Pod Insights Lenny's Podcast How to be a CEO when AI breaks all the old playbooks | Sequoia CEO Coach Brian Halligan About this episode Brian Halligan co-founded HubSpot, ran it as CEO for about 15 years, and now coaches Sequoia’s fastest-growing founders as their in-house CEO coach.
*We discuss:*
1. His LOCKS framework for evaluating founders
2. Why you should build your team like the 2004 Red Sox
3. Why hiring “spicy” candidates beats consensus picks
4. Why enterprise sales will be the last white-collar job AI replaces
5. Some of my favorite “Halliganisms”
*Brought to you by:*
Sentry—Code breaks, fix it faster: https://sentry.io/lenny
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*Episode transcript:* https://www.lennysnewsletter.com/p/sequoia-ceo-coach-why-its-never-been
*Archive of all Lenny's Podcast transcripts:*
https://www.dropbox.com/scl/fo/yxi4s2w998p1gvtpu4193/AMdNPR8AOw0lMklwtnC0TrQ?rlkey=j06x0nipoti519e0xgm23zsn9&st=ahz0fj11&dl=0
*Where to find Brian Halligan*
• X: https://x.com/bhalligan
• LinkedIn: linkedin.com/in/brianhalligan
• Delphi: https://www.delphi.ai/bhalligan
• Podcast: https://sequoiacap.com/series/long-strange-trip
*Where to find Lenny:*
• Newsletter: https://www.lennysnewsletter.com
• X: https://twitter.com/lennysan
• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/
*In this episode, we cover:*
(00:00) Introduction to Brian Halligan
(03:56) The perpetual state of constructive dissatisfaction
(05:25) Coaching CEOs
(07:49) The art of interviewing and hiring
(11:21) Getting the most out of reference calls
(13:10) Homegrown talent vs. big company hires
(16:31) Traits of successful CEOs
(19:40) Brian’s LOCKS framework for evaluating founders
(21:34) Are great CEO’s born or made?
(23:41) Giving effective feedback
(25:54) The future of go-to-market strategies
(31:56) Understanding forward deployed engineers
(34:17) How the CEO role has evolved over the last 20 years
(38:10) Halliganisms
(01:01:18) The CEO’s role in scaling a company
(01:02:41) Lightning round and final thoughts
*Referenced:*
• Dev Ittycheria on LinkedIn: https://www.linkedin.com/in/dittycheria
• HubSpot: https://www.hubspot.com
• Parker Conrad on LinkedIn: https://www.linkedin.com/in/parkerconrad
• McKinsey & Company: https://www.mckinsey.com
• Brian Chesky’s new playbook: https://www.lennysnewsletter.com/p/brian-cheskys-contrarian-approach
• Jensen Huang on LinkedIn: https://www.linkedin.com/in/jenhsunhuang
• Winston Weinberg on LinkedIn: https://www.linkedin.com/in/winston-weinberg
• James Cadwallader on LinkedIn: https://www.linkedin.com/in/jsca
• Gabriel Stengel on LinkedIn: https://www.linkedin.com/in/gabestengel
• He saved OpenAI, invented the “Like” button, and built Google Maps: Bret Taylor on the future of careers, coding, agents, and more: https://www.lennysnewsletter.com/p/he-saved-openai-bret-taylor
• Scaling Entrepreneurial Ventures: https://orbit.mit.edu/classes/scaling-entrepreneurial-ventures-15.392
• OpenClaw: https://openclaw.ai
• Ruth Porat on LinkedIn: https://www.linkedin.com/in/ruth-porat
• Mike Krzyzewski: https://goduke.com/sports/mens-basketball/roster/coaches/mike-krzyzewski/4159
• Dalai Lama’s 18 Rules for Living: https://www.prm.nau.edu/prm205/Dalai-Lama-18-rules-for-living.htm
• Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO): https://www.lennysnewsletter.com/p/lessons-from-30-years-of-building
• Kareem Amin on LinkedIn: https://www.linkedin.com/in/kareemamin
• Glassdoor: https://www.glassdoor.com
• Tobi Lütke’s leadership playbook: Playing infinite games, operating from first principles, and maximizing human potential (founder and CEO of Shopify): https://www.lennysnewsletter.com/p/tobi-lutkes-leadership-playbook
• Katie Burke on LinkedIn: https://www.linkedin.com/in/katie-burke-965767a
• Jerry Garcia: https://en.wikipedia.org/wiki/Jerry_Garcia
• Bob Weir: https://en.wikipedia.org/wiki/Bob_Weir
• Phil Lesh: https://en.wikipedia.org/wiki/Phil_Lesh
• Ron “Pigpen” McKernan: https://en.wikipedia.org/wiki/Ron_%22Pigpen%22_McKernan
• Marc Andreessen: The real AI boom hasn’t even started yet: https://www.lennysnewsletter.com/p/marc-andreessen-the-real-ai-boom
• The American Revolution: https://www.pbs.org/kenburns/the-american-revolution
• Delphi: https://www.delphi.ai
• Sonos: https://www.sonos.com
• Yamini Rangan on LinkedIn: https://www.linkedin.com/in/yaminirangan
• The Boston Red Sox: https://www.mlb.com/redsox
*Recommended book:*
• Marketing Lessons from the Grateful Dead: What Every Business Can Learn from the Most Iconic Band in History: https://www.amazon.com/Marketing-Lessons-Grateful-Dead-Business/dp/0470900520
_Production and marketing by https://penname.co/._
_For inquiries about sponsoring the podcast, email [email protected] ._
Lenny may be an investor in the companies discussed.
Transcript 14,089 words · 2 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 The thing about being a founder or CEO is no one there to rescue you. Your parents aren't going to rescue you. Your VC is not going to rescue you. That kind of hits you when you hit your first crisis.
0:08 Lenny Rachitsky? Starting a company has never been easier. Scaling one into a durable, high-impact organization has never been harder.
0:13 Speaker 00 The number of companies formed is going to mushroom over the next 10 years relative to last 10 years. It's just going to be hard to stand out and really accelerate.
0:20 Lenny Rachitsky? What's most different about what it was like to be a CEO maybe 10, 20 years ago versus today?
0:25 Speaker 00 There's a massive tax and optionality when you can move this fast and try a lot of things. It puts pressure on the CEOs to be faster and better decision makers.
0:35 Lenny Rachitsky? A lot of people in the world want to be founders. They want to be CEOs.
0:38 Speaker 00 I don't think anyone can do it. People talk about 996. It's way more than that. Founders are seven days a week. They're always on. I text Sunday nights. It's full contact.
0:46 Lenny Rachitsky? Do you feel like there are specific profiles or traits to be successful?
0:50 Speaker 00 I look for four things. I call it my lock algorithm.
0:56 Lenny Rachitsky? Today, my guest is Brian Halligan, co-founder and longtime CEO of HubSpot. I asked Brian to come on this podcast because he is, more than anyone I've met, a student of the job of a CEO. After leaving HubSpot last year, he became the in-house CEO coach at Sequoia, where he brings together dozens of top CEOs to learn from each other. He does one-on-one coaching with some of the world's top CEOs. He also hosts a popular podcast called Long Strange Trip, where he interviews some of the world's most successful CEOs. In this conversation, we unpack what it takes to be a successful CEO in today's era. Let's get into it after a short word from our wonderful sponsors. Applications break in all kinds of ways: crashes, slowdowns, regressions,
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2:23 Lenny Rachitsky? free at sentry.io/leni and use code leni for $100 in Sentry credits. That's S-C-N-T-R-Y.io/leni. This episode is brought to you by Datadog, now home to Eppo, the leading experimentation and feature flagging platform. Product managers at the world's best companies use Datadog, the same platform their engineers rely on every day to connect product insights to product issues like bugs, UX friction, and business impact. It starts with product analytics, where PMs can watch replays, review funnels, dive into retention, and explore their growth metrics. Where other tools stop, Datadog goes even further. It helps you actually diagnose
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3:48 Lenny Rachitsky? Request a demo at datadoghq.com/leni. That's datadoghq.com/leni.
3:59 Lenny Rachitsky? Brian, thank you so much for being here and welcome to the podcast. Thanks for having me, Leni. It's my pleasure. I want to start with something that I've heard your board members, the way they described you, is someone with a perpetual state of constructive dissatisfaction.
4:15 Lenny Rachitsky? Do you think this is a core foundational kind of trait of successful CEOs, successful leaders?
4:21 Speaker 00 By the way, I like that description. When she, a woman named Lori Norington, who's a subs vice chair, said that, I like it. I took it as kind of a compliment and I liked it. And as I, so I spend most of my time these days coaching very fast growth CEOs. They all are kind of like that. They're all in kind of a state of perpetual dissatisfaction, but in a positive way. One of the things, by the way, I like about the current crop of CEOs,
4:55 Speaker 00 they don't really take stock of what they've done and feel it. They're always a little bit dissatisfied with where they are and very focused on the end state. And I've been surprised at how humble this generation is of CEOs. And I think of my generation of CEOs as being, I don't know, I wouldn't, humble wasn't the first word that would come out of your mouth when you describe kind of my generation. But this generation, I feel like is different and I've been impressed with it.
5:25 Lenny Rachitsky? Okay. I have a bunch of questions along these lines because one, you've been a CEO of an incredibly successful company for a long time, for about 20 years before you move on to this new chapter. Now you work with a bunch of CEOs, you're the, you're Sequoia's in-house CEO coach. There's a few things that I've heard you do. One is you gather groups of CEOs. And what I've read is that you have kind of two tables. You have the kids' table and the adults' table. The kids' table of CEOs that are companies that are about under 100 employees. The adults' table is over 100 employees.
5:58 Lenny Rachitsky? So let me ask you just, when you look at CEOs that move from the kids' table to the adults' table, other than just, you know, they scale and grow, what is it that these CEOs that graduate from kids to adults' table do differently?
6:11 Speaker 00 The adults are really focused on, and all they really want to talk about is their exec team. Their direct reports, how do we build our exec team at next level down, org design. You would be surprised how much they think about that. And on average, I would say the adults are spending Half their time just recruiting and interviewing. It's pretty all consuming. And I remember that from that phase in HubSpot's growth. And it surprises people like, wow, my job is really just to interview and hire. I didn't know that was going to be the case. So that is one that they kind of are making that transition. And I would just say in general, people are very bad at this and HubSpot was too.
6:57 Speaker 00 I think CEOs and everyone dramatically overrates their ability to interview and overrates their gut feeling and underrates a really high quality blind reference.
7:13 Speaker 00 And I interviewed Dave, the CEO from MongoDB the other day. And he had an interesting stat. On average, over his like 10 year lifespan as a CEO of Mongo, there were two C level, two C levels turned over per year. That's a lot of turnover at the top. And I didn't keep track of it like Dave, but I'm think HubSpot was kind of similar. And all of these startups are kind of similar too. And so people are working on that and struggling with it. Uh, it's one thing in common like with all of them.
7:49 Lenny Rachitsky? What do you do when you coach someone on that? When you're like, okay, you think you're amazing at interviewing? You think you know who's going to work out? What advice do you give them to help them develop that skill?
7:59 Speaker 00 I think even me, I've been doing this for 150 years. I still think I overrate my ability to interview someone and really know if they're a good fit.
8:10 Speaker 00 I give a couple pieces of advice. Parker Conrad has a good hack that I like.
8:17 Speaker 00 Before he's got a C level interview CFO, Chief Product Officer, whatever. He has them sign an NDA and sends them the last board deck or the board memo or some important doc. And he schedules a half hour interview with them. And he just has a chat about the depth. And if they're just very complimentary and it's so great. You're doing this amazing thing. It's a major red flag to him because he wants someone that will challenge him and not a yes person. And I thought that was a pretty good hack to get inside someone's head and how they think and how they'll interact with you. Um, getting on a whiteboard and working through a problem, I think is always a good thing. I think the standard interview of walking through your background, I don't think is all that valuable.
9:02 Speaker 00 Um, and I coach people to do blind references. Find someone you know that work with them. VCs are good at this, by the way. And I get a lot of these and you can tell some of them are like, we've already decided. We're checking the box versus they're asking me hard questions about this person. And one of my favorite questions people ask is would you enthusiastically rehire this person for that role? Which I think is a really good question. On a scale of one to 10, how likely is it that you'll try to rehire this person back for me down the road? I think those types of questions are good. So not mailing it in on those blind references, I think are is really good.
9:44 Speaker 00 My other piece of advice, and no one listens to me on this, is hire slow and fire fast. Um, people hire fast and fire slow. Uh, and if I had to guess, Lenny, with 18 months after you hire a C-level exec, at least 50% of the time they're gone. There's, there's, I have mortality rate on them. It's, it's harder than people think.
10:10 Lenny Rachitsky? And what you're saying here is there's only so much you can actually do to increase those odds.
10:15 Speaker 00 I think you can. I, I, I think you can, you can, um, I think the blind references are key. I think doing like real interactive, working on a project together. I'll tell you one other thing we learned at HubSpot about this. Like we would have a candidate come in, let's say a head of engineering. And we'd have like eight people interview them in our scales, one, one to four. And let's say four people were four out of four and four people were two out of four. So that's candidate A. And then the next candidate comes in, eight people interview them, and everyone's a three out of four. Almost every time, we hired the three out of four, like the person with the least amount of weaknesses. And we changed it, and we went with the spikier people. We
10:59 Speaker 00 went with people with weaknesses. We want people to challenge stuff. And that has worked out quite well. Like, our hit rate and hub spots improved. We also have shrunk the pool of people on that interview panel from eight to like, four. Like, we just hired a head of product, and there were just four of us that interviewed him. I think that worked too. So I think there's things you could do to get better at it, for sure.
11:21 Lenny Rachitsky? Okay, this is incredibly tactical and useful. On the references piece, the toughest part is getting people to be honest, because there's very little upside to them to say negative things about people. Is there anything that you've learned to help get real, honest answers from folks you call for references?
11:38 Speaker 00 Well, I can just say, because I don't do this a lot anymore, but when people call me, I can tell what they've already decided. When they're really just looking for like, when they ask me for the strengths and weaknesses, I'm like, they've already decided. When they ask me something hard, like, on a scale of one to 10, how likely are you to hire them again? Stuff like that, that kind of gets at the core. Or, were they the top 1% of your employees? That's a good question. Oh, were they top 10? Oh. You know, that type of question is pretty good. So when I'm on the other side of it, I like when, I like when those types of questions go up. I tell you the other mistake everyone makes, I made,
12:20 Speaker 00 and all the CEOs are making now, is you're hiring for that whatever, head of engineering,
12:29 Speaker 00 and you're blown away by the resume. Like, you're 50 employees, and you're hiring this person who's been at Microsoft the last 10 years, and has a fancy title, and has fancy division in Microsoft, and you hire them. There's just a massive impedance mismatch when you hire them on what their expectations are, and what your expectations are, in the extent that you've got your shit together. It's just, you don't. You definitely don't. If you're 50 or 500 employees and they expect you to have your act together. And so that is another, like, avoid the big company hire. Like, we hired so many people from Salesforce and Google, Microsoft, like 100%, you know, attrition rate on all those folks.
13:10 Lenny Rachitsky? Something that I've seen at a lot of companies is there's like phases of like, okay, now it's like the McKinsey cohort comes in and we think that's going to be the answer. And that's the Apple group. And then that didn't work out. Then the Amazon group.
13:22 Speaker 00 The McKinsey one never works. It never works. It never works. Like, by definition, they would fail on my spectrum of like, most founders are like me. Like, they are skeptical of conventional wisdom. They're unhappy with the world works in some way. And so they're kind of far on that spectrum of rethinking conventional wisdom. And almost by definition, somebody who goes to work for McKinsey is very conservative in their outlook. And so I think that almost always fails.
13:49 Lenny Rachitsky? We're on this hiring kind of thread, so let me keep following this conversation. I read somewhere that you recommend building your team like the 2004 Red Sox.
14:01 Lenny Rachitsky? What does this mean?
14:02 Speaker 00 Well, I'm a big sports fan and big Boston Red Sox. And the Boston Red Sox hadn't won, Lenny, a World Series in 86 years since they traded Adrian. And they finally broke, and they finally won it in 2004. And the way they won it was they had a team of a bunch of homegrown, really high quality, inexpensive talent that they drafted and came through the farm system. And then they got a few free agents, like David Ortiz, that a lot of people have heard of, that they paid a fair amount of money to. Peter Martinez and Curt Schilling were kind of the canonical, older, been there, done that, bigger company folks. And they mixed really nicely. The culture really worked. And I think that's
14:45 Speaker 00 the key. I think people underrate their homegrown talent. Like, almost across the board, they underrated. And I think you want that mix. You don't want to hire a whole bunch of been there, done that. You don't want to hire none of them.
14:57 Lenny Rachitsky? I don't, I imagine this is public, but you're now a part owner of the Red Sox, is that right?
15:01 Speaker 00 I am a part owner of the Red Sox, yes.
15:02 Lenny Rachitsky? Okay, I have questions for you along those lines.
15:06 Lenny Rachitsky? Okay, that's amazing advice. Kind of what I'm taking away here is people see all these fancy logos, amazing person, VP this, that at Salesforce, Amazon, Google, whatever. And what you're saying here is don't underestimate the power of someone internal rising to the occasion.
15:21 Speaker 00 Yeah, if you look at HubSpot, like, half the management team are folks who have been there for approximately 150 years, which I like. And same with, like, you look at Apple, a lot of those people are homegrown.
15:32 Lenny Rachitsky? And so is there any tips here for doing this well? Is it just like, give people a chance?
15:36 Speaker 00 I tend to give people a chance. It's like, if you're interviewing someone that's homegrown and they're VP for that C-level job versus hiring someone from the outside. Hire someone from the outside, they're very good at interviewing from a big company, they're fancy, they're shiny. You haven't seen their warts, it's hard to figure out their warts unless you're very good at blind referencing. And so you tend to overrate them and underrate your homegrown. So if it's pretty close, I think you give your homegrown a shot at it. What's interesting to me, Lenny, is, you know, Brian Chesky sort of rethought a lot of this stuff. And he's like, everyone's over rotating to the homegrown, to the, you know, experienced talent and management teams and delegation. And I think he's mostly right about that. People haven't really followed that.
16:21 Speaker 00 People are, you know, they're hiring people from the outside quite a bit. That's kind of a standard part of the playbook that all of them are following now. It's a little different. It's actually quite different than what Brian's espousing.
16:31 Lenny Rachitsky? Going back to the conversation around CEOs, a lot of people listening to this podcast, just a lot of people in the world want to be founders, they want to be CEOs. At the same time, you look at Elon, you look at Jensen, you look at Steve Jobs, you look at you. A lot of people are like, I can't, I'm not this person, I'm not, I'm not going to be as good as them. There's no world where I'm this good. Do you feel like there are specific profiles or just like traits that you have to be born with to be a successful CEO? Or do you think it's all learnable, anybody can be successful if they really work hard?
17:02 Speaker 00 In Square, I meet all these CEOs coming in, and I have a little, like, algorithm in my head. And I look for four things. I call it my LOCKED algorithm. L is for lovable. And you know, Steve Jobs, you would say is kind of rough and maybe not lovable. But he would inspire followership. You would want to follow him. And so could I envision a 28 year old me graduating from business school, going to work for this person? Would I crawl across broken glass? That's question one. Two is just obsession. Are they deeply obsessed with this problem?
17:43 Speaker 00 Do they? I'm a little negative on people who came up with this problem to solve six months ago and started a company. I like people with deep founder market fit, who have been thinking about it for a long time and have evidence in their lives of going deep down, obsessively down a rabbit hole, because that's kind of what it takes to be a founder CEO. The C is something I wouldn't have thought of, but this is a Sequoia thing, like chip on the shoulder. Pretty much all of them have a boulder on their shoulder. And I have a bit of a chip on my shoulder, too. And the K is just for deeply knowledgeable about the domain. And so I kind of look for that. If I were to stick an S on it, I would say student.
18:27 Speaker 00 Like I look at Winston Weinberg from Harvey or James from Profound or Gabe from Rogo. Some of these new, very fast growing companies, they're students of the game. They're not just learn at alls. They're deep, deep, deep students of the game. And they're like LLMs. They're constantly, constantly learning. And it's not just learning stuff for me and their peers, but they go way back in time and have a lot of history on stuff. So those are some of the, that's kind of my little criteria I use when I'm evaluating CEOs. What do you look for, by the way? You've interviewed a ton of folks like me. What do you think's in common?
19:11 Lenny Rachitsky? Of what? Successful founders? Oh, my God. I wish I had the my succinct answer. I would ask I would go to lennybot.com and be like, what is the common pattern across these folks? One that you didn't mention that I think is interesting. I did some research on this recently with Terrence Rohan. One is just extremely ambitious, just trying to do something really wild that most people are like, that's crazy. You're not going to like, get a subscription service for all music in the world. That's just what are you doing? Do it. And you're getting
19:37 Speaker 00 I agree with that. And like, is it learnable? I noticed some of the a lot of the CEOs struggling with a couple of things like, let's say you're you're Winston, you're late twenties. You've never managed a team. You're probably never even captain of a sports team before. And in order to scale, like you have to give people feedback like constantly. And it's very unnatural. It's like, I'm going to give this this VP I hired a bunch of feedback, positive and negative. And if you don't get good at that, you really pay the price later. But that's something I think they have to learn. They all have to learn to get a good bullshit detector.
20:19 Speaker 00 They're constantly being spun. Everyone's trying to sell to them. The org is always trying to sell to them. So that's sort of something they have to develop, you know, over time. They have to all get good at the inspiration thing over time. Like you're Winston, you've never had to inspire anyone in your entire life. You know, you're you went to school and you're a lawyer for a few years and you started this thing like inspiration wasn't your thing. So there's certain things you have to kind of learn on that startup to scale up path. And the best ones learn it very fast.
20:50 Lenny Rachitsky? This is extremely interesting and useful. So lock with an S at the end, just to kind of mirror back what you're sharing. So which and when you were saying you evaluate CEOs, is this for like investing as a okay, so when you're helping Sequoia decide, should we invest in this company? What you look for is locks. I like the S. I'm going to include it there. So are they lovable? Are they inspiring? Oh, are they obsessed with this problem they're going after? Do they have a chip on their shoulder? Are they extremely knowledgeable about the problem they're going out? And it sounds like not just the problem, but just the studying companies, business, strategy, things like that. And then S was a student. I guess that's what S is. Student is studying this, being a founder, being a CEO.
21:33 Lenny Rachitsky? Okay, so I guess going back just to the question, do you think? Just to put it very simply, do you think CEOs are born or do you think they're made? Can anyone turn into an amazing CEO?
21:43 Speaker 00 I don't think anyone can do it. I don't think it's just anyone. I will say, I've noticed that, so another little rubric I have, and I don't see a lot of these, but like Bret Taylor's one, there's a few out there that are in Sequoia's portfolio. I call them a back to the baseball thing, a five tool player. In baseball, when you rank a player, it's can they hit? Can they hit with power? Can they run? Can they catch a ball? Can they throw the ball? And they they rate them kind of one to 10 at each. And it's very rare that you have a five tool player, like extremely rare. And the thing that's kind of new now are there are five tool CEOs.
22:22 Speaker 00 Like Bret Taylor's one, you can code, you have taste, you have vision, you can sell the product, you can convince employees, like this kind of super CEO. And there's a bunch of them now. And I don't know, I didn't see a lot of those. That certainly wasn't Steve Jobs. He wasn't writing, he wasn't programming.
22:44 Speaker 00 It wasn't Jeff Bezos.
22:47 Speaker 00 You know, I think there's kind of a new breed that's quite impressive.
22:49 Lenny Rachitsky? These folks you mentioned were this good before AI became a thing. I imagine AI helps more CEOs fill the gaps that they have.
22:58 Speaker 00 I think AI is, it's hard to fill the gap.
23:02 Speaker 00 You know, this guy's a developer, he's brilliant, genius level, obsessive. But can he convince, can he sell? Can he convince an investor to give him a lot of money and a high valuation? Can he convince brilliant employees to leave OpenAI and join him? Can he convince some big skeptical Fortune 500 enterprise to buy his product? Like be able to do that and have taste and be able to code really well at next levels, I think is rare. I actually think it might be the other way, though, where mere mortals like me, who can kind of code, all of a sudden, we're going to be able to build stuff. I think it kind of goes the other way.
23:42 Lenny Rachitsky? I love this list you shared of things that you find CEOs most have to learn. BS detection, inspiring people, giving hard feedback. What's maybe like the one thing that most often people that become CEOs founders have to work on? Is there like a most common thread of like, here's the thing you probably need to work on most?
24:00 Speaker 00 It's that feedback thing.
24:03 Speaker 00 All of the CEOs are building their teams and so many are like, I have a co-founder that runs product and engineering, but I need that co-founder to kind of step aside and be the CTO and the thinker and the labs person. And I need to hire somebody who can actually run the engineering machine. Like so many of the CEOs are going through that right now.
24:27 Speaker 00 That's a tricky transition. So many of the CEOs are layering folks. Like you hired that early head of sales. He hired 10 people, but just can't quite figure out the sales profile, can't quite unpack the sales process, can't quite forecast accurately. We need to layer the person. You know, those types of conversations are very tricky and quite unnatural for Homo sapiens to have. If you're, you know, you're 25 and you've never done anything like that before. So I see the best ones getting really good at that and studying it. And it's, it's super uncomfortable, but they have to kind of suck it up and get good at it.
25:04 Lenny Rachitsky? What do you find most helps them build these skills, get better at this? Is there some kind of tidbits of advice you give them? Is it something that they study to improve?
25:13 Speaker 00 I think misery loves company on this. So what I do, like the kids table is 15 CEOs of companies under 100 employees. And the adults table are CEOs of companies over 100 employees, about 15 of them. They talk about this with each other. It's kind of a safe space. And I can weigh in, but it's actually much more effective when their peers weigh in. I think misery really does like company on stuff like this. They learn from each other.
25:40 Lenny Rachitsky? So essentially it's find peers to talk to and share and be.
25:43 Speaker 00 And the reason to break it out is like the problems with the kids table are very different than the problems of the adult table.
25:50 Speaker 00 And they all rhyme, they rhyme a lot.
25:54 Lenny Rachitsky? So you teach a course at MIT around scaling startups and it's specifically around scaling, not startups, not starting the company. And you have this quote in your syllabus, starting a company has never been easier. Scaling one into a durable, high-impact organization has never been harder. Why is that the case?
26:12 Speaker 00 I mean, has it ever been easier to start a company?
26:14 Lenny Rachitsky? That's absolutely true.
26:17 Speaker 00 And the flip side of that is.
26:21 Speaker 00 I mean, how many companies is the number of companies formed is going to mushroom over the next 10 years relative to last 10 years and the last 10 years compared to the previous 10 years is mushroom. I just think in my life, like I'm old and when I was a kid, I'd walked into CVS corn drug store and I want to buy toothbrush. There are four or five there. You pick one. And, you know, in the night, in like the 90s or 2000, you go to Amazon, there are four or 5,000 toothbrushes. It's more 5,000 companies greater than toothbrushes. It got much, much easier to make stuff and even technology. AWS just made it easier to start a software company. So it's like a huge jump back then when we started up
27:04 Speaker 00 about 2006, but now it's going to be even bigger jump. So it's easier to start. Now there's so much noise and in competition, it's just going to be hard to stand out and really accelerate and scale. So that's why I say it's never been easier to start. There's never been more competition. It's never been harder to scale.
27:22 Lenny Rachitsky? And a big part of this is, is distribution essentially breaking through the noise is what I'm asking.
27:26 Speaker 00 It's hard to learn that. Like you didn't grow up doing distribution. You don't know. So they're all learning it. And the ones that learn fast, it's like a learning game. The faster you learn, you know, the better you do.
27:38 Lenny Rachitsky? Along these lines, I saw you tweet this recently where people talk about which jobs AI is going to replace. And you said that sales is maybe the last job AI will replace. What, why do you think that's the case?
27:53 Speaker 00 Well, if you look inside a typical enterprise, like where's AI like really working? Let's say inside of HubSpot, software development's working incredibly well. Customer support incredibly well. Legal starting to work incredibly well, but there really aren't apps like in the rest of the org that have really changed things a lot. And then the go to market side's been kind of slow. Really just support. Like there isn't like a canonical marketing or sales or maybe the BDR is the first one. But I think ye old enterprise sales where there's actual trust built up between two carbon based life forms, I think will be
28:37 Speaker 00 very, very, very late to go in the white collar world. I also, I think a lot about the go to market. I think the go to market is going to get turned on its head. Like when we started HubSpot, if I think of the way the funnel worked, you want to get found in Google, someone clicks on a blue link, they land on your website, they go down the rabbit hole, they clicked on contact sales, they wait until that sales rep's ready, go down that rabbit hole. And I think it's going to get turned on its head where people are evaluating a product, they start in Gemini, or they start in Anthropic, or they start in ChatGPT. And for example, ChatGPT knows way about your, he knows everything on your website, everything beyond that, knows all your competitors.
29:19 Speaker 00 So they will stay in there and do lots more research and be incredibly well educated. So your website's a lot less important. And they go to your site. I think sites will change where you're going to have a really high quality avatar that knows everything about your products, knows everything about your company and your pricing and packaging. And you can have a high quality conversation with that person. That person, that will get stored in your CRM and will get scored as this good quality conversation. And then the sales rep will follow up. But that sales rep will be an avatar with them on every sales call. You won't have to wait for their SE. They'll have their own SE that's all knowing that will follow them through the process. So go to market hasn't changed much yet, but I think over time, it's going to change a lot.
30:03 Lenny Rachitsky? This avatar, just understand, so this is, the buyer has their own little agent that comes with them? Or on HubSpot, you have this avatar that walks you through the sales process?
30:12 Speaker 00 I think both. I think me as a knowledge worker, like what I really want as a homo sapien, is I have like a Delphi clone that I really like.
30:25 Lenny Rachitsky? Same.
30:26 Speaker 00 It's actually quite good.
30:27 Lenny Rachitsky? Yeah.
30:28 Speaker 00 You have one too.
30:29 Lenny Rachitsky? Yeah. Where do people find yours?
30:31 Speaker 00 They find it on my footer, they can find it on Delphi.
30:34 Lenny Rachitsky? Okay, we'll link to it.
30:35 Speaker 00 Yeah. And what I want is like, connect that, that thing to my email, into my granola, into my plod, and it knows everything about me. And then when I go to a meeting, Lenny, I want to invite I want to invite that thing to my meeting. So it's sitting there in the Zoom meeting. It's not just taking notes like granola. It's a participant. So if I forgot something, I asked it a question if somebody else forgot. Like, I think every knowledge worker will have one of these in three, four, five years. But mine was more on the go to market side where I think every website will change and there'll be a an all-knowing avatar on that homepage. And if it's a considered purchase, I think it gets handed off to a sales rep.
31:17 Speaker 00 That sales rep has a conversation, but when that sales rep's on Zoom, they have their SE avatar that's kind of all-knowing. So I think this stuff all changes a lot in the next few years, but it hasn't really unlocked yet.
31:28 Lenny Rachitsky? What are we going to be doing in this world? These two bots chatting with each other?
31:33 Speaker 00 It's gonna be great, Lenny. You and I are gonna be like, sitting on
31:36 Lenny Rachitsky? Listening to podcasts.
31:37 Speaker 00 Free tacos, relaxing on a month-long vacation, sending our avatars to all the meetings.
31:42 Lenny Rachitsky? Go buy me some hub spot seats, please. I think this is why Claude Bot was so popular. I think this is essentially what they're building is this idea, which is now called Molt Bot, which might be changing again. It's just like this personal little agent that can go do stuff for you.
31:56 Speaker 00 Totally.
31:57 Lenny Rachitsky? So you're talking about the future of go to market is this world where there's these little bots and agents that are doing things for you, both on both sides. When you look at companies today that you work with that are doing well, that are especially AI-driven companies, what are they doing differently in terms of go to market that is working really well?
32:15 Speaker 00 Honestly, the only thing that's different today, it's exactly the same as it's been for 100 years, except they call their SEs or their system consultants for deployed engineers. The rest of it is the same. I thought it would be totally different in AI. I'm working with all these companies. They're hiring like all the same folks, running the same enterprise sales processes. So it hasn't changed that much, at least on the enterprise side. It actually hasn't. I spent the first 10 years of my career at a company called PTC, which is like an enterprise sales machine. Enterprise sales hasn't changed that much since the 1990s.
32:48 Lenny Rachitsky? Okay, and so for deployed engineer, a very hot term. The idea there is they come work with the customer and help them implement this thing. And that's come up a lot on this podcast, just with AI tools. Rarely are they just plug and play. You can't just like set up some agent that figures everything out. Takes a lot of onboarding and integration. Is it actually a different thing at all versus like sales engineering in the past? Things like that.
33:11 Speaker 00 I think it's a solution that's consultant, sales engineer, technical, they help you implement it. They connect all your systems, they customize it. It's different. I mean, you're training it in a different way. But I, well, anyway, I think the term is fine. I'm sort of being light on it because, boy, it looks similar, except that role has a different name to it.
33:31 Lenny Rachitsky? Got it. So if anything, the advice I'm hearing here is just lean into this. Continue to lean into this idea of having your employees help the customer onboard, be successful, integrate all that stuff.
33:43 Speaker 00 I think the thing that will change first is the top of the funnel around getting found in. Instead of Google, you got to get found in these.
33:51 Lenny Rachitsky? Yeah, AEO.
33:52 Speaker 00 Yeah, that's going to be really important. And the way you build your website is very different for that to optimize for it.
33:59 Speaker 00 And then your, I think your homepage is totally different. And I think you land on an avatar and have a conversation with them versus you're going through all the pages on your site. I think the top of the funnel is about to change a lot.
34:09 Lenny Rachitsky? Is anyone doing this well yet? This idea of this avatar, or is this just kind of a?
34:13 Speaker 00 If you start a, for example, HubSpot does it. We built, we built one. It's working.
34:17 Lenny Rachitsky? Okay, okay.
34:20 Lenny Rachitsky? Let me ask one more question around CO stuff, and then I want to move on to halogenisms.
34:24 Speaker 00 All right.
34:26 Lenny Rachitsky? How is just being a CEO different than it was? So you've been doing this for 20-ish years.
34:32 Speaker 00 Yeah.
34:34 Lenny Rachitsky? What's like most different about what it was like to be a CEO, maybe 10, 20 years ago versus today?
34:39 Speaker 00 What am I see? As actually Winston from Harvey said this like a year ago, and I was like, that's bullshit. But I actually think he was right. He's like, you can just do a lot more. I mean, you've got AI agents doing stuff. Everyone's more productive. The software developer is more productive. Like something that used to take you a year, it takes two months now. And so the amount of projects and the amount of stuff you can do is much, much more. I think he's right. I think that's a little dangerous. Like, let's say you found your beachhead market and that beachhead market is really good and it's very deep. There's a lot of work to do. I think what's dangerous for companies is they hop to that second act too quickly. And they lose focus on that first act.
35:21 Speaker 00 And this isn't a completely perfect analogy, but like you think of OpenAI and ChatGPT and its consumer app is doing incredible. And they're doing lots and lots and lots and lots of other things. And then Gemini comes out and they've kind of focused back on the core. I think there's a lot of competition. Everything is moving fast. I do think people get more done. And I think that impacts everything, like the planning cycles used to be a year. I think the planning cycles now are three months long.
35:49 Speaker 00 Yeah, that's a big change. I think it puts pressure on the CEOs to be faster and better. Decision makers.
36:00 Speaker 00 Like I just think of times in HubSpot when things slowed down and there was churn. It was usually my fault. It was because there were some hard, you know, one-way door type decisions on my desk. And, you know, maybe every year I would sit down and I'd, I'd open that one-way door or close it. And it just freed everyone up and we just started moving so much faster. I think people need to be making those decisions and walking through those doors much more quickly than they used to. I think that's new and different. Different. I was someone who always valued optionality. I think there's a massive tax on optionality when you can move this fast and try a lot of things. So I do think the job's changing a lot.
36:44 Lenny Rachitsky? Yeah, and there's so many reasons this is happening. One is just, technology is just, like every week there's a new shift in what is possible. It's like you're spending all these months thinking and planning, just like, what a waste of time it ends up being because so much is changing.
36:59 Speaker 00 I know. Yeah, it's hard to keep up.
37:03 Lenny Rachitsky? Luckily, we got some sweet podcasts to check out to keep up to date with what's happening. We'll link to yours, of course. Here's a puzzle for you. What do OpenAI, Cursor, Perplexity, Vercel, Plat, and hundreds of other winning companies have in common? The answer is they're all powered by today's sponsor, WorkOS. If you're building software for enterprises, you've probably felt the pain of integrating Single Sign-on, SCIM, RBAC, audit logs, and other features required by big customers. WorkOS turns those deal blockers into drop-in APIs with a modern developer platform built specifically for B2B SaaS. Whether you're a seed-stage startup trying to land your first enterprise customer or a unicorn expanding globally, WorkOS is the fastest path to becoming enterprise-ready and unlocking growth.
37:48 Lenny Rachitsky? They're essentially Stripe for enterprise features. Visit workos.com to get started or just hit up their Slack support, where they have real engineers in there who answer your questions super fast. WorkOS allows you to build like the best with delightful APIs, comprehensive docs, and a smooth developer experience. Go to workos.com to make your app enterprise-ready today. Let's talk halogenisms. Essentially, these are nuggets of wisdom and advice that you find yourself sharing. Often, you've written about a bunch of these online. And so let me just go through them and then just share the synopsis of the advice and the lesson around this halogenism. The first is, when you have to eat a shit sandwich, don't nibble.
38:29 Speaker 00 Okay, completely stole this from Ruth Porat, the CEO, CFO of Google. I saw her quote somewhere. I'm like, that's it. She's put a perfect thing on it. And I'll give you an example where I think this will play out over the next couple of years. I think within the next couple of years, there'll be a real retrenchment in valuations. And some will live up to their valuations a lot more. And like, if I look at the public markets, they're very tight right now. It's like the anti-bubble. I look at private valuations, it's like a real bubble. I think there's a reckoning somewhere down the road. And a lot of companies are going to have to do layoffs, a lot. It's never fun. It's usually the worst thing in the history of your life.
39:11 Speaker 00 And the temptation is to do, well, just do a little one now and we'll grow into it. And then do another, and then they do another one in six months and then another one. I think with everything, including this type of thing, it's just rip the darn Band-Aid off. Tell everyone the bad news. They're adults. They can handle it and get it done. And I think people avoid that. I think that's good advice with, with Poro's giving. As you're gonna have bad news to deliver, bad shit's gonna happen to your company. Even though it looks like it's going amazing right now, you're gonna, weird stuff's gonna happen. And you're gonna have to deal with it. And, and we had a lot of weird stuff happen to HubSpot. And
39:54 Speaker 00 and there's, there's a basketball coach named Mike Sheshevsky. He's Duke's basketball coach, all time winningest college basketball coach ever. If you go to a Duke basketball game, you can hear him yelling from the sidelines. Let's play, let's play. And what's going on there is when a college basketball player is playing in the game and takes a shot and clanks it off the rim and misses it. They have a strong tendency to go play overly aggressively on defense in the backcourt. And many times compound their error by making a foul or something like that. And what he wants to do is people to make their error, forget about it
40:37 Speaker 00 and move back down the other side of the court and run the play. And so we used, we actually, there were times in HubSpot's history where we had the Mike Sheshevsky's face on a huge slide in front of the company meeting saying, next play, because there was an unforced error and we need to deal with it and kind of move on.
40:54 Lenny Rachitsky? Is there a story of that that comes to mind that is interesting and worth getting into?
40:59 Speaker 00 There's a lot of them, but I remember in 2000, it was the, it was the last day of March in 2019. And
41:08 Speaker 00 We had a really bad outage like all day and we never really had one of those. And it was bad. Customers were unhappy. A lot of customers canceled. I had a lot of customers yelling at me and I remember that company meeting. I cried in front of the whole company. They couldn't believe it happened to us. And I remember using the next play slide on that one. Yeah. Most of, we made a lot of mistakes at HubSpot. A lot of bad things happened to companies and most of them are self-inflicted. And a lot of them are the old, the old saw like, companies are far more likely to die of overeating than indigestion. Usually it was we were trying to do too much.
41:53 Lenny Rachitsky? I haven't heard that version. I've always heard most companies die of suicide versus homicide.
41:58 Speaker 00 That's true too, by the way.
42:01 Lenny Rachitsky? Okay, so next halogenism. Never waste a good crisis. There's something that people hear. I'm curious, just, just kind of like, what's the, what's the lesson here? And then is there an example of this with that, where you learn this lesson?
42:16 Speaker 00 I'll just follow on. Most of the good things that happened in HubSpot came out of a crisis because we would take, you know, pretty drastic measures to fix it and make sure we didn't do the same thing again. And so in this particular case, we really rethought how we deployed software, how we thought about making software in a way that was incredibly healthy. And, I mean, we haven't had a serious outage since. The quality is much better. And a kind of interesting thing with HubSpot is we started as a marketing software company and we pivoted, we had Salesforce kind of came into our market. We pivoted into CRM. And one thing that we, if your marketing software goes down, like if your workflow,
43:00 Speaker 00 if there's a bug in the workflows or something like that, it's bad, but you survive it. You wait a little bit. If your CRM goes down, particularly the last day of the quarter, you're really impacting your customers' ability to do business. So that was like a mindset shift that we hadn't quite come to terms with of how important we were to our customers. And so we made a lot of changes based on that crisis. You know, good things come out of, usually very good things came out of crises.
43:26 Lenny Rachitsky? So there's a lesson there. Something's going wrong. Is it just like overcorrect? Like use this as a way to?
43:31 Speaker 00 Yes, we always overcorrected. Yeah, swung the, we almost, we purposely swung the pendulum hard the other way.
43:38 Lenny Rachitsky? Which connects to the first halogenism of, if you're eating a shit sandwich, you nibble. Just, it's almost like go all the way, go even further.
43:46 Speaker 00 Yes, make it really obvious to everyone what's going on.
43:50 Lenny Rachitsky? Okay, another halogenism, if you want to kill a plant, have two people water it.
43:55 Speaker 00 I love this one, it's very true. Let's say, Lenny, you bought a new beautiful plant for your office, and then you went away for a month to Turks and Caicos because your AI agent's doing your podcast, and you ask two of your friends, hey, can you, would you mind watering my plant? And there's one of two outcomes, what happens to the plant? The plant would either be overwatered and die, or not watered at all and die. And every CEO in the adults table has gone through this, and they are religious about the DRI. Like, everyone talks about DRI in the kids' table, but once it gets to the adults' table, like, people get deep religion on it. And, and I think it makes sense, like, when you're small, and you're in startup mode, everyone's in the room, everyone knows exactly what's going on.
44:40 Speaker 00 So let's say you're running a pilot project with a big account. You run that pilot project, everyone's on the same page, salesperson, service person, developer, everyone's on the same page, and you go out and do it, and you execute well. When you get it's scale, you get a sales organization, you get forward deployed engineer organization, you've got product management organization, you've got some developers working on it. Everyone's kind of separate, no one knows really what's going on in the other departments. And so let's say you want to really have a good pilot process, and you want to rethink it, because you're scaling. Everything important happens cross-functionally inside a company at scale. And you need someone powerful to own it. So let's say it's a salesperson, they need the power to, like, tell people in other divisions what to do, even if they don't own it.
45:25 Speaker 00 So almost every CEO I deal with is like a zealot on the DRI idea. And it doesn't bite you until you get to some sort of scale.
45:34 Lenny Rachitsky? And to be super clear about the advice here, it's one person is responsible for a goal, a metric, some outcome you want versus it may feel like, okay, we have two people on this. It'll be awesome. They'll work together. Your advice here is that doesn't work.
45:47 Speaker 00 Committees never work. Yes. Yes. It's in DRI is directly responsible individual.
45:53 Lenny Rachitsky? The way I always thought about this is just having someone's ass on the line for something makes them so motivated to get it done versus like spreading, you know, the responsibility and the up and the upside and the downside. It just doesn't work.
46:06 Speaker 00 I totally agree with you.
46:07 Lenny Rachitsky? Awesome. Okay. Another allegism, I don't know if you put it this way. The way I think about it is this idea of there's no such thing as a silver bullet. There just, it just takes a lot of lead bullets to get something done. I think the way you wrote about it is it's always like one step forward, two steps back. Talk about your advice there.
46:24 Speaker 00 Yeah, I always thought incorrectly that we would have one hire or one investor or one event or one product release that would, I was wrong about this, but it'd be a silver bullet. And like the reality inside the HubSpot machine, the way it felt to me, it looks from the outside like over a long time up into the right and smooth. But inside it was two steps forward, one step back, two steps forward, one step back, two steps forward, one step back. And a lot of times it was a crisis that caused that step back. So we just didn't have that. And the thing about being a founder, CEO is there's no one, especially when you're in your twenties, no one there to rescue you. Your parents aren't going to rescue you.
47:09 Speaker 00 Your VC is not going to rescue you. Your teacher, your thesis advisor, you're kind of on your own and you got to figure it out. And that kind of hits you when you hit your first crisis. Like it's on you. You can get some help, but it's on you.
47:23 Lenny Rachitsky? Sometimes they have you in their corner if they're lucky at Sequoia.
47:27 Speaker 00 I can't fault it oftentimes. I can be the shoulder they cry on and I can give them advice, but it's still on them.
47:33 Lenny Rachitsky? Do you feel like too many people start companies just like, like when someone comes to you like, hey, Brian, should I start? Should I start a company on this idea? Do you often just like, no, you don't have no idea what you're getting into? This is going to be much more painful.
47:44 Speaker 00 I heard Jensen Huang say that, like, I wouldn't start an idea if I had it to do over. If someone asked me that question, I would start HubSpot over. It was very hard. There were a lot of sacrifices. It wasn't glamorous at all. But in the end of the day, I'm incredibly proud of it. And, you know, on my deathbed, I'm going to look back and really enjoy it. And the Dalai Lama's got a good expression like, "Live a good life so you can live it again on your deathbed." And I'm really glad I did it. But I do talk a lot of founders out of it. Like, the obsession is real. It's, you have to be deeply obsessed.
48:26 Speaker 00 And all these founders and CEOs I talk to, I mean, people talk about 996. It's way more than that. I mean, the founders are seven days a week. They're always on. I text them on Sunday nights. It's full contact. And I think what's going on there, particularly now, is people just see this massive platform change, massive opportunity. They don't want to waste the opportunity. So I think that mindset's right. But people today are much more hardcore than they were in my era. Like, I worked hard. I was probably, I was 60 to 70 hours a week the entire time. Never really turned it off, but that's kind of how I thought about it. It's different now. People are much more focused. And I think Elon's inspired people.
49:09 Lenny Rachitsky? I had a startup back in the day, nowhere near as successful as HubSpot. But the way I thought about it is, let me just give it everything I have and see what I can do. This isn't a shot. This is my chance. Let me just give it all. Like, forget balance, just go for it, seven days a week for a while. And then you scale back. And it's just like such an empowering thing to do for a while. Just like, let me just try. I'll give it my best. This won't be forever.
49:33 Speaker 00 Yep.
49:35 Lenny Rachitsky? And I know you've written about this, just like, balance for CEOs, you should not have work-life balance if you want to be incredibly successful. I don't know if that's always true, but just, how do you talk about that to founders?
49:48 Speaker 00 I don't know any of the founders I work with that have work-life balance. By the way, this is not something I recommend. I didn't have it. I don't think my co-founder Dharmesh had it. None of the CEOs. The only CEO I know, and he's unusual in this way, is Kareem from Clay. He's like, "No, you need balance. Take the weekends." Like, he's got a different mindset. I'm going to have him on my pod to talk about his mindset. But he's sort of the outlier. Everyone else is really, really obsessed, and they really don't have much of a life.
50:21 Lenny Rachitsky? It did take them a long time to find product market fit.
50:23 Speaker 00 It did. We're definitely free AI.
50:27 Lenny Rachitsky? It's ignoring. I wonder if there's a correlation, but it did work out. So.
50:31 Speaker 00 Great.
50:32 Lenny Rachitsky? So it is a, it is a good lesson. Okay. A few more here. One is, uh, it's a math formula. EV is greater than TV is greater than MEV. What is that?
50:42 Speaker 00 Okay. EV is enterprise value. TV is your team's value. MEV is your value. And as HubSpot was scaling and we had a lot of people who were VPs in different roles and they started to get good sized organizations. Where they would fall down was they didn't solve for MEV, but they'd solve for TV over EV. It's all for their own team. So let's say they ran sales and say, I just want bookings to be as high as possible because I get paid on bookings. And the service team can handle all the downstream problems I created.
51:26 Speaker 00 Marketing to sales between every department that's happened. And the kind of immature managers who didn't scale really solve for themselves and some, as they solve for themselves, kind of sub optimize for their peers. And their employees would notice it and complain about it. Um, it would be fine in the short term, but it would show up. And the place it would show up, Lenny, was we did, and I think a lot of companies do this now, but we did a quarterly employee net promoter. We did a quarterly customer net promoter survey and a quarterly employee one. And we would, we would have people rated by the department they're in. And one interesting thing about that.
52:04 Speaker 00 So it's like sales and service and engineering, all the different departments. And we had an overall net promoter score and then each department had a net promoter score and. Let's just take sales. Sales net promoter score was like 65, 62, 68, 30. Oh, that's a big drop. And then you read the comments and it was not good. A lot of complaints about the leader of that. And a lot of the complaints were a little bit of this TV thing.
52:34 Speaker 00 And then we give feedback to that VP would help them. We give them all the comments, be like, you got this. And then a quarter later, from 30 to negative 5. It almost, they almost never, they never actually recovered. You lose your team, you kind of can't, it's hard to get them back. And that's why I say, you know, hire slow, fire fast. And this doesn't show up in the first 100, 150 employees. Everyone's solving for EV, but as it gets bigger and the CEO doesn't know anyone and there's a couple of layers between you and the employees, they tend to solve for TV. So we always put on the wall, solve for EV over TV over me V. And then we added CV in front of EV, solve for the customers first, then perhaps spot,
53:18 Speaker 00 then the employee, then yourself. That was very helpful to us.
53:22 Lenny Rachitsky? Yeah, I imagine everybody listening, working at a big company understands this, where you have goals, you get your KPIs and your performance reviews based on what impact you drive, if you hit your goals. And so, you know, everyone's, the incentives are focus on my goals and drive those. And I don't care about other people's goals, the company's goals.
53:41 Speaker 00 Steve Jobs had an interesting line, he says, you don't work for your boss, you work for Apple. I thought that was pretty good. And that's, I heard that after I was CEO of HubSpot, but that kind of captures the sentiment. And that's how I felt about HubSpot. You work for HubSpot first and then you work for your boss.
53:56 Lenny Rachitsky? This is hard because, you know, people's performance reviews are based on their goals, KPIs, it's always like, here's what I got to drive. Other than putting posters on the wall, and this is our just HubSpot growth above all is what matters, or customers, I guess, in your case. Is there anything tactically that was useful in helping people prioritize enterprise value?
54:14 Speaker 00 This was explicitly called out in the form for the employee, you know, when you got your review, this was part of it. And so they get, they get a score of one to, I forget, 10 on that. I would talk about it constantly. And when we first started HubSpot, I ran it a little bit like Jensen runs Nvidia where
54:34 Speaker 00 I didn't do one on ones and I gave a lot of good and bad feedback publicly in large management team meetings and I definitely would go out of my way to criticize people if I felt like they were solving for TV over EV and people got a sense for that. And then every quarter, we did like a really well-produced company meeting. We spent a lot of time on it and at the end of the company meeting, we gave out, we called them the champagne reward, which is a bottle of vuv that my co-founder and I signed and would read something nice about them and give it to them and usually there was an EV team in that. And so we did different things to kind of beat that into people's heads.
55:11 Lenny Rachitsky? Amazing. So here is just celebrate people that focus on this and also included in their valuation performance reviews.
55:19 Speaker 00 Yeah.
55:19 Lenny Rachitsky? Okay. That's a good segue to another halogenism where you talk about how companies are either customer centric, employee centric, or investor centric. And it's really important to know which you are and you guys actually shifted there. What's your insight there?
55:35 Speaker 00 Okay, we were very employee centric, more than customer centric in the first several years of HubSpot. With so much so that the company was number one on Glassdoor's best place to work. I was the number one CEO on Glassdoor. And as I look back at that, I'm not sure that's a good thing. Like wanting to be liked, I don't think is a good feature of a CEO. And wanting to be the best place to work probably isn't the right way to go. Like if you look at Toby from Shopify, his scores aren't that good, but that company's doing really, really well. And so we over-indexed on it and part of the reason we over-indexed on it is my co-founder was really strong in this and we had an incredibly powerful end of HR named Katie Burke. And we just worked on it.
56:20 Speaker 00 We spent a lot of time on it and when we'd have a management team meeting and let's say it's four hours long, like two of the four hours would be on employee stuff. And at some point,
56:31 Speaker 00 I was like, why are we spending so much time on employee net promoter scores? Like, let's say our employee net promoter score was 60 and our customer net promoter score is like 25. I was like, we need to take, I would give up 10 points of employee net promoter score to get 10 points of of customer net promoter score. And so over some time, we shifted the center of gravity to customers. And we're, we still, of course, worried about employees, but the center of gravity from HubSpot was very much customers. And we did that in a few ways. Like every time we had a management team meeting, we had our management team meetings once a month, not once a week. And we would have a customer panel come on.
57:14 Speaker 00 And that customer panel, I would run the panel and ask very tricky questions to the customers and pull out the bad news from that. And then we, we still do this. We have an, we have a, sorry, customer panel at our board meetings. Our whole board can ask questions and my favorite question is, what do you love about HubSpot? And then, and then what do you hate about HubSpot? And they kind of look at your shoes and like, come on. And it's a great way. So, so the employee's voice is here. Those company meetings, we have the, the customers in the company meetings. We changed the comp plan. So the management team got paid not on revenue, but on retention in that promoter score. And so we worked very hard and kind of swung the pendulum to customer centric.
57:57 Speaker 00 But I do think companies have one center of gravity or another.
58:00 Lenny Rachitsky? There's a really interesting thread throughout this conversation of just, what do you want to change how you operate? You have to go really far to a whole other and almost over correct to like, yeah, it's a really interesting of just how much work it takes to change culture, to change norms.
58:15 Speaker 00 And the bigger it is, the more obvious you have to make it. And the other thing about being a CEO, Annie, is you got to say the same thing over and over and over and over and over again. It just doesn't sink into people's heads. You have to just be incredibly repetitive on it before it sinks in. Same thing with marketing, but internally, that happens. The other weird thing about being a CEO, Annie, is as it gets bigger.
58:40 Speaker 00 Like when it's small, everyone's giving you shit and like you're all on the same level. But as it gets bigger, you didn't interview everyone, you had thousands of employees, you don't know everyone and people put you on a pedestal that you don't deserve. And let's say you're in the hallway and you're just kind of shooting the shit with a bunch of people and you're like, ah, it'd be cool if we had a product that did da-da-da-da. Somebody inevitably would go home and build that thing and be like, Brian wants this is a big initiative. So people really lock in on what you said and it turns out you have to be very repetitive and you have to be very careful what you say.
59:12 Lenny Rachitsky? Dharmesh was on the podcast, your illustrious co-founder, and he developed a whole system to avoid this sort of thing, flash tags, where it's like, this is just an FYI.
59:22 Speaker 00 We had a whole system because we would say something on an email to the management team or a Slack and everyone would be like, okay, this is what they want, let's do it. And sometimes it is like, this is, you need to do this. And sometimes it is like, we should talk about doing this. And sometimes it is, this is just kind of an FYI, we're thinking about it. And because it got big, we came up with that rubric of, we need to tag each email with, how, do you want me to get this done this week? Or is this something we should talk about? Or is this something that's just FYI I'm thinking about?
59:51 Lenny Rachitsky? And one of them is plea, pleading you to do, I'm not telling you to do this, I'm just pleading that you do what I ask. Oh, man. Okay. This all, this all connects. And by the way, you guys were co-founders for 20 years. You shared something before we started recording. So Dharmesh famously did not ever want direct reports. He's just like, Brian, I want to start this with you, but I'm not, I don't want to ever manage anyone. And you were talking about how you had to take on engineering, which didn't make any sense.
1:00:19 Speaker 00 I'm an engineer, but I'm, and I can code, but it's not good. And so when we started the company, it's like, and I was a CEO before, I was terrible at it, I want to do it again. You gave me CEO, I'm like, great. And he's like, and by the way, I'm not going to have any direct reports. I'm like, well, it's just the two of us. But it's like, no, ever, never. I'm like, yeah. And then, you know, we get 10, 12 people, we're starting to hire engineers and onboard them and making up big decisions and.
1:00:47 Speaker 00 I would go to him and be like, well, can you manage him? He's like, don't you remember? I told you one time at direct reports is like, surely you were kidding when you said that? He said, nope. Is there Dharma Shah has never had a single direct reported up spot?
1:01:02 Lenny Rachitsky? Incredible. I don't. It's just like a dream, a dream, a way to operate. I love that you made it possible for him and it created all this opportunity for him to tinker and
1:01:12 Speaker 00 Yes, freedom of I really think can be creative.
1:01:15 Lenny Rachitsky? Yeah, I'm excited to get him back on the podcast someday. We're going to link to that episode. Maybe a last question. I'm curious if there's anything else you think we missed. As a, as a company grows and scales, the job of a CEO changes. You've written a bit about this of just like how different the job is when you're a starter versus a scale up. What are some of the things that most change where your time goes as a CEO as the company grows?
1:01:38 Speaker 00 We clicked on this earlier, but that inspiration thing, like I have a little rubric where it's like in the startup phase, it's 90% perspiration, 10% inspiration. You get the scale up phase, it's 90% inspiration, 10% perspiration. And over time, you're doing every job in a startup and you still need to be very attached to it. And you still need to talk to customers and can't give it up. But man, you have to let go of so much stuff over time in order for the organization to scale. And I had, I have trust issues. Like I only trusted a small number of people that have spot to be a DRI to really drive something important. It drove people crazy that I didn't have a larger trust surface.
1:02:24 Speaker 00 Every one of the CEOs I work with has the same problem. And that's, that's a scaling limit. That was a limit for me. I wasn't trusting enough.
1:02:33 Lenny Rachitsky? Brian, I feel like I could chat with you for hours. There's a whole list of halogenisms I'm going to link to that we didn't even touch on, but. Before we get to our very exciting lightning round, is there anything else that you think we should chat about? Anything you want to leave a listener with?
1:02:48 Speaker 00 Well, I would say if you're a CEO and you're interested in scaling, I think the halogenism post is like, all the mistakes I made in my 15 years of being CEO, I tried to summarize them there to help you avoid them. And I have a pod, you should first listen to Lenny's pod because it's amazing, but I have a pod just for CEOs called Long Strange Trip, where I interview, I interview CEOs about this. So Lenny's interviewing me about being a CEO. I get to interview other people about being, I'm kind of a CEO geek these days.
1:03:17 Lenny Rachitsky? And the, the name of the podcast is a Grateful Dead reference, which we haven't touched on, but you're a huge Deadhead, as they say. That could be a whole other podcast conversation.
1:03:27 Speaker 00 I think you should actually, because I wrote a book called Marketing Lessons From The Grateful Dead. And there's so much, the Grateful Dead were like the ultimate Silicon Valley startup. They started in 1964. You know where they started, Lenny?
1:03:42 Lenny Rachitsky? Um, no.
1:03:44 Speaker 00 Palo Alto. Their early concerts were at Stanford, were all over Silicon Valley. They're a Silicon Valley company. They were very first principles in their thinking. They created a new category, a new way to distribute their music. They disintermediated the, uh, the ticketing companies, very innovative. Steve Jobs and Jerry Garcia are like very similar in my mind, real crass people. So I think of them as a great Silicon Valley success story.
1:04:13 Lenny Rachitsky? Uh, you said you had a whole book about this. Uh, what, what's the book called? Just in case people want to dig in.
1:04:18 Speaker 00 Marketing Lessons From The Grateful Dead.
1:04:20 Lenny Rachitsky? Amazing. And I read that you bought Jerry Garcia's guitar for a large sum at some point.
1:04:25 Speaker 00 Yes, I did. And I, I consider myself the steward of his guitar.
1:04:32 Speaker 00 It gets played like Dead and Co. played it. And there's a million Grateful Dead cover bands that let them play it, but I, I'm taking care of it for. For the Deadheads.
1:04:41 Lenny Rachitsky? What's like one nugget of wisdom or lesson that people can take away from the Grateful Dead for startups?
1:04:48 Speaker 00 Okay, people talk about spiky teams. The Grateful Dead team was interesting. Garcia himself was a bluegrass guy. He was a banjo player. And then Bob Weir recently passed, was kind of a country crooner, like, like country music. Then their, their bass player was a avant-garde jazz trombonist, Phil Lash, and their keyboard player was a guy named Ron McKernan, pick pen, and he was like a harmonica guy. And the drummer was like a marching band drummer. And so spiciest of spiky teams came together and made a new genre. They created a new category of music. It wasn't rock and roll, wasn't sort of Rolling
1:05:30 Speaker 00 Stones, it wasn't Buddy Holly, it was like this new thing. And then they called it a jam band because they played rock and roll in a bluesy, open, organic, kind of jazzy way. And so spiky teams in creating categories, underrated.
1:05:47 Lenny Rachitsky? Incredible. Are you one of these people that have been to like 100 Grateful Dead concerts?
1:05:51 Speaker 00 Yes.
1:05:52 Lenny Rachitsky? Okay. This could be a whole podcast, but we're gonna, we're gonna move along. Okay, with that, we've reached our very exciting lightning round. Brian, are you ready?
1:06:05 Speaker 00 Hmm.
1:06:06 Lenny Rachitsky? Let's do this.
1:06:07 Speaker 00 Fire it up. I've watched you do the lightning round so many times.
1:06:09 Lenny Rachitsky? I'm flattered. Unsurprising questions. What are two or three books that you find yourself recommending most to other people?
1:06:17 Speaker 00 I haven't read a book in a long time. I listen to podcasts. I'm on X. I talked to a lot of other CEOs. I can't remember the last time I actually sat down and read a book.
1:06:26 Lenny Rachitsky? Much respect. I had Mark Andreessen on recently, and I don't know if you've heard his whole thing on how, what he consumes. He talks about he has a very barbell strategy to media. It's either Twitter or books that are 10 years or older and nothing in between.
1:06:40 Speaker 00 I've heard him say that. I'm hearing him say that. Yeah, I kind of stopped reading. I looked at that. I was getting ready for this, Lenny, and I was like, I can't remember the last book I read.
1:06:49 Lenny Rachitsky? I think this is gonna make a lot of people feel better that don't read books are like, all right, this is okay. Favorite recent movie or TV show you really enjoyed?
1:06:58 Speaker 00 I love the new Ken Burns, very long, very good Revolutionary War documentary. He's a craft person. It's exceptionally well done. And what I like about it is America is really like a disruptor startup, like so many startup lessons from those, they're gutsy. Talk about two steps forward, one step back. Like they got into the details of how George Washington ran the army. We were very close to losing that war most of the time. And two steps, two steps forward, 10 steps back, two steps forward, 10 steps back.
1:07:36 Lenny Rachitsky? Lots of lead bullets.
1:07:37 Speaker 00 A lot in like, in like, unless we had alliances, like we had alliances with the French, we were screwed. Uh, so I love that, that it's a long one, but it's really good.
1:07:48 Lenny Rachitsky? How long is this? What are we getting into?
1:07:49 Speaker 00 Probably 10 plus hours.
1:07:50 Lenny Rachitsky? 10 plus hours. Whatever. It's a lot. Uh, but, uh, worth it is what I'm hearing.
1:07:55 Speaker 00 I'm in Boston, you know, it's Revolutionary War.
1:07:58 Lenny Rachitsky? Surrounded by history. All right. Uh, favorite product you recently discovered that you really love?
1:08:03 Speaker 00 I love my Delphi clone. I teach, I teach course, uh, called Scaling Entrepreneurial Ventures. And, um, I don't do, I don't do office hours. I have Delphi do my office hours. Very happy with that.
1:08:17 Lenny Rachitsky? My favorite feature of Delphi and again, lennybot.com is my Delphi, although we both have little bots. Uh, the voice feature is the coolest thing.
1:08:25 Speaker 00 Great. Not good. Great. I can't wait. I had video. They get rid of it. They're going to bring it back. Can't wait till I have this video. My least favorite, my lowest MPS product is my Sonos system. You have Sonos?
1:08:34 Lenny Rachitsky? I do, and I, I get you.
1:08:36 Speaker 00 Yes. Painful.
1:08:38 Lenny Rachitsky? Yeah. It's like so good in so many ways and so annoying in so many ways.
1:08:41 Speaker 00 Annoying.
1:08:42 Lenny Rachitsky? But like, we still use it, you know, there's nothing better.
1:08:44 Speaker 00 Not a competitor. You and I should start a Sonos competitor.
1:08:46 Lenny Rachitsky? No, we should not. That's a bad, I'm not doing this. And just to be clear what these bots are, just so people understand how cool this is. So my industry on every single podcast, like this one is going to be sucked into it and every single newsletter. And you just talk to it and ask it like, how do I find product market fit in spaced? On everything I've ever shared, here's your steps.
1:09:06 Speaker 00 Okay, what's even better about it is because you can go to ChatGPT and say, what would Lenny think about this? What it's added is the ability to put a bunch of documents in there that aren't on the internet. Like I put my lectures in there and there's a new feature where it asks you questions and it kind of interviews you. And so it's pretty proprietary. It's getting better. I like it a lot.
1:09:27 Lenny Rachitsky? Yeah, to that point, I haven't promoted this feature of it, but it's trained on all my paid content too. So even if you're not a paid subscriber, you get access to all of the things I've ever shared. Let's not tell too many people that because it's one day I'm going to pay wallet in the near future. Anyway, enough about that. LennyBatt.com. Do you have a favorite life motto that you find yourself coming back to in work or in life?
1:09:52 Speaker 00 This isn't lightning, but four years ago, I had a very bad snowmobile accident, drove a snowmobile up a cliff. The snowmobile smashed into a million pieces at the bottom of the cliff. So did I. And I laid at the bottom of that cliff for a while. I was unconscious for a long time and woke up and
1:10:17 Speaker 00 I didn't think I had my phone, so I sat there for a long time like, I'm probably going to die tonight. No one knows where I am. It's frigid out. It's in Vermont and I'm going to freeze to death. And I'm sitting there for a couple of hours. I finally was like, oh, I do have my phone. Dialed 911, by the way, 911, amazing service. And so the helicopters came in and took me out, took me to the hospital and lots of surgeries. And I was kind of out of commission for a year. And you can't see it, but I got metal all over me, all in me. Life's short, like life's short. And I made some decisions at the bottom of that cliff. That one of the decisions I made at the bottom of that cliff was I don't really like being CEO of an 8,000 person company.
1:11:02 Speaker 00 Doesn't really suit me. Like my harmonic motion is off. I don't love the day to day. If I make it out of here alive. I'm out. And so that's exactly what happened. Like, the first big thing that happened coming out of that was I gave the job to Yamani, who's still the CEO, doing a great job. Life's short. Don't waste it.
1:11:23 Lenny Rachitsky? I heard this story, but it's just as powerful, hearing it again. What um, why do you think it takes people, why does it take a moment like that to help have someone realize this, I need to change, you know, or just like?
1:11:34 Speaker 00 I think people think they're going to live forever, and they're not. As somebody who's 58, yeah, life's very short, and I'm much more intentional about the decisions I make, much more intentional about the people I hang out with today than I was before that. And I really try to work on things that bring me joy, like this pot.
1:11:56 Lenny Rachitsky? Same. I appreciate it. Same. I read that you had 20 broken bones in this accident.
1:12:02 Speaker 00 A lot of broken bones, a lot of metal. I got 33 screws in me, one loose one up here, Lenny.
1:12:11 Lenny Rachitsky? Same. Okay, last question. We talked a bit about the Red Sox. You're a part owner of the Boston Red Sox now. What's something that would surprise people about how a baseball team is run, or just what it's like on the inside of a team like the Red Sox?
1:12:27 Speaker 00 It's not as profitable as people think. People think like, these rich guys come in and buy these teams, but the way the league is set up and the way the economics are set up is not, it's not a profitable endeavor. Whereas like, other leagues are much, much more profitable. Baseball's also deeply flawed. It doesn't have a salary cap. And so you've got the Dodgers, who I take my hat off to, have like a $400 million payroll, and the Miami Marlins have like a $100 million payroll. In other leagues, that all kind of balances out pretty well. Baseball's sort of, it's set up incorrectly. I think it'll correct
1:13:09 Speaker 00 in the next couple of years, but it's kind of, it's a broken model.
1:13:13 Lenny Rachitsky? Intriguing. Stay in AI SaaS if you want to make money is what I'm hearing. Vertical SaaS.
1:13:21 Lenny Rachitsky? Brian, this was incredible. Covered almost everything I was hoping to cover. Two final questions. Where can folks find me online if they want to reach out? Where do they find the bot? Where do they, how do they work with you if they wanted to? Do they have to be a Sequoia founder? And then how can listeners be useful to you?
1:13:35 Speaker 00 I can do two things. I would love folks to listen to Long Strange Trip, my pod. And I would, I'd get some comments, but not a ton. Like Lenny, you get more comments than yours. I'm jealous. I'd like just feedback on how I'm doing. Like it's very new. And I just started a couple of months ago. It seemed like it's going pretty well. But like, it's my family and Sequoia people giving me feedback. I'd like to see how all of you, what you think about it. So that would be spectacular.
1:14:00 Lenny Rachitsky? All right. So hop on your YouTube and leave some comments about what they think. The real, real honest feedback.
1:14:05 Speaker 00 Real, unvarnished.
1:14:07 Lenny Rachitsky? Okay, here it comes. Brian, thank you so much for doing this.
1:14:10 Speaker 00 Appreciate you. Appreciate you. Thank you.
1:14:12 Lenny Rachitsky? Bye, everyone.
1:14:14 Lenny Rachitsky? Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.
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