229: DO THE WORK
The Startup Chat with Steli and Hiten
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 Close.io 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 steli@close.io and hnshah@gmail.com
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