Hiten Shah: Four Lessons I Learned Squandering My Opportunity at KISSMetrics

In “My Billion Dollar Mistake” Hiten Shah shares four lessons he learned from the early successes and ultimate eclipse of KISSMetrics.

Hiten Shah: Four Lessons I Learned
Squandering My Opportunity at KISSMetrics

There are several good lessons learned presented that are generally applicable:

1. Figure out the problems with existing solutions.
2. Determine who is willing to pay for a better solution.
3. Stay in contact with prospects and customers, don’t let competitors learn faster than you are.
4. If you are in customer discovery then a lot of new ideas are helpful, if you have found a niche then focused execution is required to own it. Product-market fit can be lost to competitors.

Figure Out the Problems with Existing Solutions

“We should have spent more time figuring out what the problems were with existing solutions and who specifically had those problems.”
Hiten Shah in “My Billion Dollar Mistake“

He started out wanting to “reinvent the analytics market.”

Determine Who Will Pay for a Better Solution

“The customers we targeted needed to be willing to pay for our solution.”
Hiten Shah in “My Billion Dollar Mistake“

It’s important to distinguish complaints–which are numerous–and dissatisfaction–which is common–from critical business needs that firms are willing to pay to solve. Too often we can hear a customer say “that’s a problem for you” and fail to understand that it’s not one they will pay to have solved.

Learn from Prospects and Customers Faster than Your Competitors Do

“We hadn’t been committed to learning as much as possible about the market and the customer. We were making educated guesses instead of coming to well researched conclusions. This led us down the wrong path twice. We needed to stop building what we thought the market wanted and get back to basics. Instead of writing code, we went out and talked to customers. ”
Hiten Shah in “My Billion Dollar Mistake“

He correctly decides to benchmark against the status quo but does not talk to people who are paying for an analytics solution: instead he talks to those using Google Analytics, which was free at the time they were conducting interviews.

“We spoke with people who used our largest competitor, Google Analytics. We asked them questions to better understand their needs and the current problems they were having with analytics software. They had a lot to say, so we listened.”
Hiten Shah in “My Billion Dollar Mistake“

But they do find a pain point people are willing to pay to solve: funnel design and management. So far so good.

Shift from Customer Discovery to Focused Execution After Product-Market Fit

His final mistake is to continue to come up with too many new ideas to explore once they had product-market fit. Instead of focusing his team;s execution purely on requests from customers and prospects who match their target, Hiten Shah tries to move faster by coming up with a stream of ideas (called “Hiten bombs” in the text). But this sends the team in too many directions

His summary is good and also points out a painful reality about “product-market fit.” It’s not a one time winner take all event. Your early traction invites competition that copies your success, building on it to raise the bar against you.

“You can’t just capture the market once and expect to keep it. You have to do it over and over again and faster than everyone else if you want to keep distance from competitors coming up behind you and disrupting you. That’s how you get ahead of the market. We forgot the process that helped us deliver that initial amazing product [listening to prospects and customers].”
Hiten Shah in “My Billion Dollar Mistake“

He is pretty clear that once they located the market he continued to inject too many of his own ideas not directly based on customer or prospect needs into the development queue, slowing progress on the core features needed and giving competitors a chance to out-execute and ultimately out-innovate his team.

This may be obvious mistakes in some ways but it’s important to note that having a lot of ideas during the exploration phase helps you discover the market. It can be difficult to realize that the practices that got you onto a successful trajectory need to change if you want to be able build on your success.

SKMurphy Take: You Need People Who Will Point Out Your Mistakes

When I re-read Hiten Shah’s article on the mistakes he made I think he overlooked probably the most serious one,  that had he rectified it, would have helped him to avoid many of the other mistakes that he made. Entrepreneurs need to have a core group they can rely on to point out their mistakes, preferably a group they feel comfortable sharing their plans and problems with so that at least some mistake can be prevented.

I have tried to map different forms of advisory groups to cultivate at different stages in a startup’s life:

• Idea stage: friends and acquaintances who will form a kitchen cabinet or informal peer advisory group they can rely on the give good feedback on their plans and to help with a post mortem or after action analysis of projects.
• Open for business: their cofounders should be wiling to engage in a full and frank exchange of views. I think you retain your informal advisory group as well, especially if you are concerned you have picked the wrong cofounder or an early employee is not working out.
• Early customers: it’s sometimes the case that an early customer is also a entrepreneurial and can act as a sounding board. You should also consider one or more outside advisors who bring expertise your current peer group may lack.
• Finding your niche: here a formal customer advisory board is worth building. It helps you stay focused on the niche and allows for candid feedback in a structured way.
• Scaling up: here you should also have a real board of directors in addition to other groups you may be relying on.

From the beginning it does not appear that Hiten Shah had a small group of peers he trusted to give him feedback and that as the company started to scale he did not put in place a structured review process that might have reduced the amount of damage his “Hiten bombs” approach of broadcasting new ideas to the entire firm.

As a senior executive or CEO,  it’s unrealistic to expect employees who are one or two levels below you to point out your mistake, especially in a public forum. Or to understand that your “thinking out loud” is not a polite way of giving direction but is in fact a request for feedback.

Again it’s a question of the things that bring early success need to be reconfigured. In the early going clear direction from the top keeps the team on the same page  and prevents endless debate and analysis paralysis. Even then you benefit from gaining everyone’s perspective. It’s always useful to allow everyone to be heard and get all of the ideas out on the table just short of where people start to repeat themselves.

Related Blog Posts

“Lessons Learned” has been a popular topic of mine over the last 13 years of blogging:

• John Cutler on Product Management Lessons Learned
• Alastair Hood: Lessons Learned Bootstrapping Verdafero
• Arun Kumar: 9 Lessons Learned Bootstrapping Kerika
• Byron Wien’s Lessons Learned in 80 Years: Seven for Entrepreneurs
• B.V. Jagdeesh on “Startup Leadership Lessons Learned”
• Scott Sambucci on “An Entrepreneur’s Lessons Learned”
• Suhail Doshi: Avoid These Seven Temptations as a First Time Founder
• Ken Imboden on Lessons From MMC, Candlestick, and NuSym
• Learning the Right Lessons From Failure
• Lessons Learned by Jason Feinsmith at Accomplice
• Founder Story: Mike Lanza’s Lessons Learned from Two Startups

Photo Credit: 123RF