My billion dollar mistake

Original author: Hiten Shah
  • Transfer
At first, I often wanted to give up. Again and again there was a feeling that we were doing everything wrong. Make assumptions about people's problems. Solve the problems that we came up with. We searched for solutions in the dark. We had a clear vision, but execution suffered.

We only knew that we wanted to reinvent the analytics market. Our first attempt was the analytical platform for Facebook application developers, because at that time they did not have effective analytical systems, they had to develop their own.

The product was created for Facebook application developers - and they liked it! Only they could not pay us.

Having created a product for customers who could not pay for it, we decided to target everyone and everyone who does business online.

The second attempt was a business intelligence tool. With it, companies of all types and sizes could create a dashboard for their key indicators. In it you can track and configure anything.

When we launched the second version, it turned out that there were too many settings for users. People did not want to waste time setting up the product. It turned out they want to get the result with minimal effort. To promote this second version, we would have to become a consulting and service company.

Despite all attempts, we have not received returns from two products. Customers didn't care. Our team was at an impasse, and we and the co-founder were on their last legs. It seemed to us that we were doing everything wrong.

I had to reconsider the approach to product development. Before creating anything else, we thought about our mistakes.

  • More time should be devoted to analyzing problems in existing solutions, and who specifically has these problems.
  • The target audience should be prepared to pay for the decision.
  • We did not seek to learn as much as possible about the market and audience. We made reasonable assumptions instead of reaching well-researched conclusions. This has led us astray twice.

I had to retreat.

It was necessary to stop creating products that, in our opinion, the market needs, and return to the basics. Instead of writing code, we went out and talked with people who used our largest competitor, Google Analytics. We asked questions to better understand their needs and current problems with analytic software. They had something to say, and we listened.

First of all, we conducted a survey of Google Analytics users.

We learned that the main users of Google Analytics are Internet marketers, and quickly found out that we should focus on them. They needed data to increase the effectiveness of marketing campaigns for their audience, and were willing to pay for analytics that would help improve conversion.

Then we did everything right. Literally everything.

We identified the urgent problems of people and focused on the profitable market segment, Internet marketers. And they created a product that solved their problems.

Moreover, we continued to create the right things at lightning speed. We have identified and satisfied every customer need.

Take, for example, reports with visualization of sequences (funnel reports). Before KISSmetrics, creating such reports took too much time. Our reports have become an industry standard that many analytics tools have copied.

Implementing and debugging new data tracking in analytics tools can take several weeks. That's why we built a debugger called KISSmetrics Live. It in real time shows the exact data that is transmitted to the program.

Passing user-level data to analytics tools was also not possible. You could not see the data for specific users. So, we have invented a new analytical model. Each piece of data in KISSmetrics is associated with an identifier, anonymous cookie, or email address.

And we knew that everything worked out, according to enthusiastic customer reviews (for example, on Twitter), how useful our product is. We solved all the painful problems of the target audience, and people were ready to tell our friends about it. At that time, we still worked in alpha and recorded hundreds of new registrations every week.

We are three years ahead of the market. Yes, for three whole years. In 2010, we worked out the analytics category to such an extent that competitors could not reduce the gap until 2013.

We had a billion dollar opportunity, right in front of us. Without the slightest doubt, KISSmetrics could be turned into a billion-dollar startup, if not screwed up.

This is exactly what we did: we screwed up.

I'm the only one to blame. It was really my failure. Well, this is my high point.

I remember how it all began. My team began to laugh and make fun of me. Seriously, that was it.

Hiten Bombs

Every week, even every day, I dropped a bomb on someone in the company. Some kind of new idea, a new direction, a new brilliant thing that I came up with. Anything to do right now.

A new feature that will help us, in my opinion (in fact, this is not so). An idea inspired by a competitor (some insignificant function). Something heard from an investor, adviser or friend (and it seemed really cool at the time, I swear ... but still, it's useless). In the best case, an important client threw me the idea the day before.

This went on for several months. It got so bad that jokes reached me. The whole company began to call them "Hiten bombs" by my last name. I heard this in the corridors and walking past the tables.

At that time I did not understand, but a flurry of random ideas completely unbalanced the team. Good or bad, none of my ideas were based on any structure or filter. I shot from the hip. I thought that I was helping the guys concentrate and complete the task.

I was damn wrong.

Every time I dropped another bomb, everything actually exploded.

The team was in a hurry to bring the idea to life. My directions became the top priority. Developers came together to find the best and fastest way to implement what I was talking about. They attracted more colleagues and added an item to the growing list of functions, bugs and customer requests. All this had to be done.

Worse, after a few really dirty, destructive “bombs” that actually didn't do any good, the team stopped listening to me. In the end, they lost confidence in me as a leader and even in the overall strategy of the company.

I set a bad example, but I expected brilliant results from the team so that they would study the audience, dig into the data and use all this information to create functions that really mattered.

But my ideas only worsened the situation. At first, the team came up with tricky ways to handle this.

- Hiten has another great idea that will save the company.
“I'll wait until he repeats it three times before doing anything.”
“They just dropped another bomb on me.” I ignored her.

And then it happened. Our leader sent an internal note throughout the company, which accurately described what the Hiten bomb is and how it affects the team.

“I hope everyone will understand where the tasks that seem outsiders come from.”

People had to explain my behavior and look for excuses for him. There is really no excuse for this.

After that note, I changed my behavior. If someone in the company had to compose a document of 1300 words to explain my behavior, then the problem is in me, not in them.

I slowed down the company.

It took me so long to change. Months and months of frustration from colleagues and subordinates, countless hours wasted, work on things that didn't matter. At this time, competitors moved forward, and customers went to them.

We had everything we needed, we had the right intentions. What we did not have was priorities, what to work on and why.

We were scattered. Each team member did what he thought was right, not knowing what was best for the business.

I myself did not know what to do and what to pay attention to. After several months of such work and after receiving this note, I realized that the team felt bewildered.

And I did only worse.

A good leader doesn't do that. He does not distract the team. Do not like rummages every day. Does not give ambiguous directions. He doesn’t drop constantly on the Hiten bomb team, like me.

Good leaders are consistent. At all times, they direct and focus the team on what is best for the business. They are impartial, focused on execution, develop a vision, help to prioritize and balance the team. An excellent product manager does this every day.

This is what you need to do every day.

For a product manager or manager, nothing else matters.

Your job is to filter the information coming in every day. Remove all distractions. Decide where to focus your limited resources. Identify the right actions that actually promote your business. Keep your order in order to complete only the most important tasks.

And if you do not?

At best, you will lose the trust of the team. Every day they will go home a little earlier, start digging a little longer in each product. They will not trust you as before. You exhausted them with too many dead end solutions and too frivolous controls.

In the worst case scenario, you will stop product development and open doors to competitors who rush past. Believe me, this will happen. Even with a three-year margin from the entire industry, we profiled an advantage, and competitors caught up with our KISSmetrics system.

How we were overtaken by competitors

Carried away by Hiten's bombs, we underestimated the influence of competitors. They began to successfully capture the market. They quickly released products, copying all our functions, because we did everything right. And then they made gradual improvements and aimed at various promising customers that we missed.

Our product was Internet-oriented, and they quickly focused on mobile applications. KISSmetrics still doesn’t work properly for mobile applications. One of our more agile and faster competitors was ahead of us. Mixpanel focused on mobile apps long before we even thought about it.

This shift in focus helped them raise $ 77 million in funding. For comparison, we at KISSmetrics raised less than $ 25 million.

Mixpanel also had a free plan (KISSmetrics did not) and the ability to track even more data for free by installing an icon on its website.

We simply dismissed their strategy because we thought it would be expensive. We assumed that the cost of customer support and infrastructure would be too high to provide something like this. And you should copy the Mixpanel strategy, as soon as we saw that people hang these icons on their sites.

We were the first in the market to create a real-time analytics tracking debugger. It was designed to help people analyze and debug their data. But we missed one big thing: outward appeal.

Viewing data in real time looks very cool when it is open and you see it. Mixpanel realized that this feature attracted paid customers. They hypanuli on it is much stronger than us. They also improved the viewing of the data so that it looked more attractive than ours. We ignored their actions, did not think about their reasons and lost a ton of sales.

A new competitor, Heap, appeared even later than Mixpanel, with very simple APIs for implementing tracking. There you just need to install one script - and automatically track everything that people do on the website.

When they first started, we could easily copy the function and destroy them. We did not do this. Now they have over 6,000 customers and a total investment of $ 40 million.

These are just a few examples when we were really hurt by poor competitor learning and poor execution.

In fact, we came up with the right ideas. But instead of quickly implementing them, we observed how others do it, and much less time passes from the moment of invention to implementation. Or we arrogantly dismissed the ideas that the market desperately wanted, opening up wide opportunities for competitors.

We have missed so many opportunities to earn even more customer love.

We ignored competitors, instead of developing our market supply based on their actions. We did not give priority to product development based on the correct information. In the end, we lacked this important information: instead of understanding the needs of customers based on the actions of competitors, we completely ignored them.

Root cause

In the first year after the release of KISSmetrics, we tried different ideas, but nothing worked.

Then, in desperation, we tried a completely different approach. We talked with customers, identified the main tasks, listened to the market. At the moment, we did not have a reliable process, we just knew that we needed to do something else. We groped for the process that led to the creation of a truly hit product.

Two years later, we released the awesome MVP system and couldn't follow the delighted reviews on Twitter.

And then we began to slide into the abyss. A few years after the start of the business, development slowed down. We were no longer innovators and leaders. We have grown a team, but have slowed the pace of development. It did not take long to wait for competitors to break ahead. In the end, they did it.

They will copy your functions and leave you behind. If they are good at copying, then they are hardly particularly talented in innovation. But any improvements on top of your functionality will help them get ahead. They just have to improve their product a little faster and better than you.

Speed ​​really matters.

You cannot capture the market once and hope to hold onto it. You have to do it all over again. And act faster than competitors if you want to keep the lead. So you are ahead of the market.

But we have lost this magic. We forgot the process that helped release this initial amazing product. We are back to old, bad habits. Our progress has stopped for three years: enough time for the entire industry to catch up with us, and after that to introduce innovations without our participation,

and all because we lost sight of how we achieved this initial success.

We lost a billion dollar opportunity without doing the right thing after our initial success.

Do not repeat my mistakes.

When developing, it’s too easy to shoot from the hip or rely on consensus. I realized that the key to progress is to create processes that guarantee multiple repetitions of success. Not one success, not two. And victories that last for months, years, even decades.

The right process for a successful product is based on continuous innovation. It is based on concentration and planning. Continuous objective research and focused development. The correct process requires serious work, but if you invest in it, you will be rewarded every time you sit down and look at your indicators.

Also popular now: