The Exchanges

Q kind of like a desperate search for more market, or when they don't have product market fit, when they try and go into enterprise as well. Similar to when they have a second product. A question that I have to you is, when's the right time to launch a second product? Often I feel it's just too early. How do you advise founders on when to launch a second product?

A A couple things. One is, um, you need to know Why you're launching a second product? That's the number one question. I'll give you buckets of reasons that are all good reasons. Um, one could be, uh, we were growing really, really nicely, but we were growing so well that now, um, we haven't hit like a hundred percent saturation, but our growth rates are stalling because there's not that many customers left to sell to for which we would be an ideal fit. And so things are getting harder now, uh, in this market. That's bucket number one. Bucket number two, we're growing nicely. Still lots of headroom in terms of nowhere near saturation, still single digit market share, but the category we're in is itself declining. We were doing great, but the ceiling happens to be now dropping. It's not that we hit the ceiling because we were growing. It's because the ceiling is dropping because there's not as big a market for that thing. That category is on the decline for whatever reason. So we need to kind of find something else. The third reason is There is an adjacent market that is a natural fit for the market we're in, and both for growth reasons and defensive reasons, we need to be in that other category. And this is the example of HubSpot. So HubSpot started in the marketing software business. Um, and about, I'll say maybe seven years in, uh, we decided that, okay, well, we have marketing…

AI assessment note: “you need to know Why you're launching a second product? That's the number one question.”

Q That is very funny. Um, yeah, tough on its friends as well. And yeah, I totally get that. Listen, I want to move into my favorite, which is a quick fire round. I could talk to you all day, Dalmash. It's been fantastic. So let's start with your favorite book and why?

A My favorite, uh, fiction book is Les Miserables, uh, Victor Hugo, and the reason is because it's the best book written of all time. That's an easy answer. Um, everyone should read it. Um, My favorite, this is, this gets harder as far as, uh, nonfiction. Um, I really like Getting to Yes. It's a negotiation book. That's one that I, like, I have read multiple times. Um, I love, uh, Innovator's Dilemma because that's sort of part of my job. So I reread that every couple of years, uh, and send people excerpts, uh, from it. So that's probably high on my list, but yeah. Um, books are harder now than they were, 10 years ago. It's, uh, A, because there's so much good content on the internet. That's part of it. But it feels like business books particularly have become a little bit formulaic.

AI assessment note: “My favorite, uh, fiction book is Les Miserables”

Q You agree with Marc Andreessen's kind of statement of like what he has on the billboard, raise prices. Um, and how do you think about that and some big lessons for you in terms of maybe where you fucked up pricing?

A Yeah. Um, I will say this, if you do raise prices and we have, um, over the years, um, Most of the numbers you track will get better, and that's why, so I, I don't, I don't universally agree with that sentiment of just raise prices and everything will work itself out, and here's why, and this goes to the kind of enterprise versus SMB debate a little bit as well, is that as you raise prices, and then I'm talking primarily on subscription-based models now, which, you know, are slowly becoming the predominant model, um, It's relatively easy to raise prices. Um, so for instance, when we went from two 50 to 500, uh, we made a very simple decision very early that says, okay, everyone that had purchased the product at two 50, we were not going to raise the price on them. So all new customers will pay the new price, all existing customers continue to pay the old price, and we held to that, um, for Well, to this day. Anyway, uh, it's a long story. But the reverse is not true. So let's say you get to, you raise the prices from two 50 to 500 to a thousand, and then let's say you somehow figure out that you overshot the market. Like in the last price jump, either the market changed or you overestimate the value you were provided, whatever it is. Let's say the actual number should have been 700, just making these numbers up. Now you have, let's say, a thousand customers paying you a thousan…

AI assessment note: “I don't universally agree with that sentiment of just raise prices and everything will work”

Q I, I know. I, I've seen it, Dharmesh. I would too. My question is, okay, so no founder meetings won. What are the other guardrails?

A Uh, no negotiating terms. So someone else leads the deal because negotiating terms requires you to actually spend time and, and do that. So all these things kind of flow to the kind of minimized time. I don't do, this is economically, Suboptimal. I don't do follow-on investments, and here's why. Because if I was going to do a follow-on investment, then I have to kind of pick which of the companies am I going to do follow-on, and which ones am I going to not participate on the follow-on rounds. If I don't participate in certain ones, then there's a signaling problem for the founders, like, okay, well, why did Dharmesh choose not to follow on with you? The way I have it now, a hundred percent of the companies, I don't do follow-on. There is no signaling problem, because everyone knows that. I've put it publicly out there. I tell the founders going in, this is my style. This is what I do. So a bunch of problems and I don't have to spend the time learning about whether the company is worth a follow on investment or not. It's like, it doesn't matter. I'm not going to do a follow on investment. I'm going to move on to the next one because that decision I can make in an hour because it goes back to kind of step one. Um, yeah. So.

AI assessment note: “Uh, no negotiating terms. So someone else leads the deal”

Q You agree with Marc Andreessen's kind of statement of like what he has on the billboard, raise prices. Um, and how do you think about that and some big lessons for you in terms of maybe where you fucked up pricing?

A Yeah. Um, I will say this, if you do raise prices and we have, um, over the years, um, Most of the numbers you track will get better, and that's why, so I, I don't, I don't universally agree with that sentiment of just raise prices and everything will work itself out, and here's why, and this goes to the kind of enterprise versus SMB debate a little bit as well, is that as you raise prices, and then I'm talking primarily on subscription-based models now, which, you know, are slowly becoming the predominant model, um, It's relatively easy to raise prices. Um, so for instance, when we went from two 50 to 500, uh, we made a very simple decision very early that says, okay, everyone that had purchased the product at two 50, we were not going to raise the price on them. So all new customers will pay the new price, all existing customers continue to pay the old price, and we held to that, um, for Well, to this day. Anyway, uh, it's a long story. But the reverse is not true. So let's say you get to, you raise the prices from two 50 to 500 to a thousand, and then let's say you somehow figure out that you overshot the market. Like in the last price jump, either the market changed or you overestimate the value you were provided, whatever it is. Let's say the actual number should have been 700, just making these numbers up. Now you have, let's say, a thousand customers paying you a thousan…

AI assessment note: “I don't universally agree with that sentiment of just raise prices”

Q That is very funny. Um, yeah, tough on its friends as well. And yeah, I totally get that. Listen, I want to move into my favorite, which is a quick fire round. I could talk to you all day, Dalmash. It's been fantastic. So let's start with your favorite book and why?

A My favorite, uh, fiction book is Les Miserables, uh, Victor Hugo, and the reason is because it's the best book written of all time. That's an easy answer. Um, everyone should read it. Um, My favorite, this is, this gets harder as far as, uh, nonfiction. Um, I really like Getting to Yes. It's a negotiation book. That's one that I, like, I have read multiple times. Um, I love, uh, Innovator's Dilemma because that's sort of part of my job. So I reread that every couple of years, uh, and send people excerpts, uh, from it. So that's probably high on my list, but yeah. Um, books are harder now than they were, 10 years ago. It's, uh, A, because there's so much good content on the internet. That's part of it. But it feels like business books particularly have become a little bit formulaic.

AI assessment note: “My favorite, uh, fiction book is Les Miserables, uh, Victor Hugo”

Q kind of like a desperate search for more market, or when they don't have product market fit, when they try and go into enterprise as well. Similar to when they have a second product. A question that I have to you is, when's the right time to launch a second product? Often I feel it's just too early. How do you advise founders on when to launch a second product?

A A couple things. One is, um, you need to know Why you're launching a second product? That's the number one question. I'll give you buckets of reasons that are all good reasons. Um, one could be, uh, we were growing really, really nicely, but we were growing so well that now, um, we haven't hit like a hundred percent saturation, but our growth rates are stalling because there's not that many customers left to sell to for which we would be an ideal fit. And so things are getting harder now, uh, in this market. That's bucket number one. Bucket number two, we're growing nicely. Still lots of headroom in terms of nowhere near saturation, still single digit market share, but the category we're in is itself declining. We were doing great, but the ceiling happens to be now dropping. It's not that we hit the ceiling because we were growing. It's because the ceiling is dropping because there's not as big a market for that thing. That category is on the decline for whatever reason. So we need to kind of find something else. The third reason is There is an adjacent market that is a natural fit for the market we're in, and both for growth reasons and defensive reasons, we need to be in that other category. And this is the example of HubSpot. So HubSpot started in the marketing software business. Um, and about, I'll say maybe seven years in, uh, we decided that, okay, well, we have marketing…

AI assessment note: “I'll give you buckets of reasons that are all good reasons.”

Q I, I know. I, I've seen it, Dharmesh. I would too. My question is, okay, so no founder meetings won. What are the other guardrails?

A Uh, no negotiating terms. So someone else leads the deal because negotiating terms requires you to actually spend time and, and do that. So all these things kind of flow to the kind of minimized time. I don't do, this is economically, Suboptimal. I don't do follow-on investments, and here's why. Because if I was going to do a follow-on investment, then I have to kind of pick which of the companies am I going to do follow-on, and which ones am I going to not participate on the follow-on rounds. If I don't participate in certain ones, then there's a signaling problem for the founders, like, okay, well, why did Dharmesh choose not to follow on with you? The way I have it now, a hundred percent of the companies, I don't do follow-on. There is no signaling problem, because everyone knows that. I've put it publicly out there. I tell the founders going in, this is my style. This is what I do. So a bunch of problems and I don't have to spend the time learning about whether the company is worth a follow on investment or not. It's like, it doesn't matter. I'm not going to do a follow on investment. I'm going to move on to the next one because that decision I can make in an hour because it goes back to kind of step one. Um, yeah. So.

AI assessment note: “no negotiating terms... I don't do follow-on investments”

Q How do you think about resourcing for second product? Is it like, hey, very lean, test, very cheap, see what we can do MVP? Or is it that never worse? You're either all in or all out. How do you recommend on the resourcing for new products?

A It's, it's a great question. I've tried it both ways. Um, personally, and this might be Uh, it is symptomatic of, um, of, of HubSpot, but in our world, we tend to do better with, uh, going all in and not, like, doing experiments. Okay, we, and we might be wrong, we made this decision, here's the thing we're gonna do, and this is not an experiment. This is not a drill. We are going to do this. So when we did decide to go into CRM, it was not, oh, let's try to build a CRM product. We'll do it as cheaply as I'm not saying you shouldn't be scrappy. You should, but in terms of like commitment to it, um, I, I sort of believe, and it might vary in other companies. Other companies might be better at this than, than we are, but, um, I believe in self-fulfilling prophecies when it comes to product investment that says, if you decide that you are going to conquer this category and build this new product, that's going to be game changing for you and you're gonna do it. Then you're going to put the best people on it. You're going to put the resource and you're going to leave no stone unturned. You're going to leave no obstacle in the path because you are all in on this bet. Um, and the degree you do that, I mean, this is relatively intuitive. It's like, okay, well, if you do that, the odds of that thing succeeding go up. So the, but here's the thing you have to be careful of, um, is that th…

AI assessment note: “we tend to do better with, uh, going all in and not, like, doing experiments”

Q accent appealing to do, but, uh, I'm thrilled to make it happen. I want to start also, I heard a little bit of a context that your wife Kristen, is the reason that you and Brian got together in the first place, scouting him at an MIT Sloan cocktail party. So can you take me to that party? What happened between you and Brian, and how that led to HubSpot?

A Yeah, so, uh, it's a, it's a fun story. So, uh, both Brian and I, uh, joined this class at MIT for grad school. It's part of the business school, and they had this kind of mixer, social cocktail party thing, so the incoming students and the classmates could kind of meet each other, and significant others were invited. Um, and you don't know me that well, but the worst possible thing you can do to me is put me in a social environment with a bunch of people I don't know and have me make small talk about things, you know, I don't know anything about or don't care about. And so, um, cause I'm the kind of hyper introvert and there's no exaggeration here. Um, my wife on the other hand is not. She's at the other end of that, uh, of that spectrum. She's super friendly, love, loves meeting people. And so we'll, what she'll do, um, at these kinds of events, so she'll kind of scout the room and I'll be hiding in a corner somewhere and she'll go scout the room. She'll talk to people. She'll be parts of little groups. And then she'll come back with a scouting report. It's like, oh yeah, I met Priya over here. She's awesome. She's from tech. Uh, I think you'll really like her. And then she came back, and this is interesting, uh, she came back and said, yeah, I met this guy, Brian. I don't know that two of you are going to hit it off because he's, you know, he's kind of got a sales background…

AI assessment note: “she came back and said, yeah, I met this guy, Brian.”

Q Damesh, I specialize in going off schedule. You have such a lovely relationship with your wife. You see it on social as well. I saw the post about the lawnmower, which I thought was hilarious. Help me out here, Damesh. What's the secret to such a fulfilling and wholesome marriage?

A Uh, the simple, the simple thing is you have to kind of enjoy each other's company. That's the number one thing, like enjoy spending, you know, time with each other. Uh, I think number two is there has to be kind of mutual admiration and respect. And those are much easier things to define than love and things like that. It's like, okay, it's a little femoral. I'm not exactly trying to explain it, but I can tell you who I have respect for. I can tell you who I admire. I can tell you, um, you know, just good people in the world. It's like, um, And it's interesting and we're very complimentary. So she's not from tech at all. Um, you know, she, she was a pharmacist by training and kind of what made us hit it off over the, you know, over a long period of time is a, that mutual respect, but then it's like, we make a good team. So we like to joke in the family that, um, you know, she wants to save the world. She got an environmental degree, like she's out, um, and I want to own it, right? I'm the capitalist, warm hearted, but red blooded capitalist. Um, and so we make a good pair. I'm out, uh, and I'm think, I'm relatively good at making money, and she will be great at channeling it to good causes, um, so.

AI assessment note: “the simple thing is you have to kind of enjoy each other's company”

Q Culture, hiring, the qualities we look for, it's all decisions. And again, I have to give Kieran on your team credit for this, but I love it again. He asked, when you have very difficult or problematic decisions that need to be made, what's your framework for solving difficult problems, and do you have a process you go through?

A Um, yes. So there, I'll, I'll talk at two levels. One is a very kind of high order, going back to the kind of the early stages of HubSpot, um, is how founders, we as two co-founders made high order decisions, and we had a very simple framework for this. Uh, number one is, do we both agree on the path on this particular decision? It's like, would we, are we choosing the same option? Would we choose the same option? If the answer is yes, decision made, there's no conversation to be had. We both agree. It's the same path. If we don't agree, Does one of us feel much more strongly about their choice than the other? By the way, it has nothing to do with areas. Look, it could be, I'm CTO. It could be about the product. Uh, he's, you know, head of marketing, sales, and everything else. It could be about pricing or something else, sales related. It doesn't matter what area it falls under. Does one of us feel much more strongly? If one of us feels much more strongly, they win. We pick their path. If both of us feel very strongly and still disagree, then we debate, and we debate, and we debate, and then ultimately, Brian decides because he's CEO. Uh, but we run it as a partnership, but we go through that kind of heuristic, um, and there have been, like, I can count, count the number of times with the fingers of one hand and still have fingers left over the number of times that that has, l…

AI assessment note: “we had a very simple framework for this. Uh, number one is, do we both agree”

Q of my companies being like, we need to move to enterprise. We need to move to enterprise. And I'm going, we're at 800 K ARR. I mean, we're so under saturated on SMB. Why are we rushing to enterprise? What are your thoughts on startups that are rushing to enterprise? How do you advise them when their home is in SMB and they're going, we need to move to enterprise?

A Yeah. Um, so I have, I have strong opinions on this and I'll, um, I'll share them. So I told you when Ryan and I started the company, kind of the, one of the top two reasons we started at HubSpot was we wanted to work together. Um, the second reason was we had a passion around SMB. Now I'll tell you why we had a passion around SMB. We both had grown up in enterprise software, right? That's, that was our background. My first, uh, you know, first software company, software startup, uh, was an enterprise software and we knew it sort of sucked. Right. It, it had always kind of sucked. It's, it's hard, I should say. Um, and, but it's even harder now. So in the nineties, which is kind of the heyday of, of enterprise software, you know, life was good. You signed multimillion dollar contracts, but then you had this kind of overpurchasing and you had this kind of glut. Uh, but then there's all this kind of downside to enterprise software, which is you get revenue concentration. And so you have a small number of customers paying you a lot of money who thereby, uh, understandably have a strong degree of influence over the product roadmap and your vision, right? So You can have whatever vision you want, but if your number one customer says, I need you to build these three things over the course of the next year, it's hard to resist building those three things, especially if you're a startu…

AI assessment note: “small number of customers paying you a lot of money who thereby”

Q When I spoke to Dani Herzberg before the show, she said that you were the disruptor from within constantly, whether it's on startups, whether it's inbound, how do you think about effective disruption from within to prevent apathy and bluntly, you know, HubSpot's a very big public company, um, lethargy, actually. How do you disrupt from within so effectively?

A Um, yeah, I might qualify the effectively part. I think we do it reasonably well, but, um, so here's the thing. So I've reduced the things that I work on at HubSpot. Um, this has been the case for now a decade down to three things. Um, and I changed them periodically, but I get it down to exactly three things. And I'll tell you what my three things are right, uh, right now. It's, uh, it's platform. The thing we're building. Brand, which is a story of HubSpot. And the third thing, which is, I think, longest running thing ever since I've been tracking these three things, this has been on my list of three things, is boldness. And what I mean by that is that a non-zero percent of my waking hours and even my non-waking hours are around, how do I push the org to take more calculated risk? It's as simple as that. It's like, okay, what is it that's keeping us from it? Are we not scared enough? Do we not see this particular trend coming? Are we like, oh, well, You know, we, we've got our product roadmap laid out, which most companies do at scale. It's like, okay, like, we have in our heads, 15 other years worth of, like, here's the things we could do. Like, customers are asking for it. They are, like, no-brainer investments. Like, we can add these features to these products, and we will make money. Like, hands down, we will make money. Uh, and so, how do you fight that? And, and the way…

AI assessment note: “how do I push the org to take more calculated risk? It's as simple as that.”

Q were at HubSpot for four years, but they want to know your answer now. They asked, what is a high conviction belief you have about technological, political, or social, or societal changes that most people aren't noticing? So in 2017 they said crypto, You said CEO is being more political. 20 19 remote work. 20 20 every company will be a media company. What would the answer be in 2022?

A My answer would be that The way buyers and sellers connect is fundamentally broken because you don't own your data. Uh, the consumers don't own the data right now. So here's what's happening. The, and we, we kind of experienced this in the consumer world already, uh, which is, oh, like when I tweet, uh, Twitter gets a hundred percent of whatever economic value that I create, right? Like directly, if they're, they're gonna advertise against it, they may sell subscriptions against it, whatever it happens to be. Um, I make nothing. When you fill out your LinkedIn profile, um, you're gonna Tell them your work history and the value you're hoping when people originally sign up is that, oh, it helps me be more discoverable in order to get a job. But then after that, it's like, if you're not looking for a job, like what was that creating for you? And the answer is, um, you know, they will essentially license slash sell slash make that data accessible and you get exactly zero percent of that value. Uh, and I'm not saying either of those companies are bad companies. I'm saying the model is broken and that in the future, um, that there will be a more direct because

AI assessment note: “The way buyers and sellers connect is fundamentally broken because you don't own your data”

Q Damesh, I specialize in going off schedule. You have such a lovely relationship with your wife. You see it on social as well. I saw the post about the lawnmower, which I thought was hilarious. Help me out here, Damesh. What's the secret to such a fulfilling and wholesome marriage?

A Uh, the simple, the simple thing is you have to kind of enjoy each other's company. That's the number one thing, like enjoy spending, you know, time with each other. Uh, I think number two is there has to be kind of mutual admiration and respect. And those are much easier things to define than love and things like that. It's like, okay, it's a little femoral. I'm not exactly trying to explain it, but I can tell you who I have respect for. I can tell you who I admire. I can tell you, um, you know, just good people in the world. It's like, um, And it's interesting and we're very complimentary. So she's not from tech at all. Um, you know, she, she was a pharmacist by training and kind of what made us hit it off over the, you know, over a long period of time is a, that mutual respect, but then it's like, we make a good team. So we like to joke in the family that, um, you know, she wants to save the world. She got an environmental degree, like she's out, um, and I want to own it, right? I'm the capitalist, warm hearted, but red blooded capitalist. Um, and so we make a good pair. I'm out, uh, and I'm think, I'm relatively good at making money, and she will be great at channeling it to good causes, um, so.

AI assessment note: “the simple thing is you have to kind of enjoy each other's company.”

Q How do you think about resourcing for second product? Is it like, hey, very lean, test, very cheap, see what we can do MVP? Or is it that never worse? You're either all in or all out. How do you recommend on the resourcing for new products?

A It's, it's a great question. I've tried it both ways. Um, personally, and this might be Uh, it is symptomatic of, um, of, of HubSpot, but in our world, we tend to do better with, uh, going all in and not, like, doing experiments. Okay, we, and we might be wrong, we made this decision, here's the thing we're gonna do, and this is not an experiment. This is not a drill. We are going to do this. So when we did decide to go into CRM, it was not, oh, let's try to build a CRM product. We'll do it as cheaply as I'm not saying you shouldn't be scrappy. You should, but in terms of like commitment to it, um, I, I sort of believe, and it might vary in other companies. Other companies might be better at this than, than we are, but, um, I believe in self-fulfilling prophecies when it comes to product investment that says, if you decide that you are going to conquer this category and build this new product, that's going to be game changing for you and you're gonna do it. Then you're going to put the best people on it. You're going to put the resource and you're going to leave no stone unturned. You're going to leave no obstacle in the path because you are all in on this bet. Um, and the degree you do that, I mean, this is relatively intuitive. It's like, okay, well, if you do that, the odds of that thing succeeding go up. So the, but here's the thing you have to be careful of, um, is that th…

AI assessment note: “in our world, we tend to do better with, uh, going all in”

Q How do you test for that low ego, high accomplishment when hiring?

A Well, when hiring, it's actually relatively straightforward. Um, do they take full credit for the, all the awesomeness that has happened to them, uh, or around them or because of them, or do they, um, do they share that credit? That's one thing. Uh, another, so in this, even post hiring, this is an easier question to answer. Um, the best people in my mind or my experience, uh, HubSpot and otherwise are the ones that, uh, when things go wrong and things will always go wrong, they will shoulder the responsibility. Right? They're not trying to shift blame. It's like, oh yeah, this went wrong because we didn't get the budget, or this person kind of pushed back on us, or we should have done it my way, and we chose to do this other thing, and therefore it didn't work. Um, the best people shoulder responsibility, but share the credit. So when things do work, they're like, yeah, yeah, I know this went really well, and it's great that we kind of, you know, beat the numbers or accomplished this, but it really was Susie over here that was kind of instrumental in that happening, and it was this over here, and I'm just glad to have been part of it, right? Like, it's just, uh, people that have that, uh, kind of low ego, Tend to really give disproportionate credit to others in terms of what, uh, what they've accomplished.

AI assessment note: “do they take full credit for the, all the awesomeness... or do they share that credit?”

Q you know, when I, when I look at you and I listened to you say Dalmash, it just seems all very natural. It's all so fluid and innate within you, this kind of core operating style in terms of insecurities. I think it's helpful and humanizing for founders to hear even people like you Have insecurities in, you know, operating. What do you think are your big insecurities today operating?

A Um, well, the big one is just around imposter syndrome, right? And, um, and everyone has it. People talk about it. Uh, I've had it my entire life. Um, and I didn't know what it was called until, you know, much later in my life, but it's around, um, so my insecurity is the fact that, uh, I grew up With kind of very modest, very, very modest means. Um, and, and that's okay. Lots of people, you know, grew up, but I just didn't have access to like a world-class education. I didn't get, uh, even access to a computer or technology until I was in my, you know, twenties, which is kind of unheard of, right? So I feel like I'm constantly like catching up, right? Like others have a massive head start. Um, and I think I'm a reasonably smart guy, so I, I have, you know, a decent amount of confidence there, but in terms of just raw exposure, things I've experienced Things I got exposed to, um, kind of early on in my career, um, I, I just didn't, uh, and I have an insecurity around that to this day, right? It's like, okay, well, you know, if, um, and I'll single out, you know, Zuckerberg and Gates and these folks, whatever, that are kind of, um, some of the icons of tech, it's like, Wow. Like they went to the best schools. They had computers where they were like 12, right? And they were programming when they were 14. It's like, like, how do you compete with that? How do you reproduce that alc…

AI assessment note: “the big one is just around imposter syndrome”

Q You said about modest means there when you were growing up, you know, obviously your, your son, um, I think it's 11 or 12. Obviously it has a very different lifestyle than you did growing up. How do you instill the same work ethic and values given a very different style of upbringing? It must be tough.

A It is, it's, uh, borderline impossible, right? Um, it's, it's because it's such a diametrically opposed thing. So then the question is, is, you know, what we will call kind of drive or ambition or just this kind of need to build or create value, is that innate, right? Or is it because you're kind of hungry and you have a chip on your shoulder and you've got a point to prove, uh, one could easily make the case that it sure helps a lot to have the hunger because you're gonna have that drive because you have no choice but to not have it, right? It's, uh, Comes down to survival. Um, having said that, the one thing that I have found, um, works better Then just like, oh, you need to like work harder, do this, whatever that, you know, um, for anyone that has kids knows that doesn't really work that well, is to kind of tap into the things he does care about and like, uh, and he is one to kind of keep score, right? And then they, um, and he obviously loves video games like, uh, many children his age. But, uh, one of the things, you know, I've done recently, um, a short excursion is that, um, you know, so he's taking a Python programming class, right? Just, uh, doing all the things I loved, uh, and I'm trying to relive my life through him. He asked for it. He's been wanting to do it. You know, he loves tech, but, um, but then I'm like, okay, well, you know, it's really abstract for him. …

AI assessment note: “tap into the things he does care about and like”

Q SMB, where they're having sales reps close 3000 dollar contracts, and having customer success managers, and I'm going, Dharmesh, this does not make sense as a financial engine, and they don't get it, and they go, but we'll scale into enterprise. How do you respond and advise them who are kind of trying to plaster on enterprise costs to this SMB distribution, and then just thinking they'll scale into enterprise?

A I think it's misguided. Um, let's, let's close up on the SMB thing. We'll close up on one thought, um, because I think it's important, is that there's this thing in, in, I'll say software, but even tech more broadly, which I call reverse gravity, that left to your own devices, your company will be pulled up into the enterprise. Always. And the only way not to be pulled up in the enterprise is you have to spend energy to resist that pull. And here's why, is that as you are, so let's say wherever on the spectrum you are, and, you know, definitions vary in terms of what's considered SMB versus enterprise, doesn't really matter, but let's say you're at SMB now, and then someone talks you into, it's like, okay, we're gonna nudge up the price point, the market, we're gonna go, instead of going from 10 to 50 person companies, we're gonna go from 50 to 500, whatever it is. Um, as you move up, every single metric you track, Will improve. Everything. Not like, oh, this thing got better, that, like, just about everything you track will look better, retention's better, getting better ARPU, average, you know, revenue per customer. Um, all those things will look better. The one thing over the long term that almost is never better is the, uh, is the, the competitive dynamic. Because everyone got pulled up. So now you're sitting here in the enterprise thing, and you're duking it out with every…

AI assessment note: “I think it's misguided. Um, let's, let's close up on the SMB thing.”

Q When I spoke to Dani Herzberg before the show, she said that you were the disruptor from within constantly, whether it's on startups, whether it's inbound, how do you think about effective disruption from within to prevent apathy and bluntly, you know, HubSpot's a very big public company, um, lethargy, actually. How do you disrupt from within so effectively?

A Um, yeah, I might qualify the effectively part. I think we do it reasonably well, but, um, so here's the thing. So I've reduced the things that I work on at HubSpot. Um, this has been the case for now a decade down to three things. Um, and I changed them periodically, but I get it down to exactly three things. And I'll tell you what my three things are right, uh, right now. It's, uh, it's platform. The thing we're building. Brand, which is a story of HubSpot. And the third thing, which is, I think, longest running thing ever since I've been tracking these three things, this has been on my list of three things, is boldness. And what I mean by that is that a non-zero percent of my waking hours and even my non-waking hours are around, how do I push the org to take more calculated risk? It's as simple as that. It's like, okay, what is it that's keeping us from it? Are we not scared enough? Do we not see this particular trend coming? Are we like, oh, well, You know, we, we've got our product roadmap laid out, which most companies do at scale. It's like, okay, like, we have in our heads, 15 other years worth of, like, here's the things we could do. Like, customers are asking for it. They are, like, no-brainer investments. Like, we can add these features to these products, and we will make money. Like, hands down, we will make money. Uh, and so, how do you fight that? And, and the way…

AI assessment note: “how do I push the org to take more calculated risk?”

Q Why was, why was product too so painful?

A Because we had already built the strength And been so good at inbound marketing and marketing software for years and years and years, growing fast, raised funding, and we were about to go into an IPO, um, and the year before the IPO is when we made this brilliant decision, like, oh, we're getting into CRM, right? Um, but it was painful because it was supposed to be painful, right? It's like, it's, um, We did the equivalent of, like, Volvo trying to start getting into, like, racing cars or something, like, you know, sports vehicles. Like, you know, that's not what they're known for, right? Like HubSpot was known for marketing. We create a category called inbound marketing, and we're associated with that, and it's scary. Not that we couldn't do it, it was still software, but, like, did we have the market's permission, um, to actually go do that thing, right? It's like, how would our customers react to this? Um, and then, you know, what new, like, muscle group do we need to, like, with inbound marketing, we had a very strong point of view. On what was broken with marketing is it wasn't about the product. It wasn't about the software. It was about this entire movement, uh, that was happening. And we got up on stages and, and talked about it, wrote a book, have an event with, you know, 30,000 people. Like it was a movement. And now when we're getting into An area we don't know hardl…

AI assessment note: “HubSpot was known for marketing... we're getting into An area we don't know hardly anything about”

Q were at HubSpot for four years, but they want to know your answer now. They asked, what is a high conviction belief you have about technological, political, or social, or societal changes that most people aren't noticing? So in 2017 they said crypto, You said CEO is being more political. 20 19 remote work. 20 20 every company will be a media company. What would the answer be in 2022?

A My answer would be that The way buyers and sellers connect is fundamentally broken because you don't own your data. Uh, the consumers don't own the data right now. So here's what's happening. The, and we, we kind of experienced this in the consumer world already, uh, which is, oh, like when I tweet, uh, Twitter gets a hundred percent of whatever economic value that I create, right? Like directly, if they're, they're gonna advertise against it, they may sell subscriptions against it, whatever it happens to be. Um, I make nothing. When you fill out your LinkedIn profile, um, you're gonna Tell them your work history and the value you're hoping when people originally sign up is that, oh, it helps me be more discoverable in order to get a job. But then after that, it's like, if you're not looking for a job, like what was that creating for you? And the answer is, um, you know, they will essentially license slash sell slash make that data accessible and you get exactly zero percent of that value. Uh, and I'm not saying either of those companies are bad companies. I'm saying the model is broken and that in the future, um, that there will be a more direct because

AI assessment note: “My answer would be that The way buyers and sellers connect is fundamentally broken”

Q time on is distribution and how they think about it. How do you think about the weighting of Product versus distribution. I think, like, the building they will come is crap. It's all in distribution. Like, your Wordle competitor, yeah, but you've got 300,000 followers on Twitter, and you could start flywheel like never before. Do you agree with me, and how do you think about that product versus distribution?

A I do agree with you. Um, so, So I'll share this with you, and this is, uh, something we applied at HubSpot, but something I've believed for a long time in terms of startups, and I've been, you know, in and around startups pretty much my entire career, is that, um, there are, like, three kinds of risk when you start a startup. Risk number one is the risk that you won't be able to build the product you envision. Like, you just can't create it, ok? That's risk number one. Risk number two is you're able to build it, but that there's a risk that, um, There's just no market for it. There's no customers. You built the product, but there's no one there to actually buy it at the levels that, and the third one is that you build the product. There is a market there, but the capital necessary to actually build a business around that product, um, you either can't get access to, or you can't make it happen. That's the kind of financial risk, um, or capitalization risk. Uh, most founders in tech companies, um, they almost always jump directly into the product risk and try to mitigate that risk by just starting to build the product. It's like, okay, well, the other tool, I don't, either they don't think about it or they think about it, but they think those are secondary. My advice and strong, strong advice is that we should stipulate that you will be able to build a product. Rarely have I ever…

AI assessment note: “I do agree with you. Um, so, So I'll share this with you”

Q How do you test for that low ego, high accomplishment when hiring?

A Well, when hiring, it's actually relatively straightforward. Um, do they take full credit for the, all the awesomeness that has happened to them, uh, or around them or because of them, or do they, um, do they share that credit? That's one thing. Uh, another, so in this, even post hiring, this is an easier question to answer. Um, the best people in my mind or my experience, uh, HubSpot and otherwise are the ones that, uh, when things go wrong and things will always go wrong, they will shoulder the responsibility. Right? They're not trying to shift blame. It's like, oh yeah, this went wrong because we didn't get the budget, or this person kind of pushed back on us, or we should have done it my way, and we chose to do this other thing, and therefore it didn't work. Um, the best people shoulder responsibility, but share the credit. So when things do work, they're like, yeah, yeah, I know this went really well, and it's great that we kind of, you know, beat the numbers or accomplished this, but it really was Susie over here that was kind of instrumental in that happening, and it was this over here, and I'm just glad to have been part of it, right? Like, it's just, uh, people that have that, uh, kind of low ego, Tend to really give disproportionate credit to others in terms of what, uh, what they've accomplished.

AI assessment note: “do they take full credit for the, all the awesomeness... or do they share that credit?”

Q Why was, why was product too so painful?

A Because we had already built the strength And been so good at inbound marketing and marketing software for years and years and years, growing fast, raised funding, and we were about to go into an IPO, um, and the year before the IPO is when we made this brilliant decision, like, oh, we're getting into CRM, right? Um, but it was painful because it was supposed to be painful, right? It's like, it's, um, We did the equivalent of, like, Volvo trying to start getting into, like, racing cars or something, like, you know, sports vehicles. Like, you know, that's not what they're known for, right? Like HubSpot was known for marketing. We create a category called inbound marketing, and we're associated with that, and it's scary. Not that we couldn't do it, it was still software, but, like, did we have the market's permission, um, to actually go do that thing, right? It's like, how would our customers react to this? Um, and then, you know, what new, like, muscle group do we need to, like, with inbound marketing, we had a very strong point of view. On what was broken with marketing is it wasn't about the product. It wasn't about the software. It was about this entire movement, uh, that was happening. And we got up on stages and, and talked about it, wrote a book, have an event with, you know, 30,000 people. Like it was a movement. And now when we're getting into An area we don't know hardl…

AI assessment note: “getting into An area we don't know hardly anything about.”

Q Well, do you get zero percent of that value? Because you get distribution. I get distribution. And then we monetize that distribution. You with the world competitor, you could sell it. You could sell premium. I monetize my distribution with sponsorships and with talent. So we do get value.

A We do on the company side, um, yes, on the personal side, you're building brand, but it's an indirect value. So, so let's say we were even monetized, like, okay, this is a value that I actually got. Um, the question is, if you even lump that in, what percentage of the overall value that was created went to the creator of that value versus the intermediary, right? It's like, okay, well, companies are buying, it's like, oh, I want to recruit, you know, I go to LinkedIn, I do a recruitment, you know, database search or whatever, and I, Make hundreds of millions of dollars, billions of dollars in revenue. How much of that actually flows back, um, you know, to the actual consumers and owners of that, um, owners of that data? That's the thing I wonder.

AI assessment note: “We do on the company side, um, yes, on the personal side”

Q What were the biggest break points in HubSpot scaling?

A Um, So I don't think about it in terms of head count. I think about it in terms of like milestones in the company. Uh, one was around, uh, so we had a relatively smooth growth curve, um, relatively predictable as a textbook, uh, textbook case. But, uh, when we went, um, I'll, I'll give you a few examples. Product two, big, big, big, uh, lots of pain, uh, going to product two. First of all, just making a decision to do product two, right? That was big, uh, going international. It's like, okay, well, we're gonna not just sell the United States and we're not gonna just take, Uh, customers of convenience because we have this thing called the internet. Fine. We were selling internationally, but we weren't really selling internationally, right? The product wasn't localized. We had no sales team anywhere other than, um, we had no support in other languages, all those things. So that was another kind of, um, pivotal point. Uh, when we was public, that's another pivotal point.

AI assessment note: “Product two, big, big, big, uh, lots of pain... going international”

Q How do you test for market? Because everyone does customer discovery and they say, would you like this? And everyone goes, yes, I would. And they go, great, we've got a market. So how do you test for market and validation?

A I'm a little bit old fashioned this way. Um, the way to test a market Is to, um, create something of value and get value in exchange, like money. Like, like, build a product, charge for the, I'll tell you what HubSpot did. And, and this is one of the thousand things that my co-founder Brian and I, like, completely agreed on. Like, we talked about this all the way through. It's like, okay. And we've talked about exactly this risk. It's like, okay, we're, you know, we're not splitting atoms. We're not creating a new energy source. We're putting someone on Mars. Let's assume right now that the product we have in mind that we'll be able to build, um, And so how do we figure out if there's a market or not? It's like, oh, well, the way to figure out if there's a market or not is to ask people for money and see if they give it to you. Okay, fine. Now what do we need in order to ask people for money? Well, we need a product. Fine. We have a product in alpha. One can argue whether we should or shouldn't be charging for it. We're gonna charge for it. And the other thing you need is a price. Because in order to ask for money, you have to know what you're going to ask for. All right. And so I'll tell you the conversation that Brian and I had in order to kind of determine the price for HubSpot in year one. Brian, by the way, context building. We had just been through Two years of business s…

AI assessment note: “ask people for money and see if they give it to you”