What's up, everyone? This is Cortland from ndhackers.com, where I talk to the founders
of profitable internet businesses, and I try to get a sense of how they got to where they
are today, so that the rest of us can learn from their example. Today, I'm lucky enough
to be talking to the one and only David Darmonin, who's best known for being the CEO of Hot
Jar. How's it going, David?
All good. Thanks. Thanks for having me.
Yeah, thanks for coming on the show. I'm really glad to have you. For those who don't know,
Hot Jar is this amazing tool for analytics and customer feedback. It gives you heat maps
and even recordings that show you exactly how people use your website, which ends up
being not only extremely useful, but pretty fun to use, in my opinion. I've been using
it on ndhackers the past few days, and it's great. So thanks, David, for building such
a cool tool.
Yeah, great to hear that. Always good to hear that there's value coming out of using Hot
Jar.
The thing is, a lot of people listening in might have never heard of Hot Jar because
you guys are only two and a half years old, but you've already grown to something like
$10 million a year in revenue, if I'm correct, and you're entirely bootstrapped. Is that
right?
Yeah, it's been some crazy paced growth.
That is crazy.
Yeah, it's been a fun journey so far. I'd say we tried to specify that we're self-funded,
as in we did invest a substantial amount of funds into the business, so just under half
a million, which is worth saying, right? Just so that many people out there don't think
that we managed to achieve what we did on no funds at all, right? So that would be very
difficult to do.
Yeah, I appreciate the honesty. So you weren't starting from zero dollars.
Exactly. And interestingly, we tried to do that twice before Hot Jar, so I like to talk
a lot about the failures before Hot Jar. So it was interesting to compare two ideas. I
wouldn't call them startups because we didn't incorporate. I had this horrible experience
of incorporating when I was in college, I was 18 or something, and it was a very bad
idea. We incorporated very quickly, which meant within months I was taking care of liquidation,
which was not fun, especially if you're based in Malta. So I promised myself years after
working in-house in a software company and then becoming a consultant, that if I had
an idea, I would take the risk of doing it as like a sole trader, and that's what I did.
But anyway, the first idea worked on, it took us two years to build it, and it hadn't seen
the light of day. And then when we launched it, we realized it wasn't going to be successful.
So with Hot Jar, we wanted it to be very different. So I guess our failures influenced a lot our
success.
Yeah, I like talking about the failure stories as well, because for everyone who's succeeded,
there's always a bunch of failures in the past, and there's things that didn't work
out so well. And so I think it'd be really fun to kind of dwell on those, if you don't
mind, and try to understand some of the lessons that you learned back then that have helped
pave the way for you to do what you're doing now. So if we could go back in time to the
you know, through the story of David Darman, and what would you say is the best point in
your life for us to kind of start the story where you began learning the things that you
know now?
It's interesting, our content team asked me the same question, but they wanted to go way
back.
I don't mind going way back, we can start wherever.
Yeah, they traced all the way back. So even though I'm based in Malta, my family is Maltese,
which is why I'm here. Many people think that we're in Malta for tax reasons. And we're
always like, no, we actually pay probably the highest tax in Europe, because we're Maltese.
It's incentivizing only foreigners here, which is interesting. But even though I'm based
in Malta, my parents immigrated to Australia, and I was born there. And I like the moment
they traced everything back to was when my dad, this was in the 80s, but you know that
that origin in Macintosh plus with the smiley hello. So he had he brought one of those into
his office, and I was what, like four or five. And I just remember falling in love with this
device. And he had like a printing machine, because he was printing like brochures and
leaflets to circulate to the Maltese community in Australia. And I just fell in love with
this idea of there being an interface between the device and the human and how that worked.
Right. So fonts and discs and folders. And this was just it captivated me. And then fast
forward, I actually ended up studying law. I'm actually a lawyer, which is kind of until
recently was a relatively useless thing to have done. But during my time studying, I actually
did a lot of work in design, just to get through the weekends, right? And also because it was
something I really enjoy doing. So I was always obsessed with the visual side. And then I
had the client who asked me, can you build a website for us? It's like, of course, even
I had no idea. But I was always frustrated. I remember with this idea of how do I measure
if what I've built is actually good or not. And it bugged me that it back in those days,
it was based on whether you'd win a Webby award, right? An award. Or if the client said,
well done, there's no really way to measure it. All I had was back then, what were they
called? Like these counters you'd put on the site. So you just know, has the number of
people coming to the site gone up or down? And then fast forward from there, I tried
to build a startup and I failed. So many fails of stories. But then I saw this ad in the
paper by a Swedish software company, Malta, that said, we have millions of page views
and we want someone to join us to help basically optimize the experience, optimize the results.
And the role was an optimization specialist, which this was kind of the beginning of this
whole CRO growth hacking thing, right? This was a long time ago. And yeah, I joined these
guys and we traveled to a ton of events and started using a lot of tools. And I think
it was actually at one of these specific events, the kind of the story of how Joe was really
born. It was Emetrix in San Francisco, actually. So having been through my whole career and
failed startups and all these things, I went to this event and I remember there was eBay
speaking, and they were saying the degree to which they go to understand their user
and customer, right? So they would go meet their typical user, a seller and a buyer in
their house to understand the context of within which they use it and the ethnographic research,
the surveys. I was so excited by the fact that these things existed. And there were
many other companies speaking there, Amazon, booking.com. So I was really inspired by what
could be done. But equally, I was really frustrated that these tools that were also being exhibited
at this conference were so expensive. So I went back from the trip trying to pitch for
us to use these tools, but they were so expensive, crazy expensive. And so yeah, I guess later
on then I moved on to become a consultant and I worked with really big companies who
I was consulting. And they had these tools which were so unreachable to this point. And
to be honest, they were so disappointing. And in the sense that like, they were kind
of typical enterprise tools, right? So they're built around the sales team, the user experience
was poor, you needed multiple tools to get something done. Then it dawned on me like
I've worked for a decade in software, I know this industry really, really well, I know
exactly how to use these tools. Maybe this is the big thing I should be working on. And
it dawned on me that my failures were coming from me, not thinking big enough. So this
was the point where I thought, okay, I'm going to think big. I'm going to persuade people
to give me money. I'm going to put which was one of my co founders, I spent six months
working as a consultant putting all the funds into the business. And yeah, that's that's
how we built our job. Basically, you talk about how you had these all these failed startups
before the story really started before you became a consultant before you saw these tools
that you really wanted for everybody to have. What were some of these startups that you
failed at? Because I think most people, it's interesting in and of itself to have multiple
failed startups in your history, like most people just dream about starting a startup
and never actually take the plunge. But you've done it numerous times and didn't quit, even
when it didn't work out. So maybe maybe talk about like, what's the story behind the first
company or the product that you worked on that ultimately failed?
Sure. So the very first company that was early 2000, and that was an advertising agency.
So it wasn't really a startup, it was more of a business. And it failed because the team
that we put together didn't make sense. We were doing it, because it was fun to have
a business garden to have a business as opposed to, you know what I mean? Like, we're very
young. So I wasn't even 20 yet. And it was this whole idea of and again, I'm glad that
we did it. Because I think the real key is to just be doing stuff, right? You just need
to do shit. Because if you're out there, that's how you're going to learn, as opposed to just
just planning or listening to others like the keys just to get out there and fail quickly
and just learn stuff. So I'm really glad that I did that very early on. Because I guess
it scared me off a little bit for some time. And more importantly, I realized like I had
to go learn from others. So I decided, okay, I'm gonna go find myself some amazing bosses
to work for and learn from them.
What was the first boss you learned you worked for that you felt you learned a lot from?
Yeah, I was lucky that my, my first boss, he was a German entrepreneur here in Malta.
And he was looking to raise funding for an M commerce incubator. This is the time when
SMS was just the new thing, right? That's that's how long ago this was. So he wanted
to build businesses around this new M commerce thing that was coming. So I joined before
they raised. And I heard in like design and project management stuff, right, so it and
stuff says again, very young. But I went through this process of raising and it was I think
we raised from Hutchinson orange, it was quite a substantial amount. So I think I was lucky
in a way to have experienced that in Malta, right in this tiny country. But more importantly,
what he gave me, he challenged me personally, constantly, I did this to everyone in nearly
even an aggressive way. But I liked it about him, in the sense that he would force you
to think much bigger of yourself and to think much bigger of what can and cannot be done.
And in fact, I then left that business and he helped me launch a business plan competition
at the University of Malta, which was an amazing opportunity. So I think he taught me a lot
around believing in yourself and thinking kind of much bigger than kind of just the
like the the location you're in. So he helped me a lot from that point of view.
So did you ever have this feeling that, you know, you really wanted to work for yourself
and that you didn't want to work a job forever? Or did you feel like you were pretty comfortable
at the job?
No, I was never comfortable at the job, to be honest, I was in I always enjoyed the adventure
and the thrill. Again, I was quite, quite young. And I guess that influenced the second
startup then. So after this, I continued studying. And then when I finished studying, I spoke
to my cousin with whom I had done the advertising agency in the beginning. And I basically having
had built so many sites for for my clients, like I hated the experience of building sites
like I was playing around with Drupal and ASP and all these things. It was like, what
if there was like a framework where you just go there and you just build a site from there
you just pay a subscription. And I think I got the idea of the subscription based from
like paying for so many domains is like, Oh, my god, this is genius. All right, you have
a domain and they they charge you every year. So it's like, what if we could build a site
in this way? So we were trying to build a framework, essentially, where someone can
build a site just by using the components, right? Which was a great idea, because this
was pre Squarespace, big commerce, all these like tools that do these things. But again,
it was me and my cousin, very young, in our in my garage, thinking a little bit too big.
So probably, in reality, back then, if we had, I don't know, found an angel investor
and really pursue this, maybe we could have succeeded. But I think we were just ahead
of our time. Ironically, though, my cousin went on to now work for automatic that own
own WordPress, which is a funny story in a way. But yeah, that was the that was the
second experience. And we failed because, again, we weren't just thinking big enough.
And we weren't really committed to it. So my cousin had another job, I was doing things
on the side, I was studying. And so we weren't just doing it completely and really believing
in it. So if there's anything I've learned throughout the last decade and a half or something,
it's when you believe in something, you just do it completely focused. And you like it's
better to just exhaust that idea as quickly as possible, as opposed to doing it on the
side with other things. Because timing is really, really critical for success, you have
to have the right timing. So it's better to know very quickly if you've got the right
timing or not.
Yeah, that makes a lot of sense. What was your skill set like at the time? I'm curious,
because you're building websites or people using all these tools. But would you have
considered yourself a programmer?
No, no, I wouldn't say so. I would. So my passion has always been designed and user
experience. But I'm deeply in love with the whole concept of marketing. And so yeah, I'm
more of a definitely more of a marketer, I would say, but more visually oriented. But
yeah, but then anything related to product and brand that's that's like, makes me tick.
So I guess it was me with that kind of idea of thinking about like how the product is
going to work and, and how visually should be presented. And then my cousin was the programmer
building the back end and all that stuff.
I think a lot of people have trouble when they don't come from a programming background,
partnering up with somebody who can help them out. And you know, essentially do that side
of the equation. What has been your strategy? It sounds like you've worked with a lot of
friends and family. But what has been your strategy, you know, outside of that for finding
good partners to work with?
That's a really good question. And I say this a lot to my friends, I get a lot of my friends
asking me, David, how do I do what you did? And like, I can't code and how do I, how do
I meet other, other developers? And it's, it's basically, it's the same thing like dating,
right? In a way, like you need to learn to speak their language. So if you have any ambition
to build something which requires programmers or programming, like a technical co-founder,
like just go out there, like create a blog, register a domain, install a few plugins in
WordPress or use Drupal, you know what I mean? Just, just play around with the basics, understand
how the internet works, servers. This is not complicated stuff, right? It just requires
some basically that you dedicate some time and be passionate a little bit about how things
work. Because then I see for myself, I get really along well with, with other technical
people because I ask questions and I want to understand how things work. And I find
that technical, technically strong people, they actually respect someone who wants to
understand and explore stuff, as opposed to kind of just dictate from a distance how things
should work, right? So I think that's the most important thing.
Yeah, that makes a ton of sense. And I really like what you said about not being afraid
to get your hands dirty. Because, you know, if you take the time to learn something that
you don't know, if you take the time to use what skills you have to try to make an impact
on your business, then it really proves to the people that you're working with or that
you want to work with, that you're not just going to be dead weight. Because their biggest
fear is that, you know, working with someone who's just going to kick back and say, here's
my idea, you guys are the programmer nerds, you just build it all on your own.
And then there's, in terms of meeting, like these people, like the best is to attend events.
Like, you know, there's all these like startup marathon things. That's a great way to kind
of get grouped up and meet people. But I'd say, I really believe in this model of working
for an amazing boss, especially earlier, early on in your career. I think in the media, we
see so many stories about, you know what I mean, the Zuckerbergs and the yellow masks
of this world, which is not the typical way people succeed, right? So we don't hear the
stories of how, again, most of the other entrepreneurs have been lucky to meet, they all have a very,
very similar story. They worked early on in companies they admired and found and bosses
they loved. And they got inspired them or challenged, like the things that those bosses
didn't do well and made them better people. And in the process also met co-founders, right?
So obviously working in a 200 person business when you're in your 20s is obviously going
to give you a hell of a network later on, right? So it's easy to discount that as kind
of a journey, a route towards getting there, let's say.
Yeah. And I bet you that's especially true when you're working for the kind of boss that
you were in a place where everybody's being pushed through their best. And you're maybe
entrusted with a little bit more responsibility than you deserve, because then you're surrounded
by talented people who are ambitious and who are likely to become your future co-founders,
as opposed to working in a more normal type of job.
That's true, because the opposite is equally true, right? So at that age, you really don't
want to waste your time working in a business you don't believe in or a boss you don't admire,
because it's kind of wasted opportunity to learn.
So one of the things that you mentioned is that you eventually got a job as a growth
consultant working with large companies. And I'm really curious what kind of things you
learned in that role, because growth is so important for any startup in any arena. And
it was probably a very new role for you. So what did you come away with?
That was a wonderful experience. So I was literally thrown in the deep end, in a good
way, in the sense that I was given five companies to consult. I can't mention their names, but
they're all global, huge brands that everyone would probably recognize on this call. Sorry,
listening to this session. But yeah, it was great in the sense that it was intimidating,
it was scary. But more importantly, working with the CEOs and growth teams and marketing
teams of these businesses, you realize that in the end, like, it's all about the people,
right? There isn't that big of a jump between what I know, and they know, which is great,
because you start to realize that the opportunities are much bigger than you think. It's so it's
so easy to be a little bit insular in your world to think that kind of you're not good
enough, right? And and that it's it's way too competitive, and you can never succeed.
So I guess what this gave me was like a short kind of condensed MBA in terms of learning,
but also speaking to what would eventually become my ideal customers, all done in a very
short timeframe. So and I guess I was also smart in a way that I read a lot of books
during this time, which helped me as I was learning, I was also kind of reading from
what others had learned. And at the same time, I was also paying a developer on the side
out of my out of the money I was making as a consultant just to experiment with ideas
as well. So it's quite a hectic two years of my life.
Yeah, you were a busy guy. What kind of ideas were you experimenting with?
So these, these are the next two ideas, then the next two kind of start as startups in
commerce, because again, we didn't incorporate. So the first one was my background, funny
enough, is I've also done it's actually how I started design, I've also done a lot of
events, parties here Malta. And that's how I learned to kind of design in the very beginning.
Now, originally, I started doing events, because I was very frustrated when I launched that
business plan competition at university, that not many people were participating in it,
they weren't interested. So I was like, Okay, what do people like in Malta, they like parties.
So let's do parties about the business plan competition, right? And that kind of worked.
But the party thing, maybe was a little bit too good at it. So we ended up doing more of that.
And then when I stopped the competition thing, I ended up doing more events.
And what was interesting was that I learned a lot from this in terms of sending emails
using social media that I just launched and how to write persuasive content, creating guest lists
to create like this concept of exclusivity and whatnot. But more importantly, I realized working
with a lot of hospitality and venues that these guys had had no idea about the idea of marketing
and digital marketing and the idea of loyalty, right and retention. So basically, I built a
great product with like with a market that I had no idea about. So I built like a digital marketing
and retention tool like with a loyalty program for retail for hospitality and whatnot. And this is
where we spent those two years, right? It was an awesome tool, where you had iPads where people
could sign up and you could log in from your phone and see like points and you could receive
updates about events. It was really well done. The problem was that once we finished and we were
ready to take this to market, I realized I had no idea how to reach these people. And it's
interesting because I considered myself to be quite smart, right? But this is the whole point,
which is this is why you have to be agile. This is why you have to kind of move as quickly as
possible to releasing something as opposed to spending a lot of time building because it's so
easy to get lost in this mind frame of what I'm building is going to be amazing. It's going to
create so much value. So what happened was we struggled to speak to the people who should be
buying it because they didn't have a traditional office. They were moving all over the place and
had weird times. It's something that I mentioned a lot when I advise startups. They didn't have a
budget, right? In inverted commas. So they hadn't allocated time and money in their brain or in
their accounts to this tool or a service or something that delivers the value that I was
trying to deliver. So in essence, what I was trying to do was, this to me is the scariest
word when you're launching something is to educate them, right? To do something that they
hadn't been doing to that point, which we managed to do as in we managed to convince a few venues
to use it and they loved it, but it was just going so much against the way that always done
things. It was difficult to sustain that usage. So that was a huge, huge disappointment for us,
but it was a wonderful learning experience. And I remember reading Seth Godin wrote the dip and
I remember reading the dip and saying, okay, we have to stop. We have to pivot because so many of
the ingredients are not lining up. Yeah, I think it's like how you talked about how easy it is to
get lost in this building phase where you're just, you know, so confident your body's going to work
and you're not really talking to anybody and you're not really attempting to sell it. So you
don't really know if it's going to work, but you feel confident. And I think one of the worst
things about it is that, you know, you talk about all these startups that you're starting and failing
at how you're learning lessons, but when you get trapped in the super long building phase,
you're kind of, you're not really learning anything. And I've, I've had points in time in my career
as well, where I would spend six months or 12 months building something and learn zero lessons
except for how to build this product. And then it would fail. And it's like, I would have learned so
much more in that year if I, if I, you know, iterated a little bit faster and actually had my
ideas hit the market earlier. But in a way, thank God we experienced that because that completely
influenced the way we launched hot jar in the market then. Yeah. So let's talk about the way
that you launched hot jar because it probably represents the culmination of a lot of the things
that you learned earlier in your career and a lot of the lessons that you learned from failing at
your businesses. How did you come up with the initial idea for hot jar and what were some of
the first steps you took to get started working on it? So yeah, I would say it was definitely the
point where I was systematically hearing clients and people say kind of the same phrases, like,
like, if only I had like these tools all in one, or it's so complicated to use this, you know what
I mean? So it's just all these things start to align where I reached out to, well, a few people I
was already working on, on these projects that I mentioned, but there was also two ex-colleagues
of mine that were working on a startup where I saw similar patterns to what I had done in terms
of mistakes in the past. So I reached out and said, hey, I'm happy to help out. And if things don't
work out, maybe we can work together, right? And that's what happened. So we ended up joining forces
and I explained kind of the vision of hot jar and we said, okay, here's the plan. So we're going to
spend one month literally only one month making sure that this is viable. Can this actually work?
Because what we were trying to do is actually build a solution that collects insights from like heat
maps, recordings, funnels, all these things and feedback in a way that is different. So
where other providers back then were collecting data constantly from all pages, all users,
all the time, we said, let's only collect data when you need it, right? Because we knew
the way agencies and internal teams worked. Let's say let's work on the homepage and let's,
let's, because we need to focus on the homepage next, or the registration page is not working. So,
so, and it's, it's physically impossible for them to optimize every part of the site at one go.
So he said, there is an opportunity here for us to do things differently, which means the data will
load much faster, which means we can do it in a much more affordable way. So this could be kind
of a game changer in terms of no one has never taken this functionality for free to everyone in
the world and then charged premium rates for premium features, right? What if we took that
freemium model and applied it to this industry? It could be a game changer,
but we wanted to make sure that that was doable, right? So we were lucky, obviously, that timing
wise, again, with AWS, reducing it pricing and so many competition, and we, we spent one month
building kind of a really, really bare prototype. And yeah, Eric told us this is doable.
Like the costs when we calculated everything. And, and again, it's all about thinking big,
right? We were thinking, what if we had hundreds of thousands of sites sending us data? How would
that work? And we knew it was doable. And that's, that's all we needed to hear. So on the back of
that, myself and Jonathan, he's, he's the micro founders more in the UX design side. We basically
created very, very quick visuals of what this product would look like, again, based on what we
knew was possible, right? So we're not trying to visualize something that we're not sure it's
possible or not yet. So we knew it was possible. And we visualize that, and we put it on the site,
right? So exactly the opposite of that other project. And we said, we just put it live on a
web page. And we said, okay, if you want this at this price, and it's going to have all of this
included in one, right, it's going to solve a lot of the problems you have, just put in your email
address. And then when you put in your email address, I remember I just seen, I was always
inspired a lot by launches of products like how Gmail had launched with five invitations, Robin
Hood had done like a queue. So we're like, we have to definitely leverage this stuff because we knew
how to do it. So what we did was once you signed up, Hodger would say, okay, you're number 100 in
the queue. Now, if you want to move ahead, you refer your friends. And by the way, if you're the top
20, you get a free lifetime account, top 200, you get a t shirt, top whatever, you get six months
for free. So we threw in a lot of kinds of incentives in there. And it just took off. It
went, it went, it went crazy, literally. So within a few months, we hit around 60,000 emails
and growing. That's crazy. And it's funny that you did exactly like the direct opposite of what
had plagued you in the past with the earlier products, because I felt the same pool as well.
Exactly. If you failed, if you failed a few times, you remember those experiences. And you just like
make sure to never fail for the same reason ever again. So that's really great to hear.
Agreed. And that's why it's so important just be doing stuff for it. You just have to do because
funnily, looking back, every tiny thing I did, like contributed to that, that kind of that plan,
right? I remember even back in the software company where I was, I always wanted to do a beta
program, but we never got down to do it. And I remember telling the team like, okay, we're
constantly thinking, how do we launch faster, faster, faster, so we can move faster? So let's
just do a beta, right? So the idea was that what we put on the site was actually get access to the
beta program, right? Not to the actual tool, which again, saved us time, which meant within one month,
we started slowly inviting people in, giving them access and getting feedback. And then I guess is
where probably we, we kind of like most people think that genius part was the viral thing,
but actually the genius thing was that everyone we invited was listened to carefully. Every
suggestion we got was written down. If we acted on it, we let them know. If we didn't, we let them
know. So we treated them with so much respect that we created this kind of community and initial
fans, which we still feel the effect of till today. I think a lot of people hear this advice
about how crucial it is to have great customer service, but at the same time, it's probably the
most often ignored advice. And I suspect that's because when you're actually in the situation of
having a ton of features to build, a ton of bugs to fix, a ton of fires to put out and sales to make,
it's hard to justify spending time to go above and beyond for your customers. It's just like not as
clear what the return on your investment is going to be. And so you prioritize other things. And so
I'd love to hear you dive into a little bit more detail here and talk about how this paid off for
you guys at Hotjar. Yeah, I was also part of that group that I didn't get it. I didn't understand
the value of that. I read an interesting book, actually, it's called selling the invisible,
which is a great book, by the way, it's kind of positioned itself as modern day marketing,
even though it's not that kind of recent anymore. But great book, I highly recommend. Even the
title in itself tells you everything, which is you are selling the invisible, you are selling bits
and bytes on a web page coming from a server. So when you think about it, what's left as a flavor
at the end of that exchange is really how you interact with them. And that is so important,
even much more than the actual product itself. Obviously, you don't want to have a shitty
product. But at the end of the day, what adds Nitro to that product is the experience they
have around that. So just the small examples that I can give are, for example, we've had
customers, big customers, right, tell us that they've chosen us just because of the way that
we've treated them. We've had reviews online from people saying, this thing maybe didn't work,
but these guys are awesome. And I know they're fixing it. So you'd be surprised that first of
course, in our case, we communicate our product roadmap, we were very transparent. These things
do add up and they do contribute to your brand. And they're much, much, much more powerful than
you might imagine. That's really interesting. And it makes me curious how much of what you've
learned in the lessons that you've applied came from your own experiences and reacting to those.
And how much of it came from things that you've learned and books and from other people. When you
talk about your viral launch campaign, for example, where you got 60,000 email subscribers,
a lot of the tactics that you use there, like exclusivity and social proof and the incentives
that you provided could easily just be read about in a book without really needing much experience.
So I'm curious what your ratio is overall, because it kind of feels like you're about
half and half of learning from books and learning from your own mistakes.
I was going to say, I think it's 50-50 actually. And what's great about that is the two compound
on top of each other. The thing is nowadays, it's kind of we're losing a little bit this,
the most effective way of learning that we've had in humanity for quite a long time,
which is someone has a very successful career or someone has been doing something for a very long
time. And they write a book about everything that they've learned. It doesn't mean you need
to copy what they're doing. But it's just the ability to look at kind of this shared wisdom
and look back at what someone experienced is truly powerful in my opinion. And it took me time
to realize this. So I think it was just five, six years ago that I started taking my reading
seriously. I joined a conversion rate experts, which is the consulting gig. And basically,
I remember going to these meetups we had every quarter with like 20, 30 other consultants from
all around the world. And I was like, Oh my God, like these guys are talking about things that I
have no idea what they're talking about. So I just went around everyone's like, okay, what's your
favorite 10 books? And I did it with everyone. And I just took the top 10 in common with everyone.
And I just read those books, and then kept on going through the list. And then those books
within them recommend other books. And it's just a never ending thing. And yeah, I think based from
what I've seen, like, if you really want to be a successful entrepreneur, you need to read it's
important, but it's so easy to read crap, right? Unfortunately, there's so many people that are now
just writing books for the sake of doing books, or you write a book to build a successful business,
you know what I mean? It's this whole thing going on. So I highly recommend, if you are really
passionate about what you're doing, reach out to 510 people that you truly admire, and ask them
which books they have read. Or even if you read online, there's a ton of thought leaders that have
said which books that they love. And start with those, right? Start with people you admire.
That's really solid advice. And I like how your story highlights kind of a third leg in addition
to learning from your own experiences and learning from books, which is to as much as possible,
surround yourself with other people who are already, you know, ideally already good at the
thing that you're trying to get good at. Because those are the types of people who are going to
recommend the books that you should read and who are going to surface all sorts of information and
tips and strategies that you probably never know about. Otherwise, I know personally,
like I've gotten much better at designing and programming and launching startups just by
talking to people and living in San Francisco where people are kind of always doing this.
A lot of people out there are kind of working in isolation. They're working in a town or a place,
and I'm sure Malta was pretty similar, where not everybody's on the same page, and they kind of
look at you funny when you tell them what you're up to. So it's worth at least finding some sort
of online community of people that you can join. Agreed. And as soon as you can afford it, then
attend events. Events are super powerful in terms of getting inspired, meeting people, networking.
Couldn't agree with you more.
So you had kind of back to the story of Hotjar. One of the things I think is interesting about how
you got started was that before you started Hotjar, you were working with all of these clients that
were huge. And that's kind of the world that you understood. And yet when you started Hotjar,
your entire hypothesis at the beginning was that you want to bring these tools to everybody,
and that you want to sell to people who don't have as much money, and you want to make the
tool as affordable as possible. Which is really interesting because you didn't necessarily have
experience knowing what people at that price range wanted. So is that something you were
concerned about at all?
Kind of. But at the same time, having failed twice, I was kind of at a point where I had
no option. I had to succeed.
Were you desperate?
Yeah, I was desperate, definitely. I was trying to avoid using the word, but that's correct.
And in fact, pricing wise, we probably lowballed ourselves a little bit too much. But I'd much
rather do that and succeed as opposed to kind of doing the opposite. So we definitely probably
spent the least time on pricing, for example. But it's the model which was important, right?
So I remember reading, there was an article, what's his name? I'm trying to remember the
name of the guy who wrote it. But anyway, it was an article about the future of an
entrepreneur, sorry, of enterprise software. And it talked about how in the future, enterprise
software is going to become more B2C, right? And it was great to read this essay, because I suddenly
realized it was one of the founders of Y Combinator, actually. And I remember reading and saying,
oh my God, this is exactly what I feel as well. I don't think enterprise software is going to be
as it is today. And I got a real glimpse of enterprise software because I had consultant
enterprise clients, not in our field, right? But I could see how it worked. And it was interesting,
I was helping these enterprise companies grow. And most of their users were telling them their
feedback, right? Was, oh my God, like, why do I have to speak to a sales team? And the prices are
hidden. And like, I just want to use the fucking product. I just want to see how it works, right?
Exactly. These kinds of things. So in a way, interestingly, the fact that I was consulting
these companies gave me a window into how teams were thinking. And then there was also our personal
belief of a future where software is no longer going to be super complicated, expensive, and you
have to speak to a sales team. Well, there will always be sales teams, right? Because you have to
sell to bigger enterprise, but it's just a different model. And we really believed in that.
So we said, okay, let's build something for teams and let the teams sell to the organization.
And that was the biggest shift in thinking for the industry that we took. And it paid off really
well. Yeah, it sounds like it. I mean, you guys have grown a crazy amount since the beginning,
and your growth kind of started right off the bat. So today, about how many websites would you say
are using Hotjar? So we have around 250,000 sites sending us data. We have 16,000 customers.
That's huge. Yeah, and we've grown. Yeah, we've grown to 11 million euro in ARR now.
So that's crazy. So that's, we're just over two and a half years. Yeah. So it's been,
it's yet we have to pinch ourselves. Two and a half years ago, if I told you that this would
be the result, would you believe me? No idea. In fact, I say this to my wife every now and then.
We still remember being in my parents apartment in Malta, and logging into
a brain tree to see how much our MRR was. And it was just like two or 3,000 euros. And I always
tell my wife, who would have told us the things we're going to just spiral so much? So yeah,
we definitely considered ourselves to be lucky. So what were some of the first things you guys
did after you had all these tens of thousands of people sign up for your mailing list? And
specifically, what were some of the best decisions you made to help kind of sustain your growth rate
and keep it to where it is up until the present day? Yeah, so there were two things that we did
quite well. And we're thankful for doing them. One is that as soon as we invite like one,
we communicated a lot with everyone who were waiting, like about what the hell is going on.
Because obviously, we couldn't invite everyone one go, right? That would have like,
killed us. So we were five people, literally doing all the support for these people and doing
updates and changes and fixing bugs. So that was this was probably the most intense 10 months of
our lives. And so yeah, so we did very well. We communicated constantly every week I send out an
email to everyone saying here's what's going on. Here's what's happening. Here's what's happening
in the beta. Here's why you're waiting. So we addressed and we used intercom back then. So we
addressed all the questions that were coming in. We allowed everyone to just reply to an email and
we'd reply to everyone. And then we started noticing some questions were coming in. So based
on the question we'd get, we'd actually eat our own dog foods and actually use surveys from Hodger.
That's the first feature that we finished, because it was the easiest, right? But we'd send out
surveys to our beta subscribers waiting for access, asking them, for example, we noticed a
lot of them were agencies. We're like, okay, if you're an agency, we'd like you to take the survey
and we asked them questions about how they wanted to pay and how they wanted it to work.
And we were blown away with the results. Some of the results were the opposite of what we thought,
right? So that early feedback had shaped the way we built the product. But equally, as soon as
someone came into the beta, like after two weeks, we sent them a survey. After three months, they
also received a survey. So there was a lot of feedback loops going on, which helped us shape
very quickly back then how the product was built. In fact, many times we say like, we wish we ran
the beta for another six months. Sounds like you guys are experts at talking to your users and
learning from the things they say, which is not surprising, because you are building a tool for
collecting feedback. Alongside having good customer support, I think talking to your users and learning
from them is one of the most challenging and yet common pieces of startup advice. It's so easy. And
I know I've been guilty of this myself numerous times where I know I'm supposed to talk to
customers, but I'll just look up and it will have been three weeks or a month since I've talked to
anybody. So it's really easy to just get behind on that. What are some of the more unintuitive
things you guys learned by talking to your customers? And how did that change your game plan?
Yeah, and the reality is we've made a mistake as well, right? So I should be speaking to customers
every week. But sometimes it's difficult to do that, especially when the patterns become the same.
And your challenge is more scaling up the technical side of things, right? That's been
our biggest challenge. Like, how do we grow the team to keep up with all the things that our
customers want us to do? And then you end up having always the same conversations with your
customers. But the reality is that your customers just love to be heard, right? That's even more
important than nearly doing the things they want you to do. And as in they go together, right? As in
just listening to them and explaining, hey, like, we've been very successful, we're hiring, we're
investing, these things do work. But there's been quite a few things like, especially on the pricing
front that have been very revealing, speaking to our customers. What I've noticed is when you build
a tool and you price it, in your mind, you create this bias of how it should be understood and used,
right? So I think the empathy you get from speaking to customers is you get this, oh,
shit moments, right? It's like, oh, no, like, that's, that's not like how it works. That's
not what we meant it to be. Or actually, we already shipped that, that's already available
in the product, right? So I think it just gives you visibility into how everything in your brain
is never going to reach your customers. So you always need to be thinking creatively about how
you're communicating, like the communication piece is so important, how you're passing on
that information to your customers. It's always been crazy to me how much the curse of knowledge
comes into play when you're trying to promote your product, or even just build your product. Because
as someone building something, and I like this happens to me all the time, I'll build something
and I want to know exactly how it's supposed to work. I know exactly what you're supposed to do,
and then I'll release it to people and think it's pretty good. And they will stumble over like the
most basic things, like things that I just didn't even conceive of being possible to
misconvey or misconstrue. And this is an equally important challenge at every phase of your
business, especially in the early phases when you don't have thousands of customers, you still need
to communicate, right? You have to put up a landing page where, ideally, customers can come and they
can understand what it is that you're building and why it's valuable to them and why they should use
it. And even if you know the answers to all of these questions, I think it still cannot be
overstated how difficult it is to get this idea perfectly from your mind and to your customers'
heads. I agree. And that's why it's a huge advantage to come from a, like to build a product
to solve a problem that you actually have, right? So that just makes it so much easier to describe
it and to understand who, like how it should be explained to the person using it. Yeah. So your
background going into Hotjar was really as like a marketer, a growth consultant. And I always think
it's interesting that there are so many angles from which people ultimately choose to become
founders. Like there are a lot of programmers and product people, obviously, who think,
hey, I know how to make stuff so I can become a founder. And a lot of times I think they end up
focusing too much on the code to the exclusion of everything else. And then you see a lot of people
who come from bigger businesses who say, hey, you know, I've seen the inner workings of how
companies work. I can start something. And very often they're kind of slow moving and not really
all that scrappy. And they're not sure how to go from like zero to one and do the very beginning
stages to get something off the ground. And then there are a lot of people who come from the
direction that you came from, which is as a marketer. And it strikes me that that's probably
a really good way to come into business because you understand how to communicate with people.
But at the same time, I wonder, are there any disadvantages or any blind spots that you had
as a marketer starting a company? Definitely. To be honest, the way I see it is that I was
always an entrepreneur, but I just became a growth consultant, like in the meantime. And that's not
good, right? Because the thing is, again, I think I was quite good at doing it. And the problem is
that it just switches you onto that mindset. Like there's nothing worse than an optimizing
mindset if you're an entrepreneur, right? Because in reality, as you said, you need to ship things
fast and you need to stay scrappy for as long as you can. Because the moment you stop to optimize
and spend too much time thinking about that, you're just not moving fast enough, right? Yeah. In fact,
many people are shocked when I tell them that a hot jar, like in two and a half years, like we've
ran maybe three split tests. That's it. And even for me, it's shocking, right? But the reality is
now we're going to start doing more of it. But the reality is like, when you know what you need to do,
because you're speaking to your user customers, there's just no time to run split tests. You know
what I mean? So you know what you need to do. And that's a good place to be in. I think many a time,
the optimizing mindset can be extremely detrimental to change, which sounds ironic.
But the more obsessed you become with measuring change, sometimes change can become slower.
So we have a mantra thought jar, which is simple, which is you need to be slightly ashamed of the
thing that you're shipping. Because if you're not, then you've probably gone a little bit too far.
That's a great mantra. And I love that you point out the limits of optimization in it,
because I mean, it's so easy to read stories of how Google is testing 42 different shades of blue
and all these different A-B testing suites. And you just think, my website is so under-optimized.
I could be doing so many better things. But ultimately, those are kind of incremental
improvements. And like you said, if you have these huge things you need to build,
if you've been talking to customers and you know kind of where you need to go,
then increasing the conversion rate on your homepage by one percentage point
is not going to be the most important thing on the top of your list.
In fact, we get asked a lot around, like, why don't we do tests, right? Sorry,
why don't we offer testing within Hotjar? Like, why don't we offer split testing?
And the reality is, we explain that actually you need to have a huge amount of traffic to do split
testing. And split testing is, by the way, not a tool for the discovery of Oworks. It's only a
confirmation that all your research and hypothesis is correct. And in fact, if you look at the whole
web, the majority of sites out there cannot be testing. They should be changing. So in a way,
that is much more top of mind for us in terms of the tool we deliver. So it's then for those
companies that do need to test, Hotjar is like the ideal complement to that. It's like the research
tool where you discover what you should be testing. Exactly. I was going to say that, like,
one of the cool things about Hotjar is that it's just watching people use the website and looking
at the heat maps makes me ask questions that I never would have asked before. Is that something
that you intended when you first built the product? Absolutely. Like the whole idea of combining the
we call it like analytics or in-page analytics or whatever, with feedback is where we're headed
towards. And we haven't even started yet in terms of where we're going. But we think that when you
observe, when you empathize, that's what makes you ask the right questions, and vice versa,
right? So when you ask questions, and you see answers, understanding what like if there's one
predominant answer or an answer, which is very peculiar, being able to see what were the events
that led to that answer is extremely powerful. It's what we call connecting the dots.
That's really good stuff. And it's just so important. So I'm looking forward to all your
new features. And I can't wait to use them when they're out. I want to go back to talk a little
bit about growth, because we talked about how after you launched this beta, you were super
communicative with your users. And you made sure to know, to let them know exactly what was going
on with the beta, their place online, you, you know, publicize your product roadmap and talked
about the features that you're going to do when you send out surveys and talk to your customers
to try to find out what was working for them and what wasn't. But I'm curious about some of your
more, you know, traditional marketing efforts, what channels really work for you guys to help
sustain your crazy growth rate over the last couple of years? And where have you gone to find
new customers? Rajar? Yeah, paid is something that we've learned to do really well, right? So
we sold software in the pre smartphone era. That's apps for like for Windows and stuff.
And back then, like content was not the most standard route to go. So I have a big belief
that the key when you launch a business is to really focus zoom in on one maximum two
channels and do them really well. You don't want to be doing too many channels on one go,
because it's very difficult to master many. So we made a conscious decision that we weren't taking
the most long term best approach. But we, we did what we what we knew how to do really well.
So basically, what we did was we said, let's let's focus on growth, because we know how to do that
really well, sorry, unpaid. So we started with with social media paid. So essentially,
leveraging channels where we know we could find the typical teams that we wanted, we knew we were
using Roger, and we made them aware of the product. And then later on, we moved into Google search,
and we're doing Google display. Then obviously, what helps us a lot in our case is the fact that
the product is quite kind of viral in itself, right. So it's not actually it's not completely
viral. So for for every one user we get for in a paid way, we wouldn't get more than one.
But we like because our users love the product so much, we actually see quite a lot of kind of what
we call this organic uptick on the back of that. So roughly for let's say every 10 paid signups we
have, we easily get another five, six that are kind of organic on the back of that. And then there's
word of mouth. And there's the feedback widgets which have a link in them. So so that has been
also a big source of growth for us. It's really cool that you're hyper focused on a couple of
channels and they're working well for you. But at the same time, you're sort of getting this
incidental traffic from other channels as well. We're running low on time here, unfortunately.
So to wrap things up, what would be your advice for somebody who's just starting out somebody
who's maybe just considering, you know, starting their first online business, or maybe someone
who's a little bit further ahead and they're kind of in the idea phases for the very first business?
What does somebody in that situation really need to know?
Be very critical about the idea in terms of its timing and question yourself like what is my unfair
advantage? Because there are just so many people out there trying to probably do what you're trying
to do. And today, ideas are not that kind of valuable. With tech becoming so cheap, and speed
being so fast to execute, you really need to have an unfair advantage of some sort. It's either that
you know exactly where to find thousands of millions of users in a cheap way. Or maybe you
know how to use this product in a way that others do not know. There needs to be some kind of unfair
advantage. So be critical on yourself. And the advice on the back of that, what we talked about
before, where there is no clear idea or clear path, then don't force it, right? Go work for
an amazing boss. I think that's a much better route towards finding that amazing idea to execute on
versus trying to force it, which might end up leading you to spend a long time working on
what would have been very difficult to be successful with. Yeah, I agree. Because no matter
how talented you are as a founder, no matter, you know, how skilled you are, what you bring to the
table, if you start off with your business aiming completely 180 degrees in the wrong direction,
then you're gonna have to spend a long time trying to rectify that mistake. And you're probably going
to run out of money and quit before you figure it out. So it's worth taking the time to do some good
research upfront, and build some knowledge and make sure that you're working on something promising.
But anyway, thanks so much for the advice, David, and thanks for coming on the show.
If you let us know where they can go to find out more about you personally and about the things
you're up to with Hotjar. So yeah, so we write quite a lot about Hotjar on our blog, even though
we're still in the, that was, this is the new channel we're moving into, right, which is content.
But I've actually been writing about our journey for quite a long time. So I've already published
two milestones in the Hotjar story, like how we did the beta, and then how we went to 1 million
ARR, and now I'm publishing soon to 3 million ARR. So I think we're sharing pretty much all the
details. I think it's quite valuable. And that's hotjar.com slash blog. But everyone can find me
on Twitter as well. I'm very happy to answer any questions that you might have or engage with you
or even take a call. So it's David Darmonine on Twitter. Thanks so much for coming on the show,
David. Thanks. It's been a pleasure. Thanks for having me. If you enjoyed listening to this
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