THE STARTUP CHAT

Steli Efti:

Hey everybody, this is Steli Efti.

Hiten Shah:

And this is Hiten Shah.

Steli Efti:

And in today’s episode of startup chat, we’re going to talk about why Trello failed  to build a one billion dollar business. This is an article that Hiten has written  recently, and it’s an article that’s gotten a lot of attention. It keeps getting like  … My timeline there’s not a single day that I don’t get a few of  the … A few people that I follow sharing this article of yours. But, there’s  controversy, right? Not everybody loves this one. So, I thought we should chat about it.

Hiten Shah:

Yeah, absolutely. So, first of all, what I learned about myself, and I think you  can relate to this, is when I write content and I’m really passionate about it,  it turns out really well. And, this was a topic that even before Trello got acquired, was bugging me. And what I mean by that is, I’ve tweeted about this  even and the tweet’s in there, before I even wrote about it. Before they even  sold, and they happened to sell and I’m like wait, this business could’ve been much  larger, right? So, I titled it the way I did because I really believed Trello  was one of the rare businesses that could’ve been unicorn status. And, I want to  make this absolutely clear because people read the title, some of them don’t read the  article, they still read the article and they like tweet at me, like, what about  your businesses you didn’t do that. I’m like, dude, do you not understand the …  Read the article again, I was very complimentary to what they did. At the same  time, it’s rare to see a business that could have been much, much, much larger,  and to me it’s clear how they could’ve been larger. So, I wanted to start  there cause it’s like, look, I titled it the way I did because, personally I  felt like they could’ve been much larger with not as much effort as it takes  many of us to get that large. You know.

Steli Efti:

So, two things to this, right. One, I think intent matters, right? What you are  saying, I think what many people are missing, I didn’t miss this because I know  you fairly well, right, but there’s difference between criticizing somebody because you think you’re better  than them or because you think you’re smarter than them or because you just like  to tear down others. Or because you are, you know, even when people succeed you  want to see the flaw in it. There’s a difference between that and a difference  between you seeing somebody even when they are successful, and you criticize them because you  deeply care, and because you’re passionate about what they do and because you’re a champion,  and fan, and an early adopter, and because you wanted that company to become all  it could be. There’s a big difference there to me, and I’ve talked about this  with Paul Graham. Often times, like when he criticizes you it never feels bad because  you can sense that it comes from this innocent place of wanting you to do  well, right, and being curious, like harshly curious about what it will take for you  to do well, versus some people that criticize you where it comes from a place  of ego or a place from like just being negative and all that. So, you  were harsh and it was bugging you, because you cared. Right, you really cared about  it. Right, that’s it, that’s it so-

Hiten Shah:

I’m like look, this is a business that could’ve done so much more for the  world instead of getting acquired by another business. You know, and these people they were  all well meaning. But, they had certain things that we can all learn from that  they did that … Honestly, it was also, I want people to learn from it,  because I did. And, I felt like I could share that because I didn’t see  anyone talking about it in that way.

Steli Efti:

There you go. And then the second thing is, I fucking love that headline, and  I feel like a way of doing great content is doing it a way that  sometimes will be misunderstood right? When you do the type of content a bunch of  people will love and nobody will criticize, that’s not bad either and you and I,  we don’t do a ton of stuff that’s super controversial, right-

Hiten Shah:

Correct.

Steli Efti:

It’s not really our style. But, I was loving seeing people tweeting about this article.  Lot’s of people were just sharing, it or sharing it with awesome read, but then  there were a few that were sharing and saying “Here’s how out of touch Silicon  Valley people think a 400 million dollar acquisition is a failure”, like that type of  a … How could you criticize a 400 million-

Hiten Shah:

That’s pretty awesome.

Steli Efti:

My God, out of touch arrogant, you know startup founder, investor dude. And I was  like, I was loving … I was hearting all of these. Because … Especially hearting  them, because I was like A, this is wrong, but B, I don’t have a  problem with this. It’s fine you’ve just given this a very strong headline and some  people it will rub them the wrong way, but I would bet that almost every  single person there, did not read the article. This is usually … The strongest reactions  come from people that just read the headline, never really care to read the article.  Alright, so either way, let’s dive … I just wanted to quickly go though these  lessons because I think they’re valuable lessons to all listeners. And for people that want  to digest in more detail, because this is going to be a quick episode, you can go to producthabits.com and you can find the article, Why Trello failed to build  a one billion dollar business, but let’s go though the key four lessons that stood  out to you and let’s start with the first lesson. Trello didn’t monetize free fast  enough. Let’s talk about that.

Hiten Shah:

Yeah, so the key lesson in there was simple. They built a product … There’s  a few, so one, they built a product at a time when this drag and  drop interface, with the columns, was actually a technical challenge to build. Basically just web  technologies weren’t where they are today. So, they built a product that was innovative, that  did something very intuitive in the browser, and they were one of the first to  do it. But, the reason that it worked for them, and got popular, it because  they made it free. So, that’s number one. Number two, is they kept this attitude of not monetizing it early, which I think was actually smart because then they could  grow it and make decisions that were focused on free, and growth, and people using  it. Now, what happened though is they might have done that for a little too  long because, they didn’t seem the use cases of how people were using this generic  tool. This tool that allowed you to basically create … Organize your world, you know,  organize your task in a very intuitive way that soccer moms were using, all the  way to Product Managers, which, is a very wide group of people. So, my whole  thesis in the article is, if they were doing their homework, or if they did  their homework, they would have realized that they could productize the product even more. And,  what I mean by that is they could verticalize it and say, okay, if you’re  a Product Manager here’s how you would configure the product. If you’re a soccer mom,  here’s how you would configure the product. And thankfully, there’s a company out there that’s actually doing a pretty good job of this, which is called Air Table. They’re basically  a spreadsheet online, you know, I’m butchering it, they’re a lot more than that, but  they have productized the experience so that they don’t get Trello’d … Basically is what  I call it. And so, what happened, fast forward a little bit and every other  product has the exact type of board that Trello has. Why did that happen, and  what could have prevented it? That is what I went into in the article. And,  I gave you a gist … You know … I know you read it, so  that’s a gist of the highlights of what I said. So, to me, like I  look at a … It’s amazing when you can build a business that’s based on  a free tool that’s super innovative and that gives so much value to so many  different types of people in the world. Right, they have like millions and millions of  users … This is a ridiculous scale that they hit. But, what they missed out on is building a very large business. Monetizing, basically, and monetizing successfully, and if they  just did that they would have turned into a much larger business, much faster. That’s  the whole thesis, that’s my, I guess, opinion. And, I wrote a big post about  it.

Steli Efti:

The second thing you talked about, which is somewhat related, but I want to highlight  still is the stickiness of it, right. Saying, hey, this product was just not sticky  enough for SMB specifically. Why wasn’t it sticky enough, and what should they have done  to prevent that from happening?

Hiten Shah:

The stickiness?

Steli Efti:

Yeah. I mean you talk about like integrations as one big thing, right. Today, when  you sell to SMB’s, I know this very well firsthand with clothes, you know the  customer doesn’t just use your product in a vacuum right. It wants your product to  play well and integrate with three, four, five, six, other tools they’re using. And it  seems like that was something that they missed out on and something that you think  they should have invested in a lot more.

Hiten Shah:

Yeah. So, for me I think workflow is so important. And workflow meaning how do  you fit into someone’s daily workflow? Does it matter if they’re soccer mom, planning parties,  or planning like every soccer on Trello and being really diligent about it? Or, if  they’re a Product Manager planning a product road map, and how people get stuff done  in Trello. The problem comes when people are doing things before they’re in Trello, that  are in other tools, or after they’re in Trello, that are in other tools, or  even on pen and paper or whatever. And what Trello … My whole thesis is,  you do use your research. You do customer research. You study how people are using  the product, and then you figure out which integrations make sense, and how you can  basically productize the experience, right? Like the soccer mom might want to integrate it with  email a lot more, for example, or her calender, right? While the Product Manager probably  wants to integrate it with GitHub, you know? And in a way, where these things  are syncing, because engineers are usually not in Trello, they’re in GitHub. Right? And so,  if you can bring Trello to GitHub … Which honestly, GitHub is now done, you’ll  get engineers to at least have an experience you will save … Have an experience  that kind of, you know, they can touch Trello without going into Trello. But also  the Product Manager’s happier because they’re not pasting tickets, or items, or, cars or whatever from Trello into GitHub. Right, so it really … My whole point was this workflow  is the solution. Determining workflow, understanding usage, understanding user behavior in that way will help  you figure out how to keep the product stickier and stickier over time. And also,  today there’s more SAS than ever, and there’s new SAS tools, probably dozens if not  hundreds coming out everyday. And, as a result, you want to keep up with integrations. You want to keep up with the tools that your customer base is using and  the different types of customers you’re using, and then support it. So, imagine if Trello  built a concept of templates. Not like their small idea around it, around like you  create a board and you can share it, although that was awesome, but you create  a board, you create integrations, you create a little more templateing than they had. You  double down on that feature, and then all of a sudden it’s like oh, take  this recipe, which is a template plus integrations and then all of a sudden you  can basically do these really amazing things that make it so your workflow’s not just  in Trello, but it’s updated in other places while your working in Trello. And I  put my Product Manager hat on, but like that’s an example of the kind of  things you could do if you did the research and realize exactly the workflow people  have, even if it’s not in your product.

Steli Efti:

I love it, and you know many people might listen to this and think, wait  a second, you know, there’s other tools out there that were somewhat generic in terms  of use case and that didn’t really focus on monetization early on and that weren’t  like that deeply integrated Dropbox might pop up as something … But I think that,  and correct me if I’m wrong, but I think that the thing a lot of  people misunderstand, especially when they take their company, and they are like we’re just going  to do what Dropbox did, is Dropbox was … Is inherently insanely sticky, just like ridiculously sticky, in the degree that Trello never, never was and never had a chance  to be on it’s on. Like, you didn’t just do a Trello board and then  forever you were like, never going to leave that tool and everyday you would add  more and more data in there and kind of … Dropbox is like a Pandora’s  box that once you open it, you put something in, now it sucks you, and  sucks all your data into it and you put more and more data and you’re  just stuck in a certain degree. So, Dropbox was able to make a lot …  do a lot of things not wrong, but ignore a lot of market opportunity and  still win because they just had this unicorn level stickiness that just is unparalleled as  almost no other product that is at that level sticky. And Trello wasn’t so they  had to … They had to work a lot harder to make it sticky and  they just didn’t work as hard as they could, could have.

Hiten Shah:

Completely agree.

Steli Efti:

Awesome, alright we’ll wrap this episode up. I want to … There’s a third really  important lesson here, which is how Trello didn’t build for the enterprise and didn’t really  monetize on that opportunity in the right way and think about it in the right  way. I actually agree with you on your analysis in there, but we’re not going  to share it on the Podcast-

Hiten Shah:

No.

Steli Efti:

Because, I want people to spend the six minutes to read the actual article-

Hiten Shah:

Aww, thank you.

Steli Efti:

It’s damn fucking good. Go read it, share it. Do me a favor, share it  and write something like, Hiten Shah is a horrible person for thinking … And then  cc’ Steli and I’ll heart and retweet it –

Hiten Shah:

Awesome, do it.

Steli Efti:

Just for fun . Go to producthabits.com why Trello failed to build a one billion  dollar business. Read that article. Learn the lessons. So much, I think, wisdom there for  all of us and we’ll hear you guys very, very soon.

Hiten Shah:

Later.