, you just have to figure your way around, maybe bug their assistant. If you have to go drop by their office and bring them lunch whatever you have to do. But that doesn’t mean it’s scaled too far. You only need five or ten interviews with brand managers or media buyers and you’ll understand what’s up. On the other side of it with the pod caster. For you, I’m guessing you have limited time, you’re trying to hustle yourself. I might just say hey can you take ten minutes and take the survey for me I’m really interested in building a product for you. And help you make more money and usually that works pretty well. And then I just build a survey based on my assumptions and based on understanding more about you as a customer.

Andrew: OK Alright. Let’s continue then. We talked about writing down and being aware of your assumptions, doing some interviews, doing some surveys. This is [?heat and shaw?] a few years after the mistake. Now you are going back in time and recreating the business in a smart way. What’s the next step?

Interviewee: I would actually try to find the patterns in those surveys. Then try to understand if I want to continue or not. It’s likely that in this business that I wouldn’t continue. That’s just my hypothesis simply because I’m trying to make publishers money as difficult if you don’t have advertiser relationships. And there’s not a huge scale of people like you that are bloggers. There’s not like, thousands of them as far as I know.
Speaker #1: I have to go after the hundred that are huge right, like you and maybe theres a hundred others maybe theres two hundred others. And then there would be a game, to me it would be like okay you know based on these assumptions I have which ones are wrong which ones are right, and do I have more questions now or more assumptions I need to make base on these responses. Do I need to go follow up with Andrew? Do I need to go follow up with some of the kind of grand managers and figure out if I need to know more information. If I don’t and I discovered something Like I discovered for example, lets say a video platform would work, I might go figure out how to build a minimal buyable product which is basically putting the putting a least amount of effort to give you something you can use, so I can actually get you using it and figuring it out from there based on usage whats right and whats wrong.

Speaker#2: Okay, all right. Lets assume you’ve gone through this, your realizing that. And actually before we continue before I make that assumption, what I thought was interesting about what you said earlier was you wouldn’t decided how to proceed, you would decide whether or not to proceed and that was unexpected for me. I thought you where going to say theres always a way, I just now have all this research thats going to show me what that way is. No, you have to stop yourself and say theres a big option and that option is to stop.

Speaker#1: I mean its also, you know a lot of people think that the leading startup stuff or even doing the start up you can kind of, theres 2 different counts one is you have a vision, your going after the vision and you have your blinders on and your doing what you have to do to get there. Another one is that Oh I’m just going to do market research and figure out what I need to do. I kind of fall in the middle ground and I think thats what guys like Eric Reece will tell you. You need a vision and it needs to be something that your passionate about and things like that, but you need to be able to kind of bob and weeb as you discover what the opportunity is and as you do these interviews. So I think, you know its very easy now after all these failures and also some successes that for me to say I have this vision I have this idea, but I’m willing to admit that I’m wrong about certain parts of my vision and I’m willing to change it because, my goal isn’t to see this vision realized, my goal is to actually build a successful business. Which doesn’t mean, It means I’m going to be wrong a lot, but it also means that if I’m taking this approach I’m okay to be wrong about parts of my vision and I’m at least headed towards success. Verses being really stuck I know I’m going to help these blogers make money, I’m going to get all of them and I’m going to figure out how to do it. Yeah you can do that, but you might fail if your assumptions are all wrong and your not really trying to learn a long the way.

Speaker#2: Okay, alright lets continue with what you and I could do if you where to recreate this business, than we’ll go back and talk about some of the other business you launched and then I’d like to end it in going through kiss metrics and seeing how you did it right because you talked about how Eric reece’s Idea helped shape kiss Metrics, and I got so curious about.. and wanted more details. So lets continue here alright. You deciding go no go you make that decision you say go. You realize what the opportunity is what do you do, Whats the minimum buyable product?

Speaker#1: For the blogger thing or just generally speaking?

Speaker#2: Lets use this as an example because I understand ideas better with examples. Not that I want to get into this business, people sometimes think that I ask questions because I want you to run my business or my business for me, no I just think that examples make ideas a lot more easier to understand and take away. So then, what would the minimal buyable product be here?

Speaker #1: So yeah, lets make some assumptions and say that they where true right? So lets say that the assumption is you need a video platform right as a blogger doing these interviews and stuff. Theres enough of you out there right, so theres hundred lets say and as a business based on the surveys as an entrepreneur I’m confident I can reach all of you. Cause based on these surveys I would know if I could reach all of you or whether is a strong enough pattern with all of you where I can build something. So lets say the pattern is getting these videos up hosting them you know running them the way you want doing the live stream is difficult and thats what we discovered so I would try to figure out how I can spec something out that would get me to step 1. You understanding whether that somewhat proven assumption is true and the way to do that is ..You know personally I’m always about kind of getorating things in the beginning if I can and also finding that early adopter. So it might be before you pick the pafor… lets say this was before then you really had this neat, what I would probably do is help you with as little technology as possible and use Youtube [5:00]
Andrew:

Interviewee: …and use You Tube, believe it or not, and string something together that’s more useful than what you have today. Right? Maybe I’d hold your hand on it. This isn’t the final product but now I have…I’d start with some assumptions I have based on those surveys. One assumption is you want a video platform, you want it easy to be able to stream and you also want the videos to be archived, right? And you would like some analytics on it, right? So I might even string together something between Justin TV and You Tube in this case because you do use live interviews and that’s a big deal for you. And then literally, manually take the Justin TV interviews and put them on You Tube. Because I might even realize that you want a bigger platform and You Tube might provide that for you. So let’s say there’s a bunch of assumptions there; I would basically cobble together a product and give it to you.

Andrew: OK. Now I understand this. This means you don’t go out and spend 45,000 before you understand what you’re building. You first test it out and then the money goes to building the better version of it. 9Carnegie in the audience is asking, “Why are we talking about video here?” And I’ll tell you why. Because I think it shows ….it helps us understand the idea but also it helps point out this issue. Heeton Shah,you’re a guy with a big reputation in this space. I would want to work with you as a podcaster because of your reputation. If you came back to me with this reputation and said, “Andrew. I’m going to give you this ghetto-rigged, You Tube-Justin TV solution,” I’m going to laugh. I’m going to say, “This is the guy who I’m supposed to be working with who’s giving it to me?” And that’s why a lot of people wouldn’t go with this minimum viable product. Wouldn’t create it?

Interviewee: That’s a very good point. So I’m looking for people that would go with it because they’re my early adopter. They’re the ones that buy into my vision for the business. So they’re not necessarily buying into what I’m doing today but they’re buying into what I’m trying to build for them in the future. So this is my early adopter. If you’re not someone who wants to go after that promise and needs that so bad you’re not an early adopter for me at this stage and I should move on and find someone else.

Andrew: What about your reputation? What about the reputation of your business? If it starts off with something that’s ghetto-rigged, whether it’s this You Tube thing or something else, doesn’t it take away some credibility?

Interviewee: No. I mean if there’s enough customers out there…Let’s say you have 1000 customers in this space and ten of them, five of them don’t like what you cobble together for them but they still believe in the vision. That’s okay. There’s still a lot more fish in the sea. So I think you shouldn’t be scared of launching something really buggy or crappy. Honestly, with KissMetrics what we’re doing today is when we have a new feature we want to launch it might take five days to make it really polished or a day to release something really fast and buggy so we can learn.I want to maximize my learning at every step and I’m not worried about making everything perfect anymore. And that statement is extremely hard for me to say. I’m a perfectionist.

Andrew: Okay. I want to come back and talk about that a bit. Let’s go on to the next step. You’ve got your minimum viable product. What happens after that? You get your feedback from people and then…

Interviewee: So you get your feedback from people and you determine again, you step back and say, “Based on this feedback and what I’m looking at,” whether it’s…maybe at that point you’re looking at metrics, maybe you’re looking at some surveys, or even just knowing based on interviewing customers and seeing the patterns, knowing whether you want to continue at that step. I think at every step, especially at the minimum viable product step, it’s like, “Do you want to continue further or not?” And really basing that on validated learnings from your customer. So I would really figure out whether you’re finding the platform useful. There’s probably a feature list that you want to make it more useful. Or it might be that you cobble it together and you use it and you’re like, “You know what? It doesn’t really matter to me.” So then I might start back at square one and try another minimum viable product that’s a little bit different and then try that on you or some other customer and see where I go. That’s basically what you would call a pivot. So I would take what I’ve learned here and figure out what the next step is. Either I’m going to double down on this minimum viable product and build it into a real business or a real product or I’m going to pivot and try a different angle. So for example, one pivot could be that we think that the tools are great but someone like you is too far along or sophisticated to use them. So we might pivot and say we want to build something like Justin TV, for example, for the common person or there’s some problems with their products that we discovered. So we’re going to take the same technology and apply it to a different type of customer. That’s what they call a customer segment pivot. So it’s the same product, the same MVP but you’re tuned in towards a different customer.

Andrew: I see. And then is there a next step after that? Either double down or pivot?

Interviewee: Same thing. It’s basically just a loop.

Andrew: Just keep coming out with these…you just keep going through this process again.

Andrew: . . . process again. Maybe you go back and you interview this same customer base and you say, “What do you need next?” And then you test out your assumptions, you look for patterns, you create the next minimum valuable product and you pivot or double down. And this is the whole series of [xx].

Interviewee: Yeah. And when you double you’re usually going towards a business and you validate it, the business. You might even validate [xx] or a little bit further whether people are going to pay.

Andrew: OK, and you know what? And what I’m hearing you also say is, “Andrew, there are certain solutions that are just so good that people would put up with a ghetto rigged answer to them.” Like in my case it’s not so much the video platform, but if you were to handle all the relations for me with my sponsors and then plug those ads in at the right spot and then make sure that they were happy afterward even if you used, even if you . . . I can’t even think of how bad it could be.

Even if you used the absolute worst video solution out there. [xx] skip, people would deal with it and I’ll be happy with it because my sponsors are happy with it. And that’s when you would say, “OK, all these other assumptions didn’t make sense. All he cares about is his relationship with his sponsors and that the audience has something that they can listen to.” Boom, that’s what we double down on and we improve that and we improve it until we’ve automated it to a place where it just all works beautifully for them.

Interviewee: Exactly.

Andrew: One question before we leave this process. As you’re doing this, other people are watching you. They’re seeing the mistakes. They’re seeing the . . . they’re hearing people complain about heating or compliment heating and they’re seeing that you’re going very slowly. What if they jump into this base and copy you and do something better?

Interviewee: Good luck to them.

Andrew: Then you’ll just let them have it at that point?

Interviewee: Well, I mean, that either means that you’re poking in the wrong direction and you need to look at that and pivot because they’re getting some customers accesses. But, I’ll almost say that’s one of the greatest things to happen for a number of reasons. One is a competitor validates your space? Two is when you have a competitor hop in and do something better, you have the option to talk to their customers. No one says you can’t go talk to their customers.

Andrew: I see. So, the same thing they did to you by figuring out what your customers like about your ghetto rigged solution and created a less ghetto rigged solution, you do back to them and you say, “OK. You worked with me, you didn’t like my system so much as you like my competitors. What is about them that you liked? What drew you over to them?

Interviewee: Yeah. And there’s a lot of ways you can do this. Like one of my favor things to do, I’ll put it out there . . . it’s one of my favorite things to do actually is go look at other people’s feedback forums. If I’m entering a space the first thing I’ll do is go on forums or get satisfaction or find their user’s voice forum and look at what their customers are [xx] on and saying about their product. A lot of times I’ll get a lot of learning there without even talking to a customer of theirs. On top of that I’ll know who their customers are when I look at those forums, a lot of the times.

Andrew: You know I’ve heard that. Those feedback tabs . . . and I’ve got them on my site and a lot of people have them on their site, they’re good way to let the audience know and vote on the problems. But, they’re also a good way for competitors to see what problems and what demands people have related to your business.

[overlapping conversation]

Interviewee: [xx] I mean I’m in tights and I’m looking at yours right now and it’s like people want to interview this small profitable boot straps. So, if I was to thinking of competing with you, I would just throw up a product, sort of speak, in you space that just does that. All I’m doing is interviewing small profitable boot straps. And . . .

Andrew: You know what? You’re absolutely right. If you were to do that, there are a lot of people who don’t like that I interviewed venture back companies. There are a lot of people who don’t like that I interviewed V.C.s. They just don’t relate to it. They don’t care for it. If you were to do just the boot strap version of what I’m doing here, you’re right. It would do very well. Many of my audience would actually go over to Heeden’s [sp] program.

Interviewee: Yeah, it’s like dumpster diving and I’m starting a new Carnegie set. That’s awesome. It is dumpster diving. I love dumpster diving.

Andrew: Let me just clear this up by the way. Andrew Carnegie didn’t say dumpster diving. Not the Andrew Carnegie. He’s referring to Andrew Carnegie, the guy who took Andrew Carnegie’s name in the chat room.

Interviewee: Yeah. There you go.

Andrew: I want to make sure that Andrew Carnegie’s good name isn’t selant here. OK, let go back to the hosting company. The half of million of dollars that you invested in it, was that just your money that you earned?

Interviewee: Yes, in that case it was. Yes. It was . . .

Andrew: How do you get to the place where you spend half a million of dollars? That just doesn’t happen overnight.

Interviewee: A lot of it was new to our situation. We were running a successful consulting company and we had the money. And so, we just kept pouring it into the ideal blindly. I’m super embarrassed about that one. So, it just happened. ‘Cuz we had other priorities. And that’s the other thing. If you’re going to do one of these businesses, I think it’s very important to focus fully on it.

Andrew: Now, you guys have, in addition to Kiss Metrics, are you still have running Crazy Ad?

Interviewee: It’s an independent company, so we have a few people running that. Neil and I are not running it day to day though, at the moment.
Andrew: Okay are there any other companies that you guys launched that you still own?

Interviewee: Well it’s just Crazy Ed which is independent and other couple products with KISSMetrics now. [unclear] It is basically there’s a couple people doing it but we don’t do anything for it. It’s just there, it’s basically shut down.

Andrew: ECS you guys have sold? Or do you still own it?

Interviewee: It’s the consulting company. We don’t, we still own the name but we don’t have any clients.

Andrew: All right. That’s another thing that you were saying that you need to focus in and that’s what you guys have done. As soon as you got into KISSMetrics you started understanding where you were going with this philosophy you were going to follow you guys got rid of everything else and started to focus deep on this.

Interviewee: And I think that’s really important. If you’re in a situation where you have your day job or a consulting business, I don’t mean that you can’t do that early customer discovery and even the minimal viable products [unclear] but if you catch your wave if you figure out what a biggie it is you need to ride it. The only way you’re going to do that is if you’re on one surf board and not two.

Andrew: All right. One more question before I move on past this hosting company. Where did the money go? What was the biggest expense there?

Interviewee: Big question. It’s a very complicated situation but I think the two biggest ones were infrastructure so actual servers and you know routers and all that kind of fun stuff and then the second one was ace employee maintenance because we actually had quite a few on board.

Andrew: Okay I won’t push any more because I see that there is something uncomfortable about that story. What is it that’s making you uncomfortable about it?

Interviewee: It’s half a million bucks down the drain, like literally. We didn’t see a penny of it back. And I didn’t, I guess we didn’t really try to understand what the market wanted. Or we didn’t talk to customers before that and in fact we never had a customer on that product if I recall correctly, which was bad as we wasted so much money and it would have been easy to email site owners and ask them about the current hosting company, you know very saturated market. So we could have easily done that.

Andrew: Oh. Okay. All right. Can you give me one other business that you guys go into that didn’t do so well?

Interviewee: Yeah. This ones great. I’m going to talk about it tonight. It was called Serph..S-E-R-P-H.com. It’s not alive anymore. It took us seven months, one developer and fifteen thousand dollars to build. We launched it in March of 2007 and actually just recently we took it offline in February 2010. That was because we discovered that certain [unclear] didn’t break and I guess this was launched three years back. But basically what it was was, I don’t know if you remember the social media monitoring companies? But I believe we did social media monitoring before anyone else did with that product, which as time has told or as we’ve seen, three years later there are successful businesses in this space. This is like radiance [unclear], tracker, there’s a few of these, there’s quite a few of these. Yeah I think someone in my [unclear] says that fifteen k is not so bad. Yeah fifteen might not be bad but seven months that one developer had was awful, especially this one component. I mean there are a number of reasons why that happened. But I wouldn’t call that the biggest failure. Not in terms of resources, in terms of money but in terms of time. Seven months went right by. You know with today’s thinking what I’d be doing is at least we could have tested a lot of products and probably come up with one or two of them, that would have been worth doubling, at least one that would have been worth doubling down on. Yeah time is money.

Andrew: How about one more?

Interviewee: Let me see. Yes I got a good one. So this one took me a second. So this one’s another outsourcing development thing. The Serph one that I was talking about was an in-house developer, but this is all he was working on for seven months. Yeah getting pretty embarrassing. But the other one is we wanted to do, there’s a lot of search engine management products.. when you’re advertising on Google and Yahoo in keywords, you know a system that help you do the bidding, that help you hit the keywords and stuff. So we wanted to build those really badly especially, as our consulting company was being a part of our business was based on managing those campaigns. So this was a search marketing campaigns on Google, Yahoo, MSN and a bunch of other networks who are smaller. We probably spent sixty to seventy thousand dollars trying to build this product. It was another in-house product with another development shop. It was called Siteblend. Yeah I don’t think its alive anymore. We end up just leaving these things lying.
Interviewee: But anyways, so that one, we spent that much money. That one actually was interesting. I’m not sure if we could have saw what was coming coming but I think we could have just spent less money in the process. But basically what ended up happening is we wanted to provide a free plan to our customers and we were reliant on Google and Yahoo’s APIs to make the whole business work because we needed data from them and we needed to manipulate what people are doing and then Google changed their policy. The first policy they changed is they didn’t want their data next to Yahoo’s data. So some of the big players apparently got around that but we didn’t because we didn’t even have a customer so we didn’t matter to them. The second thing they did is they started charging their customers for the API calls. So it would have been extremely expensive being non funded and so *unintelligible* strapped, so to speak, to kind of scale the free side of it. That doesn’t mean we couldn’t have pivoted into the paid plans and stuff like that. But for a number of those types of reasons, we stopped receiving that project after wasting like sixty grand on it.

Andrew: Sure. Why did Crazy Egg work after all the ideas that you guys tried?

Interviewee: God, dumb luck.

Andrew: Really?

Interviewee: Well, that’s part of it. Another part of it is we tried to get customers, and this is not done based on any methodology it was just what we felt was right after a lot of failures, we tried to get on customers. We tried to get customers really early. We got very smart about finding early adopters in this space so one thing we did to build our email list for beta invites was we advertised on a lot of the CSS galleries and back then the traffic was very inexpensive and also there was a lot more of it then exists today. Now it’s really widespread, designers get their CSS design fixes in other places and its not as hyped of a category anymore. Until we were able to grow a list to about twenty thousand emails and so we had a launch list with that. We also had some private forums that we participated in where we gave invite codes very early. So my estimate is that without even using that twenty thousand email list in our private alpha or beta we probably had one thousand to two thousand people using the product. Or at least that have signed up for it and based on that we were able to iterate the product. We didn’t do any formal customer development or anything but it was very similar like understand the customer’s needs, try to tune the product so it’s better. It was a very MVP product and we took that process instead of spending a lot of time and energy building first, we built a minimum model product. I think it took three or four months though, which, you know, in hindsight, I could have done faster. We kind of went from there. I think we took a very similar process to what I understand now about these things, with these start up principles and customer development kind of without knowing what those things meant just because I think entrepreneurs, after a lot of failures and some successes will tend to drive towards these kind of concepts on their own anyways. That’s what Neil and I ended up doing.

Andrew: Ok. Alright and by the way, how do you explain Crazy Egg in one sentence?

Interviewee: It shows you where people click on your web pages.

Andrew: Ok. Alright, so then you discover Eric Reese’s blog like a lot of people did but unlike most people, you actually used the ideas that he put out there with KISS metrics. Can you talk about how you did that?

Interviewee: Yeah, I’d say we’re still trying to use the ideas and we’re doing our best. I don’t know, I wouldn’t say that we’re fully done with that. I think you’re always constantly trying to be better and trying to implement his ideas. I mean a lot of the ideas are reiterated anyways so over time you get much better with it and just like the minimum *unintelligible* process, you’re doing the same thing which is just like how can someone spend an hour and make this process better in terms of say deploying code. So we’ll spend very little time and start thinking of any things he suggested to begin with. Deploy every minute if you wanted to or all the time so to speak. And so I would say that we also started doing a lot of customer interviews. So I have a typical, well not typical, but a personal problem which is when I talk to customers I don’t write anything down. It’s just a weakness of mine, I’ve never been a good student at school and around homework and writing things down. I wasn’t the worst either but anyways, I know people that cheated throughout a lot of stuff. But I didn’t, only half the stuff. But basically what we’ve started doing is we’ve taken a lot of customer interviews and we actually have someone that actually writes them down who’s doing the interviews. This is Cindy Alvarez who’s our product manager.
interviewee: Cindy Alvarez, who’s our product manager right now. Based on that we try to find patterns and figure out what kind of features to build next. So we just try to implement as much of this stuff as possible over time, and slowly. But the biggest part of it is actually writing things down. Taking a very hypothesis assumption and validated learnings approach to things. So that we’re able to learn faster than, let’s say our competition and understand what these customer needs are. So, I would say that it’s more of taking to heart the concepts around, knowing that you’re not always right, and being very comfortable with being wrong. Almost wanting to be wrong.

Andrew: Alright, let’s illustrate it with an example. Do you have an example of a project or a new product on Kiss-metrics that you used these ideas on?

Interviewee: Yeah, we have quite a few. We have turned this one into our second product. Our first one is Kiss-Metrics the main product, which is a quantitative analytics tool, helping people track conversion rates and funnels. A second assumption we had was: quantitative data is great. But qualitative data like survey data, and getting feedback data from customers whether it’s satisfaction, good satisfaction, user voice, or you know, just feedback forms and things like that are really important. But we wanted to figure out what’s the real opportunity in that. So what we did is, we basically had a developer… I had this actual story, just gonna pull it up real quick. We had a developer spend five days building a minimum viable product for qualitative feedback.

Interviewee: We had a number of assumptions. One of those assumptions was, people don’t know what to ask their customers. And then, people don’t know what actions to take based on asking their customers that information. . So, that led to a product which was one template, that’s very simple. It’s a couple things. You fill in the blanks, and we pop out the survey questions for you. What we did is, we actually partnered with Shawn Ellis. He has a blog: startup-marketing.com. I don’t know if you’ve interviewed him, but you should. Basically, we partnered with him.. He’s a seasoned marketer. He has given this survey out to people, and he was very comfortable with us partnering and templating it. So what we do is, it’s survey.io is the url.

Interviewee: Seriously, it only took five days to build, and it’s had more than 2000 signups already. That was our MVP, and we had a bunch of assumptions there. The biggest one that was validated was: yes, people do not know what to ask customers. When you tell them what to ask customers, they actually learn from it. We weren’t even trying to help them learn, we were just showing them the information. So we learned that. There’s a couple other assumptions around that which was like, not even assumptions, just activity we saw. Which was, these are long form surveys and you don’t get the highest percentage of responses on surveys when you have 10 questions and things like that.

Interviewee: We learned that, and before we really thought about that too much, we started building basically what you would call a Survey Monkey competitor. So, a tool that lets you build surveys or long form surveys. For some reason, not even some reason but, we really started digging into it and we realized that the majority of Survey Monkey’s competitors and the majority of reasons people use survey isn’t to survey their customers. It’s actually to survey their employees or do market research surveys and things like that.. And that wasn’t the business we wanted to be in. We wanted to build a product that helped you understand your customer better.

Interviewee: So we built the product that was like a Survey Monkey kinda competitor. What we decided to do was actually do a really quick MVP test on this.. What we did was, we spent two days to tweak the product a little bit and started doing pop-up surveys on web pages. That was a blast. We saw the response rate was much higher. In our own team we started thinking of, I don’t want to say hundreds, but dozens of questions we wanted to ask customers in certain places. One of the key ones we did was, In our Kiss-Metrics product, we used our minimum viable product for surveys and asked in the report interface, is this report clear, yes or no? And if they said no, we asked them to explain their answer.

Interviewee: That actually helped us improve the interface. So, we started realizing that this was a really good way to get feedback, and now we’ve built a product on it. It’s called Kiss Insights. It’s in beta. That product, two months to build and we’ve had about 500 signups so far. I don’t know if we have product market fit yet. But we’re working on it. I just got a spammy message on Skype. datethewives.com
Interviewee: who’s our product manager now, and based on that we try to find patterns and figure out what kind of features to build next. So we just try to implement as much of the stuff as possible over time, and slowly, but the biggest part of it is actually writing things down, taking a very assumption–hypothesis assumption and validated learnings approach to things, so that we’re able to learn faster than, let’s say, our competition, and understand what these customer needs are. So, so, I would say that it’s more of taking to heart the concepts around knowing that you’re not always right, and being very comfortable with being wrong. Almost wanting to be wrong.

Andrew: Let’s illustrate it with an example.

Interviewee: Sure.

Andrew: Do you have an example of–of a project, or a new product on, on kiss metrics that you used these ideas on?

Interviewee: Yeah, we have quite a few. So we–we have turned this one into our second product, our first one is kiss metrics, the main product, which is a quantitative analytics tool, helping people track conversion rates and (UNINTELLIGIBLE). A second assumption we had was, quatitative data is great, but qualitative data like survey data, and getting feedback from customers whether it’s satisfaction, user voice or, you know, just feedback forums and things like that are really important, but we wanted to figure out what’s our real opportunity in that. So what we did is, we basically, we–we had a developer–I have this actual story, I’m just going to pull it up real quick. So, we had a developer spend–sorry–so one developer spent five days, building a minimum viable product for qualitative feedback. We had a number of assumptions. One of those assumptions was, people don’t know what to ask their customers, and then people don’t know what action to take based on asking their customers that–that information, and then also, so–so that led to a product which was one template, very simple, it’s a couple things you fill in the blanks and we pop out the survey questions for you. What we did is we actually partnered with Shawn Ellis, he has a blog, startup-marketing.com, I don’t if you’ve interviewed him but you should, but basically, we partnered with him, he’s a seasoned marketer, he has given this survey out to people and he was very comfortable with us partnering and templating it. So what we do is, it’s survey.io is the url, it’s–seriously, it only took five days to build, and it’s had about 2000 sign ups, or more, already, more than 2000 sign ups, and that was our MVP. And we had a bunch of assumptions there. And the biggest one that was validated was yes, people do not know what ask–what to ask customers and when you tell them what to ask customers, they actually learn from it. And we weren’t even trying to help them learn, we were just showing them the information. So, we learned that. There’s a couple other assumptions around that which was like, not even an assumption, just, activity that we saw which was, these are long form surveys and, you know, you don’t get the highest percentage of responses on surveys when you have like ten questions and things like that. So, we learned that, and we started actually–before we even really thought about that too much we started building basically what you would call a survey monkey competitor. So a tool that lets you build surveys or long form surveys. And, you know, for some reason, once we started, not even some reason but, we really started digging into it and we realized that the majority of survey monkey’s competitors and the majority of reasons people use survey, isn’t to survey their customers. It’s actually to survey their employees, or, do like market research surveys and things like that, and that wasn’t the business we wanted to be in. We wanted to build a product that helped you understand your customer better. And so we–we kind of built the product that was like survey monkey, kind of competitor, and then what we decided to do was actually do a really quick MVP test on this. And what we did was, we spent two days to tweak the product a little bit, and started doing pop-up surveys on web pages. And, that was a blast. So, we saw the response rate much higher, we started getting very, like–in our own team, we started thinking of, I don’t want to say hundreds but dozens of questions we wanted to ask customers in certain places. So one of the key ones we did was, in our kiss metrics product, we used our minimum viable product for survey, and asked, in the report interface, is this report clear. Yes or no. And if they said no we ask them to explain their answer. So, that actually helped us improve the interface. And so we started realizing that this was a really good way to get feedback, and now we’ve built a product on it, it’s called kiss insights, and it’s–it’s in beta–that product, two months to build, and we’ve had about 500 sign-ups so far, and I don’t know if we have product market fit with that idea yet, but, we’re working on it. So, I just got a spammy message on Skype. Date the wives.com.
Andrew: And we’re gonna say that you’re gonna send me the presentation but people can also see, I’m not selling this by the way, I don’t get a cut of any of this. I’m just really genuinely curious and I’m assuming anyone who listened to all this way into the interview is also curious about this. If we’re not at the conference, can we see these videos somewhere online afterwards?

Interviewee: Yeah. I think they’re going to be recording and pricing them afterwards knowing how air curls. How [unclear] loves to share all that information. But you can also listen on Cybocast that are going on I think in fifteen different areas.

Andrew: You can all get together and watch together.

Interviewee: Yes exactly. I think if you go to sllconf.com you’ll be able to see it and oh I just realized that Justin TV is going to, they’re going to streaming on Justiv TV as well as they’re sponsoring the event they’re going to be streaming it.

Andrew: Okay. You said earlier that you had a lot of ideas for businesses. Do you have one that you would do right now if you have the time? You can do and maybe we’ll give it to the audience?

Interviewee: Big question. I have way too many ideas. Honestly I’m going to, I’m going to throw it back at you and say that it’s not really about me giving an idea because I can come up with some random idea like every minute a day. I think it’s about taking some random idea and really validating whether it’s a good idea or not. And that’s more important than an idiot like me giving some idea or giving some idea that I’d like to see built. I’m not any smarter than any other entrepreneur or aspiring entrepreneur out there. I think its more about having an idea about being really passionate about you know kind of wanting to see it through. And then wanting to learn more and more. So with our own ideas have a strong conscience for helping businesses understand data get better. Whether its qualitative or quantitative and that’s where all of our products come out and they are deeply rooted in that vision of wanting people to do better with the metrics and measurement and feedback and things like that and tie up after the products. So most of my ideas revolve around that. So I’d say pick an idea its not the idea that matters more that, its just that taking an idea and really willing to say I’m really right about it. So for example, for the longest time, they said the amount of money Survey Monkey, I wanted to go compete with that you know. We’re not competing with them at all now. It’s the best for the business it’s based on learning what the customer need was. But deeply rooted in what vision that we have for our businesses and for kind of what we want ours to be at the end of the day.

Andrew: I see. So just chasing other people’s ideas you found a way to make it yours. To make it with was your mission.

Interviewee: Exactly.

Andrew: Oh yes. So you’re constantly focusing on KISSMetrics. I see Neil Patel advising your partner, advising a billion different companies, putting up flag poles, taking pictures everywhere. Is he in the business as long and hard as you are?

Interviewee: Yeah. absolutely.

Andrew: He’s full time in the business?

Interviewee: Yeah absolutely. He’s.. I’m more focused on product development and he’s more focused on sales and marketing. So that can probably sum up the kind of stuff he does which can make you feel like he’s not doing anything. But if you looked at what I did everyday you’d think I didn’t do anything either.

Andrew: I don’t mean to say that he’s not doing anything. I just don’t understand what he’s doing at all. Actually I’m wondering what his role is.

Interviewee: Yeah it’s all sales and marketing so when we don’t have a product that needs to be aggressively marketed, he’s basically generating demand which is why you see him everywhere so to speak.

Andrew: That makes sense. I do see him everywhere. I don’t understand how he can be with me on the phone for half hour helping me think through an idea and at the same time blogging all the time, working with the white pages, working with the bunch of other people, noses in the audience saying I’m instigating something. All right. Any final words?

Interviewee: No. I think I said it in the video from the conference, I think I said it how I wanted to which is like everyone should be following these principles. You have to start, if you’re confused about wanting to start, start somewhere. Yeah these things have changed the way I think about business. I’m very much more confident about building successful startups with these principles and without them. I wish I would have known about them and practiced them.

Andrew: Bottom line. What has it done for you? KISSMetrics. What have the lean start up ideas done for KISSMetrics?

Interviewee: Increased ourchances for success for building a really big business.

Andrew: All right we leave it there guys. Thank you all for watching. We’ve talked about lot of people in the past interviews. Shawn Ellis I think I might have asked him about that once a very long time ago but we couldn’t figure out the date. I don’t remember. But [unclear] just done an interview here. This is Hiten Shah’s second interview here. You can go back and find the interview he did back when he was at ECS. Neil Patel did an interview here. You should also check out all their websites especially startup lessons learnt which is theirs to say. I said earlier today everyone is demanding more bootstrap entrepreneurs, I’m giving more bootstrapped entrepreneurs and I’m putting out calls constantly for more of that. So if you’re a bootstrapped entrepreneur who’s had a good amount of success. I’m not just looking for somebody who’s bootstrapping for the sake of bootstrapping. I need it to be a successful business. Come back here. Send me an email and we’ll do an interview with you lined up for you guys. Who..actually I want to get him on here and surprise viewers. Hiten Shah everyone watching, thank you. See you guys.

This program was sponsored by

Wufoo- The easy way to add elegant forms and surveys to your site. (I use them on my site’s contact page. When we got married Olivia and I used Wufoo on our wedding web site to collect RSVPs because their forms are beautiful.)

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  • stevenklein2

    I think it's hilarious that he's wearing a Google Analytics shirt.

    - Steve Klein – http://getsoundaround.com

  • http://twitter.com/ttunguz Tom Tunguz

    Awesome that you have the full transcript. I put up a summary at http://expostfacto.posterous.com/lean-startup-m

  • http://www.bidsketch.com Ruben

    Another great interview! Very pleasant surprise that you were able to get Hiten on last minute like this — I'm a big fan. From my interactions with Hiten, it's easy to see that he's a genuinely nice guy that's really interested in helping startups out with what he knows (even tiny single person startups like me).

    Lots of good stuff in here. Just a few takeaways for me:

    * Slicehost and Media Temple don't necessarily have an awesome product, but got market share because they understood customer needs and built products around that.

    * Evaluation of whether you continue with your idea, drop it, or change some part of it, is an iterative process.

    * Look for patterns in the feedback you've gathered to help guide how you shape your vision (and be open to changing it).

    Also, I'm a KISSmetrics user and the glimpses I've gotten into how they handle gathering customer feedback and product enhancements is really interesting from my perspective. Lots to learn from what they're doing.

  • http://mixergy.com Andrew Warner

    I asked him if he wanted to change it before the interview and he refused.

    I should have brought it up in the interview and asked him about it.

    You're right, it cracked me up too.

  • http://mixergy.com Andrew Warner

    Great info.

    I saw you on their homepage.

  • http://twitter.com/hnshah Hiten Shah

    =)

  • http://twitter.com/hnshah Hiten Shah

    Thanks for the kind words and summary of the interview, Ruben. Cindy Alvarez (http://cindyalvarez.com) has been an awesome addition to our team who has been focused on making sure we are maximizing the amount of customer feedback we get.

  • http://twitter.com/mrakowski Michael Rakowski

    I liked that Hiten talked about the upfront research work that comes before implementing an idea. The part where he describes the process of talking to potential customers to validate or invalidate assumptions about the business is particularly interesting. It's good advice for saving time and money in the long run because it helps prevent building the wrong product.

  • http://twitter.com/jasonbickford Jason Bickford

    This interview left me wanting someone to build that new video service.

    A video service that:
    Records and Streams Live
    Records for later viewing that can be embedded
    Splices up into small pieces and uploads to youtube
    Video Analytics
    Built in interview screen so it can put two people together and record similar to oovoo.com or Andrews Skype hack.
    Serve ads automatically
    Also creates a copy of audio for download and itunes
    Control if the video is public or for members only

    Now that would be cool!

  • http://twitter.com/brendanmiranda Brendan Miranda

    Thanks Andrew and Hiten.

  • Anonymous

    ACS was obviously profitable as it was funding the rest of the companies. Why didn't he just roll with ACS? It sounded like it was making an awesome amount of dough if he was able to drop half a million dollars into a hosting company that never had any customers, as well as fund half a dozen other companies.

  • Anonymous

    +Great interview, btw :)!

  • http://twitter.com/gwave4business SteveK

    Nice work guys. Thank you for sharing your failure as well as your success. I think we have to remember as bootstrappers that finding the market is step one. Step 2 is the product. Many a fortunes have been lost starting with the product.

    Hiten thank you for all the information on survey's and going into competitors forums…I will definitely be putting these into practice. Awesome interview!

  • http://mixergy.com Andrew Warner

    Thanks.

    This is one of the most useful interviews I've done.

  • http://mixergy.com Andrew Warner

    Thanks.

  • http://mixergy.com Andrew Warner

    I can't speak for Hiten & Neil, but those consulting businesses don't scale.

  • http://mixergy.com Andrew Warner

    Thanks for listening Brendan!

  • http://mixergy.com Andrew Warner

    I'm not sure if there's a market for it, but I would love to have an end-to-end solution like that. You should see all the work that goes into publishing.

  • http://mixergy.com Andrew Warner

    Thanks Michael.

  • http://mixergy.com Andrew Warner

    Great link.

    I Googled you Tom. Hope we could meet in person sometime when I'm back in the US.

  • gcrest

    Your interviews are always excellent. Thanks for bringing the experiences of other entrepreneurs, especially young entrepreneurs, to our attention.

  • http://mixergy.com Andrew Warner

    Thanks.

  • steve

    do those video stats from Wistia mean that not everyone watches the whole video to the end? i find that depressing, as this is probably the medicine that everyone needs to take, but I can relate because right now I don't have time to watch the video. I'll probably just listen on itunes while i'm doing the dishes tonight.
    do you have any stats on iTunes usage? that would probably be hard to analyze offline playback, unless Mr. Jobs built it into iTunes.

  • Ken Singh

    Andrew, can't download the MP3 of Hiten's interview ! Can you please fix it.
    Thanks.

  • http://twitter.com/hnshah Hiten Shah

    Andrew is correct, consulting businesses don't scale and we didn't want to continue something like that. It was a hard decision, but in hindsight we should have made the switch out of consulting MUCH earlier.

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  • http://www.moxe.net/ Doug Wulff

    You always bring it Andrew. Check out his pivot presentation from Lessons Learned. Freaking awesome: http://www.justin.tv/startuplessonslearned/b/26

  • http://www.moxe.net/ Doug Wulff

    You always bring it Andrew. Check out his pivot presentation from Lessons Learned. Freaking awesome: http://www.justin.tv/startuplessonslearned/b/26

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