Lenny's Podcast: Product | Career | Growth - Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO)

Starting point is 00:00:00 Some of the best startup advice I've heard is startups should focus on one thing and be really, really exceptionally world-class at that one thing. And one of our early zigs is we are going to do exactly the opposite of that. You have no direct reports, and I don't believe you've ever had direct reports at Opspot. I could become passably okay at management with some training, with some coaching. I don't want to spend N years of my life becoming passably okay at something. What was that process like to define the culture? My co-founder and I were having a lot of our founders meetings and he said,

Starting point is 00:00:28 Oh, Darmesh, I hear this culture thing is really important. By the way, can you go do that? I'm like, okay, Brian, all the people and all of me is like, I am like the worst possible person. It's not that I don't like people. I just don't like being around them a whole lot. Something that's really unique and interesting about you is you're obsessed with comedy and keynote crap. It comes down to this metric that stand-up comedians use called LPM laughs per minute. I have custom software that I've written that will say, okay, here are the points at which the audience laugh.

Starting point is 00:00:57 Today, my guest is Darmesh Shaw. Darmesh is the co-founder and CTO of HubSpot, and also one of the most fascinating and first principled thinkers I've ever met. In our conversation, we cover a lot of ground. Darmesh's hilarious and ingenious approach to putting together a talk, including measuring laughs per minute, his biggest lessons from being a public company exec for over 10 years now, especially while being a startup guy at heart, how he approached creating and scaling the culture of HubSpot, which you'll find both hilarious and inspiring, why founders and product teams are all fighting the second law of thermodynamics, had a zig while everyone else is zagging,

Starting point is 00:01:34 how and why Darmesh leans into his strengths, including never having a single direct report during his 18 years of running HubSpot, and so much more. This episode is so fun and will expand your mind in many ways. With that, I bring you Darmesh Shaw after a short word from our sponsors. And if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app, or YouTube, it's the best way to avoid missing future episodes, and it helps the podcast tremendously. This episode is brought to you by Explo, a game changer for customer-facing analytics and data

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Starting point is 00:04:16 It's an honor. It's my honor. And thank you for joining me. You are a wildly fascinating human. and so I thought it'd be fun to start with just a bunch of fun facts that I found about you online. And what I'm thinking is I'll just walk through them. Tell me if they're true as I walk through them. And then this is going to lead to a bunch of different topics that I want to talk about. How does that sound? That was great. Okay, here we go.

Starting point is 00:04:35 So one, you have no direct reports, and I don't believe you've ever had direct reports at HubSpot. That is correct. 7,000 plus employees exactly zero direct reports from time t equals zero. Okay. We're going to talk about that. You also don't do one-on-one meetings as a result. You don't have reports to have one-on-one meetings with. That's correct.

Starting point is 00:04:55 You built many site projects while it has bought, including a product called WordPlay, which at one point made $90,000 per month and had $16 million users. That is correct. You also bought chat.com for $10 million, and then you sold it two months later for more money than you bought it for. It was actually $15 plus million, but I had kind of stated eight figures, but... Ooh, is this breaking news?

Starting point is 00:05:23 It's breaking news. Wow. So that's how much you bought it for? Yes. Okay. And he sold it still for an undisclosed amount. Is that right? Undisclosed amount.

Starting point is 00:05:31 Yeah. And more than that. Yeah. There's a profit. And I know you gave some money to charity and there's some promises you made where people commented on your LinkedIn post and you gave more money away.

Starting point is 00:05:39 So it was awesome. Okay. Also, you're a billionaire. That is once again true. That's still true. Great. Also, you were born in a village in India that had no paved streets,

Starting point is 00:05:49 no traffic lights, no hospitals. That is correct. Okay. Before HubSpot, you found it two companies, but I think the more important fact there is you promised your wife you would not start another company before you started a HubSpot, and then you ended up and went on and started HubSpot. Yes, I had promised her that I would not do start. I had to kind of hang up the proverbial entrepreneurial hat.

Starting point is 00:06:11 Best lead plans and all that. I met my co-founder in grad school, which is that was the plan. I'll go back to grad school and go find myself, and then the plan. was to go eventually teach, not do another startup, but my co-founder there and one thing led to another as these things go. I hope she's forgiven you. I do too. Okay, final fact. So Kip, is that you pronounce his name Kip, your CMO? Okay, great. So he asked him what to ask you, and he tells me something that's really unique and interesting about you as you're obsessed with copyrighting and comedy and keynote prep that you have a very unique approach to preparing for a talk

Starting point is 00:06:48 and how you think about humor and slide design and story arc. That's very true. Public speaking is not something that comes naturally to me. So we're going to start there. We can talk a little bit about the copyrighting other things. They're sort of related. And I try to not do things that I'm not good at and don't enjoy. One of the rare exceptions that has snuck through is the need for me to get on stages as

Starting point is 00:07:13 founder when we have our annual HubSpot effect, our conference, which at the time, time, when we did our first one, it was like 150 people at the Marriott, right? And then it's like steadily grown since then. And so now it'll be like 10,000 people in the live audience and hundreds of thousands online. Right. So, but as I kind of came to this realization that that was not going to be able to kind of talk my way out of it, and I kind of saw how where this was headed, I'm like, okay, this is something I'm going to have to actually like learn because I can't delegate it, can't talk my way out of it. And so I'm a big believer in this, like, talent versus skill, right? So we all understand talent. It's like someone has a talent for music, someone has a

Starting point is 00:07:57 talent for athletics, whatever it happens to be. And that's true. That exists. But the way I think about it is talent basically controls the slope of the curve, but most things are actually acquireable skills. So for instance, if you have a talent for music, let's say, you might learn music faster than someone else, and your ceiling may be higher, but does not mean that other people can't learn music, right? It's like an acquireable skill. That's kind of lesson number one. And lesson number two is that there is a process, and this is the engineer in me, of just kind of functional decomposition of a problem. Okay, in order for me to be a pretty good public speaker, like what are the underlying sub-skills required to order to accomplish that?

Starting point is 00:08:38 skill number one you have to be able to stand up on stage and not pass out like yeah that's kind of the bare minimum right and so what I did over the years is to say okay I'm going to functionally decompose this skill of public speaking in front of you know what I call like high-stakes speaking I've got to like actually hold the audience's attention that's part of success it doesn't matter what the messages doesn't like nothing else will matter if I lose their attention which is increasingly easy to do now in kind of short attention span society and every year I will pick a different part of the public speaking skill set and say, oh, I want to learn about slide design and visual expression,

Starting point is 00:09:12 not the actual design, I'm not a designer. But then the one thing that I came up that has had the most impact is humor. Then you break that skill down, just like an engineer would do. It's like, okay, well, there's humor writing, there's humor execution, like on stage, whatever, there's stand-of comedy, there's like, okay, so like, how do you put all these pieces together? And along that journey, I came up with this, and I've always had this. I'm a very kind of data-driven, quant-based person. I was like, okay, well, how will I know whether something is actually funny enough or not, whether I'm losing the attention or not?

Starting point is 00:09:45 And so in preparation for one of these kind of high-stakes keynotes that I do every year, I will have my talk, I will do practice runs, I will have increasingly larger actual live audiences that I will practice it in front of, I will record those talks. Everything so far, nothing unusual yet. I will have the talks transcribed. I have custom software that I've written that will say, okay, here are the points

Starting point is 00:10:15 at which the audience laughed. Like actually audibly laugh. That's the only way it counts. And this actually, and it comes down to this metric that stand-up comedians use called LPM laughs per minute. And there's actually a benchmark that you can say, oh, well, you know, and stand-up comedians have a very, very high LPM.

Starting point is 00:10:34 Business talks have a very, very low LPM, like the most popular TED Talks, there's a high strong correlation between the most popular TED Talks and high LPMs. So I have a goal. I'm going to have a minimum. I want to improve. And so I have software

Starting point is 00:10:45 that will calculate for last per minute. And so then you learn these little kind of tools of the tricks of a trade. So it's like, okay, if you're solving literally for that ratio of laughs per minute, there are two ways to improve it. One is to add more laughs.

Starting point is 00:11:01 Two is to decrease the number of words between laughs. Right? So one of the things have stopped, It gives me a visual map. It's like, here's the entire talk broken down with a little square per minute of talk or 30 seconds. And it's like, here's what they laugh. It's like, oh, here I went one minute and 17 seconds and nobody laughed. So I have to do one of two things. Shorten that segment. If there's nothing funny that can be said without being overt over over over about it. Or I have to say, okay, I'm going to find something funny to try to inject into this and kind of break it up. Anyway, and that's a long way of saying, if I can get up on a public stage and learn that particular skill, anyone can learn that particular skill, anyone can learn just about anything. It just comes down to practice and measurement and just getting incrementally better over time. Wow. I feel like I've just learned so much about you and how you think just from that question and how you approach this problem. On this humor piece, I'm curious, any lessons to

Starting point is 00:11:54 share on how to be funny. So one of the kind of tricks of the trade in humor, and you learn this, particularly a stand-of comedy, but just any comedy, and I just hadn't thought of it this way, is that, and this is very tactical, but it works, and it's a very easy thing to apply. So let's say you're looking at, and most of us, we're not stand-up comedians, we're not going to tell jokes in a classic sense, right? And even stand-up comedians don't tell jokes, right?

Starting point is 00:12:16 They actually have stories, and they happen to have a punchliner, punch-liner, too. So two tactical pieces of advice. One is, when you're telling the story, whatever the funny bit is, those have to literally be the last words of that particular segment. Right? So once you deliver it, then you have to stop talking.

Starting point is 00:12:36 And the reason you have to stop talking is the audience needs about a half a second to react. And then they want the permission to laugh. And if you're continuing to say words, it's going to make them feel awkward and it's going to be less funny. So even if, like, moving a phrase in the sentence that you're about to say, it's like, well, that sounds kind of weird to put those set of words at the end of the thing, do it anyway, even though it's awkward because it will actually work better. That's kind of tip number one. Tip number two on LPM generally is that have a story such that you can kind of spend the time setting up the story, but then have multiple funny bits, multiple punchlines, because you've already made the investment.

Starting point is 00:13:13 I've said 75 words in order to kind of set up this context. Say something funny that's amusing, that's so whatever. Say some more things. You already have the content. You'll see the stand-up comedians do this all the time. And then say something else that's funny because you just, because a laugh is a laugh. It doesn't really matter that it was still the same story. So kind of leverage the investment you've already made in establishing context and scene,

Starting point is 00:13:33 and then just squeeze more humor into the end of it in kind of punctuated fashion. I feel like the entire podcast could just be this one thread, but I need to move on to other topics. One quick question. So you said, ideal apps for a minute is two to three-ish. Is that what you said? Yeah, two plus is hard for a business talk, right? Because stamp comedians, the reason they can do it is that's all they're really kind of solving for is LPM. In business talks, you actually have another agenda.

Starting point is 00:13:58 other than just being entertaining, right? You actually have a message you're trying to promote something, promote an idea, promote a product. So anyway, in my mind, for like most normal circumstances, even if you can get above like a 1, 1.2, 25, you're in the top desal in terms of top generally given by non-professionals. Wow. This is incredible.

Starting point is 00:14:20 So after every talk, you run this transcript and audio through your program to see how you did. Yes. And are you ever going to publish and release this program? because that sounds really cool. I have this notion of what I call soloware. And soloware is exactly what it sounds like. It's software built for exactly one person.

Starting point is 00:14:36 In my case, that one person is me. And so I've been doing this thing for like 30 years right now. I just build things that I would myself find useful. And the nice thing about solo, one of the many nice things about it is that, you know, the UI is only for one person. You don't have to do a whole lot of testing because only needs to work for one person.

Starting point is 00:14:54 And the most important thing is that because it's only for one person, And if it stops bringing utility, you can just turn it off. You should stop using it versus if you have users, even 10 users, and you put it out there, and then people would be disappointed if you took it down for whatever reason. That's kind of hard. So anyway, so that's the calculus I go through. It's like, is this useful enough to enough people where it's worth the calories of kind of making it non-soloware, making it even microware.

Starting point is 00:15:19 I just made that up. But yeah. Wow. Okay. Let's see how the YouTube comments react and how many people would want this and slash pay for it. Let me go in a slightly different direction. We talked about how you have no direct reports. You've never had any direct reports.

Starting point is 00:15:34 I know that's somewhat related to a piece of advice you often share, which is to lean into your strengths and to not do things that you're not amazing yet. So can you just talk about why this is the case? Why don't you have any reports? And then I think this idea of just like strengths and the importance focusing on strengths. Yeah. I'll tell you the quick story as to how this came about. My co-founder and I had the kind of founding meeting for HubSpot.

Starting point is 00:15:59 This is like the week where we've decided we're going to do this, and then we have this list of questions or topics for the kind of founders' discussion. One of them, and I think I've published a list. These are the questions all co-founder should ask each other in that kind of early period. One of the ones is like, okay, well, who's going to be CEO? This was an easy one because I had been CEO twice before and had figured out I'm not that good at actually suck at that. And one of the reasons I suck at that is that part of the CEO role is being good at managing people.

Starting point is 00:16:31 It's not just about leading and having a vision of whatever you actually have to do kind of the management as a craft. And so that part I already had in my head. I think Brian, my co-founder, already had in his head. That's how this conference. That was a very quick conversation. And in the moment, as soon as I had kind of had that win behind me, it's like, okay, well, I don't want to be CEO. Brian wanted to be CEO because he'd never done it before. I'm like, okay, that was easy.

Starting point is 00:16:54 And then I said, oh, and by the way, I don't want to have any direct reports. I just popped into my head as an idea. I had not pre-planned it or anything. And I sprung it on him. And the reason I suck, and it's like, okay, well, and the reason is because I have learned that I suck at management, I'm a reasonably smart person. I think I could become passably okay at management with some training, with some coaching or whatever.

Starting point is 00:17:18 I don't want to spend any years of my life becoming passively okay at something. I would rather take those same calories and take the things that I'm good at that I actually enjoy and those things are highly correlated. You tend to be good at the things you enjoy. You tend to enjoy the things you're good at. It's like, so, and Brian was like, yeah, sure. And then I'm like, no, no, Brian.

Starting point is 00:17:36 You don't understand it because then I was like, there's going to be a time in the company. It was like, oh, our VP of engineering just quit. Like, just be interim something or whatever to have this team report to you until we find it. It's like, we're going to have those things. And you're going to have to promise to me, we're not going to do that. We're going to, it's like, I am not going to have.

Starting point is 00:17:52 direct reports. And we had that kind of heart-to-heart conversation. And it was one of the best decisions I've made both for myself and for HubSpot. Had I not made that decision, I'm a startup guy. I don't know that I would have survived at a company at HubSpot scale. And right now I can honestly say I'm having a better time at HubSpot now at 7,000 people than I was having at 70 people. And the reason is I get all the upside of scale, which is I can make big bets, we can have long-term things and plans, whatever, and plan for global domination without the downsides of scale, which is, oh, you're having to manage all these people, all the kind of mechanics, and that's hard, right? It's a hard skill to have. I appreciate other people that have it.

Starting point is 00:18:34 I don't. And so I get all the upside with very little of the downside of scale. That's what kind of keeps me engaged and energized and happy at HubSpot. So I think it's been both productive for HubSpot and good for me. I love that this is an example of how you can build a company the way that you want to build it. You don't have to do it the way everybody else has done. I imagine there's a lot of challenges to this too, but I think it's inspiring to just like, hey, I'm going to design a company the way I want to build it. Yeah, it's amazing what you can get away with in terms of shaping the universe your liking. I think people automatically assume that things have to go a certain way, especially founders and first-time founders. It's like, you should at least like try it.

Starting point is 00:19:14 It's like, okay, well, I want to do it. First of, I'll give you another kind of tactical example. Both my co-founder and I are night people, not morning people. That just happens, you know, I didn't pick him because of that. We didn't learn that later. And so we made it just like from the early days of Upspot, in the early years at least, we're like, no meetings before 11 a.m. Period.

Starting point is 00:19:34 Like, that was it. And then we adjusted it, I think maybe three or four years. And we're like, all right, we can have meetings before at 11 a.m. You just can't invite one of the co-founders to it. So you're welcome to meet amongst yourselves if you choose to do so. But anyway, it's a little things. That's an amazing rule. I have a personal rule where I have no meetings before 3 p.m.

Starting point is 00:19:53 Because I don't work anywhere, I can more so create my schedule. But the idea is I create this deep work time in the beginnings of the day. I love that. Okay. So you talked about you're a startup guy. At the same time, Upspot is approaching its 10 years of being a public company. And I think 18 years since founding. I'm curious what lessons you've taken from that experience being someone that's clearly

Starting point is 00:20:18 startupy person, being an exec at a very fast-growing and large company. And I'm thinking from the perspective of a founder who's maybe thinking about starting company or starting company, what advice you might have to share for them and also for people in the exec world today. A couple of things. One, since we are publicly traded down, this doesn't get talked about enough. I'm going to go and get this out there, use this as a podcast. platform to get this message out, which is, I think, too many founders, you know, once they hit to

Starting point is 00:20:46 it, they are very apprehensive of going public and going through the IPO process and being a publicly traded company because they think, I mean, that's at the beginning of the end, it's going to like change everything and my life is going to suck. And I think they're over-indexing on what they think it's like to be a publicly traded company. In my own personal experience, and Brian, my co-founder would attest to this. And yes, there's certainly a taxer things we have to do now as a publicly trade company that we didn't have to do as a privately traded company. But there are actually benefits. For instance, if you're kind of venture back in private, let's say, you're sort of at a little bit the whim of the market and how VCs perceive

Starting point is 00:21:22 your category and all these things or whatever. And you get every now and then when you're out raising a amount of capital, you sort of get marked to market, right? Like this now here's sort of what the valuation is based on what someone's willing to kind of fund the company at. One of the nicest things, and this is underappreciated, is that we know right now what the market values HubSpot at. I can tell you that any business day of the week, right? Like that's, and there's a niceness to that. And this is the other thing I kind of tell folks within the company is that, you know,

Starting point is 00:21:51 the valuation, which is, we're in a relatively efficient market. Like the public stock market is a relatively efficient by the economic definition of the term, inefficient market. And so the valuation will oscillate around the value. So if you kind of focus on creating values, like here's what we're actually building, valuation will sometimes be higher than you deserve, sometimes will be lower than you deserve, but over the fullness of time, those two things will kind of move in lot step, right? That's been demonstrating. That's what happens. That's almost a definition of an efficient

Starting point is 00:22:18 market is that information kind of moves essentially and the valuation catches up with the actual value. But here's the other kind of social reason why I think founders should go public, which is so in a hubspots, and I hadn't thought about this. So I'm not going to take credit for being this generous, magnanimous person is that in our first pre-public years, I think we were eight years old when we went public, we had created roughly a billion dollars in market cap, give or take. We hadn't been a unicorn. So it was slightly below when we went public. So I was thought it was never a unicorn because that's privately held company over a billion.

Starting point is 00:22:55 In the subsequent years, we went from a billion dollars in market cap to 30 billion, which is roughly what it is now. That first billion of market cap creation, a very small number of people got to participate. in. The rest of the $29 billion in market cap, everyone, every public investor got a chance to participate in. And so I like the idea of, okay, well, you believe in your company. There's lots of people that believed in HubSpot. It's nice to let them kind of participate. Our customers, our partners, our well-wishers, and they can sort of now have the upside. And you'll get that in the private markets because it's a very closed, you know, you can't just buy shares in every private company you

Starting point is 00:23:35 like. I wish that existed, but it doesn't. So it's a way to let the market at large participate in your growth earlier. What about from the perspective of just staying excited and motivated and finding things to take on? Is there any lessons there for founders that are, I don't know, at a larger company and just, okay, this is going to help me stay excited about what I'm doing? Yeah, I think this is, and Bezos exemplifies this, I think, the best, which is just because you're a public company does not mandate that you do certain things. All that's necessary

Starting point is 00:24:09 is the kind of transparency that says here's what the company is doing. Here's what we're about. Here's what we're solving. And he had this with his very first annual shareholder's letter, which he obviously writes every year, which is this is what Amazon is about. We're solving for the long firm or whatever. And he didn't say this in a starky way. If you kind of reread

Starting point is 00:24:26 the letter, it's like, but if you read between the lines, it's like if you don't agree with this approach, you should not buy Amazon shares. Right? It's like It's a completely optional thing. You don't have to buy it, but this is the way we're going to run the business. And you stay true to that. And you can continue to do that.

Starting point is 00:24:41 I'll tell you one quick story. This is once again, the anti-disweigh founders that might be reluctant to go public. So one of the core values at HubSpot that's been part of the culture from the early, early, early days, literally days, is transparency. And so one of our kind of mechanisms by which we implement transparency is we've had this thing that does all information within HubSpot. is equally shared with everyone in the company, period. Right? Like everything. So our balance sheet, we raise capital at,

Starting point is 00:25:14 you know, whether we're going to be able to meet payroll in six weeks, all those things, everything was transparent all the time with two exceptions. One is if it was illegal for us to share, let's say if we were looking at some acquisition, whatever, and we had non-disclosure, or the information was not completely ours to share. And one example of that was salaries. So we feel that salaries are co-owned, both by the company and by that individual.

Starting point is 00:25:39 And it's not up to us to share someone's salary if they don't want to do that. Okay. All right. So we had that transparency. And then as we go public, we have this meeting with our investment bankers and our lawyers. This is like in the IPO prep process. And they sit down and it's part of this all-day meeting. One of the questions is like, okay, so who are your designated insiders?

Starting point is 00:26:01 Brian nor I had ever taken a company public before. We're like, we don't know what that is. It's like, oh, it's this kind of group of people that will have access to kind of all the financials and we'll know, you know, it's like, and we're like, oh, okay, so how long is that list? And they're like, you know, five or six. And so then, you know, Brian says seven, seven. And they're like, yeah, you could do seven. And then I say eight, like, because you do eight. And so what we're, and so we discovered through that mathematical induction process is like, if it's true for

Starting point is 00:26:31 and is a true for N plus one, is that there's no actual legal limit to how many insiders a company can have. And so we ended up doing literally the day we went public as we designated every single employee to be a designated insider. So that allowed us to maintain the transparency thing because there was no rule that said you could only have five, six, ten, and it was hundreds of people. And we did not make it optional. We didn't say, oh, because our downsides to be an insider, there's windows within which you can't trade, there's stuff. But we're like, okay, well, we believe in transparency, everyone's going to have access to it, and it's not an opt-in kind of thing. You're like, this is it. We're all in together. And it's been all, and we still do this to this

Starting point is 00:27:11 day, right, even at 7,000 people. Everybody's insider. So we can still share all the financials with everyone all the time. You have many contrarian opinions is what I'm getting from this conversation already. And the way you're pushing the envelope on, can we have 10? Can we have a thousand? I'm curious if there's anything else there of just contrarian way. of running a company. I know there's probably many, but what comes to mind? So one of the phrases we like to use in our industry overall is this kind of notion of first principles. I know who popularizes it, but it's used a lot. I'm not usually a snarky, but I'm not going to say something starkey, but I think most of the time first principles is used. It's actually

Starting point is 00:27:53 used incorrectly because the way first principles is supposed to work, as Elon would probably describe it, is that it's not first principles, like first principles of what we believe, these are a core kind of first principles in the company. It's the first principles of the universe. It's not what you believe is true, is what do we all collectively know to be true to the best of our knowledge? It's science, right? That's like physics, like the first and second law of thermodynamics,

Starting point is 00:28:14 those are first principles. All the layers on top of that are things that you think are true, are your assumptions or the decisions you made. And that's fine. Like you may have made some decisions. Like, for instance, transparency is not a first principle. It's a founding principle, right? It's not like everyone should do this.

Starting point is 00:28:29 It's like a completely core thing. And so, yes, I can be contrarian, but you have to kind of limit the dimensions. So the number of things that you're contrarian on has to be greater than zero, but not too high. So you want what I think of is like high conviction, low consensus bets. So high conviction is we really, really believe this. And low consensus is that most other people don't. And other people have kind of phrased this differently. I think Peter Thiel actually says it more simply.

Starting point is 00:29:00 and elegantly, which is you need to be right about something that other people think you're wrong about for a very long time. Like, okay, this is the thing that, and you just happen to be right. So one of the early kind of high conviction decisions we made at HubSpot was that we were going to focus on SMB as our target market. And I'll make a case both for SMB and for having a high conviction better. It doesn't have to be a target market, but something. Once you make that bet, because it's low consensus, it's going to be hard and necessary for

Starting point is 00:29:29 you to have the conviction because. everyone disagrees, including your board, including your investors, including potential investors. So we have that for all, literally, all 18 years of HubSpot's history. We have always had the quick, all during the IPO road shows, like, yes, we get that you've kind of on SMB. But so what's the path to the enterprise? No, you don't understand. This is not a go-to-market strategy.

Starting point is 00:29:49 This is not like, oh, we're going to conquer SMB first. This is not Bowling Pin. This is not Jeffrey Moore. This is a, we are here for SMB. That's what we're doing. And so we maintain that conviction for a very, very, long time. And that kind of helps you make other bets that are secondary. But you don't want to reinvent everything. So I'll give you an example of something that we had in the early years of HubSpot that

Starting point is 00:30:11 that we kind of forewent. So in the early years of HubSpot, we're like, okay, we believe in a flat organization. One of the manifestations of that flat organization is we had no titles in the company. Nobody had a title. Right. So even though we like, you have business cards, whatever, we have no titles. If you introduce yourself, you know, in a meeting and we had this. And we had this up to like hundreds of people. When you introduce yourself, like, oh, I work in product, I work in engineering, whatever. It's not like I'm director of X or VP of Y because that

Starting point is 00:30:39 as a thing didn't exist. Then as we scaled, we came to the realization that there's actual value that people ascribe to titles. And the reason they ascribe value to titles is because there were rumors that there was life beyond HubSpot. I couldn't believe what? There's a life out there outside of HubSpot. It's like, yeah, but it's like, And then when we go to the Thanksgiving dinner or whatever,

Starting point is 00:31:02 and I talk to my aunt, I need some shorthands like, oh, yeah, like I got promoted to director. I got, like, you know, to show some progression because it's a signaling device. And in this life beyond HupSpot and outside of UpSpot, it's like, other people are also that I want to know sort of where I was.

Starting point is 00:31:18 And it's like, okay, and this was the winning argument. I love this argument, because we had a day-long meeting on talking about this one topic. And the winning argument was, Darmesian Bright, I recognize why we don't have titles. I recognize this. And so they made the case of, yeah, there's value.

Starting point is 00:31:33 And it's like, and by virtue of you not giving us titles, that means you're having to compensate us in a kind of economic sense in other ways. So you're losing out because it's like, is that value high enough to not do that? That's a strong case. And so, and then we had it down to three choices. We're like, okay, well, we could have chosen to just stay firm as like still no titles. We could have said, okay, we're going to have classic titles. then I had the option on the table of make up your own title.

Starting point is 00:32:03 Like you can be grand pooh-bah of X, and that can be your, like, and then we ended up making a decision to go with classic titles because that actually served the need of there's a benchmark, it was a standard. Otherwise, it doesn't mean anything. So having made-up titles is pretty much the equivalent of having no titles because they lack any, any, anyway. But that's one of those things that, okay, you sort of iterate, you change things as they go. Yeah.

Starting point is 00:32:25 Yeah, I think there's so much to this. Let's just try things differently. that didn't work. That's okay. It's fine. We're just going to do what everyone else is doing here. And then often you discover a thing

Starting point is 00:32:34 that, okay, this is actually better. Just to understand, when people have no titles, so someone say as a product manager, what, do you call them a product manager? You're just like, I'm an employee hubspot. I have no title. I have no title. At the time, it was no title.

Starting point is 00:32:47 And now we have classic titles. Yeah. We have levels of things. But back then, it's like, you're just here. No title. Literally. We don't know exactly. That's okay.

Starting point is 00:32:53 No title. I saw somewhere that you paid everyone $5,000 monthly as their salary at the beginning of Hopspot, including yourselves for a long time. Yes, it's all right. Okay. Another fun fact. How long did that last, by the way?

Starting point is 00:33:05 I'm trying to think back. It's a long time ago. I want to say probably like the first year, a year and a half. Amazing. And one of the things that, and this is one of the kind of core, and not everything that, you know, we obviously not everything was right, but not everything is kind of applicable to other companies. But there are some things that I think are.

Starting point is 00:33:24 And one of the things that I think are applicable is just this need to solve. for like simplicity, right? It's like the simpler you can make things in the early years, the better off you generally are. So part of, and this is going to sound weird. So how we wound up with transparency is not because like some moral, it's like, oh, everyone deserved to have this, and this is the truth.

Starting point is 00:33:47 So it was not some moral position. It was a, when we hired the first employee in this post of both Brian Arrigiqi, when we had the first employee, we had to make the decision. It's like, oh, so what files do we give them access to? Like, what? And so Brian is just like, well of it. Like, why would we do that? And so then we kind of, then the output of that was like, okay, well,

Starting point is 00:34:13 a, like binary decisions are much easier than non-binary decisions. It's like, okay, like everything or nothing is like much, much simpler. And then it's like, okay, well, if it works for employee, you know, employee number three in the company, why wouldn't it work at four? Why wouldn't it work at five? why wouldn't it work at 50? And we just kept doing it because it's like, okay, well, until it breaks, we'll just keep doing that. Right.

Starting point is 00:34:34 And so this is the, and this applies to so many different aspects of HubSpot, but is we try to start with the simplest possible thing that might work. And then, if necessary, add the complexity, add the things, whatever. Like even our original, this is actually the tactical thing that everyone should take away, especially early stage startups. Very first HubSpot office has exactly four tables because the aspiration. for growth, right? We were in a co-working space. We worked back in the day here in Cambridge, Massachusetts. And so we had four tiers. And the only distinguishing characteristic of the four chairs

Starting point is 00:35:08 chairs, there were two chairs that were by the window, two chairs not by the window. Okay, great. Hire that first employee. Other decision we have to make is like, okay, well, where do people sit? And this one is like, well, it feels unfair to us that we would just get the window seats or whatever. It's like, okay, we believe in a flat organization. Like, why? And so what we did is we said, oh, we'll just do a lottery. Okay. And it's not like, oh, whoever pulls the thing gets the window seat. Whoever pulls gets to choose

Starting point is 00:35:34 from the remaining seats because different people ascribe different utility to different seats, right? It's like, maybe you don't want a window seat. Maybe you like the darker corner, whatever it is. And so we did that with employee number one. Then it did that with employee number two. And we did it every time we hired a new employee, we would do a seat shuffle.

Starting point is 00:35:50 We're going to do the lottery. We're going to go down the sequence. And of all the seats, that was the algorithm, right? And our investors are like, oh, that's cute and that's funny. It's not going to work at 15, 20 people. It's not going to work at 50. Worked at 25, worked at 50, worked at 100, worked at 200. We updated the algorithm.

Starting point is 00:36:08 We did some local optimizations, which we said, oh, there are some groups that should not be next to other groups because engineers like quiet time and salespeople don't. And so we're going to try to kind of optimize a little bit. So it's not completely random anymore. Now it's like within this, but we still would do it. Then we said, okay, we're not going to do it for every. higher, we're going to do it every quarter. And that stood, by the way, for hundreds of people. That mechanism still worked, right? It's like it's, yeah. Oh, my God. So the moral of the story is

Starting point is 00:36:39 that one decision of simplifying, can you imagine the amount of politics we avoided? Like, in corporate America, the amount of calories spend is like, well, your office is bigger than my office, your desk is one inch higher or one, like, no. It's like, all of that just went away. by virtue of that one decision. And we don't even know it's incalculable, honestly, like how much grief that saved us. And then there's all other kind of side benefits to it in terms of people getting to know each other better, better chemistry.

Starting point is 00:37:07 There's like lots of good upside. But just the simplicity is almost always a better answer. I love that everything often comes back to some algorithm you've developed or this N plus one approach of like, let's just keep going until something goes wrong. This is amazing. I'm excited for many more of these hilarious, amazing examples of how you did things differently. you've been talking about simplicity. The opposite extreme is, you could say, entropy.

Starting point is 00:37:31 And someone told me that you have this kind of concept that every leader and every business is fighting the second law of thermodynamics, which I believe is entropy. Yeah. Yeah. Well, yeah, the actual law is within a closed system, entropy increases over time. Okay. And yeah, we don't have to get into the... No, I love it. I love it.

Starting point is 00:37:50 I love physics. We're getting to the real, the first principles of everything. talk about that. What does that mean when you, and what does that look like when you're running in business? Okay. So in late person's terms, the second law of the dynamics, I'm paraphrasing here, is that over time, unless you intervene, everything goes to crap. I'm paraphrasing, right? Which is essentially the amount of disorder and randomness in a system is going to increase over time. You see this. Like when you break an egg, the brink of it. Like molecules don't come together and form an egg, right? That doesn't happen. It's always the other way around. It becomes disorderly and more random. That's the second law. dynamics. And this happens in companies as well, right? And it happens in code. Almost every level of abstraction, you will see some variation of this. And so the way I think about this is that in the early stages of a company, you're essentially fighting to survive. Like, just trying not to die.

Starting point is 00:38:41 Right. That's the thing. Like, okay, like Friday one, don't die. In the second phase of a company, you're trying not to stagnate. Right. Like, you still want to be able to drive growth and be able to do things like, okay, we managed not to die because stagnation is essentially death. So we're still trying not to die. But then the third stage is your fighting complexity. And that's the thing that you will crumble under your own weight over time, absent some external intervention. And this, you see this happen all the time, right? And it shows up and manifests in different ways, which is everything gets more complicated. Like, you need more layers of management, more headcount, more this, more that, more everything, everything that becomes harder. Margins go, it's like,

Starting point is 00:39:21 Just bad things start to happen, you become slower. And that's eventually, it's a slower death, right? Because you're at more scale now. But it's still eventual death, right? Like complexity does kill companies, maybe not as quickly as other things, but much more reliably than other things. And so this is why it's never too early to kind of plant the seeds of simplicity, put them in there, make that part of the kind of culture of the organization.

Starting point is 00:39:48 And we have a thing that are part of our kind of culture and dieting principles is around what I call fight for simplicity. It's literally those three words, right? And the message we're trying to convey is simplicity is worth fighting for. That's like thing number one. It's important. But the other one is that it requires fighting for us. It does not happen. And it will be a fight because the universe is working against you. And it will take calories to fight to that simplicity because everything, even well-intentioned people, will introduce complexity because that's the natural way of the world. We want more tiers in our pricing. We want these knobs and dials in the product. We want these more.

Starting point is 00:40:23 It's like all of it. Tends towards the second law and entropy increases. So anyway. I love this. The algorithm for seeding is a good example. Is there any other examples either in the product or strategy where you pushed for simplicity and that ended up being right?

Starting point is 00:40:39 Yeah. So on the product side, in the early years, and Brian gets credit for the actual implementation of this. So we had a relatively broad product. We can talk about that, pros and cons of that even in the early years. But we were solving for simplicity, and we got this from Apple. We'll talk a little, and we can talk a little bit more about genesis of this.

Starting point is 00:40:57 But we had a rule in the HubSpot product, as the product grew in those early years, that every time you added what we thought of as a knobber dial called a feature, you had to take one out somewhere else. That's a net amount of, and this is a very coarse measurement, right? It's like, okay, well, not every radio button, checkbox, drop down, whatever, menu item that you put in your nav is necessarily equivalent, but it's better than nothing. It's better than having no constraints. And so, and once again, this goes to the kind of binary thing.

Starting point is 00:41:30 It's like it just at least forces you to think about it, right? It's like versus the other mistake I think people make in product all the time, but is that we measure the cost of a feature based on the usually, or even a new product, based on the cost of implementation. Right. That's the first order to think he's like, oh, this is going to take six months, to develop, it's going to be Y engineers and Z designers or whatever. Second order thinking is thinking through the maintenance of that feature. It's like, oh, it's not just the first version

Starting point is 00:41:59 that goes out. It's like now we have this code base and we have to support and improve or whatever. I get that. The third order thinking, which I think is the most nuance and it turns out to be the most important is the other costs that that complexity adds. Okay, so let me, we'll come back to this. So when you go from product number one to product number two, right? It's like, okay, product number two is going to cost us this much to develop. It's going to have this risk associated with whether it's successful or not, all these things. So there's going to be this kind of carrying cost for product number two. What companies don't think through is that that is any of the maintenance of that. It's like, oh, we're going to need a team to kind of maintain that new product. Note what actually happens is that now when you go from product one to two, you have added dimensional complexity to your business. What I mean by that is not an incremental increase. Like, oh, we went from one to two. It's like now every decision you make, has to be made through the lens of now we have two products. We just hired an engineer. Do they work on product number one or product number two?

Starting point is 00:42:54 We're going to launch a marketing campaign. Do we spend five minutes talking about product number one and two minutes talking about product number two? How do we do anything? Every chart you look at in terms of the growth, revenue for whatever, look at all of it. Now every chart that you've ever had now has to be sliced by product one and product two in order to really kind of capture that precision.

Starting point is 00:43:14 And so now you have this new dimensional complexity that you just hadn't planned on. And this applies, once again, every level of abstraction. So everything you do in your business should factor in the long-term cost of that complexity. And it should be worth it. Of course you need. And that can make the case that you need to build product number two and product number N plus one over time. But you should be mindful about the cost of that complexity. Is there something you've done to help operationalize that?

Starting point is 00:43:42 Because I imagine this, everyone's like, yes, this is great. Don't do too many things. Simplify. Hard to do when you're like, oh, you got to drive growth. We have this awesome idea. We have this opportunity. We have a competitor. I know this is part of the culture, so maybe that's the answer.

Starting point is 00:43:56 But how do you keep people to actually this principle? So it's really hard. I'll see that. And things that have made it easier, it's a little bit idiosyncratic to HubSpot, right? So part of what has made it easier for us to keep things simple is the early constraints we impose. We didn't know this at the time. So we're building for SMB. We have a freebie product.

Starting point is 00:44:18 All right. Well, when you're doing that, there is literally a limit to how much complexity you can add because we don't have like an army of people that are going to spend in 18 months implementing something. We have to be able to support a product that's free.

Starting point is 00:44:34 That's hard to do, right? It has to be simple enough that someone can get value from this thing. And so there's these kind of self-imposed things. So the left that I would kind of carry away is come up with systematic ways and mechanisms, as Amazon would call them,

Starting point is 00:44:49 of putting guardrails and constraints in to the degree that you can. Because you can put words on a page and try to infuse it in the culture. It's like, oh, we believe in simplicity. We fight for this, and you can have meetings, and you can kind of get up in all hands meetings

Starting point is 00:45:01 and kind of reinforce that, which I encourage you to do. But like a really, even a reasonably well-done system will outbeat any other mechanism that you can kind of try to put and infused, right? Like those things kind of deteriorated over time.

Starting point is 00:45:16 It's hard to scale them. So I'm a big believer in kind of systems and imposed constraints versus. I can't help but talk about this SMBPs because I do a lot of angel investing. And classically, companies that focus on small businesses are very challenging because getting to small businesses at scale is very hard. They're often kind of more old school, not early adopters. You sell one and that's just like one small customer. And they're not going to upgrade and roll out.

Starting point is 00:45:43 out to this large group and they're not going to increase spend very quickly for founders that are exploring SMB or trying to win something SMB any advice other than just maybe the advice is probably don't do it. It's very hard. No, my advice is absolutely do it. Amazing. Great. A, because it's hard and we'll talk about that. But B, okay, so I'll tell you this quick story in terms of how we chose Smb. And so my co-founder, I met in grad school. And he had done software. He was on the kind of sales and marketing side.

Starting point is 00:46:18 I was on the product engineering side. Didn't know each other before grad school, and we met there. But one of the things we kind of, as we were kind of noodling on impossible ideas of working together on the startup, and we said, oh, we had done both on enterprise software before, right, the kind of opposite of SMB.

Starting point is 00:46:35 And there are definitely challenges with enterprise software, well-documented. One of the biggest one is that life as an enterprise software company sucks as a startup. Sales cycles are super long. Feedback loops are super long. You have to have sale. There's all this kind of, you have revenue concentration, which means you don't completely own your product roadmap anymore because whoever is writing the biggest check will ask for these three things. It's really hard to say no, especially as a startup. All these things that go along with that. It's like, okay, we sort of know that game. At the other end of the spectrum, you have consumer startups, right? It's like, okay. The problem with consumer

Starting point is 00:47:11 startups is they have very bimodal outcomes, right? It's like either you can be super successful, the next meta, the next Google, the next whatever, or it's going to be to zero, right? Like, it's very rare that you have like, oh, you made a few million bucks or whatever. I think like either it worked because it's a massive market. The case for S&B is you have almost the best of both worlds. Okay. You have the nicety of enterprise, which is, oh, I can solve a product and people pay me money for it. I don't have to be advertising subsidized. I don't have this bimodal outcome. I can build an incrementally more valuable business that's measurable. So we went from 100K and ARR to a million

Starting point is 00:47:46 AR to 2 million AR because we're a business software company. But it has the benefit of consumer because there's millions of them out there to sell to. And there is no revenue concentration. You do control your roadmap. You have very short feedback loops. You can try pretty much anything that you want because there's, you know, like, oh, we have 50 customers. What if we do this and screw it up? It's like there's five million more. I'm not, don't intentionally screw it up, but you can experiment, right? You can take on risks. And so, by the way, like, when HubSpot started SMB, it was literally like a hundred times harder to succeed in SMB, right? And we could not raise capital. Like, it was so hard,

Starting point is 00:48:21 because the common argument was, like, there literally is exactly one company in the history of software that's made a, like, global brand, billions of dollars of market that was into it. No one else had ever created SMB-focused software company. before. And we're like, yeah. It's like we know. But the nice thing about it is once you figure the physics of it out, because it's so hard to do, you end up, and this is played out. Now there's lots war-proof points. There's Shopify. There's a bunch of companies that have succeeded in SMB. But one of the things about SMB is that in the software market, this, by the way, all I know is software.

Starting point is 00:49:00 That's the kind of scope of my experience, is that in software, there's what I call reverse gravity. Over time, the market will always pull you up, right? Because what ends up happening is that smart founders and smart management teams will look at the numbers and say,

Starting point is 00:49:17 oh, well, as it turns out, our bigger customers, stay with its longer, pay us more, often have higher NPR, like all these things. And so if you allow yourself to be led by that, which is, it seemed like a reasonable, smart thing to do, you will get pulled up in the market. And because of this reverse gravity, almost every company winds up being, every successful software company ends up being an enterprise software company over the

Starting point is 00:49:44 fullest of time, right? That's what you see. It's like everyone, the kind of byproduct of that reverse gravity is that every software company ends up being an enterprise software company, so you end up competing with literally everyone. In the SMB world, you're only competing with the people stupid enough to stay focused on SMB or try to do that, right? It's like it's a much, it's a harder thing to accomplish. But once you figure out the physics of it and make it work, it's a much more sustainable, much more fun model. So I encourage, particularly startups. And maybe you fight reverse gravity for some period of time and maybe, but at least start there, try to make it work until it gets really, really, really painful and then try some more, right?

Starting point is 00:50:25 It's like there's just so much value at SMB. It's, yeah. Okay, so this theme has come up a bunch already in our conversation. I asked Chris Miller, previous podcast guest, what you're amazing at and what I should talk you about. And he said that you're very good at zinging when other people are zagging and zagging when other people are zinging. And I think that's already come across in our conversation. I guess is there anything else along those lines that you think might be helpful to people

Starting point is 00:50:49 in terms of how you think about that or examples of that in action? So this comes down to kind of high-conviction, low-consensus pets. And so we had three things that we were zinging. And by the way, it's not just me, my co-founder, I both have that kind of Zieg versus Zag. And we can ask ourselves, and we ask ourselves this to this day, right? It's like, okay, well, we understand like this is the way the world moves, this is the way it's normally done. But have we considered this completely, and not saying we should do it, but have we considered this alternate kind of alternate path. So I would encourage you at any stage of the company, you don't necessarily have to do the Zieg versus Zag,

Starting point is 00:51:24 but you should at least know what the ZIG would have been and have talked it through. So that's kind of thing number one. Some of the best startup advice I've heard that I've ever given is startup should focus on one thing and be really, really exceptionally world-class better than anyone else at that one thing. And one of our early Zigs is we are going to do

Starting point is 00:51:42 exactly the opposite of that. So from year one, HubSpot decided to build an SEO tool, web analytics, blogging tool, content management, all it. And every one of those categories, that we were building a product in literally, this is year one, had great products with great companies behind them. And so it's like, okay, well, why would you do that?

Starting point is 00:52:03 And the reason is that the one thing we wanted to be good at was solving for the actual customer problem that existed. And the customer problem that existed was not a drift of tools. Lots of great SEO, blogging, everything. All the tools existed. But SMB specifically did not have the wherewithal, put all those pieces together, right? So you and I, it's like, oh, I can throw a website up.

Starting point is 00:52:25 I can put Google Analytics on it. I can put a WufuWRM type form on. I can do all these things. I can wire it all. No big deal. Like, why is this so hard? But for most people, most FMBs, that's a science project, right? And so we said, okay, in order for us to solve the actual customer problem,

Starting point is 00:52:41 we have to solve the actual customer problem, even if it's uncomfortable, even though it's contrarian. And every kind of instinct and every advice we've heard or given says we should not do this. We should not go that broad. But once we make that day. decision. So the other kind of lesson learned, it's like, and we said this in the early years, and it's gotten better since. So let's see you do this. And this is kind of the all in one approach. We're going to have this broad-based product. It's like, okay, we're going to be, you know,

Starting point is 00:53:05 many miles wide and it's only so inches deep. One of the, and this goes back to our very systematic thinking, is like, okay, we're going to measure each of those individual product categories that we're now playing in. Are we in the top three in the market in that category? If the answer is yes, that means we invest it too much in that category. We should not be in the top three, because our value proposition is not that we want the top three blogging tools or one of the top three web analytics tools, we have the top three, whatever. Our value proposition is that everything works so well together that being in the top three

Starting point is 00:53:38 and having those right features or whatever doesn't matter. It doesn't matter as much as the all in one. And that means we over-index on one individual category by virtue of that was one of our kind of heuristics for being able to tell that we were over-indexed on one particular aspect of That was hilarious. Rarely do I hear we're in the top three and we're doing two, we're doing the wrong thing. We're too good.

Starting point is 00:53:59 By the way, and we changed that over time, right, like in the startup world and now, I would argue that most of the categories we play in, we are as, you know, surveys would tell you that we're in the top three in each of those categories now,

Starting point is 00:54:10 right? But at the time, when we were very, very resource constrained, you know, we were trying to be disciplined and focused. And, yeah,

Starting point is 00:54:16 so we're just racking up all these very, uh, contrarian approaches to company building. I imagine people listening to this might feel like, okay, cool, I'm just going to build a bunch of stuff. This is great. I work for HubSpot. Do you have any heuristics for when it makes sense to go wide and not deep that you

Starting point is 00:54:32 share with founders? When do you think it makes sense versus now you should actually follow the common advice here? Yeah, so it comes down to what problem you're solving. So I think one of the mistakes I think founders make is that, especially product-oriented founders, is that we kind of fall in love with the solution instead of solving and with the actual problem and you need to fall in love with the problem and and putting that constraint on yourself forces you to kind of understand and at least label and define what problem you're solving

Starting point is 00:55:05 because oftentimes we can describe our product or whatever but we struggle sometimes as founders to describe the actual problem so if you can make the case which HubSpot did it's like okay we it's not like we immediately jumped to that like oh we had this epiphany we're going to build the all-in-one do all the things kind of thing. We're like, oh, in actually talking to customers, because we consider doing like, oh, we'll just do this marketing piece. We'll just do this or whatever. It's like, no, that's not their issue. Their issue is like, it's not that these things don't exist. So if you, as a result of talking to customers and understanding the problem deeply, you come to the conclusion that you need to do more than just one thing. But then you should force yourself to have a discipline

Starting point is 00:55:46 that we did, which is, here's why we're going to do go a little bit broad. And here's why we're going to make sure that that broadness doesn't kill us, right? You have to have the kind of self-imposed constraint. You can't have the best of both worlds. You can't say, we're going to be all in the one. And oh, by the way, we're going to be the best. No, you can't be the best. You can say we solve this particular problem the best, but we're not going to have the best product in a lot of those, any of those dimensions.

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Starting point is 00:57:08 than any other social media platforms. Audiences on LinkedIn have two times the buying power of the average web audience, and you'll work with a partner who respects the B2DX higher. to be world you operate in. Make B2B marketing everything it can be and get $100 credit on your next campaign. Just go to LinkedIn.com slash pod Lenny to claim your credit. That's LinkedIn.com slash pod lenny. Terms and conditions apply. Okay, I'm going to go in a totally different direction for now and see where this takes us. I want to talk about flash tags. Sure. So this is something that

Starting point is 00:57:39 you came up with that came from a problem of your founder, people come to you for feedback, you give them some random thought and they treat that as gospel and they go do it and spending months fixing something. They're like, oh, it's just a thought. Talk about flash tags. Yeah. So, and this is exactly the problem, right? It's not just, once again, most things exist at every level of abstraction. So anyone that manages people, anyone that leads, has this exact same issue. It's the megaphone issue, right? Like, someone will pass you in the hall when we had offices in halls. They'll ask you a question. And as it turns out, this is particularly of founders. Like, I have an opinion on everything, like literally everything.

Starting point is 00:58:18 Because if you ask me a question, I will have it. It won't be thought out. It won't be right. But I will have one, right? And so the challenge is people will kind of take that in overindex on what was an opinion. And because it's inefficient to qualify every time someone asks you something, every time you put an email out there and say, oh, by the way, it's like, this is just my opinion. And you can put like, you know, IMHO or something like that every now. But then, like, people say, oh, that's just like politeness or something like that. Right. Okay. So here's what flash tags are, literally. And I live most of my life through email, but I do this in other media as well. It's like the hashtag that we all know, but it's a discrete set of them,

Starting point is 00:58:56 an escalating set of what I call the kind of dying on the hill spectrum. Okay, so here's how it goes. The bottom hashtag is hashtag FYI. And the definition of the FYI is, I came across this interesting blog post or I found this news or whatever, just letting you know. No response expected. Fine, go on with your life. Next level up is hashtag suggestion. I have this thought that came into my head because I listened to the episode on Lenny's podcast with Sam from Microsoft or whatever. And this feels like it could be a good thing to kind of explore. But hashtag suggestion means I still don't expect a response. You don't have to do the thing I'm asking. but it is something that I would do if I were you, or at least I would consider if I were you. Okay.

Starting point is 00:59:43 Next level up is hashtag recommendation. Hashtag recommendation is, I've thought about this a lot. I've done some research. I've done some digging. I've done some soul searching. I would do this. It's still not a you have to do this,

Starting point is 00:59:58 but if you decide not to do this, I would appreciate a response in terms of why you don't want to do this, what you learned in the process of exploring this particular thing, other alteratives or something. So it's like a response expected, but still not a mandate. And the last one is hashtag plea. I beg of you, we don't have mandates at HubSpot.

Starting point is 01:00:22 I have thought about this so much. Like, to my core in my soul, I believe this is the thing we should be doing. I'm going to plea with you to please just do this. Still not a mandate, by the way. But that's... And so now it's commonly accepted. It's like it's on the wiki.

Starting point is 01:00:40 Like people know, it's like, and I use this multiple times every day. Other people at Upspot use it. It is remarkably effective because they're self-descriptive. Hashtags are searchable. You can go back and it's like, oh, I want to know the last five hashtag recommendations that I made. How those turn out? Like there's just so much goodness that comes out of it. It's not hard to understand or describe.

Starting point is 01:01:04 It's really interesting. None of them are just, just do it. You say that there's no concept of there's no mandates, essentially. Why is that? And do you feel like people, do people just treat plea as, okay, I actually just really have to do this? So we've always had as part of kind of early manifestation of HubSpot culture, we kind of believe in autonomy, lots of companies believe in autonomy.

Starting point is 01:01:22 And we tried to carry that idea as far as we can. And for the most part, we do that. And the hashtag plea is part of that, right? This is like, we trust our people. We try to hire the best. We expect them to learn. and we still want them to, you know,

Starting point is 01:01:40 have the kind of discretion to be able to make hard decisions. And we have, you know, the clue, we call them DRIs. We didn't invent that term, a directly responsible individual.

Starting point is 01:01:48 And we'll talk more about, we should talk about more about decisions and how decisions get made. But, but the reason I do hashtag plea is that it's a soft way of, a mandate without being a mandate, right?

Starting point is 01:02:00 It's like, okay. Like, and by the way, like the number of times that happens is like I can count on the fingers of like one hand and still have fingers left over, right? That almost never gets to that. Because either I talk myself out of it. It's like, okay, and this goes to the, is this a hill I'm willing to die on, right?

Starting point is 01:02:17 It's like, okay, I get it. I may disagree. Is it the end of the world, you know, is it really going to do that much harm? And is the cost of kind of imposing that kind of founder of card, you know, go do this? It does happen, just not that often. So, yeah, awesome. And we'll link to the, there's a post you wrote about how to use these. It's flash tags.org if you want a quick way just to get to that blog post.

Starting point is 01:02:40 I believe in domain names and shortcuts because I believe in some full cities there. You mentioned decision making. There's something interesting there. Talk about how you make decisions at HubSpot. Like most organizations, HubSpot historically has made decisions poorly. It's just all the spectrum, right? I think decisions are the hardest things because it's hard to strike the balance. And we've evolved it over.

Starting point is 01:03:01 I think we're much better than we were in our earlier years. The things we get wrong, most people get wrong. wrong. And so I'll tell you the things we get right now is that, so we like to be, we're very data-oriented. We like to make data-informed decisions, but data doesn't make decisions people do. Right? So that's like thing number one. It's like, you know, you have lots of geeky founding companies or whatever. It's like, oh, like we have a chart that says this. So we should go do that. That doesn't work. It's work at that. Data's awesome. And we also have one position that we designate. to make the decision.

Starting point is 01:03:38 And that is not necessarily the executive overring that team. It's like, okay, well, so and so. And they literally owned that. And we didn't invent this idea either. This existed long before HubSpot. But it actually works. It's like you have to decide

Starting point is 01:03:51 who's going to make a decision. And that is the, like, almost the number one decision to make. And it's like, okay, don't pick people you don't trust to make the decision. And so that's kind of thing number two. And the biggest mistake, and we used to make this much more than we make now,

Starting point is 01:04:05 is, and Amazon stayed this really well. They have, theirs is called disagree and commit. We have a slight twist on, I'll tell you why we twist it a little bit. Ours is debate, decide, unite. That's our kind of phrase that we use in HubSpot culture. But the idea here, the core premise of it is that once you make a decision, getting alignment around that decision, because there will always be at any amount of scale,

Starting point is 01:04:33 people that disagreed with that decision, because they were debating the other side. Right? Like they just didn't, like they went, they would have picked option A and we ended up picking option B. But it's extremely important that even when a decision gets made and we decided to do something that's contrary to the thing that you believe in would have debated for and did debate for, you lost on that particular one. Fine. Hard to do, but so important and so valuable. And I'll tell you why we tweaked the Amazon one. So the disagree and commit sounds a little bit.

Starting point is 01:05:06 harsher than we like, right? Which is, oh, it's fine for you disagree, but then F and commit, right? It's like, okay, I get that. I'm biased. But so the debate is, okay, so let's have open debate. Let's get all the options on the table. Let's actually make the decision. And then it's unite around that decision. Not just, it's like, okay, let's kind of come together around that. And that sounds more Hub's body. So anyway, that's, but it is a lot more friendly. I was thinking that as you were talking debate, decide. unite versus disagree and commit. And then there's like have backbone, you know, in that one. It's, uh, yes. I like the other thing. I'll tell you. This is, uh, partly a hubspot thing, partly a me thing. And this will not surprise, uh, surprise you at all is I, I like to think systematically around decisions, right? And so I'll give you an example. Um, the question I ask myself when faced with a decision or a thing that I'm trying to do is like, okay, if I could write Python code, a Python function to come up with an answer to this,

Starting point is 01:06:13 what would be variables or the coefficients? Let's say you're not. If you were making an Excel spreadsheet to make this decision, what would the columns be? All right. You don't have to decide the weights, but at least decide the factors. Then the next step is like, okay,

Starting point is 01:06:27 you're the factors that I think matter of the making of this decision. I'm going to decide between these seven options. Here are the things I'm going to look at, right? You would do this for picking a school to go to, or, you know, it works, right? And you don't have to take it to the end's degree, but the exercise of going through it, it's like, okay, well, step one, if I can just identify the factors that I think should impact this decision, that's an 80% win right there. Not because it's just in your head. If the team works collectively to say, okay, here are all the factors that I think should contribute to the making of this decision. Then number two is, okay, we can't assign exact weights, so we can't write the Excel formula just yet or the Python code, but can we at least stack rank the factors? Like this factor is more important than that factor.

Starting point is 01:07:08 Now you get a closer sense of approximation, right? You're still not going to use a spreadsheet to make the decision, but the human making a decision has much better information that they have than pretty going through that exercise. One of the mistakes people make around decisions, and Amazon has written about this, I'll give you kind of my take on it, is that the calories you spend on a decision

Starting point is 01:07:29 should be proportional to the consequences of that decision. Here and simple. And he calls them like one-way doors versus two-way doors, which is kind of a binary heuristic, which is I love the elegance and simplicity of that. I'm taking it one level further, which is it literally should be proportional. Like, okay, if you have a really, really big decision that's going to be expensive to change, really, really spent a lot of calories making that decision. You might still get it wrong, but it's worth it, right? And it's not just around decisions, around activities and bets and things that you were going to do, is that the calories you spend should be kind of proportional to the outcomes and what you're seeing. and the value of it.

Starting point is 01:08:06 And that's one of the things I try to apply to my life. It's like, okay, like my geeky nature wants me to go, nine months deep and start writing code and do this thing or whatever. But I found that that one simple thing is like, okay, is this like a first order approximation where I can just identify the factors or it can like, and the other thing that helps, by the way,

Starting point is 01:08:26 is then we'll talk about this. So one of is my default position on most things, I don't mean this in a negative way is no. It's like, oh, shiny, object, should I go do this? No. And then I have to sort of force my, like, okay, like, I need like reasons to say yes. I have to kind of force myself because it's easy to say, I love new things, I love new people, like I love all that, is then so I have a, I have like a sorry but no post on my blog that, uh, life changing for me. And so, so the idea

Starting point is 01:08:59 there is that, um, this goes back to one of other first principles is a time is what a few kind of constants, right? So every time you say yes to something by definition, you're saying no to something else. And so this goes back to the kind of product heuristic we're using in the early years of house class. Like, oh, when you put something in, you have to take something out because we want to kind of keep the complexity roughly constant if we can. Same thing. So it's okay to say yes to things, but then you have to force yourself based on the calories you're committing to, to say, okay, well, what am I going to take out of my schedule, out of my life in order for me to be able to make room for this thing? Because as it turns out time,

Starting point is 01:09:35 I have not been able to, despite my best attempts, bend the laws of space and time. So how do I make room for this new thing that I want to say yes to? Yeah. I love them the way your mind works. I'm excited to talk about culture and how this connects and the way you think about culture and through all these frameworks and lenses. Before we do that, you kind of hinted at this idea of how you pick what to work on. And I know you have kind of an interesting framework for how to decide what ideas are good

Starting point is 01:10:00 and what ideas are worth investing in. I think both as a founder and a product leader, how do you think about deciding what is worth investing in? So imagine the Excel spreadsheet again. So let's think you're a value in idea for a startup, for a new product and new feature, whatever happens to be. I think this applies. So the first thing you should look at is, and I measure things on a scale of 0 to 10 because I like quantifiable things. I like to be able to multiply X by Y. I don't like letter grades.

Starting point is 01:10:26 Pepe of mine. Anyways. So put a number on. It's like, okay, if this thing were successful, let's say we're just picking a new startup idea. Like I'm considering starting this new business. If it were successful, what could it be? What's the kind of magnitude of the outcome?

Starting point is 01:10:40 However you decide. It could be impact. It could be revenue. It could be market cap. It could be peripheral. Whatever it is. It doesn't matter. It matters, but not relevant for this discussion.

Starting point is 01:10:48 So that's the potential. Thing number two is probability of success. Okay. And now I'm going to pause here and tell you the most common mistake people make is they think through the probability first without actually forcing themselves to think through the potential. And here's what happens is that they apply a filter that says, oh, I only have a like one in 10 chance to pull this off as long as 10% success rate or whatever. I'm not going to do that. Well, if it's a one in 10% one in 10 chance at $10 billion, it might be worth it.

Starting point is 01:11:22 Right? Like it might be, that maybe not. Like sometimes it's, you know, based on stage of life and things like that in terms of risk keep and afford. But like for instance, and so by the way, And when I say probability, that's the Vicky side of me, it's like, you can do it multiple ways, right? You can say, oh, here's the X percent chance. You can do in statistics as an inventory that's like, oh, here's path A, there's a Y percent chance that happens, and here's what the outcome would be, Z percent chance or X. Anyway, you're the popular things, and you come up with what's called the expected value. Anyway, so let's say we just look at two branches, like, oh, there's a 50-50 chance that I'm going to make $10 million. It's just, we'll take one branch she has to keep this shorter.

Starting point is 01:11:57 So the expected value of that is $5 million. That's literally the expected value. It's like, oh, you got a 50-50 chance at a $10 million outcome. And let's say you have a 10% chance at a $100 million outcome or a 500 million, whatever it is. So mathematically, it's like, okay, well, you should at least consider that other one, even though the chances are lower because the expected value is higher. Okay, so that's thing number one. Anyway, we'll get through the rest. So start with the kind of potential outcome, then look at probability not the other way around because then there's,

Starting point is 01:12:27 You're going to apply that mental filter and cast, throw out ideas that may not have been worth throwing out. The third thing is what I think of is either passion or proximity. Do you care about this actual thing that you can actually kind of bring to bear? And then the fourth one is, since I need a P word, it's like prowess. Like, do you have some assets, something that makes you uniquely positioned, either if you're building, a new product, you have existing lines of code that you can reuse, you have a market that you already have access to. There's something about this particular idea that you have an unfair advantage pursuing, and that impacts your probability of success, right? And this is the other reason. It's like you need to kind of look at all those things. And once again, no one thing is the deciding factors.

Starting point is 01:13:15 You're not going to just pick the thing that has the high expected values, take the potential times or whatever. It's like you have to sort of look at all of them and look at your own kind of situation. But it helps to kind of think through that, to kind of have the kind of discipline. to say, oh, how big could it be? What are the chances? How much do I care about solving this problem? Is this something I can work on for two years, 10 years, 20 years? And finally, like, why me? Like, why me?

Starting point is 01:13:40 Why would we succeed at this? Why is our chance of success even low, higher than the rest of the world? Okay, so I'm already picturing the spreadsheet here. For every idea you have, you basically have a column, potential probability of success. Yes. Proximity, you said,

Starting point is 01:13:57 just like how. Your passion. Okay, passion. Yeah. I started with passion, and I have an issue with passion as a word because it's ambiguous, because we talk within startup circles. It's like, oh, pursue your passion.

Starting point is 01:14:12 Sure. But it's like, you know what? Most of the companies that exist today that are even successful ones with awesome founders, they didn't necessarily pursue their passion. It's like they kind of, maybe you're passionate, like in their particular problem, or a market segment or something like that, but it's like, it's okay to become passionate about something

Starting point is 01:14:34 as you kind of dig into it or whatever. That's fine, too. So anyway, so. Yeah, I have one of my favorite startups that I've invested in. It's called Zip. It's a procurement platform. The founders were not passionate about procurement

Starting point is 01:14:45 when they got into the space. They just saw a huge opportunity. They thought they could build a much better product. And they got passionate about it once they started working on it and finding. And this is the thing, right? So, yes, if you can find your true calling this is what you were meant to do in the world and you have the opportunity to do it.

Starting point is 01:15:01 Great. That's a tiny small fraction of people, right? Like, that doesn't happen. And you may not even know what your passion is like, especially if you're a first time founder. It's like, okay, well, I haven't seen the world. I don't know. It's like, so yeah.

Starting point is 01:15:15 Okay, so just for people, if they're creating a spreadsheet for all their ideas and for startups, it's potential probability of success, passion, prowess. Yes. Okay, amazing. Okay, let's talk about culture. I know you spent a lot of your time on helping build HopsBot culture create the original culture. You created this epic culture code deck. I think it's 128 pages.

Starting point is 01:15:39 So maybe just to dive into it, what was that process like to define the culture of a company and maintain the culture over time? I'll say awful. At the beginning of it. Okay. So I'll give you the very quick story because I, my co-founder and I were having a lot of our founders' meetings or founders dinners as we did. do. And he had been meeting with his CEO group. And he said, oh, Darmesh, I hear this culture thing is, like, really important. By the way, the word culture had never been mentioned prior to this conversation, the halls of hub spot, like, ever. And this was how many,

Starting point is 01:16:12 how many years in? This is, I want to say, three or four years in. I can check the records. Because, by the way, even like Brian and I, even back when people worked out of offices, most of our communication was over email and async. We've always been big believers in that kind of written form. But anyway, I can tell you whether the word council was used or not. So,

Starting point is 01:16:34 and it was not. And so, and he's like, oh, like, I've heard, because, you know,

Starting point is 01:16:39 talk about this evil. Culture is super important. Darmesh, can you go do that? I'm like, okay, Brian, like all the people

Starting point is 01:16:48 and all the company is like, I am like, literally like, the bottom desile, if not like, the worst possible person. It's not that, like,

Starting point is 01:16:56 I don't like people. I just don't like being around them a whole lot. And from what little I know of culture, it sort of involves people, right? Like that, you know, I don't know, but it seems like I'd be the wrong person. But anyway, I'm a team player. I'm like, okay, it does feel like it would be important.

Starting point is 01:17:11 And so I took on the task. And I didn't really know, when he said, like, Darmesh, can you go do that? Like, what does that mean? And so what I took it to mean, it's like, okay, well, like, culture actually already exists. we have a culture, like, whatever it is. And it's working pretty well.

Starting point is 01:17:30 Companies doing well. People seem happy. And so I said, okay, well, what I'm really trying to do is kind of describe the culture that's there. So it's not creating cultures, it's articulating the culture. So we know what it is. And so then this is the, you thought it'd be showing up again. So the question I asked myself is, I literally asked myself this question, which is, if I could write a Python function that would measure the probability of success of a new person coming into HubSpot, what would the factors be? What are the things that if I could measure, if I knew,

Starting point is 01:18:01 I had a true function that says, oh, on a scale of zero to ten, here's how they rank on this and this and this and this and this, I could approximate how successful and how good they're going to be for HubSpot. That's my exercise. Okay. So I did an internal survey,

Starting point is 01:18:16 and I'll tell you why this was such an awful experience in the beginning, because this was also a good story. So once I took on this task, I sent an email to the company. It's like, hey, everyone, I'm just going to be digging into culture. We're going to send this kind of survey out. I just want to get us an understanding so I can, great.

Starting point is 01:18:32 And the negativity and the visceral response to that one email was literally up until that point, it still ranks the top three, like worst things I've ever, like, people felt so negatively and so strongly, and I was not expecting it, right? And I'll tell you the one line that really like just was gut-wrenching was like, Darmesh, here we're talking about culture. Next, we're going to have like posters up on the wall about excellence. HubSpot is not the company that I thought I joined. And like, oh, and I just like the geek part of me is like, I just not,

Starting point is 01:19:14 I did not know how overloaded that idea of culture was, right? And so then when you dig into it, it's like, oh, because, so many companies had done it so poorly and just didn't walk to walk or whatever. This is why. There was a reason why there was this kind of negative response. So anyway. So I went back to my thing. It's like, I get it. So I'm going to try to describe what we have and they'll write this truth function.

Starting point is 01:19:40 So I wrote the slide deck, which had exactly 16 slides. And that answered this one question, which is, if I can write a Python code, what are the factors? So what are the attributes that we would look for in here? And the reason I came up with that particular question is that I got this, when I did the survey, I did the NPS survey, which everyone knows that you would send to customers. It's like, oh, on a scale of 0.10, how likely are you to recommend HubSpot as a place to work? And the other NPS question is like, why did you give that answer?

Starting point is 01:20:12 As it turns out, here's the thing that I learned, which was troubling. everyone was happy, and the reason they were happy is because of the other people at HubSpot. That was the number one reason, which is both good and bad. It's like, okay, well, that's awesome, but that doesn't tell me anything, right? It's like, okay, well, that's like a self-reinforcing kind of recursive loop. And so that's what it's like, okay, well, what makes the people at HubSpot, the people that are at a HubSpot? Let's come up with the attributes that define what it means to be one of these people that

Starting point is 01:20:42 makes other people happy. And so we came up until the original kind of set of things that were embodied. in that slide deck. And I called that slide deck, the culture code deck. And the reason I called it the culture code deck is not because it was a code of conduct or a moral code or this is how company should be run.

Starting point is 01:20:56 It was because if I could write code to kind of define the culture of HubSpot, this is what the code would look like. And since that point, it's like the question I keep asking myself is if we could have an operating system that ran the company, it's the geeky part of me.

Starting point is 01:21:12 Not that you could do that, but what would that look like, right? And so, and the big kind of unlock, there are very few original ideas I've had that are any good. One of them is this thing that

Starting point is 01:21:26 culture is a product. Period. And that every company builds two products. One is the product they build for their customers, and the other is a product they build for their team. That's what culture is, is the product you build for your team. And let's say we

Starting point is 01:21:42 stipulate that that just happens to be true. just humor me for a minute. If you assume that's true, then a bunch of things kind of follow from that postulate, right, that hypothesis, which is, oh, well, just like we would never build a product without talking to customers, we would never build culture without talking to the customers as a product, which are the people. So we do a repeat of that original NPS survey. We've been doing every quarter now forever to figure out with the NPS of that product is our culture product. The other thing is like, okay, well, there's no product person in the history of humankind that would have said, oh, I built this product, it's awesome, I'm done. No one would ever say that.

Starting point is 01:22:25 And this is the number one mistake, I think, I'm biased. I think founders make is that they say, oh, we have an awesome culture and my job is to preserve the culture. That is not the job because the needs of your customers. change, and these are the employees change, right? The culture exists to help the great people do great things for the company. That's why the culture is there. And the things they need later as the company scales are different. And so just like you would never freeze the lines of code of a product, you would never freeze the lines of code of a culture. Culture should be

Starting point is 01:23:03 iterated on just like you iterate on product. So that was like, and there's so many other things that kind of fall. So just like in a product, you will get feedback from the customers like, oh, here are the bugs. And we actually call them bugs. It's like, oh, here are the bugs in the culture. At the all-hands meeting, so we have this survey, comes back, once again,

Starting point is 01:23:19 to your transparency notion, every single survey response, it's anonymous in terms of who submitted it, we publish it, right? The quant score, the subjective thing, everything,

Starting point is 01:23:29 and then we will categorize it, and we will then at the next all-hands meeting, we call them all-nines. Anyway, I love that. All-mines. And it's like,

Starting point is 01:23:41 okay, so here are the things that we heard, just like we would do for a product meeting. It's like, oh, we just, because we're like, here's what we're hearing back. It's like, here's a bug that you've identified. Here's the ones we're going to fix, and when we're going to fix them, we're going to commit, like, oh, like, you said this was broken. Okay, we're going to do something about that. Here are the things that, like, yeah, I know you

Starting point is 01:24:02 don't like it that way, but works as design, which we do in product all the time, right? And you should have the right to do that. It's like, yep, some people are going to disagree, and there are any number of reasons why we think that needs to stay the way and we're not saying necessarily forever, but as it stands, we are not prioritizing this. We are not fixing that thing that you think needs fixing for whatever reason. So the one lesson here is a very few things I've learned that I think are universally applicable. That one, I think, is right. And just so much greatness and goodness falls out of that is if you think of the people as customers, if you think of the culture as product, it takes away this kind of abstract nature of working on culture and then takes away this thing.

Starting point is 01:24:41 I heard this back in the early commentary from the Up Spot team. It's like, oh, well, culture is not something you really build because that seems fake. That seems inauthentic that you just go, it's like, oh, we're going to craft this culture. Like, no, it's, we craft in the same way. Like, I'm not saying we're going to impose it, like we're going to do this off in isolation,

Starting point is 01:25:00 but we're going to work on it, and it's something you actually do manifest. And it's not just up with the founders. Wow. What an amazing story. You're definitely getting laughs for minute for me. I think there's at least one laugh per minute so far in this podcast. That's amazing. And I think this point you just made about your job is not to preserve the culture as a leader.

Starting point is 01:25:19 I think that's really profound because I think most people don't think that. They think their job is we need to maintain our culture as we grow. It's all fading away. Our culture is changing. But your point is that's good and that's great. Bringing it back to product, I think this is an important thing. This is the kind of second order lesson learned after you start with the culture's product. is that one of the challenges

Starting point is 01:25:39 almost everyone will deal with is that you have these things and so by the way, just because culture's product does not mean there's not a sense of having what some might label as kind of core values, right? Because we have this in product as well. There are core values that the product believes in, like we believe in about our product

Starting point is 01:25:56 that we're going to kind of hold constant through it. Like, oh, we're building for SMB, wanted to be easy to use. There's constraints that we put on ourselves that are intentional that even though we iterate, we're not going to iterate away from these things that we just like kind of that high conviction back thing again. But not everything that's part of your product is a core value, right? So not everything that was part of your culture in the earlier.

Starting point is 01:26:17 So transparency is one that has endured over a long time, right, as part of our core value. And we preserved it, even though it was troublesome through the IPO. I shared that story. And then there are things that we changed that were part of like, oh, we believe this meritocracy thing in a flat organization. But the manifestation of that was a bud with the lack of titles, right? And so we changed that. It's like, okay, well, there are things.

Starting point is 01:26:37 And here's the other thing that is a mixed metaphor problem because I haven't been able to come with a good metaphor yet. But there will be things that you have that are kind of core. And the way I describe it right now, I'm just going to put it out there and ticking myself from not coming up with a better metaphor. It's like federal versus state law. All right. So there are federal laws, right, when we have here in the United States that says, okay, here are the things. and these are the inalable rights of all citizens of the United States

Starting point is 01:27:08 and these are the things that are core. But then we have state things, right? It's like, oh, for this particular state on these particular aspects, they can kind of optimize for their particular states, like, yes, we understand, like this is the co-relly,

Starting point is 01:27:19 but for RCA, we're going to do this. So we have something similar at HubSpot. We have a core set of things that are kind of part of the culture, part of the thing is like, okay, here's what we believe. And then there are things that the individual groups, so our head of engineering can come back.

Starting point is 01:27:32 It's like, yeah, I know our overall, the founder's leaning is X. But for my particular group, that doesn't really make sense. We're going to do this. I'll give you an example. So one of the core things from the early years of HubSpot is, like, we don't care about what hours you work.

Starting point is 01:27:46 Like from what time to what time, it's like it doesn't matter. Like literally does not matter. And we didn't track it. We don't care. But then over time, it's like, well, we have a support organization. And that organization, as it turns out, it does matter to our customers, right? Like, we need to, you know, have coverage and things like that.

Starting point is 01:28:01 It's like, okay, well, that sort of makes sense, right? But then you sort of have to kind of, they pick your battles, but then kind of fight back. For instance, transparency, there have been times where individual org leaders like, okay, Darmesh, I know you believe in this transparency thing and Brian believes in this transparency thing, but it's inefficient for someone that is a SDR and the sales organization to have access to the high order financials. It's a waste of time. It's a distraction. That was the argument.

Starting point is 01:28:28 It's like, you may be right. But the binary decision, the fact that we value transparency so. much we're going to. Yes, maybe it is a distraction. Fine. And the other one is like, oh, I don't want my team to have it because I just don't, you know, we were hiring so fast. And it's like, and once again, that's a lot of trust to put into people or whatever. It's like, yeah, but then this is one of the other lessons is cultures over time become self-fulfilling prophecies. So in the early, Alice, the big lesson learned. So when I put the first version, the public version of the culture code out there.

Starting point is 01:29:06 And I got feedback from the team. And like, Darmesh, like, you say this in the culture code deck. And it's just not true. It was not true enough for us to kind of, like, state that as a thing. And so the thing that I did is in the deck, I have what I call these little liner notes. It's like, stuff going on right head. It's like, oh, this is not really true yet. So it's more of an aspiration.

Starting point is 01:29:27 This is how we want it to be, but we're not walking to walk yet on this thing. So I didn't take it out because I wanted to. to be an aspiration. And here's the thing that I had not thought it through. I cannot take credit for it. What happened over the fullness of time is that those things that were aspirations became increasingly true by virtue of being in the deck. Because as people join, it's like, oh, that's the thing we aspire to. So I'm going to pretend like that's actually the culture of HubSpot, which is exactly what we want. So it's okay to say things that are aspirational, just call them out. Don't present things that are not true, but back off of the things that you would like to be

Starting point is 01:30:03 true. Wow. There's so many lessons there. It reminds me at Airbnb, actually, I was there when they created the original, there's these six core values of Airbnb. One of them was simplify, turns out. And then, I don't know, some number of years later, the founders realized we're not actually good at this. And values should reflect who you are, not who you aspire to be. And I like this middle ground you found of like, I'm going to put in here, but I'll note this isn't necessarily who we are. We didn't do that. That would have been a smart move. So they removed that core value. They're like, we're not, we're not actually this. And it goes, going from 6 to 4. There's another one they removed. So I was really impressed because you're like, okay. Wait, because they comes up in meetings. They're like, simplify them. No, it's actually really complicated. Yeah.

Starting point is 01:30:46 Okay. So what I'm going to do, I have one more question about AI. And to make this work timing-wise, I'm going to cut the lightning round. So I hope that's okay. Totally fine. Okay. I know AI is very top of my time. By the way, that's, this is my diabolical plan to have to skip the lightning round

Starting point is 01:31:01 because that's the thing I'm not good at. Like, I just, not, I'm not going to loss. Anyway, I think I was dreading the most. Playing 4D chess here. You knew exactly the timing and you're like, I will take this long for all these answers, so it will perfectly play out. So I know you're spending a lot of time on AI. It's on many people's minds these days.

Starting point is 01:31:20 You built this product called ChatSpot. Is it still called ChatSpot or did you? Is that the product you changed the name for? That's still ChatSpot. It's still chat spot. Still chat spot. And I know that you've handed that off now to like a team actually that's working on this. It's not like just a Darmesh project anymore.

Starting point is 01:31:33 So I don't know exactly where to go with this, but just why is AI? So top of mind. And where do you think people should be spending time? Where do you think things are heading? What comes to mine around AI? Yeah, it's obviously I'm not alone in my excitement, but I will say this. So I've been, so I'm about to hit the 30 year anniversary of my working in like commercial software. Right.

Starting point is 01:31:58 So I've been at this for a long, long time. And that's all I've ever known. That's all I've ever done. and the last time I was this both excited I'll just excited because when the web first came along in the mid to late 90s and I'm like oh this literally like changed everything right

Starting point is 01:32:18 and it's like relevant to everything it's like literally everything is going to be impacted by this thing called the internet and I was in my early 20s right and I've been here for mobile I've been here for social I've seen lots of things that you know, people got really excited about, but nothing, to me, has kind of hit the Richter scale to agree that AI does. And the reason is, okay, so if you think about early, you know, like early computers on PCs, that kind of gave us compute at scale, which was awesome. The internet effectively

Starting point is 01:32:52 gave us kind of distribution at scale, allowed us to take information products, whatever, and get them out at scale because everything was now connected where before it was not. What AI gives us now is cognition at scale, the ability to kind of literally amplify the human brain, right? Like that's never been done before. Not that we haven't been trying, but now we have demonstrable

Starting point is 01:33:13 evidence and products that actually work. We've used chat to PT and products like it. And so it's life changing, right? And so for the product people out there, which is a lot of you, AI, so by the way, the internet unlocked a

Starting point is 01:33:29 massive opportunity because especially for startups, right? It's like, oh, we can just reimagine the world with this new thing called the internet that was not possible a year ago and now is, what can we kind of now unlock and lots of great companies were created. I think something similar will happen here.

Starting point is 01:33:45 And there's a couple of things that I think that are just tactically that I think are possible vectors that kind of satisfy my spreadsheet of if I were going to choose ideas and this applies across industries. So as software companies and product builders, most of us have always called our products like,

Starting point is 01:34:03 oh, we build intuitive products. Where's like a good? And we say that, right? As it turns out, it's just not true. Because as a user of X product, whatever happens to be, it's like, okay, I've got this mental model, the thing I'm trying to accomplish. And then I have to translate that into a series of clicks

Starting point is 01:34:21 and drags and touches and swipes in order to accomplish the thing that I want in the software product that I'm using. And what varies is, degree to which that translation needs to occur. But there is an impedance mismatch, right? There's a translation that has to happen from the what's in my head. Like, I want to remove this background in Photoshop.

Starting point is 01:34:37 I want to create this report in HubSpot. And so the opportunity now is that we're going from what was an imperative model. This is what engineers would call like a step by step. You give instructions to a computer like, do this, do this, do this. And then hopefully you get the output we're looking forward to what engineers would call a declarative model. A declarative model is you describe the outcome you want, not the steps to get there. And the closest analogy that most people are familiar with is SQL, the querying language, right? So before SQL, if you wanted to get data out of a system, you wrote code that says,

Starting point is 01:35:12 okay, loop over all my customer records and then filter out the ones that have less than a million dollars in revenue and then give me the result. And FUL said, no, just put a where clause on it, describe the data you want, and what columns you want, and how do you want to order it, and what filters you want to apply. It figures out, it the database figures out how to get you the thing that you're looking for. Now we have the ability to do that for interfaces for software, right? So instead of saying click here, drag here, it's like, I want you to generate a report. That's all my customers in Europe that we signed up last quarter that were more than 100K in ARR. And you just literally take the thing that's in your head and express it in whatever medium you choose, text, voice doesn't matter.

Starting point is 01:35:52 And the software now can actually, so now the technology exists to pull that. that off. Did not exist before. And now it exists. I know it didn't exist before because six and a half years ago, I built this product called GrowthBot. That was a chatbot for HubSpot software and business software generally for marketing and salespeople. It's essentially what ChatSpot is now. Amazing product, GrowthBot, and it had just one teeny tiny small problem, which is it didn't work. And really well conceived, really like a billion idea. It just didn't work. And the technologies wasn't there, right? You just couldn't do it with any degree of fidelity because AI had, and now you can.

Starting point is 01:36:32 And that's what kind of caused me to go, kind of prove out my theory. It's like I had a chip on my shoulder, particularly with that idea, right? But I think, I'm not suggesting that web and mobile interfaces are going to go away, but there are a class of use cases across pretty much all software, where we can make things easier for the human by not forcing that translation layer and just make it truly intuitive. Thank you for coming to my TED Talk. So it's great about watching you, because you kind of build in public with this AI stuff, that you're just, you're doing it.

Starting point is 01:37:08 Like your approach to learning about this is building and doing. When you launch chat spot or chat spot, you tweeted that it took you many, many late nights of work. For people that want to understand what's going on, get ahead of where things are going, build the skills to be relevant in the future. Do you have any advice as a job? just build stuff and do it? Or is there anything else you'd recommend for people that want to understand what the hell is going on? Yeah.

Starting point is 01:37:34 So, and this is very simple, practical advice. And there's the same thing for engineers and software as well, is don't try to go learn something because you think it's like worth learning. Find an actual problem that you care about and go try to solve it with that new thing. Right. Like, you have something tangible that you're trying to do. So for instance, going back to my book, back to the talk around public speaking, it's like, okay, if I had said, oh, I want to learn about humor and stand-up comedy, I don't think I would have accomplished a thing, but I had a goal in mind, right, which is like, hey, I need to be able to get up on a stage and hold of a thing and I have this measurable thing. So whatever it is, whatever line of business you're in, whatever you do as a professional, I guarantee you there are ways AI can help you, even with the tools that we have out there right now. So either use the tools, build tools on top. top of the APIs that exist, very easily accessible right now, very cheap to just kind of start.

Starting point is 01:38:32 Yeah, just do it and iterate. And I'm a big believer also in kind of learning in public as well. That's why I do it. That's why the culture code is out there. It's like, okay, well, if you accept the fact that culture is a product, we're going to learn about things much better, like instead of just getting feedback from the employees at HubSpot, why don't we put it out to the world? And because the Internet is exactly good at telling you why you're an idiot, right?

Starting point is 01:38:53 It's one of its core strengths. So I would recommend. It's like, have a goal in mind, write about it. I'm a big believer in writing generally, but yeah, do it in public. I love that advice. Is there anything else that you wanted to share or touch on or leave listeners with before we wrap up? We cover a lot of territory. Yeah, we did.

Starting point is 01:39:19 Yeah, we did. I might do the quick while I'm ahead thing. I'm going to, I'll leave it with this. So I have my definition of success and I came up with years ago that I kind of still stand by and the HubSpot actually stands by is success is making the people

Starting point is 01:39:36 who believed in you look brilliant. That's it. What I like about that is this is not like an inward-facing thing. This is the kind of like customer folks like, oh, all the employees that join your company when you're a founder that were kind of silly enough to join you on this thing or whatever. It's like you were small customers that believed

Starting point is 01:39:53 in the early product that completely sucked investors that believe like all of that like do what you can to like no they reflect back on it. It's like, oh, boy, was I smart to having believed in Lenny and what he's doing. So yeah, that is really beautiful. Darmesh, you are wonderful. Thank you so much for doing this. This has been a lot of fun. I'm glad we were able to put together.

Starting point is 01:40:16 Same. We covered so much ground. We got through everything that I was hoping to get through and more. Where can folks find you online if they want to follow it you up to you and maybe reach out if they have questions, and then how can listeners be useful to you? Sure. So I'm D-H-A-R-M-E-S-H everywhere. I'm not only findable, I'm unavoidable on the Internet, as it turns out. And follow me on social media, tell me where I'm being an idiot when I can learn.

Starting point is 01:40:42 And tell me your favorite. Here's the thing. Leave a YouTube comment and tell me which Leni episodes were your favorite so I can go back, because I've been binge watching anyway. I'd love to. And then speaking that, I know you have websites of your content. You have your YouTube channel. Where can folks find those things?

Starting point is 01:41:01 Yeah, if you just go to Darmesh.com, that'll have links to the other places. And probably most often on LinkedIn, as it turns out, a topic for a whole other day. But, yeah, awesome. All right. I'll let you go. Darmesh, thank you so much for being here. Thank you. Bye, everyone.

Starting point is 01:41:20 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 lenniespodcast.com. See you in the next episode.

Lenny's Podcast: Product | Career | Growth - Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO)

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