My Billion Dollar Mistake
producthabits.com
producthabits.com
"We should have spent more time figuring out what the problems were with existing solutions and who specifically had those problems."
"The customers we targeted needed to be willing to pay for our solution."
"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."
In his fourth point he correctly decides to benchmark against the status quo but does not talk to people who are paying for an analytics solution but are using Google Analytics, which was free at the time they were conducting interviews.
"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. 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."
But they do find a pain point people are willing to pay to solve: funnel design and management. So far so good.
But the next mistake is instead of focusing team 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). He was slow to switch focus from exploration / discovery to execution / delivery. Which is understandable because it was exploration that uncovered the "billion dollar opportunity."
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]."
They're all more experienced with the industry than I, but their explanations didn't quite jive. I'm no user expert but I'm fairly sure some of their ideas won't make the user make Y happen....
Finally last week I got to talk to someone who will USE THE THING on a daily basis. In a 15 minute conversation with that dude I cleared up months of confusion / questions and I feel like that would have saved us a lot of time.
Thankfully it happened and everyone was on the call and now is on board (and I have direct contact with the dude), but man, I wanted to talk to that dude a month ago....
Also claiming you believe you lost out on a billion dollar opportunity is a bit egotistical to say. Its the same attitude that makes one say you know better than your customers/competitors and dont need no validation for your ideas.
It's the failure brag. Pretty common ego saving device in the start-up world. The first rule of a failure brag, is to make it really over the top. Something like:
It was a trillion dollar opportunity. We were the first to invent [thing that wasn't very important]. We could have easily smited every one of our competitors, all we had to do is this one thing and poof, weaklings destroyed. I merely needed to wave my hand at them, and I forgot to wave. That's how powerful my wave is. Did I mention we invented [thing that wasn't very important]? It changed the world, a world that was ours to own.
"I myself didn’t know what to do and which inputs to pay attention to. After months of this and because of the memo, I found out that this was exactly how the team felt too."
Can someone explain this to me? I genuinely don't understand this attitude. I mean maybe a week of introspection and pondering is acceptable, but months?
At no point does it seem he truly understands that his leadership failed completely. The only thing he tells you is "I’ve learned that the key to driving growth on product is to create product processes that produce repeatable wins."
This dude literally was so bad at management he tanked what he considered to be a billion dollar company and doesn't even admit to it after the fact?
I'd really like to hear the story of what running a startup is like when your main competitor is Google.
The not so charitable interpretation, which to me seems likely, is that he's using this "blog" as part of a campaign to create a new identity for himself, the "almost-billionare startup founder", who has great stories to tell and advice to give so can you please hire him on your company board because he's so well known in the community right?
He also seems to suffer from a profound lack of the ability to listen. Literally all the issues seem to be one of him being unable to comprehend reality because he's not listening to the customers,or to the industry trends; he's focused only on creating some mythical product which will be so amazing. Every little success he has buttresses his idea of himself as a visionary, but after that instead of continuing with the good ideas, he goes off on a tangent trying to fulfill this myth.
Worse yet, I'm not in a position to tell them they need to change, so I take their money and do what they ask me to do, even though I know full well it's basically a waste of time and resources for them.
But I guess there was a mismatch between the product and the marketing
https://www.wired.com/2012/10/kissmetrics-tracking/
Instead it's now kissmetricshq.com. Also there doesn't seem to be a way to get new customers. Looks like they only service old ones?
Did they secede from the market entirely? And this guy is offering coaching the kissmetrics way? Amazing...
Their twitter is also all over the place, lots of retweets and content from other SaaS providers, looks like they are shilling based on whatever reputation is left on the brand.
Starting to get the idea why they went under as that's what it looks like from an observer.
Great article, thanks for posting it!
We used Kiss for a while, but Mixpanel was free for the same volume and just as good if not better.
However, there was something in here that I think a lot of companies struggle with: how do you keep evolving when you start to calcify around a product and use case, without throwing the company into disarray? Tech markets are brutal and the competing need to stay the course but also continuously evolve and even reinvent yourself is really hard to navigate for all but the most obvious of rocket ship companies.
Building "solution that is looking for a problem".
As the Hiten Shah puts it he got ideas or Hiten Bombs by watching competitors, investors, advisers and some which he thought of himself. And he also notes later in the article, they saw Mixpanel doing mobile apps, they saw the freemium option etc. So, the feature generation process was correct.
What went wrong was Kissmetric's estimation of the success of different ideas. They decided to pass on building mobile apps or giving freemium because they thought it would cost them too much. The question is - What kind of intuition was at play to make those decisions? IMO there aren't many ways to intuitively know when something will work or not.
Who is the author?
The best solution he comes up with amounts to better planning and "Decide where to focus limited resources." Duh.
This guy is ernest, but clueless. If you meet someone like this, run for the hills. They should not be in charge of anything apart from the excel spreadsheet in front of them.
Indignation attracts more upvotes than anything else, which means a comment like this will stick to the top of a thread (where I just ran across it a minute ago), collecting mass. In other words, HN can't live by upvotes alone. There need to be countervailing mechanisms, such as flagging, software, and moderation.
Note this from the guidelines: "A good critical comment teaches us something."
I wanted to point out a phenomena, that I happen to be passionate about. I have thought alot about this. It was not meant to be a random twitter comment. But I am very serious about this, and hope that people notice this pathology. This guy is clearly lost in his "left-brain" [1]: full of details, trees with no forrest. It's all about plans, manipulation, linearity, verbiage, control. No wider context, no magic. Probably he has an impressive mastery of details, but basically clueless, as I said. Very likely he is a positive energetic person, full of charisma, nice to be around. Yet too often we put these charismats in charge! So that's my Dr. House run-down that I was reluctant to give. In summary, good with spreadsheets, hopeless at finding a direction.
[1] See "The Master and His Emissary" by Iain Mcgilchrist. Awesome book.
Since you've thought about it a lot and are passionate about it, I'm sure that there was no ill intent behind your comment. But somehow your benign intent still translated into a passionate putdown of someone specific. Imagine if you ran across a comment like that about yourself on HN: run for the hills if you meet this guy! Ugh, duh, clueless! It would feel like a gut punch to most of us. When we write such comments, we badly underestimate the impact they might have on whoever we're talking about by 10x or more. In fact, we usually don't take it into account at all.
Another way to mitigate that, and make the comment more interesting, would have been to talk about your own experience, previous encounters you've had with this theme, cases where you've seen it applied, and so on.
We’ve used them for almost... 5 years now and I have no idea what the author is referencing as their “fire” product.
The UI never made much sense, and above a certain number of streaming events the live view was useless.
The reporting is not great or reliable, the “SQL” report is a nightmare to use. It doesn’t follow many of the normal SQL syntax and was sorta just dropped onto users without much information besides a two paragraph help article that isn’t that helpful.
Simply put, they built a great initial product and then spent so much time twiddling their thumbs to not improve the product or help customers who stream a lot of events get them into better pipelines (e.g what segment does very well) and then built out pretty shoddy reporting tools on top of it.
We had to build our own reporting tools through a myriad of ETLs using spark + other technologies just to clean the events coming through. Some user error and bad eventing policies on our side? Of course but Kissmetrics didn’t do much to help customers with tooling.
These 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.
He may not have nearly been as disruptive as was articulated.
Maybe he talked about a few ideas, and there were some distractions ...
... or maybe the company was never very good in the first place. Maybe they didn't have insightful devs, designers and staff who could move at a quick enough pace, identify the best trends.
Even in full hindsight, these things are really hard.
I worked for BlackBerry, and I have many concerns about culture and leadership that led to their demise. At the same time - you're up against two of the most formidable companies in the world, one (Apple) with the best product of the new era, and the other (Google) giving it away for free. And BB didn't have vast surpluses and an arsenal of competitive advantage to lean on. In hindsight, it's possible there was nothing at all BB could have really done, it was going to get beat.
Also, sometimes the operational reality of a company trumps all narratives. What everyone does on a daily basis, grinding, is the 'real reality' of a place, and the rest is just talk.
I guess even to casual observers it was pretty clear at a certain point that Apple and Google had already won the smartphone market (BB, Nokia, Microsoft all tried hard but they have always been the niche), but BB hung around for quite a bit and now I had to look it up to figure out what they're currently doing.
Sounds pretty fascinating that a company that looked absolutely dominating in the smartphone segment was totally decimated so quickly.
+ BB culture was full of smart people, but we were not hugely innovative. It's like we were the 'greatest toaster maker' in the world. In any other business, we would have dominated.
+ BB was not a 'smartphone' - it really was just 'great email and long battery life'. The underrying OS, features etc. could not enable it to compete with iPhone. BB bought an OS later, but it was too late.
+ BB was way smaller and did not have vast talent pools. Google had a few hundred people in mapping. We had 2. Consider a similar story across other cross-cutting verticals. iOS is basically MacOS-light. That's a massive advantage.
+ When apps came along, Apple just dropped them into iTunes as a new category. BB had to come up with things from scratch.
+ BB was a hugely utilitarian in focus. The 'Tech' CEO did not speak the language of design. He basically had no clue, no understanding of the language. Talking design to him would be like talking about his daughter's shoe colours.
+ BB sold to carriers, and did whatever they asked. That's what made them huge. So we made a new device for each carrier. Apple, because they had power, made '1 device' and told carriers to shove it. But it was hot so carriers did as they were told. BB was 'told' to make an iPhone killer by Verizon (AT&T got the original iPhone deal) and it turned into the BB Storm, which was crap by any measure.
+ BB was sold as a 'solution' not a 'platform' - meaning all of the 3rd party stuff was an afterthought. We never cared about apps. I know, because it was my job to care about apps :).
+ The two CEO's hated each other and never got along. I'm ashamed to say this but they were both narrow, arrogant people. The opposite of thoughtful. One was a NYC style hardened sales guy with quirks, the other a techie from the 1980's. They did not come up with the BB. The BB was originated by a PM called 'Dave Castell' (great man) as almost a 'last resort' 20 years into the startup. It was a pager with email on it. It sold extremely well to execs. Everything was just a scramble from then on.
Indeed it's a fascinating story.
Despite our failings, I don't think we could have beat Apple + Android.
> iOS is basically MacOS-light
Yeah, I often forget that Apple had years and years of building engineering expertise around Operating Systems (MacOS) and Embedded Hardware (iPod) which they smartly leveraged into iOS. Google had something similar, but for different reasons (Google Research, ChromeOS etc.).
I wonder what the best course of action would have been. If the CEO's had recognized the futility of a fight, and had pivoted the company into an App company (BB messenger was extremely popular) or had adopted Android earlier ...
In the end I think once KISSmetrics became a hit, it was hubris that took over and the mistakes followed. That's likely hard to own and admit in a blog post, because you'd basically have to be a different person to write it.
So to me, the "ugh" response makes a lot of sense.
The other way is this: use your intuition, and then go to the facts (details) to verify or disqualify the intuition. It's top-down rather than bottom-up. You don't get intuition by memorizing stuff. Beware the clean desk. I could go on and on ...
* I hate to categorize people, but there it is.
Most lazy people I know will stick to manual action rather than take the time to script it out, mostly due to that initial overhead or having to potentially iterate on the logic due to future unknowns.
'Taking the easy' path is not 'clever', it's just a good habit, and there's no reason that this person cannot be hard working as well.
Smart and diligent will get you a push button every day instead of one every week.
There is no substitute for fairly hard work in most startup environments. There are so many details, so many little things to consider, so much to be done that cannot be replaced with a button.
It relates well to my experience.
At a hosting company I worked for, many of the system admins and developers were promoted from within technical support.
Technical support had one very awesome feature I only ever saw at this company -- you had a quota of how many tickets you should complete in a given day. If you completed that number, you could leave and were paid for the full day. If you had 80 tickets to complete and did them in 2 hours, you left. If you had 80 tickets and couldn't complete them, you left after working for 8 hours. You could work from home every other day if you were hitting your quota, and work from home increased your quota by like 10 tickets. Quota numbers were based on some average of your tickets over the last 8 weeks, and for most people were somewhere around 70-100.
Categorically, each and every person who was promoted out of tech support had written scripts to fix common issues that were happening and frequently only worked a couple of hours a day while they were in technical support; other times would spend a lot of extra time working out programs to automate their jobs. Looking back at it, I think each of us thought we were getting away with something, but it was noticed and encouraged.
> Someone has a job that makes them push a button every 5 minutes. They write a script so they never have to push a butten again. That person is clever and lazy. That is who you want.
I believe my story very strongly correlates with the spirt of GP's explanation; if you do not see the similarities I'm not sure I could explain further.
If you do see the similarities and simply disagree with the word 'lazy,' then I should make my assumptions of the word more clear. In GP's context I've assumed the definition by Larry Wall from the Three Virtues[1]:
> Laziness: The quality that makes you go to great effort to reduce overall energy expenditure
Grit (determination, resilience hard work) is often indicated as the #1 predictor of success - not IQ, and I agree with this.
Unless what you're doing is very new, or super sophisticated in which case brilliance is really a key ingredient, give me 'smart, gets along, works hard and accomplishes things' any day over 'brilliant and lazy'.
Biggest reward for the lowest cost.
It is a quote from a psychopath who tells other people "take that hill" and then lights up a cigar in the officer's club and brags how brave and smart he was.