From App to Suite to Platform, with HubSpot's Co-Founder Brian Halligan

Startups aren't the only companies racing to build the new world of AI. This week, Sarah Guo talks with Brian Halligan, the co-founder, longtime CEO and now executive chairperson of HubSpot, the fastest growing CRM. He talks about category creation, coining the term ‘inbound marketing,’ lessons in scaling from an app to a suite to a platform, staying innovative at scale, and how they're navigating the AI disruption. Brian also describes the life-threatening moment he decided to step back from the CEO role. Plus, what he’s up to at Propeller Ventures and why he’s banking on the ocean to save us from climate change. Brian coined the term "inbound marketing" and together with Dharmesh Shah built a movement around the concept, which included organizing the industry-leading INBOUND event and co-authoring the book Inbound Marketing. Now, as the founder of Propeller Ventures, Brian directs a $100 million climate tech venture fund, specializing in ocean investments. He also serves on the boards of Navier and Aquatic Labs. Brian developed MIT’s popular Scaling Entrepreneurial Ventures class, which he’s taught for over a decade. Show Links: Brian Halligan | LinkedIn Propeller VC WHOI Partnership HubSpot Culture Code Read his books: Inbound Marketing and Marketing Lessons From the Grateful Dead Sign up for new podcasts every week. Email feedback to [email protected] Follow us on Twitter: @NoPriorsPod | @Saranormous | @EladGil |@BHalligan Show Notes: (0:00:00) - HubSpot's Journey from Unlikely Startup to Industry Incumbent (0:05:32) - The End of Cold Calling (and the Birth of Inbound) (0:16:40) - Building a Multi-Product Company (0:22:07) - How to Stay Innovative and Hungry after Going Public (0:29:12) - AI Workflows in CRM and the Incumbent Data Advantage (0:36:09) - Creating a Culture Code for HubSpot (0:40:24) - Propeller Venture Fund, Ours Oceans and Climate Investing

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:05Sarah Guo?

  Customer relationships are the lifeblood of every business. And CRM, a key system of record for every business, is facing a sea change. Riding those waves is HubSpot, one of my hero companies. A unlikely SMB marketing software startup founded in 2006 in Boston has over almost two decades become the primary contender to Salesforce through brilliant strategy and consistent execution. And it's as much a community and a movement as a business. They've recently made big bets on AI. Today, I'm sitting down with Brian Halligan, founder, longtime CEO, and now executive chairman of HubSpot, to discuss learnings from the founder journey, staying innovative as an incumbent, the impact of AI on workflow software, and his new mission in climate tech with Propeller. Brian, thanks for doing this. Welcome to No Priors.

• 0:48Speaker 01

  Thanks. I have two questions for you.

• 0:50Sarah Guo?

  Shoot.

• 0:50Speaker 01

  Why were we an unlikely success?

• 0:53Sarah Guo?

  Oh, I hope that is not offensive. I guess...

• 0:56Speaker 01

  Because of Boston?

• 0:57Sarah Guo?

  I think because of Boston. Because in 2006 time period, the companies, you must have heard this from VCs, the markets that people thought were worth going after were like high-end enterprise in a small number of categories.

• 1:12Speaker 01

  Yeah.

• 1:13Sarah Guo?

  Right? And so the idea that you'd sell software for SMBs to manage an online presence and do social, like that, that felt unclear that you'd become a $25 billion-plus business.

• 1:28Speaker 01

  It was clear to us.

• 1:31Sarah Guo?

  That's what makes you the founder.

• 1:32Speaker 01

  Okay, I have another question for you. You referred to us as a hero company, by the way, I'm honored. Like, what's number one on your hero list?

• 1:39Sarah Guo?

  Oh, man, I feel like I'm gonna offend friends if I choose one.

• 1:44Speaker 01

  What's your criteria?

• 1:46Sarah Guo?

  If I think the product has changed the world, if I think like the people just made really interesting decisions. I'd probably say like, but this is just because it's the one I'm closest to, Figma.

• 1:56Speaker 01

  Yep.

• 1:57Sarah Guo?

  I have a lot of admiration for Dylan and Evan, and like, I think they changed how a lot of people worked. And it was also like, not obvious at the beginning.

• 2:04Speaker 01

  No, I am with you on that.

• 2:06Sarah Guo?

  But yeah, good questions. I'm supposed to be asking the questions. It's supposed to be easy for me, Brian.

• 2:12Speaker 01

  All right, fire away.

• 2:13Sarah Guo?

  Okay, so Brian, you actually started, I think, as a sales leader for PTC, like famous enterprise sales organization in Asia. How did you go from that to the founder of HubSpot?

• 2:27Speaker 01

  I actually started as PTC's first BDR and its headquarters in Boston and moved in sales and channels. And then they, there was, the company was going incredibly well and they moved me over to Asia to start it. So I moved to Japan and I lived in Hong Kong for a while. And yeah, I was there for 10 years, a really good run.

• 2:48Speaker 01

  But I just think of my, I have three chapters in my story. Chapter one was PTC, enterprise sales, eat your young, really a hard charging culture, sales-driven culture, terrific company in some ways, unusual culture, tough place to work. I left there and I had a second chapter that couldn't be more different, started the sales organization for a company no one's heard of anymore called Groove Networks. And Groove's famous for its founder, a guy named Ray Ozzy, who's the father of Lotus Notes. And it did okay, like we got the 20 million in revenue and Microsoft bought it and it's like a little part of SharePoint now. But it really didn't tip.

• 3:28Speaker 01

  And what was interesting about that company and learnings for me was Ray was a product person and the company was very much a product company. And he referred to himself as a social anthropologist, which I thought was really interesting. He sort of watched where technology was going and he thought about how human behavior would change and then he tried to create something kind of in the future to match it. And he did that with Lip Notes, sort of hit the nail on the head. He did it with Groove, it was a little early. Groove was like a little bit of Dropbox, a little bit of Slack, a little bit of Notion. It was on peer-to-peer platforms, just a little early. Microsoft bought it, but I learned a lot. I don't envision and build compelling products. He was very early on product-like growth for me and model. And I don't know anybody else in B2B was really doing that at the time.

• 4:10Speaker 01

  And so I get to, we didn't figure it out, by the way, but we got to learn a lot along there. And then I went back to business school. And those three sort of, you know, the sort of right-wingish PTC, the sort of left-wingish Groove and the sort of back-to-basics MIT came into my head and really influenced me personally and I think still influenced HubSpot in a lot of ways.

• 4:34Sarah Guo?

  When I say unlikely, I just think it's actually amazing that there was this. Idea that was happening out in the market, like a change in the world, you should describe it, but the way I think of it is like people don't want to be advertised and sold to, right? They're out hunting for solutions. They want to be educated and this thing around inbound marketing, around creating a presence for people to come find you and giving that value to your customers, your end users, like you really created that category. Like, how did you even discover the idea? Tell us about the beginning.

• 5:07Speaker 01

  We started in business school. There were two ahas that led to it, and I have terrific co-founder, Dharmesh, had one and I had one. Mine was, while I was in B-school, I was sort of an EIR at a little venture firm that was going nowhere in Boston called Longworth. And they had me working with their startups to help them teach them the PTC way. How did you build PTC? Can you show us the playbook? And they all were doing the PTC playbook. They were all buying lists and cold calling. They were all buying lists and spamming people. They were all doing other people's straight shows. They were hiring PR agencies, buying ads. And it just didn't seem like it worked at all.

• 5:49Speaker 01

  Like, people were immune to the marketing at that point. They had caller ID all of a sudden. They had ad blocker. They had DDRs. Like, no, humans got really good at that point at blocking traditional marketing out. And so I was kind of wallowing in like, my playbook doesn't work. And then Dharmesh blogged his way through business school. And he was an early tech blogger. He had a blog called OnStarups.com. It's a pity he didn't keep it going. But anytime he heard an interesting lecture, he would write about it. And I was looking at his Google Landings reports and comparing it to all my wealthy venture-backed startups with like money and teams and expertise. He's crushing them, like by two orders of magnitude more interest in this crappy little blog.

• 6:30Speaker 01

  And I started describing the world as, well, my folks are doing outbound marketing and he's doing inbound marketing. And you've got to match the way you market with the way humans actually shop and buy. And humans are starting to use Google. They stopped subscribing to magazines. They started writing the blogs. They started using the social media stuff. And so we sort of captured that shift and then said, well, let's build a platform to help marketers move from the old school outbound way to the new school inbound way. That was the basic foundational idea. And that was kind of chapter one. We've had a lot of chapters.

• 7:04Sarah Guo?

  Yeah. Well, one thing that's stuck through many chapters has been the inbound conference, a conference that over a hundred thousand people go to. You can give me the stats, like people like Barack Obama speak at it. It's sort of a pilgrimage for people who work in marketing. Like, how did this happen? Why did you do it?

• 7:22Speaker 01

  So in the early days of HubSpot, the way we described ourselves to venture capitalists like yourself was, at the time Salesforce just had us at that. Salesforce.com is the sales. HubSpot is the marketing. And the good thing about that is it's stuck on VC's heads. It's like, oh, that sounds like a good thing. Like, we would go to Dreamforce every year. And by the way, we'd sit at Dreamforce and we'd sit there being like, God, I hope they don't announce a marketing product this year. Literally, the two of us would sit there like, please don't announce a marketing product. Anyway, we would go and we said, that seems like a decent idea, but it's more user conference. Let's create like a community thing that people will come, even if they're not HubSpot customers. So we said, let's create this inbound thing. And we just gave it a go.

• 8:06Speaker 01

  And we had a room of 400 people in the Marriott in Kendall Square. We invited Seth Godin and David Merman Scott and Brian Solis, as these books are still floating around, who are early sort of acolytes. They may or may not call it inbound, but basically the same ideas were coming out of their mouths. And we sold out in like five minutes and it was really good. And so then we sort of got on the treadmill and just kind of kept doing it every year. I really enjoy it like we had, I'll tell you, we had some amazing speakers like Reese Witherspoon and Guy Raz and people like that. But my favorite speaker I got to interview, one of my heroes, Andrew Huberman, who's, he's on my Mount Rushmore these days. And then we have, you know, 12,000 people live, a couple hundred thousand people listen.

• 8:49Speaker 01

  And over time, when it's kind of turned into like, it's like, it reminds me of a Grateful Dead kind of thing, like the parking lot outside the Grateful Dead, a Grateful Dead concert. It's a community and it's very much a community. And the thing that people value most aren't those big sessions. It's the smaller sessions on like, the hell are we, what the hell is AI? And how do we get our arms around this market or stuff like that? And people really connect.

• 9:10Sarah Guo?

  Yeah, that's, uh, that's very cool. I know you wrote a whole book about this, but I think for anybody who is not a deadhead, right, like the, the Grateful Dead are as much about like community, human connection, collective experiences as music, so.

• 9:25Speaker 01

  Few people know this, but the Grateful Dead were founded in Palo Alto in a little music shop in Palo Alto, did their first studio recording at Stanford University. So it's actually a child of Silicon Valley.

• 9:37Sarah Guo?

  Oh, interesting, yeah.

• 9:38Speaker 01

  It wasn't San Francisco, later, they later went to San Francisco and then they, they ended up in Marin, but yeah, they're a child of Palo Alto.

• 9:45Sarah Guo?

  Yeah, doesn't strike me as the most counterculture starting point, but we'll, we'll take it.

• 9:49Speaker 01

  Now, one of the things that's interesting that, that about inbound, you thought about that word, there was a huge debate in the early days of HubSpot of what is this thing? And half the people were like, you know, it's internet marketing software, which it was. And a couple of us were like, it's inbound marketing software. And everyone was like, what the hell is inbound marketing? One of the early battles and decisions we made is let's try to create a category around this idea of inbound versus outbound. And that did work and we still have the inbound conference. I would just say we tried to do inbound sales, failed. Uh, very difficult to create a category, it turns out. I tried to create this thing called, instead of the funnel, it's the flywheel.

• 10:34Speaker 01

  I don't know why it worked, but some of the things we did that seemed to resonate was there was an enemy outbound, and I think it always helps to have an enemy. It was a little catchy. It seemed to stick on people's minds. A whole bunch of other people like Seth Godin and David Merman Scott, Brian Solis, were kind of talking about similar things and we just kind of stuck a word on it. And then we just worked it. We wrote, each wrote two blog articles a week. Someone invited us to like a flea market. We would go and speak. We wrote a book, which is a crap ton of work, Nice and Weekends. So anyway, we did that and we created a category. And for those of you listening going through that battle, I would say it worked and it's been one of our keys to success.

• 11:19Speaker 01

  But it was a ton of work and it's very hard to pull that off.

• 11:22Sarah Guo?

  Were there a few things that made sort of the sales terminology not as successful? Because like we should talk about in a second. The sales product for HubSpot was incredibly successful.

• 11:32Speaker 01

  Sales products are on fire. That's our kind of second act. We tried to call it inbound sales, but sales leaders were like, no, no, no, no, no. We do outbound. You don't get it. We do outbound sales. That's like what we do. And marketers, they're like, no, no, no, no. We do outbound marketing. And the thing is marketer, the marketer's bosses were like, I searched on our company in Google and I couldn't find us, you know? And I went on this, this thing called Facebook. I got an account there. They were getting asked about it, but I don't think the CEO was asking the head of sales about, why are we getting more inbound leads? And then they kind of put that in marketing. Anyway, it was sort of, it was pushed back on by the salespeople.

• 12:16Speaker 01

  We really had to support outbound selling to build a viable and big business on that side.

• 12:22Sarah Guo?

  We have some friends in common, Elias and David, who were acquired into HubSpot via their own startup at the time for Performable. I don't know if you guys did any other acquisitions that were important. This one felt important. What, what did you learn about acquisitions from this?

• 12:38Speaker 01

  That one was important. And I could kind of give you the background on that. When Darmesh and I started it, we were really about the top of the funnel. How do we help people turn total strangers into visitors to their website? And then turn them into leads. But we hadn't really thought of like a database, segmenting the database, drip campaigns by email.

• 12:58Speaker 01

  Honestly, we weren't that passionate about it at the time. We didn't have deep domain expertise about it. And so, little known fact, at the time, we actually closed around with Sequoia. And some of the proceeds we were going to use, we were going to acquire a company in what we called middle of the funnel, the database side, segmentation, drip marketing, all that stuff. We made a bid for Par Dot, couldn't get to a number. I went out to Marketo's CEO and proposed Marsbot to merge the companies. Mergers equals, I offered them the CEO gig. They weren't interested in the time.

• 13:29Sarah Guo?

  Too bad.

• 13:30Speaker 01

  I know. I think that would have been interesting. And then, you know, David and Elias were well-known quantities. We knew them in Boston and they were passionate about this middle of the funnel stuff. It was an acquirer. We acquired them and their team. And it worked. They sort of built that middle of the funnel. I would say, we haven't done many since at all, none of that scale. It's hard to get the cultures to match. And I think if I had it to do over with David and Elias, I think I could have done a much better job of sort of assimilating them and partnering with them. I was pretty junior at the time, so I am kind of. But we've only done very small acquisitions. Like, I'm a big believer in the Peter Thielism of, you've got to be right about something that everyone else thinks you're wrong about.

• 14:15Speaker 01

  And you have to be right about it for a long time. And you've got to zag when everybody else says you're going to zag. And we've had a few of those in our, in our history. Okay, the first one was SMB. And I kind of think of us as the M in SMB. We're sort of the startup, scale up. That's who we sell to. We don't sell to the big, slow-moving enterprises. Everybody thought it was a bad idea. Every venture capitalist we spoke to, we got lots of notes from venture capitalists. And the reason was they didn't like that idea. And the question they would all ask is, well, who else had done it? And at the time, it was Intuit. And they'd say, who else? And literally, there was no one else. And they're like, why? And we explained, well, historically, you couldn't get your cost to acquire a customer down because you needed humans to do it.

• 15:00Speaker 01

  And there's new ways to acquire customers using inbound marketing. And then you're going to lose customers. So you need to upsell your existing ones. You've got to get your total lifetime value up and your revenue retention rates are over 100. If you get that math to work, you can build a scalable business. But people were very skeptical. Our board members were very skeptical. Even when we went public, people were very skeptical about it. I still get asked about it all the time. But we zig when everyone else zagged. And we diluted a lot more than we would have if we just went to the enterprise like Marketo did. Everyone wanted us to be Marketo. Just be like Marketo and Elba. We're like, well, they're already there. Why do we want to be like them? The world doesn't need a third one of these things.

• 15:40Speaker 01

  The second kind of zig when everyone else is zagging was, I described earlier how Dharmesh and I would sit in the audience at Dreamforce, hoping that Salesforce.com didn't want to wake up one day and say, we're going to be the Salesforce.com marketing. And of course, they did one day. And we saw that coming. So they bought four marketing companies in one year. And we went from being their best partner to kind of an enemy. And we pivoted. We had been talking about pivoting to CRM, but we pivoted and we said, let's go to CRM. Let's come underneath them. Let's zig when everyone else is zagging. Let's not make it like theirs. Let's make it incredibly easy to use. And let's make it freemium. And everybody thought it was a terrible idea.

• 16:24Speaker 01

  Investors are bored, most of our employees. But we saw it. We use Salesforce. It's hard. It's expensive. And we were like, let's make an easy and expensive one. And that was your second product, sales product. That was almost 10 years ago. And now we got a, we have a marketing hub, sales hub, service hub, ops hub, CMS hub, commerce hub, we have a whole suite now. But we drew on a whiteboard at an offsite that we were going to transform the company from a marketing app to a CRM platform. And we drew on a whiteboard, we were going to go from a pure inside sales organization to, we called it freemium then, people call it product like growth. And honestly, we're still on those journeys, nine years later. We're filling out that platform and we're getting better

• 17:06Speaker 01

  and better at that PLG motion. But I'm a big fan of zigging when everyone else is zagging.

• 17:10Sarah Guo?

  So I have to stop you here because it feels so like, it is not under, I mean, it is under your control, but it's certainly not deterministic in terms of launching a freemium product, especially as a company that didn't start exactly that way.

• 17:28Speaker 01

  Yeah.

• 17:29Sarah Guo?

  How did you have the confidence to say like, we can get something organically adopted and we're going to stick with it? And can you, can you talk about that? Because, you know, when, when the sales product for HubSpot did work, it, it really worked. Like, it grew faster and was more profitable than the original marketing business. It made you guys really important and strategic. The story played out as your strategic offsite described.

• 17:51Speaker 01

  Yeah.

• 17:51Sarah Guo?

  But I think most people, most product teams, most companies would say like, you can't just make a freemium product, right? Or if you know you can, you should call me.

• 18:00Speaker 01

  Right. I think what's kind of interesting about that pivot, we were eight years in and we pivoted. We wanted to build a West Coast company in the East Coast. We wanted to build a multi-billion dollar company. We were, the one thing Darmesh and I had in common, we had been somewhat successful earlier. We wanted to swing for the fences. So we were willing, kind of risk seeking a little bit. And a lot of people ask me like, how do you become a multi-product company? How do you go from app to suite? How do you go from suite to platform? And the answer is with great difficulty. So back then, we wanted to do both things. We wanted to build a sales application and we wanted to build a freemium motion. So it's kind of two changes at a time, which may, maybe not, wasn't a great idea. The way we did it,

• 18:45Speaker 01

  Was like a lot of things that HubSpot copied Apple. And there's so many stories about how Steve Jobs built the Mac. And they had a separate building and they had a separate login to that side of the building and a separate stack and everything was different over there. We said, we're gonna have to do that because it's such a big change. So we had a whole separate part of the building. Then we took three leaders inside of HubSpot. Brian Balfour, who people probably know. Guy named Christopher Donald, who people may or may not know, we had a product for us for a long time. And a guy named Mark Robert, who a lot of people know, he's kind of the sales professor at HBS now. And I jammed them together and I said, let's go, let's build this thing, you know? I'll, I'll, I'll do whatever I can to help, but let's keep, I'll keep you isolated from all the BS.

• 19:28Speaker 01

  The truth is, those three couldn't come to grips on what the vision of the thing was. They disagreed on what the vision was. And one of my lessons learned there is people need to really want to come together. You can't kind of mush people together. They're immensely talented, but that, there wasn't the autonomy with the three of them. So anyway, we found other gigs and some left. And what ended up happening is I became the co-founder with Christopher Donald. And we made a couple of decisions on what the strategy would be. And we just kind of ran fast. And it took us a good two and a half years to get a half decent sales product out there and a half decent PLG motion. And, and we kept it separate. So we have separate sales teams selling it. It was PLG motion.

• 20:13Speaker 01

  And the marketing salespeople were like, you know, we really just want to sell that thing. We're like, no, you can't sell it, can't sell it. So we had a separate instance of HubSpot to manage all these, everything. And then one day we're like, okay, we're ready, let's merge them back together. And we did a counterintuitive thing. We took the sales business and we acquired the marketing business. So we took that freemium PLG motion and we applied it to marketing. We took a bunch of the leadership and applied it over to the marketing side. And so I say with great difficulty, like individually for me, dealing with the fallout of those three, trying to figure the strategy out, having patience through it. Like I've made a lot of mistakes and I made a lot of mistakes in there, but I consider that maybe. If not, maybe my best chapter inside HubSpot is pulling that off.

• 20:57Sarah Guo?

  Yeah, it's extraordinary. You just said you wanted to build a multi-billion dollar company, like a West Coast company on the East Coast. So I also happen to know Christopher O'Donnell, and he said the one question to ask you was how HubSpot succeeded more after the IPO when so many Boston-based companies have struggled.

• 21:15Speaker 01

  Yeah, see, Tom is a very smart man. Okay, a couple of thoughts on that. I listened to a podcast with Marc Andreessen the other day. He's obviously a big Silicon Valley booster, and he talked about, he's not crazy about investing in companies outside of Silicon Valley, because the companies tend to optimize for like a local maximum. Like, you want to be the biggest tech company in Boston, or you want to be the biggest tech company in Austin, whereas companies in Silicon Valley want to be the biggest tech company. You want to beat Apple, want to beat Google. And I think he's right. And I've never heard anyone say that before. When we built HubSpot, we always said, we want to build a West Coast company on the East Coast. So we'd like, once a year, we would drag the entire management team out to the West Coast to visit a whole bunch of people

• 21:58Speaker 01

  that were respected, that would push our thinking. We were really built like a West Coast company, and the East Coast companies were just thought a little bit differently. I think one thing we did around the IPO is we always said the IPO is the starting line, not the finish line. Starting line, not the finish line. Starting line, not the finish line. We just said that a million times, and I meant it.

• 22:16Sarah Guo?

  Do you know how much this worked, Brian? I think it was my very first conversation, I have no idea how this came up, but my very first conversation with Chris, he brought this up, and he said, "Starting line, not the finish line." And I was like,

• 22:27Speaker 01

  Oh, interesting.

• 22:28Sarah Guo?

  It has permeated, you know, at least your leadership incredibly deeply.

• 22:33Speaker 01

  Interesting. Christopher and I work really closely together, so I'm not shocked. The other thing we did is, when you go public, companies change a lot. And the biggest change that happens to startups when they go public is you need to name like five officers, and these are five people who have access to all of the information at any given time. In exchange for all those information rights, they're locked into trading windows that they can trade the stock in. And then you have to block lots of important information for the rest of the employees. We flipped that, and we said every employee, the terminology is a little different, but basically every employee at HubSpot. Frontline support person, anyone, they're all officers. So they all had the same access to information. Everyone's locked into certain trading windows. So it didn't feel like a

• 23:17Speaker 01

  big change when we went public, and I think that helped a lot. The other thing was, it was quite clear that we were heading towards being a CRM platform. We had our second product in the market. On the IPO, Rocho was super awkward because, you know, we have whatever $200 million marketing business and we have this like $1 million sales business. And it was like the last slide and everyone just was like, yeah, whatever. Why? Don't even bring that up. The bank was like, don't even bring it up because no one gives any credit for it. But it was a big initiative inside the company. So people could see it. I think that helped as well.

• 23:51Sarah Guo?

  And people believed it and they were, they're like working on that despite, you know?

• 23:54Speaker 01

  Yeah, I think everyone believed us in that both our mesh and I wanted to build something big and special. There's a line we always use that we want to build a company our grandkids would be proud of. And like my dad had a really interesting career. He worked for BBN, you know, in Israeli career. He worked for GE when it was cool to work for GE. And I brag about it. And I want my son Luke to brag about my career and hopefully he has kids someday and they brag about my career and be proud of it. And so that's sort of what we, that's the mantra we use over and over again.

• 24:25Sarah Guo?

  I want to ask you one or more, two, one or two more questions about, about leadership. And then I want to talk a little bit about AI. So we're just walking through all of my favorite HubSpot people. So JD Sherman, your COO for a while, at certain points managed, you know, large parts, entire organization at HubSpot and was there for a long time. In terms of all the founders that listen to the podcast, many at some point think about hiring a COO. How did you guys decide to do this? What advice would you have for, for people?

• 24:55Speaker 01

  We hired, so after we closed our Sequoia round, we bought Performable. And we stopped like tracking expenses. We just started spending like drunken soldiers. And we just got distracted. It was a really good round. We had Sequoia, Google and Salesforce in the round. And we just kind of took our eye off the ball. We had never missed a quarter and we missed that quarter on the revenue side and missed the expense side by a country mile. We had a couple of longtime board members, Larry and David, Larry from Journal Catalyst. And they were like, you know what?

• 25:30Speaker 01

  You could use some help.

• 25:33Speaker 01

  I was like, what do you mean? We think you should hire a COO and I pushed back. I was like, nah, I got this. I got this. Not really. And they're like, go see if you can find one. And so I interviewed a bunch of people and I met JD and JD was a long time IBM person, which is like, oof. And, and then he was at Akamai for a long time. He was CFO at Akamai.

• 25:58Sarah Guo?

  Wait, is it oof like PTC people are oof?

• 26:01Speaker 01

  I mean, IBM was just a huge, low company. Like we, we were very fast. We were the, the antithesis of IBM. But he had spent a bunch of time at Akamai, which is a scale up we admired in Boston. He was CFO and, and he was trains on time type of person. And he's just a wonderful, funny, great culture add. And so we convinced him to join us. CEO, certain times he managed small parts of the organization. Certain times he managed a lot of the organization. It was a really good call. Um, and I thank my board members for that heads up. Uh, later on, my board also advised me to get a coach. So I hired this guy who's like a psychology professor slash coach from Columbia, who is really useful in coaching me over time. And then more recently I decided to step down.

• 26:46Speaker 01

  You know, we got to two billion in revenue. I really didn't think the road from two billion to 20 billion was my forte. I didn't know a lot about that. Uh, maybe a little less passionate about that part of the journey. And we had a wonderful woman, Yamani, that was run and go to market. And so she's the CEO now and I'm the chairman. So I think CEOs need to be open minded about their strengths and their weaknesses and fill them in. I think a lot of CEOs probably need a COO. And a lot of CEOs should probably not retire, but move into the chairman role and let somebody else run the day to day of the company. And they might be surprised how much, how happy they are when they do that.

• 27:25Sarah Guo?

  So as chairman now, you still know a lot about and are very engaged in HubSpot. HubSpot has committed to, I think, big investments in AI. And in, in my discussions with your leadership team, like, what are you guys doing here? Um, and when did, when did you start to think about it?

• 27:41Speaker 01

  We've had an AI team for a long, long time, but it's more an ML team. It's interesting, we had a call with Sam Altman. Two and a half years ago, I got connected with them and I'm like, would you mind if I just picked your brain on AI? Because at the time, there was like an arms race for AI people that cost a million dollars, a higher amount of MIT.

• 27:59Sarah Guo?

  Now it costs two.

• 28:00Speaker 01

  Yeah, and this is before Sam Altman was Sam Altman, you know, uh, he actually was before he levitated and walked on water. And he said, first of all, don't hire, don't go hire a bunch of PhDs. You'll never keep up with the arms race. He's like, we're at OpenAI, we keep losing people to Google. The second thing he said is AI is progressing in a pretty linear way now, and it's getting better, but it's getting better slowly. He said, at some point in time in the future, and he said, I'm not sure what that point in time is going to be. It's gonna go asymptotic. It's really gonna get a lot better. And so he said, keep chugging away and wait till that happens. Basically what we did, and man, was you right. The second we saw ChatGPT.

• 28:44Speaker 01

  We tried to invest in, in OpenAI, Darmesh had got early looks at it, and we tried to get in the round with Microsoft and had a bunch of discussions with them and they bought. At the end of the day, they wouldn't let us in, which is kind of a bummer, but uh. Yeah, we were on it pretty, pretty early and as soon as we started seeing it and Darmesh started playing with the early stuff. Uh, we started pushing it hard on the engineering product work that. You know, certain things that come along, blockchain came along and crypto comes along, mobile comes along that are interesting. This is a big shift that's incredibly relevant to CRM, incredibly relevant to the way humans will shop and buy. And this wasn't something we could kind of half measure in, so we, we kind of pivoted right into it, right, right out of the gate when ChatGPT first came up.

• 29:29Sarah Guo?

  You've been looking at how businesses engage with customers for, for 20 years and you've been really, really right about some of the macro shifts. Like, how, what do you think is going to happen about how we engage or how, how customers buy?

• 29:42Speaker 01

  I think one of the obvious things is how much better these things are getting and how quickly they're getting better. And everything you've got on your website and every social post you've put out there, it's consumed and understands it. And so I think of Google, someone goes to Google, they ask a question, it gives you a list of blue links, click that blue link. That, that prospect lands on your website. Um, but you think of ChatGPT, yeah, they keep asking the questions about you. They don't necessarily have to go to your website.

• 30:10Speaker 01

  And so I think that'll be a big shift and having lots of high quality content is going to be important, but I think one of the things that's not going to work is using AI to just create tons of content. I think Sam Altman and all the people building the the other models are going to look at similar signals to Google. They're going to say how many links are into the site, what's the power of the links, other signals of credibility. You've got to create really, really, really high quality content if you want to get found in there. The other thing I think people need to do is give folks a reason to come to your site. And I've been a big advocate of ungate everything. You know, you used to have all this white papers, all this crap behind gates. And I'm like, put it in your blog, whatever. I actually think maybe gates come back a little bit because what's the

• 30:54Speaker 01

  reason to go to your website unless there's some additional content you get beyond that login? And I think PLG and all that still is very, very viable. But I do think the world for marketers and sellers is going to change a lot.

• 31:07Sarah Guo?

  Uh, how do you, um, how does AI change like what you build at HubSpot? How are customers using what you have already built?

• 31:15Speaker 01

  Yeah, we built a bunch of stuff, some's in beta, some's in V1. And it's getting nice adoption. Like, the really obvious thing we did is content assist. So you're writing a blog article and you want it to write it for you. You want an image, landing page. That's got really nice adoption. We built like a campaign builder. So I think of AI writ large and workflow apps. It used to be like, humans go and create all the workflows. And now AI can just look at what's going on and create a better workflow for you. So sort of campaign assistant has been super popular. We have a thing called ChatSpot, which is basically a layer on top of OpenAI. We use cloud, we use Anthropic's models,

• 32:00Speaker 01

  we use different models for this. And then our API, so it kind of pulls all this information together. And we're seeing a lot of people particularly casually use this sort of HubSpot, not want to, you know, go through 10 clicks to to build that donut-shaped report inside of HubSpot, but just say, hey, give me the donut-shaped report about leads last month from geography. Just a whole new UI for this stuff, I think is quite interesting. We're just starting to build agents. We definitely got bots, so a lot of our customers are starting to use our bots on their website for support, for marketing. I think what'll be interesting for companies is Support organizations and like BDR and SCR organizations are going to get incredibly

• 32:40Speaker 01

  efficient as these bots get smarter and they're just going to be able to answer so many more questions 24 hours a day. They're not going to be tired. They're not going to be hungover. They're not going to make mistakes. They're not going to make mistakes, but I think the world's going to shift a lot in CRM for go-to-market organizations, mostly in positive ways.

• 32:59Sarah Guo?

  I feel like I've also seen, you know, a dozen companies in each of the domains that you mentioned. How do you think about, you know, now being, I'm sure you still feel like the rebel, but like being an incumbent versus what advantages startups have?

• 33:13Speaker 01

  In most disruptions, I think the rebels have the advantage. I don't think that's the case here. Like, we have so much data over so many years about so many customers and that's what makes this stuff really sing. And as a brand-new startup in this space, you gotta get data. It's hard to get data. And so I do think incumbents like HubSpot, like Salesforce, have kind of an unfair advantage. I think the fact that we leaned into it and we moved fast helps. And there's approximately 1,000 CRM companies out there. I wouldn't imagine they're all moved as fast as Salesforce and HubSpot did. But I do think incumbents in this very rare case do have kind of an advantage. Funny to refer to HubSpot as an incumbent company at this point.

• 33:59Sarah Guo?

  Yeah, you're 20 years in and 26, 7 billion of market cap, right?

• 34:03Speaker 01

  Yeah.

• 34:04Sarah Guo?

  Okay, we had dinner at some point where you talked about the investment in culture at HubSpot and how you and Dharmesh thought about it. It shows up in the results. You guys are repeat winners on Glassdoor in terms of both like CEO to work for and best place to work. How?

• 34:18Speaker 01

  Okay, the early days of HubSpot, we didn't want to talk about culture, HR, any of that stuff the first three years. Like, culture was a poor word. No one should bring it up. You can't measure it. It's soft. And then I joined a CEO group about three years in. And I largely joined that CEO group because one of the members was a guy named Colin Engel, who is the CEO of iRobot that makes those rumah vacuum cleaners. I would describe my relationship with Colin in two words. The first is man, the second is crush, a major man crush. I showed up for the first meeting, there's nine CEOs around the table.

• 35:03Speaker 01

  And sat right next to Colin. And I didn't know this, but they picked a topic and they would just go very deep into one topic all day. And it's like CEO couch down. And the topic of the day was culture. I was like, time with this, this is such a waste of time. Can't believe I'm spending all day talking about culture. And so I didn't say anything all morning and I didn't sit next to Colin at lunch, asking him questions with product and innovation. And Colin said, you don't like this culture topic, do you? I said, no, I think it's a waste of time. He said, cultures, how do you scale your company? Culture is how people make decisions when you're not in the room.

• 35:47Speaker 01

  Okay. Took no, just paid in the afternoon. And then that next day, I started our match in the office. And he said, how's Colin, how's your meeting? I said, fantastic, I loved it. He said, tell me about it. I said, well, it was all about culture. He said, that sucks. I said, no, Dharmesh. Culture is how you scale the company. Culture is how other people make decisions when you're not in the room. And so we started chatting about it and I said, why don't you be the culture czar? And in a very weak moment, Dharmesh said, sure. He's not one to take on initiatives like that.

• 36:28Speaker 01

  Uh, and we actually hired a terrific professor of ours from Sloan to do a project to survey our employees about the culture. And she ended up promoter, she said on scale of one to 10, how likely you refer HubSpot Y to a friend. And we got the results back. Almost everyone said they liked the culture, which is a real surprise to us because we didn't allow people to talk about that. And then we said, can you build us like a version one of a culture deck? Which was like describing our culture, what it's like to work here, the relationship with employees in the company. And that was our culture code. And we totally ripped off Netflix at the time to have something called the culture code and really worked for them. And Netflix had a very, very unique culture.

• 37:12Speaker 01

  And we built the same type of deliverable, very different than Netflix, but the same format. We posted it up and man, it got a huge uptick and it still does.

• 37:22Sarah Guo?

  We'll link to the presentation.

• 37:23Speaker 01

  We had two products. We have a product that we sell to customers. And if that product's high quality and unique relative to competitors, it'll be like a magnet that pulls customers and retains them. And we have a second product that's our culture. And if it's unique relative to the competition and really high quality, it'll be like a magnet that pulls into employees or retains them. So we really took it quite seriously. We edit that culture document every six months to keep it fresh and make sure we're walking the walk on it. We still do a net promoter survey once a quarter. We publish every answer that doesn't include really bad swear words and things like that in there on our wiki so everyone can see what everyone else is saying. We address many of them, oftentimes like, hey, we're not going to do this, but we heard you. And so we take it very, very, very seriously.

• 38:08Sarah Guo?

  Are there answers from those surveys that have surprised you over the years?

• 38:13Speaker 01

  I mean, you're in a, any company, people are going to complain about virtually everything, everything. At one point, we put, we had a, we put a smoothie bar. We had a smoothie bar.

• 38:25Sarah Guo?

  You are a Silicon Valley company.

• 38:26Speaker 01

  Totally.

• 38:27Sarah Guo?

  A smoothie bar.

• 38:28Speaker 01

  Yeah. And I don't know why this was the case, but we, we didn't have protein powder for it. And I don't know if it was like, who, the person in charge, it was just, it was too expensive or it was hard. I don't know why, but for some reason, there was no protein powder. There was like a thousand complaints about the lack of protein powder. It was, we called it Smoothie Gate.

• 38:57Speaker 01

  The other thing I think we did right, by the way, Sarah, was we, at least for us, we didn't hire someone who was a career HR person. We have a woman in marketing who just was a dog in a bone about people issues all the time. She talked more about people issues than marketing issues. And we said to her, like, why don't you just come and be our first HR person? I don't want to do that. I want to be HR, I'm a marketer. And it took weeks, months of convincing her, and she finally did it. Katie Burke, she still runs our people ops. And she's the one who caused Smoothie Gate and still will not give in on the protein powder.

• 39:36Sarah Guo?

  There's no protein powder?

• 39:37Speaker 01

  It's still, Smoothie Gate, it's like, eight years later, it persists. HR people are tricky to hire because in HR, you've got recruiting people, you've got compensation people, you've got culture people, you've got DNI people, you've got benefits people. And, you know, if you've got a person who runs HR, they likely grew up through one of these things and doesn't know much about the others. Very unlike sales or service where they really rhyme. Most of those things in HR, they don't really rhyme that much. And so, it's the one place where you can take a real athlete who's smart, that can think in first principles and figure it out. And that was the route we took.

• 40:18Sarah Guo?

  Okay, let's talk about how, you know, you're spending time now. You co-founded a firm called Propeller Ventures, which focuses on developing ocean-related climate technologies. Why'd you do that?

• 40:32Speaker 01

  I got in a terrible snowmobile accident two years ago, and I broke 13 bones, had five surgeries, and I was lying there in the snow, thinking I was going to die. I actually was like, I don't enjoy running the day-to-day of HubSpot anymore. I don't think I'm as good at this size as I was at earlier sizes.

• 40:58Speaker 01

  If I make it through and live, I'm not going to come back and do it. And I, very shortly thereafter, I'd like to get into the climate game. It's the existential crisis of our life. I'm sort of a mission-driven type of person. And once I got healthy, Yomni took over as CEO. I started meeting with climate people, you know, founders, VCs, professors and whatnot. Everyone in climate is depressing, like not optimistic and depressing. So I sort of did a roadshow. And then one day I visited a place called the Woods Hole Oceanographic Institute on Cape Cod. Surprisingly, oceanographers are really optimistic about climate change.

• 41:39Speaker 01

  Like the ocean absorbs much of the carbon dioxide from the air, absorbs almost all the excess heat we're producing. It got us out of the last ice age. It's the only thing of scale that can really get us out of the pickle we're in. Doesn't matter how many trees we plant. We can't get there with trees, they die and give their carbon, a lot of the carbon dioxide back up. So, all right. And so I started volunteering for them and helping them. And I was like, you know, we need venture involved. We need money and venture, not just research. So we started a venture fund called Propeller, a hundred and twenty million dollar fund, where we back startups at the intersection of climate change and the ocean. And I did that a little over a year ago. Going great. So far, so good. We made about 10 investments.

• 42:24Sarah Guo?

  Amazing. We're out of time here. Is there anything that you were hoping to talk about that we didn't? Or anything you want to add?

• 42:32Speaker 01

  No, I wanted to say, I think you're doing a great job. I'm really happy you started your own fund. I'm really happy you're focused on AI. I'm really happy to be an investor in your fund. I really wish I invested more and I'm proud of you.

• 42:44Sarah Guo?

  Oh, that's very kind.

• 42:45Speaker 01

  All right, thanks, Erin.

• 42:46Sarah Guo?

  Thanks, Brian. Find us on Twitter at NoPriorsPod. Subscribe to our YouTube channel if you want to see our faces. Follow the show on Apple Podcasts, Spotify, or wherever you listen. That way you get a new episode every week. And sign up for emails or find transcripts for every episode at no-priors.com.