In this episode of 20vc, Harry Stebbings interviews Dharmesh Shah, the founder and CTO of HubSpot, a comprehensive CRM platform. Shah discusses his journey from bootstrapping his first company, Pyramid Digital Solutions, to creating the multi-billion-dollar enterprise HubSpot, highlighting his commitment to SMBs and the importance of culture within a company. He emphasizes transparency, humility, and the value of community in business success. Additionally, Shah shares insights into his angel investing philosophy, focusing on minimizing time rather than maximizing returns, and his predictions for future market efficiencies. Throughout, Shah advocates for customer-centric approaches and the significance of bold, calculated risks in driving company growth and innovation.
"Now, Dharmesh started HubSpot in 2006 and today it is a publicly traded company with over three and a half thousand people and a market cap of $16.9 billion as of today."
This quote highlights Dharmesh Shah's successful entrepreneurial journey with HubSpot, emphasizing the company's growth and market significance.
"In addition to all of this, Dharmesh coauthored Inbound marketing. Dharmesh founded and writes for Onstartups.com as top ranking startup blogging community with over a million members."
This quote summarizes Dharmesh's contributions to the startup ecosystem, including his writing and community-building efforts.
"The reason HubSpot started was two reasons. One, I wanted to work with brian, and two, we both had a shared passion for SMBs."
This quote explains the foundational reasons behind HubSpot's creation, highlighting the importance of partnership and shared goals.
"The simple thing is you have to kind of enjoy each other's company. That's the number one thing."
This quote captures the essence of Dharmesh's view on marriage, emphasizing the joy of companionship as a key element.
"The best people I've ever met have a very low ego to accomplishment ratio."
This quote reflects Dharmesh's perspective on leadership, where humility in the face of success is highly regarded.
"Culture debt, 16 years later, like we are now, you're still sort of paying that price."
This quote underlines the enduring impact of early hiring decisions on a company's culture and the challenges of rectifying them.
"Culture is a product. So we build a product. If you're a tech company, you build a product for your customers."
This quote illustrates the approach of treating company culture as a product that needs to be thoughtfully crafted and maintained.
"Once we got through that, talked people off the ledge and I understood better why they were reacting negatively is because culture, as it had been practiced before, was mission statements on the wall and high fluten words like integrity and this and excellence and whatever."
This quote explains the initial misunderstanding among employees about the company's cultural shift, associating it with superficial corporate practices rather than meaningful values.
"And that's when we came up with the original set of what some people call values. I think of them as coefficients or the attributes of people. And transparency was up there, humility was up there, empathy was up there in terms of the attributes that really kind of stood out."
The quote highlights the core attributes that HubSpot identified as essential for success within the company, moving away from generic values to specific, actionable traits.
"Regardless of where in kind of stage of evolution you are, the best time to work on culture is time t equals zero. Simultaneous to thinking about the product, think about the people."
This quote emphasizes the critical importance of prioritizing company culture from the inception of a startup, suggesting that it should be developed alongside the product.
"The big one is just around impostor syndrome. Everyone has it, people talk about it. I've had it my entire life and I didn't know what it was called until much later in my life."
This quote reveals Shah's personal struggle with impostor syndrome, a common experience among successful individuals, highlighting its impact on his perception of his achievements.
"It's borderline impossible because it's such a diametrically opposed thing. So then the question is what we will call drive or ambition, or just this kind of need to build or create value."
The quote captures the difficulty of instilling the same drive and ambition in a child who grows up in a different environment than the parent, acknowledging the influence of upbringing on one's motivation.
"Most founders, they almost always jump directly into the product risk and try to mitigate that risk by just starting to build the product."
This quote advises against the common startup mistake of prioritizing product development over market validation, emphasizing the importance of proving market demand early on.
"But the one big value to it, it was simple. And the thing we were trying to do was we were not necessarily trying to optimize for the cash."
The quote conveys the strategic decision to prioritize simplicity and market validation over maximizing immediate revenue in HubSpot's early pricing strategy.
"So I have strong opinions on this and I'll share them. I told you, when Brian and I started the company, one of the top two reasons we started HubSpot was we wanted to work together. The second reason was we had a passion around SMB."
This quote explains Shah's preference for the SMB market and his rationale for choosing it over the enterprise market when starting HubSpot, emphasizing the agility and feedback opportunities in SMB.
"ome is based on the number of iterations. That's the one predictor of it. So if I can go through something a thousand times and someone else went through it 100 times, I'm going to do something fundamentally better."
This quote emphasizes the importance of repetition and iterations in mastering a task or business process. The more you repeat, the better you become.
"I just believe that as long as you have a data piping back into the system on the enterprise side, because the sales cycles are so long, the amount of data coming in, which is the amount of evidence, the amount of insight coming in, is just one 10th of what you would see in a non enterprise company."
The quote underlines the challenge of getting frequent and substantial data feedback in enterprise sales due to longer sales cycles, which hampers rapid learning and iteration.
"The value of SMB, from an economics, from a startup perspective, is that you have the scale of consumer, literally millions of them out there. But then you have the business model of enterprise, which is you can actually charge people money and you don't have the bimodal outcome that you have in consumer."
This quote highlights the economic advantage of SMBs, which combine the scale potential of consumer markets with a sustainable, chargeable business model, avoiding the extreme win-or-lose outcomes common in consumer products.
"There's this thing 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."
The quote introduces the concept of "reverse gravity" where tech companies are naturally drawn towards the enterprise market due to seemingly improved business metrics.
"And the only way not to be pulled up into the enterprise is you have to spend energy to resist that pull."
This quote suggests that to avoid being pulled into the enterprise market, companies must actively resist and focus on their chosen market segment.
"It's okay to do things that don't scale, that I'm okay with. If you're doing it for learning and you have a pass, it's like, okay, well, this is the path all along, but you have to sort of have a plan that says, okay."
The quote stresses that while it's acceptable to engage in non-scalable activities for learning purposes, it is crucial to have a strategic plan for growth and scaling.
"One is you need to know why you're launching a second product. That's the number one question."
This quote emphasizes the need for a clear rationale behind launching a second product, ensuring it aligns with the company's growth strategy.
"Founders should put off the second product for as long as they can, but not forever."
The quote suggests a cautious approach to introducing a second product, advocating for focus on the core offering before diversifying.
"When you go from product n equals one to product n equals two. And that is a huge gap because everything in the business, when you launch your second product becomes harder, every decision becomes harder."
This quote explains that introducing a second product adds a significant layer of complexity to every aspect of the business.
"I believe in self fulfilling prophecies when it comes to product investment."
The quote reflects the belief that a strong commitment and positive mindset toward a new product can increase its chances of success.
"Non 0% of my waking hours and even my non waking hours are around. How do I push the to take more calculated risk?"
Dharmesh Shah dedicates his efforts to encouraging the company to take calculated risks, which is essential for innovation and avoiding stagnation.
"You cannot rely on osmosis for anything good that that's going to happen. You have to sort of beat the drum."
The quote underscores the need for continuous communication and reinforcement of company values and strategies, especially in a growing company.
"Product two, big, big lots of pain going to product two."
This quote reflects the challenges HubSpot faced when deciding to launch a second product, which was a significant and painful shift for the company.
"Going international, it's like, okay, well, we're going to not just sell to the United States."
The quote captures the strategic milestone of HubSpot's international expansion, which involved adapting to new markets beyond the United States.
"Do you not think the state of product marketing stay is pretty abysmal?"
The quote reflects a critical view of the current state of product marketing, suggesting it lacks distinctiveness and excitement.
"To me, product marketing is all about c"
Unfortunately, the transcript is cut off and does not provide the complete thoughts on product marketing from the speaker.
"So one of the things that I think HubSpot got right is that we were kind of builders of community well before we even had a product, right?"
This quote highlights the strategic move by HubSpot to establish a community as a foundation for their business, even before they had a product to sell.
"You have to kind of polarize your market. 100% of the people cannot agree with what you're saying because then you're basically in the middle."
This quote emphasizes the need to create a distinct position in the market that may not appeal to everyone, as this differentiation is crucial for standing out.
"A real community is one when the community participants are getting value from each other and you are there as the host, you're not up on stage."
The quote clarifies that the essence of a community lies in the value exchange between its members, with the host facilitating rather than dominating the interactions.
"My answer would be that the way buyers and sellers connect is fundamentally broken because you don't own your data."
This quote presents Shah's belief that the current model where consumers do not own their data is flawed and that this will change in the future.
"So number one principle of my angel investing is solve for minimizing time, not maximizing return."
This quote explains Shah's primary rule for angel investing, which is to conserve his time for his main venture, HubSpot.
"One is investing in ideas that involved atoms instead of just bits... And then secondly is not trusting my instincts when kind of my ego accomplishment thing was raising yellow flags."
This quote reveals Shah's self-reflection on his investment mistakes, emphasizing the importance of trusting one's instincts.
"Biggest strength is the ability to separate skills from talent... Biggest weakness is I'm pathologically non confrontational."
This quote gives insight into Shah's self-perceived strengths and weaknesses, which have shaped his approach to business and management.
"HubSpot will have grown further and solved more of our customer problems. Feels like we're in early innings."
This quote expresses Shah's long-term vision for HubSpot and his commitment to its ongoing development.