No Priors: Artificial Intelligence | Technology | Startups - From App to Suite to Platform, with HubSpot's Co-Founder Brian Halligan

Episode Date: October 12, 2023

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

Customer relationships are the lifeblood of every business. And CRM, a key system of record for every business, is facing a sea change. Riding those waves is HubSpot, one of my hero companies. A unlikely S&B marketing software startup founded in 2006 in Boston has over almost two decades become the primary contender to Salesforce through brilliant strategy and consistent execution. And it's as much a community and a movement as a business. They've recently made big bets on AI. Today I'm sitting down with Brian Halligan, founder, long-time CEO, and now executive chairman of HubSpot to discuss learnings from the founder journey, staying innovative as an incumbent, the impact of AI on workflow software and his new mission in climate tech with Propeller.

Ryan, thanks for doing this. Welcome to No Pryors. Thanks. I have two questions for you. Shoot. Why were we an unlikely success? Oh, I hope that is not offensive. I guess.

Because of Boston? I think because of Boston. because in 2006 time period, the companies, you must have heard this from VCs, the markets that people thought were worth going after were like high-end enterprise in a small number of categories. Yeah. Right? And so the idea that you'd sell software for SMBs to manage an online presence and do social, like that, that felt unclear that you'd become a, you know, $25 billion plus business.

Interesting. It was clear to us. That's what makes you the founder. Okay, I have another question for you. You referred to us to a hero company, by the way, I'm honored. Like, what's number one on your hero list? Oh, man. I feel like I'm going to offend friends if I choose one. What's your criteria? If I think the product has changed the world, if I think, like, the people just made really interesting decisions.

I'd probably say, like, but this is just because it's the one I'm closest to, Figma. Yep. I have a lot of admiration. for Dylan and Evan, and, like, I think they changed how a lot of people worked. And it was also, like, not obvious at the beginning. No, no. I'm with you on that. But, yeah, good questions.

I'm supposed to be asking the questions. It's supposed to be easy for me, Brian. All right, fire away. Okay. So, Brian, you actually started, I think, as a sales leader for PTC, like famous enterprise sales organization in Asia. How did you go from that to the founder of HubSpot? I actually started as PTC's first BDR and its headquarters in Boston and moved in sales and channels.

And then they, they were, the company was going incredibly well and they moved me over to Asia to start it. So I went to Japan and I lived in Hong Kong for a while and, yeah, we're there for 10 years. It's a really good run. But I just think of my, I have three chapters in my story. Chapter one was PTC, Enterprise Sales, Eat Your Young, really a hard charging cult. culture, sales-driven culture, terrific company in some ways, unusual culture, tough place to work. I left there, and I had a second chapter that couldn't be more different, started the sales organization for a company.

No one's heard of anymore called Groove Networks. And Groo is famous for his founder, a guy named Ray Ozzy, is the father of Lotus Notes. And it did okay. Like, we got the 20 million of revenue and Microsoft bought it. And it's like a little part of SharePoint now. but it really didn't tip. And what was interesting about that company and learnings for me was Ray was a product person and the company was very much a product company.

And he referred to himself as a social anthropologist, which I thought was really interesting. He sort of watched where technology was going and he thought about how human behavior would change and then he tried to create something kind of in the future to match it. And he did that with notes, sort of hit the nail on the head. He did it with Groove. It was a little early. Groove was like a little bit of Dropbox, a little bit of Slack, a little bit of Notion. It was on peer-to-peer platform just a little early.

Microsoft bought it, but I learned a lot how to envision and build compelling products. He was very early on product like Grow a Freemium model. And I don't know anybody else in B2B was really doing that at the time. And so I get to, we didn't figure it out, by the way, but we got to learn a lot along there. And then I went back to business school. And those three sort of, you know, this sort of right-wingish PTC, this sort of left-wingish groove and this sort of get back to basics, MIT came into my head and really influenced me personally, and I think still influence HubSpot in a lot of ways.

When I say unlikely, I just think it's actually amazing that there was this idea that was happening out in the market, like a change in the world. You should describe it, but the way I think of it is like people don't want to be advertised and sold to, right? They're out hunting for solutions. They want to be educated. and this thing around inbound marketing, around creating a presence for people to come find you

and giving that value to your customers, your end users. Like, you really created that category. Like, how did you even discover the idea? Tell us about the beginning. We started in business school. There were two ahas that led to it, and I have a terrific co-founder, Darmesh, had one, and I had one. Mine was, while I was in B-school,

I was sort of an EIR at a little, venture firm that was going nowhere in Boston called Longworth. And they had me working with their startups to help them teach them the PTC way. How did you build PTC? Can you show us the playbook? And they all were doing the PTC playbook. They were all buying lists and cold calling. They were all buying lists and spamming people. They were all doing other people's trade shows. They were hiring PR agencies, buying ads. And it just didn't seem like it worked at all. Like people were immune to the marketing at that point. They had caller ID all of a sudden.

They had ad blocker. They had DVRs like, humans got really good at that point at blocking traditional marketing out. And so it's kind of wallowing in like, my playbook doesn't work. And then Darmesh blogged his way through business school. He was an early tech blogger.

He had a blog called onstarups.com, so pity you didn't keep it going. But anytime you heard an interesting lecture, he would write about it. And I was looking at his Google Analytics reports in comparing get to all my wealthy venture-backed startups with like money and teams and expertise. He's crushing them.

Like, by two orders and magnitude more interest in this crappy little blog. And I started describing the world as, well, my folks are doing outbound marketing and he's doing inbound marketing. And you've got to match the way you market with the way humans actually shop and buy them. Humans starting to use Google. They stopped subscribing to magazines. They started subscribing the blogs. They started using the social media stuff.

And so we sort of captured that. shift and then said, well, let's build a platform to help marketers move from the old school outbound way to the new school inbound way. That was the basic foundational idea. And that was kind of chapter one. We've had a lot of chapters. Yeah. Well, one thing that's stuck through many chapters has been the inbound conference, a conference that over 100,000 people go to. You can give me the stats. Like people like Barack Obama speak at it. It's sort of a pilgrimage for people who work and marketing? Like, how did this happen? Why did you do it? So in the early days, a HubSpot, the way we described ourselves, the venture capital is like

yourself was. At the time, Salesforce just at SFA. Salesforce.com is to sales as a hotspot as to marketing. And the good thing about that is it's stuck on B.C.'s heads. It's like, oh, that sounds like it could be a good thing. Like, we would go to Dreamforce every year. And by the way, we'd sit at Dreamforce and we sit there being like, God, I hope they don't announce a marketing product this year. Literally the two of us. to sit there like, please don't announce a marketing product. Anyway, we would go and we said,

that seems like a decent idea, but it's more user conference. Let's create like a community thing that people will come, even if they're not HubSpot customers. So we said, let's create this inbound thing. And we just gave it a go.

And we had a room of 400 people in the Marriott and Kendall Square. We invited Seth Godin and David Miriamer Scott and Brian Solis, these folks are still floating around, who are early sort of acolytes, they may or may not call it inbound, but basically the same ideas were coming out of their mouths.

And we sold out in like five minutes, and it was really good. And so then we sort of got on the treadmill and just kind of kept doing it every year. I really enjoy it. Like, we had, I'll tell you, we had some amazing speakers like Reese Witherspoon and Guy Raz and people like that. But my favorite speaker I got to interview one of my heroes, Andrew Huberman, who's, he's on my Mount Rushmore these days. And then we have, you know, 12,000 people live, a couple hundred thousand people listen. And over time, when it's kind of turned into, like, it reminds me of a Grateful Dead kind of thing, like the parking line outside the Grateful Dead concert.

It's a community. And it's very much a community. And the thing that people's value most aren't those big sessions. It's a smaller sessions on. Like, what the hell is AI and how do we get our arms around in this market or stuff like that? And people really connect. Yeah, that's, that's very cool. I know you wrote a whole book about this, but I think for anybody who is not a deadhead, right? Like, the Grateful Dead are as much about, like, community, human connection, collective experience as music. A few people know this, but the Grateful Dead were founded in Palo Alto and a little music shop in Palo Alto did their first studio recording at Stanford University. So it's actually a child of Silicon Valley. Oh, interesting. Yeah. It was in San Francisco.

They later went to San Francisco. And then they ended up in Marin there. But, yeah, they're a child of Palo Alto. Yeah. Doesn't strike me as the most counterculture starting point. but we'll take it. Now, one of the things that's interesting that about inbound, you thought about that word,

there was a huge debate in the early days of HubSpotter. What is this thing? And half the people were like, you know, it's internet marketing software, which it was. And a couple of us were like, it's inbound marketing software. And everyone was like,

what the hell is inbound marketing? One of the early battles and decisions we made is let's try to create a category around this idea of inbound versus outbound. and that did work, and we still have the inbound conference. I would just say we tried to do inbound sales, failed. Very difficult to create a category, it turns out. I tried to create this thing called, instead of the funnel, it's the flywheel.

I don't know why it worked, but some of the things we did that seemed to resonate was there was an enemy outbound, and I think it always helps to have an enemy. It was a little catchy. It seemed to stick on people's minds. a whole bunch of other people like Seth Godin and David Raymond Scott and Brian Solis were kind of talking about similar things and we just kind of stuck a word on it and then we just worked it we wrote each wrote two blog articles a week someone invited us to like a flea market we would go and speak we uh wrote a book which is a crap ton of work uh nice and weekends so anyway we did that

and we created a category and for those of you listeners going through that battle I would say it worked, and it's been one of our cases of success, but it was a ton of work, and it's very hard to pull that off. Were there a few things that made sort of the sales terminology not as successful? Because, like, what we should talk about in a second? The sales product for Hubbot was incredibly successful. Sales products are on fire. That's our kind of second act. We tried to call it inbound sales, but sales leaders are like, no, no, no, no, no, no, we do outbound sales. You don't get it. We do outbound sales. That's like what we do. And marketers, they're like, No, no, no, no, we do outbound marketing.

And the thing is, the marketer's bosses were like, I searched on our company in Google, and I couldn't find us, you know. And I went on this, this thing called Facebook, I got an account there. They were getting asked about it, but I don't think the CEO was asking the head of sales about, why are we getting more inbound leads? And then they kind of put that in marketing. Anyway, it was sort of, it was pushed back on by salespeople. We really had to support outbound selling to build a viable and big business on that side.

We have some friends in common, Elias and David, who were acquired into HubSpot via their own startup at the time for performable. I don't know if you guys did any other acquisitions that were important. This one felt important. What did you learn about acquisitions from this? That one was important. And I could kind of give you the background on that. When Darmesh and I started it, we were really about the top of the funnel. How do we help people turn total strain?

into visitors for their website and then turn them into leads. But we hadn't really thought of like a database, segmenting the database, drip campaigns via email. Honestly, we weren't that passionate about it at the time. We didn't have deep domain expertise about it. And so little known fact at the time,

we actually closed around with Sequoia. And some of the proceeds we're going to use, we're going to acquire a company in what we call MoFood, middle of the funnel, the database size, segmentation, drip marketing. all that stuff. We made a bid for par dot, couldn't get to a number. I went out to Marquetta's CEO and proposed Marspot to merge the company's merger of equals I often the CEO gig. They weren't interested in the time. Too bad. I know. I think that would have been interesting. And then,

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

it for a long time. And you've got to zig when everybody else says you're going to zag. And we've had a few of those in our history. Okay, the first one was SMB. And I kind of think of us as the M and S&B. We're sort of the startup scale up. That's what we sell to. We don't sell to the big slow-moving enterprises. Everybody thought it was a bad idea. Every venture capitalist we spoke to, we got lots of notes from venture capitalists, and the reason was they didn't like that idea. And the question that would all ask is, well, who else had done it?

And at the time, it was into it, and they'd say, who else? And literally, there's no one else. And they're like, why? And we explained, well, historically, you couldn't catch your cost to acquire a customer down because you needed humans to do it. And there's new ways to acquire customers using, you know, in-bam marketing. And then you're going to lose customers. So you need to up sell your existing ones.

You've got to get your total lifetime value up in your revenue retention rates over 100. If you get that math to work, you can build a scalable business. But people were very skeptical. Our board members were very skeptical. Even when we went public, people were very skeptical about it. I still get asked about it all the time. But we zig when everyone else zagged. And I, you know, we diluted a lot more than we would have.

We just went to the enterprise like Marquetto did. Everyone wanted us to be Marquetto. Just be like Marquetto and Elk. We were like, well, there's our, there are. already there. Why do we want to be like them? The world doesn't need a third one of these things. The second kind of zig when everyone else is zagging was I described earlier how Darmesh and I would sit in the audience at Dreamforce, hoping that Salesforce.com didn't wait when I wake up one day and say, we're going to be the Salesforce.com of marketing. And of course,

they did one day. And we saw that coming. So they bought four marketing companies in one year. And we went from being their best partner to kind of an enemy. And we pivoted. You know, we had been talking about pivoting to CRM, but we pivoted and we said, let's, let's go to CRM, let's come underneath them, let's zig when everyone else is asking. Let's not make it like theirs. Let's make it incredibly easy to use. And let's make it freemium. And everybody thought it was a terrible idea.

Our investors are bored, most of employees. But we saw it. We used Salesforce. It's hard. It's expensive. And we were like, let's make an easy. inexpensive one. And that was her second product, sales product. That was almost 10 years ago. And now we got a, we have a marketing hub, sales, hub, service hub, ops, subs, CMS, Hub, Commerce

that we have a whole suite now. But we drew on a whiteboard at an offsite that we were going to transform the company from a marketing app to a CRM platform. And we drew on a whiteboard. We were going to go from a pure inside sales organization to we called it freeing them. People call product like growth. And honestly, we're still on those journeys nine years later. We're filling out that platform and we're getting better and better at that PLG motion. But I'm a big fan of zinging whenever else is that. So I have to stop you here because it feels so, like, it is not under, I mean, it is under your control, but it's certainly not deterministic in terms of launching a Fremium product, especially as a company that didn't start exactly that way.

Yeah. How did you have the confidence to say, like, we can get something organically, adopted, and we're going to stick with it. And can you talk about that? Because, you know, when the sales product for HubSpot did work, it really worked. Like, it grew faster and was more profitable than the original marketing business. It made you guys really important and strategic. The story played out as your strategic offsite described. Yeah. But I think most people, most product teams, most companies would say, like, you can't just make a freemium product, right? Or if you know you can, you should call me. Right. I think what's kind of interesting about

out that pivot. We were eight years in and we pivoted. We wanted to build a West Coast company in the East Coast. We wanted to build a multi-billion dollar company. The one thing Darmesh and I had in common, we had been somewhat successful earlier and we wanted to swing for the fences. So we were willing, kind of risk-seeking a little bit.

And a lot of people asked me, like, how do you become a multi-product company? How do you go from app to suite? How do you go from suite to platform? And the answer is with great difficulty. So back then, we wanted to do both things. We wanted to build a sales application, and we wanted to build a frame of motion. So it's kind of two changes at a time, which maybe wasn't a great idea. The way we did it

was like a lot of things that had HubSpot, we copied Apple. And there's so many stories about how Steve Jobs built the Mac. And they had a separate building, and they had a separate log into that side of the building, and a separate stack. And everything was different over there. We said, we're going to have to do that because it's such a big change. So we had a whole separate It's hard of the building. Then we took three leaders inside of HubSpot, Brian Balfour, who people probably know, a guy named Christopher O'Donnell, who people may or may not know around product for us for a long time. And a guy named Mark Robar, who a lot of people know, he's kind of a sales professor of HBS now.

And I jammed them together, and I said, let's go, let's build this thing. And I'll do whatever I can to help it. But let's keep, I'll keep you isolated from all the, yes. The truth is, those. Those three couldn't come to grips on what the vision of the thing was. They disagreed on what the vision was. And one of my lessons learned there is people need to really want to come together. You can't kind of mush people together.

They're immensely talented. But there wasn't the optimally with the three of them. So anyway, we found other gigs and some left. And what ended up happening is I became the co-founder with Christopher O'Donnell. And we made a couple decisions on what the strategy would be. And we just kind of ran fast. And it took us a good two and a half-decent sales product out there and a half-decent PLG motion.

And we kept it separate. So we had separate sales team selling it. It was PLG motion. And the marketing salespeople were like, you know, we really just want to sell that thing. We're like, no, you can't sell it. We can't sell it. We had a separate instance of HubSpot to manage all these, everything. And then one day we're like, okay, we're ready.

Let's merge them back together. And we did a counterintuitive thing. We took the sales business and we acquired the marketing business. So we took that freemium PLG motion and we applied it to marketing. We took a bunch of the leadership and applied it over the marketing side. And so I say with great difficulty, like individually for me, dealing with the fallout of those three, trying to figure the strategy out, having patience through it.

Like I've made a lot of mistakes and I made a lot of mistakes in there, but I consider that maybe my best chapter inside HubSpot is pulling that off. Yeah, it's extraordinary. You just said you wanted to build a multi-billion dollar company, like a West Coast company on the East Coast. So I also happen to know Christopher O'Donnell, and he said the one question to ask you was how HubSpot succeeded more after the IPO when so many Boston-based companies have struggled. Yeah, see, Tom is a very smart man.

Okay, a couple thoughts on that. I listened to a podcast with Mark Andreessen the other day. He's obviously a big seal account valley booster. And he talked about it. he's not crazy about investing in companies outside Silicon Valley because the companies tend to optimize for like a local maximum like you want to be the biggest tech company in Boston or you want to be the biggest tech company whereas companies in Silicon Valley want to be the bigest tech company you know want to beat Apple want to beat Google and I think he's right and I've never

heard anyone say that before when we build top spot we always say we want to build a West Coast company on the East Coast so we like once a year we would drag the entire management team team out to the West Coast to visit a whole bunch of people that were respected that would push our thinking. We were really built like a West Coast company. And the East Coast companies were just thought a little bit differently. I think one thing we did around the IPO is we always said the IPO is starting line, not the finish line. Starting line, not the finish line. We just said that a million times and I meant it. Do you know how much this worked, Brian? I think it was my very first conversation. I have no idea how this came up, but my very first conversation with Chris,

he brought this up, and he said starting line, not the finish line. It has permeated, you know, at least your leadership incredibly deeply. Interesting. Kermishth and I work really closely together. So I'm not shocked. The other thing we did is when you go public, companies change a lot. And the biggest change that happens to startups when they go public is you need to name like five officers. And these are five people who have access to all of the information in a given time.

in exchange for all those information rights, they're locked into trading windows that they can trade the stock in. And then you have to block lots of important information for the rest of the employees. We flipped that and we said every employee, the terminology is a little different, but basically every employee has bought,

frontline support person, anyone, they're all officers. So they all have the same access to information. Everyone's locked into certain trading windows. So it didn't feel like a big change when we went public, and I think that helped a lot. The other thing was it was quite clear that we were heading towards being a CRM platform. We had our second product in the market.

On the IPO, Rocho, it was super awkward because, you know, we have whatever, $200 million marketing business, and we have this like $1 million sales business. And it was like the last slide. And everyone just was like, yeah, whatever. Why? Don't even bring that up. The bankers, like, don't even bring it up because no one gives any credit for it. But it was a big initiative inside the company so people could see it.

And people believed it. And they were, they were like working on that despite, you know. Yeah. I think everyone believed us in that both Darmesh and I wanted to build something big and special. There's a line we always use that we want to build a company our grandkids to be proud of. And like my dad had a really interesting career. He worked for BBN, you know, in his early career. He worked for GE when it was cool with it, and I brag about him. And I want my son Luke to brag about my career and hopefully has kids someday, and they brag about my career and be proud of it. And so that's sort of what we, that's the mantra we use over and over again. I want to ask you one or more, two more questions about, about leadership.

And then I want to talk a little bit about AI. So we're just walking through all of my favorite HubSpot people. So J.D. Sherman, your CEO for a while, at certain points, managed, you know, large parts, entire organization at HubSpot and was there for a long time. In terms of all the founders that listened to the podcast, many at some point think about hiring a COO. How did you guys decide to do this? What advice would you have for for people? We hired, so after we closed our Sequoia round, we bought Performable and we stopped like tracking expenses. We just started spending like drunken soldiers. And we just got distracted. It was a really

good round. We had Sequoia, Google, and Salesforce in the round. And we just kind of took our eye off the ball. We had never missed a quarter and we missed that quarter on the revenue side and missed the expense side by a country mile. We had a couple long-time board members, Larry and David Larry from Journal Catalyst, and they were like, you know what? You could use some help. I was like, what do you mean? Did I think you should hire a COO? And I pushed back. I was like, nah, I got this. I got this. Not really. And so they're like, go see if you can find one. And so I interviewed a bunch of people, and I met J.D. And J.D. was a long time IBM person, which is like, oof. And then he was at Akamai for a long time. It was a CFO at Akamai. Wait, is it, like PTC people are oof?

I mean, IBM was just a huge little company. Like, we were very fast. We were the antithesis of IBM. But he had spent a bunch of time at Akamai, which is a scale up we admired in Boston. It was CFO. And he was trained. on time type of person, and he's just a wonderful, funny, great culture ad. And so we convinced him to join the CEO. Certain times he managed small parts of the organization, certain times he managed a lot of the organization. It was a really good call. And I thank my board members for that heads up. Later on, my board also advised me to get a coach. So I hired this guy who's like a psychology professor slash coach from Columbia, who's really useful in coaching me over time. And then more recently, I decided to step down. You know, we got to $2 billion in revenue.

I really didn't think the road from $2 billion to $20 billion was my forte. I didn't know a lot about that. Maybe a little less passionate about that part of the journey. And we had a wonderful woman, Yomini, that was running go-to-market. And so she's the CEO now, and I'm the chairman. So I think CEOs need to be open-minded about their strengths and their weaknesses and fill them in. I think a lot of CEOs probably need a C-O-O. And a lot of CEOs should probably not retire, but move into the chairman role and let somebody else run the day to day of the company.

And they might be surprised how happy they are when they do that. So as chairman now, you still know a lot about and are very engaged in HubSpot. HubSpot has committed to, I think, big investments in AI and in my discussions with your leadership team. Like, what are you guys doing here? And when did you start to think about it? We've had an AI team for a long, long time, but it's more an ML team. It's interesting. We had a call with Sam Maltman two and a half years ago. I got connected with them and I'm like, would you mind if it just picked your brain on AI? Because at the time, there was like an arm

trace for AI. I had people that cost a million dollars. You hire them out of MIT. Now it costs two. Yeah. And this is before Sam Altman was Sam Allman. You know, he actually was before he levitated and walked on water. And he said, first of all, don't hire, don't go hire a bunch of PhDs. You'll never keep up. up with the arms race. He's like, we're at Open AI. We keep losing people to Google. The second thing he said is AI is progressing in a pretty linear way now. And it's getting better, but it's getting better slowly. He said at some point in time in the future, and he said, I'm not sure what that point in time is going to be. It's going to go asymptotic. It's really going to get a lot better. And so he said, keep chugging away and wait until that happens. Basically what we did.

And man, was you right, the second we saw ChatGPT, we tried to invest in Open AI, Darmatia got early looks at it, and we tried to get in the round with Microsoft and had a bunch of discussions with them, and they thought at the end of the day, they wouldn't let us in, which is kind of bummered. But, yeah, we were on it pretty early, and as soon as we started seeing it, and Darmatia started playing with the early stuff, we started pushing it hard on the engineering product work that, you know, certain things that come along, blockchain came along, and crypto comes along or mobile comes along that are interesting, this is a big shift that's

incredibly relevant to CRM, incredibly relevant to the way humans will shop and buy, and this wasn't something we could kind of half measure in. So we kind of pivoted right into it right out of the gate when Chachipitin first came up. You've been looking at how businesses engage with customers for 20 years, and you've been really, really right about some of the macro shifts. Like, what do you think it's going to happen about how we engage or how customers buy? I think one of the obvious things is how much better these things are getting and how quickly they're getting better. And everything you've got on your website and every social post you ever put out there, it's consumed and understands it. And so I think of Google,

someone goes to Google, they ask a question, it gives you a list of blue links to click that blue link. That prospect lands on your website. But you think of chat GPT, yeah, they keep asking the questions about you. They don't necessarily have to go to your website. And so I think that'll be a big shift and having lots of high quality content is going to be important, but I think one of the things is not going to work is using AI to just create tons of content.

I think Sam Olman and all the people building the other models are going to look at similar signals to Google. They're going to say how many links are into the site with the power of the links, other signals of credibility. You've got to create really, really, really high quality content if you want to get found in there. The other thing I think people need to do

is give folks a reason, to come to your site. And I've been a big advocate of ungate everything. You used to have all this white papers, all this crap behind Gates. And I'm like, put it in your blog, whatever. I actually think maybe Gates come back a little bit because what's the reason to go to your website

unless there's some additional content you get beyond that login? And I think PLG and all that still is very, very viable. But I do think the world for marketers and seller is going to change a lot. How do you, how does AI change, like, what you build at HubSpot? How are customers using what you have already built? Yeah, we built a bunch of stuff, some's in beta, some's in V1, and it's getting nice adoption.

Like, the really obvious thing we did is content assist, so you're writing a blog article and you want it to write it for you, you want an image, landing page. That's got really nice adoption. And we built like a campaign builder. So I think of AI writ large and workflow apps. It used to be like humans go and create all the workflows. And now AI can just look at what's going on and create a better workflow for you. So sort of campaign assistant has been super popular.

We have a thing called ChatSpot, which is basically a layer on top of Open AI. We use club. We used Anthropics models. We use different models for this. And then our API, so it kind of pulls all this information together. And we're seeing a lot of people, particularly casual users of HubSpot, not want to, you know, go through 10 clicks to build that donut shape report inside a HubSpot, but just say, hey, give me the donut shape report about leads last month from geography. Just a whole new UI for this stuff, I think is quite interesting. We're just starting to build agents. We definitely got bots. So a lot of our customers are trying to use our bots on their website for support for marketing. I think what will be interesting for companies is, Support organizations and like BDR and SDR organizations are going to get incredibly efficient as these bots get smarter. And they're just going to be able to answer so many more questions, 24 hours a day.

They're not going to be tired. They're not going to be hung over. Not going to make mistakes. They're going to make mistakes. But I think the world's going to shift a lot in CRM for go-to-market organizations. Mostly a positive ways. I feel like I've also seen, you know, a dozen companies in each of the domains that you, mention. How do you think about now being, I'm sure you still feel like the rebel, but like being

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

coming company at this point. Yeah, you're 20 years in and 26, 7 billion of market cap, right? Yeah. Okay, we had dinner at some point where you talked about the investment in culture at HubSpot and how you and Darmesh thought about it. It shows up in the results. You guys are repeat winners on Glass Store in terms of both like CEO to work for and best place to work. How? Yeah. The early days of HubSpot, we didn't want to talk about culture, HR, any of that stuff, the first three years. Like culture was a poor letter word. No one should bring it up.

You can't measure it. It's soft. And then I joined a CEO group about three years in. And I largely joined that CEO group because one of the members was a guy called Colin Engel, who is the CEO of I Robot that makes those room a vacuum cleaners. I would describe my relationship with Colin in two words. the first is man the second is crush a major man crush on I showed up for the first meeting there's nine CEOs around the table

and sat right next to Colin and I didn't know this but they picked a topic and they would just go very deep into one topic all day and it's like CEO couch down and the topic of the day was culture I was like this is such a waste time I can't believe I've spent all day talking about culture And so I didn't say anything all morning.

And I didn't see him at lunch asking him a question of product and innovation. And Colin said, you don't like this culture topic, too? I said, no, I think it's a waste of time. He said, culture is how do you scale your company? Culture is how people make decisions when you're not in the room. Okay. Took note to spend the afternoon. And then that next day I saw Darmesh in the office.

And he said, how's Colin? How's your meeting? It's fantastic. I loved it. He said, tell me about it. I said, well, it was all about culture. That sucks. I said, no, Darmesh, culture is how you scale the company.

Culture is how other people make decisions when you're not in the room. And so we started chatting about it. And I said, why don't you be the culture czar? And in a very weak moment, Darmesh said, sure. He's not one to take on initiatives like that. And we actually hired a terrific professor of ours from Sloan to do a project to survey our employees about the culture. And she didn't end up promoter.

She said on scale one to 10, how likely you refer her, HubSpot, Y, to a friend. And we got the results back. Almost everyone said they like the culture, which is a real surprise to us because we didn't allow people to talk about that. And then we said, can you build this like a version one of a culture deck, which was like describing our culture was like to work here. There was an employee company. And that was our culture code. And we totally ripped off Netflix at the time to have something called the culture code and really worked for them. And Netflix had a very, very unique culture.

And we built the same type of deliverable very different than Netflix, but the same format we posted it up. and man, it got a huge up tick, and it still does. We'll link to the presentation. We have two products. We have a product that we sell to customers, and if that product's high quality and unique relative to competitors, it'll be like a magnet that pulls customers and retains them. And we have a second product that's our culture.

And if it's unique relative to the competition and really high quality, it'll be like a magnet that pulls into employees and retains them. So we really took it quite seriously. We edit that culture document every six months to keep it fresh and make sure we're walking the walk on it. We still do a net promoter survey once a quarter. We publish every answer that doesn't include really bad swear words and things like that on our wiki so everyone can see what everyone else is saying.

We address many of them oftentimes like, hey, we're not going to do this, but we heard you. And so we take it very, very, very seriously. Are there answers from those surveys that have surprised you over the years? I mean, you're in any company, people are going to complain about, virtually everything, everything. At one point, we put, we had a, we put a smoothie bar. We had a smoothie bar. You are a Silicon Galley company. Totally. Smoothie bar. Yeah. And I don't know why this was the case, but we, we didn't have protein powder for it.

And I don't know if it was like, the person in charge was just, it was too expensive or it was hard. I don't know why. But for some reason, there was no protein powder. There was like a thousand complaints about the lack of protein powder. It was, we called it smoothie gate. The other thing I think we did right, by the way, Sarah, was we, at least for us, we didn't hire someone who was a career HR person. We have a woman in marketing who just was a dog on a bone about people issues all done.

You should talk more about people issues than marketing issues. And we said to her like, why don't you just come and be our first HR person. I don't want to do that. I want to be HR and we'll marketer. And it took weeks, months of convincing her and she finally did it. Katie Burke, she still runs our people ops. And she's the one who caused smoothie gate and still will not give in on the protein powder. There's no protein powder?

It's still the smoothie gate. It's like eight years later. Oh, my gosh. HR people are tricky to hire because in HR, you've got recruiting people, you've got compensation people, you've got culture people, you've got D&I people, you've got benefits people. And, you know, if you've got a person who runs HR, they likely grew up through one of these things and doesn't know much about the others.

Very unlike sales or service where they really rhyme. Most of those things in HR, they don't really rhyme that much. And so it's the one place where you can take a real athlete who's smart that can think in first principles and figure it out. And that was the route we took. Okay. Let's talk about how, you know, your spending time now, you co-founded a firm called Propeller Ventures, which focuses on developing ocean-related climate technologies. Why'd you do that? I got in a terrible snowmobile accident two years ago, and I broke 13 bones, I had five surgeries, and I was lying there in the snow thinking I was going to die.

I actually was like, I don't enjoy running the day-to-day of HubSpot anymore. I don't think I'm as good at this size as I was, earlier sizes. If I make it through and live, I'm not going to come back and do it. And I, in very shortly thereafter, I'd like to get into the climate game. It's the existential crisis for life. I'm sort of a mission-driven type of person. And once I got healthy, Yamini took over to CEO. know, I started meeting with climate people, you know, founders, VCs, professors and whatnot.

Everyone in climate's depressing, like, not optimistic and depressing. So I sort of did a roadshow. And then one day I visited a place called the Woods Hole Oceanographic Institute on Cape Cod. Surprisingly, oceanographers are really optimistic about climate change. Like the ocean absorbs much of the carbon dioxide from the air. absorbs almost all the excess heat we're producing. It got us out of the last ice age. It's the only thing of scale that can really get us out of the pickle we're in.

It doesn't matter how many trees we plant. We can't get there with trees. They die and give their carbon, a lot of the carbon dioxide back up. So, all right. And so I started volunteering for them and helping them. And I was like, you know, we need venture involved. We need money and venture, not just research. So we started a venture fund's called Propelor, $120 million.

dollar fund where we back startups at the intersection of climate change in the ocean. And I did that a little over a year ago going great. So far so good. We made about ten investments. Amazing. We're at a time here. Is there anything that you were hoping to talk about that we didn't or anything you want to add? No, I want to say, I think you're doing a great job. I'm really happy you start your own fund. I'm really happy to focus on AI. I'm really happy be an investor in your fund. I really wish I invested more, and I'm proud of you. Oh, that's very kind.

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