This Week in Startups - E997: HubSpot CEO & Co-founder Brian Halligan shares insights on the origin of inbound marketing, how The Grateful Dead inspired HubSpot, importance of customer experience, managing employees in the Glassdoor Era & more

Episode Date: November 5, 2019

0:52 Jason intros Brian Halligan 1:35 Brian describes how his job has changed as HubSpot has scaled 3:33 Jason asks Brian about buying Jerry Garcia's guitar "Wolf" 4:42 Jason & Brian reminisce over Grateful Dead shows at Giants Stadium 6:36 How the Grateful Dead pioneered "Inbound Marketing" & inspired HubSpot 15:24 How Brian met his Co-founder Dharmesh Shah 17:04 The original idea behind HubSpot 19:18 Ray Ozzie's impact on HubSpot & Brian 25:34 Benefits of introversion 30:06 Succession planning in tech 33:24 Avoiding pot-holes as CEO 35:18 Importance of customer experience in 2019 38:45 Examples of creating a great end-to-end customer experience 49:43 How Brian keeps himself sharp & motivated 52:45 Managing employees from different generations in the "Glassdoor Era"

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He was a VP of Sales at a company called Groove, about 15, 20 years ago. And then he created what is one of the most successful startups to ever come out of Boston in the New England area. That company, of course, is HubSpot. And they handle inbound marking him and him and his partner, I don't know, 12 years ago. And they started HubSpot just 13 years ago when they were just getting started. And it's been an incredible journey from really pre the whole cloud era you guys started. And now, how many employees? employees do you have? I don't know. It's 3,000-ish. Oh, my Lord. Yes. How have things changed for you from those early days, a dozen of you, you know, building out the product and selling it to 3,000? What have you had to do as a

founder and CEO to kind of level up? Because you've never run anything this big. No. This is a first-time experience for you. Not even closer. Yeah. I would say one of my great strengths is I like to make the decisions. and be in control and all that kind of stuff. And my greatest strength turns into your greatest weakness as you scale up, that desire to be in control and to manage tightly and things like that. So one of the many things that have had to evolve is my predilection for being in control and making all the decisions. You have to really hire well and delegate.

It's really a boring old sob, but it's absolutely true. And I think this is the case for so many founders, where the real strength that got you going and got the early customers and got your product market fit and all that good stuff really flips on you once you get north of, let's say, 100 employees. And a big part of that is in the early stages, you're really setting the framework of the company, the company as a product, the culture, the infrastructure. And you need to make those decisions as the founders. It's critical for you to make them and it's your job to make them because you're, You're going to be limited in resources. You're only to be able to hire a certain caliber of person.

And then as you get bigger, well, then the opportunity presents itself for really people who've done this before, people who've had 100 or 200 people report into them. So you have to change your entire personality. Your entire mode of operating goes from being details to big picture. I don't think you change your personality, but you definitely change the way you manage and handle people. I think I'm still the same quirky person I was prior to starting HubSpot. Yeah.

You bought Jerry Garcia's guitar. I got to get that out of the way. All right. What's your favorite song to play on it? We got a little ripple. Ripple is a good acoustic guitar song. I like to play that. I'm not very good guitar player.

I'm terrible. But I have a app for that. Musician. Have you seen a musician? It's really good. You are a musician? Of course I am. Oh, my God.

We've got to become friends on a musician. level up. I just had the founder on. I love that out. Do you know that they raised like almost no money? It took him three or four products to get it out there. It's impressive. It's like the third or verse, it's like I think it was the third product they released. Really? Yeah, they had two other ones. The original one was going to be like teach kids. It was like sort of like guitar hero and you know, teach kids and then they realize screw it just everybody just wants to. And they do piano and all the other stuff too. And singing now and everything. That's awesome. So there's hope for us. Yes. There's not much hope for me on this front.

Not a lot of hope. But you have very little talent. You own Wolf. I own Wolf. Jerry Garcia. How many dead shows have you been to in your life? I lost count, but it's well over 100. Really?

Yeah. I've been to like 10. I used to go to the giant stadium ones. I don't know if you remember those because you were in the North East. Total shit show. It was the shit show of fucking shit show. You would, because what would happen is they would play what? Ten nights at the giant stadium?

Not 10, but yeah, they'll play once. Yep. It was at least a week. Yes. And describe for people listening what in 1984, 85, giant stadiums, the Meadowlands parking lot looked like by the third show. Yeah. It was like Mogadishu. It was basically like Mogadish.

Somewhere between Woodstock and Mogadishu. It was like a war zone. It was. People were living in the Meadowlands. Oh, yeah. In their tents, in their VWs. Because this is the time where people toured with the dead. They still do, by the way.

Idiots like me still do. I'm going to New York for Halloween the day after Halloween next week to see Dead and Co. Dead and Co. Dead and Co. Phil Esh. Yes. Not Philish, actually. Oh, Phil's not in it.

No. What's the lineup? It's John Mayer. I saw John Mayer with him, and it was amazing. He's very good. I mean, when it first came out with John Mayer was going to, that everyone was, the dead community was not enthusiastic. But the guy has real chops.

He is a hell of a musician. He's got hard. It feels like the dead on speed, I told somebody. Like, it just brings the whole thing up. Yes. Like on, it's like they're on speed. They're going like 30% faster. And when they do like space and stuff like that or solos, it's like John Mayer was born

to be in the dead. Totally. He was born to be in the dead. He's impressed. Plus, he's young and he's energetic, and he's giant. People don't know he's 6'5 and he bounce around on stage. He's so into it. Kind of slow.

And so he just brings an energy to it that I like. Some deadheads really don't like it. I love it. Did you know that HubSpot was kind of inspired by the Grateful Dead? Let's go. How so? Okay. Here we go.

So wait, does this include the brown acid? No. It's got nothing to do with the brown acid. It's got nothing to do with drug use at all. Because that's what Elizabeth Holmes is. Tom's took and then she had the idea for there and us. It has nothing to do with any drug. This is...

Adam took the brown acid, came up with a wee work. You took... Got nothing to do with that. Nothing to do with acid. Okay, great. Let me just ask you a question. Go ahead. Let's say it was 1984.

Correct. And you wanted to go to a Rolling Stones concert. And you walked into the Rolling Stones concert and you brought your recording equipment with you. What happened at the door, Jason? You were arrested. You were turned away. Absolutely. They were like, you are.

are out of your mind. You're crazy. This is RIP. Don't even think about it. Not a chance. What would happen if you would show up at a Grateful Dead concert with all your equipment? They would take you to the special section closest to the stage and the soundboard so you get a crystal clear recording. So it was preserved forever and everybody in the community could remix insurance. Okay.

So you leave the concert and then you go from Boston. You go to Giant Stadium. Then you go to Philly and you record. RFK Stadium. Yep. You record 20 shows and then you get back to your dorm room. which of those shows did you make copies of in a handout? Hmm, which are the shows?

All of them? The best or the worst? Oh, the best. Of course, the best. Yes, yes, yes. So you take the best one and then you're at a... Tape trader. No, you're at a frat party and somebody pops it in.

You're listening to it. And the person next to you says, what is this crazy gypsy music? And you say, well, this is the Grateful Dead. And they say, how do I get some of that? So, well, come with me on tour. They're coming to this summer. It's going to be great. The Grateful Dead were the first true inbound marketers, content marketers that gave their content

away, encouraged people to spread it and pulled in new customers through it. You didn't know this about the HubSpot? No, of course, I knew it, but I never made the connection to the HubSpot. I know you wrote the book on Dead and Marketing. But wow, like what an amazing when you think about it. And the Dead's purpose for doing that was one. Okay. So what's the other thing.

You know the story of how they decided to let this happen. So let me just ask you another question. Yep. In 1984, you're going to a Rolling Stones concert in Boston and then RFK and a giant stadium. Garden, whatever. What's the difference between those concerts? Oh, my God. Well, they changed the sets, right?

But, yeah, they changed the sets. Actually, no. Rolling Stones? Oh, sorry, Rolling Stones. Oh, it's the same. It's the same set list. Maybe they changed the encore. But generally speaking, same set list.

they get it perfect. It's road. It's right. It's road. In the Grateful Dead, it's the exact opposite. They played a unique set in a unique way every night, which I thought was really quite clever. Now, Jerry Garcia had a couple. Wait, how does that relate to the HubSpot and startups?

I forgot. Yeah. And the reason they let people copy the concerts is like, well, we're done with that. We did it once. It can be out there in the ether. That's their IP. They can kind of own it. And they just got very good at that model.

And they didn't do it as some sort of brilliant marketing strategy. They did it just because they thought it was a good idea and the right thing to do. Now, they did a couple other brilliant things when it comes to marketing. Jerry Garcia says something that I think is very apt in today's day and age of politics and the internet. He said, Grateful Dead Music, it's like black licorice. 10% of the world loves black licorice. 90% hates it. Yeah. We like that black licorice.

Either people love it. or they don't. And the internet's kind of like that. The internet likes a polarization. Of course. Another thing that's interesting about the fearful dead. We were supposed to do a HubSpotland, but this is more interesting. Much more interesting.

Let's go. SaaS software or the dead. I mean, come on. What's more interesting than the dead? Fine. Let's do it. Let's do it. Let's just say, Jason, you were going to a Rolling Stones concert in 1984.

You would purchase your tickets, I assume, like most people through ticket masks. Yeah, you go to ticket masks. You wait in line on a Saturday morning. The scalpers would open the doors five minutes late. They'd open the door at 607 after the scalpers had taken the first five or six minutes of tickets. I know this racket in Brooklyn because I knew the guys who were running the machines. Who get all the best tickets? The scalpers.

Of course they did. Yeah. Bastards. And so once the Rolling Stones went to concert, who made all the money. Well, Ticketmaster made their junk. And the scalpers made their chunk. Yeah. And you know who got screwed?

The real fans. The real fans and the band. Yes. The people actually at the concert got screwed. The people who couldn't be bothered to go to the concert took the money. The other problem the Grateful Dead had to have with that model is it was all folks like venture capitalists and angel investors in the front rows. Yeah, who didn't dance. It weren't that rabid fans.

Squared. It wasn't the rabid fans. The Gravold Day didn't like that. So when you wanted to buy tickets from the Grateful Dead, this is very relevant today, the Internet and all your guests, is they created their own ticketing agency. Yep. So the way you would get tickets from the Grateful Dead is you go 415. and I forgot the number, everybody said to have them memorized, and they would tell you the list of shows coming up.

And the way you get the tickets was really interesting. You had to go to the post office, get a postal money order. Yep. Then you had to have a three by five index card, yep. And you could put the number of tickets you want, but not more than four. Right. To a concert. And then you mail that in.

Yep. How do you think they decided who got the best seats? I don't know. Is it a lottery? No. No. They wanted their best fans in the front row. How might they determine that?

Oh, how frequently you gone? If they had gone before? They didn't have like databases. Got to have database. What they did have, though, is you had to send them a self-address stamped envelope. Ah. And on that envelope, if you were a really crazy fan, you would draw the bear. Bears, mushrooms, you name it on there, glitter.

And so the best. For a miracle. The best seats went to the people who were the best grateful, grateful dead artists. Oh, my God. great. It's so genius. It is. They cut out the middleman. It's the story of the internet. And you had a really interesting proxy for what was the person's level of passion for the product. Correct. Which is, yeah, you want to reward those people, not the people who have the Amex black card. It's everything that's wrong with society today. The dead understood and predicted. Kind of agree. It was everybody at a dead show is equal.

and everybody's in it together. So when you go to a dead show, you see everybody walking around with a finger in the air. Yep. Walking around with their finger in the air. Now, this is not like, I need drugs or I'm number one. It's I need a miracle. And I need a miracle means...

I want a free ticket. I need a free ticket. I am like not able to afford to go to the show. Can anybody help me up? Hook me up with a free ticket. Yep. And it worked. It worked. Turns out they were early, early viral marketers, early content marketers.

They were the template for inbound market. Walker Corporate Law is a boutique law firm specializing in the representation of entrepreneurs and startups, and they encourage fixed fees. They believe that billable hours reward in efficiency, so they will tell you what you're going to spend for each of the things you need to get done with your legal team. for your startup. Whether that's things like your terms of service licensing agreements, mergers and acquisitions, whatever it is, you're raising money, you know how to do this IP assignments, all this important stuff, are going to be done by lawyers with decades of experience. You're not going to get an associate who is learning on the job and your startup is their grand

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They really figured it out. And so was that the first idea for HubSpot? It was just trying to solve that email problem. When you in Darmesh, how did you in Darmesh meet? I never actually asked you. Okay, I'll tell you the story how we met. Yeah. So we were both going to...

You were a sales guy who was a square. Yes. Yeah, we were both going to Sloan again. Who was going to Dead shows on the weekend. Yes. So your sales job at Groove Networks, Ray Ozzie's company. Yep. The guy who created those notes.

And so I was... So we both went to Sloan. MIT business school. And just before classes started, they had a cocktail party. And I remember I was at the cocktail pair was on my second beer. And this mom woman comes up to me and starts kind of asking me questions, like a lot of questions. Like this, like an interview. Yeah, yeah, like an interview.

And you're like, what's up? And I assume she was a classmate, Kirsten. She was wonderful. And she walked away. And it turns out what was going on at that moment. It was an interview. See, Darmesh, when he goes to a cocktail party, he prefers hiding behind the plant

and then what he does is he sends his wife out to interview everyone in the room and I was one of the interviewees you know what the scouting report on me was this guy's really stoned he just got back from a dead shout no no okay it was basically you'll never like him he's the sales guy oh he's into the grateful dead he's into the red

strokes you'll have nothing in common see I would have a problem with that because it was like well you're a redsox fan so I would want to meet you just to say redsox Sox, go Yankees. That's like a Yankees, Red Sox thing. But the dad, I would want to meet you and then sales guy, I would want to run. Yeah, he didn't, he couldn't spell dead. He didn't know what the Red Sox is not him.

Do you ever take term next to a Dead and Go show? He wouldn't want to go. Oh my God, we should totally take him. That's how we met. That's how we met. Wow. You want to tell you how the, the, the HubSpot dots connected. Yes.

About six months in, we did start getting to know each other and really, liking each other. And there were two dots that connected. One was my dot, one was his dot. I was doing a little gig at a venture capital firm, tiny little venture capital firm in Boston. And they wanted me to work with the founders and the marketers and the sellers. How the heck do you build a company in today's day age? And I would ask them, you know, what's your playbook? And they all would buy a list and they would cold call. They would buy a list and span people to do the big trade show that hire the PR firm, lots of advertising. And none of it seemed to work. Like, people had caller ID, people had spam protection, people had ad blocker, people had DVRs. Like, the world seemed to be shifting. So I'm kind

wallowing in misery with my wealthy venture cap, capital based startups. And Darmesh, he started blogging his way through Sloan. And every time he heard an interesting class or anything, he'd write a bloggeralk about it, he had a thousand times more interest in his little crappy on startups blog than any of my wealthy venture back. People forget your co-founder Darmesh had on startups, a blog, and this is where writing is so important. I think one of the most important things you can do in this world is be a good writer. I do too.

And so we were juxtaposing it. And the way we started describing the world was all these businesses, they were doing what we started going outbound interruption-based marketing. An annoying based marketing. Yes. And what Darmesh was doing was we started going inbound, matching the way he marketed with the way humans actually shop and live and buy and make decisions, mostly through getting good at SEO and good at very early social media marketing and getting good at connecting with other

bloggers. And so that was... That's how I meant, Dermas. We started linking to each other's blogs. I'm not surprised at all. That was it. That was the kernel. We said, oh, Inbound's the way to go.

And then we tried to implement inbound. And we had to put in a new CMS. We had to put in a blog, SEO consulting, social media consultants. We had to put in CRM, web analytics. It just got really complicated. And so HubSpot became this platform to enable marketers to move from that old school outbound to the new school inbound. That's the dots that connected. That is so amazing.

Hey, I want to just go back in time and talk about Ray Ozzy and Groove. I think it was called Groove networks originally. It was. It was, right? And then they just called the Groove afterwards. No, it's always Groo Networks. And Ray Ozzy had started Lotus Notes, which Lotus bought notes, then IBM bought notes. But it was the first notes.

He was kind of this. genius who created this kind of workflow software. But you met him at Groove Networks. Yes, he was my boss. Explain to me what, yeah, Groove Networks was when you joined it and what was magical about that company? Because I don't think Ray Ozzy, it's kind of like yourself, gets much credit in the overall startup conversation. Like, there's not a lot of interviews with Ray Ozzy or you on the internet. That's why I was so excited to have me on. Okay. So what was Ray Ozzie? Like, what did you learn from him? Oh, so for people haven't heard of Ray Ozzy, he's the father of Lotus Notes, which 100 years ago was a really big deal.

And a lot of you listeners probably don't even, haven't heard of it. Why was it a big deal? Well, it was the... Why was it mind-blown? It was the... First of all, it was email. Really before there was email. Right.

That was kind of a big deal back then. And then it was these... Think of Airtable version one. Like, you know, very lightweight, easy to use database apps that mere mortals could build. And this was very early in the era. No one else was doing that kind of thing. And he made it easy for mirror mortals to create these little data. based in these little workflow apps that back into the 1990s was a really big deal.

It was a really big deal. I was at Sony at the time. And the first thing I did ever building a product, really, what software was, one of the first things, was I built a little gateway that went to LexisNexis, searched Nexus for Sony, Mickey Shulhoff, Tommy Motola, Barry Wine, a bunch of different executives. And then structured the data from Nexus. I imported it into Jason's News database. and Lotus Notes.

And then I sent invites and alerts to Mickey Shulhoff and those other people were on Lotus Notes. Every time a news story came in, that mentioned their name. I got it. This is before Google existed. It's 1994. Yep. They went crazy. And then I could see how long they spent inside of it.

And I guess I can I say that? Okay, I'll just say random executives were spending hours a day reading about themselves and reading about Sony in the news. That's awesome. Nexus was also global. And it was this database of global news before Google existed or Google News did. So then he created a second company called Groove, which was a big deal. This was what, 99 to 2000 timeframe? 2001, 2001, 2001.

Yeah, 2001, 2001, 2001. Really the most difficult moment to ever create a company in. Explain that moment in time to startups now since it is 20 years later and we're old. We are old. The crash of 1999 and 2000 was rough. And he basically started, he built a big, big, you know, raised a lot of money in the, the depth. If we thought 2008 was deep, it was really deep in tech back then. Yeah. And it deserved to be. It was a ridiculous time prior to that. But he started at a really

hard time. And what it did, he's the thing about Ray Ozzy that I learned from him is he considers himself a technologist cross with an anthropologist as the way he described himself. And from the anthropology perspective, he watched how people spoke with each other, how they spoke in the phone, how they acted in meetings. He just was observer of collaboration. He has PhD in this kind of thing. And then what do you want to do was predict where the future of technology was going and build software to help people do it better.

Amazing. Very simple. And that idea lives in HubSpot. We basically are obsessed with how humans decide stuff. How do you buy something? You go through that decision process. And we obsess over it. And then we try to build software to help companies deal with that and leverage it.

So there's a lot of Ray inside of HubSpot, huge influence on us. When, and that was part of the observation was this anthropological, you have salespeople who are designed to interrupt people. Yep. By calling them on the phone, the worst experience ever. Because back then, caller ID didn't exist. Yeah, you answered your phone and somebody like, hey, can I interest you in this? Yep.

And that's what you had to do in that job, dial for dollars. So Reyesi was visionary. One of the things that was good about Reyes, he could very easily predict the future, but sometimes he predicted the future a little too far out. Ah, that's a leak in the game. And I think with notes, he had it just right,

and he had the Lotus platform behind him. We didn't quite have that. He had me, you know, what's much. Hey, everybody, took this out. Where he was also ahead of, so he basically built something that's a little bit like Dropbox meets Trello meets Slack,

really early version of that and it was on a peer-to-peer, complicated architecture. And I think it was just ahead of its time. It was really cool. It was really cool thing because I remember you would download this application and your application would connect to each other. Yes. So you didn't need to exactly have a server. Yeah. My version of Groove Networks would connect to yours. I would have all my files in it. I would be able to chat with you. I would be able to create workflow. Yep. And it would stay in sync. Whether you were online or offline, had a little server that would make sure would stay in sync. That is incredible.

It was cool technology. But being too far ahead. It can be problematic. He was a little far ahead, I think, than that. Another area he was ahead of his time is we were a freemium model. That wasn't my idea. That was his idea. And there wasn't a lot known about how to pull a frame of frame. The word premium didn't exist. Didn't exist. And they called a try before you buy? It was true. It was a free version. And he was smart. He wanted to get a viral adoption of the thing. It's the same game that Dropbox plays today and Slavis. And he was also a way.

ahead of his time there. And I think the guy is a genius and not only a genius, but like, oh my God, one of the nicest humans with the biggest hearts you'll ever come across. We have to get Ray Ozzy on the pod. He's wonderful. And he had a big influence on me personally on my career. And I just learned so much of him. I just learned his method of how to observe behavior, how to build software. I learned how to think about innovation in a whole new way.

And it wasn't so much, I just observed him. And I'll tell you another thing I learned about, about he was a big time introvert. He was. Big time. And Darmesh is a big time introvert. And those two actually have a lot in common. So it prepared me very well to partner with someone who also I think is brilliant in Darmesh and also quite introverted. Yeah.

How do you as somebody who's clearly extroverted and I fake it? You fake it. Yeah. Oh, you're actually an introvert on the Myers-Briggs? Yes. How does an introvert learn to fake it? you just muscle through it. Like I got fired up for today's interview.

I actually have a podcast after this will be fired up. And then I got in my calendar like cool down for an hour or so. And then I'll have dinner with a bunch of people tonight. Because I will be zonked after two podcasts. Interesting. Yeah. So every time you're talking, that is draining the battery. Yep.

And for me, I was like, I was 86% or 100% of my Myers-Briggs. Yep. Extrovert. Yep. Like right now, I'm plugged in to like a, 45 watt charger, 60 watt charger. After our interview, I'm already like, oh, my God, I got to do this. Oh, my God, I got to do that.

Oh, my God, I got to talk to this founder. It's like my battery is going up. Yeah, my battery is going down. I'm enjoying the conversation, so it's not going down quickly. Right. So Darmesh is even more introverted. I know him. Yes, much more.

He needs time to think. Yep, time by himself. Time by himself. Yes. And the hardest times, I think, for Darmesh, where when we do like the IPO road show or doing a fundraising up and down Sand Hill Road for three or four days or just constant people meetings

and I think we learned to deal with each other just like well we need to build in some time for downtime and like I'll sign of dinner and I just go back to our rooms and check email. It's fine. It's worked out great. The problem is... But Ray was very much like that. So people want to spend time with the leader.

Yep. The leader's batteries being drained and the leader's like, I'm counting the minutes to when I can go home and respond to email or just read a book or something. Yes. And the battery can recharge. It doesn't take a terribly long time. And then you go get it again. It's so interesting how people thought of like introversion as like a disease as opposed to a superpower. It's almost. It is. It is a superpower. People stigmatized it as like this person's a bit of an introvert. Yep. Yep. But it's not. It's not. You build up that energy. It gives you a reflection time.

Yep. Introverts are more thoughtful generally. They are. They like spend time and think something through. And I don't think it's a secret that so many of the most successful people in Silicon Valley are introverts. Larry Page. Elon's actually very introverted. So many of them. Evan Williams is very introverted. David Sachs, yeah, somewhere in between. Bill Gates.

Bill Gates kind of introvert, but he also liked debating and interacting with people. He was kind of in between. Did you ever meet Bill in that era? I never met Bill ever. Oh, really? No. And I worship the guy. Yeah.

There's a lot of lessons there, too. Hiring is not as easy. is just putting an ad on some message boards somewhere and hoping for the best. No, that's not how you do it. That's not how you do it right in 2019. No, you want to use LinkedIn. If you're growing your business, you need to reach the right candidates at the right time. And 600 million members visit LinkedIn to make those connections and learn and grow as professionals. You know that. They also go there. Sometimes they want to discover new job opportunities. In fact, a new hire is made every eight seconds on LinkedIn.

One, two, three, four, five, six, seven, eight. Somebody just got hired on LinkedIn. That's right. And here is my CMO, Presh, who we just upgraded to an associate. He's in the game. And here he is, posting a job for us, a customer success person, manager in Toronto. Here's the job function, a little business development, a little customer service. He takes our nice little job description, pops it in there.

Look at that whizzywig editor. It looks great. Does a preview of the job. ready to go, but that's not all he's going to do here. He's going to pick that he wants them to have customer service experience for two years. And he's going to post that job and it's going to show that job to the right people at the right time. He did that in seconds. And here's the good news. I'm going to give you $50 right now. A $50, a 50, a 50, a 50 from your boy, J-Cal. Go to LinkedIn.com slash twist, LinkedIn.com slash twist, and get that 50 right now.

Terms and conditions, of course, apply because it's 50 bucks. So go ahead and get it, LinkedIn.com slash twist. And thank you to LinkedIn for supporting the show. I do appreciate it. Let's get back to this amazing episode. What I like about Bill Gates is the second act. I mean, how many people have a second act like that? Wow.

And I also admire you pick the right person to take over the company. I think he picked the hell of a person. That's not easy to do and give them the room. Bomber or Satya. Satya. Yeah. Barmer, I think, did a good job making sure that the place didn't collapse when Bill left. I mean, you can criticize him, but that's a real carry moment when somebody with that shadow, like Steve Jobs, or it's, I think the playbook might be emerging that your number two operations lieutenant is the best person to take over until you find the innovator. So you think like, if you compare Bomber and Tim Cook, they were both just like operational sales machine. machines. Yeah.

Neither of them are making the world's greatest product. I actually think, well, in tech, there really were no successful successions. There weren't any successions for the long time. Yeah. Last few years, though, I think Dara has done a nice job at Uber. I think Satti has done an amazing job. I think, I forgot his name, but I really like the guy who's running Adobe is doing a fantastic job. Well, actually, if you think Adobe and then obviously Google with Sundar.

Yeah. It's interesting what's going on. People are being much more thoughtful. Who is the, yeah, I wonder who the Adobe, put the Adobe CEO in the chat room. Oh, Narayan. Narayan is his last name. Is he Indian by chance? Yeah.

You know what? I just had an epiphany. The four people we just mentioned are Indian. Are all Indian. Dara's not. He's from, oh, no, Dara is, um, Middle Eastern descent. What is he? Is he Egyptian?

Persian. He's Persian. He's Iranian, yeah. That's really interesting. I just think, I just think this, this idea of succession planning. It used to be that you'd get the, the, you'd get the, you're, In the 90s of the way it worked, you remember this. You have the quirky introverted founder,

and then match them with this salesperson basically. Yeah, Eric Schmidt would be the classic example of like adult supervision. It's adult supervision. And then it kind of worked. And then over time, people were looking at the business and said, well, Steve Jobs is doing pretty well. And that whole story. And Ellison did pretty well. And so many of these founders did so well.

And they're like, well, enough of that. We're going to stick with the quirky and herodervative founder and surround the founder. That's worked for a long time. And that was kind of phase two. I think phase three is emerging where, well, they're figuring out there is sort of that next chapter. And the next chapter isn't Eric Schmidt all the time. It's more like Dara and Satya, they're product people. Yeah.

Actually, now that you think about it, like a formalized product person who knows operations, and you've talked about this a lot, I think knowing how to operate every single part of the business efficiently is critical. during that scale period and during the sustained period. You have to be excellent at everything, don't you? I've given up on that, actually. Not you, the company, I'm saying. Oh, yeah, to scale, you have to be good at

you have to be at least good at everything. Good or excellent. You have to be excellent at a couple of things. If any one part of HubSpot gets bad, the whole machine just kind of grinds to a, it slows way down. There needs to be a level of basic competence at each function. And you need to level, it's not even leveling up, it's a leveling different as you get bigger.

How do you as the founder CEO now watch out for those like potholes and know, oh my God, what's your early warning system that something could come off? And now that the cars, you know, listen, this is like a big ship now. It's a battleship, you know. Like it's not easy to turn. We're not perfect. We're by no means perfect at it. Yeah. One thing we, culturally, we're okay when somebody makes mistakes. We make a lot of them, actually. We're not okay if we make the same mistake twice. And so we have a, it's a little hack. There's a hundred page PowerPoint deck that comes out once a month. And you can point at each slide in the PowerPoint deck and say, oh, I remember why that's in here. We made a mistake in 2013 around hiring and support. We fell behind in hiring support. And now it's a problem because people had to wait too long in support. Then they hung up and they called their sales reps. So we missed.

our MTS numbers and we missed our sales numbers. Oh, wow. Stuff like that. Yeah. So you have this like Bible now. Kind of, yeah. That has the data in it. Institutional knowledge lives in that deck.

Wow. And so what we try to do is, okay, we made this mistake and we say to ourselves, well, what, if we knew three months earlier, what could we have known that would have prevented that mistake? Ah. What led up to it? Yeah. What were the sequence of events?

It's almost like the NTSB looking at a crash. Yes. And being like, let's rebuild the plane. piece by piece. Why did sales miss? Let's look at the tape and hear what they had to say. It's a little bit like that in a PowerPoint. Yeah, a little bit like, yeah, a flight recorder.

I love that. And so in that case, like, oh, we should have been looking at not just how many people are hiring, but the recruiting pipeline that we have for support, the happiness of the employees in support, how many people are getting transferred out of support because we never, ever, ever in the history of HubSpot, again, want to fall behind on support because it not only misses support in the customer experience, up, it messes the sales. You did a tweet about this. It was a very good tweet. 2009, like, it was all about making an excellent paraphrasing here, like this absolutely excellent product. 2019, it's about the service and the support and the customer experience. Maybe we could pull

that tweet up if we have it somewhere. Explain to me what you're thinking was there and how it changed over the decade. I remember in business school, one of the professors used to have this mantra like don't even bother starting your company unless your product 10 times better than the competition right yet the 10 exit and that's good advice because well it was well it was good advice it was good advice um the reality is it's impossible to do today uh in the software industry at least or any kind of hard industry the truth is like it's so much easier to build stuff today uh it is isn't it let's see you're in the software industry you have amazon amazon amazon web services you have And source. All the software you buy is as a service. You don't need office space. It's so much cheaper and so much more efficient to build something. And it's so hard to get a sustainable long-term product advantage today. Because some startups on your butt or some big good competitor like Adobe, like Microsoft. These companies don't just roll over and die like they used to. They get a new founder type person running that thing and they're on you.

They're competitive. And so they can catch up. So long-term sustainable competitive. advantage of the product that is really hard. It seems to me that the companies are really successful today are the ones that are really obsessed, not about that product market experience, product market fit, but it's more like that experience market fit. How do you transform that customer experience? So many of the winners today are doing just that. Here's the tweet. If you want to follow B. Halligan. He's on the Twitter and he's verified. Congratulations on that. 2009, your product needs to be 10 times better than your competition, 2019, your customer experience needs to be 10 times better than the competition. It's so true. If you look at superhuman, we were lucky enough to invest

in that. It's doing really well. Do you use it? I don't. And I know a lot of people to do. It's a controversial in my industry. Is it why? Well, it's good tracking that stuff is doing. Oh, the tracking stuff, right. Yeah. Yeah. What do you think about tracking email? Is that like a big no-no? It's gray. It's gray. Yes. We should just have a standard for it. Like, on message, you can go in and say put read receipts. Yes. You can do that an email. You can do that in an email.

It's not up front. If I send you an email, I can put a read receipt on there. So I don't have a big issue with knowing if you open it. Where I have a bit of an issue is knowing where you are when you open it. That's a little problematic. That's a little creepy. Is it a superhuman do that? Ex-girlfriend, ex-boyfriend, weird stuff like that.

You can imagine where that could go. I haven't seen it go that way, but it's over the gray for me. Yeah, that's why I use a tracker. and all of my persona is a 15-year-old girl in Japan. And I just used a Japanese IP address. And people are like, oh, how's Tokyo? And I'm like, oh, you creepy mofo. I'm actually at my office in San Francisco.

Why are you? How do you get the experience? What have you learned about building great experience? Because obviously, you learned a lot about building a product by watching and studying people from the church of Reazi. Now you seem to think, hey, you win based. upon that full experience. Everybody's going to make a good or great product. Hard to get ahead, as you said.

What about that service around it? In fact, if you think of the history of us, but we're in kind of our second act. The first act was an arbitrage opportunity we saw of the Internet. It's like instead of renting space in someone's radio show or renting space to someone's TV show or renting space in a magazine or newspaper, just create your own damn radio show, your own damn TV. Be a content creator. Exactly. And rents a space to yourself.

Right. And that was the basis behind inbound. Start a goddamn blog. Exactly. Podcasts, whatever. Whatever. And it worked remarkably well, still works remarkably well. You are a great example of that, by the way.

You didn't have to spend tens of millions of dollars buying a TV studio and all kinds of stuff. Literally, I have an unlimited budget, and the most I can spend is $100,000 on all the hardware we have here. In the early days, you would be talking about a half million dollars to build a studio, a million dollars ten years ago. You literally can't spend it. You can't buy a $5,000 camera anymore. You didn't have to buy the frequency to have your own TV station. No, you did not need an antenna. You just needed the internet connection.

It is crazy. Yes, it's crazy. And a lot of ways it's very good. And that was hard. At a lot of ways, it's not. But we'll rebalance. I mean, the arbitrage opportunity was really big back then. And like any B2B boring, exciting, B2C, any company at all, start a podcast, start a blog, start

or whatever, and start to really pull people in from Google and social in a whole new way. It's still there. I think the new arbitrage opportunity is more just being completely obsessive about creating an awesome end-to-end experience. And I just think about myself and all these consumer brands I use. I come home from work in a lift and then I get home and I turn on Spotify and I'm having a good time. And they open the box of toys I get from chewy.com for my dog. And then I order dinner from DoorDash.

And then I watch a Netflix movie. And then I ride in my Peloton. Like I just use all these new technologies and inventions. None of them are particularly novel technologies. Right. They're novel business models. They're great products. And they create a new much better customer experience.

That just seems to be the story of the last several years. You could argue Peloton, whatever. Some of these IPOs haven't been successful. but I think when you look back five years from now on this era, there's a whole new set of interesting big, multi-billion dollar companies created that just rethought the customer experience around a boring old products. Yeah, I mean, Peloton is life-changing.

I have the treadmill I was on it this morning. And it is, if you just think about the most beautiful, perfect treadmill, it's that. Then you're like, and we put a TV on it, and think about having the most awesome instructional. instructor available and then have 20 of the most awesome instructors available and the most amazing gamification. Yeah, you're competing with other people.

It's amazing. It's just everything is great about it. And down to the installation and the ordering Tesla, the same thing. You order a Tesla. It's easy. You go online. I would argue none of that is a breakthrough technology product thing. It's knitting it all together almost perfectly and then creating a great brand.

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