The Exchanges

Q Was now HubSpot could mean a lot of things. Actually, I don't know what it means. Was this always the vision to be some sort of SMB business? What was this initial vision on? I'd actually don't know on day zero.

A Yeah. The only reason, well, not the, I mean, the primary reason we started the company is both of us had a, a passion for SMB. This is when we were both grad school students when we first kind of met as classmates. And partly the reason is we had both done enterprise software before in our prior lives. As it turns out, enterprise software sucks as a life. Um, you've got these extended sales cycles. It takes you so long to figure out product market fit because you don't get as many data points back. Um, the other end of the spectrum, you could do consumer applications, consumer companies, and those tend to be very kind of, uh, bimodal outcomes. Either you could come up with something great. It's the next Facebook and it's billion plus dollars and, or it's nothing because you, you know, you just don't know if you're going to break it through. So beauty of SMB is that you have the kind of old fashionedness of enterprise, which is you can charge money for software, but you have the scale of consumer where there's millions of them out there to be served. Yeah. And we were just excited about, and we thought it was an underserved market that, you know, there were, everybody ends up getting pulled up into the enterprise. Um, and we felt that if we could kind of have the courage of our conviction and stay in SMB, that that would be, that would work itself out. That was one of the found…

AI assessment note: “the primary reason we started the company is both of us had a, a passion for SMB”

Q So it sounds like you had, like, You know, at the end, companies are either sales-led or sort of product-led at some level. Occasionally there's quirky other ones, marketing or design, like Mailchimp or Figma we chat about, but did you argue? Did the CTO argue that there was not enough resources in engineering? Were you, were you frustrated with your co-founder?

A Well, I wouldn't call it frustration because we both made a deliberate decision in the early, um, early years of HubSpot. This is, okay, we're building business software. Okay, we're not putting someone on Mars, inventing a new energy source. So let's stipulate that if we happen to stumble into an actual market, that we will be able to build a product to kind of serve that market. So the risk we were trying to mitigate in the early years is the only way to figure out if there's a market or not is to try and sell into that market and see if people will pay you money and if they will stay, right? So that's the thing. Um, the, the challenge was, uh, so that was a very deliberate, intentional decision. But then you sort of get addicted to that curve, right? They're going month and month and quarter. It's like, ah, that looks really pretty. It's really fun to show that at a board meeting. Um, so we didn't get frustrated with each other, but we, I think we had like a, a joint epiphany that says, okay, well, this can't continue. Like it's been a good run, but we can't do this. There was no argument. It was like, yeah, let's do this.

AI assessment note: “so we didn't get frustrated with each other... There was no argument.”

Q Um, because I think 50 is the new, the new number for me. If you don't have this help at 50, you're digging yourself so deep that it's tough to dig out after 50, right?

A That you have the math. Yeah, as an industry, we talk about technology debt a lot, right? It came up in an earlier conversation, and we understand that, and that was a kind of analog to financial debt, which we understood even better, but there is such a thing as people debt, right? It's like, okay, well, I'm taking the shortcut right now, and I'm gonna hire all engineers, or all designers, or all product people, and no one in kind of people or the other kind of related disciplines, and I think the people debt has a higher interest rate, uh, than technology debt or financial debt, and it's, it's unknown, right? So if you make those mistakes or those missteps, it's hard to kind of Like change, and sometimes if you make a big mistake and do something toxic to your culture, kind of rooting that toxicity out is near impossible sometimes, right? So it's, ah, yeah, I think.

AI assessment note: “there is such a thing as people debt, right?”

Q The features from two to two, even though we love them all, our children, can you really prioritize them equally?

A And this is a long running, uh, debate up until we made the decision, um, and even now, because it's another zig, right? Like everyone you ever talk to says, you gotta pick one. You're not gonna be able to straddle the fence and do both, you know, reasonably well. You're gonna compromise both. Um, and there are really good, strong arguments in that favor. The counter argument, um, for us was, okay, well, we have a lot of leads coming in. That's part of it, but it's like, oh, well, the, the investment we make on our upper market, 202,000 segment, we have these features that we add that we can kind of subside. We're making money. Yes. And then over time, our MO is we pull those down to lower tiers all the way down to the free tier. And so it benefits the fact that we're in the kind of upmarket market.

AI assessment note: “our MO is we pull those down to lower tiers all the way down to”