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My First MillionFrameworks to Become a Billionaire with HubSpot Co-Founder Dharmesh Shah | My First Million #197
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CHAPTERS
- 0:00 – 8:42
Episode Preview and Guest Introduction
Sam and Shaan preview the conversation with Dharmesh Shah, including his $5 million offer, then introduce him as HubSpot's co-founder and CTO. Dharmesh explains that HubSpot takes nearly all of his working time.
- •Dharmesh offers to write a $5 million seed check for an idea and says he is dead serious
- •The hosts preview wealth, HubSpot's early days, The Hustle acquisition and a batch of ideas
- •Dharmesh has listened to the podcast almost daily for 60 days
- •He is HubSpot's CTO and calls it his obsession
- •His virtual green-screen living-room background
- 8:42 – 13:31
Why HubSpot Bought The Hustle
Shaan asks Dharmesh about the culture clash in acquiring The Hustle. Dharmesh says HubSpot's quieter culture differs from Sam's type-A style, but the deal's strategy is sound, and Sam explains why he sold.
- •HubSpot has done few acquisitions, most of which went well
- •Dharmesh contrasts Sam's brash style with HubSpot's kinder, gentler culture
- •He says SaaS companies will increasingly own their distribution instead of renting audiences
- •Sam says he wanted a reputation as a fair deal maker and thinks HubSpot is undervalued
- 13:31 – 17:42
Net Worth, Freedom and Levels of Wealth
Sam asks about Dharmesh's public net worth and how money changed his life. Dharmesh says the first few million bought freedom, while Shaan describes diminishing joy at higher levels of wealth. Dharmesh adds that he and his wife plan to donate 90%-plus of it.
- •Most of Dharmesh's net worth is HubSpot shares, so it is public
- •He sold his previous company for roughly $10-15 million
- •The first ~$5 million had a dramatic impact by buying freedom
- •Shaan describes wealth levels from getting out of debt to $100 million
- •Dharmesh and his wife plan to donate 90%+
- 17:42 – 24:21
The Time-Money Framework and Hourly Rates
Dharmesh explains that we convert time into money early and buy time back later. After a $125-an-hour engineering job, he decided never to do tasks he could pay less than that to delegate. Shaan and Sam share how they set their own aspirational hourly rates.
- •First half of life is converting time to money, latter half is buying time back
- •At $125/hour he stopped doing tasks cheaper to delegate
- •His average rate over 30 years works out to about $10,000 an hour
- •Shaan recounts Naval's idea of an outrageous hourly rate
- •Sam assumes $3 million a year but still enjoys mowing the lawn
- 24:21 – 32:21
Rich Guy Questions: Spending, Tipping and Working Without a Grind
Shaan asks about outlandish spending, and Dharmesh describes micro acts of generosity, heavy tipping and a distaste for physical possessions. He then explains why HubSpot isn't a grind: he has no direct reports and focuses on three things at a time.
- •Tips 50-100% and sponsors people who can't afford events
- •Prefers bits over atoms because physical things take upkeep
- •His wife wants to save the world while he makes the money
- •Agreed with co-founder Brian that Brian is CEO and he has no direct reports
- •Focuses on three things, such as brand, culture and boldness
- •Calls copywriting an underrated, measurable skill
- 32:21 – 36:26
How HubSpot Began
Dharmesh explains that HubSpot wasn't supposed to happen after he promised his wife no more startups. He describes selling his first company, going to grad school, meeting Brian and choosing between two ideas.
- •He funded HubSpot early and is the largest shareholder
- •A casino-table analogy for self-funded startup founders
- •Went back to grad school at 35 or 36 after selling his first company
- •Met Brian in grad school and they decided to do a company together before settling on an idea
- •Marketing and an ERP-style product for small business were the two finalist paths
- 36:26 – 43:22
Idea: A Blockchain-Powered LinkedIn
Dharmesh pitches Shaan on a blockchain professional network and offers $5 million to fund it. He argues for coin-priced attention and a PageRank-style weighted graph where endorsements from valuable people count more.
- •Dharmesh offers a seed check and says he has picked out a seven-figure domain
- •Everyone has a coin, so attention can be priced and spam pays the recipient
- •Explains PageRank as a weighted, recursive measure of authority
- •Replace the symmetric follow with buying someone's coin
- •Shaan calls it a tremendous idea
- 43:22 – 48:55
BitClout, Scams and Decentralized Governance
Dharmesh and Shaan discuss BitClout as an early example of this kind of network. Dharmesh has put in about a million dollars, believes it is not a scam, and is optimistic that self-governance will emerge, while Shaan raises the problem of schemers with no company to police them.
- •Shaan wants to try BitClout to recognize the next real platform
- •Dharmesh has invested roughly a million dollars and spoke to the founder
- •Gaming of new platforms is compared to early SEO spam on Google
- •Shaan asks how decentralized platforms handle schemers without a CEO
- •Dharmesh expects self-governance over time
- 48:55 – 53:46
Idea: Natural Language as the Future of Software
Dharmesh argues that natural language interfaces will be a bigger trend than mobile because software can respond to intent instead of clicks. He describes his own Growth Bot experiment.
- •Software claims to be intuitive but makes users translate intent into clicks
- •Examples: asking Photoshop or HubSpot in plain language
- •He calls it a mega trend bigger than mobile, with B2B a natural fit
- •Shaan asks for magic-trick examples
- •Growth Bot let marketers ask questions of their data
- 53:46 – 56:43
Website Grader and Diagnostic Tools
Sam asks why Dharmesh likes website graders. He tells the story of Website Grader as a lead generation tool and explains why diagnostic tools and percentile scores work well.
- •Website Grader began as an internal tool for qualifying prospects
- •It made people realize they needed HubSpot
- •Percentile scores work better than absolute scores
- •They initially failed to collect email addresses until Gail Goodman suggested it
- 56:43 – 1:01:24
GPT-3 and a Magic-Trick Startup
Shaan describes how a friend's GPT-3 website-building demo went viral and raised money. Dharmesh says he has played with GPT-3 and spoke with Sam Altman, and expects a sudden jump in usefulness.
- •Shaan sees conversational search as next-level Google
- •Friend demoed GPT-3 generating websites from descriptions
- •One viral GIF led to about $2 million raised
- •Dharmesh talked to Sam Altman about where it's headed
- •Expects a quick jump from zero to one
- 1:01:24 – 1:05:22
Idea: A Remote Culture Community and Domain Hacks
Sam asks about remoteculture.com, and Dharmesh describes a paid community for people ops and HR. He shares his habit of buying domains to put inventory on ideas, and the hosts joke about domain trophies and The Hustle's domain.
- •Remote Culture would be a paid community and blog for people ops and HR
- •Communities are efficient network-based businesses
- •He buys a related domain when an idea takes shape
- •He bought thehustle.com as a gift for Sam
- •Sam says not to let domain names stop you from doing things
- 1:05:22 – 1:11:58
A Framework for Evaluating Startup Ideas
Dharmesh shares a profit, passion and probability scoring framework and warns against discarding low-probability ideas. He says good ideas are dangerous and that mediocrity is the real risk. He explains why HubSpot swung for the fences with venture funding.
- •Score profit potential, passion and probability from 0 to 10 and multiply
- •People wrongly filter on probability first, ignoring expected value
- •Good ideas masquerading as great ones waste time, and mediocrity is the thing to fear
- •HubSpot raised $105 million and aimed for a binary outcome
- •Great ideas often emerge only after starting the company
- 1:11:58 – 1:20:58
Constructive Podcast Criticism and Wrap-Up
Shaan asks Dharmesh for fair criticism. He suggests headline copywriting for episodes and reconsidering the show's name, and suggests Naval and Drew from Dropbox as guests before the hosts wrap up.
- •Apply the Shaan25 headlines approach to each episode
- •The acronym and name limit the show's wider reach
- •Generate alternative names and measure them before deciding to change
- •Suggests Naval and Drew from Dropbox as guests
- •Dharmesh will return and can be found as Dharmesh everywhere online
