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SPI 557: Secrets to Starting a Business and Earning Passive Income with Hiten Shah

We’re definitely talking about passive income today with our friend, Hiten Shah.

I’m so grateful to have Hiten on. He revealed some secrets that I’ve never heard before, things he’s never shared before. And they’re things he’s actually implemented. Plus, we get to talk about his new business and how he’s applied these secrets to his business.

If you’re an entrepreneur and you’re thinking about starting a business, or you want to make sure your business idea is validated and it’s a perfect product-market fit, we’re going to remove the guesswork for you today.

We also talk a little bit about cryptocurrency and NFTs. Hiten is big into that world, it’s something he does for fun and money. I’m going to pick his brain in relation to that, as well.

There’s so much gold here in today’s show—I’m sure you’ll enjoy it!

Today’s Guest

Hiten Shah

Hiten Shah is the Co-Founder and CEO at Nira. Hiten has started multiple software companies since 2003 including Crazy Egg, KISSmetrics, and Nira.

You’ll Learn

Resources

SPI 557: Secrets to Starting a Business and Earning Passive Income with Hiten Shah

[00:00:00] Hiten:
Whenever you talk to a customer, a potential customer, or anyone in the market, take a lot of notes. Those notes are priceless. They’re your gold. They are what helps you determine what problems are worth solving.

Learn what we used to call “customer development,” which is basically, learn how to ask people about the problems they have. Not about the solution you’re building.

[00:00:45] Pat:
Hey, what’s up. It’s Pat here. Welcome to session 557 of the Smart Passive Income podcast.

We’re definitely talking about passive income today with our friend, Hiten Shah. I was introduced to him from our good friend, Neil Patel, who’s been a guest on the show several times.

I’m so grateful to have Hiten on because he revealed some secrets that I’ve never heard before, that he’s never shared before. Things he wonders why more people aren’t doing them.

These secrets, they’re not just talk. They’re things that he’s actually implemented.

We talk about his new business, and the things that he’s done and applied from what he’s about to share with you. So, if you’re an entrepreneur and you’re thinking about starting, or you want to make sure that your idea is validated and it’s a perfect product market fit, we’re going to remove the guesswork for you today in this episode.

Now we also talk a little bit about cryptocurrency and NFTs, something that we talked about last week in more depth. Hiten is big into that world. It’s something he does for fun and for money. I want to dissect a little bit of his brain with relation to that, as well.

You should all go check him out. In fact, he recommends you check him out on Twitter. He’s very active there, and shares a lot of fun and great things with relation to his businesses, as well as crypto and whatnot.

You can find him at H N S H A H on Twitter.

Let’s dive into this conversation. There’s so much gold here, and I’m hoping that you enjoy it. Here we go.

Hiten, welcome to the Smart Passive Income podcast. Thanks for joining us.

[00:02:08] Hiten:
Thanks for having me. I’m stoked to be here.

[00:02:10] Pat:
I first heard of you with relation to Kissmetrics, one of the first companies you founded. Tell me about what the hardest part about building that company was for you.

[00:02:20] Hiten:
It was the first time my co-founder Neil, and I, raised money for a business. I cut my teeth on understanding the difference between a self-funded business and a venture-backed business. That was a very big mindset shift.

When you raise money from investors, you’re getting money ahead of revenue. When you self-fund a business, you’re using your money to get to revenue. Those are two very different things.

The way you budget, the way you think about spending money, the way your mindset is in a self-funded business is more of a conservation strategy. When you raise money from investors, it’s about using the money to get to milestones that are meaningful so you can raise more money.

Those milestones, these days over time are much more aligned with. Kind of your revenue back in the day. Like it was very different, like user growth and things like that. Obviously this is the caveat is depends what type of business, but tied to revenue is a better metric that our milestone, whether it’s for self funded or venture backed business, but the high level, I learned that you’re getting money ahead of revenue in order to build revenue.

When you raise money, when you don’t raise money, you’re basically scrambling scrappy to figure out how to get through. So you can be ramen profitable or you can make enough money to quit your job or make enough money that you were making at your job. Right. Things like that. Or make enough money to hire people, to help you.

Right. Very different than if all of a sudden there’s a stack of money sitting here and you have to figure out how to use it for the model that you’re in for your business.

[00:04:03] Pat:
Could you have succeeded if it was self-funded do you think.

[00:04:06] Hiten:
Yeah. We had a great income source with our consulting business, so we would have just poured money into it, which we had done. Prior to get to even the first business that we did crazy ag that was self-funded and his cell phone. And even till today.

[00:04:19] Pat:
Crazy egg. we’ve used it on our platform. Amazing tool. Thank you for helping to build that.

By the way, I’m I’m curious. So was this pitching in front of investors with like a slide deck and that sort of was that the first time you kind of had to go to.

[00:04:32] Hiten:
Yeah, I, that, that part, I even have a, a, you could put it in the show notes or whatever, but I have a pitch deck guide that I share that I’ve made a few years ago with my co-founder at Nira. short answer is yes. Longer answer is like with pitch decks. It’s all about your near. It’s all about your story.

It’s all about the linear progression of your business. And the fact that you have a clear way of saying, Hey, this is what we’ve done. This is where we’re at today. And this is where we believe. And that progression is like, basically past present future. And that’s how I recommend people start thinking through their narrative.

And then as much of the customer that you can put in, in the, in that scenario, like talking about the customer case studies results the customers have had, if it’s really early, the validation you have from them about their new. Right. And that alignment with what you’re doing, things like that are really helpful on the pitch deck side.

It took me many years to figure that out. cause a lot of the content about pitch decks, talk too much about, you need this slide. You need this order, things like that. But if you think about it, guy Kawasaki had a great pitch deck book, no book on how to, how to do these things. the art of the start is I believe what it was called Sequoia, the famous venture capital firm.

Well, most well-known in a lot of circles. they have a pitch deck format with like standard sides. If you think about it, though, if you’re thinking about your audience, which you always should, they are used to that format. So when they see that format, that could either be really good for you or really bad.

My advice is it’s really bad because it doesn’t help them understand you, your narrative, your story, and the business. So I tend to go off the book. Or off the reservation, as they say, and try to do something that’s more help companies when I’m helping them with this. Or when they look at my pitch deck, I really get the narrative down of your business, what you’ve done and where you’re going in a very succinct, clear way without sharing everything.

Because a lot of founders want to share everything and have these long-winded stories. When, when I hear them, I’m like, there’s these five nuggets that matter they’re in this order. And that’s, what’s going to resonate with them before. And that my whole guide kind of goes into that again, happy to share the link.

It’s just a, it’s a ironically, it’s 115 or 119 slide deck about pitch decks. That shouldn’t be that long, but it teaches you with good and bad examples. And this whole narrative based approach, which is kind of the ultimate way to pitch anything.

[00:07:12] Pat:
Thank you for that. We’ll definitely add that in the show notes. Now, most of the audience listening right now, they’re likely not even looking at trying to get outside funding.

They’re trying to self-fund they’re trying to bootstrap. And so what would be the advice that you would have from your perspective on how to succeed in those first three, six months of, you know, generating business ideas and trying to find that product market fit?

What particular, what in particular would be the main focus? Cause there’s, it feels like a million things that we could do.

[00:07:38] Hiten:
Yeah, three things and I do these three things. so number one is, whenever you talk to a customer or a potential customer, anyone even in the market take a lot of notes. Those notes are priceless. They’re your gold basically. They’re what they are. What helps you determine what problems are worth solving? Underneath that tip is learn what we used to call customer development, which is basically learn how to ask people about the problems they have, not about the solution you’re building. and when you ask them about their problems, you want to do something like this. Let’s say I’m interviewing you. You have a podcast. I want to build some kind of podcast tool. I would, ask you to start with what’s your number one challenge with your. You would probably say something like distribution, that would be my guests, then I would try to go deeper. Right. Like I know this market. and, and, and, and, and again, I would still ask you that even if I knew the market right.

But we’re, we’re playing out a mock scenario. Right. So if you say distribution, I w I would, because it’s distribution, I would ask two questions. If it was something else I would just ask one. My real question that I want to ask is, tell me about a time when you have that.

And then I would want you to talk about it in the case of distribution.

I might even ask you, tell me about a success with distribution you’ve added and a failure, because what I’m trying to do is talk to 10 people like you, usually it doesn’t is what I like to say. Usually. I really like to say until you get bored and I want to hear your stuff. I don’t want to tell you my solution.

I want to give you barely anything except, Hey, I’m really thinking about building something in a podcast space that helps podcasters. I don’t know what it should be yet. I have some ideas, but I really want to hear from you and what problems and challenges you have. That’s how I would start the condo.

Then I would ask that question of what’s your number one challenge with the X. And then I would dig into getting stories from you. It’s all about stories. Then I would go do this about a dozen. By then you usually see a anecdotal Pattern. Don’t try to come up with a Pattern while you’re trying to figure out the stories and the problems.

Take one big pass at analyzing all the stuff you heard and then start finding what I call the Pattern of. And that is what will get you the right problem to solve before you even think about building some solution or writing any code or building landing pages or whatever you’re going to do, because you need to have an informed viewpoint.

Right? A lot of people come up with an idea and they’re like, that’s my idea. I’m gonna go build it, please. Don’t do that. Take an idea and figure out the customer that would want that idea. That’s not you. And then go do what I just. Yeah, it will save you years of time, in some cases, at least months, not days, not weeks, months, always months.

And when I don’t do it, I waste time when I do do it. I’m goal because I can then be like, oh, I can’t come up with a solution to this, these distribution problems that these people have. I’m going to go pivot, which is not even a pivot because he didn’t even start. Right. I’m just going to change directions.

Sometimes you find a nugget you want to dive deeper into. Sometimes it’s like, oh, Pat’s got a big audience. Okay. Let’s go find more people with big audiences. Cause there’s some Pattern that they have problems with, right. Or whatever. Right. So it’s those kinds of things that are important to. All number one, take lots of notes, focus on a customer, learn how to ask them about their problems, not your solution.

Right. Number two for a self-funded business. And this will work for any business by the way, because all, all non-funded businesses typically start self-funded or super. Even if they did raise money, that’s why it’s like, there’s not really a big difference. Although everyone wants to believe there is. And there’s haters about venture capital and haters about self-funding I’m not a hater.

I’ve done both. I just want people to win. I want people to succeed. I want people to make money, right? Like that, that’s what you’re doing this for. We’re capitalist, this, this, this, like, let’s do it. Right. So, so number two is basically. This idea that every business is a race to actuals in a spreadsheet. Every business ends up with a spreadsheet that says for the simplest thing, this is how much it cost us to do this. This is how much money we made and there’s a negative or positive on the other end. And the spreadsheet is like your sales numbers, all the details, like all of that. Once you figure out the problem to solve and you solve.

And you get people to basically buy it. Then you have numbers before that you have fake numbers. So you have forecasts or you have hypotheses build those out in a spreadsheet. Yes. Just do it. If you’re, everyone’s got a friend that can help with that, if you’re not good at that. So go ask that friend, tell them what it needs to look like.

This is how many visitors I need. Zombie signups. I need, this is how much I’m going to charge. Like, whatever that is. And then get your real actuals once you start having them. I think you should do this for as many things in life as possible. That need to be binary and simple. And you can simplify a lot of things that way.

When I do investments of any kind, these days, I’m whipping up a spreadsheet and. And I’m just doing it cause like it just gets that out and then you can focus on the fun stuff. Not that that isn’t fun, but you find the fun in that. Cause it’s about usually making money or making a number go up or something like that.

Right? So that’s number two, it’s a race to a spreadsheet. Get there early. Even before you have the actuals, when you can predict things or you think you can predict things and you get actuals that can help you figure out where to focus, to make improvements and don’t focus anywhere else. So that’s the main reason.

The number three. It’s a little bit near and dear to my heart, and it’s actually related to finding a problem and then how best to solve it. A lot of people have gotten into like the idea of a minimal viable product or a minimum viable product. Some people call it a minimum desirable product I had, I love your cup.

It’s a Tesla cup. I have a Tesla. Tesla is our office.

[00:13:50] Pat:
They are

[00:13:51] Hiten:
It’s one of my best performing stocks, as you can imagine. and no joke I’m holding forever, anyway, not

[00:14:00] Pat:
Right now, by the way.

[00:14:01] Hiten:
Wholly forever, not financial advice, do your thing. so, so, so, so this is the concept and even Tesla started like this. And so it’s actually funny that this and this kind of clicked for me right now, but I’m gonna give you an example from Instagram, but the idea is.

And I had the pleasure of learning from Eric Reese firsthand, who wrote the book on the lean startup. So this is out of extreme depth on not just the concepts in the book, but how he executed on them and his original intention with them, which has been lost. So I just wanted to share that and give him credit because nobody has done more for the early stage business world than he has, in my opinion.

[00:14:43] Pat:
Perfect.

[00:14:45] Hiten:
All my concepts are from him to be honest, because at a very, at a time when I was developing my ability to actually repeat what I had done before he showed up and he’s like, yo, this is what’s up. So the, the, the concept that I call it, and the way I think about it is that you’re looking for the step one for your.

And this could be for a feature later on, which is the Instagram example I’m about to give, or it could be even for a company like Tesla that built a whole car first and sold it for a high amount of money. This was our Roadster, which was their step one. But what did it get them? Everything. Does that car exist today anymore?

I don’t think so. We see them roaming around the road, but it doesn’t exist. It was using a Lotus, a spirit like chassis. Like come on. Like, it looks silly. Like it didn’t make any sense and it costs a lot of money, but it went kind of fast. but it was a step one for this massive business that we see now that had like 300,000 electric car sales last quarter or something insane like that.

So big things start small. Right. So I like to call them step one. the reason for that is when we get into the solution side, let’s say you did all the problem things, right. Got the problem. 90 to come up with a solution. You’re basically. Have all these ideas, what it could be, what it should be, all the features you need best way to solve the problem or best ways to solve the problem.

And you have this whole blown out idea. But the reason for that is to identify in my opinion, the reason you should be doing that and have those ideations and all that is to identify what’s the best step one. The reason for that is you don’t know which one of those things that are fantastic. You want to do that are.

And you don’t even know step one when you’re just thinking through it and trying to figure out all these ideas and getting all excited about it, because everyone gets excited about their ideas and their solutions, everybody, even me. So I really care about the sequence of what you built it, more than I care about pretty much anything else.

That’s why I focus on step one. So. What is the step one thing, this crazy guy with the beard today is saying, right? so the step one thing is this Instagram, when they wanted to compete with Pinterest, they launched, what I think is like one of the best step ones out there. They launched a little icon on every Instagram Instagram post that has a little bookmark thing.

You know, it, if you use Instagram, it’s on the bottom, right. Of every item. You could click it in the beginning and it just said saved to your profile or saved or something. It didn’t even get that complicated in order to find that saved item, that post you’d have to go in your profile, it’s buried and have to find it. Then about six months later, They came out and said 46% of people on Instagram have used that button at least once and saved a post. So now we’re going to give you save, collect. This is Facebook or Metta. Now they could have built the whole thing. They could even build public pages with boards. I mean, this is a company with tons of resources. They were smart enough to know. Step one is what matters because we have to earn the right to do the next thing. How do we earn the right?

Our customers, our consumers, our users are using the thing because if they don’t use the thing, it makes no sense to do the rest. So they started with a little icon and even today they are not competing with Pinterest yet. They don’t have public boards. They don’t have any of that. You know why nobody goes back to the old stuff they saved. so you might be sitting here and be like, why do they still have it? Why do they still have it? Well, they said 46% of people used it. Right. what they didn’t share. And I don’t know, the numbers is of the 46%. That’s. Their retention. compared to the ones that didn’t, it was probably so much higher because psychologically when you save stuff, we’re all pack rats.

Right? When you save stuff you’re more invested in, so they don’t even need to do anything else. I don’t even think that many people go look at their collections on there. Why would you like you think you want to, but you don’t. Right. So. My whole point is like they found a brilliant step one that got them what they want.

It wasn’t even competition with Pinterest is higher retention. And once they were satisfied with what they did, they stopped anytime they can pick that up. If Pinterest is a threat again, or they feel like they should but they don’t need to because it hit their goals internally, but also they aligned it with what they should do for consumers based on earning the right.

So I think step ones earn you the right for whatever the next step is. Until you earned the right. You might not even know what that next step should be.

[00:19:37] Pat:
What I love about this is we’re removing the guesswork, right? We’re implementing things that allow us for our audience or their behavior to help us understand where to go next, versus like you said, most of us. The jaded about our great idea, build something, nobody buys it or nobody picks it up. And then we’re kind of left wondering what’s going on now, you were talking about these big companies, Tesla, Instagram, they have massive amounts of users that would enable us to see what the numbers are rather quickly.

How about the person listening, who is just starting out? They don’t have a large audience, if any audience and how might they go out and understand. The feedback might be for what those first steps are going to be.

[00:20:19] Hiten:
Yeah. So you always have to find strategies to be able to interview the right people in your target audience. Right? So that’s the basics. And like there’s so many ways you can do that. These days. Twitter is one, even Instagram itself is another one. So there’s so many ways to reach the person you want.

And then there’s all this little friends and friends of friends and asking for intro. So I’ll save all that for some blog posts that’s out there. That’s probably really killer on it. Right. So that’s cool. But now your question’s valid. But if you’ve already done the work of getting to people, you know how to get to them, even if it’s not scalable, right?

So you get to them, let’s say you get to a dozen of them, you have them use your thing and you just literally, so here’s the thing. When you don’t have quantitative data that can be statistically significant or close to it, you have to go deeper into each individual. That’s using your. That’s it. So it’s like depth versus breadth.

When you don’t have the breadth to look at the numbers you go deep. That means interviews, calls, whatever you have to do. Like in my current business, when we first, before we pivoted, when we first built it. we had cohorts of people in the tans are 20 using our product for four weeks. And we told them if you’re going to use it, we need to talk to you once a week.

And then we got the feedback we want it. And we also made it easy for them to give us feedback in the minimal janky thing we built. So that we can have as many signals as possible with just 10 or 20 people. So it’s totally possible, but you need to go just deeper. And now there’s even really great tools, like crazy egg that we’ve added a feature where you can watch the recordings.

Right. Like you could do things like that in order to understand what people are doing. It’s not rocket science anymore. It’s also just never was, but people always made it too complicated. And honestly, like the majority of what stops people from making money is their own cognitive biases, as well as their own assumptions about whatever they’re getting into.

And I, and I think you use a great word to me. It’s simply like, don’t make any assumptions, even if you think they’re. And really validate those or invalidate them so that you don’t go chasing something that doesn’t matter chasing something that nobody wants, because most of the wasted effort in startups or even businesses and company building is chasing some concept idea, solution that nobody wants.

And that’s what we’re all fighting against.

[00:22:39] Pat:
Thank you for that. Love it. Let’s go into a person validates.

They see that it works. It’s time to scale. We’ve removed the guesswork, and now we want to scale our brand and put it out there into the world. Similarly, there’s a million things that we could do. What are the top two or three ways that You prefer to start scaling a business after it has been valid?

[00:23:02] Hiten:
For me, the framework is who’s your customer, where do they hang out? And how do you reach them? And then I got this from the book traction by the duck duck go founder. It’s a great book for anyone that doesn’t understand marketing that wants to actually tactically go do it, but it’s a very age old marketing concept.

You basically go find other companies in your space or ancillary spaces or ones that are targeting your customer. You just look and try to break down how they’re doing. And then you get all those ideas of the different channels and tactics and you prioritize against what you think will work, right. And also what you have the resources to accomplish or can have the resources to accomplish.

And then the cost of it, if that’s important to you at that time and try to make these things so simple, right. And like, and guarantee that even if you know nothing, you can do this.

[00:23:56] Pat:
I mean, I think there’s a, there’s a lot of people out there, myself included at times that go, well, here’s what everybody else is doing.

I need the one-up them. I need to do something different in order to be seen to be heard. And I know that’s true in. Positioning often, but in terms of marketing tactics, just use what is already working for others, as you’re saying.

[00:24:17] Hiten:
You’ll never be able to figure out what’s unique. Unless, you know what others are doing. So on the tactical execution side, which is what you’re talking about, you have choices, you have opinions. Sure. You want to do it different, do it different if that’s your point of view. Right? Like for example, in my world, when it comes to product, I like new, different, and right.

And the process I described earlier is basically how you get to new, different and right. But you can also use that process to go copy somebody else, but just make sure you’re nailing the right problems. Even when you talk about positioning, positioning, the implication is it’s a position in the market.

So if you don’t know what’s happening in the market, you’re not really coming up with great positioning. You’re just making it up. Right. So I always start with, and I, and I used to the reason I’m a little harsh on this one. I used to think exactly the way you did. We’re like I got, I gotta be different. I gotta be different, but we confuse different and better.

You don’t have to be different to be better. You really want to be better. You don’t want to be different. You want to be better and better. You’re not going to understand without knowing what the baselines are in the market. Like I can tell you today with my company and my product, it is better than any solution in the market, but I’m not saying that because.

I’m saying that because what I mentioned about going deep on each individual customer, what you’re looking for them saying, right. If they say it, it’s true, if you say it, it doesn’t mean anything. And the same with marketing, you say you want to be unique and different, but that only matters if you understand the customer mindset.

So I’ll give you a couple of my secrets if you want to call it that, not that anything’s a secret. Okay. Because all my stuff’s public out there too, but the 2, 2, 2 things I love to do that I don’t see enough people doing and we make our teams do it all the time. We will dissect reviews of products in our market.

We will take them from G2. Crowd or whatever it’s called now. Trust, radius, apple store, like the, the iPhone store to app store Android, wherever Yelp, if it’s relevant book reviews. One of my favorite hacks is actually. Find the book book on the topic related to your product and figure out what people think about it.

In fact, people authors do this to write books. They try to find the gaps. And what do people hate? What do they love? And the more comprehensive you are with what I just said, whether it’s review sites, if you’re a B2B business, if you’re a mobile app app stores, if you’re going to write a book bookstores, you get to get a pulse on the market For free for free. I’ll say it again for free. You just got to put in the time to pull out the reviews and read them and analyze them. Nobody does this stuff, but it is the killer killer secret, because then you understand the market, then you understand how your positioning should be. Oftentimes when you do that stuff, you’d figure out how to market it.

So you figure all that out by doing that kind of. That’s trick number one, trick number two, I don’t hear very often and it’s like my favorite one. Now, if I’m targeting a certain job function, I will go analyze the job descriptions that are out there and the job postings for that job function. Cause I want to make sure that our solution hits someone’s itemized list of what they’re responsible for at work.

So then we’ll analyze that. And be like, oh, these are the things they, these are the things that are required to do by their employers. And if we’re targeting that customer, we should hit on those things. We should not worry about other things. So it’s another way to find problems if you think of it that way.

Yeah. So those are my two secrets. I just give them away on your podcast. I don’t think I’ve married those two together, but honestly, if you ignore everything else, anyone listening that I just said, except those two things, you will increase your chances of building something. Where you can have that Smart Passive Income where you can have that growth you want, and that business that you’re looking for.

[00:28:23] Pat:
Amazing. Thank you, Hiten. You know, when you were talking about understanding the market and really getting in there, I mean, this is the difference between what people thought that the segway was going to be right. Changing. The way we walk around versus, you know, that was so different, different than anything.

And it

[00:28:39] Hiten:
But it wasn’t right. It wasn’t right. I like view different ad right at the right part is where you spend most of the time first, you know?

[00:28:48] Pat:
Right. And then of course Tesla, it didn’t reinvent the car. Just like you said, made it a lot better.

[00:28:56] Hiten:
Yeah. Yeah. They didn’t reinvent anything. If you really think about it until they really got in there and figured out what they needed to reinvent,

Like they didn’t even know they could make the car think of it that way they came in, not knowing if they could make the car. Right. Like, and then they made a Roadster and they used like obscure car frame because they didn’t have.

Factories or anything I believe to do all that. They built these cars, like by hand, if I’m not mistaken, they didn’t have their fancy robots or anything. You know, I don’t know this for sure, but this is what I’m guessing, knowing Elon Musk and how they roll. And so it was their step one. Step one is a silly little Roadster.

Even look at Uber, you know what? Their step one was replaced, the black card. Not replace taxis, replace black cars, make the black car show up right away. And what I mean by black cars, those cars that people call on the phone and say, I need a show for was a car. Right. And they’re usually called black cars.

Right. And that’s what people would bring. Cause they’re usually these black sedans, Lincoln town car style. Right. And they would show up and you’d get picked up from the club or whatever. That’s a step one because the behavior was already happening. They just made it happen with a click of button.

[00:30:05] Pat:
That’s so sure.

[00:30:06] Hiten:
Right.

And then they realize, oh, it should be called Uber cab or whatever. Cause people understand casual. No, like it started with something where they knew there was an audience. They knew that audience value, convenience, not price, but now like you have Uber pool and the stuff Lyft’s doing and all that. And they’ve come brought the price down over time.

But they started with a classic step one in my mind. How do we get to market and learn as fast as possible? And they earned the right to do all the next things because now we have. We have actuals, right? And then we can figure out what to tweak. Like they realize, oh, not everyone wants to pay that much.

Okay, sure. That’s obvious. But they realize that on their own. And then just started finding all the efficiencies that they needed to letting people even buy their own cars through Uber and all that stuff. Those all came from very simple step one that they started, you know, which is how everything starts.

If you want to forget to make it successful.

[00:30:57] Pat:
You mentioned pricing pricing is such an interesting topic, you know, that could go any which way. And for those of us listening who are consultants or entrepreneurs building, our first online course pricing is often just feels like a shot in the dark sometimes. And so what is your approach to pricing in a market?

You validated a product. How do you go about understanding the true value of what it is that you have to offer? And it compared to potentially others in the market?

[00:31:22] Hiten:
I’m a broken record. I would just start. I mean, I love pricing research. We can dive deep into all that stuff, but let’s just take that out because that’s a whole another convo, but like there is pricing research you can do with surveys. It’s very clear. I have guides on it. I’ve written my friends at profit well are very good to do that.

Right. And they’re very good at teaching people how to do that. So that’s an area I’m very adamant about, but you don’t need to. You should do it. It gives you a lot of great data. It tells you even what features different groups of people need and want. Let’s just think about what the, what not the, what the goal of pricing is, but what is a price, a price for something is the price that someone’s willing to pay for it.

In the majority of scenarios, the vast majority, 99% people are already paying for the thing that you’re going to go say, So why don’t you go figure out how they buy, what price point, who else is involved in the purchase that makes you really good, very audience centric And go figure out how to know your buyer, know who they are, And then figure out what are they buying today, And how are they buying it?

It’s it’s, it’s all about buying. It’s not about the price. It’s about. buying, then you’ll figure out, oh, there’s these five, alternatives to our business or our product that we’re proposing. And here are the different prices and how they buy it. And usually again, broken record today, but you put the price grids all in a spreadsheet and you start mapping features and prices and you start dissecting, what are they doing?

You look at the reviews for anyone talking about. Because sometimes people will say, I wish they charged me more. Believe it or not. Sometimes they’ll say this is way too much, but I need it. Right. And you start getting a lot of heuristics and ideal ideology around your market. Cause he, the one Pattern you’ll see in all the stuff that I’ve come to on this through the years, and this is not going to change is only care about what the customer thinks.

So I can assess a market by doing many of the tactics I mentioned to you. I know so much about. In fact, like I’ve written posts over the years, dissecting a whole company just by looking at their company history and being able to imply a bunch of things about why they did these things. How do I do. Well, I’ve read so much, so many reviews about so many different products and things, even skimming them.

You start getting a solid understanding. If you don’t want to get all analytical, which I highly recommend you do put this stuff in air table, spreadsheets, notion, whatever your flavor is. So you can really deeply analyze it, but more importantly, communicated with other people on your team and keep it documented because even at our company at Nira, with all these things, We go back to them regularly because all of a sudden we’ll be on a sales call or we’ll be on a customer success call.

We’ll hear the customer mention feature X. And then my co-founder, I usually like thinking big, we heard that one of the first set of interviews, Marie got them. Yep. And she loves going and finding them. She’s like crazy about the notes and all that, which I’m so thankful for. Cause I’m crazy about wanting them, but I’m not as crazy about writing them as she is.

And so I’ve learned a lot from her on that. Ding, ding, dang. We heard it. We heard it before Marie, like, let’s go find it. So then we gotta like, it’s fun. Honestly, we go on that hunt and we go find that stuff. And then now we have a one-page document about the feature from the thousands of pages of notes.

We hadn’t, you know, how much easier that makes everybody’s life.

Wow. Like, come on. So it’s like these small things that are work real work, like dirty work, right notes or dirty work. Like nobody wants to do that. Crap. Priceless.

[00:35:03] Pat:
Hmm. Tell me about Neera. What is Neera? What is it? What is the company built for?

[00:35:08] Hiten:
We answer one simple question, and this is typically for it teams today, but we will have a start-up plan. And for other, other types of folks in security teams, in the near future. But basically the simple question, we answer is, do you know who has access to company? We gave you that answer. And today’s very focused on Google workspace, but there’s not a single person. I asked that question to that can tell me, yeah, I know who has access to our stuff.

[00:35:35] Pat:
What are the origin of that idea? Come from.

[00:35:38] Hiten:
We started with an enterprise search tool that we did something really unique. We showed you the people you collaborate with and what documents you have shared.

[00:35:46] Pat:
Hmm.

[00:35:46] Hiten:
And we had a sidebar. Yeah, it was, it was amazing. We had to shut it down because there wasn’t a business there that we believed in. and we found a bigger one with what I’m saying, but here’s what happened.

It’s a great story. A customer, they were in San Francisco. They were like, I think 50 to a hundred people at the time CEO of the company go to his office, opens up his laptop, logged into our product He’s like, Hey, did you share. Did your system share these documents with this person?

Like, no, our systems are showing you, it doesn’t have that capability today. Anyway, you can’t even share something from our system today. It’s just showing you what exists. It’s showing you who has access. He’s like, why does that person have. I dunno, then he clicks on the person, sees all the stuff the person has, has with them. And he S he said something like, yeah, we’ve been, we’ve been raising money recently where we’re about to raise money and this person has access to a bunch of stuff. and they haven’t worked with us in six months and that’s not okay. So then he tells us the next morning, I literally spent all night until I passed out, going in and figuring out who has access using your tool, and then going into Google, which was a.

And removing their access and he had to do that over and over again. So we put that in the back of our pocket because we hadn’t invalidated the enterprise search product as a business. Yet, obviously we had notes within a few months. We’re already working on something for it teams because we realize it teams are the ones that worry about that.

Or when someone’s wondering who has access it, teams get the big hit and have to go deal with it in larger companies, which is great. When it’s a team and a CIO and stuff like that, there’s money there. If you can solve a problem for them. So we were very excited. so we just literally ran straight into that.

Once we realized that the enterprise search tool was a dead end for us, at least. And we found something way more valuable. And so now you sign up for our product. You connect with Google. It takes a couple days. And then within 24 to 48 hours, even if a company has tens of millions of documents, hundreds of millions of documents, we’ve pulled them in and are giving the it team, which are administrators of Google workspace, a tool they’ve never seen.

You can just scroll and find any document you want to make changes on a million documents all at once. You can select all and make those changes. You want to restrict documents with public links that haven’t been shared in over, or haven’t been modified in over a year. You can find that within a couple of clicks, click all of them and change those links.

And then now we have automation and other things at the end of the day, companies need policies around the collaboration that’s happening within these tools and the sharing externally, internally, and they don’t have. Any tooling to build that out, including Google’s own tooling, nobody’s really built that.

And we’re obviously going to go across tools as well. So it’s a very quick summary of where we started, how we got here and where we’ve ended up and how excited I am about it too. I’m super pumped because product market fit is so hard to get to. We spent years my co-founder and I finding something that was worthy of.

To be Frank. And now we found something that’s more than worthy of our time. Our team went from 14 people a year ago to we had our all hands today. I think about 24 today, mostly engineering. We started building our business team last quarter and everything that I share today, we use at the company, everything I shared today, we use to get here and this is an incredible business. We have, I can’t share more about the numbers or anything, but like it’s an incredible business. I mean, as I just described it, you don’t have another tool. That’s. So our whole product is new, different, and right. I’ll share one other thing

[00:39:09] Pat:
Sure.

[00:39:09] Hiten:
Early on We discovered when people started showing us the other tools that They all have pagination, so they all make you go, oh, I’m going to show you 10 of these documents that you’re looking for. And I’m gonna show you 10 more. We had customers show us, Hey, I selected a hundred. I’m going to select another a hundred on the next page. I’m a select another hundred of a select, another a hundred. They keep going. Sometimes they spent. just selecting the right documents. then they try to take an action on all those documents.

Sometimes thousands of documents and it fails almost in every tool they showed us because it wasn’t designed properly. It wasn’t designed with people actually taking the depth and understand use case. So our tool, it has infinite scroll has no pagination. You can always just keep scrolling, keep adding the documents you want to change.

And then just. In fact, the filtering we have is so fast that you don’t need to scroll. You’re like, I want to get down to Murray’s documents that have agreement in the title that have a public link. You can do that in two seconds. And all of a sudden you’re seeing those lines. And then you select all and you change them.

And we have a full audit log telling you what happened. I’m telling you all of this, not to pitch my product. I’m telling you all this, because everything I just said about our solution was designed around every single problem that we heard in the market. Then nobody was able to solve for these customers.

So I’m righteous now. I’m like, I want to build every single tool I possibly can for these it people, ‘cause nobody did what I just said. And we’re in a world today where we should not be wasting people’s time when we build these businesses, we should not be adding hundreds of customer success, people or dozens of them just because our product.

So like my like high and mighty on this, is like, build great products. Cause you’re wasting people’s time when you don’t. And I just shared exactly how you can do that on this call, because I think product is everything.

[00:40:59] Pat:
Yeah, that’s so good. Thank you for that. And sharing those secrets and sharing the process. And now seeing it executed here, I mean, obviously near is not for the Inc’s listening here, but hear your process and to hear how you’ve executed on that. It’s absolutely fantastic. I wanted to talk about one more topic before we left today, eaten, and this is around a lot of noise with relation to NFTs and blockchain and all that kind of stuff.

I know that’s something you’ve been talking a lot about, especially on Twitter. I know we could open up a huge can of worms with relation to that, but for knowing who the audience is listening to this right now, is there anything we can or should be paying attention to with relation to NFTs in particular, when it comes to building our business?

We’ve seen people like Gary V with V friends and creating community around NFTs and blockchain and whatnot. But to many, it still feels like this. I don’t know this magical land that only certain people are invited to in all of the rest of us are just kind of, what are those people doing? We have no idea.

Can you bring things back down to play in English for us? And just, is there any opportunity here for business owners and an additional passive.

[00:42:05] Hiten:
I’ll be the first one to say, everyone’s welcome in this. That’s just the truth. That’s the intention of the space in the space. There are acronyms like Wagni w a G M I, you know what that stands for. We are all going to make it. There’s a ritual in the morning. You say GM. Good morning and night you say GN.

Good night. there’s also N GMI not going to make it. Usually that’s because you made a bad investment and it held it too long or something like that. There’s also something called Hoddle, which is stands for hold HODL. But it’s whole right. If you understand the intention behind those acronyms, think about it.

What space is going to have an acronym that people use for good morning, good night. And also we are all going to make it and the opposite of that, because if you have something that cheery, you’re going to have the opposite, which is not going to make it right. This is a welcoming space. I want to be the first one to say that the reason people don’t feel welcome, it gets cause it’s daunting.

I spent the last 18 months in all the free time. I had to just learn about it because I’m a super curious person. I don’t think it’s something where I would be like, I have this business and I’m going to tack on web three or NFTs or whatever also. I don’t think there’s a web 1, 2, 3.

I think this is the internet and the internet is evolving. That’s all, this is like it’s not even web three. It’s just an evolution of the internet. We’ve always had that. There’s been small pockets of the internet that like moved in a certain way and it got more and more popular.

And then it took over parts of the internet. There’s so many things like this. It’s incredible. Right? Many, many people that have passive income, from software businesses. They were crazy before now. They’re not even the courses stuff we thought it was like shady, slimy, internet, marketers, and snakes.

These courses are amazing. They teach people pigs, right? Whether people take these courses and complete them is all different problem, but Hey, they exist and they help you learn what’s wrong with it. So everything started out with a ton of divisiveness in like people being like, this is bad.

It’s terrible. Right? So this is the same thing with this, but it’s also because we put a bunch of labels on this stuff for no reason. This is just the internet. This is the world. This is evolution of the. Right. That’s that’s my standpoint. That’s why I dove in. I’m like, I want to understand this stuff and also my label for this.

And this is why I don’t have suggestions for business owners today to tack it on. But if you want to really think through it from a ground up, it’s totally worth it if you want to, but don’t tack it on is a simple, I do it for fun and. I don’t have any other intention in the space. I have a very amazing business B2B enterprise that I love, and I want to continue building, this is my hobby.

It keeps me occupied when I need to be occupied with something besides my family and my work. This is my hobby. My hobby is also for fun and profit. So for anyone listening, You have to understand so much today to get into it, but if you get a Coinbase account and you buy some Bitcoin in Syria, You have just in, within their tool, you don’t need any other thing. You can buy cryptocurrency, Bitcoin, Ethereum, whatever, and earn a higher interest rate. Then at your bank. And as long as you’re willing to deal with the volatility of the price of Bitcoin Ethereum, and you’re putting some level of savings in there, it’s actually a much more viable, alternative than your bank account. That’s it, everyone that is on this, call should at least have 500 to a thousand, if not more in a Coinbase account, earning some level of interest that you can just feel what that magic internet money feels like.

Compared to the real world. If you want to call it that what we’ve been used to with banks and all that, that’s it. I’m not a preacher. I’m not going to tell people you need to be in on this, but I will tell you if you want to earn some extra interest on your money, sign up for a Coinbase account, regular point-based convert some of your dollars into the theories, come and go. And if you really want to trade in your day trader and you do stocks or something on the side, get a Robyn in an account and day trade. Some crypto. Those are my two passive income strategies that you can probably pull off with very little time and effort.

[00:46:24] Pat:
When it comes to crypto, obviously there’s a lot of different resources out there that talk and teach about this stuff. I know you do as well. I recommend everybody. Who’s interested to follow you on Twitter, at least a newsletter as well. who do you follow? Where do you learn?

[00:46:40] Hiten:
Honestly, like when I first got. The claim based app has a lot of education about all the different cryptocurrencies. They have little quizzes. You can even earn a couple bucks here and there on certain crypto coins by doing their quizzes and learning about them. A trusted sources, important, everything else, including Gary V it’s all in the weeds.

It’s going to sound like a bunch of mumbo jumbo, even when he talks about the basics of NFTs. Like this is not because he’s wrong. This is not because what he’s saying is not good. It’s because it’s a rabbit. It’s just a rabbit hole, even he will have to admit that. Right. And does, and so you have to understand the lingo into all this.

Put a spindle this time, you just get a Coinbase account and just start browsing around just like you would get an E-Trade account and start understanding that stuff. That’s the basics. Let’s start there. Let’s not get too fancy. But if you really want to dive in. Cool. Look at Gary V. Videos on NFTs. He doesn’t talk about crypto talks about NFTs in particular.

Go look at his video. It’s good between Gary V about NFTs. If you’re really curious about it, and then Coinbase, you have those two major things. At least the basics you’ll get covered. I still wouldn’t suggest Gary V’s videos or anything to anybody because he’s Gary V of course, and houses. No he’s top of hustle before now he’s talking about NFTs, like, okay, cool, cool, cool.

He knows how to transform himself. He knows how to find early trans, but I still remember the guy that would incessantly talk about hustle and it turned me off, frankly, not on him, just on his content. I actually think he’s a genuine, good human being, but like, I can’t suggest his content to someone who just wants to learn.

I can suggest Coinbase. Because they’re the biggest, I don’t know if they’re the biggest, but there’s a, there’s the most consumer-friendly today for crypto that I’ve found Robin hood is a little bit easier, but you don’t get to own the crypto there. And it’s a little bit of a different situation. If you have a Robin hood account, it is good to date.

Sure. But Providence also a day trader platform, in my opinion. so Coinbase is what I’d suggest. And then if you really want to know about NFTs, Gary V is a trusted source. You can trust him what comes out of his mouth in terms of. I will not deny that even today he helped launch, something called candy.com, which is like a top shots for MLB and NFL, I think. But you go to the site, you’re going to be confused, guaranteed.

[00:48:59] Pat:
Yup have been before for sure. And I’m trying to learn as much as I can and you know, I’m sure this is maybe the first time maybe anybody’s ever heard me talk about crypto or, and if T’s here on the, on the channel, So

[00:49:10] Hiten:
So we should just have a one-on-one on it. If you want to dive deep, happy to do it. And also anyone that’s listening, you can direct message me on Twitter. I’m sure my Twitter will be shared. I will answer any questions. I don’t care. How many of you do that? I will send you resources that are deeper than what I just said, but like, I’m just here to learn. we shouldn’t have biases. We shouldn’t think this is Ponzis all the time and all that cause the whole money? systems upon T but I’m not going to get into that. because the government can print money anytime they want. Let’s not forget that. So this is, this is not too dissimilar, you know, like, but anyway,

[00:49:43] Pat:
Yeah, that is very true. I mean, this is, this is why.

[00:49:46] Hiten:
I’ll take every objection. I’d be like, do you like, buddy? Do you like money? Do you like money? Then let’s talk about this. You don’t like buddy. Cool. Don’t talk to me about it. I’m very basic. Like I’m not trying to say decentralized centralized. I’m not trying to get into all that. Yes. There are very great potential aspects of it.

There are all these downsides of it too, but that’s with everything new, right. And even everything.

[00:50:08] Pat:
So it sounds like you have a big mix of all kinds of things that you just enjoy and have fun with. You have your crypto, obviously your businesses and new ideas always popping up. You talked about Tesla and investing in that as well. that’s awesome. That’s that sounds, that sounds amazing. And it seems that it can keep you occupied, but also keep you excited all the time.

[00:50:28] Hiten:
You know, for me, like I’ve always believed in passive income. So like there’s a lot of irony in that. I’m not just saying that because that’s the name of your show and all that stuff. And I keep seeing it here on your little Mike, which is amazing, could be a little less blurry, but I’d rather see your face, I guess, fully.

Anyway, I love it. But, what I was going to say is I’ve always been into. Like, like my SAS business has been running crazy. XL funded has been running for 16 years. It’s right around 20 people. We don’t plan on adding a lot in a lot of people for quite some time. You can imagine the passive income.

I get from that I can call it my passive income.

Cause my wife runs that company. but like she runs that company right with our head of engineering over there who also is one of the co-owners. but when COVID hit, I really. Realize that I wanted to get more passive income and I wanted to do it without. Leaving my house because I was forced to do it without leaving my house.

And so I dove into everything I could, one of my businesses, I turned into a full passive income business for myself. I really thought do crazy. I got a little bit more with the team and figured out we actually want to grow the crap out of it sooner than later. So now we’re going to put even more effort into it, on the product side and practice what I’m preaching here today.

Cause we haven’t been able to do. There because we treated it a little differently until now. and then I started diving into NFTs, crypto decentralized finance to be able to earn passive income. So I love, I loved, just loved it when I was introduced to you, just last week. And we were talking about this, cause this is my thing right now in terms of my.

Right. Cause I have a startup that has its own challenges that is not passive income by ADB. but then I have all these things that are passive income number of businesses there. They do own a bunch of properties. Cause that’s what everyone does real estate, right. For passive income. So Ballwin actually got one that I convinced my dad to buy many, many, many years ago when I didn’t have the money when I was like a teenager.

And then he handed it over to me and you know, it’s like a fourplex makes about 50 grand a year. I paid seven 50 for it. My dad paid it. Like, I don’t know how many years ago now? 20, 25 years ago. Right. Like,

[00:52:37] Pat:
And with a world where the market is now. I mean, it’s probably looking really good. So,

[00:52:40] Hiten:
Yeah. And we don’t care about the underlying price of it at all. We just care about the income we’re going to get and make sure we’re going to get the income. And we have a management property management company handles it. They handle it for years, right.

[00:52:50] Pat:
Um

[00:52:51] Hiten:
Yeah, I think I, I don’t know. This is where the world is.

I love that you’re doing this. I think the audience, well, whoever you are, whatever you’re doing, like there, there, there are more, more ways to make money today without having to move from your beanbag. I sit on a bean bag all day than any other time on the. And we should all be taking advantage of it and it doesn’t take much time and effort and you don’t need to make a complicated and think you have to understand a lot of things.

You just need. Some kind of buddy system is what I recommend. Find a buddy that’s into it. They can just show you some of the ropes and like, you’ll be there in no time. Right. And obviously a lot of this stuff is money. You feel like you can throw away just like you would invest in stocks typically because that’s also should be treated as throw away money in my opinion.

But you know, it is what it is. and it’s also nice to meet someone else who’s bullish on Tesla.

[00:53:37] Pat:
Amen to that. Yo, thank you so much. I appreciate you. And

[00:53:40] Hiten:
Yeah.

[00:53:40] Pat:
For your time today, Hiten.

Where should people go to follow you and keep up with all the things you have goign on?

[00:53:46] Hiten:
Yeah, everything’s on my Twitter. So, Twitter is @HNShah, H N S H A H.

[00:53:52] Pat:
Thanks, my friend. Appreciate you. It’s been a pleasure.

[00:53:56] Hiten:
Yeah. Thank you.

[00:53:56] Pat:
Alright. I hope you enjoyed that conversation with Hiten Shah. We talked about a lot of stuff, and I really loved our discussion on pricing, as well as product market fit and validation.

This is all stuff that I’ve written on. I love the secrets and the strategies that he shared that you can do right now.

I also want to stress the importance of spreadsheets, and taking it and simplifying it in a way that allows you to see answers, and actually take the stuff from our research, from our conversations, and put it all into one spot so we can actually start to make sense of all this. Again, remove the guesswork when we are making these decisions, not having any assumptions at all.

If you are having any assumptions in relation to your audience, and the business that you’re creating, and the solutions for them. Maybe you haven’t done enough research or had enough conversations. That’s a big takeaway, I think for me, and I’m sure there’s many other takeaways as well.

Let me know what you think of this on Twitter @PatFlynn, and also tag Hiten at H N S H A H. on Twitter as well. We’d love to hear from you.

Thank you so much for taking time out of your day. I think that we’re going to stay friends because this is the first time we chatted, but we ended up chatting a little bit more after we stopped recording, about Tesla and other fun things that we’re both doing together. We have a lot in common it seems.

I appreciate you for listening all the way through. Thank you so much for listening and watching this. I look forward to serving you next week. We have another great episode coming your way, so make sure you hit subscribe, if you haven’t already. I look forward to serving you.

Cheers. Thanks so much, and as always, Team Flynn for the win. Peace out.


Smart Passive Income Podcast

with Pat Flynn

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