20VC Hiten Shah on The Right Way To Think About Depression, Control and Burnout, Why Nobody Really Knows What They Are Doing and How One Should Receive Advice As A Result & How To Gain SelfAwareness As A Leader

Summary Notes


In an insightful conversation on "The Twenty Minute VC," Harry Stebbings reconnects with Hiten Shah, the seasoned entrepreneur behind FYI, a platform designed to locate documents swiftly. Shah's entrepreneurial journey began with an internet marketing consultancy, evolving through several SaaS ventures, including Crazy Egg and KISSmetrics. His experience extends to angel investing, with involvement in companies like Buffer and Clearbit. Shah and Stebbings delve into the nuances of remote work, emphasizing the importance of process and documentation. They also discuss the evolving landscape of startup funding, the significance of customer-centric product development, as highlighted by Superhuman's responsive adaptation to privacy concerns, and the shift towards value-oriented pricing models in SaaS, as demonstrated by Drift. Shah's approach to leadership centers on self-awareness, focusing on directing, coordinating, editing, motivating, and co-learning. Reflecting on his investment philosophy, Shah stresses the unpredictability of early-stage investing and the importance of embracing serendipity without harboring regrets over missed opportunities.

Summary Notes

Introduction to the Special Episode

  • Harry Stebbings introduces a special, longer-than-usual episode of the 20 Minute VC.
  • Hiten Shah, co-founder at FYI, is welcomed back to the show.
  • Hiten has a history of successful ventures and investments.

"We are back for a very special founders Friday here on the 20 minutes vc with me, Harry Stebbings and I'd love to hear your feedback on how we make the show better for you. And I respond to all messages directly at H. Stebbings 1996 with two b's on Instagram. But to the special episode, and I have to admit it's not 20 minutes, but the discussion was just so great, so enjoyable and just free flowing that it was too special an opportunity not to run with."

This quote explains the nature of the episode and introduces the guest, Hiten Shah. It sets the tone for an engaging and insightful conversation beyond the usual format.

Hiten Shah's Background and Ventures

  • Hiten Shah has co-founded several companies, including FYI, Quicksprout, Kiss Metrics, and Crazy Egg.
  • Shah has raised significant funding for his ventures and has been an active angel investor.
  • He emphasizes the importance of customer experience and investment decision optimization.

"Before FYI, Hidden cofounded Quicksprout alongside Neil Patel. Together they scaled the platform to over 500,000 readers every month. Before Quicksprout, Hidden was the cofounder and CEO of Kiss Metrics, raising over $19 million in the process of the company from the likes of our friends at True Ventures, uncork Capital and Felicis Ventures, just to name a few. Finally, Hidden is also the co founder at Crazy Egg, the heat mapping tool used by thousands to improve the effectiveness of their websites."

This quote summarizes Hiten Shah's entrepreneurial journey, highlighting his experience in founding and scaling businesses, as well as his success in raising funds from notable venture capital firms.

Hiten Shah's Entrepreneurial Journey

  • Hiten Shah started in internet marketing in 2003 and transitioned to SaaS products.
  • His first successful product was Crazy Egg, which launched in 2005.
  • Shah has taken on multiple roles, from CEO to investor, and has advised numerous startups.

"So started in 2003 when I started an Internet marketing consultancy with my co founder, who's now my brother in law, and I've known him since he was eleven and I was 15. And so my now wife said, hey, he's got one customer paying him $3,500 a month for SEO. He's just going into college. You're just getting out of college. Why don't you two partner up?"

This quote provides a brief history of Hiten Shah's entry into the world of startups and his early success that set the stage for his future ventures.

Meeting with Entrepreneurs and Giving Advice

  • Hiten Shah met with one new entrepreneur every weekday for several years.
  • He learned that most people, including himself, do not really know what they are doing.
  • Shah emphasizes the importance of being contextual and encouraging rather than just giving advice.

"For about four or five years, I decided I was going to meet with one new entrepreneur every weekday. So that was five days a week. I would meet someone new that I didn't know before."

This quote describes Hiten Shah's commitment to networking and mentoring within the entrepreneurial community, highlighting his approach to learning and advising.

Lessons from Advising Entrepreneurs

  • Shah discovered that conflicting advice is common and that entrepreneurs often seek validation rather than direction.
  • He learned to focus on encouragement and motivation instead of prescriptive advice.
  • Shah's approach evolved to helping entrepreneurs find their own path, rather than replicating his own experiences.

"So many lessons. I think the number one lesson there was basically nobody knows what they're doing. And that's not just them, that's also me."

This quote captures the key lesson Hiten Shah learned through his extensive experience advising entrepreneurs, which is the universal uncertainty in the startup world.

Seeking Truth and Learning as a Board Member

  • Shah advises that individuals should seek patterns and insights from others but ultimately forge their own path.
  • He believes that observing and learning from others is more impactful than seeking direct advice.
  • Shah emphasizes the importance of being a lifelong learner and staying adaptable.

"The reason nobody knows is they only know what's right for them. So you could talk to ten board members, you might find a few patterns."

This quote reflects Hiten Shah's perspective on seeking knowledge and learning from others, highlighting the importance of individuality and personal growth.

Vulnerability in the Startup Ecosystem

  • Shah discusses the concept of "figureoutability" and the importance of having faith in one's ability to solve problems.
  • He observes a growing trend of vulnerability and openness in the startup ecosystem.
  • Shah suggests that embracing lifelong learning and acknowledging one's limitations can lead to greater impact and success.

"So this concept of figureoutability, where you can have faith that someone's going to figure it out."

This quote introduces the idea of "figureoutability," which is central to Shah's philosophy of problem-solving and personal development in the startup world.

The Value of Serial Entrepreneurship

  • Shah agrees that serial entrepreneurship is overrated, as the rapidly changing market diminishes the advantages of past experiences.
  • He underscores the importance of focusing on constants in the market rather than relying on previous successes.
  • Shah's extensive experience has led him to value adaptability and continuous learning over resting on laurels.

"It's been 16 years and probably like 30, 40 different products that I've tried to build and a few things that have worked and some that are still working and others that are early stage and things like that."

This quote reflects Hiten Shah's long history of entrepreneurial efforts and his perspective on the changing nature of business success.

Fundraising Timelines and Investor-Founder Relationships

  • Concern about the compression of fundraising timelines and the impact on building real human relationships between founders and investors.
  • The importance of the stage of fundraising and whether the investor will be on the board or not, as it significantly affects the relationship.
  • At seed stage, the dynamics are different; a lead investor may or may not take a board seat, and the frequency of interaction varies.
  • The necessity for founders to understand the investor's incentive, which at the seed stage is often to see the business reach the next round of funding.
  • The importance of maintaining a professional relationship with investors, even if it becomes friendly, to ensure clear communication especially during difficult decisions.

"Honestly hidden, I'm quite concerned that there's this real compression in fundraising timelines. Founders and investors simply don't have the time to build kind of these real human relationships."

This quote expresses concern about the shortened timeframes for fundraising, which may hinder the development of meaningful relationships between investors and founders.

"You have to understand what the incentive is for the investor, what the incentive is for your self, which is obviously building a great business."

This quote highlights the need for alignment of incentives between investors and founders, with the understanding that both parties have different primary goals.

Seed Stage Fundraising Dynamics

  • The seed stage can proceed without a lead investor through "party rounds," but scenarios with a lead investor and a board seat are distinct.
  • The frequency of interaction with board members and the consistency of communication, such as board decks and meetings, are crucial.
  • The metaphor of being comfortable enough to have a drink with an investor symbolizes the desired level of comfort in the relationship, while maintaining professional boundaries.
  • The core of the investor-founder relationship should be business and incentive alignment, not friendship, to facilitate objective discussions about the business.

"So seed stage is fascinating because you can go pretty far at a seed stage without having a lead, and you could do what they call, or they used to call a party round."

This quote describes the flexibility in seed stage fundraising where a lead investor is not always necessary.

"You cannot let the friendship get in the way, because this is a business relationship, and you need to make sure that you have incentive alignment with them."

This quote emphasizes the importance of maintaining a business relationship with investors, regardless of any personal rapport, to ensure decisions are made in the best interest of the business.

Always Be Raising Mentality

  • The strategy of "always be raising" depends on the current state and trajectory of the business.
  • If the business is on a clear path to success, the focus should be on finding the best investors rather than adhering to compressed timelines.
  • The creation of a compelling narrative is necessary when the business's success is not as evident to attract investor interest.

"It depends more on that than anything else. If you have a business that is like a train and it's leaving the station, and with or without the investor, your business will be successful."

This quote suggests that the attractiveness of a business to investors is often based on its momentum and perceived inevitability of success, which can transcend fundraising timelines.

Professionalization of Pre-Seed Investing

  • The trend of professionalization and institutionalization of pre-seed investing is spreading globally, reducing the prevalence of friends and family rounds.
  • This trend is influenced by the Bay Area and is expected to become standard practice worldwide.

"I think this trend is going to permeate everywhere. That's just what it's going to boil down to."

This quote predicts the global adoption of professional pre-seed investing practices, reflecting changes observed in the Bay Area.

Importance of Business Basics in Fundraising

  • Capital alone cannot save or grow a business; the fundamentals of the business are crucial.
  • Investors are interested in the business's market, go-to-market strategy, and the team's understanding of these aspects.
  • The basics of the business, including the market, customers, and the team's knowledge, are what investors evaluate, not just the founder or the story.

"The business is what matters. The business is what people are investing in."

This quote emphasizes that the core elements of the business itself are the primary concern for investors, rather than peripheral aspects like founder stories.

Impact of Angel Investing on Operational Perspective

  • Angel investing requires dedication and an understanding that it is a numbers game with a high failure rate.
  • The feedback loop for angel investing success is long, making it challenging to assess one's aptitude in the short term.
  • Angel investors make judgment calls based on limited data at the early stages, while post-Series A investors can make more data-informed decisions.

"I feel like investing is something that you have to be pretty dedicated to in order to do an amazing job at it beyond like precede or seed rounds."

This quote reflects the commitment required to be successful in investing, particularly beyond the earliest funding stages.

Evaluating Market Size in Seed Investments

  • Market size is less critical than the business's expansion strategy and the team's vision for growth.
  • A clear path for the business's expansion is more important than starting with a massive, obvious market opportunity.

"Markets are all pretty big now, and I don't really care about market size as much as if this business has a natural path or some, not even natural. But the founders and the team are thinking about how it expands over time and where they see it going."

This quote suggests that a business's potential for growth and the team's strategic thinking are more important factors than the current size of the market.

Customer-Centric Business Growth

  • Growing a business successfully involves prioritizing customers and product quality.
  • Recent examples such as Superhuman's fundraising illustrate the importance of customer focus and product excellence.

"Growing a business is all about putting your customers first and making your product awesome."

This quote underscores the principle that customer satisfaction and product quality are fundamental to business growth.

Superhuman's Response to Privacy Concerns

  • Mike from Envision raised privacy concerns about Superhuman's email tracking feature.
  • Rahul from Superhuman responded thoughtfully, describing changes to make the tracking feature opt-in for new customers.
  • The response was customer-centric, addressing the needs of early adopters and adapting to a broader customer base.
  • Email tracking is a common practice in the industry, with other tools offering similar features.
  • The criticism of Superhuman's response was considered somewhat unfair due to industry norms.

"Rahul from superhuman had an extremely thoughtful and conscious response to it of basically, literally describing the changes that they're going to make as a result, where they get to turn this feature off by default for every new customer that comes in, and the customer would have to deliberately turn it on."

The quote explains Rahul's immediate and considerate reaction to privacy concerns, highlighting the proactive steps Superhuman took to address the issue. It also emphasizes the customer's choice in using the tracking feature.

Drift's Innovative Pricing Strategy

  • Drift, a live chat tool provider, changed the market by not charging per contact unlike competitors.
  • This move was seen as customer-aligned and addressed market fatigue with per-contact pricing.
  • Drift's strategy was considered a significant change in the market, likely to influence other companies.

"What the folks at drift did was as far as I know, they were the first company in the space to basically get rid of the contact. So they make it so that not get rid of it, but they basically make it so that they're not charging you per contact, so you have unlimited contact in all of their plants."

The quote describes Drift's disruptive pricing model which deviated from the industry standard. This decision was aimed at better serving customers and challenging existing market practices.

Value-Based Pricing and Customer Alignment

  • Jeff Bezos' philosophy of focusing on constants, like customers wanting lower prices, is influential.
  • Companies should align pricing with customer value rather than just increasing costs as customers grow.
  • Drift's pricing change is an example of adapting to customer frustrations and market demands.

"It's really about your value metric. And in this case, this value metric had just worn out and it was really causing fatigue in the market."

Hiten Shah emphasizes the importance of a pricing model that reflects the true value to customers, suggesting that traditional models may become obsolete and cause market fatigue.

Hiten Shah's Evolution as a Leader

  • Self-awareness and focus on what's best for the business are key developments in Hiten's leadership.
  • Hiten has learned to direct, coordinate, edit, motivate, and co-learn with his team.
  • These leadership functions are critical for guiding and energizing teams and fostering collective learning.

"I think I've increased my self awareness about how I impact the team in ways that are negative or ways that are hurting the business."

This quote reflects Hiten's growth in understanding his influence on the team and the business, highlighting the evolution of his leadership skills toward a more holistic approach.

Coordination as a Leadership Challenge

  • Coordinating involves thoughtful consideration of team dynamics and business direction.
  • It is one of the more challenging aspects of leadership for Hiten due to its complexity.

"I think coordinating is the challenge and the one I spend not necessarily more time on, but the one where I like being more thoughtful about that one than some of the other ones."

Hiten acknowledges the difficulty of coordination within leadership, stressing the need for careful thought in aligning team efforts with business objectives.

Time and Energy Management

  • Hiten focuses on energy rather than time when deciding on tasks, emphasizing the importance of engagement.
  • Serendipity plays a role in business success, and energy for tasks can lead to unexpected benefits.

"I spend so much less energy worrying about time and so much more of my time worrying about, do I have the energy for that?"

The emphasis on energy over time management suggests that passion and interest are more critical for productivity and success than strict time allocation.

Handling Burnout and Stress

  • Hiten has not been consciously aware of burnout but recognizes stress when trying to control the uncontrollable.
  • He manages stress by focusing on what he can control and accepting what he cannot.

"The biggest problem with that for me is sometimes I don't know that I'm trying to get control of things I don't control."

Hiten's introspection on stress and burnout highlights the challenge of recognizing when one is attempting to exert control over uncontrollable circumstances, which can lead to unnecessary stress.

Favorite Book: "The Courage to Be Disliked"

  • Hiten Shah's current favorite book is "The Courage to Be Disliked," which focuses on becoming comfortable with being disliked.
  • The book is conversational and presents the psychological theories of Alfred Adler, who is less known than Freud and Jung.
  • Hiten finds the book impactful and plans to reread it periodically.

"My current book is called the courage to be disliked. And it's about psychology and it's amazing. And the reason the book is amazing is because it focuses on making you comfortable with literally being disliked." "It's by a japanese author, and he is essentially sharing this psychologist's theory, this psychologist, Alfred Adler." "It's probably been one of the most impactful books I've read recently."

  • The explanation of these quotes highlights the book's central theme of embracing unpopularity as a form of personal freedom, and Hiten's endorsement of its profound impact on his perspective.

Recognition and Appreciation

  • Harry Stebbings mentions his weakness for seeking recognition and appreciation from others, indicating that he could benefit from the book's teachings.
  • Hiten agrees and shares quotes from the book that resonate with him, emphasizing the importance of living by one's principles even if it leads to being disliked.

"And the one weakness that I always have that people say is I'm always looking for other people's recognition and appreciation in a bad way." "The courage to be happy also includes a courage to be disliked. When you have gained that courage, that courage to be disliked, your interpersonal relationship will all at once change into things of likeness."

  • The quotes and Harry's admission suggest that the struggle for recognition can be a common issue, and the book offers a philosophical approach to overcoming this need.

Hiten Shah's Superpower in Company Building

  • Hiten Shah struggles to identify what he is the best in the world at due to his focus on continuous improvement.
  • He enjoys thinking about other people's businesses and improving anything, including businesses, plants, or himself.
  • His superpower may be linked to his enjoyment and interest in these areas.

"I think it's difficult to me to think through what I'm the best in the world at, mainly because I just always want to get better." "One is someone asked me at a dinner, or they were going through, it was a dinner with a bunch of founders and folks and investors, and that they wanted you to share your hobby. So the hobby I shared is my hobby is thinking about other people's businesses."

  • These quotes reflect Hiten's humility and his passion for business and self-improvement, which he regards as potential superpowers.

The Future of Remote Working

  • Hiten believes building in San Francisco will continue to make sense due to the large pool of tech talent.
  • He discusses the shift towards remote and distributed work, highlighting that companies need to embrace this reality.
  • Hiten's companies have been remote since 2003, and he advises others on remote work strategies.

"I think it's going to make sense to build an SF for the foreseeable future simply because there is a really large pool of talent here." "My companies have all been remote since 2003." "We're all going to have to start embracing it at some point, sooner than later."

  • The quotes emphasize the ongoing relevance of San Francisco for tech companies while acknowledging the growing trend of remote work and the need for companies to adapt.

Keys to Successful Distributed Work

  • Hiten Shah cites process documentation and improvement as crucial for successful distributed work.
  • His company, FYI, focuses heavily on creating and using documents to facilitate remote collaboration.
  • He believes that being remote has forced his team to be more systematic and process-oriented.

"Extreme amounts of process documentation and process improvement. Boring stuff." "We have tons of documents. I mean, we are a product that helps you find your documents."

  • The quotes underscore the importance of structured processes and documentation in managing a distributed team effectively.

Angel Investment Misses and Regrets

  • Hiten Shah does not dwell on missed investment opportunities, viewing angel investing as unpredictable.
  • He has an "Uber story" but does not regret missing out on the investment, emphasizing a lack of data in early-stage investing and the importance of making informed decisions at later stages.

"I don't think about my misses, Harry, and I don't have any." "I definitely have an Uber story where I could have invest at one point because Ryan Graves and I, we were having tea at samovar right before, I think he joined the company when Wright, he was going to and he was telling me about it."

  • Hiten's perspective on angel investing reflects a pragmatic approach, focusing on the inherent uncertainty of startups and the lack of regret for missed opportunities.

The Next Five Years for Hiten Shah and FYI

  • Hiten Shah's company, FYI, is working on building a product that teams love, focusing on document discovery and knowledge management.
  • He sees a long-term opportunity in helping people and organizations find the information they need to do their jobs.
  • Hiten is dedicated to addressing the challenge of finding documents across various platforms.

"Right now, we're focused on, basically, we've built a great single player product where people can find their documents in three clicks or less." "The thing that we've been aggressively working on internally and determined about is building a product that teams love."

  • The quotes provide insight into FYI's current focus and future goals, highlighting the continuous effort to enhance team productivity and information accessibility.

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