How to Grow Your Self Funded Business Faster – Hiten Shah – MicroConf 2014

All right. Micro comp. I got so much to say. So everyone can hear me. Everyone's awake. Yeah. No.

All right. Okay.

Where do I begin? So.

This is my favorite conference. I've been to a lot of conferences over the last 10, 11 years almost about technology. And it's. Yeah, I don't want to miss it for the life of me. Kissmetrics is sponsoring it this year. That took some convincing from our marketing person, but I'm just kidding, it was easy. And so the reason I love microconf is, is because it's all about self funded entrepreneurship. I'm specifically today going to talk not about tactics and I'm actually going to talk about a whole bunch of stuff that is related to things that I think matter. As you're a self funded entrepreneur, ways to think about different stages of your business and kind of a few other things. This is stuff I haven't talked about before. And you probably won't get a lot of tactics from me because the conference is full of tactics. And so the biggest thing that I keep hearing, and I know some of you that have talked to me about this, understand my issue here is that a lot of people consider themselves bootstrapped. And I think that's incorrect. We don't have straps, we don't have boots, we don't pull ourselves up from them. It's very old terminology. So I would encourage all of you to use the word self funded if you haven't raised money and if you're self funding, self funding your company. So we should be proud of that. And I think bootstrapping takes a little bit of that away from us. So that's my rant about that. But more importantly, the one thing that I would say that is sort of probably most exciting for me and I promise I'll get away from philosophy pretty soon. This is the last slide of that. Maybe not, but is this idea of freedom of time and in my experience, there's basically two ways that you can get that. One way is that you.

Start some business. Either you raise money or you start the business and you sort of then raise money and then you keep raising money and then you end up like the founder CEO of Box.com who has 4% of the company before they go IPO. And yes, he's going to make hundreds of millions of dollars. But that's kind of the common situation when you raise money is you end up with a very small percentage of the business. And I think Rob was actually telling me to, or he was saying there's a Unicorn study that says 34 out of 10,000 companies that raise money, I guess they end up actually having an exit, having a billion dollar exit. So that's one way to get freedom of time. You raise a bunch of money and you grow a business and you have thousands of employees and then you sell your company. That's very uncommon. But you do end up having freedom of time. You have tens of millions of dollars, if not hundreds of millions of dollars, and you get to do whatever the hell you want with your time.

The reason I'm excited about this conference, I'm excited about the opportunity all of us have, is that we can get freedom of time in a different way. And the way we can do it is we can sit there, build our own software, charge actual customers for it, and just start making money and do whatever we want. And that's what's exciting. I think more people in this world can get that compared to raising money and selling a company for millions and millions of dollars or billions of dollars, or going public. So anyways, that's my rant. It's over. That's why I'm here. This is very exciting for me. It should be exciting for all of you. I was going to have my friend do a dance, but he didn't want to do it. I almost convinced him. He was almost there. And it was to that song Happy. And one of the reasons is we should all be happy. We don't have investors, we shouldn't be thinking about them, and we get to figure out how to make money. And we're at a conference where people can help you if you're at a phase where that's what you need. So there's this concept, regardless of what you kind of. What kind of. Whether you raise money or not, or, you know, if you're building software. That has kind of stuck with me and it's this idea of pirates versus explorers. So I'm going to explain it and then we'll go on. So explorers. Explorers are.

The people that just want to build something new just because it's new. I can call out people in this room that are explorers. There's a sort of the idea that they don't want to build something someone else has built. They think about it like this. Basically whatever I'm doing is revolutionary. And then there's pirates.

Pirates are sort of my favorite in a way, just in general, because what they usually do is they're fast followers and they chase sort of things. They want to steal other people's loot. And so this Is a concept that took me a while to understand because I was skewed one way and I needed to quantify that for myself because it really based on this and which one you are essentially what spectrum you are on this, the way you build software, the way you think about software, the way you even think about running your business is going to be vastly different. And so the way I like to say it is explorers are very discovery centric. So you want to discover new land, new things, new opportunities. You're usually first movers, which is good and bad. And you're usually looking really to solve problems in unique ways. And then as pirates, you're more market centric. So you're thinking a lot about your competition, you're thinking a lot about sort of the market, where it's going to go, how big it is and things like that. You're also thinking that like you can, if someone's built something, you can build it faster than that, basically. And then they're very focused on building the solution just because they look at the world and they think in solutions, not in problems. So what I'm curious about is how many of you would consider yourselves more like a pirate?

Awesome. And would everyone else be the explorer? Do we need to raise our hands on that? Awesome. Sweet. Okay, so it's actually a pretty even mix and I'm glad it resonated with you guys because this is the first time I've talked about this and it's something that actually defines how you build software, how you think about building products and things like that. And some of the people I would have guessed actually fell in the right camp as to what I would have guessed. And I think it's a spectrum. What I can tell you is if you start a company one way, it's very difficult to make the company work the other way. And so just be conscious when you're starting or even right now, which one are you? How do you think about the world? What makes you get up in the morning and actually want to write code, talk to customers, sell your product, whatever it may be. All right, so my philosophy is really over now. Now it's going to be very tactical, hopefully. No, I'm just kidding. Still strategy.

So that's what I'm supposed to talk about today. And so, and that's what I wanted to, because I've talked about tactics. You're going to hear a lot of tactics, you're going to get those three sort of takeaways. I wanted to give sort of a better framework based on things that I've learned. So this is actually a revenue graph of Crazy Egg and the three phases that I'm going to divide up. The rest of the talk in is start, scale and grow. And so before I get into it, I'm curious, who's just starting? You barely have a product. It's an idea. I know we did a poll, but this is a little bit different. Okay, great. Who's scaling? Scaling is like you have something, you need to figure out what to do next. Okay. And then who's growing? Growing is like you might be spending money on acquisition, things like that. Awesome. Okay, cool. So it's actually relatively even. I think we're stacked a little bit on start. So I'm going to talk about these three phases and first I'm going to talk about this little formula. I'm not an engineer, I fake it. I know engineers like formulas. So.

This is the formula. It's basically focus, sequence equals speed. And there's a different way to think about these three things depending on what phase you're on. So the way I think about it is that at any given point in a company, I don't care if you're venture backed or self funded, in this case, all of you are hopefully self funded. Don't raise money. Trust me, I've done it.

And.

The way I think about it is you can only go as fast as you can if you figure out what you should be focused on right now in the phase that you're in, and if you figure out how to sequence the things you need to do to move as fast as possible. So that's kind of the formula I like to use to think about where you're at and what you should be doing. So in the start phase, our graph looked like this. This is our revenue graph. It's not monthly recurring revenue, it's straight up revenue. And the reason is it's kind of, if you notice between the start and the end, it actually didn't grow that much. And you'll see in later slides that it grows more. And you're really just trying to figure things out. And when you're trying to figure things out and you're just starting out, what you're trying to do is what I call find the pain. And this is like customer pain. Like what's really painful, what's, what's causing people, what's going to solve this guy's problem, what's going to make him feel better about being beat up in the boxing ring. And that's really what you're Trying to find out. I mean, if you think about your customer, you can think about them like this little dude that's sitting there looking pretty bad. Usually they don't even have their helmets on, though, or boxing gloves. But you're looking for that thing that's really painful for your customer, the thing that you can attack. And so I'm going to talk a little bit about that. But this is the formula I would use. It's the pain. So you're looking for that pain, and then what you're sequencing and what you're really trying to do is build a product that solves that problem. And it might take a bunch of these MVPs or iterations or whatever you want to call them. That actually gets you to what I would call fit. And that's basically product market fit. Again, I'm going to talk about concepts. If you don't know these concepts, please just Google them. That's what Google's there for. And you'll hear a lot of tactical stuff later on. And the reason is I want to go really fast through these concepts because what I've learned is that there's just a lot of content out there. Many of you blog? I blog sometimes. My co founder blogs. All kinds of people blog, and all the content's out there. So I'm going to talk about some of the concepts that sort of I found very interesting when it comes to how people tend to find pain. So one is personal pain. This is one of my favorites to talk to entrepreneurs about. So how many of you started your company with a personal pain? So this is a pain that you had a problem that you had. Awesome. Great. Does it ever feel like that.

Where you're hitting your head against the wall? You can admit it. It's okay.

So I've noticed that what happens is you'll see waves, so you'll see categories of software products be built just because somebody was trying to build that themselves and they decided they could turn it into a business. This is a very common pattern in technology today. And I think it feels like that I've personally been there. And it sometimes does feel like that, because it's like, I built it, I had to build it. Other people got to have that problem. So I'm going to go start my business that way. And then you end up learning all kinds of things that make you sometimes feel like that.

So the next concept would be Lean Startup. So has anyone here not heard of Lean Startup? Wow, great. Has anyone here read the book?

All right, many of you, great. So I don't use this terminology anymore. I don't use pivots or MVPs too much. And the reason is I think there's a lot of misconceptions about it. I think this cartoon basically describes the biggest misconception that I get, which is lean means cheap or lean means you're spending less money. And so that's kind of what's happened with Lean Startup. But it is a very good way to find pain. There are a lot of tactics in there. In short, from my perspective, it just helps you be more scientific about your startup, about your company and how you sort of build it, but it has nothing to do with cheap. The next concept, which is a little bit different, is customer development. Again, how many of you have heard of this concept? Awesome. Have you read any of the books on it? There's a bunch of books on it. Cool. How about blog posts? Awesome. Cool. So there's a bunch of people that have written good stuff. Cindy Alvarez, Jason Evanish, Kevin Dewalt. My friend Patrick somewhere in this room probably, and he's around. You should bother him. Where is he?

No, another Patrick. Not that Patrick, although he's written about it too. Oh, he's back there. If you want to know about customer development, you should bother him. He wrote a little blue book about customer development. That's the best book on the topic. Anyways, it feels like this. If you're doing it wrong, if you're doing it wrong, you're telling people, this is my solution, you should buy it. And that's not what customer development is about. Customer development is about finding pain. I like to use it as a process to get painful stories out of people that I'm talking to. So again, customer development. Next. Has anyone heard of the Sales Safari by Amy Hoy?

Awesome.

Has anyone done one?

Awesome. So what it is is basically the idea that you can go online and go really figure out what pain people have by looking at forums and all kinds of other places where people are posting online, even Twitter searches and things like that. Sometimes it feels like this where you. You're only getting the perspective that people have expressed digitally. And so that's why I use this cartoon specifically, just because sometimes you need other perspectives. But also it's a great tactic at finding pain. She's got a whole boot camp and a whole process on how to do it. When you're starting out, it's all about finding pain. All these tactics will help you. The next one is one of my favorites, and it's a new one that I'VE been sort of studying. It's called Jobs To Be Done or the Switch Method. Has anyone heard of this? Oh, cool. Awesome. More people than I thought. So this cartoon's actually interesting. It's basically the guy saying, I got all these problems and there's only one solution to them, which is Prozac and jobs to be done. The whole process and the whole way it works is the philosophy and ideology is that people are hiring your software, your product to do a job, and you need to identify what job they're hiring your product to do. And a lot of it has to do with situational analysis. So what situation are they in when they decided to hire your product? It's really cool. You should look it up. There's a podcast, there's a lot of content about it. There's an awesome milkshake video about Clay Christensen, who came up with the concept, talking about why people hire. Basically, what job does a milkshake do, why do people hire a milkshake and what job does it do in the morning? So this is the one that's kind of new and fancy. Now, one thing you'll notice about all these different tactics to find pain is that they're all a little bit different. They're all a little bit similar. It really just depends on what your skew is. If you don't really want to talk to people on the phone or Skype or in person, then you might want to do a sales safari. If you don't mind talking to people, but are very biased when you do it, you might want to use jobs to be done or some very structured process to kind of understand the pain. But either way, please figure out the pain. Otherwise you're basically going to build things people don't want. And that's not what you need to be doing, especially when you're trying to move as fast as possible and are self funded and it's your own money. This is another one that's just a quick aside. A lot of people are afraid of charging for their product just in general, or they're charging too little, which is a whole different story. So one thing I would say is charge people early. There's probably the one case study that I can say is the most interesting in charging people early. That is a SaaS product and at the time it was self funded. So it's the folks at Buffer and there's a whole bunch of blog posts about how they did it. But even before they built the product, they just had a landing page and it said, see plans and pricing or plans and pricing. And then it went to a kind of get notified sort of screen. So they were already when they first started testing this idea that people will pay for this product. And then the next step they went into was kind of the next one on the right where they actually put a pricing page in the middle. And then they went to sort of the get notified screen. So I would encourage all of you start charging even maybe before you have the product, if you can pull that off. It's really one of the key indicators to determine whether there actually is pain and somebody gives a shit or not. And if you're really early and you just have like an idea or maybe have two or three ideas or two or three different ways you can approach it, you can create two or three of these different sort of landing pages. I've even done these once a product is much more mature, just to see if I can get extract more money out of people or more value that I can provide them when they're currently using the product. This is kind of last but not least.

For the start period for me. And the way I think about it, I think size does matter. And what I mean by that is when you're self funded and you're trying to build a business, the market size is important. And the reason for that is that you might not see it in the beginning, but as you start getting through the other two phases of scale and grow, you'll notice that if you can't get enough customers to come to you and you have a, you know, at Most it's like 1,000 or 10,000 customers, you might need to build a heavier organization with the sales process and things like that. That become difficult as a self funded company because in those scenarios you have to invest in people before they actually are producing anything of value to the business in terms of revenue and things like that. For example, for a sales rep, the average ramp time is three to six months, which means you hire them and they won't be at quota until three to six months, which means they're probably not making you money for a while. And so the size of the market, your ability to reach the market is actually important to make sure that you can scale the business and grow the business.

Scale.

So this is the crazy egg graph for scale. It looks a little better, I think we got better. But you can see all this stuff is quite wavy. And again, this is revenue, not mrr. If it was mrr, it would look pretty smooth because MRR always goes up. And the reason I did that is because I wanted to sort of show some of the bumps and you'll see there's sometimes some patterns in the first two humps that just has to do with things we figured out. AB tests we ran, things like that. So scale, at least for me, it felt like this. It felt like I had a house, it was cool, but the door was closed and there was money all around me and I didn't know how to get it in my house. And that's really what it felt like. It actually felt like this even. It felt like I could do a million things at this point.

And if I don't change anything at all, things will be fine. And that's why you notice those humps. We spent a lot of time trying to figure out what to do and there were a million things we could do. And so I'm going to talk about how you should sort of get to this point where the money is just coming in your door and it's sort of not a problem. So the formula for this that I think about is your goal is to make things repeatable and get to repeatability as fast as possible. And I called it scale. A lot of people would consider later stages scale, but to me, when it's early, you've started, you've hit product market fit. The next thing you need to do is figure out all the things you're doing manually, all the things that need to be sort of turned into systems and be optimized so that you can actually make things repeatable. And so I would focus on systems. So systems are like, you know, the way people onboard your product, the way that you actually acquire customers and figure out what systems you need to optimize. Once you figure out the systems you need to optimize, you just start iterating around the optimization, A, B testing, you know, making things more automated that are manual, things like that. One of the things I've noticed is that there's actually I met some non engineers. I know a lot of you are engineers, but I met some non engineers that have actually built businesses with five figures in recurring revenue completely on Google spreadsheets and a few landing pages. And the way they did that is that they didn't really think about any of this stuff until they got to the point where they had to scale it. And then they actually brought in software and started automating it a lot more. So the trend that I'm seeing is you can get really far in a business if you want to by doing a lot of things behind the scenes. That are very manual. And so when you get to scale, you need to think about what are all the things you're doing manually, what are all the things that are not repeatable yet and how do you make them repeatable. And there'll be some talks, I'm sure, about some of this kind of stuff too. One of the mistakes we made a lot, and we stopped making it recently, I'd say in the last year, is that we would actually drive the business very blind. And what I mean by that is we would think about adding a feature or we would think about a system we want to make repeatable. And we wouldn't really think about the data, we wouldn't think about the metrics, we wouldn't think about the information. I know there's some irony here, I run a couple metrics companies, but we really wouldn't think about it like that. And so what I would encourage you to do is think about where you're blind, where you're not actually seeing the numbers, where you're not thinking about what do we need to know, what are the numbers, what are things that we need to improve? I think Peter Drucker said it best. It's basically what gets measured, gets managed. And in my experience that's so true. So if you need to make something scale, you need to measure it so you can understand what it is. And this isn't just like things customers or visitors are doing. We started measuring all kinds of things around processes. I mean, the simple stuff is like time it takes for support requests to be turned around. Other things are like the time between when somebody signs up and when they actually, you know, do something meaningful in your product. There's all kinds of things you could be measuring depending on what the systems are. But if you don't measure them, you won't be able to optimize them and iterate.

And this is kind of obvious where, you know, you're trying to optimize everything for learning. And what I mean by that is don't over optimize and actually make sure that you're maximizing how much you can learn. Because in this period when you're trying to scale, you've hit product market fit and things aren't repeatable. The learnings are actually really valuable. They're always valuable. But in this case, what I found is that you're always trying to learn about the customer and understand what can be done. But you also need to look outside and think about how do I make a lot of these things repeatable? Are other people Doing things that I can be trying, Is there a better way to do it for my market? Things like that. So this is a period of, I'd say probably one of the largest learnings around, kind of what your business looks like, how much revenue you have, and how you can sort of scale it to the next level. And I've even been in the situation where some of those bumps that we saw when we started getting increases in revenue, we had no idea why. One, we were running blind. Two, we didn't really think about the learning and go spend the time to figure out why is it that we made more money that month compared to the previous month. And I would encourage you to actually learn all this stuff during this period. And the last thing as I was saying was things are repeatable, make things repeatable, scale things, things like that. There is one thing that I found very valuable for myself and I think it's worth repeating. Back when we launched Crazy Egg, this was within the first, I think three to six months. We had 37 signals actually do a heat map of their homepage and they wrote a whole blog post about it. And then somebody in the comments basically made me a line item for, for.

The pros and cons of Crazy Egg in a company at the time called Clicks Density. And I happen to be a line item and it says Heaton, very responsive and helpful. So for the first two to three years of that business, I was doing all of customer support and commenting everywhere I could whenever the product was mentioned. I know this is a common practice now, and I know I just talked about repeatability, but if I could find the bandwidth, and I do sometimes, I still try to do that as much as possible. We also now have my co founder, Neil. If you ever look at his blog, Quicksprout or even the Crazy Egg blog, you'll see him commenting on literally every blog post and things like that. And I think that builds a lot of trust, loyalty and audience.

That can kind of make you a line item for why someone should go with your product versus another product. You are basically the brand, you are the company. I think everyone that even works with you in your company, even contractors and stuff, represent your company to some extent. So this is just something to think about as you're trying to make things repeatable. There's things like this that kind of, in my opinion, shouldn't necessarily be thought of as repeatable or scalable or outsourced. So grow. This is a lot steeper graph. This is actually the most recent growth, for lack of a better Word. This is actually when we first started advertising, we actually had no advertising until basically the beginning of this. And so that's why you'll see some bumps and then some choppiness. And then now we've figured out a bunch of stuff on how to scale a business and more. I think this is probably, for me, one of the most equally frustrating and exciting periods in a business. I've seen multiple companies through all three stages now and got to see a lot more. And it's so frustrating sometimes to watch the revenue not go up or you not being able to dial the knobs and stuff like that. But it is something to think about. For a while, we kind of had this feeling, and it's this feeling that, like, oh, we're making money. We didn't think we would make this much money or have this much success even a year ago or two years ago. And this is one of the things about SaaS. Once it just starts working, after a certain point, it just keeps working.

You can make it work better, but you could also feel like this, like, hey, it's working. I'm good. And so I've been there. And I think resisting that growth.

If you bought your freedom of time and maybe you don't want to do more with it and you're happy with whatever you're doing, and that's totally fine. I'm sure you'll get bored, though. And that's what happened to us in a couple instances. And so in this period, there's a big.

Lesson that I've learned, and I think it's a difficult lesson for some people, but basically you're actually focused on traffic, believe it or not, and I'll explain why in a second. And then you're also focused. Your sequence is the iterations you do with that traffic, and that leads to growth. And so here's what I mean. So at some point, if you know you've hit product market fit, you've figured out systems to scale the business and you've started sort of scaling, but you might not have figured out actually how to grow and what the dials are for traffic and things like that. One of the things that I've noticed after seeing lots and lots of a B test, more than I can count, and lots of different types of businesses, that when you focus on the top of the funnel.

Excuse me, everything below, it just gets bigger. And it also allows for AB testing to get statistically significant and relevant much faster. So at some point, if everything else is working, you just start filling the top of Funnel as much as possible, and then run tests down the funnel as much as possible, as fast as possible. And that's what I mean by traffic and iteration. That's really all it boils down to. And traffic could be, depending on what kind of business you are, it could mean a lot of different things. For most of my businesses, traffic is either finding ways to grow, word of mouth, which is really key. So there's all kinds of ways to do that. And the second piece for us is just lots of content. We do lots of blogging, and that grows the traffic. And then over time, we learn how to convert it. And it's just simple math. If you have, you know, if you double or triple the traffic at the top, you will generally double or triple everything below it, but you have an exponential effect. If you could even double the conversion rate at one or two of those steps, and then all of a sudden it's a 4x improvement. But if you don't have enough traffic coming at the top, then, then your test might take months to get significant.

And that means that you're just not growing as fast as you can. So I can't stress it enough that everybody that understands growth at this point understands that the top of funnel is actually more important than anything else once you hit this scale. Another thing I would say is growth comes from obsessing about your customers. And if you do that, then you will get the growth that you're seeking or looking for, or that you deserve, for lack of a better word. And at all stages, you're focused on the customer. I think at growth, some people tend to do less qualitative stuff, less customer development, things like that. And in those cases, you might not learn things that you should know, like leading indicators for features or competitors or whatever it may be, and what they're doing from your customer's mouth so that you can sort of plan out how you add to the product. We're actually in a very personal story on this one. We're in an interesting place with Crazy Egg, where, like, we didn't think it would be as big as it is, and it's pretty big right now, but there's a pattern that we're seeing around what people want next and what they're doing when they leave our product. A lot of the jobs to be done, interviews and other things helped us understand this. And so we have a big project to actually add probably an equivalent size feature to what we currently have, just so that we can expand the product and grow even more. And we wouldn't have figured that out very easily unless we were actually talking to customers and had some hunches around that. And so obsessing about them can really be helpful. I wish we would have figured it out earlier because then we would have built it earlier.

This is also another sort of important point for me and it's all about time. So.

At any given point, especially during the growth phase.

Again, you can probably do a million things, although it's probably a lot more focused at this point, and plans and things like that. I go back and forth whether I like planning or not. And some people say that you can't really plan that far out. I'm pretty much generally in agreement to that. But I would just say that when you're growing, time is still your scarcest resource. It's the one thing that you kind of always have against you, I think in life in general, but also during these periods with the SaaS business. So you want to use it wisely, don't do things that are sort of futile or not worth doing. And I've seen a lot of people get into that. So they're like, oh yeah, now we have all this growth. Well, how do I go, I don't know, do TV ads and believe it. I've heard that from self funded companies and stuff like that. And without actually thinking about how that's going to help the business or if there's some other thing that can help, you're probably going to make the wrong decision. There's a lot of different methods for this. This is actually the time when I do something that's not generally my personality, but I will actually pull up a spreadsheet and start doing pros and cons. There's actually a Benjamin Franklin method somewhere that's actually pretty cool. You guys should look it up. It's some prioritization matrix. It's very good at helping you make decisions about one thing versus another thing or whether you should do something or not. I actually tend to do a lot of that instead of planning just so that I can get to quick decisions about where to spend, let's say, money to acquire new customers and things like that.

And this is the last probably but not least obvious thing, which is you want to continuously make improvements. You want to do that at all stages. But at growth, like I said, it can be very easy to sit there and be like, I'm good, it's growing, I'm done. And sometimes it looks like growth, but it's really just scale and you've figured out some level of Scale. And so you want to continuously think about improvements. You want to think about, how can I make this better, how can we grow more things like that. If you've already set your systems up and figured out how to make things repeatable, you've got enough freedom of your own time. Hopefully if you set those things up that you can start thinking about these kind of things, the higher level things, the things on, like how do you add a massive feature to the product that's actually going to be good? How do you research it? How do you figure out what to do? So I do want to end with this slide before my last slide and remind people that this is the equation. It's pretty, pretty simple. If you figure out what to focus on and you figure out the order of things you need to do to make that go faster, you will get faster, you will get better at doing things. Also, I feel like this all the time. I have all this energy. I'm like Superman, but I can't fly yet. And so I wanted to leave you guys with this slide.

Hey, you were talking about strategy within a company. Could you talk a little bit about the way you personally strategize across your companies? So, for example, putting energy into crazy eggs also takes time away from other things you could do. How do you address that kind of strategy?

Yeah, you know, I've been studying a lot about like personality types and things like that. And I think I talked a little bit about that at dinner. But.

The truth is, like, I'll tell you how I do it, but it really only works for my personality type. And so the way I do it is that I like finding people that are really good at something, like great at it, better than me, but yet I have enough knowledge to know, like how they're gonna do something, or I've done it before and hire them. It's that simple. And sometimes they're contractors, sometimes it's full time people. And so because for me, I like to protect my time. And I don't mean that like I'm not doing meetings. Many of you know, I've spent time with you guys, whether it's here or even on email or on the phone or whatever. But it's like I want to be able to do the things that I want to do. And I think for me, letting other people do the things that I don't want to do is kind of my attitude. So every day I just try to think about is there something I'm doing that I shouldn't be doing? Right? Like I've even entertained outsourcing presentations. But I realize that I can't do that. So that's something I want to do with my own time. But outsourcing meaning just somebody to help me. I also manage my own calendar because I want to manage my own time. So I would say that I have a lot of different businesses going on that need attention, but most of the time I'm finding other people to put that attention. And generally my rule is.

If something's. I'm your first call. This is what my dad taught me, actually, when I was a kid. But I'm your first call if something's wrong or if you're stuck and you have a hard problem. And I generally have my time open for those kind of situations with anybody that's working with me. So that's kind of how I do it. But I think it all depends on personality types. There's friends of mine that just want their hands in everything. And so I think they have a different way to manage their time. So they'll outsource a lot of the stuff that I probably wouldn't like, calendars and things like that.

I have a question for you. At one point, you guys were using Gmail for support, I think, on kissmetrics, Is that right?

Yeah, on everything we've done, I mean.

And you guys have some pretty massive products.

Why have you stuck with Gmail and have you considered switching?

Yeah. So today at kissmetrics we have a number of people in customer success and support. So we're actually using Help Scout. And the reason we're doing that is because.

There'S just a better process when you have multiple people that we can use that with in that business. There's a guy, Lars, running around here that works with us there. You can ask him about the workflow there. It's been good for us at Crazy Egg, which I think gets more support tickets than KissMetrics. But there's about one and a half to two people working on support there. It's still all Gmail. And we just found there's a labs feature called canned responses. There's labels, and then there's us doing a lot of.

Instead of letting people have the email, we'll actually have forums on the site so we can add a lot of diagnostic data or like what plan they're on and stuff like that. And we'll auto label into Gmail. That helps us prioritize. So I prefer Gmail still because I think I can get really far, if not forever on Gmail.

Are there any resources that you would recommend when you're trying to figure out like a pricing model or structure for your products early on. Yeah, pricing. Thanks for that question.

I could do a three hour talk on that question. Especially for SaaS. I'm very opinionated on the topic. I guess I'll just give you like three things that kind of. I'll make them up right now, but they'll be good, I think. So. One is, I think what people forget is that if they're going to tier their SaaS product, they don't realize one thing. And this is with not just tiering but just in general. One is really focusing in on how your customer buys.

And so what do they currently buy, how are they paying for that thing and how can you align as closely as possible with that? Because to me, if I'm inventing a new thing like charging a number of support tickets instead of number of support reps, I better have a damn good reason and an insight that makes it so I'm going against how every other product in my category charges and how the customer wants to buy. So actually that's probably the biggest tip I have. Second one is that there's a book called Strategies of Pricing and Tactics. It reminds me of the books I had in school. I can link you guys to it, but I think it's Pricing Strategies and Tactics or something. It's a really thick book. It's kind of expensive. It's like right around 60, 70 bucks. There might be some PDFs online that are kind of parts of the book. It's the most thorough read on pricing and it has a lot of strategies around how to do it. And the third thing is that.

I think people get scared about changing pricing and things like that on their customers. So what the folks at WUFU did is they tested multiple price points, but when people actually got billed, they were just always getting charged the lowest price point. So they could still measure the conversion across the price points, but they still billed the lowest price point. The other thing that I've done is that generally you don't have a lot of word of mouth in a product when you're trying to figure out pricing. So. So I'm not really scared to change the pricing on people and see what happens. I will tell you that there are. If you hunt around the Internet, you will find strategies without having to get people to put in a credit card to understand pricing. So I'd probably do some research and figure those out as well. There's some really cool stuff out there on that. But I can link you to a bunch of it if you'd like to.

Thanks for your talk. I've got a startup that is firmly in the scale phase, I think, and have that paralysis of there's so many things wrong with it and so many things I could possibly work on. You know, you mentioned collecting data, but like how do you. How do you choose where to start on that mountain?

Yeah, that's a good question. I personally have a luxury where all the people that work on the SaaS products we have are people that understand data and analytics. So we can whip up any stat pretty fast without even any of our tools like internal. So I mean the small couple tips, if you're not logging things transactionally right now, then you should be. And what I mean by that is a lot of software is built in such a way where the last login is rewritten. So instead of rewriting the last login, log every login of a user and create a table so that you can do that. And then that goes for almost any other thing you can do. Because the kind of analysis you're going to want to do around user behavior and customer behavior is going to be related to transactional sort of analysis and time series analysis. And so that's probably the biggest tip I have on that. The second thing is depending on what you need to. What is the absolute thing? What is the one system that is the most important system that you got to turn into a repeatable system that's going to determine what you measure. So if you get a lot of traffic and you're not converting enough of it, turning that into a system might be important. And in that case it's like, do you have the metrics to look at your funnel? Are you able to ab test and have a. What I like to do is I like to have a test running all the time at the key parts of my funnel, no matter what, even if it's like just make it bold just so that I can have the practice of running it. And that's what I mean by systems. So it really just depends on specifics of what system makes the most sense. I'm always happy to chat with you though, if you need help figuring that one out.

Hi. So instead of targeting anyone and everyone in customer development, how do you focus in on your most ideal customer? Yeah, so there's a lot of content out there and that's why I would say you should Google it. But I would Google like basically the idea of a problem hypothesis and how you. They have basically customer problem and solution hypothesis. And so I would just, I would just be very specific about what customer has the problem in your hypothesis and then it becomes very clear as to what customer segment you should focus on. So it all has to do with your hypothesis would be the answer I would give you.

All right, we have time for two more questions.

Hi Heaton, you mentioned you talked earlier about charging early and I realize like a lot of us today are building SaaS products, you know, monthly recurring revenue, but what's your thoughts on charging early for an enterprise type application like a downloadable web app that's targeted more towards the enterprise businesses?

Yeah.

Believe it or not, it might be even more important with enterprise to charge early. The reason is enterprise generally has money. You're usually walking into their office or something like that or having multiple conversations with them. So I would get really fast to like, if it's early I might just say, can we do a three month paid pilot where you're actually paying me? Because what I've noticed in my experience is that when you, when you go to an enterprise and you don't charge them for something, it's very hard to get conversations with them, follow ups with them and figure out what the pain really is that they have. But when they start paying for something, it becomes a little more real even generally that's true, but I think in enterprise I would charge way earlier if you could. And that's also a way to signal whether they even give a shit about what you want to do for them.

Last question.

It doesn't even have to be about his talk, just anything he's ever spoken about, ever.

Hi. It's more on the, I guess on the focus and sequence. When you're at such an early stage where, you know, collecting data almost seems useless because you probably got a handful of people who are using it. So it's more how, I guess any talk about, you know, how do you decide what to focus on where you're at such an early stage or you're trying to kind of decide what the pain is? I guess.

Yeah, I don't really go heavy on the quantitative metrics early on in terms of when I'm starting because I think it's much more about talking to people and understanding the pain and so quantitative. I mean a lot of you are engineers so maybe you care about being data driven or data oriented early on. For me, I'm a product guy. I'd rather figure out.

What problem do they have? Is it painful enough? Do I hit a nerve when I talk to like the 10th customer still have. I found a pattern in the conversations. And even if you have people signing up for your service, generally you don't have much traffic. You're not really trying to scale customer acquisition or any of that. So measuring a lot of that stuff might not be worth it, especially if that product you're building doesn't matter and you end up ditching it. And so I would put a lot more emphasis on all the sort of stuff I talked about around whatever your process is on finding pain, just pick a process, try it, and see what you really latch onto. There's about five of them I described, so just find the one that most aligns with how you can do it fast and also effectively.

Thank you, Heaton.

Sweet. Thank all of you.