The Learning Leader Show With Ryan Hawk - 153: Brian Halligan, CEO of HubSpot: How To Make Them Come To You

Starting point is 00:00:00 So we espouse becoming a media outlet in and of yourself. We say you should create a great blog. We say you should create a great podcast like you've done here, Ryan. We say you should create lots of videos. And it used to be, I think about 10 years ago, gosh, it was expensive to start a radio station. I mean, you have to buy the bandwidth. I don't even how you do it, but millions of dollars start a radio station. Today, I mean, Ryan, you started your podcast.

Starting point is 00:00:25 It costs you nothing, basically. And, you know, 10 years ago, you started a newspaper. My God, it was expensive. Today, you started a blog. It's really cheap. 10 years ago, boy, you want to start a TV station. God, love you. There were only, I only had six TV stations growing up.

Starting point is 00:00:40 Gosh, it's become cheaper. And so we take advantage of those shifts to enable people to create content and use that content to pull people in and turn their business into a magnet for their industry and disrupt all their competitors. That's the idea of inbound pulling them in versus trying to interrupt them doing the old school outbound.

Starting point is 00:00:56 Are leaders born or are they made? Our host, Ryan Hawk, believes that leaders can be made through determined, focused work on learning the art and science behind the makeup of other successful leaders. Now it's time to inhale knowledge and exhale success. You're listening to The Learning Leader Show with Ryan Hawk. Hey, and welcome to The Learning Leader Show. I am Ryan Hawking. Thank you so much for being here. What an impressive featured leader tonight.

Starting point is 00:01:37 We have the co-founder and CEO of HubSpot, Brian Halligan, as our guest. In addition to running HubSpot, he's also co-authored two books, marketing lessons from the Grateful Dead and Inbound Marketing, get found using Google, social media, and blogs. Ernst & Young named Brian the entrepreneur of the year in 2011. I love this talk, a few of the topics we got into, how he's grown HubSpot from nothing to a $2 billion business, and dealing with some negative press, negative news. A former employee, Dan Lyons, a great writer, wrote a bestselling book titled Disrupted. And I brought this up, and I appreciate the fact that Brian was so transparent to describe what was going on through his mind and the company when this negative news hit and how they handled it. And then why the profession of selling is changing and how we all can understand it better to succeed in the future. You're going to love this one with Brian Halligan.

Starting point is 00:02:37 Brian, so excited to have you here on the Learning Leader Show. A question to get us rolling, and that's around sustaining excellence and the fact that you've done a fantastic job at this throughout your career, and you've also done a great job of spending time around others who have sustained excellence. And I'm curious from your perspective, what are some of the common themes or characteristics people who have sustained excellence all seem to share? How are you doing, Ryan? That's a very interesting question.

Starting point is 00:03:14 And here's the one way to think about it is I'm a co-founder and CEO of this company HubSpot. It's going pretty well. We're 10 years in. One thing I've noticed about sustaining excellence, I don't know if I wouldn't even characterize this as excellent. I characterize, you know, Steve Jobs is excellent, like people like that. So we're not in that league. But to the extent that someone would describe us as being very good is willingness to change. And in particular, gosh, I've seen a lot of changes from when I was CEO and co-founder of HubSpot in its first, you know, one, two, three years in kind of startup mode to the way I need to run the company in what I like to refer to as scale up mode.

Starting point is 00:04:00 Like, boy, the toolkit for the CEO, it's a totally different set of tools I've had to develop, most of them by making mistakes as they move from small to life. And I suspect people who want to sustain excellence as CEOs and companies, they all have to go through this journey. And it's it's kind of a mumpy one. I, you wrote a great piece. I think it's titled Scale Up Leadership Lessons you've learned over nine years as HubSpot's CEO. I read it in preparing for our time together, which I found to be really interesting because as a writer, you are, at least to me, seem very transparent, which is aligned with the core values of your company. Talk to me about the, I'm curious about the beginning stages when you are looking to create a company or what stage where you were at in your life as HubSpot was born? I was in an interesting spot in my life.

Starting point is 00:04:58 I never thought I would start a company. I never thought I'd have an idea good enough. But a kind of a perfect storm came together. I had a good idea and I had a really good co-founder, this guy, Darmesh, that I started the company with. And my other options were I could go be a VP of sales at kind of an A-lister venture-backed startup here in Boston, or I could go be a CEO at some kind of C-lister startup that was going sideways that they were throwing the founder out. And it was a no-brainer. It turned out probably the best decision I've ever made to start HubSpot.

Starting point is 00:05:32 But I ended up starting HubSpot at that point in my life. And even, you know, I'll tell you one of the funny things about HubSpot, it looks at a lot. It looks like a rocket shift from the outside from day one, but it's been slow and steady as she goes. Like it's lots of going forward two steps, back a step, going forward two steps, back a step, lots and lots of little decisions adding up. And no silver bullet. There was no one decision or one thing we did that changed the trajectory meaningfully. It's just been steady as she goes, constant improvement in the business. It's been different than I thought it would be.

Starting point is 00:06:09 Quite frankly. What advice do you give one other startup CEOs, maybe if they're in the beginning stages of their company, I assume now that it's been some time since you've been there, nine, ten years, that you are a person that others look to for advice to say, how do I deal with this? How do I, you know, from the littlest details to some of the bigger scale up portions of the business, if people are even lucky enough to get to the scale up portion of their business, because, as we both know, most, not most, but a lot of them struggle and fail. So what is the, what's the common advice you find yourself giving to people in that mode?

Starting point is 00:06:50 Two things I say. I get that question a lot. First is find a good co-founder. It's tough to start a company by yourself. It's lonely. It's hard work. And when you find a good co-founder, you've got to be sort of value aligned and you've got to be skill aligned. Like in my case, I'm more of a sales and marketing person, my co-founder's technical.

Starting point is 00:07:13 There's a bit of a one plus one equals three that happens with us that's quite helpful. And we've been at it for 10 years and we kind of see the world in a very similar way. So that's the key first thing. Get a good co-founder. Don't get four or five. You have four or five co-founders. You end up with four or five people around the table making decisions. You tend to make very conservative decisions when you do that.

Starting point is 00:07:31 You pick lowest common denominator roots. And I think when you're a startup, you need to take a lot of risk. You need to swing hard. and you need to fight conventional wisdom kind of at every turn. And the more people around the table deciding things, the less likely you are to do that. The second thing is I feel like startup founders spend an awful lot of time worrying about stuff that won't ultimately matter if you don't get through product market fit. At the end of the day, you need two things.

Starting point is 00:07:56 You need a product or a service offering that is valuable, that's useful, that is really, really improve someone's life for a business's productivity or helps them make more money, something that is inherently quite valuable and works. And you also need a product that's unique. And without it being unique, it's no point in having it be valuable. And so to the extent possible, you should try to spend near 100% of your darn hours in that first six months or year trying to get that right. How do I get to product market fit?

Starting point is 00:08:27 But beyond product market fit, how do I get a product that fits in the market that's truly valuable in the market and has some level. of uniqueness relative to all the other competitors out there. And it turns out that sounds easy, but there's very few companies that actually pull that off and are able to sustain it. So those are the two things that I would say is pick a great co-founder that complements you that's value aligned. And secondly, don't worry about all the BS.

Starting point is 00:08:54 Don't worry about spend a lot of time with lawyers or business development or branding or any of that stuff. Work on getting your value prop and your product right and getting some customers who are delighted in getting your value prop to be unique. And the rest is kind of BS. For the people listening that I've not heard of HubSpot, how would you describe a couple things? One, what is HubSpot and what does it do for its customers? Sure. The initial insights, so when we back in those days, we had two insights that led us to HubSpot. One was that humans in general are sick and tired of being marketed and sold to.

Starting point is 00:09:34 and are getting really good at blocking salespeople and marketers out, whether that was your DVR back then or caller ID or spam protection or ad blocker. It's just getting nearly impossible to interrupt your way into somebody's life. And the second aha we had was that the way people actually live and work and shop for stuff has changed. And they spend an increasing amount of time using Google to find products living in all these social media sites. and that's evolving very fast, and living in the blogosphere, and the ability to create content and the ability to influence, the ability for you to become a media outlet has become much easier.

Starting point is 00:10:14 So those two ahas that were put together, and we sort of said, let's think of a new way to market and sell that actually matches the way people shop and buy. And we called it inbound marketing and selling versus old school outbound marketing and selling. And then we built up kind of a very much, software platform and some services to help companies make that leap from old school to new school, from outbound to inbound, and help grow their company.

Starting point is 00:10:40 And that's what we are today. You know, growing up, it's just the two of us 10 years ago. Now it's 1,500 people and $2 billion in market cap. It's gone. Turns out we had a good idea. It was valuable. And it was unique. And it still is.

Starting point is 00:10:55 It's more valuable than ever. And surprisingly, it's still very unique in the market. interesting um brian i i bring this up because so at my my wife's company she works at a smaller business and they use hubspot for everything and so before obviously i'm preparing uh to speak with the ceo of hub spot i i naturally asked her tell me why you like it and if there's anything you don't like tell me tell me why and so i wanted to share with you some of her shorthand notes she's only worked there actually for about seven months now but here are some of the things she This is coming directly from a customer, someone who runs business, she runs business development for her company.

Starting point is 00:11:35 Very easy to use. Communicating with staff is simple. Has a great marketing side, a great sales side. It's very easy to manipulate the data fields, one all inclusive tool for contact management, campaign management, design and create emails, all documents from their company's website. They update it through that. They blog through it. All fields are completely customizable. don't have to rewrite code or create a new form field out of the box. It's extremely easy to use and very easy to customize. I thought that was a pretty cool endorsement from somebody who uses your product every single day. Yeah, I like that. You know what? As I just kind of sit back and listen to it, it's pretty similar to what we set out to do 10 years ago. We wouldn't have always gotten that rave review. We would have got, boy, it's great, but there's a ton of bugs or it was hard to use. but that's basically what Darmesh and I set up to do 10 years ago. And we set out to do it for small businesses. I kind of think of it as the Internet.

Starting point is 00:12:38 The Internet's a wonderful thing for so many things. The Internet, I think, disproportionately benefits small businesses relative to large businesses. Your success in the Internet age is much, much more about the width of your brain than it is about the width of your wallet. You don't need a ton of dough to get found online. And so what we wanted to do was enable them to take advantage of the internet. And because we were dealing with small businesses, we said, boy, we need to make it easy. We need to make it something you don't have to call an IT guy to do anything or write me code. And so it warms my heart to hear that review.

Starting point is 00:13:12 The phrase you used was inbound. And so obviously I've heard of this and understand the inbound methodology. Could you share what exactly that means for those of us or for those people listening? who don't, or maybe they're turning their head a little bit, saying inbound methodology, what does that mean? Sure. I feel like, let's just take marketing and then sales. The way marketers have traditionally marketed is they will buy a big list of emails and they'll

Starting point is 00:13:42 call them or they'll email them. That's sort of a classic piece of the playbook. And gosh, it just doesn't work anymore. I don't know about you, but I never answer the phone. I don't even have a phone on my desk anymore. And I get so many emails, there's no way I'm answering a cold email. And then marketers do a lot of advertising. Gosh, it's gotten hard to do advertising.

Starting point is 00:14:06 More and more people have ad blocker software. It can work in social media. It's starting to work pretty well on Facebook and Google. It can work. It's not cheap, but it can work. That the traditional playbook is broken. This idea of going outbound, interrupting them. The idea is how do you do inbound?

Starting point is 00:14:20 How do you have it such that, let's just say you're selling, whatever you're selling, you want it to be such that any time someone's in Google, anytime someone's in Facebook and Instagram and any social media set, they just keep tripping over your brand through an interesting piece of content. So we espouse becoming a media outlet in and of yourself.

Starting point is 00:14:41 We say you should create a great blog. We say you should create a great podcast like you've done here, Ryan. We say you should create lots of videos. And it used to be, I think about 10 years ago, gosh, it was a good. expensive to start a radio station. I mean, you have to buy the bandwidth. I don't even how you do it, millions of dollars start a radio station. Today, I mean, Ryan, you started your podcast, cost you

Starting point is 00:15:03 nothing, basically. And 10 years ago, you started a newspaper. My God, it was expensive. Today, you started a blog. It's really cheap. Ten years ago, boy, you want to start a TV station. God, love you. There were only, I only had six TV stations growing up. Gosh, it's become cheaper. And so we take advantage of those shifts to enable people to create content and use that content to pull people in and turn their business into a magnet for their industry and disrupt all their competitors. That's the idea of inbound pulling them in versus trying to interrupt them doing old school outbound.

Starting point is 00:15:36 I love, first of all, the emotion that you bring to this, Brian. It makes for great audio. So I can already envision that phrase right there being pulled as a little clip. But I appreciate it. I think you're so right. And basically when you hear the content marketing and, inbound marketing is it's just the ability for to put people in positions to find you much easier where maybe they see this great blog post that helps them in something completely different in their

Starting point is 00:16:05 business and they're like who wrote that and then they kind of they click through it and they're like oh that came from somebody who writes for for HubSpot and then all of a sudden they're back to you guys and then before you know it they're they work at a company like my wife does and they say you know what we're going to we're going to implement this product for everything that we do and they continually come to you because you're making their lives better. Yeah. Now, the other thing I think is going on is a big shift in selling. Marketing has shifted over the last 10 years.

Starting point is 00:16:33 I think selling is going to shift. I just look at a typical salesperson's life. They cold call 100 times a day. Well, 20 years ago, I had a phone in my desk with no caller ID on it, right, in 1996. And it worked. You would pick up the phone. 10 years ago, I had a phone on my desk with caller ID. I was very reticent to pick up the phone.

Starting point is 00:16:57 Today, I don't have a phone on my goddamn desk. So it's like, who are you calling? If you call my mobile phone, there is no way in God's name. That's one playbook that I would argue is totally gone. And is largely a complete waste of time. The second playbook they use is they buy lists themselves, and they'll email people. Again, tough, tough, tough, tough game to play. And so I think the sales playbook's shifting as well.

Starting point is 00:17:24 Sales, I think, is changing more than anything these days. I just think of my co-founder just bought a fancy new car, bought a Tesla. He bought it online. It was an e-commerce site effectively. And that's something like $100,000. You just look at the line that's moving for salespeople. I go to CVS today. I don't talk to a human.

Starting point is 00:17:42 I self-checkup. Everything I do today, I'm dealing with a computer or a bot or a self-checkout or an ATM machine that less and less things are involving salespeople. So the world of sales needs to be evolving to. It used to be you had a salesperson touching every transaction. Now you're only going to have salespeople touching relatively complicated transactions and the rest of it will really be automated and can be done through your website and social media and different channels like email. And so sales, I think, is the next big, whopper shift that's going to happen as the old playbook just feels like it's shaking.

Starting point is 00:18:16 I'm thinking of, so just to let you know, Brian, there are a number of field sales professionals that listen to this podcast, typically in their car, maybe driving in between. There's someone, there's at least one listening right now with his earbuds in or over his Bluetooth in his car or her car. And they're saying, wait a second, Brian, what are you talking about here, buddy? Like, I make good money. I have a good job. I'm driving from appointment to appointment. Don't tell me that my job is going to be eliminated because a computer or, or, uh, inbound or something is going to take over.

Starting point is 00:18:48 What do you think of when you, because there are, I mean, tons and tons of people who are, who have those, you know, they own a territory and everything within that territory and they work at a big company and they sell a somewhat complex product. And they're thinking, you know, this is my career here. What's, what's going on? How do you feel towards those types of sales roles that have been around for quite some time? I'm going to cop out and say, it depends. Like, I used, I started my career selling.

Starting point is 00:19:15 computer-a-designed software. And the deals we did were millions of dollars, and we go into car companies and help them re-engineer the way they built their cars, stuff like that. And I was the sales guy saying, that's a complicated thing that's not just selling a piece of software, it's doing, you know, re-engineering a process. You're going to need humans to do that,

Starting point is 00:19:34 arguably, forever at least, our lifetimes here on this phone call. On the other end of that spectrum, let's say you're selling a piece of CAD software, just to one single architect in an office and that piece of CAD software costs $2,000. That $2,000 piece of software used to be sold by someone driving to that person's office, training them, installing it, doing all that. That $2,000 piece of software today, I would argue should be sold over e-commerce,

Starting point is 00:19:59 the training should be done by video. So the line, I think, is moving. If I were an outside salesperson, I would lean towards products that are complicated, that you need humans to be involved in, not just to sell, but to help that customer understand the value. and realize that value. And that line, I think, is moving up. So if you're selling a product that's in a middle range, you know, a couple thousand dollars or a few thousand dollars a year, I think you could get you, you can feasibly get yourself automated out of a job just like bank tellers are automated, just like CVS clerks are automated.

Starting point is 00:20:31 So many tasks that are wrote that you can do with email and web and increasingly bought technology. And so my advice would be to move up towards more complicated enterprise level partnership types of sales and try to get yourself out of businesses where you can easily sell it online. I think that's happening. I think it's happening fast. I just look at it here at HubSpot. Our core marketing products cost anywhere from $2,000 a year to $100,000 a year. Our sales products are a little less expensive. They're more like, you know, 500 bucks a year to $5,000 a year.

Starting point is 00:21:09 Those sales products we sell, we're selling them all on e-commerce. We have some humans that help and overlay, but almost all of it is done without a human. It's just gotten easier to do it. And I think the shift is afoot and whatever. Capitalism is very efficient. And so I would just be careful. The other thing I would say about sales and outside salespeople is outside salespeople typically aren't spending their day cold calling. I think people who spend their day cold calling,

Starting point is 00:21:36 that's going to get even harder. It's a frustrating way to make a living, a hard, hard way to make a living, that that cold calling is a rough way to go. I think the skill set has moved from aggressive, aggressive salespeople whose job it is to grab onto the ankle of that buyer and pull them down the funnel. It's a much more of a consultative salesperson who's thoughtful, who can understand the problem they're having and map your solution into it. The criteria has moved from aggressive to smart. And so the smarter you are is the salesperson, the better off you are. And I think that will continue to change. I really like that viewpoint of it. You know, Brian, one of the other, I would say, aspects of you and your business that you guys are quite famous for, at least to anyone who

Starting point is 00:22:19 pays attention to these types of things like me, is the culture of your business. You have a slide share with over 2.8 million views titled, code creating a lovable company. Talk to me about the transparency within HubSpot of you guys, you and your co-founder of creating this slide share with anyone who's willing to look at it when it comes to your culture and why you guys broadcast. It seems just about everything that has to do with your company. It's public for anyone to read. Okay. In terms of culture, when we started HubSpot, we said, well, let's build a company. that our grandkids will be proud of us.

Starting point is 00:23:03 How do we build a company that will be around for many, many decades? It'll become a pillar company here. We're based in Boston. It'll be big, and we can be really proud of it. So we built it with the idea that the two of us would work here for a long, long time. It spent 10 years, I think it'll be decades more. And so first of all, we wanted to build a place we wanted to work at. And we had both worked at places that weren't great to work at.

Starting point is 00:23:22 That was the first thing. The second thing is it just seemed to me that the Internet had changed things in terms of how communications happened. how leadership happens, how interactions happen inside a company. And that to a certain extent, the new people coming into the workforce expected a different level of interaction with the company and the leaders. So we said, how do we rethink our culture from scratch, assuming we started it in the age of the internet,

Starting point is 00:23:49 and how do we build that culture in a way that we would love to come to work every day? And how do we build a culture that's unique in a way that'll be a magnet for the people who kind of think like we do in terms of this stuff? And so we sat our butts down and we wrote a culture code is what we call it. And it's about a 20-minute read. You're right. It's on slide share. And we were very much inspired when we wrote it by the founding fathers of the United States.

Starting point is 00:24:17 What I like about the founding fathers is they want to create a more perfect union. And they were certainly influenced by England and by Greece and other countries. And they sat down and they wrote a constitution of how the country will work. How do the parts of government work together? How does a populace work with the government? How do you overthrow the government? All that kind of stuff. And they kind of thought about it from scratch with some influence.

Starting point is 00:24:37 We did the same thing. So we sat down like, given our predilections, how would we want this company to work? How would a modern company work? And we were very much influenced by Netflix and Google, who both had spent a lot of time about this stuff. And then we had some of our influence. And we wrote it down and we published it. And it was, you know, it's been millions of views on SlideShare. I don't know why it's been so popular on slide share per se, but I'll tell you why we published it.

Starting point is 00:25:03 We published it purposely as a recruiting tool. And so we have a unique culture. It's unique in a way that really matches HubSpot. It attracts a unique type of employee, and I think it repels to certain other type of employee that maybe, hopefully they can see what it's like, and they'll be, they'll say, hey, that's just not for me. And so we were very thoughtful about that and we used it essentially as a recruiting goal. What I would advise other people to do is do the same darn thing. Survey your employees, find out where their heads are at, think about what your culture you want it to be, write it down, edit it once a quarter. If you're not walking the walk in the culture, that's a big problem.

Starting point is 00:25:41 So we revisit it and amend it once a quarter and publish it and use that as your own recruiting vehicle. So you guys have, I was curious about that. From a recruiting perspective, how hard you have to work? work to hire people versus the number of candidates coming to you. We have a huge inbound, huge influx of inbound interest. And part of it is, part of it's definitely that we have a unique culture and a unique way of thinking of it. I think that's worked.

Starting point is 00:26:12 What, um, how many people work for Hubside right now? I think it's like 1,500. 1,500 people. Okay. And located where I know your, your primary office is in Massachusetts. Is that, do you have other offices? Yeah, we're in, we have a big office in Dublin in Europe, but boy, it's going great. And then we have little ones.

Starting point is 00:26:31 We have a little one in Portsmouth, New Hampshire, and Australia, in Singapore, we're just doing Japan. But the big offices are Cambridge, Mass, and Dublin, Dublin, Ireland. Yep. The other aspect when it comes to your culture that I wanted to ask you about was that you guys had a negative event happen, I would say, earlier in the year. A book written by a former employee. named Dan Lyons called Disrupted. It created a lot of press, a lot of attention. He spoke negatively about, I mean, the interesting thing about this to me is that regardless of what company you look at, there are going to be employees who used to work at the company who just didn't like it. And I think

Starting point is 00:27:11 that's very common. I mean, we saw some of the stuff on Amazon that came out earlier in here as well. But anyway, this came out in Dan's book, and he's a good writer, and it was interesting. And it I'm guessing created a tough moment for you guys. A stock took a hit. A lot of things were happening. You guys were, you and your co-founder responded with a great post on LinkedIn. What was going on in the minds of the two leaders of the company? And you could speak for yourself here when this book gets published and got a lot of press

Starting point is 00:27:45 and a lot of notoriety. And the bulk of the reason was because he was speaking negatively about your company. I won't lie. Definitely a tough, tough moment in the history of Hubsop for, for, I'll speak for Darmesh too, for both of us. A couple thoughts. I mean, first of all, Dan is a very good writer. He is very funny, and he did a good job on the book from that perspective. But I hope, I think, and I hope people realize that he's a satirist. I mean, he lampooned Steve Jobs for years as fake Steve Jobs.com online. That's how I got to know him.

Starting point is 00:28:23 I really like the blog, ironically. And he's a writer for the, you know, the, the, the, the, the, the, the, the, the, the, the, the, the, the cityical grain of salt. As I read the book, and I certainly read it, he criticized virtually everything about the company from the shape of our logo to our company color, to our company meetings, to our value prop, to our property, I mean, just everything about it. A lot of it I take with a grain of salt. There's a couple things that we're right, and I frankly agree with them.

Starting point is 00:28:56 One of them is diversity. Like a lot of tech companies, we are way too white. We're way too white male. And we're young. We skew young. And I think he points out some, I think he's right about some of his criticisms about that. So we've taken that very seriously.

Starting point is 00:29:11 It's been a ton of time on that in trying to really improve it. And I think that'll improve the company. But you're right to bring up. a tough moment in our company. I'll tell you, the most interesting part about the book to me is he took aim at what I consider one of our greatest strengths. The arrow he shot at Huffspot was at our culture. Ironically, I think her culture is her greatest strength. And I think if you asked her employees that say the same thing. Anyway, it was an interesting chapter. And it was definitely a trying time. I don't recommend it for others. Well, yeah, I thought it was interesting

Starting point is 00:29:46 that, you know, some of the things that were heavily criticized, you know, if you look at third parties rating the company, I think it was number four on Glass Store and one of the best places to work in the country right up there next to Facebook and Google, which I found interesting that that was what was also criticized. And so sometimes I think there, when enough people work out of place, you're going to find some that just aren't happy. And it just so happens that in this case it was a person who happens to be a funny writer who was a journalist. But the part that, one of the parts that I pulled that I thought, I don't know, it just surprised me is when he said HubSpot's leaders were not heroes, but rather a pack of sales and marketing

Starting point is 00:30:31 charlottons who spun a good story about magical transformational technology and got rich by selling shares in a company that still has never turned a profit. And I was like, whoa, I mean, that's, you know, some powerful language that's, you know, some powerful language that had to hit, had to hit you, like, right in the heart? That one didn't, I don't recall that particular part. It was, I sort of take that out a bit with a grain of salt. Go ahead and read it to me again. Let's pick the parts.

Starting point is 00:31:03 Okay. All right. It's right here. HubSpot's leaders were not heroes, but rather a pack of sales and marketing charlotents who spun a good story about magical transformational technology and got rich by selling shares in a company that still has never turned a profit. Yeah, I guess I would push back. I would agree we're not heroes for sure, so that part I agree with.

Starting point is 00:31:25 Are we Charlton's? I would violently disagree with that. I mean, we have 20-something thousand customers. Most of them are incredibly successful with the product. We sell a subscription business, so month after month after month, they resubscribe basically to the product. We have thousands of stories of customers that have grown by implementing our methodology and using our products. So I guess I would take, I'd push back pretty hard on that. I wouldn't, I don't think we're Charlton's by any stretch of the imaginations.

Starting point is 00:32:00 I wouldn't call us visionaries or anything like that. But I think we had a good idea. I think we built a good product. I think the idea and the product put together really work for thousands of people. In terms of getting rich, we definitely made a few bucks. along the line. When we went to the company public, we made a few bucks. But boy, we made a lot of money for our investors. Our angel investors or venture investors, our public investors, we went out, when public at 25, the stock last time I looked, it was at 58. And those investors are hard to

Starting point is 00:32:30 please, and they're very skeptical folks. And I don't, I don't think they think we're a bunch of Charlton's pulling wool over anyone's eyes. So, yeah, the proof is kind of in the numbers right there. I guess I would push back. You know, it's parts of Dan's book that I really buy, that is right. and, you know, push back on that part. You know, the interesting thing, I get this question from others who have, who I've spoken with other CEOs and I get emails from listeners. And so I sometimes feel an obligation to go to certain places. When a CEO starts a company and then eventually takes it public,

Starting point is 00:33:02 people are fascinated by the money aspect of it. And I am too. And so how does that work in your case when you started it and then you obviously raised funds so that dilutes how much you own of the company. So how does it work from a, you know, dollars in your pocket versus your net worth? I'm curious to learn about that aspect from when you started to now where you are after you guys have gone public and have had a lot of success. Sure. It's probably different that a lot of folks think. When you start it, you own, let's say roughly half the company. And then we raised $100 million of venture capital over the first eight

Starting point is 00:33:41 years of HubSpot in a series of rounds, like Sequoia Capital invested and Google invested in folks like that. Every time they put money in, they're essentially buying a piece of the company. And so by the time we went public, I owned today between 4% and 5% of HubSpot. So my slice of the pie got smaller. And it's a game you play. It's a bet you play on the future. Like let's sell a piece of the company. Let's bet on growth. Let's try to get that pie to be bigger. So I don't own half the pie, half of a small pie. I own four or five percent. of a big giant pie now. And it's risky and you have to have a good idea.

Starting point is 00:34:15 You have to execute. You have to hire well. And once in a while, that works. And it's work for us for a number of reasons. So that's how you can think about it. My net worth is between 4% and 5% of all of HubSpot. You don't make a lot of cash along the line. In fact, when you go public, you have to be very careful about how you sell the shares.

Starting point is 00:34:34 So I shell a little tiny chunk of shares once a quarter on the same day every quarter. Because I want to send a signal, and the signal's real, that I have faith in the long-term prospects of the company. And I'm not dumping my shares. So almost all of my net worth, north of 90% of my net worth, is tied up in one stock inside of HubSpot. And then I have a little bit of liquidity left for other stuff. So it's on paper, I'm very wealthy. But in terms of cash flows and whatnot, it's probably not what people think. The way to really make money, it turns out, is to sell your company.

Starting point is 00:35:10 It's not to take it public because it will take years and years and years for this to pay off for me. If I really wanted to make a lot of dough, I'd sell it tomorrow to XYZ Corporation. And then you get all the cash at that point. Is that something that's obviously not going to go too much into that, but is that something that you guys have thought about? It's really not been in the cards from day one. We've really been focused on how you build long-term value. How do you build a company that your grandkids will be proud of?

Starting point is 00:35:40 And we're getting there. A lot of people in companies like a Cubspot, they look back at the good old days and they pining for the good old days. I don't. I actually like it now. We've got 1,500 employees. We can improve their lives. They're buying houses and they're paying off their kids' schools. Like, that is going on.

Starting point is 00:35:55 I think that's great. They're learning things. They're leaving and starting companies doing cool stuff. Our alumni are doing great. Our customers are getting huge value. We get 3,000 partners. They're doing well. I like a bigger company where you've got leverage and you can improve more lives.

Starting point is 00:36:09 So I actually think these are the good old days for Epspot. Another really interesting and cool thing you guys do is you have this event called inbound in November. And correct me if I'm wrong, but I was reading some stats that showed this event that you guys throw is growing quicker than Dreamforce, which is, I think, a pretty well-known event thrown by Salesforce.com out in San Francisco. I love to learn more about the reason that you decided to start doing. an in-person event and then really how it's grown. I was watching the videos and everything that's on it was just blew me away of how professional

Starting point is 00:36:49 and how great it looked. So I'd love to learn more about the beginnings of that up to this point. Yeah. I kind of think of HubSpot as having three pieces to it. We have lots of content that we use on our blog and podcasts, wherever that pulls people in. We have a code. We have a piece of software. And then there's this community piece.

Starting point is 00:37:08 And we see ourselves as sort of shepherds of the inbound community. We may have come up with this inbound name and the inbound meme. Lots of other people have run with it and like the idea. And any time we did a webinar or did something on social, boy, there was a lot of interest in it. Like if you look at HubSpot on social, there's a lot of stuff going on. And so at one point we just said, well, why don't we create a physical place where everyone can get together and get to know each other a little bit? And we probably did this. I can't remember when we first did it, six years or so.

Starting point is 00:37:36 We had 500 people come, and Seth Godin was one of the speakers, and David Mirman Scott, probably a lot of people you have on. They had them both, yeah. Yeah. And they spoke, and I spoke, and Darmesh spoke. And there was this fervent community around the idea of inbound and the idea of how do you unsuck the marketing industry? How do you unsuck the sales industry? How do you make selling and marketing? You know, how do you transform it and make it more noble and make it better and make it more productive and help companies grow?

Starting point is 00:38:05 And we had a great time. And the community had a great time. So let's keep going. We keep investing in it and growing it. And I think last year we had 14,000 or so and should be even bigger this year. So it's a lot of fun. It's the funnest week of the year for me. It's the only time in my life where I get hugs.

Starting point is 00:38:20 I'm a little introverted, but I don't get a lot of hugs. But customers and partners, like 100 times a day, will come up and hug me. And it's a little awkward, but it's really nice. Wow. So what happens? How many days is it for four days? It's three, four days. and all our partners come, all our customers.

Starting point is 00:38:39 But it's not just that. It's more of a community event. So I would say 70% of the people aren't a customer or partner, aren't paying HubSpot any money. It's just become sort of the place where all the kind of people thinking about sales transformation and marketing transformation hang out. And what happens during those three days? It's a lot of speakers, really good speakers, a lot of networking events,

Starting point is 00:39:03 a lot of hands-on workshop types of stuff, a lot of that type. of stuff. Yeah, it's really good. I like it. Is that a more of a marketing for HubSpot or is it a solid revenue generating event? We lose money on it actually. I was going to say I thought maybe it was a marketing expense. It falls in the marketing line, but it's a money loser for us. It's hard, really hard. It's one of the things really hard to generate the ROI on it. But it feels right and we suspect the ROI is good because it's a place for our partners and customers. to get together and learn about our new stuff. I think it's a relatively efficient way to do that. When I think of marketing of HubSpot, in the early days of HubSpot, we argued about what should we call it? Should we call it internet marketing software, which it is?

Starting point is 00:39:52 Or should we call it inbound marketing and create a new meme? And we argue which one should we call it? We decided to create the new meme and to say it's not just about internet marketing. It's about this idea of transforming your marketing, making it more lovable and making it a more engaging experience. It's better for the buyer and the seller. And that turned out to be a good decision trying to create your own meme and your own market and your own thingy, but expensive. And I would say, I would argue that at HubSpot over the last 10 years, we spent half our marketing budget on HubSpot and half our marketing budget on the inbound meme and the inbound movement.

Starting point is 00:40:27 And so that conference is in that bucket of the inbound movement bucket. I got you. So Brian, I read a lot of the things that you've published out on. line. I pulled apart maybe a couple that I'd like to go over if you're cool with maybe expanding upon some of the things that I've read that I found to be really interesting and compelling. One of them is the sign of a good team is that they can have healthy debate, but once a decision gets made, whether they won the debate or not, they need to line up behind it. If you don't have that feature in your team, it is hard to scale. that that that that that is very true how do you how do you hire and get you know in the interview process

Starting point is 00:41:14 and i don't know what all goes into your interview process maybe we can we can pull some pieces from that um how do you get the right people that are willing because i think there are everyone can kind of think of people that are that enjoy debating or even arguing but not necessarily the part where once the decision is made that everyone kind of stands in line. I think of, I don't know why this just popped in my head, but the show, the newsroom, I don't know if you ever watched that on HBO, but whenever they would make a decision, they would, they would, all the characters in the show would disagree on something. But then once the decision was made, it was like they all had each other's back no matter what, even if they completely disagreed with

Starting point is 00:41:54 the decision that was made. And that's what I felt like now with just, just reading that quote that you said. Yeah. And this is a little bit what I talked about before of you said something about your first question was something about how do you consistently deliver excellence or something like that. And this is one of the things that as we shifted from startup mode, startup CEO to more scale up mode, scale up CEO, this is one of the things that needed to shifts. In general, the way I made decisions was really holding HubSpot back. And I found a lot about decision making and along a lot of levels, I changed the way I made decisions. And at the end of the day, the CEOs get a lot of jobs,

Starting point is 00:42:35 but they're primarily the decision maker. You get paid to make a series of correct decisions. One of the ways in which I was holding us back was I would not make a final decision. We'd make a decision on something. We'd argue about it. We'd make a decision. We'd let that argument fester. And a month later, that argument would come back around and someone would try to overturn the decision.

Starting point is 00:42:56 When you're in startup mode, that's not very exciting. Because when you made the decision, there's only three or four people in the room. You hadn't committed a lot of dollars or resources behind it. And changing your mind was cheap. As you get into scale up mode, changing your mind gets actually quite expensive, getting all the troops lined up and you spend real money and real people behind it. And so we came up with a term. It's not a very exciting term, but we call it sailing ships. So when we make a decision now, we say, okay, are we sailing the ship on it?

Starting point is 00:43:25 Yep, ship's sailing. And what we imagine is a big ship sailing out of the harbor with sails on it. And gosh, if you want to turn that ship around, it's going to take a heck of a long time to turn it around. So in other words, this ship has sailed. Don't come back around. I know you disagreed with it and you argued passionately. I listened to you. We all listened to you.

Starting point is 00:43:46 We heard it. We understand the straight-offs on both sides. We're going this way. You lost it. Line up behind it. And it was that idea of sailing ships. I don't remember how it came into our lexicon, but it came into our lexicon probably five years ago, and it's become kind of part of our culture.

Starting point is 00:44:00 It's like, oh, Brian, you're sailing the ship? Yep, that ship's sailing. And it's helped a lot. I don't know if it's who we're hiring. I don't necessarily think that's it. I just think it's kind of part of our culture now that, okay, we know you disagree. We heard you. As long as you listen to the person, if they made a rational argument, you understood the argument,

Starting point is 00:44:19 you didn't blow it off, and you considered it. I think people are fine with it. And so that's one of many ways in which I've tried to evolve my decision making from a startup CEO to more of a scale up CEO. How involved are you in the hiring process? It's dependent on the level of the job, I'm guessing. Yes, very much. So you're hiring leaders. What are the key qualities you look for in leaders that you want to work alongside you and for you at HubSpot?

Starting point is 00:44:48 We're trying to hire people who have some scale-up experience these days, but it's not just that. Like, we've hired some folks from some bigger companies who've worked at scale-ups. And when they come in and they say, we're going to take things in this direction in our department. And when you say, okay, that's a new direction. Why are you taking it in that direction? Well, because we did it at our last fill in the blanks, blanks, big company. Okay. you did it at your last company. That's great. Why did you do it at your last company? Well,

Starting point is 00:45:22 I don't really remember. Why does that apply here? I'm looking for people who came from a big company. Maybe they came from Salesforce.com. Fine. We hired a couple great guys from Salesforce. They come in and they don't just want to implement the Salesforce.com playbook. They actually understand why Salesforce.com made certain decisions they made. They go back to first principles in their thinking and they don't just bring that playbook in. They customize a playbook that fits for HubSpot, its culture, its target market, its personas, all of that stuff. And they don't just bring it in for the sake of bringing it in. So I'm looking for that first principles thinker who's been in a big company.

Starting point is 00:45:58 It turns out that's extremely rare. How do you identify that through the interviewing process? I think you just got to ask them why. Okay, you're a VP of Sales and Salesforce.com. And in Salesforce.com, you set your territories up and you set your hierarchy up such that you've got eight sales, reps on the front line per manager and then eight managers per director. Each manager has an overlay for this product, that product, and that product. You put them in territories, that lead rotation. And if you can walk me through all that, what Salesforce did, which many people at Salesforce can do

Starting point is 00:46:33 in a very articulate way, that's fine. But when you go back to them and say, why? Why did you do the overlay model and not just let your reps sell it? Why did you set the commission plan up that way in the first place? What are the incentives you wanted to create? Why, why, why? Why? why. If they can tell you why and get back to first principles, that's a good thing. Not what, but why. Yeah, exactly. It makes a lot of sense. Brian, thank you so much for being. This has been, I could literally talk to you for hours. This is so enlightening. I've learned a lot. Actually, one more question. When you first heard the phrase learning leader, and your team was so great to work with, by the way, to get this whole conversation set up. But when you heard the phrase learning

Starting point is 00:47:14 leader and they told you that this guy, the host of Learning Leader Show, wanted to have you on as a guest. What was the first thought that came to mind? I like the name a lot was the first thought that came to mind. And it's just exactly back to that last question you asked me. I like leaders who are constantly learning and evolving, particularly as we think about the sales and marketing world. The internet has completely changed the way I think about how you sell. Really completely change how I think you should market.

Starting point is 00:47:42 Really completely changed about how you should. should lead your employees. Everything is changing. And so what I'm looking for are those learning leaders, people who have been in scale us before, but are learners, are open-minded to the idea that there's shifts going on and don't just bring in that old dusty playbook and try to replay it inside of HubSpot. So I like that learning leader. I'm a big learner myself, Darmeshire a big learner, big reader. And so I'm all for that. And I think that's missing. That's missing in a lot of leaders today is they're bringing that old playbook in and that that old playbook sometimes

Starting point is 00:48:16 isn't just isn't right. Man, I love that. I love how you describe that. Thank you so much. Veracious reader I read. What are the last few books that you've loved that you would maybe recommend for my listeners? I could not more highly recommend Shoe Dog by

Starting point is 00:48:32 Nike's found Phil Knight. I used to live in Japan. There's a lot of stories about him doing business in Japan. If anyone's ever going to do business in Japan, he kind of nails it. How hard it is in some of the tips. The book was, take the fact that he's a founder and a businessman away. He's a fantastic writer. It's like a cross between a Jack Welch book, which is all business in Catcher in the Rye. It's sort of a journey of self-reflection and growth. It's like a coming-of-age

Starting point is 00:49:00 novel combined with a business book. It's the best business book I've read in years. Wow. Big endorsement. I love it, man. Hey, Brian, I know we're a little bit over. I really appreciate it. Where would you send everybody to learn more about you and HubSpot online? Go to HubSpot.com. Thought so. Or are you on Twitter? At B. Halligan or I wrote some good stuff on Medium.com. Yeah, really good stuff.

Starting point is 00:49:26 I'm a Medium fan. Yeah, I love it. Thank you so much again for being here, Brian. I greatly appreciate it. And I absolutely want to continue this dialogue as we both progress, man. Sounds good. All right. Thank you. This episode of The Learning Leader Show is over,

Starting point is 00:49:40 but we have plenty more to keep you. locked in until next time. Head over to learningleadershow.com for more information and to request your favorite entrepreneur, CEO, world class athlete, or anyone else that inspires you. You can also talk to Ryan directly by reaching out to him on Twitter at Ryan Hawk 12. Thanks again and we'll see you next time on the Learning Leader Show.

The Learning Leader Show With Ryan Hawk - 153: Brian Halligan, CEO of HubSpot: How To Make Them Come To You

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