Omer (00:11.840)
Welcome to another episode of the SaaS Podcast.
I'm your host, Omer Khan and this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business.
Today's interview is with Neil Patel.
Neil is a highly successful entrepreneur, angel investor and analytics expert.
He's best known for his work in digital marketing and as the co founder of software companies KissMetrics and Crazy Egg.
His current blog, Quicksprout, generates over a million dollars in annual revenue.
The Wall Street Journal calls him a top influencer on the web.
Forbes says he's one of the top 10 online marketers and entrepreneur mag.
He created one of the top 100 most brilliant companies in the world.
And on top of that, he was recognized as a top 100 entrepreneur under the age of 30 by President Obama.
So with that, let's bring on Neil.
Neil, welcome to the show.
Neil Patel (01:16.470)
Thanks for having me.
Omer (01:18.550)
So I've told our audience just a little bit about you.
Tell us in your own words a little more about you personally and then give us an overview about your products and business.
Neil Patel (01:27.350)
Sure.
So I'm just an average Joe.
I was born in London.
I grew up in Orange County.
My parents decided to move to California, right.
Orange County, California, when I was a little baby.
And it wasn't Orange county like you think, right.
From the TV life.
If you ever hear about Hollywood, Louisiana, Orange county, it's all roughly the same area.
You think the Ritz, the Glamour.
But there are poor parts as well.
Right.
So I grew up in a low income apartment complex, which means that it was somewhat subsidized due to the fact that my parents could not afford to pay all of it.
Nonetheless, had a great experience, went to a good school, right?
High school, junior high, elementary school, et cetera.
Got a great education.
And I saw that other people around me were living a much better life.
I myself wanted to experience that much better life.
And I felt that the only way to experience that at the time was by making more money and being rich.
I was young and naive and at the same time I only thought that the way you could make money, a lot of it, was to be entrepreneur.
And in most cases that is true.
But the naive part was that you need money to be happy.
So I started a few different businesses.
The first one was a job board.
It failed miserably.
From there I started the ad agency.
The ad agency did quite well from there, realized that customers of the agencies had analytical problems.
So we created a few analytics product From Crazy Egg to hello Bar to Kiss Insights, which is now Qualaroo, and a few other products as well.
And that brings me today, just keep cranking on the software products.
I enjoy hanging out with my friends and having fun, and I work a bit too much.
Omer (03:07.010)
Thanks for that, Neil.
We obviously want to know about your business today, but it's also great for us to be able to get to know you personally a little better and find out where you came from and what drove you in your earlier days.
Now, for people who aren't familiar with kissmetrics and Crazy Egg, could you just take a minute to explain what those products do?
Neil Patel (03:27.210)
Sure.
So, Crazy Egg, think of it as a usability analytics tool.
You have a website, you want to fine tune your website.
Do you know where people click, where they're not clicking, how they're interacting?
Sure.
Looking at numbers is one thing, but we'll actually draw a visualization for you, a heat map.
Right.
Hotspots where people click a lot, cold spots where they don't click too often.
And that's what Crazy Egg does.
It'll help you fine tune your design, your messaging, your copy, so that way you can maximize your conversion rate.
Kissmetrics, on the other hand, is a customer analytics platform.
Google Analytics tells you what happened.
Kissmetrics, on the other hand, tells you who did it.
If you want to find out what your specific customers are doing, why they're doing it, how to get more customers like that, write your ideal ones.
That's what KissMetrics is great for.
In essence, it helps you optimize the lifetime value of your customer as well as increasing your conversion rate.
Omer (04:21.870)
Great.
So before we dive into more details, we like to kick things off with a success quote just to better understand what drives and motivates our guests.
What is your favorite success quote?
Neil Patel (04:32.190)
To succeed in life, you need two things, ignorance and confidence.
And that quote is by Mark Twain.
The reason I love it.
If you're not confident what you're gonna do, you're probably not gonna go too far because you're gonna be questioning yourself a bit too often.
You also need ignorance, because the odds of you succeeding are against you.
What drives entrepreneurs is their hopers, their believers.
If you don't really believe in what you're doing, you're not gonna succeed.
And if you look at the data and the stats and the numbers, right, the odds are against you.
So you need to be ignorant and just keep pushing forward and ignore all the other things around you.
Omer (05:11.120)
That's a great quote.
It actually reminds me of a guy called Cliff Young, who was a potato farmer in Australia.
I think at the age of 61, he decided to enter the Sydney to Melbourne race, which was considered to be one of the most difficult tests in the world.
It was over 500 miles and took six or seven days to compete.
Now, Cliff had zero experience competing in races, but he figured he'd spent enough time chasing his livestock around, so he should be able to run this race.
And he turned up wearing the same clothes he wore on the farm every day.
And by the end of the first day, he was so far behind everyone else that when all the other runners were sleeping, he kept running for another few hours because he didn't know any better.
And eventually he ended up setting a record and beating everyone else by 10 hours.
So sometimes being ignorant can really be a great asset.
Okay, Neil, let's take a journey together back to your early days and explore how you got started.
First of all, let's talk a little bit about Crazy Egg.
Where did the idea for that come from?
Neil Patel (06:24.900)
The idea from Crazy Egg came by.
There was an analytics solution at the time called clicktail.
Not clicktail.
Kicktracks.
Sorry about that.
Click Tracks visually showed you how people clicked on your site.
The issue with it was is it was a bit off because of how they were tracking, and it wasn't that visual.
But they started a few visual components, like, hey, why can't we take that to the next level and make things even more visual?
And that's where the concept of crazy came about.
Omer (06:53.750)
So walk me through the specific steps you took to start turning that idea into a product.
I mean, did you go out and try to validate it?
Did you start building the product straight away?
What were those next steps that you took?
Neil Patel (07:04.760)
Should have validated it.
Instead, what we just did is hit up our designer.
I had him start designing it.
We tweaked the concept over time because he had ideas, we had ideas, other people had ideas.
Then from there, we just started hiring developers, and we were just searching on Google for developers.
Most of them failed, and we eventually found one.
His name is John Butler.
He's now our CTO and owns a good portion of Crazy Egg.
He himself ended up creating a great product.
Omer (07:33.970)
Okay, so you didn't do any customer development.
You had this idea.
You went about building the product, and then, so you've got this product in market.
Now.
How did you go about getting your first few customers?
Neil Patel (07:47.250)
We did ads.
We realized that our ideal customers should be designers.
Right, and marketers.
You analyze what's happening with your website, you need to make changes.
So we first targeted designers because designers could actually make the changes to their websites.
We went to all the CSS galleries at the time, which were popular, like CSS Tricks, CSS Vault, whatever.
Their names were unmatched style.
And we bought ads on all these places.
We spent around 10 grand in ads.
And we collected over 10,000 emails from it of people who are interested in the beta version before we even launched it.
We just created a splash page and had them opt in.
Omer (08:26.130)
Okay, so you gathered about 10,000 email addresses before the product had shipped, and then what did you do with those email addresses?
Neil Patel (08:34.210)
Once we launched, we just blasted out to that list and said, hey, join our sign up for our product.
And that's how we got started.
Omer (08:41.570)
And so looking back at those early days with Crazy Egg, what do you think was one of the biggest mistakes that you made?
Neil Patel (08:47.810)
We had a free product and we closed the free product.
When we closed it, our revenue more than doubled in 30 days.
But the reason I say that's a mistake is it's better to do a freemium model and figure out how to convert users from free to paid.
We just didn't know how to do that back then.
Right.
The company's more than six years old.
We just weren't that sophisticated.
Omer (09:05.700)
So let's talk a little bit about kissmetrics.
Where did the idea for that product come from?
Neil Patel (09:10.180)
It was Crazy Egg 2.0.
Within Crazy Egg.
We couldn't analyze our lifetime value of our customers, what causes churn, how to keep customers longer.
We were looking at metrics in Google Analytics and it just showed the basic front end stuff.
Clicks, conversions.
But what about free to paid?
How many people are converting from there?
Why are they converting?
What's the first user experience?
Why are some people using the product when they sign up and others aren't?
So we created kissmetrics to solve all these problems for us.
Omer (09:40.100)
And why did you decide to launch it as a separate product instead of just doing it as you said?
Neil Patel (09:44.960)
Crazy Egg 2.0, very expensive product, and we had cash flow issues.
So what we ended up doing is raising venture capital for it and spinning it out.
Omer (09:54.160)
Okay, let's talk about what you did differently with kissmetrics compared to Crazy Egg.
So you had this idea for kissmetrics, but you've got some cash flow issues, and so you decide to go and get venture capital money and launch this as a separate product.
What did you do next?
Neil Patel (10:12.450)
What we ended up doing was we created a beta version of it.
We got users on board, we had roughly three iterations of the product changed a lot over the time.
What you see now is not what we started with.
And from there we eventually just started introducing paid plans.
But what we first had to do was create a product and actually see if people use it and have the pain point.
And we figured they did because.
Because people were spending thousands and thousands of dollars on custom analytics solutions.
Omer (10:41.470)
And so what kind of validation were you doing with kissmetrics, we were doing
Neil Patel (10:46.430)
a lot of customer development.
So with KissMetrics, we ended up learning that you don't just create a product, you get feedback early as possible, you build a minimal viable product and you keep iterating.
So we use the Lean Startup principles when it came to creating KISS Metrics versus Crazy, which we didn't do any of that kind of stuff.
Omer (11:08.230)
And so what was the, what was the response when you launched the product?
Did it resonate instantly with your target audience?
Was it relatively easy to start getting your first thousand customers or was it sort of a bumpy ride for you?
Neil Patel (11:23.230)
Initially it was pretty easy, but for me, keep in mind that my biggest skill set is I'm a good marketer, right.
Better at marketing than almost any other marketing related stuff.
So it ended up working out.
What we quickly ended up learning from the kissmetrics experience.
Getting customers is not the hardest thing for businesses, any business.
Because with money you can get customers, keeping them is the hardest part.
Omer (11:52.770)
Yes, I agree.
It's not just about acquiring new customers.
You've got to do just a good as a good job in retaining those customers.
So what were you doing to keep more customers around for longer?
Neil Patel (12:02.820)
You keep getting feedback from customers and you adapt and you modify the approach until you reduce your churn and customers are happier with you.
Right.
Omer (12:12.020)
So how long did it take you roughly to get your first thousand customers for KissMetrics?
Neil Patel (12:17.540)
Paying customers or free customers?
Omer (12:19.700)
Paying customers?
Neil Patel (12:20.900)
I do not know.
It had to been more than a year for sure.
Under two, three years.
Right.
I don't know what the exact time frame was, but it took us a while.
Omer (12:29.120)
So can you, can you give us an idea of, you know, how many customers you have right now with KissMetrics?
Neil Patel (12:34.480)
I actually don't know the number off the top of my head.
I know it's in the thousands, but I don't keep track of it.
I just track revenue.
Omer (12:40.160)
Are you able to disclose how much revenue KissMetrics is currently generating?
Neil Patel (12:44.320)
I'm not.
Omer (12:45.440)
All right, so let's talk a little bit about.
So you've got the product in market, you've got some customers you want to keep growing.
What were the marketing strategies that you used to try and scale this business and grow a bigger customer base?
Neil Patel (12:58.930)
So you're asking what marketing tactics do you do to scale this business?
Correct.
Yeah.
The biggest one we did was content marketing.
We created a blog around analytics marketing, anything that ideal customers will all learn about.
And we try to answer all their questions throughout our blog.
And eventually people like, wow, these guys write great content.
What else do they do?
Omer (13:21.900)
And was content marketing the primary way that you were acquiring these new customers?
Neil Patel (13:27.340)
Yes, it still is today.
Omer (13:29.260)
Did you also do any paid advertising?
Neil Patel (13:32.220)
Paid advertising?
We tested it out.
It's expensive.
Content marketing is much more cheaper and effective.
Omer (13:38.140)
Yeah.
Content marketing is clearly an area where you have done very well, not just with KissMetrics, but also across your other businesses, such as Quicksprout.
So let's talk a little bit about money.
How did you start generating revenue for kissmetrics?
Neil Patel (13:55.480)
The way we started generating revenue is once you start getting all these visitors, what you end up doing is you release paid plans and you figure out how to tierum.
Right.
Whether you want to charge $5, $20, $100, $1,000 a month, whatever it may be.
And we said, hey, here's KissMetrics.
It costs us money to run this analytics company and compute data and give you great recommendations, so please pay us if you like the service.
And we gave people a free trial to show them that our product's good.
Omer (14:20.890)
And how well were you converting customers or free users into customers from that approach?
Neil Patel (14:26.490)
Well, it's a free trial, so after a while, the trial ends and you have to pay or you don't get any more.
Omer (14:32.010)
Right.
But did you find that it was a relatively smooth process from the end of the trial to getting people to convert into paid customers?
Neil Patel (14:40.570)
Yeah, we have sales reps, so sales reps contact people and call them up, et cetera.
Right.
So.
So it's not too tough of a process.
Omer (14:47.740)
So looking back at growing the KissMetrics business, what was one big challenge that you faced?
Neil Patel (14:55.980)
One of the biggest challenges we faced with kissmetrics was we didn't do a good job of making our product usable early on, and the product still could be more usable.
But what we've been doing over time is getting more user feedback, adjusting the design, creating more documentation on how to use a product, creating video tutorials.
Right.
So we've been doing all this kind of stuff to really help people with the onboarding.
Omer (15:22.700)
What was some of the specific things that you just tell me a little bit more about that.
I mean, what were some of the things that you did to go and overcome that?
Neil Patel (15:31.420)
Yeah, like I said, we'll create things like videos.
So if you have an E commerce site that's on Magento, we'll create a video that shows you how to get started on a Magento site.
If you have a WordPress blog, we'll show you how to get started on a WordPress blog, maybe even provide a plugin.
We adapted the first user experience, the onboarding, from giving you the code to showing you how to implement on your site, to saying, hey, don't know how to implement it.
Do you have a developer?
We'll email it out to them.
So it's just doing a lot of different tweaks and testing until we got it right and we can still improve from where we are today.
Omer (16:02.570)
I also want to talk a little bit about your blog, quicksprout.
So you have these two software companies, Crazy Egg, which includes Crazy Egg and hello Bar.
And you've got the KissMetrics product and business.
And then you have the Quick Sprout site where you seem to be publishing a huge amount of high quality content like a machine.
How are you balancing your time and dealing with all of these different products and priorities?
Neil Patel (16:30.070)
So blogging for me is fun and it actually drives revenue to the businesses.
So that's why I continually do it.
Plus I really do enjoy it.
And blogging doesn't take me that much time.
Right?
I can crank out a blog post within an hour or two.
As for the other two things, right, like time wise, how am I spending?
I'm not the CEO of any of the companies, so I do help a lot.
I spend most of my time on kissmetrics.
I don't have to go into the office and manage, you know, whatever employees we have.
I think we have 60 plus.
I don't have to deal with much of that.
All I really had to do is just focus on driving more revenue to the businesses.
My goal with all the companies is just help evangelize them and drive signups.
Omer (17:11.380)
So we started this conversation by going back to where the idea for Crazy Egg and kissmetrics came from.
And then we took this journey together and how you turn those ideas into successful products.
Looking at your business today, what is the one thing that you're most excited about right now?
Neil Patel (17:27.860)
Just about growing all the businesses.
I really enjoy the growth phase.
I hate creating.
I rather add more users and figure out how to fine tune a business.
And for me it's fun.
Omer (17:38.590)
And what is the biggest goal that you want to try and achieve in the next few years?
Neil Patel (17:42.910)
Create a company that does $100 million a year in revenue.
Omer (17:46.110)
And do you know what kind of company that's going to be?
Neil Patel (17:48.910)
I do not.
I'm not there yet, but I will know when I'm there and hopefully I do get there.
Right.
I don't know if I ever will, but I think I have a good shot.
Omer (17:59.380)
Well, you have a great track record, so I'd say your chances are pretty good.
Neil Patel (18:03.380)
Thank you.
Omer (18:04.900)
So, okay, Neil, so it's time for our lightning round.
I'd like to ask you a series of questions and then I'd like you to just answer them as quickly as possible.
So you ready for that?
Neil Patel (18:14.020)
Sounds good.
Let's get started.
Great.
Omer (18:16.220)
Let's do it.
So, number one, what's the best piece of business advice you ever received?
Neil Patel (18:21.540)
Focus.
I've had a lot of issues focusing in the past.
If you just focus on one business and you put all your time and energy into it, you're more likely going to do better than if you did one too many things.
And entrepreneurs these days have a bit too much ADD and they try to do one too many businesses at a time.
Omer (18:39.080)
What book would you recommend to our audience and why?
Neil Patel (18:42.920)
Sure, Lean Startup.
It'll actually show you how to create products in the most efficient manner and ideally in the least amount of money as well.
Omer (18:53.400)
What's one attribute or characteristic in your mind of a successful entrepreneur?
Neil Patel (18:58.920)
They got to learn how to be scrappy.
If you can't figure out how to save money, cut corners.
Right.
Not in unethical ways, but if you can figure out how to cut corners on cost, get stuff done at a quicker pace and spend less money.
And I think everything is almost possible in this world.
Right.
You're more likely to succeed because money is definitely not on your side, nor is time as entrepreneur.
So you got to be scrappy.
Omer (19:21.320)
What's your favorite personal productivity tool or habit rescue?
Neil Patel (19:26.000)
Time.
It's a tool that helps you be more efficient with your time.
Omer (19:29.160)
What does it exactly do?
Neil Patel (19:30.840)
It tracks your inefficiencies and tells you where you're wasting time on the computer.
Omer (19:35.640)
Like hanging around on social media websites.
Neil Patel (19:38.040)
Exactly.
Omer (19:39.160)
So if you had to start over today, what problem or market would you go after?
Where do you believe the opportunities are?
Or you your interests lie?
Neil Patel (19:49.760)
Same.
I would go after the same market, small and medium businesses and figure out what you can end up building from that'll help them solve a problem.
What the problem may be, I don't know.
You would have to interview, survey them and figure out how you can help them all solve a problem in an affordable manner and make your solution really easy to use.
Omer (20:07.360)
What's an interesting or fun fact about you that most people don't know?
Neil Patel (20:14.000)
For me, I would say most people don't know I enjoy partying.
I party not that often, but I used to party a lot more.
But I do enjoy having my fun.
Everyone just sees me as a workaholic, which I am.
But although I work extremely hard, I also play really hard.
Omer (20:29.680)
And apart from partying, what is one of your most important passions outside of your work?
Neil Patel (20:35.200)
Sure.
I love helping other people out.
So I realize in life when someone else is smiling, it makes me happy.
So.
So I enjoy making other people smile.
Great.
Omer (20:45.610)
Those are great answers, Neil.
Thank you.
Neil Patel (20:47.810)
No problem.
Omer (20:48.930)
All right, so it is time for us to wrap up on this episode now.
Neil, I want to thank you for joining me today and sharing your experiences and insights with our audience and for letting us to get get to know you a little bit better personally.
You have a great story and you're having a lot of success in with a lot of different businesses and I'm looking forward to continuing to see what progress you make over the coming years.
If folks want to find out more about your products or they want to get in touch with you, what's the best way for them to do that?
Neil Patel (21:20.200)
Yeah, they can just go to quicksprout.com and click on the contact page and get in touch from me there.
