Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO)

[00:00] Some of the best startup advice I've heard is startups should focus on one thing and be really, really exceptionally world-class at that one thing. And one of our early zigs is we are going to do exactly the opposite of that. You have no direct reports, and I don't believe you've ever had direct reports at HubSpot. I could become passably okay at management with some training, with some coaching. I don't want to spend N years of my life becoming passably okay at something. What was that process like to define the culture? [00:30] culture thing is really important. By the way, can you go do that? I'm like, okay, Brian, all the people in all of me is like, I am like the worst possible person. It's not that I don't like people. I just don't like being around them a whole lot. Something that's really unique and interesting about you is you're obsessed with comedy and keynote prep. It comes down to this metric that stand-up comedians use called LPM, laughs per minute. I have custom software that I've written that will say, okay, here are the points at which the audience laugh. [00:54] Thank you. [00:57] Today my guest is Dharmesh Shah. Dharmesh is the co-founder and CTO of HubSpot and also one of the most fascinating and first principled thinkers I've ever met. [01:07] In our conversation, we cover a lot of ground. [01:09] Dharmesh's hilarious and ingenious approach to putting together a talk, [01:13] including measuring laps per minute, [01:15] his biggest lessons from being a public company exec for over 10 years now, especially while being a startup guy at heart, how he approached creating and scaling the culture of HubSpot, which you'll find both hilarious and inspiring, why founders and product teams are all fighting the second law of thermodynamics, how to zig while everyone else is zagging, how and why Dharmesh leans into his strengths, including never having a single direct report during his 18 years of running HubSpot, and so much more.

[01:45] and will expand your mind in many ways. With that, I bring you Dharmesh Shah after a short word from our sponsors. And if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes, and it helps the podcast tremendously. [02:03] This episode is brought to you by Xflow, a game changer for customer facing analytics and data reporting. Are your users craving more dashboards, reports, and analytics within your product? Are you tired of trying to build it yourself? As a product leader, you probably have these requests in your roadmap, but the struggle to prioritize them is real. Building analytics from scratch can be time consuming, expensive, and a really challenging process. Enter Xflow. [02:33] solution designed entirely with your user in mind. Getting started is easy. Xplow connects to any relational database or warehouse, and with its low-code functionality, you can build and style dashboards in minutes. Once you're ready, simply embed the dashboard or report into your application with a tiny code snippet. The best part? Your end users can use Xplow's AI features, which [02:56] for their own report and dashboard generation, eliminating customer data requests for your support team. Build and embed a fully white-labeled analytics experience in days. Try it for free at xplo.co.lenny. That's E-X-P-L-O dot C-O slash Lenny. This episode is brought to you by Vanta. When it comes to ensuring your company has top-notch security practices, things get complicated fast.

[03:26] you can assess risk, secure the trust of your customers, and automate compliance for SOC 2, ISO 27001, HIPAA, and more with a single platform, Vanta. Vanta's market-leading trust management platform helps you continuously monitor compliance alongside reporting and tracking risks. Plus, you can save hours by completing security questionnaires with Vanta AI. [03:56] and streamline security reviews. Get $1,000 off Vanta when you go to vanta.com/lenny. That's V-A-N-T-A dot com slash Lenny. [04:11] Dharamesh, thank you so much for being here and welcome to the podcast. [04:15] Thanks for having me, Lenny. It's an honor. It's my honor, and thank you for joining me. [04:19] You are a wildly fascinating human, and so I thought it'd be fun to start with just a bunch of fun facts that I found about you online. [04:26] And what I'm thinking is I'll just walk through them. Tell me if they're true as I walk through them. And then this is going to lead to a bunch of different topics that I want to talk about. How does that sound? [04:34] That was great. Okay, here we go. So one, you have no direct reports and I don't believe you've ever had direct reports. [04:41] at HubSpot. [04:42] That is correct. 7,000 plus employees, exactly zero direct reports from time T equals zero. [04:47] Okay, we're going to talk about that. [04:49] You also don't do one-on-one meetings as a result. You don't have reports to have one-on-one meetings with. [04:54] That's correct. [04:55] You build many side projects while at HubSpot, including a

[04:58] product called Wordplay, which at one point made $90,000 per month and had 16 million users. [05:05] That is correct. You also bought chat.com for $10 million. [05:10] And then you sold it two months later for more money than you bought it for. [05:14] It was actually 15 plus million dollars, but I had kind of stated eight figures, but yes. Ooh. Is this breaking news? [05:23] Breaking news. Wow. So that's how much you bought it for. [05:26] Yes. Okay. He sold it still for an undisclosed amount. Is that right? And it was a mountain. Yeah. And more than that. Yeah. There was a profit and I know you gave some money to charity and there's some [05:35] Promises you made where people commented on your LinkedIn post and you gave more money away. So it was awesome. [05:40] Okay, also you're a billionaire. [05:42] That is once again true. Still true. [05:45] Great. [05:46] Also, you were born in a village in India that had no paved streets, no traffic lights, no hospitals. [05:52] That is correct. [05:53] Okay. [05:54] Before HubSpot, you founded two companies, but I think the more important fact there is you promised your wife you would not start. [06:00] another company before you started HubSpot and then you ended up and went on and started HubSpot. [06:05] Yes, I had promised her that I would not do Star. I had to come. [06:08] hang up the proverbial entrepreneurial hat, best laid plans and all that. I met my co-founder in grad school, which is that was the plan. I'll go back to grad school and go find myself. And then the plan was to go eventually teach, not do another startup. [06:23] And I met my co-founder there and [06:25] One thing led to another as these things go. I hope she's forgiven you.

[06:28] I'll be soon. [06:29] *laughs* [06:31] Okay, final fact. So Kip, is that how you pronounce the name, Kip your CMO? [06:36] Okay, great. So I asked him what to ask you, and he tells me something that's really... [06:41] unique and interesting about you is you're obsessed with copywriting and comedy and keynote prep. [06:46] that you have a very unique approach to preparing for a talk and how you think about humor and slide design and story arc. [06:51] That's very true. This is [06:54] Public speaking is not something that comes naturally to me. So we're going to start there. We can talk a little bit about the copywriting, other things that are sort of related. [07:02] And one of the [07:04] And I try to not do things that I'm not good at and don't enjoy. One of the rare exceptions that I snuck through is the need for me to get on stages as founder when we have our annual conference. [07:16] HubSpot event, our conference, which at the time when we did our first one, it was like 150 people at the Marriott. Right. And then it's like steadily grown since then. And so now it'll be like 10,000 people in the live audience and hundreds of thousands online. Right. So. [07:32] But as I kind of came to this realization that... [07:36] I was not going to be able to kind of talk my way out of it. And I kind of saw how, where this was headed. I'm like, okay, okay. [07:42] This is something I'm going to have to actually learn because I can't delegate it, can't [07:46] talk my way out of it. And so I'm a big believer in this... [07:52] like talent versus skill, right? So we all understand talent. It's like someone has a talent for music, someone has a talent for athletics, whatever it happens to be.

[07:59] And that's true. [08:00] exists but the way i think about it is talent basically controls the slope of the curve but most things are actually acquirable skills so for instance if you have a talent for music let's say you might learn music faster than someone else and your ceiling may be higher but does not mean [08:16] that other people can't learn music, right? It's like an acquirable skill. That's kind of lesson number one. [08:21] And lesson number two is that there is a process, and this is the engineer in me, of just kind of functional decomposition of a problem. Okay. [08:31] in order for me to be a pretty good public speaker like what are the underlying sub skills required or to accomplish that okay skill number one you have to be able to stand up on stage and not pass out um [08:42] Like, yeah, that's kind of the bare minimum, right? [08:44] And so what I did over the years is to say, okay, I'm going to functionally decompose this skill of public speaking in front of what I call high stakes speaking. [08:53] I've got to actually hold the audience's attention. That's part of success. It doesn't matter what the message is. Nothing else will matter if I lose their attention, which is increasingly easy to do now in a short attention span society. [09:06] And every year I will pick a different part of the public speaking skill set and say, oh, I want to learn about slide design and visual expression, not the actual design. I'm not a designer. But then the one thing that I came up that has had the most impact is humor. [09:18] But then you break that skill down just like an engineer would do. It's like, okay, well, there's humor writing. [09:23] There's humor execution, like onstage, whatever. There's stand-up comedy. There's like, okay, so like, how do you put all these pieces together?

[09:30] And along that journey, I came up with this, and I've always had this, I'm a very kind of data-driven [09:35] a quant-based person. [09:38] It's like, okay, well... [09:39] how will I know whether something is like actually funny enough or not, whether I'm losing the attention or not. Um, and so, [09:46] in preparation for one of these kind of high stakes keynotes that I do every year. [09:52] I will have my talk. I will do practice runs. [09:57] I will have increasingly larger [09:59] actual live audiences that I will practice it in front of. I will record those talks. Everything so far, nothing unusual yet. I will have the talks transcribed. [10:11] I have custom software that I've written that will say, "Okay, here are the points at which the audience laughed. [10:18] like actually audibly laugh, that's the only way it counts. And this actually, and it comes down to this metric that standup comedians use called LPM, laughs per minute. [10:28] And there's actually a benchmark that you can say, oh, well, you know, and stand-up comedians have a very, very high LPM. Business talks have a very, very low LPM. [10:36] like the most popular TED Talks, there's a high strong correlation between the most popular TED Talks and high LPMs. So I have a goal, I'm like, I'm gonna have a minimum, I wanna improve, and so I have software that will calculate the last per minute. [10:48] And so then you learn these little kind of tools, so the tricks of the trade. So like, okay, if you're solving literally for that ratio of last per minute, [10:54] There are two ways to improve it. [10:56] One. [10:58] is to add more laughs.

[11:01] Two is to decrease number of words between laughs, right? So it's like, so one of the things that software measures, it gives me a visual map. It's like, here's the entire talk broken down with a little square per minute of talk or 30 seconds. And it's like, here's what they laughed. It's like, oh, here I went one minute and 17 seconds and nobody laughed. [11:18] So I have to do one of two things, shorten that segment if there's nothing funny that can be said without being over it about it. Or I have to say, OK, I'm going to find something funny to try to inject into this and kind of break it up anyway. And that's a long way of saying if I can get up on a public stage and learn that particular skill, anyone can learn just about anything. It just comes down to. [11:39] practice and measurement and just getting incrementally better over time. That's... [11:45] Wow. I feel like I've just learned so much about you and how you think just from that question and how you approach this problem. [11:51] On this humor piece, I'm curious any lessons to share on how to be funny. [11:56] So one of the kind of tricks of the trade in humor, and you learn this particularly in stand-up comedy, but just any comedy, and I just hadn't thought of it this way. [12:04] is that and this is very tactical but it works and it's a very easy thing to apply so let's say you're looking at and [12:09] Most of us in the... [12:11] you know we're not stand-up comedians we're not gonna tell jokes in a classic sense right and even stand-up comedians don't tell jokes right like they they actually have stories and they happen to have a punch finder uh punch finder too so uh two tactical pieces of advice one is [12:24] When you're telling the story, whatever the funny bit is, [12:28] Those have to literally be the last words of that particular segment.

[12:32] So once you deliver it, [12:34] Then you have to stop talking. And the reason you have to stop talking is the audience needs about a half a second to react. And then they want the permission to laugh. And if you're continuing to say words, it's going to make them feel awkward and it's going to be less funny. [12:48] So even if like moving a phrase in the sentence that you're about to say is like well that sounds kind of weird to put those set of words in [12:55] At the end of the thing, [12:57] do it anyway even though it's awkward because it will actually work better. That's kind of tip number one. Tip number two on LPM generally is that [13:04] Um, [13:05] have a story such that you can kind of spend the time setting up the story but then have multiple funny bits multiple punch lines because you've already made the investment i've said [13:14] 75 words in order to kind of set up this context. [13:17] Say something funny that's amusing, that's so whatever. Say some more things. You already have the content. You'll see the stand up comedians do this all the time. And then say something else that's funny because you just because a laugh is a laugh. Doesn't really matter that it was still the same story. [13:28] So kind of leverage the investment you've already made in establishing context and scene. [13:33] and then just squeeze more humor into the end of it in kind of punctuated fashion. I feel like the entire podcast could just be this one thread, but I need to move on to other topics. [13:41] One quick question. So you said ideal apps per minute is two to three-ish? [13:45] Is that what you said? Yeah. Two plus is hard for a business talk, right? Because stand-up comedians, the reason they can do it, [13:53] is that's all they're really kind of solving for is LPM. In business talks, you actually have another agenda other than just being entertaining, right? You actually have a message you're [14:01] try to promote something, promote an idea, promote a product. So anyway, in my mind, for

[14:07] for like most normal circumstances even if you can get above like a one one point [14:12] 2, 2, 5? You're in the top decile in terms of top generally given by non-professionals. Wow, this is incredible. So after every talk, you run this transcript and audio through your program to see how you did it. [14:25] Yes. And are you ever going to publish and release this program? Because that sounds really cool. [14:29] I have this notion of what I call solo wear. And solo wear is exactly what it sounds like. It's software built for exactly one person. In my case, that one person is me. And so I've been doing this. [14:40] for like 30 years right now. I just build things that I would myself find useful. And the nice thing about Solo, one of the many nice things about it is that, you know, the UI is only for one person. You don't have to do a whole lot of testing, because it only needs to work for one person. And the most important thing is that, because it's only for one person, if it stops bringing utility, [15:00] you can just turn it off. You should stop using it. Versus if you have users, even 10 users, and you put it out there, [15:05] And then people would be disappointed if you took it down for whatever reason. [15:09] that's kind of hard so anyway so that's the calculus i go through is like is this [15:14] Useful enough to enough people where it's worth the calories of kind of making it non solo where making it even micro where I just made that up but yeah, so [15:22] Wow. Okay. Let's see how the YouTube comments react and how many people would want this and slash pay for it. [15:28] Let me go in a slightly different direction. We talked about how you have no direct reports. You've never had any direct reports. [15:34] I know that's somewhat related to a piece of advice you often share, which is to lean into your strengths.

[15:39] and to not do things that you're not amazing at, [15:41] So can you talk about why this is the case? Why don't you have any reports and [15:46] And then I think this idea of just strengths and the importance of focusing on strengths. [15:51] Yeah, I'll tell you the quick story as to how this came about. My co-founder and I had the kind of founding meeting for HubSpot. This is like the week where we've decided we're going to do this and then we have this list of questions or topics for the kind of founder's discussion. [16:07] One of them, and I think I've published a list. So these are the questions all co-founders should ask each other in that kind of early period. One of the ones is like, okay, well, who's going to be CEO? [16:18] This was an easy one because I had been CEO twice before. [16:22] and had figured out I'm not that good at it, I actually suck at that. And one of the reasons I suck at that is that part of the CEO role [16:30] is being good at managing people. It's not just about leading and having a vision of whatever's, actually have to do kind of the management as a craft. [16:38] And so that part I already had in my head, I think Brian, my co-founder, already had in his head, that's how this conversation, that was a very quick conversation. [16:45] And in the moment, as soon as I had kind of had that wind behind me, it's like, OK, well, I don't want to be CEO. [16:51] Brian wanted to be CEO because he'd never done it before. Like, okay, that was easy. And then I said, oh, and by the way, [16:56] I don't want to have any direct reports. [16:59] just i could just like pop into my head as an idea i had not like pre-planned it or anything and i sprung it on him and the reason it's like and [17:06] It's like, okay, well, and the reason is because I have learned that I suck at management.

[17:11] I'm a reasonably smart person. I think I could become passively okay at management with some training with some coaching or whatever. I don't want to spend N years of my life becoming passively okay at something. [17:22] I would rather take those same calories and take the things that I'm good at that I actually enjoy. Those things are highly correlated. You tend to be, [17:29] good at the things you enjoy, you tend to enjoy things you're good at. [17:32] It's like, so, [17:34] and and brian was like yeah sure and then i'm like no no brian you don't understand because then i was like [17:39] There's going to be a time in the company, it was like, oh, our VP of engineering just quit. Just be interim something or whatever to have this team report to you until we find it. It's like... [17:46] We're going to have those things. [17:48] And you're gonna have to promise to me we're not gonna do that. We're gonna really, it's like I am not going to have direct reports. And we have that kind of heart to heart conversation. [17:56] And it was one of the... [17:59] best decisions I've made both for myself and for HubSpot. Had I not made that decision, I'm a startup guy, I don't know that I would have survived at a company at HubSpot scale. [18:09] And right now I can honestly say I'm having a better time at HubSpot now at 7,000 people than I was having at 70 people. And the reason is I get all the upside of scale, which is I can make big bets. We can have long term things and plans, whatever, and plan for global domination without the downsides of scale, which is, oh, [18:28] You're having to manage all these people, all the kind of mechanics, and that's hard, right? It's a hard skill to have. I appreciate other people that have it. I don't. [18:35] And so I get all the upside with very little of the downside of scale, and that's what kind of keeps me engaged and energized and happy at HubSpot. So I think it's been both productive for HubSpot and good for me.

[18:46] I love that this is an example of how you can build a company the way that you want to build it. You don't have to do it the way everybody else has done. I imagine there's a lot of challenges to this too, but [18:55] I think it's inspiring to just like, hey, I'm going to design a company the way I want to build it. [18:58] Yeah, it's amazing what you can get away with in terms of shaping the new universe to your liking. I think people automatically assume that things have to go a certain way, especially founders and first-time founders. It's like... [19:12] You should at least like, [19:13] try it. It's like, okay, well, I want to do it. First of all, I'll give you another kind of tactical example. Both my co-founder and I, [19:19] are night people, not morning people. [19:21] That's... [19:22] It just happens, you know, I didn't pick him because of that. We learned that later. And so we made it just like from the early days of AppSpot, in the early years at least, we're like, [19:31] No meetings before 11 a.m. [19:34] Period. That was it. And then we adjusted it, I think maybe three or four years, and we're like, all right, we can have meetings before 11 a.m., you just can't invite one of the co-founders to it. So you're welcome to meet amongst yourselves if you choose to do so. But anyway, it's a little things. That's an amazing rule. I have a personal rule where I have no meetings before 3 p.m. Because I don't work anywhere, I can... [19:55] more so create my schedule, but the idea is I create this deep work time in the beginnings of the day. I love that. Yeah. [20:02] Okay, so you talked about you're a startup guy. [20:04] At the same time, [20:06] HubSpot is approaching its 10 years of being a public company. [20:09] and I think 18 years since founding. [20:12] I'm curious what [20:14] lessons you've taken from that experience being someone

[20:18] That's clearly startupy person. [20:20] being an exec at a very fast-growing and large company. [20:24] And I'm thinking from the perspective of a founder who's maybe thinking about starting a company or starting a company, what [20:29] Advice you might have to share for them? [20:31] And also for people in the exec world today. [20:33] A couple of things, one, since we are publicly traded now, this doesn't get talked about enough, I'm going to go ahead and get this out there, use this as a platform to get this message out, which is I think too many... [20:44] founders, once they get to it, they are very apprehensive of going public and going through the IPO process and being a publicly traded company because they think, I mean, that's at the beginning of the end, it's going to change everything and my life is going to suck. And I think they're over-indexing. [21:00] on what they think it's like to be a publicly traded company. In my own personal experience, and Brian, my co-founder, would attest to this, and yes, there's certainly a tax or things we have to do now as a publicly traded company that we didn't have to do as a privately traded company. [21:13] But there are actually benefits. For instance, if you're kind of venture back in private, let's say you're sort of at. [21:19] a little bit the whim of the market and how VCs perceive your category and all these things or whatever and and and you get every now and then when you're out raising a round of capital you sort of get mark to market right like this now here's sort of what the valuation is based on what someone's willing to kind of fund the company at. [21:34] One of the nicest things, and this is underappreciated, is that we know that [21:39] right now what the market values HubSpot at. I can tell you that any business day of the week, right? Like that's, um, and there's, there's a niceness to that. And this, the other thing I, I kind of tell folks within the company is that,

[21:51] The valuation, which is... [21:54] We're in a roughly efficient market. Like the public stock market is a relatively efficient, by the economic definition of the term, inefficient market. And so the valuation will oscillate around the value. So if you kind of focus on creating values, like here's what we're actually building, valuation will sometimes be higher than you deserve, sometimes will be lower than you deserve, but over the fullness of time, [22:13] those two things will kind of move in lockstep, right? That's been demonstrated. That's what happens. That's almost a definition of an efficient market is that, [22:19] information kind of moves centrally, and then the valuation catches up with the actual value. But here's the other kind of social reason why I think founders should go public. [22:30] which is so HubSpot, and I hadn't thought about this, so I'm not going to take credit for being this generous, magnanimous person, is that, [22:38] In our first pre-public years, [22:42] I think we were eight years old when we went public. We had created roughly a billion dollars in market cap, give or take. We hadn't been a unicorn, so it was slightly below when we went public, so I was thought it was never a unicorn because that's a privately held company over a billion. In the subsequent years, we went from a billion dollars in market cap to 30 billion, which is roughly what it is now. [23:01] That first billion of market cap creation, a very small number of people got to participate in. [23:07] The fourth [23:08] The rest of the $29 billion in market cap, everyone, every public investor got a chance to participate in. And so I like the idea of, okay, well, you believe in your company. There's lots of people that believed in HubSpot.

[23:22] it's nice to let them kind of participate. Our customers, our partners, our well-wishers, and they can sort of now have the upside. And you don't get that in the private markets because it's a very closed, you know, you can't just buy shares in every private company you like. I wish that existed, but it doesn't. So it's a way to, you know, [23:39] Let the market at large participate in your growth. [23:42] earlier [23:43] What about from the perspective of just staying? [23:45] Excited. [23:46] and motivated and finding things to take on is there any lessons there for founders that are [23:51] I don't know, at a larger company and just, okay, this is going to help me stay excited about what I'm doing. [23:56] Yeah, I think this is, and Bezos exemplifies this, I think, the best, which is, you know, [24:03] just because you're a public company does not mandate that you do certain things. All that's necessary is the kind of transparency that says, "Here's what the company is doing. Here's what we're about. Here's what we're solving." And he had this with his very first annual shareholders letter, which he obviously writes every year. [24:20] which is this is what amazon is about we're solving for the long term or whatever and [24:23] and he didn't say this in a snarky way if you kind of reread the letter it's like but [24:28] But if you read between the lines, it's like if you don't agree with this approach, you should not buy Amazon shares. [24:33] right it's like it's a completely optional thing you don't have to buy it but this is the way we're going to run the business and you stay true to that and you can continue to do that i'll tell you one quick story this is once again the uh [24:44] to, [24:45] anti-dissuade founders that might be reluctant to go public. So one of the core values at HubSpot that's been part of the culture [24:51] from the early, early, early, early days, literally days, is transparency.

[24:56] And so one of our kind of mechanisms by which we implement transparency is we've had this thing that does all information within HubSpot. [25:04] is equally shared with everyone in the company, [25:08] Period. [25:10] Right, like everything. So our balance sheet, whether we raise capital at, whether we're gonna be able to meet payroll in six weeks, all those things, everything was transparent all the time, with two exceptions. One is if it was illegal for us to share, let's say if we were looking at some acquisition, whatever, and we had non-disclosure, or, [25:29] the information was ours, not completely ours to share. And one example of that was salaries. So we feel that salaries are co-owned, both by the company and by that individual, and it's not up to us to share someone's salary if they don't want to do that. Okay. All right, so we have that transparency, and then as we go public, [25:49] We have this meeting with our investment bankers and our lawyers. This is my [25:53] in the IPO prep process and they sit down and as part of this all-day meeting one of the questions is like okay so so who are your designated insiders [26:02] Mm-hmm. [26:03] Brian nor I had ever taken a company public before, we're like, "We don't know what that is." It's like, "Oh, it's this kind of group of people "that will have access to all the financials, "and will know." [26:13] And we're like, oh, OK, so how long is that list? And they're like, you know, five or six. [26:17] And so then Brian says seven. [26:20] seven and they're like yeah you could you could do seven and if i say eight [26:25] like because you do eight and so what we're and so we discovered through that mathematical induction process uh it's like if it's true for n is a true friend plus one is that there's no actual legal limit to how many insiders

[26:36] a company can have. [26:38] and so we ended up doing literally the day we went public because we designated every single employee [26:43] to be a designated insider. [26:45] So that allowed us to maintain the transparency thing because there was no rule that said you could only have five, six, ten. And it was hundreds of people. And we did not make it up. So we didn't say, oh, because our downsides to being an insider, there's. [26:57] windows within which you can't trade, there's stuff. But we're like, okay, well we believe in transparency, everyone's going to have access to it, [27:05] And it's not an opt-in kind of thing. You're like, this is it. We're all in it together. And it's been all, and we still do this to this day, right? Even at 7,000 people, everybody's an insider. [27:15] so we can still share all the financials with everyone all the time. You have many contrarian opinions is what I'm getting from this conversation already, and the way you're pushing the envelope on. Can we have 10? Can we have 1,000? [27:26] I'm curious if there's anything else there just... [27:30] contrarian [27:31] ways of running a company. I know there's probably many, but what comes to mind? [27:36] So one of the phrases we like to use in our industry overall is this kind of notion of first principles. I don't know who popularized it, but it's used a lot. I'm not usually a snarky. I'm not going to say something snarky, but. [27:49] I think [27:50] Most of the time, first principles is used. It's actually used incorrectly. Because the way first principles is supposed to work, as Elon would probably describe it, is that it's not first principles, like first principles of what we believe. These are core kind of first principles in the company. [28:04] It's the first principles of the universe. It's not what you believe is true, it's what do we all collectively know to be true to the best of our knowledge. It's science, right? That's like physics, like the first and second law of thermodynamics, those are first principles. All the layers on top of that are things that you think are true, are your assumptions or the things, the decisions you made.

[28:21] And that's fine. You may have made some decisions. For instance, transparency is not a first principle. [28:25] It's a founding principle, right? [28:28] everyone should do this it's like a completely core thing and so yes um i can be uh contrarian but you have to kind of limit the dimensions so the number of things that you're contrarian on has to be greater than zero but not too high right so you want uh what i think of is like [28:46] high conviction, [28:48] low consensus bets, right? So high conviction is we really, really believe this. And low consensus is that most other people don't. And the other people have kind of phrased this differently. I think Peter Thiel actually says it more simply and elegantly, which is, you need to be right about something that other people think you're wrong about for a very long time, right? Like, okay, this is the thing that, and you just happen to be right. [29:08] So one of the early... [29:10] kind of high conviction decisions we made at HubSpot, was that we were gonna focus on SMB as our target market. [29:17] I'll make a case both for SMB and for having a high conviction better. It doesn't have to be a target market, but something that [29:23] Once you make that bet, [29:26] because it's low consensus, it's going to be hard and necessary for you to have the conviction because everyone disagrees, including your board, including your investors, including potential investors. So we have that for all, literally all 18 years of HubSpot's history. [29:38] We have always had the question, all during the IPO roadshow, it's like, yes, we get that you've kind of, [29:43] on SMB, but so what's the path to the enterprise? [29:47] No, you don't understand. This is not a go-to-market strategy. This is not like, oh, we're going to conquer SMB first. This is not Bowling Pin. This is not Jeffrey Moore. This is a...

[29:54] We are here for SMB. That's what we're doing. [29:58] And so we maintain that conviction for a very long time. And that kind of helps you. [30:03] make other bets that are secondary, but [30:06] but you don't want to reinvent everything so i'll give you an example of something that we had in the early years of hubspot that we kind of forwent so in the early years of hubspot we're like okay we believe in a flat organization [30:17] One of the manifestations of that flat organization is we had no titles in the company. [30:22] Nobody had a title. [30:23] So even though you have business cards, whatever, we have no titles. If you introduce yourself in a meeting, and we had this up to hundreds of people. [30:32] When you introduce yourself, like, oh, I work in product, I work in engineering or whatever. It's not like I'm director of X or VP of Y because that... [30:39] the thing didn't exist then as we scaled we came to the realization that there's actual [30:46] value that people ascribe to titles. And the reason they ascribe value to titles is because, there were rumors that there was life beyond HubSpot. Like, I couldn't believe it, what? There's a life out there outside of HubSpot. It's like, yeah, but then when we go to the Thanksgiving dinner or whatever, and I talk to my aunt, [31:04] I need some shorthand. It's like, oh, yeah, I got promoted to director. I got promoted to show some progression because it's a signaling device and... [31:11] in this life beyond HubSpot and outside HubSpot, it's like, [31:15] other people are also gonna want to know sort of where I was in the second. Okay. And this was the winning argument. I love this argument because we had a, [31:22] day-long meeting on talking about this one topic and the winning argument was Darmesh and Brian I recognize why you why we don't have titles I recognize this and so they made the case of yeah there's you know value and it's like and by virtue of you not giving us titles

[31:37] That means you're having to compensate us [31:40] in an economic sense in other ways. [31:43] you're losing out because it's like, is that value high enough to not do that? [31:48] That's a strong case. And then we had it down to three choices. We're like, okay, well, we could have chosen to just stay firm with still no titles. We could have said, okay, we're going to have classic titles. [31:59] Then I had the option on the table of make up your own title. [32:03] like you can be grand foobah of x and that can be like and then we ended up making a decision to go with classic titles because that actually served the need of there's a benchmark was a standard otherwise it doesn't mean anything so having made up titles is pretty much the equivalent of having no titles because they lack any any anyway um but [32:20] That's one of those things that, [32:21] Okay, you sort of iterate, you change things as they go. [32:25] Yeah, I think there's so much to this. Let's just try things differently. [32:28] Okay, that didn't work. That's okay. It's fine. We're just going to do what everyone else is doing here. And then often you discover a thing that, okay, this is actually better. [32:36] Okay. [32:36] Just to understand, when people have no titles, so someone, say, is a product manager, what [32:40] Do you call them a product manager or just like, I'm an employee at HubSpot, I have literally no title? [32:45] At the time, it was no title, and now we have classic titles. Yeah. We have levels of things. But back then, it's like, you're just here. No title. Literally, no title. We don't know exactly. No title. [32:54] I saw somewhere that you paid everyone $5,000 monthly as their salary at the beginning of HubSpot, including yourselves for a long time. Yes, is that right? Okay. [33:02] Another fun fact. How long did that last, by the way? I'm trying to think back. It's a long time ago. I want to say probably the first year, year and a half. Amazing.

[33:11] and and and [33:13] One of the things that, and this is one of the kind of core, [33:16] Not everything that we, obviously not everything was right, but not everything is kind of applicable to other companies, but there are some things that I think are. [33:24] And one of the things that I think are applicable is just this, [33:28] need to solve for like simplicity right it's like the simpler you can make things in the early years the better off you generally are so part of um [33:36] This is going to sound weird. So, uh, [33:39] how we wound up with transparency is not because like some moral it's like oh everyone deserves to [33:45] and this is the the truth so it's not some moral position it was a when we hired the first employee [33:51] in this close to both right and right. [33:55] When we hired the first employee, we had to make the decision. [33:58] It's like, oh, [33:59] so what files do we give them access to like what and so brian is just like [34:03] like why there's nothing to hide like why would we why would we do that and so then we kind of then the output of that was like okay well [34:13] A, binary decisions are much easier than non-binary decisions. It's like, okay, everything or nothing is much simpler. And then it's like, okay, well, if it works for employee number three in the company, [34:25] why wouldn't it work at four why wouldn't it work at five why wouldn't it work at 50 and we just [34:29] kept doing it because it's like okay well until it breaks we'll just keep doing that right and so this is the uh and this applies to so many different aspects of HubSpot but [34:39] is we try to start with the simplest possible thing that might work. And then if necessary, add the complexity, add the things or whatever. Like even our original, this is actually the tactical thing that everyone should take away, especially early stage startups.

[34:53] very first HubSpot office has exactly four tables because aspirations for growth, right? We were in a co-working space. So we work back in the day here in Cambridge, Massachusetts. [35:03] And so we had four tiers, and the only distinguishing characteristic of the four chairs, there were two chairs that were by the window, two chairs not by the window. Okay, great. [35:12] hire that first employee. Other decision we have to make is like, okay, well, where do people sit? And this one is like, well, it feels unfair to us that we would just get the window seats or whatever. It's like, okay, we believe in a flat organization, like why? And so what we did is we said, oh, [35:26] "We'll just do a lottery." Okay. And it's not like, oh, whoever pulls the thing gets the window seat. Whoever pulls gets to choose from the remaining seats because different people ascribe different utility to different seats, right? It's like, maybe you don't want a window seat. Maybe you like the darker corner, whatever it is. And so we did that with employee number one. [35:44] Then we did that with employee number two, and we did it every time we hired a new employee, we would do a seat shuffle. We're going to do the lottery. We're going to go down the sequence. And of all the seats, that was the algorithm. Right. [35:55] And our investors are like, oh, that's cute and that's funny. [35:59] it's not going to work at 15 20 people it's not going to work at 50. it worked at 25 worked at 50 worked at 100 worked at 200 we updated the algorithm we did some local optimizations which we said oh [36:11] There are some groups that should not be next to other groups because engineers like QuietTime and salespeople don't. [36:17] And so we're going to try to kind of [36:19] Optimize a little bit so it's not completely random anymore now. It's like within the what we still would do it Then we said okay. We're not gonna do it for every hire. We're gonna do it every quarter and

[36:27] And that stood, by the way, for [36:30] Hundreds of people, that mechanism still worked, right? It's like it's, yeah. Oh, my God. So the moral of the story is that one decision of simplifying things, [36:43] Can you imagine the amount of politics we avoided? [36:46] corporate america the amount of calories spent is like well your office is bigger than my office your desk is one inch higher one would it like [36:53] No, it's like all of that just went away by virtue of that one decision. And we don't even know, it's incalculable honestly, like how much grief that like saved us. And then there's all other kind of side benefits to it in terms of people getting to know each other better, better chemistry, there's like lots of good upside. [37:09] but just the simplicity is almost always a better answer. I love that everything often comes back to some algorithm you've developed, or this n+1 approach of like, let's just keep going until something goes wrong. [37:19] This is amazing. I'm excited for many more of these hilarious, amazing examples of how you did things differently. [37:26] You've been talking about simplicity. [37:28] Opposite extreme is [37:30] you could say, entropy. And someone told me that you have this kind of concept that every leader in every business is fighting [37:37] the second law of thermodynamics, which I believe is entropy. [37:41] Yeah. Well, yeah. The actual law is within a closed system, entropy increases over time. Okay. Yeah. We don't have to get into the... No, I love this. We're getting to the real, the first principles of everything. [37:55] Talk about that. What does that mean when you and what does that look like when running a business? Okay. So in layperson's terms, the second law of thermodynamics, I'm paraphrasing here, is that over time, unless you intervene, everything goes to crap.

[38:07] I'm paraphrasing, right? Which is essentially the amount of disorder and randomness in a system is going to increase over time. You see this, like when you break an egg, the break of it, like molecules don't come together and form an egg, right? That doesn't happen. It's always the other way around. It becomes disorderly and more random. That's the second law of thermodynamics. And this happens in companies as well, right? [38:28] and it happens in code, like almost every level of abstraction, you will see some variation of this. And so the way I think about this is that [38:36] In the early stages of a company, you're essentially [38:39] Fighting to survive. Just trying not to die, right? That's the thing like okay like that Friday one don't die In the second phase of a company you're trying not to stagnate Right like you still want to be able to drive growth and be able to do things like okay. We managed not to die because I [38:55] stagnation is essentially death so we're still trying not to die but then um [38:59] the third stage is you're fighting complexity and that's the thing that you will crumble under your own weight over time absent some external intervention uh and this you see this happen all the time right and it shows up and manifests in different ways which is everything gets more complicated like you need more layers of management more headcount more this more that more everything everything that becomes harder margins go just bad things start to happen you become slower and that's eventually it's a slower death right because you're at more scale now [39:29] eventual death right like complexity does kill companies maybe not as quickly as other things but much more reliably than other things and so this is why I'm

[39:39] It's never too early to... [39:43] kind of plant the seeds of simplicity uh put them in there make that part of the kind of culture of the organization and and we have a thing that are part of our kind of culture and guiding principles around uh what i call fight for simplicity it's literally those three words right and the message we're trying to convey is simplicity is worth fighting for that's like thing number one it's important but the other one is that you're going to be a part of the organization that's [40:04] it requires fighting force. It does not happen, and it will be a fight because the universe is working against you, and it will take calories to fight to that simplicity because everything, even well-intentioned people, will introduce complexity because that's the natural way of the world. We want more tiers in our pricing. We want these knobs and dials in the product. We want these more, you know, it's like all of it tends towards the second law and entropy increases. So anyway, I love this. The algorithm for seeding is a good example of this. Is there any other [40:34] strategy. [40:34] where you [40:35] pushed for simplicity and that ended up being right. [40:38] - Yeah, so on the product side, in the early years, and Brian gets credit for the actual implementation of this, [40:46] So we had a relatively broad product, and we can talk about that, pros and cons of that, even in the early years. [40:51] But we were solving for simplicity and we got this from Apple. We'll talk a little bit more about Genesis of this, but we had a rule that [40:59] in the HubSpot product as the product grew in those early years, that every time you added what we thought of as a knob or dial, call it a feature,

[41:09] You had to take one out somewhere else. That's a net... [41:14] amount of, and this is a very coarse measurement, right? It's like, okay, well, not every radio button, check box, drop down, whatever menu item that you put in your nav is necessarily equivalent. [41:23] But it's better than nothing. It's better than having no constraints. [41:26] And so, [41:28] And once again, this goes to the kind of binary thing. It's like it just at least forces you to think about it, right? It's like versus the other mistake I think people make in product all the time is that [41:39] we measure the cost of a feature based on the usually or even a new product based on the cost of implementation [41:47] Right, that's the first order of thinking. It's like, oh, this is gonna take six months to develop. It's gonna be Y engineers and Z designers or whatever. Second order thinking is thinking through the maintenance of that feature. It's like, oh, it's not just the first version that goes out. It's like now we have this code base that we have to support and improve or whatever. I get that. [42:03] The third order thinking, which I think is the most nuanced and it turns out to be the most important, [42:09] is the other costs that that complexity adds. Okay, so let me, we'll come back to this. So when you go from product number one to product number two, right, it's like, okay, product number two is gonna cost us this much to develop, it's gonna have this, [42:22] risk associated with whether it's successful or not, all these things. So there's going to be this kind of carrying cost for product number two. [42:27] What companies don't think through [42:29] is that that is, you know, the maintenance of that. It's like, oh, we're gonna need a team to kind of maintain that new product. No, what actually happens is that now, when you go from product one to two, [42:38] you have added dimensional complexity to your business.

[42:42] What I mean by that is not an incremental increase, like, oh, we went from one to two. It's like, now every decision you make has to be made to the lens of, now we have two products. [42:51] "We just hired an engineer. "Do they work on product number one or product number two? "We're gonna launch a marketing campaign. "Do we spend five minutes talking about product number one "and two minutes talking about product number two? "How do we do anything?" Every chart you look at in terms of the growth, revenue for whatever, all of it, now every chart that you've ever had now has to be sliced by product one and product two in order to really kind of capture that precision. [43:14] and so now you have this new dimensional complexity that you just hadn't planned on and this applies once again every level of abstraction so everything you do in your business [43:23] should factor in [43:24] the long-term cost of that complexity. [43:26] and it should be worth it and that of course you need and that can make the case that you need to build product number two and product number n uh and plus one over time uh but you should be mindful about the cost of that complexity yeah i think it's [43:38] Is there something you've done to help... [43:41] operationalize that because I imagine this [43:43] Everyone's like, yes, this is great. Don't do too many things. [43:47] Simplify. Hard to do when you're like, oh, we got to draft growth. We have this awesome idea. We have this opportunity. We have a competitor. [43:53] I know this is part of the culture, so maybe that's the answer, but how do you keep people to actually... [43:59] this principle. [44:00] So it's really hard, I'll say that. And things that have made it easier, it's a little bit idiosyncratic to HubSpot, right? So part of what has made it easier for us to keep things simple, [44:10] is the early constraints we imposed. We didn't know this at the time. So we're building for SMB. We have a freemium product.

[44:18] "All right, well, when you're doing that, [44:20] There is literally a limit to how much complexity you can add because we don't have an army of people that are going to spend 18 months implementing something. We have to be able to support a product that's free. [44:33] Like that's hard to do, right? Like it has to be simple enough that someone can get value from this thing. And so there's these kind of self-imposed things. So the lesson I would kind of carry away is come up with, [44:45] systematic ways and mechanisms, as Amazon would call them, of putting guardrails and constraints in, to the degree that you can, because you can put words on a page and try to infuse it in the cultures, like, oh, we believe in simplicity, we fight for this, and you can have meetings and you can kind of get up in all hands meetings and kind of reinforce that, which I encourage you to do, [45:03] But like a really, [45:07] Even a reasonably well done system will out beat any other mechanism that you can kind of try to put in and infuse, right? Like that, those things kind of deteriorate over time. It's hard to scale them. So I'm a big believer in kind of systems that impose constraints versus... [45:22] I can't help but talk about this SMB piece because I do a lot of angel investing and classically, [45:26] Companies that focus on small businesses are very challenging because getting to small businesses at scale is very hard. [45:34] they're often kind of more old school not early adopters you sell one and you [45:39] That's just like one small customer, and they're not going to... [45:42] upgrade and roll it out to this large group and they're not going to increase spend off very quickly. [45:48] For founders that

[45:49] are exploring SMB. [45:51] or trying to win something, SMB, any advice other than just maybe the advice is probably don't do it. It's very hard. [45:57] No, my advice is absolutely do it. Amazing. Great. A, because it's hard, and we'll talk about that. But B, okay, so I'll tell you this quick story in terms of how we chose SMB. And so my co-founder and I met in grad school, and he had done software. He was on the sales and marketing side. I was on the product engineering side. Didn't know each other before grad school, and we met there. [46:22] But one of the things we kind of, as we were kind of noodling on possible ideas of working together on a startup. [46:29] who said, "Oh, we had done both enterprise software before," right, the kind of opposite of SMB. [46:36] There are definitely challenges with enterprise software, right? Well-documented. One of the biggest one is that life as an enterprise software company sucks. [46:45] as a startup. Sales cycles are super long, feedback loops are super long. [46:50] You have to have sale. There's all this kind of, you have revenue concentration, which means you don't completely own your product roadmap anymore because whoever is writing the biggest check will ask for these three things. It's really hard to say no, especially as a startup. All these things that go along with that. It's like, okay, we sort of know that game. [47:05] at the other end of the spectrum, [47:07] you have consumer startups, right? It's like, okay. The problem with consumer startups is they have very bimodal outcomes, right? It's like either you can be super successful, the next meta, the next Google, the next whatever, or it's gonna be to zero, right? Like it's very rare that you have like, "Oh, you made a few million bucks or whatever." I think it's like either it worked,

[47:24] because it's a massive market. [47:27] The case for SMB is you have [47:30] Almost the best of both worlds. [47:32] You have the nicety of enterprise, which is, oh, I can solve a product and people pay me money for it. I don't have to be advertising subsidized. I don't have this bimodal outcome. I can build an incrementally more valuable business that's measurable. So, oh, we went from 100K in ARR to a million in ARR to two million in ARR because we're a business software company. [47:50] But it has the benefit of consumer because there's millions of them out there to sell to. And there is no revenue concentration. You do control your roadmap. You have very short feedback loops. You can try pretty much anything that you want because there's [48:01] "Oh, we have 50 customers, if we do this and screw it up." It's like, there's five million more. I'm not intentionally screwed up, but you can experiment. You can take on risks. [48:10] And so, [48:12] And by the way, when HubSpot started SMB, [48:15] it was literally like 100 times harder to succeed at SMB, right? And we could not raise capital. It was so hard because the common argument was like, [48:24] There literally is exactly one company in the history of software that's made a, like, [48:30] global brand, billions of dollars of market that was into it. No one else had ever created an SMB-focused software company before. [48:37] And we're like, yeah, it's like we know. [48:40] But the nice thing about it is once you figure the physics of it out, because it's so hard to do, [48:46] you end up and this is split up now there's lots more proof points there's shopify there's a bunch of companies that have uh succeeded in smb but [48:53] One of the things about SMB is that

[48:57] In the software market, this, by the way, all I know is software. That's the kind of scope of my experience is that, [49:04] in software, [49:06] There's what I call reverse gravity. [49:08] but [49:09] over time, the market will always pull you up, right? Because what ends up happening is that smart founders and smart management teams will look at the numbers and say, oh, [49:18] Well, as it turns out, our bigger customers [49:21] Stay with us longer. Pay us more. [49:23] often have higher NPA, like all these things, and so if you [49:29] allow yourself to be led by that, which is, [49:32] seems like a reasonable smart thing to do, you will get pulled up in the market. And because of this reverse gravity, almost every company... [49:39] winds up being, as every successful software company, ends up being an enterprise software company over the full list of time, right? That's what you see. It's like everyone... [49:47] the kind of byproduct of that reverse gravity is that every software company ends up being an enterprise software company so you end up competing with literally everyone in the smb world you're only competing with the people stupid enough [50:00] to stay focused on SMB or try to do that, right? It's like it's a much, it's a harder thing to accomplish, [50:06] But once you figure out the physics of it and make it work, it's a much more sustainable, much more fun model. So I encourage particularly startups. [50:15] And maybe you fight reverse gravity for some period of time, and maybe, but at least start there, try to make it work until it gets really, really, really painful, and then try some more, right? It's like there's just so much value in SMB.

[50:29] Okay, so this theme has come up a bunch already in our conversation. I asked Chris Miller, previous podcast guest, [50:35] what you're amazing at and what I should talk to you about. And he said that you're very good at [50:39] Zigging when other people are zagging and zagging when other people are zigging. [50:43] And I think that's already come across in our conversation. [50:45] I guess, is there anything else along those lines that you think might be helpful to people? [50:49] in terms of how you think about that or examples of that in action? So this comes down to kind of high conviction, low consensus bets. And so we had, uh, [50:58] like three things that we were zigging. And by the way, it's not just me. My co-founder and I both have that. [51:03] kind of zig versus zag, and we ask ourselves, and we ask ourselves this to this day, right? It's like, okay, well, we understand that this is the way the world moves, this is the way it's normally done, but... [51:13] "But have we considered this completely?" I'm not saying we should do it, but have we considered this alternate kind of alternate path? So I would encourage you, any stage of the company, [51:22] You don't necessarily have to do the zig versus zag, but you should at least know what the zig would have been and have talked it through. So that's kind of thing number one. Some of the best startup advice I've heard that I've ever given is startups should focus on one thing and be really, really exceptionally world class, better than anyone else at that one thing. [51:40] And one of our early zigs is we are going to do exactly the opposite of that. So from year one, HubSpot decided to build an SEO tool, web analytics, blogging tool, [51:50] content management, all of it. And every one of those categories that we were building a product in, literally this is year one, [51:57] great products with great companies behind them and so it's like okay well why would you do that um and and the reason is

[52:05] that the one thing we wanted to be good at [52:08] was [52:09] solving for the actual customer problem that existed. And the customer problem that existed was not a drift of tools, lots of great SEO, blogging, everything, all the tools existed, but SMB specifically did not have the wherewithal to put all those pieces together, right? So you and I, it's like, oh, I can throw a website up, I can put Google Analytics on it, I can put a Wufoo type form on it, I can do all these things, I can wire it all, [52:31] No big deal. Like, why is this so hard? But for me, [52:34] Most people, most SMBs, [52:36] That's a science project, right? And so we said, "Okay, in order for us to solve the actual customer problem, [52:42] We have to solve the actual customer problem, even if it's uncomfortable, even though it's contrarian and every kind of instinct, every advice we've heard or given says we should not do this. We should not go that broad. [52:52] But once you make that decision, so the other kind of lesson learned, and we said this in the early years, and it's gotten [52:59] better systems let's say you do this and this is kind of the all-in-one approach we're going to have this broad-based product [53:03] It's like, okay, we're going to be many miles wide and only so inches deep. [53:08] One of the, and this goes back to our very systematic thinking, is like, okay, we're going to measure each of those individual product categories that we're now playing in. [53:17] Are we in the top three? [53:20] in the market in that category. If the answer is yes, that means we invested too much in that category. We should not be in the top three, because our value proposition is not that we want the top three blogging tools, or we want the top three web analytics tools, or we have the top three whatever, [53:33] Our value proposition is that everything works so well together

[53:36] At that, [53:37] being in the top three and having those right features or whatever doesn't matter. Doesn't matter as much as the all-in-one. And that means we over-index on one individual category by virtue of that was one of our kind of heuristics for being able to tell that we were over-indexed on one particular aspect of it. That was hilarious. [53:52] Rarely do I hear... [53:55] We're in the top three and we're doing the wrong thing. We're too good. By the way, we've changed that over time, right? In the startup world and now, I would argue that most of the categories we play in, we are, as surveys will tell you, we're in the top three in each of those categories now, right? But at the time, when we were very, very resource constrained, [54:13] We were trying to be disciplined and focused. We're just racking up all these very [54:19] contrarian approaches to company building. [54:22] I imagine... [54:23] People listening to this might feel like, OK, cool, I'm just going to build a bunch of stuff. This is great. I work for HubSpot. Do you have any heuristics for when it makes sense to go wide and not deep? [54:31] that you share with founders? When do you think it makes sense versus now you should actually follow the common advice here? [54:37] Yeah, so it comes down to, [54:41] what problem you're solving. So I think one of the mistakes I think founders make is that, especially product-oriented founders, [54:49] is that we kind of fall in love with the solution instead of falling in love with the actual problem. And you need to fall in love with the problem. [54:57] n [54:58] Putting that constraint on yourself, [55:00] forces you to kind of understand and at least label and define what problem you're solving because oftentimes we can describe our product or whatever but we struggle sometimes as founders to describe the actual problem so

[55:11] if you can make the case which hubspot did it's like okay we've it's not like we immediately jump to that like oh we have this epiphany we're gonna build the all-in-one do all the things kind of thing we're like oh [55:22] in actually talking to customers [55:24] because we we consider doing it like oh we'll just do this marketing piece we'll just do this or whatever it's like [55:29] no that's not their issue their issues like it's not that these things don't exist so [55:34] if you have as a result of talking to customers and understanding the problem deeply you come to the conclusion [55:41] that you need to do more than just one thing but then you should force yourself to have the discipline that we did which is [55:48] Here's why we're going to go a little bit broad. [55:51] And here's how we're going to make sure that that broadness doesn't kill us. You have to have the kind of self-imposed constraint. You can't have the best of both worlds. You can't say, we're going to be all in one and, oh, by the way, we're going to be the best. No, you can't be the best. You can say, we solved this particular problem the best, but we're not going to have the best product in any of those dimensions. [56:10] Amazing. I love this advice. [56:40] For Webflow, after ramping up on LinkedIn in Q4, they had the highest marketing source revenue quarter to date. With LinkedIn ads, you'll have direct access to and can build relationships with decision makers, including 950 million members, 180 million senior execs, and over 10 million C-level executives. You'll be able to drive results with targeting and measurement tools built specifically for B2B.

[57:04] In tech, LinkedIn generate a 2 to 5x higher return on ad spend than any other social media platforms. Audiences on LinkedIn have two times the buying power of the average web audience, and you'll work with a partner who respects the B2B world you operate in. Make B2B marketing everything it can be and get $100 credit on your next campaign. Just go to linkedin.com slash pod Lenny to claim your credit. That's linkedin.com slash pod Lenny. Terms and conditions apply. [57:33] Okay, I'm going to go in a totally different direction for now and see where this takes us. I want to talk about flash tags. Sure. So this is something that you came up with that came from a problem of your founder, people come to you for feedback, you give them... [57:45] some random thought. [57:46] And they treat that as gospel and they go do it in spinning. [57:48] months fixing something that you're like, oh, it's just a thought. [57:52] Talk about flash tags. Yeah, so and this is exactly the problem, right? It's not just, once again, most things exist at every level of abstraction. So anyone that manages people, anyone that leads has this exact same issue. It's the megaphone issue, right? Like someone will pass you in the hall when we had offices in halls. Yeah, they'll ask you like a question. And as it turns out, this is particularly true of founders, like I have an opinion on everything, like literally everything. So if you ask me a question, I don't have it. It won't be thought out. It won't be right. [58:22] but I will have one. Right. And, um, [58:24] And so the challenge is people will kind of take that and over-index on what was an opinion. [58:30] It's inefficient to qualify every time someone asks you something, every time you put an email out there and say, oh, by the way, it's like.

[58:36] This is just my MP, you can put like, you know, I am a show or something like that every now and then, but then like people say, oh, that's just like politeness or something like that, right? Okay, so here's what flash tags are, literally. [58:46] and I live most of my life through email, but I do this in other media as well. It's like the hashtag that we all know, but it's a discrete set of them, an escalating set of what I call the kind of dying on the hill spectrum. [59:01] Okay, so here's how it goes. [59:04] The bottom hashtag is hashtag FYI. And the definition of the FYI is, I came across this interesting blog post or I found this news or whatever, just letting you know. [59:13] No response expected. [59:15] fine go on with your life next level up is hashtag suggestion [59:20] I have this thought that came into my head because I listened to the episode on Lenny's podcast with Sam from Microsoft or whatever. And this feels like... [59:30] that could be a good thing to kind of explore but hashtag suggestion means [59:34] I still don't expect a response. You don't have to do the thing I'm asking. [59:38] but it is something that i would do if i were you or at least i would consider if i were you okay next level up is hashtag recommendation hashtag recommendation is [59:47] I've thought about this a lot. [59:49] Thank you. [59:50] I've done some research. I've done some digging. I've done some soul searching. [59:54] I would do this. [59:56] it's still not a you have to do this but if you decide not to do this [1:00:01] I would... [1:00:03] appreciate a response in terms of why you don't want to do this what you learned in the process of exploring this particular thing other alternatives or something so it's like a response expected

[1:00:13] but still not a mandate. And the last one is hashtag plea. I beg of you, we don't have mandates at HubSpot. [1:00:22] I have thought about this so much, like to my core in my soul. I believe this is the thing we should be doing. I'm going to plea with you. [1:00:31] to please just do this um still not a mandate by the way um but that's and so now it's [1:00:38] commonly accepted like it's on the wiki like people know it's like and i use this multiple times every day other people upspot use it um [1:00:45] It is remarkably effective. [1:00:50] because they're self-descriptive hashtags are searchable right you can go back it's like oh i want to know the last five hashtag recommendations that i made [1:00:57] How'd those turn out? There's just so much goodness that comes out of it. It's not hard to understand or describe. It's really interesting that none of them are just do it. [1:01:07] You say that there's no concept of there's no mandates, essentially. [1:01:11] Why is that? And do you feel like people just treat police as, "Okay, I actually just really have to do this"? So we've always had, as part of kind of early manifestation of HubSpot culture, we kind of believe in autonomy. Lots of companies believe in autonomy, and we tried to carry that [1:01:24] that idea as far as we can. And for the most part, we do that. And that's, and the hashtag plea is part of that, right? This is like, we trust our people, we try to hire the best, we expect them to learn, and we still want them to [1:01:40] have the kind of discretion to be able to make hard decisions. And we have, we call them DRIs. We didn't invent that term, a directly responsible individual. And we'll talk more about, we should talk more about decisions and how decisions get made. But the reason...

[1:01:53] I do hashtag plea, is that it's a soft way [1:01:57] of, uh, [1:01:59] a mandate without being a mandate, right? It's like, okay, [1:02:02] And by the way, the number of times that happens is I can count on the fingers of one hand and still have fingers left over. That almost never gets to that. Because either I talk myself out of it, it's like, okay, and this goes to the, is this a hill I'm willing to die on? It's like, okay, I get it, I may disagree. [1:02:20] Is it the end of the world? Is it really gonna do that much harm? [1:02:24] and is the cost of kind of imposing that kind of founder card uh you know like go do this um [1:02:31] It does happen, just not that often. So, yeah. Awesome. And we'll link to the, there's a post you wrote about how to use these. It's flash tags.org if you want a quick way just to get to that blog post. I believe in domain names and shortcuts because I believe in some quercities there. [1:02:44] You mentioned decision making. There's something interesting there. Talk about how you make decisions at HubSpot. Like most organizations, HubSpot historically has made decisions [1:02:52] poorly um it's just all spectrum right i think uh decisions are one of the hardest things because it's hard to strike the balance um [1:03:00] And we've evolved it over. I think we're much better. [1:03:02] than we were in our earlier years. The things we get wrong, most people get wrong, and so I'll tell you the things we get right now is that, [1:03:10] So we... [1:03:12] we like to be, we're very data oriented. We like to make data informed decisions, but data doesn't make decisions people do. Right. So there's like, [1:03:22] That's like thing number one. It's like, you know, you have lots of geeky founding companies or whatever. It's like, oh, like we have a chart that says this. So we should go do that. That doesn't work. Data is awesome. And we also have one position that we designate.

[1:03:37] to make the decision. [1:03:38] And that is not necessarily the executive overing that team. It's like, okay, well, so-and-so, like, [1:03:44] And they literally owned that. And we didn't invent this idea either. This existed long before HubSpot. But it actually works. It's like you have to decide... [1:03:52] Who's going to make a decision? And that is the like the almost the number one decision to make. And it's like, OK, don't pick people you don't trust to make the decision. And so that's kind of thing. Number two. [1:04:02] And the biggest mistake, and we used to make this much more than we make now, [1:04:06] and Amazon stayed this really well, [1:04:11] They have theirs is called disagree and commit. [1:04:15] We have a slight twist and I'll tell you why we twist it a little bit ours is Debate decide unite. That's our kind of phrase that we use in HubSpot culture, but the idea here the core premise of it is that a [1:04:27] Once you make a decision, [1:04:28] getting alignment around that decision, because there will always be, at any amount of scale, people that disagree with that decision because they were debating the other side, right? Like they just didn't, like they went, [1:04:38] They would have picked option A, and we ended up picking option B. But it's extremely important that [1:04:45] even when a decision gets made and we decide to do something that's contrary to the thing that you believe in would have debated for and did debate for [1:04:52] You lost on that particular one. Fine. [1:04:55] hard to do, but so important and so valuable. And I'll tell you why we tweaked the Amazon one. So the disagree and commit [1:05:05] sounds a little bit harsher than we like, right? Which is like, oh, it's fine for you to disagree, but then effing commit, right? It's like, okay, I get that.

[1:05:14] I'm biased, but so the debate is, [1:05:18] Okay, so let's have open debate. Let's get all the options on the table. [1:05:22] let's actually make the decision and then it's unite around that decision not just it's like okay like let's kind of come together around that um and that [1:05:30] Sounds more HubSpot-y. It is a lot more friendly. I was thinking that as you were talking. Debate, decide, unite. [1:05:37] Versus disagree and commit. And then there's like have backbone, you know, in that one. It's, yes, I like it. The other thing I'll tell you, this is partly a HubSpot thing, partly a me thing. And this will not surprise you at all. [1:05:51] is... [1:05:51] I like to think... [1:05:54] systematically around decisions, right? And so I'll give you an example. [1:05:59] The question I ask myself when faced with the [1:06:02] a decision or a thing that I'm trying to do. It's like, okay, if I could write Python code, a Python function, [1:06:09] to come up with an answer to this. [1:06:13] What would be [1:06:15] variables or the coefficients, okay, let's say you're not, if you were making an Excel spreadsheet to make this decision, what would the columns be? All right, you don't have to decide the weights, [1:06:24] but at least decide the factors. Then the next step is like, okay, you're the factors that I think matter in the making of this decision. I'm going to decide between these seven options. Here are the things I'm going to look at, right? You would do this for... [1:06:33] picking a school to go to, or, you know, it's like, it works, right? And you don't have to take it to the nth degree, but the exercise of going through it, it's like, okay, well, step one, if I can just identify the factors that I think should impact this decision,

[1:06:47] That's an 80% win right there. [1:06:49] not because it's just in your head if the team works collectively to say okay here are all the factors that i think should contribute to the making of this decision [1:06:58] Then number two is, okay, we can't... [1:07:00] assign exact weights so we can't write the excel formula just yet or the python code but can we at least stack rate the factors like this factor is more important than that factor now you get a closer sense of approximation right you're still not going to use the spreadsheet to make the decision but the human making a decision [1:07:17] has much better information they had than pre going through that exercise. One of the mistakes people make around decisions and Amazon has written about this, I'll give you kind of my take on it, is that [1:07:27] The calories you spend on a decision [1:07:30] should be proportional to the consequences of that decision. [1:07:34] Fair and simple. He calls them one-way doors versus two-way doors, which is kind of a binary heuristic, which is, I love the elegance and simplicity of that. I'm taking it one level further, which is, [1:07:44] It literally should be proportional. It's like, okay, if you have a really, really big decision, that's gonna be expensive to change, [1:07:49] Really, really, but a lot of calories... [1:07:51] making that decision. You might still get it wrong, but it's worth it, right? And it's not just around decisions, around activities and best and things that you were going to do. Um, [1:08:00] is that the calories you spend should be kind of proportional to the kind of the outcomes and what you're seeking and the value of it and that's one of the things i try to apply to my life is like okay like my geeky nature wants me to go uh you know nine months deep and you know [1:08:12] start writing code and do this thing or whatever. But I found [1:08:16] that that one simple thing is like okay

[1:08:18] Is this like a first order approximation, where I can just identify the factors or it can like, [1:08:24] and and the other thing that helps by the way is and we'll talk about this um so one of is [1:08:30] My default position on most things, and I don't mean this in a negative way, is no. [1:08:34] It's like, oh, shiny object. Should I go do this? [1:08:36] No. And then I have to sort of force myself, OK, like I need reasons to say yes. I have to kind of force myself because it's easy to say I love new things. I love new people. I love all that. [1:08:48] So I have a [1:08:50] I have a sorry but no post on my blog that's life-changing for me. [1:08:57] And, you know, [1:08:58] So the idea there is that, this goes back to other first principles, is time is what a few kind of, [1:09:06] Constants, right? It's like, so every time you say yes to something, by definition you're saying no to something else. And so this goes back to the kind of product heuristic we were using in the early years of HubSpot. It's like, oh, when you put something in, you have to take something out, because we wanna kind of keep the complexity roughly constant if we can. Same thing, so it's okay to say yes to things, but then you have to force yourself, based on the calories that you're committing to, [1:09:27] to say, "Okay, well, what am I gonna take out of my schedule, out of my life, in order for me to be able to make room for this thing?" Because, at the turn of time, I have not been able to, despite my best attempts, bend the walls of space and time. [1:09:39] So how do I make room for this new thing that I want to say yes to? [1:09:43] So... [1:09:44] I love the way your mind works. I'm excited to talk about culture and how this connects in the way you think about culture and through all these frameworks and lenses.

[1:09:52] Before we do that, [1:09:53] You kind of hinted at this idea of how you pick what to work on. [1:09:57] And I know you have kind of an interesting framework for how to decide what ideas are good and what ideas are worth investing in. I think both as a founder and a. [1:10:04] product leader. [1:10:05] How do you think about deciding what is worth investing in? So imagine Excel spreadsheet again. So let's figure a value and idea for a startup, for a new product, a new feature, whatever it happens to be. I think this applies. [1:10:16] So the first thing you should look at is... [1:10:19] And I measure things on a scale of 0 to 10, because I like quantifiable things. I like to be able to multiply x by y. I don't like letter grades. It's a pet peeve of mine. Anyway. So... [1:10:29] Put a number on it, it's like, okay, if this thing were successful, so let's say we're just picking a new startup idea, like I'm considering starting this new business. [1:10:36] If it were successful, [1:10:37] what could it be? What's the kind of magnitude of the outcome? However you decide. It could be impact, it could be revenue, it could be market cap, it could be portfolio, whatever it is. It doesn't matter. I mean it matters but not relevant for this discussion. So that's the potential. [1:10:50] Thing number two is probability of success. Okay. And now that I pause here and tell you the most common mistake people make is, um, [1:11:01] They think through the probability first without actually forcing themselves to think through the potential. And here's what happens is that they apply a filter that says, oh, [1:11:09] I only have a like one in 10 chance to pull this off as long at 10% success rate or whatever. Not going to do that. [1:11:15] Well, if it's a one in 10% chance at $10 billion, it might be worth it, right? Like it might be, maybe not. Like sometimes it's based on stage of life and things like that in terms of risks you can afford. But like for instance,

[1:11:29] And so by the way, when I say probability, it's the big side of me. It's like you can do it multiple ways, right? You can say, oh, here's the X percent chance. You can do in statistics as an event tree. It's like, oh, here's path A. [1:11:39] there's a y percent chance that happens and here's what the outcome would be z percent chance or x anyway you're the popular things and you come up with what's called the expected value anyway so let's say we just look at two branches like oh there's a [1:11:51] 50-50 chance. [1:11:52] that I'm going to make [1:11:54] 10 million dollars and she will take a one branch just to keep this shorter so the expected value of that is five million dollars [1:12:01] Right. That's literally the expected value. It's like, oh, you got a 50 50 chance that a 10 million outcome. [1:12:05] And let's say you have a [1:12:08] 10% chance [1:12:09] at a hundred million dollar outcome or a 500 whatever it is so mathematically it's like okay well [1:12:16] you should at least consider that other one even though the chances are lower because the expected value is higher. Okay, so that's thing number one. Anyway, we'll get through the rest. So start with the kind of potential outcome, then look at probably not the other way around because then you apply that mental filter and cast throw out ideas that may not have been worth throwing out. The third thing is or is what I think of is either passion or proximity. Do you care about this actual thing? [1:12:40] that you can actually kind of bring to bear. [1:12:45] And then the fourth one is... [1:12:48] is since i need a p word it's like prowess like do you have some assets some something that makes you uniquely positioned uh either if you're building a new product you have existing lines of code that you can reuse you have a market that you already have access to there's something about this particular idea that you have an unfair advantage pursuing and that impacts your probability of success right and this is the other reason and it's like you need to kind of look at all those things um and once again no one thing is the deciding factor you're not going to just pick

[1:13:18] times, whatever. It's like you have to sort of [1:13:20] Look at all of them and look at your own [1:13:22] Kind of situation but it helps to kind of think through that to kind of have the kind of discipline to say oh how big could it be? What are the chances? How much do I care about solving this problem? Is this something I can work on for two years ten years twenty years? I [1:13:36] And finally, like... [1:13:37] Why me? Why me? Why my company? Why would we succeed at this? Why is our chance of success even low, higher than the rest of the world? [1:13:48] Okay, so I'm already picturing the spreadsheet here for every idea you have. You basically have a column. [1:13:52] potential, [1:13:53] probability of success, proximity, you said? Just like how-- - Yeah, or passion. - Okay, passion. - Yeah. I started with passion, and I have an issue with passion as a word, because it's ambiguous. Because we talk within startup circles, it's like, "Oh, pursue your passion." [1:14:12] Sure. But it's like, you know what? [1:14:15] Thank you. [1:14:16] Most of the companies that exist today, that are even successful ones with awesome founders, [1:14:22] they didn't necessarily pursue their passion it's like they kind of [1:14:25] Maybe you're back for like in a particular problem or a market segment or something like that, but it's like, it's okay to become passionate about something as you kind of dig into it or whatever. That's fine too. So it's like anyway, so. [1:14:38] Yeah, I have one of my favorite startups that I've invested in is called Zip. [1:14:41] It's a procurement platform. [1:14:43] The founders were not passionate about procurement when they got into the space. They just saw a huge opportunity. They thought they could build a much better product.

[1:14:50] And they got passionate about it once they started working on it. And this is the thing, right? So, yes. [1:14:56] If you can find your true calling, this is what you were meant to do in the world and you have the opportunity to do it, great. That's a tiny, small fraction of people, right? Like that's, it doesn't happen. And you may not even know what your passion is, like, especially if you're a first time founder. It's like, okay, well, I haven't seen the world. I don't know. It's like, um, [1:15:14] So, yeah. Okay. So just for people, if they're creating a spreadsheet for all their ideas and for startups, its potential, [1:15:20] probability of success. [1:15:22] Passion, prowess. [1:15:24] Yes. Okay, amazing. [1:15:26] Okay, let's talk about culture. I know you spend a lot of your time [1:15:29] on helping build [1:15:31] HubSpot's culture create the original culture, [1:15:34] He created this epic culture code deck. I think it's 128 pages. [1:15:38] So maybe just to dive into it, what was that process like to define the culture of a company and maintain the culture over time? [1:15:47] - I'll say awful. No, the beginning of it. Okay, so I'll give you the very quick story, 'cause my co-founder and I, we're having a lot of our founders' meetings, or founders' dinners, as we do. [1:15:59] and he had been meeting with his CEO group and he said, "Oh, [1:16:03] Dharmesh, I hear this culture thing is really important. By the way, the word culture had never been mentioned prior to this conversation, the Halt of HubSpot, ever. [1:16:11] And this was how many years in? [1:16:13] This is, I want to say three or four years in. I can check the records. Because by the way, even like Brian and I, even back when people worked out of offices, most of our communication was over email and async. We've always been big believers in the kind of written form. But anyway.

[1:16:29] so i can tell you whether you know the word puzzle is used or not uh so [1:16:34] and and it was odd and so and he's like oh like i've heard because you know talking to c for us culture is super important [1:16:41] Tomes. [1:16:43] Can you go do that? [1:16:44] I'm like, okay, Brian, all the people in all of me is like, I am literally the bottom decile, if not the worst possible person. It's not that... [1:16:56] Thank you. [1:16:57] I don't like people. I just don't like being around them a whole lot. And from what I know of culture, it sort of involves people, right? Like that, you know, I don't know, but it seems like I'd be the wrong person. But anyway, I'm. [1:17:08] I'm a team player, I'm like, okay. It does feel like it would be important. And so I took on the task, and I didn't really know, [1:17:15] It was like-- [1:17:17] like when he said like dharmesh can you go do that like what does that mean and so when i [1:17:21] took it to me, and it's like, OK, well, [1:17:24] Culture actually already exists. We have a culture, whatever it is. And it's working pretty well, companies doing well, people seem happy. [1:17:32] And so I... [1:17:33] I said, "Okay, well, what I'm really trying to do is describe the culture that's there, [1:17:39] So it's not creating cultures, articulating the culture. So we know what it is. And so then this is the you decided to be showing up again. So the question I asked myself. [1:17:47] is i literally asked myself this question which is if i could write a python function [1:17:52] that would measure the probability of success of a new person coming into HubSpot [1:17:57] What would the factors be? What are the things that if I could measure, if I knew I had a true function that said, oh, on a scale of zero to 10, here's how they rank on this and this and this and this and this and this. I could proximate how successful and how good they're going to be for HubSpot.

[1:18:11] that's my exercise okay so I did internal survey and I'll tell you why this was such an awful experience in the beginning because this is also a good story so once I took on this task I sent an email to companies like hey everyone [1:18:24] uh i'm just gonna be like digging into culture so i'm gonna send this kind of survey out i just want to get us an understanding so i can [1:18:31] Great. [1:18:32] and the [1:18:33] negativity and the visceral response [1:18:36] to that one email was literally up until that point, it still ranks the top three, [1:18:43] like worst things i've ever like [1:18:46] but like people felt so negatively and so strongly and i was not expecting it right like and and i'll tell you the one line that really like just uh was gut-wrenching was like [1:18:57] Dharmesh, [1:18:59] You hear we're talking about culture, [1:19:02] Next, we're going to have like posters up on the wall about excellence. HubSpot is not the company that I thought I joined. [1:19:09] And like, oh, it's just like the geek part of me, I just did not know how overloaded that idea of culture was. Right. And so [1:19:18] Then when you dig into it, it's like, oh, because... [1:19:22] so many companies have done it so poorly and just didn't walk the walk or whatever. This is why. There was a reason why there was this kind of negative response. So anyway. [1:19:31] Thank you. [1:19:32] So I went back to my thing, it's like, [1:19:35] I get it. [1:19:37] So I'm going to try to describe what we have and write this truth function. So I wrote the slide deck.

[1:19:42] which had exactly 16 slides, and that answered this one question, which is, if I could write a Python code, what are the factors? So what are the attributes that we would look for in humans that are? And the reason I came up with that particular question is that I got this, when I did the survey, I did the NPF survey, which everyone knows that you would send to customers is like, Oh, on a scale of zero to 10, [1:20:03] How likely are you to recommend HubSpot as a place to work? End of the... [1:20:08] The other NPS question is like, why did you give that answer? As it turns out, here's the thing that I learned, which was... [1:20:15] troubling. Everyone was happy, [1:20:19] And the reason they were happy is because of the other people at HubSpot. [1:20:23] That was the number one reason. [1:20:25] which is both good and bad. It's like, okay, well, that's awesome, but that doesn't tell me anything, right? It's like, okay, well, that's like a self-reinforcing, kind of recursive loop. [1:20:34] So that's when it's like, OK, well, what makes the people at HubSpot the people that are up? Let's come up with the attributes that define what it means to be one of these people that makes other people happy. [1:20:43] And so we came up with the original kind of set of things that were embodied in that slide deck. [1:20:47] And I call that slide deck the culture code deck. [1:20:50] And the reason I called it the culture code deck is not because it was a code of conduct or a moral code or this is how companies should be run. It was because if I could write, [1:20:58] code to kind of define the culture of hubspot this is what the code would look like and and [1:21:03] Since that point, it's like the question I keep asking myself is if we could have an operating system that ran the company, the geeky part of me, [1:21:12] Not that you could do that, but what would that look like? Right? And so, and the big,

[1:21:15] kind of unlock the very few [1:21:19] original [1:21:20] ideas I've had that are really good. One of them is this thing that [1:21:26] Culture is a product. [1:21:29] Period. And that every company builds two products. One is the product they build for their customers and the other is a product they build for their team. [1:21:37] that's what culture is, it's the product you build for your team. And let's say we stipulate that that just happens to be true. Just humor me for a minute. If you assume that's true, [1:21:50] then a bunch of things kind of follow from that postulate, that hypothesis, which is [1:21:56] "Oh, well, just like we would never build a product without talking to customers, we would never build a culture without talking to customers." [1:22:02] to the customers of the product, which are the people. Just so we do, [1:22:06] Repeat of that original NTF survey we've been doing every quarter now forever to figure out what the NPS of that product is our culture product the other thing is like okay, well I [1:22:17] There's no product person in the history of humankind that would have said, oh, I built this product. It's awesome. I'm done. [1:22:24] no one would ever say that and this is the number one mistake i think um i'm biased uh [1:22:31] I think founders make, [1:22:33] is that they say, oh, [1:22:35] We have an awesome culture and my job is to preserve the culture. [1:22:39] That is not the job because [1:22:44] the needs of your customers change the needs of the employees change right the culture exists to help the great people do great things for the company that's why the culture is there and the things they

[1:22:54] later as the company scales are different and so just like you would never freeze the lines of code of a product you would never freeze the lines of code of a culture culture [1:23:02] should be iterated on just like you iterate on on product so that was like and there's so many other things that kind of fall so just like in a product you will get feedback from the customers like oh here are the bugs and we actually call them bugs it's like oh here are the bugs in the culture and we at the all hands meeting so we have the survey comes back once again it's your transparency uh notion every single survey response it's anonymous in terms of who submitted it we publish it right the quant score the subjective thing everything and then we will categorize it [1:23:32] All hands meeting. I would call them all minds. Anyway, we'll wrap up. All minds. [1:23:38] Colin. [1:23:40] And it's like, okay, so... [1:23:43] here are the things that we heard just like we would do for a product meeting it's like oh we just because we're like here's what we're hearing back it's like here's the bugs that you've identified uh here's the ones we're gonna fix [1:23:52] and when we're gonna fix them, we're gonna commit, like, oh, you said this was broken, okay, we're gonna do something about that. [1:23:59] here are the things that like yeah i know you don't like it that way but it works as design which we do in product [1:24:05] all the time, right? Like, and you should have the right to do that. It's like, yep, some people are gonna disagree, and there may be any number of reasons why we think that needs to stay the way, and we're not saying necessarily forever, but as it stands, we are not prioritizing this, we are not fixing that thing that you think needs fixing, for whatever reason. [1:24:21] The one lesson here is, [1:24:24] Very few things I've learned that I think are universally applicable.

[1:24:27] That one, I think, is right. And just so much greatness and goodness falls out of that is if you think of the people as customers, if you think of the culture as product, [1:24:37] It takes away this kind of abstract nature of working on culture and then takes away this thing. I heard this back in the early commentary from UpSpot teams. Like, oh, well, [1:24:46] Culture is not something you really build because that seems fake. That seems inauthentic that you just go, it's like, oh, we're going to craft this culture. [1:24:54] Like, no, it's we craft in the same way. Like, I'm not saying we're going to impose it like we're going to do this off in isolation, but we're going to work on it. And it's something you actually do manifest. And it's not just up to the founders. [1:25:07] Wow, what an amazing story. [1:25:09] You're definitely getting laughs per minute from me. I think there's at least one laugh per minute so far in this podcast. This is amazing. [1:25:14] I think this point you just made about [1:25:16] Your job is not to [1:25:18] preserve the culture as a leader, I think that's really profound because I think most people don't think that. They think their job is we need to [1:25:24] maintain our culture as we grow. It's all fading away. Our culture is changing. [1:25:28] But your point is that's good and that's great. Bringing it back to product, I think this is an important thing. This is the kind of second order lesson learned after you start with the culture as product. One of the challenges almost everyone will deal with is that you have these things. And so, by the way, just because culture as product does not mean there's not a sense of having what some might label as kind of core values. We have this in product as well. There are core values that the product believes in, like we believe in about our product that we're going to kind of hold constant through it.

[1:25:58] like we're building for SMB, we want it easy to use. There's constraints that we put on ourselves that are intentional, that even though we iterate, we're not gonna iterate away from these things that we, just kind of that high conviction, that thing again. [1:26:11] not everything that's part of your product is a core value, right? So not everything that was part of your culture in the early years. So transparency is one that has endured over a long time, right? As part of our core value and we preserved it, even though it was troublesome through the IPO. I share that story. And then there are things that we changed that were part of like, oh, we believe this meritocracy thing in a flat organization. But the manifestation of that was a bud with the lack of titles, right? And so we changed that. It's like, okay, well, there are things that [1:26:37] And here's the other thing that is, [1:26:40] It's a mixed metaphor problem, because I haven't been able to come up with a good metaphor yet, but there will be things that [1:26:47] that you have that are kind of core [1:26:49] And the way I describe it right now, I'm just gonna put it out there, I'm ticking myself for not coming up with a better metaphor, is like federal versus state law. [1:26:58] All right. So there are federal laws that we have here in the United States. [1:27:03] that says, okay, here are the things, and these are the inalienable rights of all citizens of the United States, and these are the things that are core. But then we have state. [1:27:11] things right it's like oh for this particular state on these particular aspects they can kind of optimize for their particular states like yes we understand like this is the co-rally but for rc we're gonna do this so we have something similar at hubspot we have a core set of things that are kind of part of the culture part of the thing is like okay here's what we believe and then there are things that uh the individual groups so our head of engineering can come back it's like yeah i know our overall like the founder's leaning is x but for my particular group that doesn't really make sense we're gonna do this i'll give you an example

[1:27:41] So one of the core things from the early years of HubSpot is like we don't [1:27:45] care about what hours you work, like from what time to what time. It's like it doesn't matter. Like literally does not matter. And we didn't track it. We don't care. But then over time, it's like, well, we have a support organization. [1:27:55] And that organization, as it turns out, does matter to our customers, right? Like we need to, you know, have coverage and things like that. It's like, okay, well, that sort of makes sense, right? It's like, but then you sort of have to, [1:28:06] kind of pick your battles, but then kind of fight back. For instance, transparency, there have been times where individual org leaders like, okay, Dharmesh, I know you believe in this transparency thing, and Brian believes in this transparency thing, [1:28:17] But it's inefficient for someone that is a SDR in the sales organization to have access to the high order financials. It's a waste of time. [1:28:25] It's a distraction. That was the argument. [1:28:28] Thank you. [1:28:29] You may be right. [1:28:30] but the binary decision the fact that we value transparency so much [1:28:35] we're going to. Yes, maybe it is a distraction. Fine. And the other one is like, oh, I don't want my team to have it because I just don't. [1:28:44] You know we were hiring so fast and it's like and once again that's a lot of trust to put into people or whatever It's like yeah, but then this is one of the other lessons is cultures over time become self-fulfilling prophecies Is that so in the early? I? [1:28:59] Now this is a big lesson learned. So when I put the first version, the public facing version of the culture code out there, [1:29:06] And I got feedback from the team and like, Dharmesh, like you say this in the culture code deck.

[1:29:12] And it's just not true. [1:29:13] was not true enough for us to kind of like state that as a thing. And so the thing that I did is in the deck, I have what I call these little liner notes. It's like stuff going on right here. It's like, oh, this is not really true yet. So it's more of an aspiration. This is how we want it to be. But we're not walking the walk yet on this thing. So I didn't take it out because I want to be an aspiration. And here's the thing that I had not thought it through. I cannot take credit for it. What had happened over the fullness of time, [1:29:40] is that those things that were aspirations became increasingly true by virtue of being in the deck. Because as people join, it's like, oh, [1:29:48] that's the thing we aspire to so i'm going to pretend like that's actually the culture of hubspot which is exactly what we want um so [1:29:55] It's okay to say things that are aspirational. Just call them out. Don't present things that are not true, but back off of the things that you would like to be true. Wow. There's so many lessons there. [1:30:06] It reminds me of Airbnb, actually. I was there when they created the original 36 core values of Airbnb. [1:30:12] One of them was Simplify. [1:30:13] Turns out, [1:30:14] And then, I don't know, some number of years later, [1:30:17] the founders realized we're not actually good at this and value should reflect who you are not who you [1:30:22] aspire to be and i like this middle ground you found of like i'm gonna put in here but i'll note this isn't necessarily who we are [1:30:27] We didn't do that. That would have been a smart move. So they removed that core value. They're like, we're not actually this. And it going from 6 to 4, there's another one they removed. So I was really impressed because they're like, OK. Wait, because it comes up in meetings. They're like, let's simplify it. No, it's actually really complicated.

[1:30:44] Yeah. [1:30:46] Okay. [1:30:47] So what I'm going to do, I have one more question about AI. And to make this work timing wise, I'm going to cut the lightning round. So I hope that's okay. Totally fine. Okay. I know AI is very top of mind. By the way, this is my diabolical plan to have to skip the lightning round because that's the thing I'm not good at. I'm not saying anything. Anyway, that's the thing I was dreading the most. Playing 4D chess here. [1:31:09] You knew exactly the timing, and you're like, I will take this long for all these answers, so it will perfectly play out. [1:31:16] So I know you're spending a lot of time on AI. It's on many people's minds these days. [1:31:20] You built this product called ChatSpot. Is it still called ChatSpot or did you, is that the product you changed the name for that's still ChatSpot? It's still ChatSpot. Still ChatSpot. And I know that you've handed that off now to like a team actually that's working on this. It's not like just an entire mesh project anymore. Yep. [1:31:34] So I don't know exactly where to go with this, but just why is AI so top of mind? And where do you think people should be spending time? [1:31:42] Where do you think things are heading? [1:31:44] What comes to mind around AI? [1:31:46] yeah it's um obviously i'm not alone in my excitement um but i i will say this so i've been so i'm about to hit the 30-year anniversary of my working in like commercial software right like that so i've been at this for a long long time and that's all i've ever known that's all i've ever done and [1:32:03] The last time I was this... [1:32:06] both excited, [1:32:09] I'm just excited because when the web first came along in the mid to late 90s, I'm like, oh,

[1:32:16] like this literally like changed everything right it's like relevant to everything it's like if literally everything is going to be impacted by this thing called the internet and i was in my early 20s right um [1:32:26] And I've been here for mobile. I've been here for social. I've seen lots of things that people got really excited about, but nothing else. [1:32:35] to me has kind of hit the richter scale to agree that ai does and the reason is [1:32:41] Okay, so if you think about early... [1:32:43] you know, [1:32:45] Like early... [1:32:46] Computers, not PCs. That kind of gave us compute at scale, which was awesome. The internet effectively gave us kind of distribution at scale, allowed us to take information, products, whatever, and get them out at scale because everything was now connected where before it was not. [1:33:01] What AI gives us now is cognition at scale, the ability to kind of literally amplify the human brain, right, like that's never been done before. Look, not that we haven't been trying, but now we have demonstrable, [1:33:14] evidence and products that actually work we've used chat tpt and it's uh and products like it [1:33:20] And so it's... [1:33:21] life-changing right and so for the product people out there which is a lot of you um [1:33:26] AI, so by the way, the internet unlocked a massive opportunity because, especially for startups, right? It's like, oh, we can just reimagine the world with this new thing called the internet that was not possible, you know, a year ago and now is. What can we kind of now unlock and lots of great companies were created? I think something similar will happen here. And there's a couple of things that I think that are just tactically that I think are possible vectors that kind of satisfy my spreadsheet of if I were going to choose ideas.

[1:33:56] so as software companies and product builders most of us [1:34:01] have always called our products like, "Oh, we build intuitive products." Where's that good? And we say that, right? [1:34:08] As it turns out, it's just not true. Because as a user of X product, whatever it happens to be, it's like, okay, I've got this mental model, the thing I'm trying to accomplish, and then I have to translate that into a series of clicks and drags and touches and swipes in order to accomplish [1:34:25] the thing that I want in the software product that I'm using. And what varies is the degree to which that translation needs to occur. But there is an impedance mismatch, right? There's a translation that has to happen [1:34:34] from the what's in my head like i want to remove this background in photoshop i want to create this report in hubspot [1:34:39] And so, [1:34:40] The opportunity now is that we're going from what was an imperative model. This is what engineers would call like a step-by-step. You give instructions to the computer like do this, do this, do this, do this, and then hopefully you get the outcome you're looking for to what engineers would call a declarative model. A declarative model is you describe the outcome you want, not the steps to get there. And the closest analogy that most people are familiar with is SQL. The [1:35:06] the Korean language, right? So before SQL, if you wanted to get data out of a system, you wrote code that says, okay, loop over all my customer records and then filter out the ones that have less than a million dollars in revenue and then give me the result. [1:35:18] And SQL said, [1:35:19] No, just put a where clause on it, describe the data you want, and what columns you want, and how you want to order it, and what filters you want to apply, and it figures out, it, the database figures out, how to get you the thing that you're looking for.

[1:35:31] Now we have the ability to do that for interfaces, for software, right? So instead of saying, click here, drag here, it's like, I want you to generate a report. That's all my customers in Europe that we signed up last quarter that were more than 100K in ARR. [1:35:44] and you just take the thing that's in your head and express it in whatever medium you choose, text, voice, doesn't matter. [1:35:52] And the software now can actually, so now the technology exists to pull that off. It did not exist before and now it exists. I know it didn't exist before because [1:36:01] Six and a half years ago, I built this product called GrowthBot. That was a chatbot for HubSpot software and business software, generally for marketing and salespeople. It's essentially what ChatSpot is now. [1:36:12] amazing product growth bot and it had just one teeny tiny small problem which is it didn't work [1:36:20] and really well conceived really like brilliant idea it just didn't work and the technologies wasn't there right you just couldn't do it with any degree of fidelity because you know ai had and now you can and that's what kind of caused me to go uh kind of prove out my theories like i had a chip on my shoulder particularly with that idea right uh but [1:36:40] But I think-- [1:36:41] And I'm not suggesting that web and mobile interfaces are going to go away, but they're a class of use cases across pretty much all software. [1:36:48] where we can... [1:36:50] make things easier for the human by not forcing that translation layer and just make it truly [1:36:56] intuitive. Yeah. [1:36:57] So. [1:36:58] Thank you for coming to my TED Talk.

[1:37:02] So it's great about watching you because you kind of build in public with this AI stuff. [1:37:07] that you're doing it. Your approach to learning about this is building and doing. When you launched ChatSpot, you tweeted that it took you many, many late nights of work. [1:37:17] For people that [1:37:18] One, two... [1:37:20] understand what's going on, get ahead of where things are going, build the skills to be relevant in the future. Do you have any advice? Is it just build stuff and do it? Or is there anything else you'd recommend? [1:37:30] for people that want to understand what the hell is going on. [1:37:33] Yeah, so and this is very simple. [1:37:37] practical advice and it's the same thing for like uh engineers and software um as well is don't try to go learn something uh because you think it's like worth learning find an actual problem that you care about and go try to solve it with that new thing right like you have something tangible that you're trying to do so for instance um you know going back to my book back to the talk around public speaking it's like okay if i said oh i want to learn [1:38:03] about humor and standup comedy, [1:38:06] I don't think I would have accomplished the thing, but I had a goal in mind, right? Which is like, hey, I need to be able to get up on a stage and hold up a thing and I have this measurable thing. [1:38:13] so whatever it is whatever line of business you're in whatever you do as a professional um [1:38:18] i guarantee you there are ways uh ai can help you even with the tools that we have out there right now so either [1:38:24] Use the tools, build tools on top of the APIs that exist, very easily accessible right now, very cheap to kind of start. Yeah, just do it and iterate. And I'm a big believer also in kind of learning in public as well. That's why I do it. That's why the culture code is out there. It's like, okay, well, if you accept the fact that you're doing it, you're doing it.

[1:38:42] that culture is a product, [1:38:43] we're gonna learn about things much better, like instead of just getting feedback from the employees at HubSpot, [1:38:49] Why don't we put it out to the world? And because the Internet is exceptionally good at telling you why you're an idiot. Right. It's like it's one of its core. [1:38:55] core strengths um so i i would recommend it's like [1:39:00] Have a goal in mind, write about it, [1:39:03] I'm a big believer in writing generally, but yeah, do it in public. I love that advice. [1:39:09] Is there anything else that you wanted to share or touch on or leave listeners with? [1:39:14] before we [1:39:16] wrap up. [1:39:17] - We cover a lot of territory. - Yeah, we did. - Yeah, we did. - I might do the quit while I'm ahead thing. I'm gonna, I'll leave it with this. [1:39:26] So I have my definition of success. I came up with years ago that I still stand by, and HubSpot actually stands by, [1:39:34] Success is making the people who believed in you look brilliant. [1:39:39] That's it. [1:39:40] What I like about that is it's not like an inward facing thing. It's this is the kind of. [1:39:44] like customer folks like, oh, all the employees that join your company when you're a founder that were kind of silly enough to kind of join you on this thing, whatever. It's like you were small. Customers that believed in the early product that completely sucked. Investors that believe like all of that. [1:39:57] like do what you can to like though maybe they reflect back on it it's like oh [1:40:02] Boy, was I smart to having believed in Lenny and what he's doing. So, yeah. [1:40:07] That is really beautiful. [1:40:09] Dharmesh, you are wonderful. Thank you so much for doing this.

[1:40:13] This has been a lot of fun. I'm glad we were able to put together. Same. We covered so much ground. We got through everything that I was hoping to get through and more. Where can folks find you online if they want to follow what you're up to and maybe reach out if they have questions? And then how can listeners be useful to you? [1:40:27] sure so i'm i'm dharmesh d-h-a-r-m-e-s-h everywhere i'm not only findable i'm unavoidable on the internet as it turns out um and [1:40:39] Follow me on social media and tell me where I'm being an idiot and when I can learn. And tell me your favorite ideas thing. [1:40:45] leave a YouTube comment and tell me which, [1:40:48] Lenny, episodes were your favorite, so I can go back, because I've been binge-watching anyway. [1:40:53] I'd love to know. And then speaking of that, I know you have websites of your content. You have your YouTube channel. Where can folks find those things? [1:41:01] um yeah if you just go to dharmesh.com that'll have links to the other places uh and probably most often on linkedin as it turns out um which is a whole topic for a whole other day uh [1:41:12] But... [1:41:13] Yeah, awesome. [1:41:14] All right, I'll let you go. Dermesh, thank you so much for being here. Thank you. Bye, everyone.