The Startup Chat with Steli and Hiten on Smash Notes

The Startup Chat with Steli and Hiten podcast.

December 31, 2019

Unfiltered insights and actionable advice straight from the trenches of startup and business life. The show hosts, Steli Efti and Hiten Shah, are both serial entrepreneurs who have founded multi-million dollar SaaS startups. Being busy CEOs of fast-growing companies, they know the value of your time and make sure you get the most out of each 22 minute episode. Tune in for new episodes every Tuesday and Friday.

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Do you have a consulting company and are looking at pivoting to a software company? If so, this episode is for you. Steli and Hiten talk about their own experiences building their software companies. They share their own motivation behind creating software and why they achieved success in what they created. Tune in to hear what it takes to build software that is exceptional and why you NEED to please your existing clients in the meantime.

Time Stamped Show Notes:

00:18 – Today’s episode is about making that transition from a consulting company to a startup or software company

00:51 – Steli is receiving a lot of emails from people who want to transform their consulting and service business into a software or product business

01:21 – Steli met someone who wanted to pivot from being an online information business to as SaaS business

02:13 – There was an intern at who built an online product

02:53 – He now has a vibrant community behind him, his customers enjoy the product, and he is making money

03:12 – His number one goal for the next year is to build a software product

03:34 – Steli says he is uncomfortable when the goal is to go from services to software because he thinks this desire to shift may not come from a right place

04:28 – It takes a lot of time to build a brand and it will also take time to build a software product

05:14 – Betting the business on a new thing is risky and there are many potential traps

05:27 – It is more practical to learn or build small software products rather than pivot the whole business without having any experience

06:15 – Hiten did it this way: they had cash flow coming in and they wanted to get out of consulting. They had a general customer segment of marketers and designers and they evaluated which of their products benefited them the most

06:48 – They tried 12 different products before Crazy Egg was launched in 2005

07:33 – Hiten looked for their lead engineer and partner for Crazy Egg

08:01 – It was easier to create a software company back then than it is today because there is enough software out there for every need

09:01 – Hiten did a time and budget-box approach

09:18 – Steli says they did not make the conscious choice to move from services to a product business

09:47 – They knew two things – the 2 co-founders were technical and Steli would be the first sales person they would rent out to

10:38 – They figured things out on the way and organically created great sales software

11:32 – Steli says there was also a lot of luck involved – they had the right team at the right time and he did not advise people to copy what they did

12:09 – Steli says the problem is that other companies rush the process of becoming a software business and put too much weight on it this transition

13:06 – The team can get sloppy with their own business and clients because they become to occupied with building the software product itself

13:51 – Hiten says to make it a resource allocation project; you have to be smart about how you transition

14:10 – Hiten never had a timeline, they just allocated resources to the software because they wanted to learn from it.

15:08 – Hiten’s tip: Keep doing what you are doing to make more money and use that money to fund whatever opportunities you are looking for in software

16:33 – 37 Signals built Base Camp and Ruby on Rails out of their own need  

17:43 – They were their own internal customers at first

18:42 – Hiten says the mistake that consulting and service companies make is creating software that is not geared towards their own customers and target market

19:17 – If you have follow up questions, email them at and

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