Hiten Shah’s SaaSventure – From Crazy Egg To KISSmetrics And Back

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Hiten Shah is a world-class online marketer and serial entrepreneur. Hiten is well known for being Co-founder of Crazy Egg and KISSmetrics but with being the curator of the awesome SaaS Weekly newsletter, his contributions to the Growth Hacking movement, speaking engagements and advisor roles, Shah has become one of the biggest influencers in SaaS land.

In this interview, Hiten takes us on a SaaS infused journey through why he left KISSmetrics and what he’s working on now, view’s on bootstrapping vs Venture funding, one major piece of advice for all marketers and who he’d pick as a business partner if not Neil Patel.

 

The Update

“I actually am no longer involved in KISSmetrics even on the board or in any capacity with the company beyond I have equity in it because I started it.” his idea was that it was just time to move on and do something new. “We’ve had two CEOs there. I was actually interim CEO last year and basically the business is doing great considering everything that happened. We had a pretty major lawsuit a while ago and it made it so that we couldn’t raise money for two years and we’re battling a lawsuit. So that really made it that we couldn’t invest in growth at least from a cash standpoint.

The business is pretty old now and I think it’s time for someone else to have a whack at it.” Says Shah.
“One of the lessons learned there is like markets move really fast. I would say SaaS, even the markets, the categories with all these new companies coming in and all this opportunity, the markets are moving really fast. They’re getting crowded really fast.”

And moving from KISSmetrics onto what projects Hiten is now working on, he is back with his long time business partner and co-founder Neil Patel.

“I’m back to work here in Crazy Egg, which is a self-funded SaaS product that creates heat maps for people that click on a page. We were one of the first. It’s 10 years old and we’re probably the only ones that actually stayed true to just doing that. That will come to end this year, 10 years in, where we’re going to start doing some other stuff that we’ll start launching later this year.

Then I’ve started working on a new company, which is really my co-founder’s blog, QuickSprout. we’re building software. He’s been blogging a lot about online marketing, content marketing and doing a pretty good job of it. We get about 700,000 visitors a month and we’re going to start building software to help people write better content and get more traffic.”

From Services to SaaS – A path well trodden

There’s a lot of famous examples of SaaS companies that started out as consulting businesses and then transitioned to the SaaS business model. 37 Signals to Basecamp, Exceptional to Intercom, Elastic to Close.io and, of course, Advantage Consulting Services to Crazy Egg. Having made that journey with ACS to Crazy Egg, Shah had some thoughts on the well trodden path

“I think it’s just a certain type of pattern. Many of us got really good at helping other people with their, in our case, their marketing. In 37 Signals’ case it was just design and a little bit of product development. In Intercom’s case they did a whole plethora of stuff focused starting with design.” Says Hiten.

“I think that as you get good at helping other people, you also get better yourself. At some point, I think many of us have the realisation that by building software, we can actually have more leverage, more ability to choose our own destiny with our business versus always having to get new customers and keep them happy. You’re sort of working for yourself.” Shah continues
“I think that being said, even consulting and services and all that side of things it’s probably the fastest, easiest way to make money. And everyone can have some… you generally have some expertise that they can be like that. It’s a way to fund your business or fund yourself early on if you don’t want to go get a job and then it evolves, I would say, into you make a business out of it or you don’t and you just start working on a product just because you’re able to actually have that freedom to do that.”

For many people including Hiten, Jason Fried, Steli Efti, Eoghan McCabe, starting in consulting before moving to creating a SaaS company is an alternative to having to work for somebody else.

On Bootstrapping vs VC Money

The barriers to entry for starting a SaaS are lower than ever, but still many startups fixate on fundraising rather than bootstrapping. Is this a good or bad thing in Shah’s opinion? “I think there’s a lot more confusion about self-funding versus venture-funding, probably maybe even up to like 3 years ago, as recently as 3 years ago. I’d say that a lot of that confusion has definitely dissipated. For example, since it’s easier than ever to write code and deploy it using AWS and other things out there, you could build something on weekends. Honestly. And you can even get users and some traction for it and still have a day job. We’re just seeing the barrier to creating something and getting a few customers down to like just nights and weekends. And I think as that happened, we’re just starting to see these companies come out there and have a decent amount of traction, have more traction than ever. There’s probably something kind of similar to Moore’s Law related to that where it’s like you can get more customers faster than ever and it just gets easier every year.”

Hiten believes “ it’s much harder to keep a customer especially with these markets getting crowded and it being so easy to build products, but at the end of the day, the more competition tends to create a lot more value than less competition. Obviously if you’re a competitor, you’d rather prefer to be Number 1 and ideally have as little competition as possible both from an innovation standpoint, more stuff out there better in general.”

I’d focus on actually figuring out a product worth building, Number 1, and then building some level of that product, whatever you can accomplish and then trying to get some traction first before even considering the route you take with your business if you can find a way to afford to do that.”

Having bootstrapped with Crazy Egg and had venture funding with KISSmetrics, Shah is well placed to understand the pro’s and cons for both. But does he have a leaning either way? What path would Shah take with his next venture?

“I think regardless of what route I take, I need a product and I need some ability to get customers. Regardless of whether it’s venture-funding or self-funding, I need those two things. The pattern I’ve seen is that over time people are getting investment when they’re way further along.” Says Shah.

“My recommendation anybody starting out today is I wouldn’t worry about funding or self-funding or venture-funding or anything like that. I’d focus on actually figuring out a product worth building, Number 1, and then building some level of that product, whatever you can accomplish and then trying to get some traction first before even considering the route you take with your business if you can find a way to afford to do that.” Hiten adds
“Otherwise, like many people, they don’t have an option and they have to go either seek funding or find a way to make ends meet while they’re building their product. But what I’m seeing right now is it’s been a long time since you could raise money on a PowerPoint basically unless you’re somebody who’s already done it before. These days, that’s not it. It’s at the very least, some level of a working prototype and some validation that you can actually build a product.” For most people.

SaaS Pricing Models-Freemium

On top of his day job building software companies, Hiten’s role as a thought leader in the SaaS, Entrepreneurial and marketing domains is neatly tied together in a bi-weekly podcast, The Startup Chat. Together with Steli Efti, CEO of Close.io, they provide ‘unfiltered insights and actionable advices straight from the trenches of startup and business life’. A particular SaaS flavoured episode, was Ep 003, a discussion on Freemium. During that episode Shah lays out a an important point during his verbal jousting with Steli, that the fastest growing SaaS companies all have a free pricing plan.

“Really it’s about at the end of the day doing the right thing for your customer base. In most markets today, your market isn’t just an enterprise customer that wants demo request, handholding, and all these other things. Or even in some old-school industries, even with small businesses like HR, they still require all that even when you’re selling to small businesses.

The recommendation I would have would be really consider the size of your market and whether you can offer something for free that can provide a ton of value that helps people start early engaging with your business in a meaningful way with your product ideally before they’re even ready to make a bigger leap and invest even more in it by paying for it.” Says Shah.

To me it’s doing the right thing for the customer. It’s like do they really want to sign up for a trial? Does anyone really want to sign up for a trial of a product?” That’s really the question begs Shah.
“To me, I know I’m getting philosophical, but if you think about it, in a trial model you get a bunch of customers in a month and if they don’t convert within 30 days of them signing up you tell them to go away. I would just say that from a product standpoint, from a business standpoint that’s just bad. That’s like turning people away that could hang around and use your product. If they were motivated to sign up and start a trial so there was something you should be able to do for them for free.” That’s another way to think about it, and Hiten doesn’t think you’re doing the right thing for the market and your customer if you do that.

Doing a Zenefits: “Now, the irony today is like you’re starting to see these trends where you have companies like Zenefits and a bunch of other ones that are slowly creeping up that are providing the SaaS product for free and monetising their customer base in a different way. Even if you look at Mint back in the day, it was a free product to manage your expenses, budget, anything as a college student, from a personal finance standpoint and then they built a lot of things around recommending things to you and tried to make money that way. So that trend is kind of old but now we’re starting to see like full free products with no paid plans come to market. I think the trend is only going in that direction of more and more products are going to be free.” Says Shah

It’s not Social Selling, it’s Human to Human

The medium is the message, a phrase coined by Marshall McLuhan in 1964, is an apt description for how well Shah has utilised Twitter for business gains or rather we should say, ‘Social Selling’. With over 190K Twitter followers and having used the medium tactics with great success with one particular example being the time Hiten and his business partner Neil Patel managed to get 23,000 email signups, largely driven via Twitter before the Crazy Egg product was even launched.

This makes a really good case for companies to find their medium that works for them. To experiment more with social and use channels like Twitter, Facebook, LinkedIN a lot more perhaps than they are using today. Is this the age of Social Selling?

To me it’s just being human and being human with the channels that you have available to you.

“ I would just say that whether it’s marketing or selling or whatever you want to call it, it’s a human-to-human process, or there’s an intermediary like a website. To me I think social selling, at least the way it’s defined, is people define it as developing relationships as part of a sales process. That’s the basics of how you’ll see a lot of technical definitions for it.

I’d venture to say that like it’s not really social selling. To me it’s just being human and being human with the channels that you have available to you. Even back in the day, this is nothing new. Back in the day, the way we would market things… back in the day meaning let’s say 5 years ago pre-existence of Facebook for anybody, Twitter and even LinkedIn wasn’t that big and a lot of these other platforms like Pinterest didn’t even exist, we were doing social selling by commenting on people’s blogs. It’s not any different in my mind. It’s just an ability for you to say something in a social setting. A blog in the commentary is essentially a social setting and I think so are all these social media sites.” For Shah it’s about relationships and building them.

“The easiest form of it is not even sales for me. It’s like if someone mentions my brand, my company in any light, it’s my job if I’m there either as me, my account, my personal account or my company’s account to respond and act in a responsible manner to be honest. Because, look, if someone’s going to have a problem with my business, I want to help them solve their problem. That’s not cool. Right?” Says Shah.
“If someone’s praising the business, I want to re-tweet it. I want to amplify that. One, because it’s good for me. Obviously. But two, someone’s endorsing the product publicly or endorsing my brand publicly and that’s huge. To me it’s not just about sales, it’s about being human and using our channels that we have available to us on the internet to be human.

It’s cool that we have a name for it. I know salespeople love putting names to stuff just like marketers do but like this is how we do it. This is how it should be done. It’s just like back in the day when you need to knock on someone’s office and get in their door, schedule a meeting with them. But instead you have this opportunity because there’s so much more going on these online channels where you can start actually helping people in real-time when they need it.”

Share everything you know

What if Hiten Shah were to write the actual online marketing playbook for SaaS startups? His Number 1 marketing strategy tip would be this.

“I think I might have said this before but I would say share everything you know. So some of the best marketing these days comes from people who are sharing what they know. Sharing, educating, helping people learn things. Especially when you’re a B2B SaaS business, it’s imperative.
If you’re the go-to source for someone’s education about the market or marketing in the case of many of my blogs and stuff like that, you’re building a brand before they even get to use your product. It’s great and it’s a much easier way to pull people in.”

Many would call that inbound marketing. To Hiten, the Number 1 strategy you have is what you know. The Number 1 asset is what you know and how you can help people with that knowledge.
“I would say that the poster child of this was actually 37Signals, now Basecamp. Back in the day when they would share things like that, nobody was sharing. Nobody was talking about A-B testing when they were talking about it for a SaaS business.”

“I think share what you know and just try to educate people that way. That’s the strategy that’s working right now and more importantly, I think it’s the most human one we have.”

Another favourite example is Intercom with their blog. “If you’re a product person, there’s no way you’re not reading that blog because they give you lots of deep insights into how to make better products. And just like they do, they built a killer product and they talk about how they did it. That’s what they know. They even share internal tech talks and videos and stuff like that on their blog.” Says Shah.
“I would say that there’s a lot of great examples out there of this tactic I’m talking about. The beauty of this specific tactic is that I think it turns into a strategy. Once you start getting good at it, you start doing more.”

Another example would be the folks at Groove HQ. They shared their journey to 100k MRR on their blog from day zero.
“I think share what you know and just try to educate people that way. That’s the strategy that’s working right now and more importantly, I think it’s the most human one we have.”

Now Hiten Shah is working on developing software for the hugely popular blog and prime example of sharing what you know, QuickSprout. The software that Hiten and Neil Patel are is to help content marketers but how?

“We don’t know what we’re going to do there. We do know that the brand my co-founder, Neil, has built off of QuickSprout is all based on sharing what he knows. He’s got some of the best posts around, even some of the patterns he’s learned about what makes people click on those posts. A lot of other people have sort of imitated and got inspired by.
Neil was like one of the first to come up with certain patterns. He’s even got 100k-A-Month Challenge going on where we’re building a new blog and we’re trying to get it to 100k in revenue a month and we’re sharing everything about how we do that.”

A lot of that’s already baked in to the content on the blog and so when we think about the product, it’s actually the truth is we have an advantage because you signed up for it. So since you’re signing up for it, we have a lot more information about your blog and other information like that and your own data so we actually invert it and make it more about you and your content and how you can do better.”
The whole goal of that business is to help you increase traffic. The content will help you increase your traffic and the software will help you increase your traffic. “The main way today is going to be essentially helping you write more effective content. A lot of that has to do with tips and tricks that we’ve already shared on the blog through the content.”

Outside of, QuickSprout and Crazy Egg, Shah does a lot of advising with a number of startups. There’s a quote currently on Shah’s Twitter cover, from Zig Ziglar that likely gives some insights as to why he advises a ton of startups and entrepreneurs looking for help:

“ You will get all you want in life if you help enough other people get what they want”.

We asked Shah if there was any learnings he could share in terms of commonalities in problems that he may have seen with the SaaS startups asking him for advice?

“I’ve got one thing that’s super fascinating to me as I’ve talked to a lot of companies especially SaaS companies about growth and marketing and even revenue. One of the most interesting things I’ve learned is that there isn’t as much standardisation as you’d expect. So the way that one company writes blog posts or the way that another company does their paid advertising it’s not going to be the same across companies.
When you read a lot of the content out there, it’s very prescriptive in like you should do this or I did this, it worked for me. There’s not enough taking it to the point of this is how you can make it work for you and realising that this content is just out there and it’s just how somebody did something you’re supposed to get inspired by it versus trying to directly apply it to your business all the time because that just tends not to work. Because I’ve seen a lot of people make that mistake of trying to repeat what someone else did successfully and having problems doing it because their market is different, their product is different.” Says Shah.

Hiten believes that Timing is important and of course, the way the world is today is constantly changing. You couldn’t build a Twitter audience like Shah did with KISSmetrics in the same way that they did back then right now because channels such as Twitter get saturated and new ones come up all the time.
“I would say that what worked for someone else won’t necessarily work for you. Your job is to get inspired by what they’ve done and be inspired by everything and use the information you have about your customer base and your product and your market and your business and the timing right now to figure out what strategy you should use.

My biggest piece of advice is figure out what’s unique about you and make that the thing that you market and how you do your marketing. That doesn’t mean you’re just copying tactics or growth hacks from other people.”

Lifelong Learning

For me, I’m hungry for knowledge and information so I say yes more

Shah is a proponent of lifelong learning, he talks about the books that he reads. Being an infovore and interestingly he also listens to audio at 2x speed or 3x on Audible. “I’ve gotten very used to it to the point where I’ll even watch movies and TV shows at 2x when I’m watching them alone because I can binge-watch things faster than you. “

“There’s an interesting thing I do where a lot of people will say when you have opportunities or stuff like that you should say “No more,” or you should say, “Yes more,” or whatever depending on the mood they’re in they’ll give you different advice. For me, I’m hungry for knowledge and information so I say yes more. And I go spend my time to learn. If I’m gaining knowledge and information then that’s just feeding my engine. That engine is what I use to help myself help other people. So the more I know the more information and data I have.”

Shah feel’s like it’s his job to sort through it so he tends to actually say yes a lot more than most people would say yes but that also teaches him how to deal with more. “A lot of folks ask ‘how do you get all this stuff done?’ I’m like I just pile it on and I don’t feel overwhelmed and I learn and deal with how to deal with more.” Says Shah.

“That’s what I also mean by how do I think about information and lifelong learning. To me it’s like this whole 2x thing is like how do I get more information and process it and consume it faster? And then over time I learn how to deal with it. So it might feel like a fire hose in the beginning like a fire hydrant opened up and all the water is coming at you and you’re being water boarded or whatever, but eventually you’ll get used to it and you’ll almost start liking it. That’s when the magic happens and you start really making connections and having sort of faster progress.” To Shah, lifelong learning has a lot to do with creativity and innovation and those are the things he values very highly.

Another Co-founder not called Neil Patel

Hiten Shah and Neil Patel met in 2002, through Patel’s sister Amee who Shah was dating at the time and is now married to. Shah and Patel clearly had business chemistry and have gone from founding together their consulting practice ACV, to Crazy Egg, to KISSmetrics and now together again at Quicksprout. When asked if Hiten was to start another SaaS company, and had to choose another co-founder which couldn’t be Neil Patel, Shah said
“I don’t think I have a specific person, to be honest. I think there’s some awesome people out there that are busy, and that are friends of mine that I’d love to explore and work with. A lot of them are either complementary to my skill set or they’re people that I feel like I’ve learned from.”

But generally, just in doing that, I would literally just from a practical standpoint figure out what I’m actually really good at and then figure out what are the things I’m bad at and find people that are good at what I’m bad at. So for me, product engineering, design, all those things I value very highly and care about I also care about growth. And then my co-founder cares a lot about sales and marketing and he also cares about growth as well. I think growth is a commonality. So I’d probably aim for people that understand growth and then pair it with innovation and growth. I would pick from people like that.” Says Shah.

“You can think of folks all the way from like Andy Johns, Brian Balfour, a friend of mine at Facebook named Alex Shultz because that skill set of growth and understanding growth from a product standpoint I think is very rare. And anybody that I work it if it weren’t Neil that’s probably something that, believe it or not, would be actually pretty complementary and also complement a lot of things that I want to get better at but don’t necessarily consider myself the best.”

Hiten Shah Spoke with Alex Theuma for The SaaS Revolution Show which you can subscribe to now on iTunes

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